##### Table of Contents



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 December 31, 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.
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware
    
    23-2636866(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)
 1436 LANCASTER AVENUE,
BERWYN, PENNSYLVANIA 19312
 610-296-3400
 None
 þ o
 o 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, 2010 and December 31, 2010 (unaudited)
    
    
    3Interim Unaudited Consolidated Statements of Operations for the Three and Six Months
Ended December 31, 2009 and 2010
    
    
    4Interim Consolidated Statements of Stockholders Equity as of June 30, 2010 and December
31, 2010 (unaudited)
    
    
    5Interim Unaudited Consolidated Statements of Cash Flows for the Six Months Ended
December 31, 2009 and 2010
    
    
    6Notes to Interim Unaudited Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    44Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    65Item 4. Controls and Procedures
    
    
    67PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    67Item 1A. Risk Factors
    
    
    67Item 6. Exhibits
    
    
    68Signature
    
    
    69EXHIBIT 3.1EXHIBIT 4.1EXHIBIT 4.2EXHIBIT 10.3EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 31.3EXHIBIT 32.1EXHIBIT 32.2EXHIBIT 32.3
  Amended and Restated Certificate of Incorporation of Dollar Financial Corp., as amended
 Supplemental Indenture dated December 2, 2010 between DFG Acquisition Services, Inc.,
Military Financial Services, LLC, Dealers Financial Services, LLC and U.S. Bank National
Association, as trustee
 Guarantee dated December 2, 2010 executed by DFG Acquisition Services, Inc., Military
Financial Services, LLC, Dealers Financial Services, LLC
 Share Purchase Agreement dated December 31, 2010 among Dollar Financial U.K. Limited, Dollar
Financial Corp., CCRT International Holdings B.V. and CompuCredit Holdings Corporation
 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
 Rule 13(a)-14(a)/15d-14a Certification of Executive Vice President and Chief Financial
Officer
 Rule 13a-14(a)/15d-14(a) Certification of Senior Vice President of Finance and Corporate
Controller
 Section 1350 Certification of Chief Executive Officer
 Section 1350 Certification of Executive Vice President and Chief Financial Officer
 Section 1350 Certification of Senior Vice President of Finance and Corporate
Controller
 2




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##### Table of Contents



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,
    
    
    December 31,2010
    
    
    2010(unaudited)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    291.3
    
    
    $
    170.4Consumer loans, net:Consumer loans
    
    
    111.3
    
    
    
    133.4Less: Allowance for consumer loan losses
    
    
    (10.4
    )
    
    
    (11.4
    )Consumer loans, net
    
    
    100.9
    
    
    
    122.0Pawn loans
    
    
    35.5
    
    
    
    113.4Loans in default, net of an allowance of $21.8 and $27.0
    
    
    9.3
    
    
    
    12.0Other receivables
    
    
    17.1
    
    
    
    36.0Prepaid expenses and other current assets
    
    
    25.8
    
    
    
    31.7Current deferred tax asset, net of valuation allowance of $4.9 and $4.9
    
    
    1.0
    
    
    
    Total current assets
    
    
    480.9
    
    
    
    485.5Deferred tax asset, net of valuation allowance of $80.2 and $81.6
    
    
    22.6
    
    
    
    19.2Property and equipment, net of accumulated depreciation of $117.2 and $129.3
    
    
    67.5
    
    
    
    81.5Goodwill and other intangibles
    
    
    609.0
    
    
    
    716.8Debt issuance costs, net of accumulated amortization of $3.5 and $5.5
    
    
    18.7
    
    
    
    18.1Other
    
    
    15.9
    
    
    
    18.6Total Assets
    
    $
    1,214.6
    
    
    $
    1,339.7LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    44.8
    
    
    $
    32.7Income taxes payable
    
    
    6.2
    
    
    
    6.8Accrued expenses and other liabilities
    
    
    92.6
    
    
    
    90.8Debt due within one year
    
    
    3.3
    
    
    
    7.8Current deferred tax liability
    
    
    0.3
    
    
    
    Total current liabilities
    
    
    147.2
    
    
    
    138.1Fair value of derivatives
    
    
    47.4
    
    
    
    66.8Long-term deferred tax liability
    
    
    24.0
    
    
    
    29.2Long-term debt
    
    
    725.3
    
    
    
    787.2Other non-current liabilities
    
    
    52.4
    
    
    
    66.5Stockholders equity:Common stock, $.001 par value: 100,000,000 shares authorized;
36,539,663 shares and 36,692,933 shares issued and outstanding at
June 30, 2010 and December 31, 2010, respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    331.1
    
    
    
    334.6Accumulated deficit
    
    
    (115.5
    )
    
    
    (83.2
    )Accumulated other comprehensive income
    
    
    2.7
    
    
    
    0.9Total Dollar Financial Corp. stockholders equity
    
    
    218.3
    
    
    
    252.3Non-controlling interest
    
    
    
    
    
    
    (0.4
    )Total stockholders equity
    
    
    218.3
    
    
    
    251.9Total Liabilities and Stockholders Equity
    
    $
    1,214.6
    
    
    $
    1,339.7
  3




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 
 INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share amounts)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2010
    
    
    2009
    
    
    2010Revenues:Consumer lending
    
    $
    82.7
    
    
    $
    99.3
    
    
    $
    160.2
    
    
    $
    191.3Check cashing
    
    
    38.5
    
    
    
    36.8
    
    
    
    76.3
    
    
    
    72.0Money transfer fees
    
    
    7.1
    
    
    
    7.9
    
    
    
    13.9
    
    
    
    15.1Pawn service fees and sales
    
    
    4.7
    
    
    
    7.3
    
    
    
    8.5
    
    
    
    13.5Gold sales
    
    
    13.2
    
    
    
    11.3
    
    
    
    19.0
    
    
    
    22.4Other
    
    
    14.5
    
    
    
    19.9
    
    
    
    28.3
    
    
    
    42.4Total revenues
    
    
    160.7
    
    
    
    182.5
    
    
    
    306.2
    
    
    
    356.7Operating expenses:Salaries and benefits
    
    
    37.7
    
    
    
    42.8
    
    
    
    74.5
    
    
    
    83.5Provision for loan losses
    
    
    12.7
    
    
    
    16.5
    
    
    
    24.4
    
    
    
    30.4Occupancy
    
    
    10.8
    
    
    
    12.0
    
    
    
    21.7
    
    
    
    23.6Purchased gold costs
    
    
    9.2
    
    
    
    7.2
    
    
    
    13.4
    
    
    
    14.9Depreciation
    
    
    4.1
    
    
    
    3.9
    
    
    
    7.4
    
    
    
    7.5Returned checks, net and cash shortages
    
    
    2.6
    
    
    
    2.0
    
    
    
    4.9
    
    
    
    3.9Maintenance and repairs
    
    
    2.9
    
    
    
    3.2
    
    
    
    5.7
    
    
    
    6.5Advertising
    
    
    4.7
    
    
    
    5.9
    
    
    
    8.1
    
    
    
    11.7Bank charges and armored carrier service
    
    
    3.5
    
    
    
    3.9
    
    
    
    6.9
    
    
    
    7.7Other
    
    
    11.9
    
    
    
    15.2
    
    
    
    22.7
    
    
    
    28.7Total operating expenses
    
    
    100.1
    
    
    
    112.6
    
    
    
    189.7
    
    
    
    218.4Operating margin
    
    
    60.6
    
    
    
    69.9
    
    
    
    116.5
    
    
    
    138.3Corporate and other expenses:Corporate expenses
    
    
    22.9
    
    
    
    23.9
    
    
    
    43.3
    
    
    
    49.4Other depreciation and amortization
    
    
    1.1
    
    
    
    2.8
    
    
    
    2.2
    
    
    
    5.5Interest expense, net
    
    
    12.8
    
    
    
    21.9
    
    
    
    24.5
    
    
    
    43.5Loss on extinguishment of debt
    
    
    8.8
    
    
    
    
    
    
    
    8.8
    
    
    
    Unrealized foreign exchange (gain) loss
    
    
    (3.9
    )
    
    
    (17.8
    )
    
    
    3.9
    
    
    
    (32.4
    )Loss on derivatives not designated as hedges
    
    
    3.3
    
    
    
    10.8
    
    
    
    3.3
    
    
    
    24.6(Proceeds from) provision for litigation settlements
    
    
    
    
    
    
    (4.1
    )
    
    
    1.3
    
    
    
    (3.9
    )Loss on store closings
    
    
    1.3
    
    
    
    0.1
    
    
    
    1.6
    
    
    
    0.5Other expense, net
    
    
    1.4
    
    
    
    2.0
    
    
    
    1.3
    
    
    
    2.6Income before income taxes
    
    
    12.9
    
    
    
    30.3
    
    
    
    26.3
    
    
    
    48.5Income tax provision
    
    
    5.9
    
    
    
    10.5
    
    
    
    13.9
    
    
    
    16.6Net income
    
    
    7.0
    
    
    
    19.8
    
    
    $
    12.4
    
    
    $
    31.9Less: Net loss attributable to non-controlling interests
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.4
    )Net income attributable to Dollar Financial Corp.
    
    $
    7.1
    
    
    $
    20.0
    
    
    $
    12.4
    
    
    $
    32.3Net income per share attributable to Dollar Financial Corp:Basic
    
    $
    0.20
    
    
    $
    0.55
    
    
    $
    0.34
    
    
    $
    0.89Diluted
    
    $
    0.19
    
    
    $
    0.53
    
    
    $
    0.34
    
    
    $
    0.86Weighted average shares outstanding:Basic
    
    
    36,069,838
    
    
    
    36,480,854
    
    
    
    36,033,687
    
    
    
    36,440,652Diluted
    
    
    37,274,813
    
    
    
    37,896,788
    
    
    
    36,986,001
    
    
    
    37,628,431
  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)
    
    
    36,539,663
    
    
    $
    
    
    
    $
    331.1
    
    
    $
    (115.5
    )
    
    $
    
    
    
    $
    2.7
    
    
    $
    218.3Comprehensive income:Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.3
    )
    
    
    (4.3
    )Cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.5
    
    
    
    2.5Net income attributable to
Dollar Financial Corp.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32.3
    
    
    
    
    
    
    
    
    
    
    
    32.3Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30.5Restricted
stock vested
    
    
    240,092Stock options exercised
    
    
    29,541
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2Vested portion of granted
restricted stock and
restricted stock units
    
    
    
    
    
    
    
    
    
    
    1.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.9Retirement of common stock
    
    
    (116,363
    )Other stock compensation
    
    
    
    
    
    
    
    
    
    
    1.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.4Net loss attributable to
non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    (0.4
    )Balance, December 31, 2010 (unaudited)
    
    
    36,692,933
    
    
    $
    
    
    
    $
    334.6
    
    
    $
    (83.2
    )
    
    $
    (0.4
    )
    
    $
    0.9
    
    
    $
    251.9
  5




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 
 INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
 Six Months EndedDecember 31,2009
    
    
    2010Cash flows from operating activities:Net income
    
    $
    12.4
    
    
    $
    31.9Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    11.2
    
    
    
    14.9Loss on extinguishment of debt
    
    
    8.8
    
    
    
    Change in fair value of derivatives not designated as hedges
    
    
    2.9
    
    
    
    15.6Provision for loan losses
    
    
    24.4
    
    
    
    30.4Non-cash stock compensation
    
    
    3.5
    
    
    
    3.2Loss on disposal of fixed assets
    
    
    0.2
    
    
    
    0.4Unrealized foreign exchange loss (gain)
    
    
    3.7
    
    
    
    (32.4
    )Deferred tax provision
    
    
    (3.1
    )
    
    
    8.2Accretion of debt discount and deferred issuance costs
    
    
    5.7
    
    
    
    7.5Change in assets and liabilities (net of effect of acquisitions):(Increase) in loans and other receivables
    
    
    (42.6
    )
    
    
    (62.1
    )(Increase) in prepaid expenses and other
    
    
    (0.6
    )
    
    
    (4.1
    )Increase (decrease) in accounts payable, accrued expenses and other liabilities
    
    
    8.1
    
    
    
    (55.9
    )Net cash provided by (used in) operating activities
    
    
    34.6
    
    
    
    (42.4
    )Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    (123.5
    )
    
    
    (75.1
    )Additions to property and equipment
    
    
    (11.7
    )
    
    
    (18.1
    )Net cash used in investing activities
    
    
    (135.2
    )
    
    
    (93.2
    )Cash flows from financing activities:Proceeds from the issuance of 10.375% senior notes due 2016
    
    
    596.4
    
    
    
    Proceeds from the exercise of stock options
    
    
    0.1
    
    
    
    0.2Repayment of term loan notes
    
    
    (351.1
    )
    
    
    Other debt payments
    
    
    (6.9
    )
    
    
    Payment of debt issuance and other costs
    
    
    (19.1
    )
    
    
    (0.3
    )Net cash provided by (used in) financing activities
    
    
    219.4
    
    
    
    (0.1
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    17.0
    
    
    
    14.8Net increase (decrease) in cash and cash equivalents
    
    
    135.8
    
    
    
    (120.9
    )Cash and cash equivalents at beginning of period
    
    
    209.6
    
    
    
    291.3Cash and cash equivalents at end of period
    
    $
    345.4
    
    
    $
    170.4
  6




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary of Significant Accounting Policies
 Basis of Presentation
  ® ® ® ® ® ® ® ® ® ®
  Use of Estimates
  Principles of Consolidation
  Reclassifications
  
    
    Reclassifying $9.4 million of loans and a related allowance of $7.4 million from
Consumer Loans, net, to Loans in Default, net, in the Companys Consolidated Balance Sheet
as of June 30, 2010, to conform the presentation of our Poland business to the remainder
of the Companys operations.
    
