##### 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 March 31, 2009
 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 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



DOLLAR FINANCIAL CORP.
INDEX
 Page No.PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsInterim Consolidated Balance Sheets as of June 30, 2008 and March 31, 2009 (unaudited)
    
    
    3Interim Unaudited Consolidated Statements of Operations for the Three and Nine
Months Ended March 31, 2008 and 2009
    
    
    4Interim Consolidated Statements of Stockholders Equity as of June 30, 2008 and March
31, 2009 (unaudited)
    
    
    5Interim Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended
March 31, 2008 and 2008
    
    
    6Notes to Interim Unaudited Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    30Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    52Item 4.
    
    Controls and Procedures
    
    
    53PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    54Item 1A.
    
    Risk Factors
    
    
    54Item 6.
    
    Exhibits
    
    
    56Signature
    
    
    
    
    57EX-31.1EX-31.2EX-31.3EX-32.1EX-32.2EX-32.3
  2




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##### Table of Contents



PART 1. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 DOLLAR FINANCIAL CORP.
 
 INTERIM CONSOLIDATED BALANCE SHEETS
 (In thousands, except share and per share amounts)
 June 30,
    
    
    March 31,2008
    
    
    2009(unaudited)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    209,714
    
    
    $
    191,567Loans receivable, net:Loans receivable
    
    
    123,683
    
    
    
    93,153Less: Allowance for loan losses
    
    
    (7,853
    )
    
    
    (6,280
    )Loans receivable, net
    
    
    115,830
    
    
    
    86,873Loans in default, net of an allowance of $22,580 and $18,652
    
    
    11,317
    
    
    
    8,055Other receivables
    
    
    11,031
    
    
    
    10,784Prepaid expenses and other current assets
    
    
    18,938
    
    
    
    16,159Current deferred tax asset, net of valuation allowance of $4,335 and $4,335
    
    
    471
    
    
    
    26Total current assets
    
    
    367,301
    
    
    
    313,464Deferred tax asset, net of valuation allowance of $93,355 and $99,833
    
    
    11,720
    
    
    
    11,594Property and equipment, net of accumulated depreciation of $98,302 and $95,963
    
    
    68,033
    
    
    
    53,312Goodwill and other intangibles
    
    
    470,731
    
    
    
    416,670Debt issuance costs, net of accumulated amortization of $4,656 and $6,378
    
    
    15,108
    
    
    
    11,375Fair value of derivatives
    
    
    
    
    
    
    28,104Other
    
    
    10,030
    
    
    
    12,519Total Assets
    
    $
    942,923
    
    
    $
    847,038LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    51,054
    
    
    $
    31,454Income taxes payable
    
    
    12,194
    
    
    
    9,831Accrued expenses and other liabilities
    
    
    32,189
    
    
    
    29,515Debt due within one year
    
    
    9,187
    
    
    
    3,768Current deferred tax liability
    
    
    
    
    
    
    12Total current liabilities
    
    
    104,624
    
    
    
    74,580Fair value of derivatives
    
    
    37,214
    
    
    
    Long-term deferred tax liability
    
    
    22,352
    
    
    
    21,261Long-term debt
    
    
    574,017
    
    
    
    563,571Other non-current liabilities
    
    
    11,391
    
    
    
    9,766Stockholders equity:Common stock, $.001 par value: 55,500,000 shares authorized; 24,229,178
shares and 24,088,026 shares issued and outstanding at
June 30, 2008 and March 31, 2009, respectively
    
    
    24
    
    
    
    24Additional paid-in capital
    
    
    255,197
    
    
    
    256,055Accumulated deficit
    
    
    (95,950
    )
    
    
    (63,018
    )Accumulated other comprehensive income (loss)
    
    
    34,054
    
    
    
    (15,201
    )Total stockholders equity
    
    
    193,325
    
    
    
    177,860Total Liabilities and Stockholders Equity
    
    $
    942,923
    
    
    $
    847,038
  3




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DOLLAR FINANCIAL CORP.
 
 INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except share and per share amounts)
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2008
    
    
    2009
    
    
    2008
    
    
    2009Revenues:Check cashing
    
    $
    51,503
    
    
    $
    37,263
    
    
    $
    146,025
    
    
    $
    127,419Fees from consumer lending
    
    
    73,316
    
    
    
    58,551
    
    
    
    215,419
    
    
    
    210,054Money transfer fees
    
    
    6,921
    
    
    
    5,957
    
    
    
    19,960
    
    
    
    20,351Franchise fees and royalties
    
    
    1,237
    
    
    
    990
    
    
    
    3,740
    
    
    
    3,276Other
    
    
    16,336
    
    
    
    15,403
    
    
    
    36,746
    
    
    
    42,313Total revenues
    
    
    149,313
    
    
    
    118,164
    
    
    
    421,890
    
    
    
    403,413Store and regional expenses:Salaries and benefits
    
    
    42,778
    
    
    
    34,429
    
    
    
    116,661
    
    
    
    111,507Provision for loan losses
    
    
    14,023
    
    
    
    10,242
    
    
    
    44,899
    
    
    
    40,392Occupancy
    
    
    11,359
    
    
    
    9,863
    
    
    
    30,790
    
    
    
    31,503Depreciation
    
    
    3,597
    
    
    
    3,057
    
    
    
    9,620
    
    
    
    9,819Returned checks, net and cash
shortages
    
    
    4,973
    
    
    
    2,866
    
    
    
    14,226
    
    
    
    13,228Telephone and communications
    
    
    1,917
    
    
    
    1,739
    
    
    
    5,367
    
    
    
    5,616Advertising
    
    
    2,602
    
    
    
    1,451
    
    
    
    7,426
    
    
    
    6,659Bank charges and armored carrier
service
    
    
    3,611
    
    
    
    3,174
    
    
    
    9,954
    
    
    
    9,937Other
    
    
    13,287
    
    
    
    10,748
    
    
    
    35,739
    
    
    
    36,073Total store and regional expenses
    
    
    98,147
    
    
    
    77,569
    
    
    
    274,682
    
    
    
    264,734Store and regional margin
    
    
    51,166
    
    
    
    40,595
    
    
    
    147,208
    
    
    
    138,679Corporate and other expenses:Corporate expenses
    
    
    17,893
    
    
    
    15,452
    
    
    
    52,621
    
    
    
    52,566Other depreciation and amortization
    
    
    854
    
    
    
    925
    
    
    
    2,663
    
    
    
    2,903Interest expense, net
    
    
    9,771
    
    
    
    8,144
    
    
    
    26,837
    
    
    
    26,163Loss on store closings
    
    
    176
    
    
    
    644
    
    
    
    369
    
    
    
    6,137Other income, net
    
    
    (159
    )
    
    
    (832
    )
    
    
    (323
    )
    
    
    (5,992
    )Income before income taxes
    
    
    22,631
    
    
    
    16,262
    
    
    
    65,041
    
    
    
    56,902Income tax provision
    
    
    8,802
    
    
    
    8,361
    
    
    
    26,194
    
    
    
    23,970Net income
    
    $
    13,829
    
    
    $
    7,901
    
    
    $
    38,847
    
    
    $
    32,932Net income per share:Basic
    
    $
    0.57
    
    
    $
    0.33
    
    
    $
    1.61
    
    
    $
    1.37Diluted
    
    $
    0.56
    
    
    $
    0.33
    
    
    $
    1.58
    
    
    $
    1.37Weighted average shares outstanding:Basic
    
    
    24,120,797
    
    
    
    23,951,974
    
    
    
    24,087,467
    
    
    
    24,024,628Diluted
    
    
    24,522,485
    
    
    
    24,007,851
    
    
    
    24,590,362
    
    
    
    24,114,896
  4




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DOLLAR FINANCIAL CORP.
 
 INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 (In thousands, except share data)
 AccumulatedCommon Stock
    
    
    Additional
    
    
    Accumulated
    
    
    Other
    
    
    TotalOutstanding
    
    
    Paid-in
    
    
    Income
    
    
    Comprehensive
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    (Deficit)
    
    
    Income (loss)
    
    
    EquityBalance, June 30, 2008
(audited)
    
    
    24,229,178
    
    
    $
    24
    
    
    $
    255,197
    
    
    $
    (95,950
    )
    
    $
    34,054
    
    
    $
    193,325Comprehensive income:Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,507
    )
    
    
    (40,507
    )Cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,748
    )
    
    
    (8,748
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,932
    
    
    
    
    
    
    
    32,932Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,323
    )Restricted stock grants
    
    
    159,417Stock options exercised
    
    
    259,545
    
    
    
    
    
    
    
    3,305
    
    
    
    
    
    
    
    
    
    
    
    3,305Vested portion of granted
restricted stock and
restricted stock units
    
    
    
    
    
    
    
    
    
    
    3,079
    
    
    
    
    
    
    
    
    
    
    
    3,079Purchase and retirement of
company shares
    
    
    (535,799
    )
    
    
    
    
    
    
    (7,492
    )
    
    
    
    
    
    
    
    
    
    
    (7,492
    )Retirement of common stock
    
    
    (24,315
    )Other stock compensation
    
    
    
    
    
    
    
    
    
    
    1,966
    
    
    
    
    
    
    
    
    
    
    
    1,966Balance, March 31, 2009
(unaudited)
    
    
    24,088,026
    
    
    $
    24
    
    
    $
    256,055
    
    
    $
    (63,018
    )
    
    $
    (15,201
    )
    
    $
    177,860
  5




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DOLLAR FINANCIAL CORP.
 
 INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 Nine Months EndedMarch 31,2008
    
    
    2009Cash flows from operating activities:Net income
    
    $
    38,847
    
    
    $
    32,932Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    14,822
    
    
    
    15,121Loss on extinguishment of debt
    
    
    97
    
    
    
    Provision for loan losses
    
    
    44,899
    
    
    
    40,392Non-cash stock compensation
    
    
    1,966
    
    
    
    5,045Losses on store closings
    
    
    140
    
    
    
    1,963Deferred tax provision
    
    
    3,834
    
    
    
    3,793Other, net
    
    
    341
    
    
    
    Change in assets and liabilities (net of effect of acquisitions):Increase in loans and other receivables
    
    
    (56,492
    )
    
    
    (33,672
    )Increase in prepaid expenses and other
    
    
    (4,955
    )
    
    
    (3,635
    )Increase (decrease) in accounts payable, accrued expenses and other liabilities
    
    
    20,459
    
    
    
    (14,380
    )Net cash provided by operating activities
    
    
    63,958
    
    
    
    47,559Cash flows from investing activities:Acquisitions, net of cash acquired
    
    
    (138,165
    )
    
    
    (2,382
    )Additions to property and equipment
    
    
    (19,363
    )
    
    
    (11,013
    )Net cash used in investing activities
    
    
    (157,528
    )
    
    
    (13,395
    )Cash flows from financing activities:Decrease in restricted cash
    
    
    1,014
    
    
    
    Proceeds from the exercise of stock options
    
    
    1,027
    
    
    
    3,305Purchase of company stock
    
    
    
    
    
    
    (7,492
    )Other debt payments
    
    
    (5,453
    )
    
    
    (2,653
    )Net increase (decrease) in revolving credit facilities
    
    
    3,971
    
    
    
    (3,753
    )Payment of debt issuance and other costs
    
    
    (441
    )
    
    
    (128
    )Net cash provided by (used in) financing activities
    
    
    118
    
    
    
    (10,721
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    4,171
    
    
    
    (41,590
    )Net decrease in cash and cash equivalents
    
    
    (89,281
    )
    
    
    (18,147
    )Cash and cash equivalents at beginning of period
    
    
    290,945
    
    
    
    209,714Cash and cash equivalents at end of period
    
    $
    201,664
    
    
    $
    191,567
  6




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary of Significant Accounting Policies
 Basis of Presentation
  ® ® ® ®
  Use of Estimates
  Principles of Consolidation
  Reclassification
  Earnings per Share
  7




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary of Significant Accounting Policies (continued)
 Earnings per Share (continued)
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2008
    
    
    2009
    
    
    2008
    
    
    2009Net income
    
    $
    13,829
    
    
    $
    7,901
    
    
    $
    38,847
    
    
    $
    32,932Reconciliation of denominator:Weighted average of common shares outstanding  basic 1
    