    Reclassifying $35.5 million of pawn loans from Consumer Loans, net, to Pawn Loans in
the Companys Consolidated Balance Sheet as of June 30, 2010.
 7




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Revenue Recognition
      Consumer Loans, Net
  Loans in Default
  Company-Funded Consumer Loan Loss Reserves Policy
  8




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Fair Value of Financial Instruments
     Common Stock and Stock Split
   9




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Earnings per Share
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2010
    
    
    2009
    
    
    2010Net income attributable to Dollar Financial Corp.
    
    $
    7.1
    
    
    $
    20.0
    
    
    $
    12.4
    
    
    $
    32.3Reconciliation of denominator:Weighted average of common shares outstanding  basic (1)
    
    
    36.1
    
    
    
    36.5
    
    
    
    36.0
    
    
    
    36.4Effect of dilutive stock options  (2)
    
    
    0.7
    
    
    
    1.0
    
    
    
    0.5
    
    
    
    0.8Effect of unvested restricted stock and restricted stock unit grants (2)
    
    
    0.5
    
    
    
    0.4
    
    
    
    0.5
    
    
    
    0.4Weighted average of common shares outstanding  diluted
    
    
    37.3
    
    
    
    37.9
    
    
    
    37.0
    
    
    
    37.6
 
 (1)
    
    Excludes 0.2 and 0.1 shares of unvested restricted stock which are included in total
outstanding shares of common stock as of December 31, 2009 and 2010, respectively. The
dilutive effect of restricted stock and restricted stock units 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
     10




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Three Months Ended
    
    Six Months EndedDecember 31,
    
    December 31,2009
    
    2010
    
    2009
    
    2010Expected volatility
    
    
    54.5
    %
    
    
    52.7
    %
    
    
    54.9
    %
    
    
    52.8
    %Expected life (years)
    
    
    5.7
    
    
    
    5.5
    
    
    
    5.9
    
    
    
    5.5Risk-free interest rate
    
    
    3.01
    %
    
    
    1.86
    %
    
    
    3.23
    %
    
    
    1.88
    %Expected dividends
    
    
    None
    
    
    
    None
    
    
    
    None
    
    
    
    NoneWeighted average fair value
    
    $
    7.91
    
    
    $
    8.36
    
    
    $
    6.32
    
    
    $
    8.23
  WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    AggregateExercise
    
    Contractual
    
    Intrinsic ValueOptions
    
    Price
    
    Term (years)
    
    ($ in millions)Options outstanding at June 30,
2010 (1,798,522 shares exercisable)
    
    
    2,908,018
    
    
    $
    10.22
    
    
    
    7.5
    
    
    $
    9.9Granted
    
    
    80,411
    
    
    $
    16.70Exercised
    
    
    (29,541
    )
    
    $
    7.41Forfeited and expired
    
    
    (55,556
    )
    
    $
    9.03Options outstanding at December 31, 2010
    
    
    2,903,332
    
    
    $
    10.45
    
    
    
    7.0
    
    
    $
    25.1Exercisable at December 31, 2010
    
    
    2,134,204
    
    
    $
    10.36
    
    
    
    6.4
    
    
    $
    12.4
   11




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  WeightedAverageRestricted
    
    Grant-DateStock Awards
    
    Fair-ValueOutstanding at June 30, 2010
    
    
    150,843
    
    
    $
    9.66Granted
    
    
    
    
    
    $
    Vested
    
    
    (70,567
    )
    
    $
    9.47Forfeited
    
    
    
    
    
    $
    Outstanding at December 31, 2010
    
    
    80,276
    
    
    $
    9.82
   WeightedRestricted
    
    AverageStock Unit
    
    Grant-DateAwards
    
    Fair-ValueOutstanding at June 30, 2010
    
    
    909,023
    
    
    $
    9.98Granted
    
    
    48,176
    
    
    $
    16.44Vested
    
    
    (274,846
    )
    
    $
    9.97Forfeited
    
    
    (36,213
    )
    
    $
    10.97Outstanding at December 31, 2010
    
    
    646,140
    
    
    $
    10.41
  Recent Accounting Pronouncements
 Business Combinations
 Accounting for Convertible
Debt Instruments That May Be Settled Upon Conversion (Including Partial Cash Settlement)
 12




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##### Table of Contents



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
 Receivables  Disclosures about the Credit Quality
of Financing Receivables and the Allowance for Credit Losses
 Business Combinations (Topic 805) 
Disclosure of Supplementary Pro Forma Information for Business Combinations
 13




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Financing Receivables
   Consumer Credit Exposure
Credit Risk Profile Based on Payment Activity
(in millions)
 Consumer
    
    
    ConsumerLoans,
    
    
    Loans,
    
    
    PawnGross
    
    
    Allowance
    
    
    LoansPerforming
    
    $
    133.4
    
    
    $
    11.4
    
    
    $
    113.4Non-performing
    
    
    39.0
    
    
    
    27.0
    
    
    
    $
    172.4
    
    
    $
    38.4
    
    
    $
    113.4
  Age Analysis of Past Due Loans Receivable
As of December 31, 2010
(in millions)
 Greater
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    RecordedThan 90
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    Investment >1-30 days
    
    
    30-59 days
    
    
    60-89 days
    
    
    days Past
    
    
    Total Past
    
    
    
    
    
    
    Financing
    
    
    90 Days andPast Due
    
    
    Past Due
    
    
    Past Due
    
    
    Due
    
    
    Due
    
    
    Current
    
    
    Receivables
    
    
    AccruingConsumer Loans
    
    $
    11.1
    
    
    $
    6.2
    
    
    $
    4.9
    
    
    $
    23.5
    
    
    $
    45.7
    
    
    $
    126.8
    
    
    $
    172.4
    
    
    $
    1.8Pawn Loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113.4
    
    
    
    113.4
    
    
    
    Total
    
    $
    11.1
    
    
    $
    6.2
    
    
    $
    4.9
    
    
    $
    23.5
    
    
    $
    45.7
    
    
    $
    240.2
    
    
    $
    285.8
    
    
    $
    1.8
  Loans Receivable on Nonaccrual Status
As of December 31, 2010
(in millions)
 Consumer Loans
    
    $
    39.0Pawn Loans
    
    
    Total
    
    $
    39.0
 3. Acquisitions
    14




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      Cash
    
    $
    4.0Pawn loans
    
    
    71.5Prepaid expenses and other current assets
    
    
    3.6Property and equipment
    
    
    3.0Other assets
    
    
    0.1Accounts payable
    
    
    (0.4
    )Accrued expenses and other liabilities
    
    
    (3.9
    )Debt
    
    
    (61.8
    )Other non-current liabilities
    
    
    (1.5
    )Net tangible assets acquired
    
    
    14.6Indefinite-lived intangible assets acquired
    
    
    0.4Goodwill
    
    
    76.2Total purchase price
    
    $
    91.2
 15




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      Balance at June 30, 2010
    
    $
    496.8Acquisitions:Sefina Finance AB
    
    
    76.2Various small acquisitions
    
    
    15.2Purchase accounting adjustments:Military Financial Services, LLC
    
    
    (1.4
    )Foreign currency translation adjustment
    
    
    14.2Balance at December 31, 2010
    
    $
    601.0
  Pro Forma ResultsThree months ended
    
    Six months endedDecember 31,
    
    December 31,2009
    
    2010
    
    2009
    
    2010(Unaudited in millions except
    
    (Unaudited in thousands exceptper share amounts)
    
    per share amounts)Revenue
    
    $
    175.2
    
    
    $
    190.5
    
    
    $
    337.1
    
    
    $
    372.6Net income attributable to Dollar Financial Corp.
    
    $
    10.3
    
    
    $
    21.6
    
    
    $
    14.2
    
    
    $
    35.6Net income per common share  basic
    
    $
    0.29
    
    
    $
    0.59
    
    
    $
    0.39
    
    
    $
    0.98Net income per common share  diluted
    
    $
    0.28
    
    
    $
    0.57
    
    
    $
    0.38
    
    
    $
    0.95
 16




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 4. Goodwill and Other Intangibles
  United States
    
    
    Dealers FinancialRetail
    
    
    Services
    
    
    Canada
    
    
    Europe
    
    
    Other
    
    
    TotalBalance at June 30, 2010
    
    $
    205.7
    
    
    $
    53.5
    
    
    $
    136.4
    
    
    $
    94.6
    
    
    $
    6.6
    
    
    $
    496.8Acquisitions and purchase
accounting adjustments
    
    
    
    
    
    
    (1.4
    )
    
    
    15.0
    
    
    
    76.4
    
    
    
    
    
    
    
    90.0Foreign currency translation
adjustments
    
    
    
    
    
    
    
    
    
    
    9.3
    
    
    
    4.1
    
    
    
    0.8
    
    
    
    14.2Balance at December 31, 2010
    
    $
    205.7
    
    
    $
    52.1
    
    
    $
    160.7
    
    
    $
    175.1
    
    
    $
    7.4
    
    
    $
    601.0
  Gross Carrying AmountJune 30,
    
    
    December 31,2010
    
    
    2010Non-amortizing intangible assets:Goodwill
    
    $
    496.8
    
    
    $
    601.0Reacquired franchise rights
    
    
    51.3
    
    
    
    55.0DFS MILES Program
    
    
    35.4
    
    
    
    35.4Tradenames
    
    
    
    
    
    
    0.4$
    583.5
    
    
    $
    691.8Amortizable intangible assets:Various contracts
    
    $
    28.7
    
    
    $
    28.7Reacquired franchise rights
    
    
    
    
    
    
    2.6Accumulated Amortization:Various contracts
    
    
    (3.2
    )
    
    
    (6.2
    )Reacquired franchise rights
    
    
    
    
    
    
    (0.1
    )Total intangible assets
    
    $
    609.0
    
    
    $
    716.8
     17




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Fiscal Year EndedJune 30,
    
    
    
    Amount2011
    
    
    
    $
    6.42012
    
    
    
    
    6.52013
    
    
    
    
    6.12014
    
    
    
    
    5.92015
    
    
    
    
    3.0$
    27.9
 5. Debt
  June 30,
    
    
    December 31,2010
    
    
    2010National 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
    )
    
    
    (3.2
    )Dollar Financial Corp. 2.875% Senior Convertible Notes due 2027
    
    
    38.3
    
    
    
    39.5Dollar Financial Corp. 3.000% Senior Convertible Notes due 2028
    
    
    84.9
    
    
    
    87.8Scandinavian credit facilities
    
    
    
    
    
    
    61.8Other
    
    
    8.7
    
    
    
    9.1Total debt
    
    
    728.6
    
    
    
    795.0Less: current portion of debt
    
    
    (3.3
    )
    
    
    (7.8
    )Long-term debt
    
    $
    725.3
    
    
    $
    787.2
 Senior Notes
  Convertible Notes
 Senior Convertible Notes due 2027
  18




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##### Table of Contents



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 DFC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 DFC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.
     19




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Senior Convertible Notes due 2028
    
    
    during any calendar quarter commencing after December 31, 2009, if the closing sale price
of DFC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 DFC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
  20




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Debt
  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 DFC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 DFC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
     21




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      Scandinavian Credit Facilities
    6. Fair Value Measurements
   22




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2010
(in millions)
 Quoted Prices inActive Markets
    
    Significantfor Identical Assets
    
    Other
    
    Significantand Liabilities
    
    Observable
    
    Unobservable
    
    Balance at(Level 1)
    
    Inputs (Level 2)
    
    Inputs (Level 3)
    
    December 31, 2010AssetsDerivative financial instruments
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    LiabilitiesDerivative financial instruments
    
    $
    
    
    
    $
    66.8
    
    
    $
    
    
    
    $
    66.8
  7. Derivative Instruments and Hedging Activities
 Risk Management Objective of Using Derivatives
    23




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Cash Flow Hedges of Foreign Exchange Risk
   Cash Flow Hedges of Multiple Risks
    24