    
    24,121
    
    
    
    23,952
    
    
    
    24,087
    
    
    
    24,025Effect of dilutive stock options 2
    
    
    383
    
    
    
    
    
    
    
    473
    
    
    
    14Effect of unvested restricted stock and restricted stock unit
grants
    
    
    18
    
    
    
    56
    
    
    
    30
    
    
    
    76Weighted average of common shares outstanding  diluted
    
    
    24,522
    
    
    
    24,008
    
    
    
    24,590
    
    
    
    24,115
 
 (1)
    
    Excludes 75,060 and 114,406 shares of unvested restricted stock, which are included
in total outstanding common shares as of March 31, 2008 and March 31, 2009,
respectively.(2)
    
    The effect of dilutive stock options was determined under the treasury stock method. Stock Based Employee Compensation
   .
   8




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DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary of Significant Accounting Policies (continued)
 Stock Based Employee Compensation (continued)
  Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2008
    
    2009
    
    2008
    
    2009Expected volatility
    
    
    50.8
    %
    
    
    52.2
    %
    
    
    49.7
    %
    
    
    49.6
    %Expected life (years)
    
    
    6.0
    
    
    
    6.0
    
    
    
    6.0
    
    
    
    5.8Risk-free interest rate
    
    
    3.09
    %
    
    
    2.38
    %
    
    
    3.60
    %
    
    
    2.51
    %Expected dividends
    
    None
    
    None
    
    None
    
    NoneWeighted average fair value
    
    $
    11.23
    
    
    $
    3.40
    
    
    $
    13.44
    
    
    $
    3.71
  WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    AggregateExercise
    
    Contractual
    
    Intrinsic ValueOptions
    
    Price
    
    Term (years)
    
    ($ in millions)Options outstanding at June 30, 2008
(1,028,778 shares exercisable)
    
    
    1,542,363
    
    
    $
    16.25
    
    
    
    7.8
    
    
    $
    1.6Granted
    
    
    456,785
    
    
    $
    8.49Exercised
    
    
    (259,545
    )
    
    $
    12.74Forfeited and expired
    
    
    (148,371
    )
    
    $
    16.42Options outstanding at March 31, 2009
    
    
    1,591,232
    
    
    $
    14.58
    
    
    
    8.1
    
    
    $
    0.7Exercisable at March 31, 2009
    
    
    832,698
    
    
    $
    16.28
    
    
    
    6.9
    
    
    $
    
   9




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DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary of Significant Accounting Policies (continued)
 Stock Based Employee Compensation (continued)
  WeightedAverageRestricted
    
    Grant-DateStock Awards
    
    Fair-ValueOutstanding at June 30, 2008
    
    
    52,305
    
    
    $
    21.90Granted
    
    
    96,752
    
    
    $
    9.38Vested
    
    
    (31,772
    )
    
    $
    20.84Forfeited
    
    
    (2,879
    )
    
    $
    18.50Outstanding at March 31, 2009
    
    
    114,406
    
    
    $
    11.69
   WeightedRestricted
    
    AverageStock Unit
    
    Grant-DateAwards
    
    Fair-ValueOutstanding at June 30, 2008
    
    
    226,802
    
    
    $
    21.32Granted
    
    
    302,075
    
    
    $
    7.86Vested
    
    
    (79,092
    )
    
    $
    22.42Forfeited
    
    
    (12,813
    )
    
    $
    21.66Outstanding at March 31, 2009
    
    
    436,972
    
    
    $
    11.80
  Recent Accounting Pronouncements
 Fair Value Measurements
 The Fair
Value Option for Financial Assets and Financial Liabilities  Including an Amendment of FASB
Statement No. 115 Accounting
for Certain Investments in Debt and Equity Securities
 10




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary of Significant Accounting Policies (continued)
 Recent Accounting Pronouncements (continued)
  Business
Combinations (a revision of Statement No. 141),
 Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No.51
 Disclosures
about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133
 Accounting for Convertible Debt
Instruments That May Be Settled Upon Conversion (Including Partial Cash Settlement)
  11




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DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 2. Acquisitions
         12




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 2. Acquisitions (continued)
  Balance at June 30, 2008
    
    $
    419.4Acquisitions:Various small acquisitions
    
    
    1.0Foreign currency adjustment
    
    
    (47.5
    )Balance at March 31, 2009
    
    $
    372.9
  (Unaudited in
thousands except per share amounts)Three months ended
    Nine months endedMarch 31,
    March 31,2008
    2008Revenue
    
    $
    149,470
    
    $
    447,291Net income
    
    $
    13,852
    
    $
    42,432Net income per common share  basic
    
    $
    0.57
    
    $
    1.76Net income per common share  diluted
    
    $
    0.56
    
    $
    1.73
 3. Goodwill and Other Intangibles
  United
    
    
    
    
    
    
    UnitedStates
    
    
    Canada
    
    
    Kingdom
    
    
    TotalBalance at June 30, 2008
    
    $
    205,506
    
    
    $
    189,429
    
    
    $
    75,796
    
    
    $
    470,731Acquisition
    
    
    516
    
    
    
    51
    
    
    
    3,355
    
    
    
    3,922Foreign currency translation adjustments
    
    
    
    
    
    
    (36,214
    )
    
    
    (21,769
    )
    
    
    (57,983
    )Balance at March 31, 2009
    
    $
    206,022
    
    
    $
    153,266
    
    
    $
    57,382
    
    
    $
    416,670
 13




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 3. Goodwill and Other Intangibles (continued)
  June 30,
    
    
    March 31,2008
    
    
    2009Gross
    
    
    GrossCarrying
    
    
    CarryingAmount
    
    
    AmountNon-amortized intangible assets:Goodwill
    
    $
    419,351
    
    
    $
    372,867Reacquired franchise rights
    
    
    51,380
    
    
    
    43,803$
    470,731
    
    
    $
    416,670
 Goodwill and Other Intangible Assets
     4. Contingent Liabilities
   Canadian Legal Proceedings
  14




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 4. Contingent Liabilities (continued)
 Canadian Legal Proceedings (continued)
  Mortillaro Smith
  Day Young Young
 Parsons
  15