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Pay Fixed
    
    Receive Floating
    
    Receive FloatingForeign Currency Derivatives
    
    Pay Fixed Notional
    
    Strike Rate
    
    Notional
    
    IndexUSD-CAD Cross Currency Swap
    
    CAD 181,658,135
    
    
    8.75
    %
    
    $
    157,987,500
    
    
    3 mo. LIBOR + 2.75% per annumUSD-CAD Cross Currency Swap
    
    CAD 60,820,448
    
    
    7.47
    %
    
    $
    52,662,500
    
    
    3 mo. LIBOR + 2.75% per annumUSD-CAD Cross Currency Swap
    
    CAD 82,972,163
    
    
    7.41
    %
    
    $
    71,812,500
    
    
    3 mo. LIBOR + 2.75% per annum
 Non-designated Hedges of Commodity Risk
   Tabular Disclosure of Fair Values of Derivative InstrumentsAsset 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
    
    
    
    $
    
    
    
    
    
    $
    47.4Asset Derivatives
    
    
    Liability DerivativesAs of December 31, 2010
    
    
    As of December 31, 2010Balance Sheet Location
    
    Fair Value
    
    
    Balance Sheet Location
    
    Fair ValueDerivatives
not designated as
hedging
instruments:Commodity Options
    
    Derivatives
    
    $
    
    
    
    Derivatives
    
    $
    0.2Cross Currency Swaps
    
    Derivatives
    
    
    
    
    
    Derivatives
    
    
    66.6Total derivatives
not designated as
hedging instruments
    
    
    
    $
    
    
    
    
    
    $
    66.8
 25




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##### Table of Contents



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 Six Months Ending December 31, 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)Commodity Options
    
    $
    
    
    
    
    
    $
    
    
    
    Other income / (expense)
    
    $
    Foreign Exchange Contracts
    
    
    
    
    
    Foreign currency gain / (loss)
    
    
    
    
    
    Other income / (expense)
    
    
    Cross Currency Swaps
    
    
    (2.7
    )
    
    Extinguishment of Debt
    
    
    (3.9
    )
    
    Other income / (expense)
    
    
    (3.3
    )Interest Expense
    
    
    (0.8
    )Tax Benefit
    
    
    1.3Total
    
    $
    (2.7
    )
    
    
    
    $
    (3.4
    )
    
    
    
    $
    (3.3
    )Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statement of Operations for the Six Months Ending December 31, 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)Commodity Options
    
    $
    
    
    
    
    
    $
    
    
    
    Other income / (expense)
    
    $
    (0.2
    )Cross Currency Swaps
    
    $
    
    
    
    Interest Expense
    
    $
    (3.2
    )
    
    Loss on derivatives not designated as hedges
    
    $
    (24.6
    )Tax Benefit
    
    
    0.8Total
    
    $
    
    
    
    
    
    $
    (2.4
    )
    
    
    
    $
    (24.8
    )
 Credit-risk-related Contingent Features
    26




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 8. Comprehensive Income
  Three months ended
    
    
    Six months endedDecember 31,
    
    
    December 31,2009
    
    
    2010
    
    
    2009
    
    
    2010Net income
    
    $
    7.0
    
    
    $
    19.8
    
    
    $
    12.4
    
    
    $
    31.9Foreign currency translation adjustment(1)
    
    
    3.4
    
    
    
    (12.0
    )
    
    
    7.7
    
    
    
    (4.3
    )Fair value adjustments for derivatives, net(2)
    
    
    (2.2
    )
    
    
    
    
    
    
    (2.7
    )
    
    
    Amortization of accumulated other comprehensive income
related to ineffective cash flow hedges (3)
    
    
    3.1
    
    
    
    1.3
    
    
    
    3.4
    
    
    
    2.5Comprehensive income
    
    
    11.3
    
    
    
    9.1
    
    
    
    20.8
    
    
    
    30.1Net income (loss) applicable to non-controlling
interests
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.4
    )Comprehensive income attributable to Dollar Financial
Corp.
    
    $
    11.4
    
    
    $
    9.3
    
    
    $
    20.8
    
    
    $
    30.5
 
 (1)
    
    The ending balance of the foreign currency translation adjustments
included in accumulated other comprehensive income on the balance sheet were
gains of $28.9 million and $10.0 million as of December 31, 2009 and 2010,
respectively.(2)
    
    Net of $0.9 million of tax for the three months ended December 31, 2009.(3)
    
    Net of $1.2 million and $0.4 million of tax for the three months ended
December 31, 2009 and 2010, respectively. For the six months ended December
31, 2009 and 2010, the tax was $1.3 million and $0.7 million respectively.  9. Income Taxes
 Income Tax Provision
  27




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##### Table of Contents



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)
    
    
    (4.3
    )
    
    
    1.5
    
    
    
    (5.8
    )Balance at December 31, 2010
    
    $
    118.5
    
    
    $
    86.5
    
    
    $
    32.0
      10. Contingent Liabilities
 Contingent Liabilities
  28




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##### Table of Contents



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
  29




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##### Table of Contents



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
  30




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   11. Segment Information
   31




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (In millions)DealersUnited States
    
    
    FinancialRetail
    
    
    Services
    
    
    Canada
    
    
    Europe
    
    
    Other
    
    
    TotalAs of and for the three months ended
December 31, 2009Total assets
    
    $
    267.6
    
    
    $
    129.2
    
    
    $
    576.1
    
    
    $
    225.9
    
    
    $
    45.4
    
    
    $
    1,244.2Goodwill and other intangibles, net
    
    
    206.0
    
    
    
    117.4
    
    
    
    184.6
    
    
    
    78.7
    
    
    
    5.2
    
    
    
    591.9Sales to unaffiliated customers:Consumer lending
    
    
    18.2
    
    
    
    
    
    
    
    38.1
    
    
    
    24.6
    
    
    
    1.8
    
    
    
    82.7Check cashing
    
    
    11.1
    
    
    
    
    
    
    
    18.1
    
    
    
    9.3
    
    
    
    
    
    
    
    38.5Money transfer fees
    
    
    1.2
    
    
    
    
    
    
    
    4.2
    
    
    
    1.7
    
    
    
    
    
    
    
    7.1Pawn service fees and sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.7
    
    
    
    
    
    
    
    4.7Gold sales
    
    
    0.1
    
    
    
    
    
    
    
    2.0
    
    
    
    11.1
    
    
    
    
    
    
    
    13.2Other
    
    
    2.6
    
    
    
    0.6
    
    
    
    6.8
    
    
    
    4.2
    
    
    
    0.3
    
    
    
    14.5Total sales to unaffiliated customers
    
    
    33.2
    
    
    
    0.6
    
    
    
    69.2
    
    
    
    55.6
    
    
    
    2.1
    
    
    
    160.7Provision for loan losses
    
    
    3.1
    
    
    
    
    
    
    
    4.5
    
    
    
    4.6
    
    
    
    0.5
    
    
    
    12.7Depreciation and amortization
    
    
    1.4
    
    
    
    0.1
    
    
    
    1.7
    
    
    
    1.6
    
    
    
    0.4
    
    
    
    5.2Interest expense, net
    
    
    
    
    
    
    
    
    
    
    6.6
    
    
    
    1.5
    
    
    
    4.7
    
    
    
    12.8Loss (gain) on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    3.6
    
    
    
    4.7
    
    
    
    0.5
    
    
    
    8.8Unrealized foreign exchange (gain)
    
    
    
    
    
    
    
    
    
    
    (3.9
    )
    
    
    
    
    
    
    
    
    
    
    (3.9
    )Loss on derivatives not designated
as hedges
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    
    
    
    
    
    
    
    
    3.3Loss on store closings
    
    
    0.1
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    0.7
    
    
    
    1.3Other expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    0.7
    
    
    
    1.4Income (loss) before income taxes
    
    
    6.0
    
    
    
    0.3
    
    
    
    11.3
    
    
    
    6.8
    
    
    
    (11.5
    )
    
    
    12.9Income tax provision
    
    
    1.3
    
    
    
    
    
    
    
    2.6
    
    
    
    1.9
    
    
    
    0.1
    
    
    
    5.9As of and for the six months ended
December 31, 2009Sales to unaffiliated customers:Consumer lending
    
    
    36.0
    
    
    
    
    
    
    
    73.4
    
    
    
    47.7
    
    
    
    3.1
    
    
    
    160.2Check cashing
    
    
    22.0
    
    
    
    
    
    
    
    35.5
    
    
    
    18.8
    
    
    
    
    
    
    
    76.3Money transfer fees
    
    
    2.5
    
    
    
    
    
    
    
    8.2
    
    
    
    3.2
    
    
    
    
    
    
    
    13.9Pawn service fees and sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.5
    
    
    
    
    
    
    
    8.5Gold sales
    
    
    0.1
    
    
    
    
    
    
    
    2.6
    
    
    
    16.3
    
    
    
    
    
    
    
    19.0Other
    
    
    5.2
    
    
    
    0.6
    
    
    
    13.6
    
    
    
    8.3
    
    
    
    0.6
    
    
    
    28.3Total sales to unaffiliated customers
    
    
    65.8
    
    
    
    0.6
    
    
    
    133.3
    
    
    
    102.8
    
    
    
    3.7
    
    
    
    306.2Provision for loan losses
    
    
    6.8
    
    
    
    
    
    
    
    8.3
    
    
    
    8.3
    
    
    
    1.0
    
    
    
    24.4Depreciation and amortization
    
    
    2.3
    
    
    
    0.1
    
    
    
    3.3
    
    
    
    3.2
    
    
    
    0.7
    
    
    
    9.6Interest expense, net
    
    
    
    
    
    
    
    
    
    
    12.0
    
    
    
    3.1
    
    
    
    9.4
    
    
    
    24.5Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    3.6
    
    
    
    4.7
    
    
    
    0.5
    
    
    
    8.8Unrealized foreign exchange loss
    
    
    
    
    
    
    
    
    
    
    (4.1
    )
    
    
    7.9
    
    
    
    0.1
    
    
    
    3.9Loss on derivatives not designated
as hedges
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    
    
    
    
    
    
    
    
    3.3Provision for litigation settlements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    1.3Loss on store (gain) closings
    
    
    0.3
    
    
    
    
    
    
    
    0.7
    
    
    
    (0.1
    )
    
    
    0.7
    
    
    
    1.6Other expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    0.6
    
    
    
    1.3Income (loss) before income taxes
    
    
    10.2
    
    
    
    0.3
    
    
    
    29.6
    
    
    
    9.3
    
    
    
    (23.1
    )
    
    
    26.3Income tax provision
    
    
    2.5
    
    
    
    
    
    
    
    8.3
    
    
    
    2.8
    
    
    
    0.3
    
    
    
    13.9
 32




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (In millions)DealersUnited States
    
    
    FinancialRetail
    
    
    Services
    
    
    Canada
    
    
    Europe
    
    
    Other
    
    
    TotalAs of and for the three months ended
December 31, 2010Total assets
    
    $
    259.5
    
    
    $
    118.8
    
    
    $
    451.6
    
    
    $
    455.3
    
    
    $
    54.5
    
    
    $
    1,339.7Goodwill and other intangibles, net
    
    
    206.0
    
    
    
    110.0
    
    
    
    211.9
    
    
    
    181.5
    
    
    
    7.4
    
    
    
    716.8Sales to unaffiliated customers:Consumer lending
    
    
    16.7
    
    
    
    
    
    
    
    43.0
    
    
    
    37.2
    
    
    
    2.4
    
    
    
    99.3Check cashing
    
    
    9.5
    
    
    
    
    
    
    
    19.1
    
    
    
    8.2
    
    
    
    
    
    
    
    36.8Money transfer fees
    
    
    1.1
    
    
    
    
    
    
    
    4.8
    
    
    
    2.0
    
    
    
    
    
    
    
    7.9Pawn service fees and sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.3
    
    
    
    
    
    
    
    7.3Gold sales
    
    
    0.6
    
    
    
    
    
    
    
    4.2
    
    
    
    6.5
    
    
    
    
    
    
    
    11.3Other
    
    
    3.0
    
    
    
    5.5
    
    
    
    6.6
    
    
    
    4.8
    
    
    
    
    
    
    
    19.9Total sales to unaffiliated customers
    
    
    30.9
    
    
    
    5.5
    
    
    
    77.7
    
    
    
    66.0
    
    
    
    2.4
    
    
    
    182.5Provision for loan losses
    
    
    2.1
    
    
    
    
    
    
    
    4.8
    
    
    
    8.6
    
    
    
    1.0
    
    
    
    16.5Depreciation and amortization
    
    
    0.7
    
    
    
    1.5
    
    
    
    1.9
    
    
    
    2.1
    
    
    
    0.5
    
    
    
    6.7Interest expense, net
    
    
    
    
    
    
    
    
    
    
    17.8
    
    
    
    0.1
    
    
    
    4.0
    
    
    
    21.9Unrealized foreign exchange (gain) loss
    
    
    
    
    
    
    
    
    
    
    (18.9
    )
    
    
    
    
    
    
    1.1
    
    
    
    (17.8
    )Loss on derivatives not designated
as hedges
    
    
    
    
    
    
    
    
    
    
    10.8
    
    
    
    
    
    
    
    
    
    
    
    10.8(Proceeds from) provision for
litigation settlements
    
    
    
    
    
    
    
    
    
    
    (4.1
    )
    
    
    
    
    
    
    
    
    
    
    (4.1
    )Loss on store (gain) closings
    
    
    0.2
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    (0.2
    )
    
    
    0.1Other (income) expense, net
    
    
    
    
    
    
    
    
    
    
    (0.8
    )
    
    
    3.1
    
    
    
    (0.3
    )
    
    
    2.0Income (loss) before income taxes
    
    
    6.8
    
    
    
    1.5
    
    
    
    23.6
    
    
    
    10.3
    
    
    
    (11.9
    )
    
    
    30.3Income tax provision
    
    
    0.4
    
    
    
    0.3
    
    
    
    6.4
    
    
    
    3.3
    
    
    
    0.1
    
    
    
    10.5As of and for the six months ended
December 31, 2010Sales to unaffiliated customers:Consumer lending
    
    
    32.4
    
    
    
    
    
    
    
    84.4
    
    
    
    70.1
    
    
    
    4.4
    
    
    
    191.3Check cashing
    
    
    19.2
    
    
    
    
    
    
    
    36.8
    
    
    
    16.0
    
    
    
    
    
    
    
    72.0Money transfer fees
    
    
    2.3
    
    
    
    
    
    
    
    9.2
    
    
    
    3.6
    
    
    
    
    
    
    
    15.1Pawn service fees and sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.5
    
    
    
    
    
    
    
    13.5Gold sales
    
    
    1.0
    
    
    
    
    
    
    
    7.8
    
    
    
    13.6
    
    
    
    
    
    
    
    22.4Other
    
    
    5.9
    
    
    
    12.0
    
    
    
    13.5
    
    
    
    11.0
    
    
    
    
    
    
    
    42.4Total sales to unaffiliated customers
    
    
    60.8
    
    
    
    12.0
    
    
    
    151.7
    
    
    
    127.8
    
    
    
    4.4
    
    
    
    356.7Provision for loan losses
    
    
    4.2
    
    
    
    
    
    
    
    9.0
    
    
    
    15.8
    
    
    
    1.4
    
    
    
    30.4Depreciation and amortization
    
    
    1.4
    
    
    
    3.1
    
    
    
    3.5
    
    
    
    4.0
    
    
    
    1.0
    
    
    
    13.0Interest expense, net
    
    
    
    
    
    
    
    
    
    
    35.5
    
    
    
    0.1
    
    
    
    7.9
    
    
    
    43.5Unrealized foreign exchange (gain)
loss
    
    
    
    
    
    
    
    
    
    
    (34.1
    )
    
    
    
    
    
    
    1.7
    
    
    
    (32.4
    )Loss on derivatives not designated
as hedges
    
    
    
    
    
    
    
    
    
    
    24.6
    
    
    
    
    
    
    
    
    
    
    
    24.6(Proceeds from) provision for
litigation settlements
    
    
    
    
    
    
    
    
    
    
    (4.0
    )
    
    
    
    
    
    
    0.1
    
    
    
    (3.9
    )Loss on store closings
    
    
    0.3
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.5Other (income) expense, net
    
    
    
    
    
    
    
    
    
    
    (1.4
    )
    
    
    3.2
    
    
    
    0.8
    
    
    
    2.6Income (loss) before income taxes
    
    
    12.9
    
    
    
    4.0
    
    
    
    31.8
    
    
    
    22.9
    
    
    
    (23.1
    )
    
    
    48.5Income tax provision
    
    
    1.0
    
    
    
    0.3
    
    
    
    7.9
    
    
    
    7.2
    
    
    
    0.2
    
    
    
    16.6
 33




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 12. 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.
  34




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Balance Sheets
June 30, 2010
(In millions)
 Dollar
    
    
    National
    
    
    DFGFinancial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCurrent AssetsCash and cash equivalents
    
    $
    5.4
    
    
    $
    218.6
    
    
    $
    18.3
    
    
    $
    49.0
    
    
    $
    
    
    
    $
    291.3Consumer loans, net
    
    
    
    
    
    
    29.8
    
    
    
    20.9
    
    
    
    50.2
    
    
    
    
    
    
    
    100.9Pawn loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35.5
    
    
    
    
    
    
    
    35.5Loans in default, net
    
    
    
    
    
    
    6.1
    
    
    
    0.6
    
    
    
    2.6
    
    
    
    
    
    
    
    9.3Other receivables
    
    
    0.4
    
    
    
    9.8
    
    
    
    1.8
    
    
    
    6.8
    
    
    
    (1.7
    )
    
    
    17.1Prepaid 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
 35




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Statements Of Operations
Three Months ended December 31, 2009
(In millions)
 Dollar
    
    
    National
    
    
    DFGFinancial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Consumer lending
    
    $
    
    
    
    $
    38.1
    
    
    $
    18.2
    
    
    $
    26.4
    
    
    $
    
    
    
    $
    82.7Check cashing
    
    
    
    
    
    
    18.1
    
    
    
    11.1
    
    
    
    9.3
    
    
    
    
    
    
    
    38.5Other
    
    
    
    
    
    
    13.0
    
    
    
    3.9
    
    
    
    22.6
    
    
    
    
    
    
    
    39.5Total revenues
    
    
    
    
    
    
    69.2
    
    
    
    33.2
    
    
    
    58.3
    
    
    
    
    
    
    
    160.7Operating expenses:Salaries and benefits
    
    
    
    
    
    
    14.6
    
    
    
    12.2
    
    
    
    10.9
    
    
    
    
    
    
    
    37.7Provision for loan losses
    
    
    
    
    
    
    4.6
    
    
    
    3.1
    
    
    
    5.0
    
    
    
    
    
    
    
    12.7Occupancy
    
    
    
    
    
    
    4.0
    
    
    
    3.5
    
    
    
    3.3
    
    
    
    
    
    
    
    10.8Depreciation
    
    
    
    
    
    
    1.4
    
    
    
    1.4
    
    
    
    1.3
    
    
    
    
    
    
    
    4.1Other
    
    
    
    
    
    
    11.4
    
    
    
    6.2
    
    
    
    17.2
    
    
    
    
    
    
    
    34.8Total operating expenses
    
    
    
    
    
    
    36.0
    
    
    
    26.4
    
    
    
    37.7
    
    
    
    
    
    
    
    100.1Operating margin
    
    
    
    
    
    
    33.2
    
    
    
    6.8
    
    
    
    20.6
    
    
    
    
    
    
    
    60.6Corporate and other expenses:Corporate expenses
    
    
    
    
    
    
    4.9
    
    
    
    14.3
    
    
    
    3.7
    
    
    
    
    
    
    
    22.9Intercompany charges
    
    
    
    
    
    
    6.4
    
    
    
    (9.1
    )
    
    
    2.7
    
    
    
    
    
    
    
    Other depreciation and amortization
    
    
    
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.5
    
    
    
    
    
    
    
    1.1Interest expense, net
    
    
    4.1
    
    
    
    6.6
    
    
    
    0.6
    
    
    
    1.5
    
    
    
    
    
    
    
    12.8Loss (gain) on extinguishment of debt
    
    
    (0.2
    )
    
    
    3.6
    
    
    
    0.7
    
    
    
    4.7
    
    
    
    
    
    
    
    8.8Unrealized foreign exchange (gain) loss
    
    
    
    
    
    
    (3.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.9
    )Loss (gain) on derivatives not
designated as hedges
    
    
    
    
    
    
    3.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.3Loss on store closings
    
    
    
    
    
    
    0.5
    
    
    
    0.1
    
    
    
    0.7
    
    
    
    
    
    
    
    1.3Other expense (income), net
    
    
    
    
    
    
    0.5
    
    
    
    0.2
    
    
    
    0.7
    
    
    
    
    
    
    
    1.4Gain on sale of subsidiary
    
    
    
    
    
    
    
    
    
    
    (140.0
    )
    
    
    
    
    
    
    140.0
    
    
    
    (Loss) income before income taxes
    
    
    (3.9
    )
    
    
    11.0
    
    
    
    139.7
    
    
    
    6.1
    
    
    
    (140.0
    )
    
    
    12.9Income tax provision
    
    
    
    
    
    
    2.6
    
    
    
    1.3
    
    
    
    2.0
    
    
    
    
    
    
    
    5.9Net (loss) income
    
    
    (3.9
    )
    
    
    8.4
    
    
    
    138.4
    
    
    
    4.1
    
    
    
    (140.0
    )
    
    
    7.0Less: Net income attributable to
non-controlling interests
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Equity in net income (loss) of subsidiaries:National Money Mart Company
    
    
    8.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8.4
    )
    
    
    Guarantors
    
    
    138.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (138.4
    )
    
    
    Non-guarantors
    
    
    4.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.1
    )
    
    
    Net (loss) income attributable to
Dollar Financial Corp.
    
    $
    147.0
    
    
    $
    8.4
    
    
    $
    138.5
    
    
    $
    4.1
    
    
    $
    (290.9
    )
    
    $
    7.1
 36




---



##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Statements Of Operations
Six Months ended December 31, 2009
(In millions)
 Dollar
    
    
    National
    
    
    DFGFinancial
    
    
    Money Mart
    
    
    and
    
    
    Non-Corp.
    
    
    Company
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Consumer lending
    
    $
    
    
    
    $
    73.4
    
    
    $
    36.0
    
    
    $
    50.8
    
    
    $
    
    
    
    $
    160.2Check cashing
    
    
    
    
    
    
    35.5
    
    
    
    22.0
    
    
    
    18.8
    
    
    
    
    
    
    
    76.3Other
    
    
    
    
    
    
    24.4
    
    
    
    7.8
    
    
    
    37.5
    
    
    
    
    
    
    
    69.7Total revenues
    
    
    
    
    
    
    133.3
    
    
    
    65.8
    
    
    
    107.1
    
    
    
    
    
    
    
    306.2Operating expenses:Salaries and benefits
    
    
    
    
    
    
    28.0
    
    
    
    25.7
    
    
    
    20.8
    
    
    
    
    
    
    
    74.5Provision for loan losses
    
    
    
    
    
    
    8.3
    
    
    
    6.8
    
    
    
    9.3
    
    
    
    
    
    
    
    24.4Occupancy
    
    
    
    
    
    
    8.0
    
    
    
    7.2
    
    
    
    6.5
    
    
    
    
    
    
    
    21.7Depreciation
    
    
    
    
    
    
    2.6
    
    
    
    2.3
    
    
    
    2.5
    
    
    
    
    
    
    
    7.4Other
    
    
    
    
    
    
    20.4
    
    
    
    11.8
    
    
    
    29.5
    
    
    
    
    
    
    
    61.7Total operating expenses
    
    
    
    
    
    
    67.3
    
    
    
    53.8
    
    
    
    68.6
    
    
    
    
    
    
    
    189.7Operating margin
    
    
    
    
    
    
    66.0
    
    
    
    12.0
    
    
    
    38.5
    
    
    
    
    
    
    
    116.5Corporate and other expenses:Corporate expenses
    
    
    
    
    
    
    9.3
    
    
    
    26.4
    
    
    
    7.6
    
    
    
    
    
    
    
    43.3Intercompany charges
    
    
    
    
    
    
    10.9
    
    
    
    (15.6
    )
    
    
    4.7
    
    
    
    
    
    
    
    Other depreciation and amortization
    
    
    
    
    
    
    0.7
    
    
    
    0.7
    
    
    
    0.8
    
    
    
    
    
    
    
    2.2Interest expense, net
    
    
    8.1
    
    
    
    12.1
    
    
    
    1.1
    
    
    
    3.2
    
    
    
    
    
    
    
    24.5Loss on extinguishment of debt
    
    
    (0.2
    )
    
    
    3.6
    
    
    
    0.7
    
    
    
    4.7
    
    
    
    
    
    
    
    8.8Unrealized foreign exchange (gain) loss
    
    
    
    
    
    
    (4.1
    )
    
    
    0.1
    
    
    
    7.9
    
    
    
    
    
    
    
    3.9Loss on derivatives not designated as
hedges
    
    
    
    
    
    
    3.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.3Provision for litigation settlements
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    
    
    
    
    1.3Loss on store closings
    
    
    
    
    
    
    0.7
    
    
    
    0.3
    
    
    
    0.6
    
    
    
    
    
    
    
    1.6Other expense (income), net
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    1.3Gain on sale of subsidiary
    
    
    
    
    
    
    
    
    
    
    (140.0
    )
    
    
    
    
    
    
    140.0
    
    
    
    (Loss) income before income taxes
    
    
    (7.9
    )
    
    
    29.0
    
    
    
    137.0
    
    
    
    8.2
    
    
    
    (140.0
    )
    
    
    26.3Income tax (benefit) provision
    
    
    (0.3
    )
    
    
    8.4
    
    
    
    2.7
    
    
    
    3.1
    
    
    
    
    
    
    
    13.9Net (loss) income
    
    
    (7.6
    )
    
    
    20.6
    
    
    
    134.3
    
    
    
    5.1
    
    
    
    (140.0
    )
    
    
    12.4Equity in net income of subsidiariesNational Money Mart Company
    
    
    20.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20.6
    )
    
    
    Guarantors
    
    
    134.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (134.3
    )
    
    
    Non-guarantors
    
    
    5.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5.1
    )
    
    
    Net (loss) income attributable to
Dollar Financial Corp.
    