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 4. Contingent Liabilities (continued)
 Canadian Legal Proceedings (continued)
      California Legal Proceedings
 Bufil Bufil Bufil
  We The People Legal Proceedings
  16




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 5. Capital Stock
   
 6. Fair Value Measurements
   19




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 6. Fair Value Measurements (continued)
  Assets and Liabilities Measured at Fair Value on a Recurring Basis at March 31, 2009
( in thousands)
 Quoted Prices inActive Markets
    
    Significantfor Identical
    
    Other
    
    Significant
    
    Balance atAssets and
    
    Observable
    
    Unobservable
    
    March 31,Liabilities (Level 1)
    
    Inputs (Level 2)
    
    Inputs (Level 3)
    
    2009AssetsDerivative
financial
instruments
    
    $
    
    
    
    $
    28,296
    
    
    $
    
    
    
    $
    28,296LiabilitiesDerivative
financial
instruments
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  7. Loss on Store Closing and Other Restructuring
    20




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 7. Loss on Store Closing and Other Restructuring (continued)
  Severanceand Other
    
    
    StoreRetention
    
    
    ClosureBenefits
    
    
    Costs
    
    
    TotalBalance at June 30, 2008
    
    $
    0.2
    
    
    $
    
    
    
    $
    0.2Charge recorded in earnings
    
    
    0.6
    
    
    
    5.5
    
    
    
    6.1Amounts paid
    
    
    (0.8
    )
    
    
    (3.2
    )
    
    
    (4.0
    )Non-cash charges
    
    
    
    
    
    
    (1.8
    )
    
    
    (1.8
    )Balance at March 31, 2009
    
    $
    
    
    
    $
    0.5
    
    
    $
    0.5
 8. Segment Information
  21




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 8. Segment Information (continued)
 United
    
    
    
    
    
    
    UnitedStates
    
    
    Canada
    
    
    Kingdom
    
    
    TotalAs of and for the three months ended
March 31, 2008Total assets
    
    $
    279,742
    
    
    $
    462,433
    
    
    $
    178,124
    
    
    $
    920,299Goodwill and other intangibles, net
    
    
    206,683
    
    
    
    187,721
    
    
    
    75,055
    
    
    
    469,459Sales to unaffiliated customers:Check cashing
    
    
    18,826
    
    
    
    18,945
    
    
    
    13,732
    
    
    
    51,503Fees from consumer lending
    
    
    22,045
    
    
    
    34,839
    
    
    
    16,432
    
    
    
    73,316Money transfer fees
    
    
    1,733
    
    
    
    3,840
    
    
    
    1,348
    
    
    
    6,921Franchise fees and royalties
    
    
    685
    
    
    
    552
    
    
    
    
    
    
    
    1,237Other
    
    
    2,722
    
    
    
    10,762
    
    
    
    2,852
    
    
    
    16,336Total sales to unaffiliated customers
    
    
    46,011
    
    
    
    68,938
    
    
    
    34,364
    
    
    
    149,313Provision for loan losses
    
    
    5,874
    
    
    
    6,406
    
    
    
    1,743
    
    
    
    14,023Interest expense, net
    
    
    2,786
    
    
    
    5,116
    
    
    
    1,869
    
    
    
    9,771Depreciation and amortization
    
    
    1,462
    
    
    
    1,718
    
    
    
    1,271
    
    
    
    4,451Loss on store closings
    
    
    132
    
    
    
    39
    
    
    
    5
    
    
    
    176Other expense (income), net
    
    
    5
    
    
    
    (72
    )
    
    
    (92
    )
    
    
    (159
    )Income before income taxes
    
    
    3,716
    
    
    
    14,170
    
    
    
    4,745
    
    
    
    22,631Income tax provision
    
    
    2,417
    
    
    
    4,935
    
    
    
    1,450
    
    
    
    8,802As of and for the nine months ended
March 31, 2008Sales to unaffiliated customers:Check cashing
    
    $
    42,025
    
    
    $
    60,979
    
    
    $
    43,021
    
    
    $
    146,025Fees from consumer lending
    
    
    57,757
    
    
    
    111,265
    
    
    
    46,397
    
    
    
    215,419Money transfer fees
    
    
    4,055
    
    
    
    11,716
    
    
    
    4,189
    
    
    
    19,960Franchise fees and royalties
    
    
    1,990
    
    
    
    1,750
    
    
    
    
    
    
    
    3,740Other
    
    
    5,546
    
    
    
    23,573
    
    
    
    7,627
    
    
    
    36,746Total sales to unaffiliated customers
    
    
    111,373
    
    
    
    209,283
    
    
    
    101,234
    
    
    
    421,890Provision for loan losses
    
    
    18,562
    
    
    
    20,968
    
    
    
    5,369
    
    
    
    44,899Interest expense, net
    
    
    5,122
    
    
    
    15,986
    
    
    
    5,729
    
    
    
    26,837Depreciation and amortization
    
    
    3,718
    
    
    
    4,828
    
    
    
    3,737
    
    
    
    12,283Loss on store closings
    
    
    276
    
    
    
    88
    
    
    
    5
    
    
    
    369Other expense (income), net
    
    
    214
    
    
    
    (418
    )
    
    
    (119
    )
    
    
    (323
    )(Loss) income before income taxes
    
    
    (3,542
    )
    
    
    51,906
    
    
    
    16,677
    
    
    
    65,041Income tax provision
    
    
    1,997
    
    
    
    19,171
    
    
    
    5,026
    
    
    
    26,194
 22




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 8. Segment Information (continued)
 United
    
    
    
    
    
    
    UnitedStates
    
    
    Canada
    
    
    Kingdom
    
    
    TotalAs of and for the three months ended
March 31, 2009Total assets
    
    $
    264,448
    
    
    $
    421,535
    
    
    $
    161,055
    
    
    $
    847,038Goodwill and other intangibles, net
    
    
    206,022
    
    
    
    153,266
    
    
    
    57,382
    
    
    
    416,670Sales to unaffiliated customers:Check cashing
    
    
    15,960
    
    
    
    13,608
    
    
    
    7,695
    
    
    
    37,263Fees from consumer lending
    
    
    17,966
    
    
    
    25,851
    
    
    
    14,734
    
    
    