    $
    152.4
    
    
    $
    20.6
    
    
    $
    134.3
    
    
    $
    5.1
    
    
    $
    (300.0
    )
    
    $
    12.4
 37




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Statements Of Cash Flows
Six Months Ended December 31, 2009
(In millions)
 Dollar
    
    
    National
    
    
    DFGFinancial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    152.4
    
    
    $
    20.6
    
    
    $
    134.3
    
    
    $
    5.1
    
    
    $
    (300.0
    )
    
    $
    12.4Adjustments to reconcile net income
(loss) to net cash provided by (used in) operating activities:Undistributed income of subsidiaries
    
    
    (160.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    160.0
    
    
    
    Depreciation and amortization
    
    
    0.4
    
    
    
    4.0
    
    
    
    3.3
    
    
    
    3.5
    
    
    
    
    
    
    
    11.2Loss (gain) on extinguishment of debt
    
    
    (0.2
    )
    
    
    3.6
    
    
    
    0.7
    
    
    
    4.7
    
    
    
    
    
    
    
    8.8Change in fair value of derivatives not
designated as hedges
    
    
    
    
    
    
    2.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.9Provision for loan losses
    
    
    
    
    
    
    8.4
    
    
    
    6.8
    
    
    
    9.2
    
    
    
    
    
    
    
    24.4Non-cash stock compensation
    
    
    3.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.5Losses on disposal of fixed assets
    
    
    
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.2Unrealized foreign exchange (gain) loss
    
    
    
    
    
    
    (4.0
    )
    
    
    
    
    
    
    7.7
    
    
    
    
    
    
    
    3.7Deferred tax provision (benefit)
    
    
    
    
    
    
    (1.0
    )
    
    
    2.3
    
    
    
    (4.4
    )
    
    
    
    
    
    
    (3.1
    )Accretion of debt discount and deferred
issuance costs
    
    
    4.8
    
    
    
    0.1
    
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    5.7Change in assets and liabilities (net of effect of acquisitions):(Increase) decrease in loans and other
receivables
    
    
    
    
    
    
    (15.9
    )
    
    
    (8.0
    )
    
    
    (18.7
    )
    
    
    
    
    
    
    (42.6
    )(Increase) decrease in prepaid expenses
and other
    
    
    
    
    
    
    7.8
    
    
    
    (4.8
    )
    
    
    7.1
    
    
    
    (10.7
    )
    
    
    (0.6
    )Increase (decrease) in accounts payable,
accrued expenses
and other liabilities
    
    
    0.6
    
    
    
    7.6
    
    
    
    (3.9
    )
    
    
    (6.9
    )
    
    
    10.7
    
    
    
    8.1Net cash provided by (used in) operating
activities
    
    
    1.5
    
    
    
    34.2
    
    
    
    130.8
    
    
    
    8.1
    
    
    
    (140.0
    )
    
    
    34.6Cash flows from investing activities:Acquisitions, net cash acquired
    
    
    
    
    
    
    
    
    
    
    5.0
    
    
    
    (128.5
    )
    
    
    
    
    
    
    (123.5
    )Additions to property and equipment
    
    
    
    
    
    
    (3.5
    )
    
    
    (1.3
    )
    
    
    (6.9
    )
    
    
    
    
    
    
    (11.7
    )Net (increase) decrease in due from affiliates
    
    
    (0.1
    )
    
    
    (235.4
    )
    
    
    (122.9
    )
    
    
    218.4
    
    
    
    140.0
    
    
    
    Net cash provided by (used in) investing
activities
    
    
    (0.1
    )
    
    
    (238.9
    )
    
    
    (119.2
    )
    
    
    83.0
    
    
    
    140.0
    
    
    
    (135.2
    )Cash flows from financing activities:Proceeds from sale of 10.375% Senior Notes
due 2016
    
    
    
    
    
    
    596.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    596.4Proceeds from exercise of stock options
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Repayment of term loan notes
    
    
    
    
    
    
    (272.6
    )
    
    
    
    
    
    
    (78.5
    )
    
    
    
    
    
    
    (351.1
    )Other debt payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.9
    )
    
    
    
    
    
    
    (6.9
    )Payment of debt issuance and other costs
    
    
    (1.5
    )
    
    
    (13.3
    )
    
    
    (4.1
    )
    
    
    (0.2
    )
    
    
    
    
    
    
    (19.1
    )Net cash provided by (used in) financing
activities
    
    
    (1.4
    )
    
    
    310.5
    
    
    
    (4.1
    )
    
    
    (85.6
    )
    
    
    
    
    
    
    219.4Effect of exchange rate changes on cash and
cash equivalents
    
    
    
    
    
    
    17.9
    
    
    
    
    
    
    
    (0.9
    )
    
    
    
    
    
    
    17.0Net increase (decrease) in cash and cash
equivalents
    
    
    
    
    
    
    123.7
    
    
    
    7.5
    
    
    
    4.6
    
    
    
    
    
    
    
    135.8Cash and cash equivalents balance-beginning of
period
    
    
    0.1
    
    
    
    138.4
    
    
    
    30.3
    
    
    
    40.8
    
    
    
    
    
    
    
    209.6Cash and cash equivalents balance-end of period
    
    $
    0.1
    
    
    $
    262.1
    
    
    $
    37.8
    
    
    $
    45.4
    
    
    $
    
    
    
    $
    345.4
 38




---



##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Balance Sheets
December 31, 2010
(In millions)
 Dollar
    
    
    National
    
    
    DFGFinancial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCurrent AssetsCash and cash equivalents
    
    $
    1.1
    
    
    $
    103.8
    
    
    $
    26.2
    
    
    $
    39.3
    
    
    $
    
    
    
    $
    170.4Consumer loans, net
    
    
    
    
    
    
    34.4
    
    
    
    22.9
    
    
    
    64.7
    
    
    
    
    
    
    
    122.0Pawn loans, net
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    113.3
    
    
    
    
    
    
    
    113.4Loans in default, net
    
    
    
    
    
    
    8.8
    
    
    
    0.3
    
    
    
    2.9
    
    
    
    
    
    
    
    12.0Other receivables
    
    
    0.4
    
    
    
    21.6
    
    
    
    5.3
    
    
    
    8.7
    
    
    
    
    
    
    
    36.0Prepaid expenses and other current
assets
    
    
    
    
    
    
    5.5
    
    
    
    6.7
    
    
    
    19.5
    
    
    
    
    
    
    
    31.7Total current assets
    
    
    1.5
    
    
    
    174.2
    
    
    
    61.4
    
    
    
    248.4
    
    
    
    
    
    
    
    485.5Deferred tax asset, net of valuation
allowance
    
    
    
    
    
    
    18.2
    
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    19.2Intercompany receivables
    
    
    258.8
    
    
    
    119.2
    
    
    
    
    
    
    
    
    
    
    
    (378.0
    )
    
    
    Property and equipment, net
    
    
    
    
    
    
    29.9
    
    
    
    15.0
    
    
    
    36.6
    
    
    
    
    
    
    
    81.5Goodwill and other intangibles
    
    
    
    
    
    
    212.0
    
    
    
    316.5
    
    
    
    188.3
    
    
    
    
    
    
    
    716.8Debt issuance costs, net
    
    
    1.3
    
    
    
    14.5
    
    
    
    2.2
    
    
    
    0.1
    
    
    
    
    
    
    
    18.1Investment in subsidiaries
    
    
    119.6
    
    
    
    293.1
    
    
    
    8.4
    
    
    
    
    
    
    
    (421.1
    )
    
    
    Other
    
    
    
    
    
    
    0.6
    
    
    
    17.8
    
    
    
    0.2
    
    
    
    
    
    
    
    18.6Total Assets
    
    $
    381.2
    
    
    $
    861.7
    
    
    $
    421.3
    
    
    $
    474.6
    
    
    $
    (799.1
    )
    
    $
    1,339.7Current LiabilitiesAccounts payable
    
    $
    0.8
    
    
    $
    10.9
    
    
    $
    12.9
    
    
    $
    8.1
    
    
    $
    
    
    
    $
    32.7Income taxes payable
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    7.3
    
    
    
    
    
    
    
    6.8Accrued expenses and other liabilities
    
    
    0.8
    
    
    
    36.2
    
    
    
    20.6
    
    
    
    33.2
    
    
    
    
    
    
    
    90.8Debt due within one year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.8
    
    
    
    
    
    
    
    7.8Total current liabilities
    
    
    1.6
    
    
    
    47.1
    
    
    
    33.0
    
    
    
    56.4
    
    
    
    
    
    
    
    138.1Fair value of derivatives
    
    
    
    
    
    
    66.6
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    66.8Long-term deferred tax liability
    
    
    
    
    
    
    7.1
    
    
    
    20.0
    
    
    
    2.1
    
    
    
    
    
    
    
    29.2Long-term debt
    
    
    127.3
    
    
    
    596.8
    
    
    
    
    
    
    
    63.1
    
    
    
    
    
    
    
    787.2Intercompany payables
    
    
    
    
    
    
    
    
    
    
    233.9
    
    
    
    144.1
    
    
    
    (378.0
    )
    
    
    Other non-current liabilities
    
    
    
    
    
    
    34.7
    
    
    
    14.8
    
    
    
    17.0
    
    
    
    
    
    
    
    66.5Total liabilities
    
    
    128.9
    
    
    
    752.3
    
    
    
    301.7
    
    
    
    282.9
    
    
    
    (378.0
    )
    
    
    1,087.8Total Dollar Financial Corp.
stockholders equity
    
    
    252.3
    
    
    
    109.4
    
    
    
    119.6
    
    
    
    192.1
    
    
    
    (421.1
    )
    
    
    252.3Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    (0.4
    )Total stockholders equity
    
    
    252.3
    
    
    
    109.4
    
    
    
    119.6
    
    
    
    191.7
    
    
    
    (421.1
    )
    
    
    251.9Total Liabilities and Stockholders
Equity
    
    $
    381.2
    
    
    $
    861.7
    
    
    $
    421.3
    
    
    $
    474.6
    
    
    $
    (799.1
    )
    
    $
    1,339.7
 39




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Statements Of Operations
Three Months ended December 31, 2010
(In millions)
 Dollar
    
    
    National
    
    
    DFGFinancial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Consumer lending
    
    $
    
    
    
    $
    43.0
    
    
    $
    16.7
    
    
    $
    39.6
    
    
    $
    
    
    
    $
    99.3Check cashing
    
    
    
    
    
    
    19.1
    
    
    
    9.5
    
    
    
    8.2
    
    
    
    
    
    
    
    36.8Other
    
    
    
    
    
    
    15.6
    
    
    
    10.2
    
    
    
    20.6
    
    
    
    
    
    
    
    46.4Total revenues
    
    
    
    
    
    
    77.7
    
    
    
    36.4
    
    
    
    68.4
    
    
    
    
    
    
    
    182.5Operating expenses:Salaries and benefits
    
    
    
    
    
    
    15.7
    
    
    
    12.7
    
    
    
    14.4
    
    
    
    
    
    
    
    42.8Provision for loan losses
    
    
    
    
    
    
    4.8
    
    
    
    2.1
    
    
    
    9.6
    
    
    
    
    
    
    
    16.5Occupancy
    
    
    
    
    
    
    4.4
    
    
    
    3.4
    
    
    
    4.2
    
    
    
    
    
    
    
    12.0Depreciation
    
    
    
    
    
    
    1.4
    
    
    
    0.7
    
    
    
    1.8
    
    
    
    
    
    
    
    3.9Other
    
    
    
    
    
    
    13.3
    
    
    
    6.7
    
    
    
    17.4
    
    
    
    
    
    
    
    37.4Total operating expenses
    
    
    
    
    
    
    39.6
    
    
    
    25.6
    
    
    
    47.4
    
    
    
    
    
    
    
    112.6Operating margin
    
    
    
    
    
    
    38.1
    
    
    