    58,551Money transfer fees
    
    
    1,431
    
    
    
    3,229
    
    
    
    1,297
    
    
    
    5,957Franchise fees and royalties
    
    
    486
    
    
    
    504
    
    
    
    
    
    
    
    990Other
    
    
    2,830
    
    
    
    8,750
    
    
    
    3,823
    
    
    
    15,403Total sales to unaffiliated customers
    
    
    38,673
    
    
    
    51,942
    
    
    
    27,549
    
    
    
    118,164Provision for loan losses
    
    
    3,882
    
    
    
    4,904
    
    
    
    1,456
    
    
    
    10,242Interest expense, net
    
    
    2,783
    
    
    
    3,904
    
    
    
    1,457
    
    
    
    8,144Depreciation and amortization
    
    
    1,363
    
    
    
    1,396
    
    
    
    1,223
    
    
    
    3,982Loss on store closings
    
    
    277
    
    
    
    327
    
    
    
    40
    
    
    
    644Other expense (income), net
    
    
    45
    
    
    
    309
    
    
    
    (1,186
    )
    
    
    (832
    )(Loss) income before income taxes
    
    
    (380
    )
    
    
    10,225
    
    
    
    6,417
    
    
    
    16,262Income tax provision
    
    
    4,245
    
    
    
    2,194
    
    
    
    1,922
    
    
    
    8,361As of and for the nine months ended
March 31, 2009Sales to unaffiliated customers:Check cashing
    
    $
    44,311
    
    
    $
    51,497
    
    
    $
    31,611
    
    
    $
    127,419Fees from consumer lending
    
    
    62,957
    
    
    
    93,054
    
    
    
    54,043
    
    
    
    210,054Money transfer fees
    
    
    4,550
    
    
    
    11,404
    
    
    
    4,397
    
    
    
    20,351Franchise fees and royalties
    
    
    1,470
    
    
    
    1,806
    
    
    
    
    
    
    
    3,276Other
    
    
    8,623
    
    
    
    22,653
    
    
    
    11,037
    
    
    
    42,313Total sales to unaffiliated customers
    
    
    121,911
    
    
    
    180,414
    
    
    
    101,088
    
    
    
    403,413Provision for loan losses
    
    
    17,477
    
    
    
    16,998
    
    
    
    5,917
    
    
    
    40,392Interest expense, net
    
    
    9,644
    
    
    
    11,493
    
    
    
    5,026
    
    
    
    26,163Depreciation and amortization
    
    
    4,225
    
    
    
    4,531
    
    
    
    3,966
    
    
    
    12,722Loss on store closings
    
    
    3,347
    
    
    
    2,744
    
    
    
    46
    
    
    
    6,137Other expense (income), net
    
    
    554
    
    
    
    (3,898
    )
    
    
    (2,648
    )
    
    
    (5,992
    )(Loss) income before income taxes (1)
    
    
    (14,386
    )
    
    
    47,817
    
    
    
    23,471
    
    
    
    56,902Income tax provision
    
    
    4,219
    
    
    
    13,831
    
    
    
    5,920
    
    
    
    23,970
 
 (1)
    
    (Loss) income before income taxes for the United States and Canada have been adjusted by
$4,980. This adjustment is related to the disallowed portion that was repaid by the United States
to its Canadian subsidiary associated with the settlement granted in the competent authority tax
proceeding. 23




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 9. Derivative Instruments and Hedging Activities
 Risk Management Objective of Using Derivatives
  Cash Flow Hedges of Foreign Exchange Risk
   Notional
    
    NotionalForeign Currency Derivates
    
    Sold
    
    PurchasedCAD Put/USD Call Options
    
    CAD 6,000,000
    
    $
    4,800,000GBP Put/USD Call Options
    
    £900,000
    
    $
    1,440,000
  Cash Flow Hedges of Multiple Risks
   24




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 9. Derivative Instruments and Hedging Activities (continued)
  Pay Fixed
    
    Pay Fixed
    
    Receive Floating
    
    
    Receive FloatingForeign Currency Derivates
    
    Notional
    
    Strike Rate
    
    Notional
    
    
    IndexGBP-USD Cross Currency Swap
    
    £19,877,676
    
    8.360%
    
    $
    39,000,000
    
    
    3 mo. LIBOR + 3.00% per annumEUR-GBP Cross Currency Swap
    
    £20,731,223
    
    8.450%
    
    
    30,703,826
    
    
    3 mo. Euribor + 3.00% per annumUSD-CAD Cross Currency Swap
    
    CAD184,978,258
    
    7.135%
    
    $
    160,875,000
    
    
    3 mo. LIBOR + 2.75% per annumUSD-CAD Cross Currency Swap
    
    CAD61,932,049
    
    7.130%
    
    $
    53,625,000
    
    
    3 mo. LIBOR + 2.75% per annumUSD-CAD Cross Currency Swap
    
    CAD84,448,625
    
    7.070%
    
    $
    73,125,000
    
    
    3 mo. LIBOR + 2.75% per annum
 Tabular Disclosures
  Tabular Disclosure of Fair Values of Derivative Instruments (1)
 Asset Derivatives
    
    
    Liability DerivativesAs of March 31, 2009
    
    
    As of March 31, 2009Balance Sheet
    
    
    Fair
    
    
    Balance Sheet
    
    
    FairLocation
    
    
    Value
    
    
    Location
    
    
    ValueDerivatives designated as hedging instruments under SFAS 133Foreign Exchange Contracts
    
    Prepaid Expenses
    
    $
    192
    
    
    Other Liabilities
    
    $
    Cross Currency Swaps
    
    Derivatives
    
    
    28,104
    
    
    Derivatives
    
    
    Total derivatives designated as hedging instruments under
SFAS 133
    
    
    
    
    
    $
    28,296
    
    
    
    
    
    
    $
    
 
 (1)
    
    The fair values of derivative instruments are presented in the above
table on a gross basis. Certain of the above derivative instruments
are subject to master netting arrangements and qualify for net
presentation in the Consolidated Balance Sheet in accordance with FASB
Interpretation No. 39, Offsetting of Amounts Related to Certain
Contracts. 25




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 9. Derivative Instruments and Hedging Activities (continued)
  Tabular Disclosure of the Effect of Derivative Instruments on the Interim Unaudited Consolidated Statement of Operations for the Three Months Ending March 31, 2009
 Location ofGain or (Loss)Recognized in
    
    
    Amount of Gain orIncome on
    
    
    (Loss) RecognizedLocation of Gain
    
    
    Amount of Gain
    
    
    Derivative
    
    
    in Income onor (Loss)
    
    
    or (Loss)
    
    
    (Ineffective
    
    
    DerivativeAmount of Gain or
    
    
    Reclassified from
    
    
    Reclassified from
    
    
    Portion and
    
    
    (Ineffective Portion(Loss) Recognized in
    
    
    Accumulated OCI
    
    
    Accumulated
    
    
    Amount
    
    
    and AmountDerivatives in SFAS 133
    
    OCI on Derivative
    
    
    into Income
    
    
    OCI into Income
    
    
    Excluded from
    
    
    Excluded fromCash Flow Hedging
    
    (Effective Portion),
    
    
    (Effective
    
    
    (Effective
    
    
    Effectiveness
    
    
    EffectivenessRelationships
    
    net of tax
    
    
    Portion)
    
    
    Portion)
    
    
    Testing)
    
    
    Testing)Foreign Exchange Contracts
    
    $
    57
    
    
    Foreign currency 
gain / (loss)
    
    $
    
    
    
    Other income / 
(expense)
    
    $
    Interest Expense
    
    
    
    
    
    Other income / 
(expense)
    
    
    Cross Currency Swaps
    
    
    11,315
    
    
    Corporate Expenses
    
    
    Total
    
    $
    11,372
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
 Tabular Disclosure of the Effect of Derivative Instruments on the Interim Unaudited Consolidated Statement of Operations for the Nine Months Ending March 31, 2009
 Location ofGain or (Loss)Recognized in
    
    
    Amount of Gain orIncome on
    
    
    (Loss) RecognizedLocation of Gain
    
    
    Amount of Gain
    
    
    Derivative
    
    
    in Income onor (Loss)
    
    
    or (Loss)
    
    
    (Ineffective
    
    
    DerivativeAmount of Gain or
    
    
    Reclassified from
    
    
    Reclassified from
    
    
    Portion and
    
    
    (Ineffective Portion(Loss) Recognized in
    
    
    Accumulated OCI
    
    
    Accumulated
    
    
    Amount
    
    
    and AmountDerivatives in SFAS 133
    
    OCI on Derivative
    
    
    into Income
    
    
    OCI into Income
    
    
    Excluded from
    
    
    Excluded fromCash Flow Hedging
    
    (Effective Portion),
    
    
    (Effective
    
    
    (Effective
    
    
    Effectiveness
    
    
    EffectivenessRelationships
    
    net of tax
    
    
    Portion)
    
    
    Portion)
    
    
    Testing)
    
    
    Testing)Foreign Exchange Contracts
    
    $
    156
    
    
    Foreign currency gain / (loss)
    
    $
    
    
    
    Other income / 
(expense)
    
    $
    Interest Expense
    
    
    
    
    
    Other income / 
(expense)
    
    
    Cross Currency Swaps
    
    
    54,413
    
    
    Corporate Expenses
    
    
    Total
    
    $
    54,569
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
 26




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 9. Derivative Instruments and Hedging Activities (continued)
 Credit-risk-related Contingent Features
    10. Comprehensive Income (Loss)
  Three months ended
    
    
    Nine months endedMarch 31,
    
    
    March 31,2008
    
    
    2009
    
    
    2008
    
    
    2009Net income
    
    $
    13,829
    
    
    $
    7,901
    
    
    $
    38,847
    
    
    $
    32,932Foreign currency translation adjustment(1)
    
    
    12
    
    
    
    (3,613
    )
    
    
    299
    
    
    
    (40,507
    )Fair value adjustments for cash flow hedges, net(2)(3)
    
    
    (7,387
    )
    
    
    5,534
    
    
    
    (13,509
    )
    
    
    (8,748
    )Total comprehensive income (loss)
    
    $
    6,454
    
    
    $
    9,822
    
    
    $
    25,637
    
    
    $
    (16,323
    )
 
 (1)
    
    The ending balance of the foreign currency translation
adjustments included in accumulated other comprehensive
income (loss) on the balance sheet was a gain of $37.9
million and a loss of $2.6 million respectively as of
March 31, 2008 and 2009.(2)
    
    Net of $4.1 million and $2.5 million of tax for the three
months ended March 31, 2008 and 2009, respectively. For
the nine months ended March 31, 2008 and 2009, the fair
value adjustments for cash flow hedges were net of $6.8
million and $4.0 million of tax, respectively.(3)
    
    Net of $0.2 million and $0.7 million which were
reclassified into earnings for the three months ended March
31, 2008 and 2009, respectively. For the nine months ended
March 31, 2008 and 2009, the fair value adjustments for
cash flow hedges which were reclassified into earnings were
$0.8 million and $1.4 million, respectively.  27




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 11. Income Taxes
 Income Tax Provision
   Deferred
    
    
    Valuation
    
    
    Net DeferredTax Asset
    
    
    Allowance
    
    
    Tax AssetBalance at June 30, 2008
    
    $
    109.9
    
    
    $
    97.7
    
    
    $
    12.2U.S. increase
    
    
    6.8
    
    
    
    6.8
    
    
    
    Foreign increase/(decrease)
    
    
    (0.9
    )
    
    
    (0.3
    )
    
    
    (0.6
    )Balance at March 31, 2009
    
    $
    115.8
    
    
    $
    104.2
    
    
    $
    11.6
     28




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##### Table of Contents



DOLLAR FINANCIAL CORP.
 NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 12. Subsequent Events
   
 29




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following is a discussion and analysis of the financial condition and results of operations for
Dollar Financial Corp. for the three and nine months ended March 31, 2009 and 2008. References in
this section to we, our, ours, or us are to Dollar Financial Corp. and its wholly owned
subsidiaries, except as the context otherwise requires. References to OPCO are to our wholly
owned operating subsidiary, Dollar Financial Group, Inc.
 Executive Summary
  ®
      30