    10.8
    
    
    
    21.0
    
    
    
    
    
    
    
    69.9Corporate and other expenses:Corporate expenses
    
    
    
    
    
    
    5.4
    
    
    
    13.9
    
    
    
    4.6
    
    
    
    
    
    
    
    23.9Intercompany charges
    
    
    
    
    
    
    3.9
    
    
    
    (7.5
    )
    
    
    3.6
    
    
    
    
    
    
    
    Other depreciation and amortization
    
    
    
    
    
    
    0.4
    
    
    
    1.9
    
    
    
    0.5
    
    
    
    
    
    
    
    2.8Interest expense, net
    
    
    3.4
    
    
    
    17.8
    
    
    
    0.3
    
    
    
    0.4
    
    
    
    
    
    
    
    21.9Unrealized foreign exchange loss (gain)
    
    
    
    
    
    
    (18.9
    )
    
    
    1.1
    
    
    
    
    
    
    
    
    
    
    
    (17.8
    )Loss on derivatives not
designated as hedges
    
    
    
    
    
    
    10.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.8Provision for litigation settlements
    
    
    
    
    
    
    (4.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.1
    )Loss on store closings
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Other expense (income), net
    
    
    
    
    
    
    (0.4
    )
    
    
    (0.7
    )
    
    
    3.1
    
    
    
    
    
    
    
    2.0(Loss) income before income taxes
    
    
    (3.4
    )
    
    
    23.1
    
    
    
    1.8
    
    
    
    8.8
    
    
    
    
    
    
    
    30.3Income tax provision
    
    
    
    
    
    
    6.4
    
    
    
    0.7
    
    
    
    3.4
    
    
    
    
    
    
    
    10.5Net (loss) income
    
    
    (3.4
    )
    
    
    16.7
    
    
    
    1.1
    
    
    
    5.4
    
    
    
    
    
    
    
    19.8Less: Net loss attributable to
non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.2
    )Equity in net income (loss) of subsidiaries:National Money Mart Company
    
    
    16.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16.7
    )
    
    
    Guarantors
    
    
    1.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.1
    )
    
    
    Non-guarantors
    
    
    5.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5.6
    )
    
    
    Net income (loss) attributable to
Dollar Financial Corp.
    
    $
    20.0
    
    
    $
    16.7
    
    
    $
    1.1
    
    
    $
    5.6
    
    
    $
    (23.4
    )
    
    $
    20.0
 40




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Statements Of Operations
Six Months ended December 31, 2010
(In millions)
 Dollar
    
    
    National
    
    
    DFGFinancial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Consumer lending
    
    $
    
    
    
    $
    84.4
    
    
    $
    32.4
    
    
    $
    74.5
    
    
    $
    
    
    
    $
    191.3Check cashing
    
    
    
    
    
    
    36.8
    
    
    
    19.2
    
    
    
    16.0
    
    
    
    
    
    
    
    72.0Other
    
    
    
    
    
    
    30.5
    
    
    
    21.2
    
    
    
    41.7
    
    
    
    
    
    
    
    93.4Total revenues
    
    
    
    
    
    
    151.7
    
    
    
    72.8
    
    
    
    132.2
    
    
    
    
    
    
    
    356.7Operating expenses:Salaries and benefits
    
    
    
    
    
    
    30.9
    
    
    
    25.6
    
    
    
    27.0
    
    
    
    
    
    
    
    83.5Provision for loan losses
    
    
    
    
    
    
    9.0
    
    
    
    4.2
    
    
    
    17.2
    
    
    
    
    
    
    
    30.4Occupancy
    
    
    
    
    
    
    8.8
    
    
    
    6.6
    
    
    
    8.2
    
    
    
    
    
    
    
    23.6Depreciation
    
    
    
    
    
    
    2.8
    
    
    
    1.5
    
    
    
    3.2
    
    
    
    
    
    
    
    7.5Other
    
    
    
    
    
    
    25.1
    
    
    
    13.1
    
    
    
    35.2
    
    
    
    
    
    
    
    73.4Total operating expenses
    
    
    
    
    
    
    76.6
    
    
    
    51.0
    
    
    
    90.8
    
    
    
    
    
    
    
    218.4Operating margin
    
    
    
    
    
    
    75.1
    
    
    
    21.8
    
    
    
    41.4
    
    
    
    
    
    
    
    138.3Corporate and other expenses:Corporate expenses
    
    
    
    
    
    
    11.5
    
    
    
    28.8
    
    
    
    9.1
    
    
    
    
    
    
    
    49.4Intercompany charges
    
    
    
    
    
    
    10.4
    
    
    
    (17.3
    )
    
    
    6.9
    
    
    
    
    
    
    
    Other depreciation and amortization
    
    
    
    
    
    
    0.7
    
    
    
    3.9
    
    
    
    0.9
    
    
    
    
    
    
    
    5.5Interest expense, net
    
    
    6.7
    
    
    
    35.5
    
    
    
    0.6
    
    
    
    0.7
    
    
    
    
    
    
    
    43.5Unrealized foreign exchange loss (gain)
    
    
    
    
    
    
    (34.2
    )
    
    
    1.8
    
    
    
    
    
    
    
    
    
    
    
    (32.4
    )Loss on derivatives not
designated as hedges
    
    
    
    
    
    
    24.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24.6Provision for litigation settlements
    
    
    
    
    
    
    (4.0
    )
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    (3.9
    )Loss on store closings
    
    
    
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.5Other expense (income), net
    
    
    
    
    
    
    (0.3
    )
    
    
    (0.2
    )
    
    
    3.1
    
    
    
    
    
    
    
    2.6(Loss) income before income taxes
    
    
    (6.7
    )
    
    
    30.7
    
    
    
    3.8
    
    
    
    20.7
    
    
    
    
    
    
    
    48.5Income tax provision
    
    
    
    
    
    
    7.9
    
    
    
    1.3
    
    
    
    7.4
    
    
    
    
    
    
    
    16.6Net (loss) income
    
    
    (6.7
    )
    
    
    22.8
    
    
    
    2.5
    
    
    
    13.3
    
    
    
    
    
    
    
    31.9Less: Net loss attributable to
non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    (0.4
    )Equity in net income (loss) of subsidiaries:National Money Mart Company
    
    
    22.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22.8
    )
    
    
    Guarantors
    
    
    2.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.5
    )
    
    
    Non-guarantors
    
    
    13.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13.7
    )
    
    
    Net income (loss) attributable to
Dollar Financial Corp.
    
    $
    32.3
    
    
    $
    22.8
    
    
    $
    2.5
    
    
    $
    13.7
    
    
    $
    (39.0
    )
    
    $
    32.3
 41




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Consolidating Condensed Statements Of Cash Flows
Six Months Ended December 31, 2010
(In millions)
 Dollar
    
    
    National
    
    
    DFGFinancial
    
    
    Money
    
    
    and
    
    
    Non-Corp.
    
    
    Mart
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    32.3
    
    
    $
    22.8
    
    
    $
    2.5
    
    
    $
    13.3
    
    
    $
    (39.0
    )
    
    $
    31.9Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:Undistributed income of subsidiaries
    
    
    (39.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39.0
    
    
    
    Depreciation and amortization
    
    
    0.6
    
    
    
    4.8
    
    
    
    5.4
    
    
    
    4.1
    
    
    
    
    
    
    
    14.9Change in fair value of derivative not
designated as a hedge
    
    
    
    
    
    
    15.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.6Provision for loan losses
    
    
    
    
    
    
    9.0
    
    
    
    4.2
    
    
    
    17.2
    
    
    
    
    
    
    
    30.4Non-cash stock compensation
    
    
    3.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.2Losses on disposal of fixed assets
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.4Unrealized foreign exchange (gain) loss
    
    
    
    
    
    
    (34.2
    )
    
    
    1.8
    
    
    
    
    
    
    
    
    
    
    
    (32.4
    )Deferred tax provision
    
    
    
    
    
    
    5.1
    
    
    
    2.7
    
    
    
    0.4
    
    
    
    
    
    
    
    8.2Accretion of debt discount and deferred
issuance costs
    
    
    4.3
    
    
    
    3.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.5Change in assets and liabilities (net of effect of acquisitions):Increase in loans and other receivables
    
    
    
    
    
    
    (19.7
    )
    
    
    (5.4
    )
    
    
    (37.0
    )
    
    
    
    
    
    
    (62.1
    )Increase in prepaid expenses and other
    
    
    
    
    
    
    
    
    
    
    (3.6
    )
    
    
    (0.5
    )
    
    
    
    
    
    
    (4.1
    )Increase (decrease) in accounts payable,
accrued expenses and other liabilities
    
    
    3.3
    
    
    
    (33.4
    )
    
    
    (12.9
    )
    
    
    (12.9
    )
    
    
    
    
    
    
    (55.9
    )Net cash provided by (used in) operating
activities
    
    
    4.7
    
    
    
    (26.8
    )
    
    
    (4.9
    )
    
    
    (15.4
    )
    
    
    
    
    
    
    (42.4
    )Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    
    
    
    
    (19.3
    )
    
    
    
    
    
    
    (55.8
    )
    
    
    
    
    
    
    (75.1
    )Additions to property and equipment
    
    
    
    
    
    
    (3.7
    )
    
    
    (2.9
    )
    
    
    (11.5
    )
    
    
    
    
    
    
    (18.1
    )Net (increase) decrease in due from affiliates
    
    
    (9.0
    )
    
    
    (77.5
    )
    
    
    15.7
    
    
    
    70.8
    
    
    
    
    
    
    
    Net cash (used in) provided by investing
activities
    
    
    (9.0
    )
    
    
    (100.5
    )
    
    
    12.8
    
    
    
    3.5
    
    
    
    
    
    
    
    (93.2
    )Cash flows from financing activities:Proceeds from the exercise of stock options
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2Payment of debt issuance and other costs
    
    
    (0.2
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.3
    )Net cash used in financing activities
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Effect of exchange rate changes on cash and cash
equivalents
    
    
    
    
    
    
    12.6
    
    
    
    
    
    
    
    2.2
    
    
    
    
    
    
    
    14.8Net (decrease) increase in cash and cash
equivalents
    
    
    (4.3
    )
    
    
    (114.8
    )
    
    
    7.9
    
    
    
    (9.7
    )
    
    
    
    
    
    
    (120.9
    )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
    
    
    $
    103.8
    
    
    $
    26.2
    
    
    $
    39.3
    
    
    $
    
    
    
    $
    170.4
 42




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 13. Pending Acquisitions
   43




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##### Table of Contents



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 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, (iv) references to GBP refer to the British Pound Sterling, the lawful
currency of the United Kingdom of Great Britain and Northern Ireland, (v) references to SEK refer
to the Swedish Krona, the lawful currency of Sweden and (vi) references to EUR refer to the Euro,
the lawful currency of the European Union.
 Executive Summary
 Overview
 ® ® ® ® ® ® ® ® ® ® ®
  44




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Recent Events
    45




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##### Table of Contents



Discussion of Critical Accounting Policies
   46




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##### Table of Contents



Results of Operations
  Three Months Ended December 31,
    
    Six Months Ended December 31,2009
    
    2010
    
    2009
    
    2010(Dollars in thousands, except per share amounts)Total revenues:Consumer lending
    
    $
    82,746
    
    
    
    51.5
    %
    
    $
    99,299
    
    
    
    54.4
    %
    
    $
    160,188
    
    
    
    52.3
    %
    
    $
    191,297
    
    
    
    53.6
    %Check cashing
    
    
    38,537
    
    
    
    24.0
    %
    
    
    36,779
    
    
    
    20.2
    %
    
    
    76,339
    
    
    
    24.9
    %
    
    
    72,043
    
    
    
    20.2
    %Money transfer fees
    
    
    7,091
    
    
    
    4.4
    %
    
    
    7,890
    
    
    
    4.3
    %
    
    
    13,914
    
    
    
    4.5
    %
    
    
    15,136
    
    
    
    4.2
    %Pawn service fees and sales
    
    
    4,655
    
    
    
    2.9
    %
    
    
    7,253
    
    
    
    4.0
    %
    
    
    8,488
    
    
    
    2.8
    %
    
    
    13,514
    
    
    
    3.8
    %Gold sales
    
    
    13,237
    
    
    
    8.2
    %
    
    
    11,263
    
    
    
    6.2
    %
    
    
    19,012
    
    
    
    6.2
    %
    
    
    22,378
    
    
    
    6.3
    %Other
    
    
    14,403
    
    
    
    9.0
    %
    
    
    19,999
    
    
    
    11.0
    %
    
    
    28,256
    
    
    
    9.3
    %
    
    
    42,333
    
    
    
    12.0
    %Total consolidated revenues
    
    
    160,669
    
    
    
    100.0
    %
    
    
    182,483
    
    
    
    100.0
    %
    
    
    306,197
    
    
    
    100.0
    %
    
    
    356,701
    
    
    
    100.0
    %Operating expenses:Salaries and benefits
    
    
    37,723
    
    
    
    23.5
    %
    
    
    42,837
    
    
    
    23.5
    %
    
    
    74,459
    
    
    
    24.3
    %
    
    
    83,487
    
    
    
    23.4
    %Provision for loan losses
    
    
    12,662
    
    
    
    7.9
    %
    
    
    16,471
    
    
    
    9.0
    %
    
    
    24,358
    
    
    
    8.0
    %
    
    
    30,437
    
    
    
    8.5
    %Occupancy
    
    
    10,838
    
    
    
    6.7
    %
    
    
    12,044
    
    
    
    6.6
    %
    
    
    21,685
    
    
    
    7.1
    %
    
    
    23,611
    
    
    
    6.6
    %Cost of goods sold
    
    
    9,246
    
    
    
    5.8
    %
    
    
    7,179
    
    
    
    3.9
    %
    
    
    13,409
    
    
    
    4.4
    %
    
    
    14,876
    
    
    
    4.2
    %Depreciation
    
    
    4,071
    
    
    
    2.5
    %
    
    
    3,926
    
    
    
    2.2
    %
    
    
    7,445
    
    
    
    2.4
    %
    
    
    7,527
    
    
    
    2.1
    %Other
    
    
    25,519
    
    
    
    16.0
    %
    
    
    30,095
    
    
    
    16.5
    %
    
    
    48,335
    
    
    
    15.8
    %
    
    
    58,506
    
    
    
    16.4
    %Total operating expenses
    
    
    100,059
    
    
    
    62.3
    %
    
    
    112,552
    
    
    
    61.7
    %
    
    
    189,691
    
    
    
    62.0
    %
    
    
    218,444
    
    
    
    61.2
    %Operating margin
    
    
    60,610
    
    
    
    37.7
    %
    
    
    69,931
    
    
    
    38.3
    %
    
    
    116,506
    
    
    
    38.0
    %
    
    
    138,257
    
    
    
    38.8
    %Corporate expenses
    
    
    22,949
    
    
    
    14.3
    %
    
    
    23,938
    
    
    
    13.1
    %
    
    
    43,300
    
    
    
    14.1
    %
    
    
    49,364
    
    
    
    13.8
    %Other depreciation and amortization
    
    
    1,110
    
    
    
    0.7
    %
    
    
    2,815
    
    
    
    1.5
    %
    
    
    2,162
    
    
    
    0.7
    %
    
    
    5,514
    
    
    
    1.5
    %Interest expense, net
    
    
    12,842
    
    
    
    8.0
    %
    
    
    21,929
    
    
    
    12.0
    %
    
    
    24,466
    
    
    
    8.0
    %
    
    
    43,503
    
    
    
    12.2
    %Loss (gain) on extinguishment of debt
    
    
    8,813
    
    
    
    5.5
    %
    
    
    
    
    
    
    
    %
    
    
    8,813
    
    
    
    2.9
    %
    
    
    
    
    
    
    
    %Unrealized foreign exchange (gain) loss
    
    
    (3,915
    )
    
    
    (2.4
    )%
    
    
    (17,798
    )
    
    
    (9.8
    )%
    
    
    3,912
    
    
    
    1.3
    %
    
    
    (32,409
    )
    
    
    (9.1
    )%Loss (gain) on derivatives not
designated as hedges
    
    
    3,285
    
    
    
    2.0
    %
    
    
    10,800
    
    
    
    5.9
    %
    
    
    3,275
    
    
    
    1.1
    %
    
    
    24,620
    
    
    
    6.9
    %(Proceeds from) provision for litigation settlements
    
    
    
    
    
    
    
    %
    
    
    (4,129
    )
    
    
    (2.3
    )%
    
    
    1,267
    
    
    
    0.4
    %
    
    
    (3,932
    )
    
    
    (1.1
    )%Loss on store closings
    
    
    1,332
    
    
    
    0.8
    %
    
    
    119
    
    
    
    0.1
    %
    
    
    1,650
    
    
    
    0.5
    %
    
    
    467
    
    
    
    0.1
    %Other expense, net
    
    
    1,254
    
    
    
    0.8
    %
    
    
    1,980
    
    
    
    1.2
    %
    
    
    1,424
    
    
    
    0.4
    %
    
    
    2,681
    
    
    
    0.9
    %Income before income taxes
    
    
    12,940
    
    
    
    8.0
    %
    
    
    30,277
    
    
    
    16.6
    %
    
    
    26,237
    
    
    
    8.6
    %
    
    
    48,449
    
    
    
    13.6
    %Income tax provision
    
    
    5,904
    
    
    
    3.7
    %
    
    
    10,484
    
    
    
    5.7
    %
    
    
    13,870
    
    
    
    4.5
    %
    
    
    16,589
    
    
    
    4.7
    %Net income
    
    
    7,036
    
    
    
    4.3
    %
    
    
    19,793
    
    
    
    10.9
    %
    
    
    12,367
    
    
    
    4.1
    %
    
    
    31,860
    
    
    
    8.9
    %Less: Net loss attributable to
non-controlling interests
    
    
    (94
    )
    
    
    (0.1
    )%
    
    
    (243
    )
    
    
    (0.1)
    %
    
    
    (36
    )
    
    
    
    %
    
    
    (400
    )
    
    
    (0.1)
    %Net income attributable to Dollar
Financial Corp.
    
    $
    7,130
    
    
    
    4.4
    %
    
    $
    20,036
    
    
    
    11.0
    %
    
    $
    12,403
    
    
    
    4.1
    %
    
    $
    32,260
    
    
    
    9.0
    %Net income per share attributable to
Dollar Financial Corp.:Basic
    
    $
    0.20
    
    
    
    
    
    
    $
    0.55
    
    
    
    
    
    
    $
    0.34
    
    
    
    
    
    
    $
    0.89Diluted
    
    $
    0.19
    
    
    
    
    
    
    $
    0.53
    
    
    
    
    
    
    $
    0.34
    
    
    
    
    
    
    $
    0.86
 Constant Currency Analysis
  47




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##### Table of Contents



Three Months Ended December 31, 2010 compared to Three Months Ended December 31, 2009
 Revenues
      48




---



##### Table of Contents



Operating Expenses
    Corporate Expenses
  Other Depreciation and Amortization
  Interest Expense
   49




---



##### Table of Contents



Unrealized Foreign Exchange Gain/Loss
  Loss on derivatives not designated as hedges
  (Proceeds from) Provision for Litigation Settlements
  Loss on Store Closings
  Other (Income) Expense
   Income Tax Provision
  50




---



##### Table of Contents



NetDeferred
    
    
    Valuation
    
    
    DeferredTax Asset
    
    
    Allowance
    
    
    Tax AssetBalance at September 30, 2010
    
    $
    122.9
    
    
    $
    85.8
    
    
    $
    37.1Foreign increase/(decrease)
    
    
    (4.4
    )
    
    
    0.7
    
    
    
    (5.1
    )Balance at December 31, 2010
    
    $
    118.5
    
    
    $
    86.5
    
    
    $
    32.0
      Six Months Ended December 31, 2010 compared to Six Months Ended December 31, 2009
 Revenues
  51




---



##### Table of Contents



Operating Expenses
    52




---



##### Table of Contents



Corporate Expenses
  Other Depreciation and Amortization
  Interest Expense
   Unrealized Foreign Exchange Gain/Loss
  Loss on derivatives not designated as hedges
  53




---



##### Table of Contents



(Proceeds from) Provision for Litigation Settlements
  Loss on Store Closings
   Other (Income) Expense
   Income Tax Provision
   NetDeferred
    
    
    Valuation
    
    
    DeferredTax Asset
    
    
    Allowance
    
    
    Tax AssetBalance at June 30, 2010
    
    $
    122.8
    
    
    $
    85.0
    
    
    $
    37.8Foreign increase/(decrease)
    
    
    (4.3
    )
    
    
    1.5
    
    
    
    (5.8
    )Balance at December 31, 2010
    
    $
    118.5
    
    
    $
    86.5
    
    
    $
    32.0
  54




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##### Table of Contents



Review of Reportable Segments
  %
    
    
    
    
    
    %Three Months Ended
    
    
    Inc/Dec -
    
    
    Six Months Ended
    
    
    Inc/Dec -December 31,
    
    
    Margin
    
    
    December 31,
    
    
    Margin2009
    
    
    2010
    
    
    Change
    
    
    2009
    
    
    2010
    
    
    Change(Dollars in thousands)United States Retail revenues:Consumer lending
    
    $
    18,180
    
    
    $
    16,680
    
    
    
    -8.3
    %
    
    $
    36,038
    
    
    $
    32,366
    
    
    
    -10.2
    %Check Cashing
    
    
    11,132
    
    
    
    9,472
    
    
    
    -14.9
    %
    
    
    22,039
    
    
    
    19,231
    
    
    
    -12.7
    %Money transfer fees
    
    
    1,220
    
    
    
    1,126
    
    
    
    -7.7
    %
    
    
    2,495
    
    
    
    2,256
    
    
    
    -9.6
    %Gold sales
    
    
    109
    
    
    
    560
    
    
    
    413.8
    %
    
    
    140
    
    
    
    1,015
    
    
    
    625.0
    %Other
    
    
    2,527
    
    
    
    3,012
    
    
    
    19.2
    %
    
    
    5,110
    
    
    
    5,943
    
    
    
    16.3
    %Total United States Retail revenues
    
    $
    33,168
    
    
    $
    30,850
    
    
    
    -7.0
    %
    
    $
    65,822
    
    
    $
    60,811
    
    
    
    -7.6
    %Operating margin
    
    
    20.5
    %
    
    
    25.3
    %
    
    4.8 pts.
    
    
    
    18.3
    %
    
    
    24.4
    %
    
    6.1 pts.Total DFS revenues (Included in Other)
    
    $
    621
    
    
    $
    5,501
    
    
    
    785.8
    %
    
    $
    621
    
    
    $
    12,005
    
    
    
    1833.2
    %Operating margin
    
    
    61.6
    %
    
    
    53.7
    %
    
    (7.9  pts.
    )
    
    
    61.6
    %
    
    
    58.1
    %
    
    (3.5  pts.
    )Canada revenues:Consumer lending
    
    $
    38,126
    
    
    $
    43,031
    
    
    
    12.9
    %
    
    $
    73,342
    
    
    $
    84,461
    
    
    
    15.2
    %Check Cashing
    
    
    18,150
    
    
    
    19,076
    
    
    
    5.1
    %
    
    
    35,489
    
    
    
    36,830
    
    
    
    3.8
    %Money transfer fees
    
    
    4,219
    
    
    
    4,822
    
    
    
    14.3
    %
    
    
    8,267
    
    
    
    9,251
    
    
    
    11.9
    %Pawn service fees and sales
    
    
    
    
    
    
    7
    
    
    
    100.0
    %
    
    
    
    
    
    
    9
    
    
    
    100.0
    %Gold sales
    
    
    1,982
    
    
    
    4,287
    
    
    
    116.3
    %
    
    
    2,607
    
    
    
    7,703
    
    
    
    195.5
    %Other
    
    
    6,710
    
    
    
    6,548
    
    
    
    -2.4
    %
    
    
    13,604
    
    
    
    13,445
    
    
    
    -1.2
    %Total Canada revenues
    
    $
    69,187
    
    
    $
    77,771
    
    
    
    12.4
    %
    
    $
    133,309
    
    
    $
    151,699
    
    
    
    13.8
    %Operating margin
    
    
    48.0
    %
    
    
    49.2
    %
    
    1.2 pts.
    