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##### Table of Contents



Discussion of Critical Accounting Policies
   Revenue Recognition
    Company-Funded Consumer Loan Loss Reserves Policy
   31




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##### Table of Contents



Check Cashing Returned Item Policy
  Goodwill and Indefinite-Lived Intangible Assets
 Goodwill and Other Intangible Assets,
    Derivative Instruments and Hedging Activities
 Disclosures about Derivative Instruments and
Hedging Activities, an amendment of FASB Statement No. 133 (SFAS 161)
  32




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##### Table of Contents



Income Taxes
  Accounting for Uncertainty in Income Taxes an interpretation of SFAS 109 Accounting for Income
Taxes
 Results of Operations
 Revenue Analysis
 Three Months Ended March 31,
    
    
    Nine Months Ended March 31,(Percentage of total
    
    
    
    
    
    
    
    
    
    
    (Percentage of total($ in thousands)
    
    
    revenue)
    
    
    ($ in thousands)
    
    
    revenue)2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009Check cashing
    
    $
    51,503
    
    
    $
    37,263
    
    
    
    34.5
    %
    
    
    31.5
    %
    
    $
    146,025
    
    
    $
    127,419
    
    
    
    34.6
    %
    
    
    31.6
    %Fees from consumer lending
    
    
    73,316
    
    
    
    58,551
    
    
    
    49.1
    %
    
    
    49.6
    %
    
    
    215,419
    
    
    
    210,054
    
    
    
    51.1
    %
    
    
    52.1
    %Money transfer fees
    
    
    6,921
    
    
    
    5,957
    
    
    
    4.6
    %
    
    
    5.0
    %
    
    
    19,960
    
    
    
    20,351
    
    
    
    4.7
    %
    
    
    5.0
    %Franchise fees and royalties
    
    
    1,237
    
    
    
    990
    
    
    
    0.8
    %
    
    
    0.8
    %
    
    
    3,740
    
    
    
    3,276
    
    
    
    0.9
    %
    
    
    0.8
    %Other revenue
    
    
    16,336
    
    
    
    15,403
    
    
    
    11.0
    %
    
    
    13.1
    %
    
    
    36,746
    
    
    
    42,313
    
    
    
    8.7
    %
    
    
    10.5
    %Total revenue
    
    $
    149,313
    
    
    $
    118,164
    
    
    
    100
    %
    
    
    100
    %
    
    $
    421,890
    
    
    $
    403,413
    
    
    
    100
    %
    
    
    100
    %
 Constant Currency Analysis
  33




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Three Months Ended March 31, 2009 compared to Three Months Ended March 31, 2008
    Nine Months Ended March 31, 2009 compared to Nine Months Ended March 31, 2008
   34




---



##### Table of Contents



Store and Regional Expense Analysis
 Three Months Ended March 31,
    
    
    Nine Months Ended March 31,(Percentage of total
    
    
    
    
    
    
    
    
    
    
    (Percentage of total($ in thousands)
    
    
    revenue)
    
    
    ($ in thousands)
    
    
    revenue)2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009Salaries and benefits
    
    $
    42,778
    
    
    $
    34,429
    
    
    
    28.6
    %
    
    
    29.1
    %
    
    $
    116,661
    
    
    $
    111,507
    
    
    
    27.7
    %
    
    
    27.6
    %Provision for loan losses
    
    
    14,023
    
    
    
    10,242
    
    
    
    9.4
    %
    
    
    8.7
    %
    
    
    44,899
    
    
    
    40,392
    
    
    
    10.6
    %
    
    
    10.0
    %Occupancy
    
    
    11,359
    
    
    
    9,863
    
    
    
    7.6
    %
    
    
    8.3
    %
    
    
    30,790
    
    
    
    31,503
    
    
    
    7.3
    %
    
    
    7.8
    %Depreciation
    
    
    3,597
    
    
    
    3,057
    
    
    
    2.4
    %
    
    
    2.6
    %
    
    
    9,620
    
    
    
    9,819
    
    
    
    2.3
    %
    
    
    2.4
    %Returned checks, net
and cash shortages
    
    
    4,973
    
    
    
    2,866
    
    
    
    3.3
    %
    
    
    2.4
    %
    
    
    14,226
    
    
    
    13,228
    
    
    
    3.4
    %
    
    
    3.3
    %Telephone and communications
    
    
    1,917
    
    
    
    1,739
    
    
    
    1.3
    %
    
    
    1.5
    %
    
    
    5,367
    
    
    
    5,616
    
    
    
    1.3
    %
    
    
    1.4
    %Advertising
    
    
    2,602
    
    
    
    1,451
    
    
    
    1.7
    %
    
    
    1.2
    %
    
    
    7,426
    
    
    
    6,659
    
    
    
    1.8
    %
    
    
    1.7
    %Bank Charges and armored
carrier expenses
    
    
    3,611
    
    
    
    3,174
    
    
    
    2.4
    %
    
    
    2.7
    %
    
    
    9,954
    
    
    
    9,937
    
    
    
    2.4
    %
    
    
    2.5
    %Other
    
    
    13,287
    
    
    
    10,748
    
    
    
    9.0
    %
    
    
    9.1
    %
    
    
    35,739
    
    
    
    36,073
    
    
    
    8.3
    %
    
    
    8.9
    %Total store and regional
expenses
    
    $
    98,147
    
    
    $
    77,569
    
    
    
    65.7
    %
    
    
    65.6
    %
    
    $
    274,682
    
    
    $
    264,734
    
    
    
    65.1
    %
    
    
    65.6
    %
 Three Months Ended March 31, 2009 compared to Three Months Ended March 31, 2008
   Nine Months Ended March 31, 2009 compared to Nine Months Ended March 31, 2008
  35




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Corporate and Other Expense Analysis
 Three Months Ended March 31,
    
    Nine Months Ended March 31,(Percentage of total
    
    
    
    
    
    
    
    
    
    (Percentage of total($ in thousands)
    
    revenue)
    
    ($ in thousands)
    
    revenue)2008
    
    2009
    
    2008
    
    2009
    
    2008
    
    2009
    
    2008
    
    2009Corporate expenses
    
    $
    17,893
    
    
    $
    15,452
    
    
    
    12.0
    %
    
    
    13.1
    %
    
    $
    52,621
    
    
    $
    52,566
    
    
    