    
    
    49.5
    %
    
    
    49.5
    %
    
    (0.0 pts.
    )Europe revenues:Consumer lending
    
    $
    24,637
    
    
    $
    37,219
    
    
    
    51.1
    %
    
    $
    47,707
    
    
    $
    70,098
    
    
    
    46.9
    %Check Cashing
    
    
    9,255
    
    
    
    8,232
    
    
    
    -11.1
    %
    
    
    18,812
    
    
    
    15,982
    
    
    
    -15.0
    %Money transfer fees
    
    
    1,653
    
    
    
    1,942
    
    
    
    17.5
    %
    
    
    3,152
    
    
    
    3,629
    
    
    
    15.1
    %Pawn service fees and sales
    
    
    4,655
    
    
    
    7,245
    
    
    
    55.6
    %
    
    
    8,488
    
    
    
    13,505
    
    
    
    59.1
    %Gold sales
    
    
    11,146
    
    
    
    6,366
    
    
    
    -42.9
    %
    
    
    16,265
    
    
    
    13,611
    
    
    
    -16.3
    %Other
    
    
    4,225
    
    
    
    4,987
    
    
    
    18.0
    %
    
    
    8,359
    
    
    
    10,951
    
    
    
    31.0
    %Total Europe revenues
    
    $
    55,571
    
    
    $
    65,991
    
    
    
    18.8
    %
    
    $
    102,783
    
    
    $
    127,776
    
    
    
    24.3
    %Operating margin
    
    
    36.9
    %
    
    
    33.6
    %
    
    (3.3 pts.
    )
    
    
    37.7
    %
    
    
    33.7
    %
    
    (4.0 pts.
    )Other revenues:Consumer lending
    
    $
    1,804
    
    
    $
    2,369
    
    
    
    31.3
    %
    
    $
    3,102
    
    
    $
    4,373
    
    
    
    41.0
    %Pawn service fees and sales
    
    
    
    
    
    
    1
    
    
    
    100.0
    %
    
    
    
    
    
    
    1
    
    
    
    100.0
    %Gold sales
    
    
    
    
    
    
    49
    
    
    
    100.0
    %
    
    
    
    
    
    
    49
    
    
    
    100.0
    %Other
    
    
    318
    
    
    
    (49
    )
    
    
    -115.4
    %
    
    
    560
    
    
    
    (13
    )
    
    
    -102.3
    %Total Other revenues
    
    $
    2,122
    
    
    $
    2,370
    
    
    
    11.7
    %
    
    $
    3,662
    
    
    $
    4,410
    
    
    
    20.4
    %Operating margin
    
    
    -12.7
    %
    
    
    -52.0
    %
    
    (39.3 pts.
    )
    
    
    -16.6
    %
    
    
    -38.3
    %
    
    (21.7 pts.
    )Total revenue
    
    $
    160,669
    
    
    $
    182,483
    
    
    
    13.6
    %
    
    $
    306,197
    
    
    $
    356,701
    
    
    
    16.5
    %Operating margin
    
    $
    60,610
    
    
    $
    69,931
    
    
    
    15.4
    %
    
    $
    116,506
    
    
    $
    138,257
    
    
    
    18.7
    %Operating margin %
    
    
    37.7
    %
    
    
    38.3
    %
    
    0.6 pts.
    
    
    
    38.0
    %
    
    
    38.8
    %
    
    0.8 pts.
 55




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##### Table of Contents



Three Months Ended December 31,
    
    Six Months Ended December 31,Revenue
    
    Pre-Tax Income
    
    Revenue
    
    Pre-Tax Income2009
    
    2010
    
    2009
    
    2010
    
    2009
    
    2010
    
    2009
    
    2010United States Retail
    
    
    20.6
    %
    
    
    16.9
    %
    
    
    48.6
    %
    
    
    35.6
    %
    
    
    21.5
    %
    
    
    17.0
    %
    
    
    29.5
    %
    
    
    35.1
    %DFS
    
    
    0.4
    %
    
    
    3.0
    %
    
    
    2.2
    %
    
    
    7.8
    %
    
    
    0.2
    %
    
    
    3.4
    %
    
    
    0.8
    %
    
    
    10.9
    %Canada
    
    
    43.1
    %
    
    
    42.6
    %
    
    
    86.2
    % (1)
    
    
    59.3
    %(2)
    
    
    43.5
    %
    
    
    42.5
    %
    
    
    82.9
    %(4)
    
    
    49.6
    %(7)Europe
    
    
    34.6
    %
    
    
    36.2
    %
    
    
    55.6
    %
    
    
    53.8
    %
    
    
    33.6
    %
    
    
    35.8
    %
    
    
    49.8
    % (5)
    
    
    62.1
    %Other
    
    
    1.3
    %
    
    
    1.3
    %
    
    
    -92.6
    %
    
    
    -56.5
    %(3)
    
    
    1.2
    %
    
    
    1.3
    %
    
    
    -63.0
    %(6)
    
    
    -57.7
    %(8)100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 
 (1)
    
    Excludes $4.0 million of unrealized foreign exchange gains and $3.3 million of losses
on derivatives not designated as hedges.(2)
    
    Excludes $18.9 million of unrealized foreign exchange gains, $4.2 million of proceeds
from litigation settlements and $10.8 million of losses on derivatives not designated as
hedges.(3)
    
    Excludes $1.1 million of unrealized foreign exchange losses.(4)
    
    Excludes $4.1 million of unrealized foreign exchange gains and $3.3 million of losses
on derivatives not designated as hedges.(5)
    
    Excludes $7.9 million of unrealized foreign exchange losses.(6)
    
    Excludes $1.3 million of provisions for litigation settlements.(7)
    
    Excludes $34.1 million of unrealized foreign exchange gains, $4.1 million of proceeds
from litigation settlements and $24.6 million of losses on derivatives not designated as
hedges.(8)
    
    Excludes $1.7 million of unrealized foreign exchange losses and $0.1 million of
provisions for litigation settlements. Three Months Ended December 31, 2010 compared to Three Months Ended December 31, 2009
 United States Retail
     56




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##### Table of Contents



Dealers Financial Services
   Canada
    Europe
  57




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##### Table of Contents



Six Months Ended December 31, 2010 compared to Six Months Ended December 31, 2009
 United States Retail
     Dealers Financial Services
  Canada
  58




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##### Table of Contents



Europe
    Changes in Financial Condition
  59




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##### Table of Contents




    
    Continued improvements in United States Retail 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 United States Retail short-term consumer
loans decreased from 4.1% at June 30, 2010 to 2.2% at December 31, 2010.
    
    In constant currency, the ratio of allowance for loan losses in Canada as a percentage of
loans outstanding has decreased from 2.7% at June 30, 2010 to 1.8% at December 31, 2010.
    
    In constant currency, Europes ratio of allowance for loan losses as a percentage of loans
outstanding has decreased from 12.5% at June 30, 2010 to 11.2% at December 31, 2010,
primarily as a result of lower loss reserves applied to our Internet loan business.
    
    The impact of a larger loan portfolio in Poland, which carries a higher loan loss reserve
percentage than our legacy single payment portfolio, continues to increase the overall loan
loss reserve as a percentage of gross loans receivable.
 Liquidity and Capital Resources
     Senior Secured Credit Facility
  60




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##### Table of Contents



United Kingdom Overdraft Facility
  Scandinavian Credit Facilities
  Long-Term Debt
   61




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##### Table of Contents



Future Obligations
   Less than
    
    
    1-3
    
    
    4-5
    
    
    After 5Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsRevolving credit facilities
    
    $
    2.8
    
    
    $
    2.8
    
    
    $
    
    
    
    $
    
    
    
    $
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120.0Scandinavian credit facilities
    
    
    61.8
    
    
    
    4.2
    
    
    
    49.4
    
    
    
    8.2Other Notes Payable
    
    
    6.3
    
    
    
    0.8
    
    
    
    5.5
    
    
    
    
    
    
    
    Obligations under Canadian Class Action Settlement Agreements Payable in Cash
    
    
    13.9
    
    
    
    13.9
    
    
    
    
    
    
    
    
    
    
    
    Sefina acquisition installment payments
    
    
    14.9
    
    
    
    14.9
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    170.1
    
    
    
    40.4
    
    
    
    59.2
    
    
    
    35.4
    
    
    
    35.1Total contractual cash obligations
    
    $
    1,034.6
    
    
    $
    77.0
    
    
    $
    114.1
    
    
    $
    43.6
    
    
    $
    799.9
  Seasonality
  62




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##### Table of Contents



Impact of Inflation
  Impact of Recent Accounting Pronouncements
 Receivables  Disclosures about the Credit Quality of Financing Receivables and the Allowance for
Credit Losses
 Business Combinations (Topic 805) 
Disclosure of Supplementary Pro Forma Information for Business Combinations
 63




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##### Table of Contents



DOLLAR FINANCIAL CORP.
SUPPLEMENTAL STATISTICAL DATA
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2010
    
    
    2009
    
    
    2010U.S. company-funded consumer loan originations
    
    $
    139.4
    
    
    $
    132.3
    
    
    $
    275.2
    
    
    $
    255.7Canadian company-funded consumer loan originations
    
    
    209.1
    
    
    
    224.5
    (1)
    
    
    408.3
    
    
    
    436.9
    (1)U.K. company-funded consumer loan originations
    
    
    125.7
    
    
    
    172.0
    (2)
    
    
    245.2
    
    
    
    325.1
    (2)Poland company-funded consumer loan originations.
    
    
    2.7
    
    
    
    4.6
    (3)
    
    
    4.1
    
    
    
    8.3
    (3)Total company-funded consumer loan originations
    
    $
    476.9
    
    
    $
    533.4
    
    
    $
    932.8
    
    
    $
    1,026.0U.S. company-funded consumer loan revenues
    
    $
    18.2
    
    
    $
    16.7
    
    
    
    36.0
    
    
    
    32.4Canadian company-funded consumer loan revenues
    
    
    38.1
    
    
    
    43.0
    
    
    
    73.4
    
    
    
    84.4U.K. company-funded consumer loan revenues
    
    
    24.6
    
    
    
    37.2
    
    
    
    47.7
    
    
    
    70.1Poland company-funded consumer loan revenues
    
    
    1.8
    
    
    
    2.4
    
    
    
    3.1
    
    
    
    4.4Total consumer lending revenues, net
    
    $
    82.7
    
    
    $
    99.3
    
    
    $
    160.2
    
    
    $
    191.3Gross charge-offs of company-funded consumer loans
    
    $
    41.5
    
    
    $
    50.4
    
    
    $
    85.5
    
    
    $
    99.0Recoveries of company-funded consumer loans
    
    
    (29.9
    )
    
    
    (34.8
    )
    
    
    (63.8
    )
    
    
    (73.8
    )Net charge-offs on company-funded consumer loans
    
    $
    11.6
    
    
    $
    15.6
    
    
    $
    21.7
    
    
    $
    25.2Gross charge-offs of company-funded consumer loans as a
percentage of total company-funded consumer loan
originations
    
    
    8.7
    %
    
    
    9.4
    %
    
    
    9.2
    %
    
    
    9.6
    %Recoveries of company-funded consumer loans as a
percentage of total company-funded consumer loan
originations
    
    
    6.3
    %
    
    
    6.5
    %
    
    
    6.9
    %
    
    
    7.1
    %Net charge-offs on company-funded consumer loans as a
percentage of total company-funded consumer loan
originations
    
    
    2.4
    %
    
    
    2.9
    %
    
    
    2.3
    %
    
    
    2.5
    %
 
 (1)
    
    Net of a $9.2 and $20.4 million increase as a result of the impact of exchange
rates for the three and six months ended December 31, 2010.(2)
    
    Net of a $5.9 and $14.7 million decrease as a result of the impact of exchange
rates for the three and six months December 31, 2010.(3)
    
    Net of a $0.2 and $0.2 million decrease as a result of the impact of exchange
rates for the three and six months December 31, 2010. 64




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##### Table of Contents



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
   65




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##### Table of Contents



Cross-Currency Interest Rate Swaps
       66




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##### Table of Contents



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
  67




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##### Table of Contents



Item 6. Exhibits
 Exhibit No.
    
    Description of Document2.1
    
    Stock Purchase Agreement dated December 2, 2010 between NSF Nordic Special Finance AB and
Dollar Financial U.K. Limited (1)3.1
    
    Amended and Restated Certificate of Incorporation of Dollar Financial Corp., as amended4.1
    
    Supplemental Indenture dated December 2, 2010 between DFG Acquisition Services, Inc.,
Military Financial Services, LLC, Dealers Financial Services, LLC and U.S. Bank National
Association, as trustee4.2
    
    Guarantee dated December 2, 2010 executed by DFG Acquisition Services, Inc., Military
Financial Services, LLC, Dealers Financial Services, LLC10.1*
    
    First Amendment to and Consent Under Amended and Restated Credit Agreement dated as of
December 2, 2010 among Dollar Financial Corp., Dollar Financial Group, Inc., National Money Mart
Company, Dollar Financial U.K. Limited, the several lenders parties thereto, and Wells Fargo Bank,
National Association, as administrative agent (2)10.2
    
    Amended and Restated Dollar Financial Corp. 2007 Equity Incentive Plan (3)10.3+
    
    Share Purchase Agreement dated December 31, 2010 among Dollar Financial U.K. Limited, Dollar
Financial Corp., CCRT International Holdings B.V. and CompuCredit Holdings Corporation31.1
    
    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
 
 *
    
    Management contracts and compensatory plans and arrangements.+
    
    Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.
The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules
and exhibits upon request by the Securities and Exchange Commission.(1)
    
    Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed by
Dollar Financial Corp. on January 5, 2011.(2)
    
    Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by
Dollar Financial Corp. on December 8, 2010.(3)
    
    Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by
Dollar Financial Corp. on November 17, 2010 68




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##### Table of Contents



SIGNATURE
  DOLLAR FINANCIAL CORP.Date: February 9, 2011
    
    *By:
Name:
    
    /s/ Randy Underwood

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. 69