    12.5
    %
    
    
    13.0
    %Other depreciation
and amortization
    
    
    854
    
    
    
    925
    
    
    
    0.6
    %
    
    
    0.8
    %
    
    
    2,663
    
    
    
    2,903
    
    
    
    0.6
    %
    
    
    0.7
    %Interest expense, net
    
    
    9,771
    
    
    
    8,144
    
    
    
    6.5
    %
    
    
    6.9
    %
    
    
    26,837
    
    
    
    26,163
    
    
    
    6.4
    %
    
    
    6.5
    %Loss on store closings
    
    
    176
    
    
    
    644
    
    
    
    0.1
    %
    
    
    0.5
    %
    
    
    369
    
    
    
    6,137
    
    
    
    0.1
    %
    
    
    1.5
    %Other (income) expense
    
    
    (159
    )
    
    
    (832
    )
    
    
    (0.1)
    %
    
    
    (0.7)
    %
    
    
    (323
    )
    
    
    (5,992
    )
    
    
    (0.1)
    %
    
    
    (1.5)
    %Income tax provision
    
    
    8,802
    
    
    
    8,361
    
    
    
    5.9
    %
    
    
    7.1
    %
    
    
    26,194
    
    
    
    23,970
    
    
    
    6.2
    %
    
    
    5.9
    %
 Three Months Ended March 31, 2009 compared to Three Months Ended March 31, 2008
 Corporate Expenses
  Other Depreciation and Amortization
  Interest Expense
  36




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Loss on Store Closings
  Income Tax Provision
   Deferred
    
    
    Valuation
    
    
    Net DeferredTax Asset
    
    
    Allowance
    
    
    Tax AssetBalance at December 31, 2008
    
    $
    115.4
    
    
    $
    100.1
    
    
    $
    15.3U.S. increase
    
    
    4.1
    
    
    
    4.1
    
    
    
    Foreign increase/(decrease)
    
    
    (3.7
    )
    
    
    
    
    
    
    (3.7
    )Balance at March 31, 2009
    
    $
    115.8
    
    
    $
    104.2
    
    
    $
    11.6
    37




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Nine Months Ended March 31, 2009 compared to Nine Months Ended March 31, 2008
 Corporate Expenses
  Other Depreciation and Amortization
  Interest Expense
  Loss on Store Closings
  Income Tax Provision
  38




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##### Table of Contents



Deferred
    
    
    Valuation
    
    
    Net DeferredTax Asset
    
    
    Allowance
    
    
    Tax AssetBalance at June 30, 2008
    
    $
    109.9
    
    
    $
    97.7
    
    
    $
    12.2U.S. increase
    
    
    6.8
    
    
    
    6.8
    
    
    
    Foreign increase/(decrease)
    
    
    (0.9
    )
    
    
    (0.3
    )
    
    
    (0.6
    )Balance at March 31, 2009
    
    $
    115.8
    
    
    $
    104.2
    
    
    $
    11.6
     39




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Three Months Ended March 31,
    
    Nine Months Ended March 31,Percent/
    
    
    
    
    
    
    
    
    
    Percent/($ in thousands)
    
    Margin
    
    ($ in thousands)
    
    Margin2008
    
    2009
    
    Change
    
    2008
    
    2009
    
    ChangeRevenue:United States
    
    $
    46,011
    
    
    $
    38,673
    
    
    
    (15.9
    )%
    
    $
    111,373
    
    
    $
    121,911
    
    
    
    9.5
    %Store and
regional margin
    
    
    16.8
    %
    
    
    19.7
    %
    
    2.9 pts.
    
    
    
    10.6
    %
    
    
    13.7
    %
    
    3.1 pts.Canada
    
    $
    68,938
    
    
    $
    51,942
    
    
    
    (24.7
    )%
    
    $
    209,283
    
    
    $
    180,414
    
    
    
    (13.8
    )%Store and
regional margin
    
    
    44.6
    %
    
    
    42.2
    %
    
    (2.4 pts.
    )
    
    
    45.7
    %
    
    
    45.1
    %
    
    (0.6 pts.
    )United Kingdom
    
    $
    34,364
    
    
    $
    27,549
    
    
    
    (19.8
    )%
    
    $
    101,234
    
    
    $
    101,088
    
    
    
    (0.1
    )%Store and
regional margin
    
    
    37.0
    %
    
    
    40.0
    %
    
    3.0 pts.
    
    
    
    39.2
    %
    
    
    40.2
    %
    
    1.0 pts.Total Revenue
    
    $
    149,313
    
    
    $
    118,164
    
    
    
    (20.9
    )%
    
    $
    421,890
    
    
    $
    403,413
    
    
    
    (4.4
    )%Store and
regional margin
    
    $
    51,166
    
    
    $
    40,595
    
    
    
    (20.7
    )%
    
    $
    147,208
    
    
    $
    138,679
    
    
    
    (5.8
    )%Store and
regional margin
percent
    
    
    34.3
    %
    
    
    34.4
    %
    
    0.1 pts.
    
    
    
    34.9
    %
    
    
    34.4
    %
    
    (0.5 pts.
    )
  Three Months Ended March 31,
    
    Nine Months Ended March 31,Pre-tax
    
    
    
    
    
    
    
    
    
    Pre-taxRevenue
    
    Income/(Loss)
    
    Revenue
    

    Income/(Loss)2008
    
    2009
    
    2008
    
    2009
    
    2008
    
    2009
    
    2008
    
    2009United States
    
    
    30.8
    %
    
    
    32.7
    %
    
    
    16.4
    %
    
    
    (2.3)
    %
    
    
    26.4
    %
    
    
    30.2
    %
    
    
    (5.4)
    %
    
    
    (25.3)
    %Canada
    
    
    46.2
    %
    
    
    44.0
    %
    
    
    62.6
    %
    
    
    62.8
    %
    
    
    49.6
    %
    
    
    44.7
    %
    
    
    79.8
    %
    
    
    84.1
    %United Kingdom
    
    
    23.0
    %
    
    
    23.3
    %
    
    
    21.0
    %
    
    
    39.5
    %
    
    
    24.0
    %
    
    
    25.1
    %
    
    
    25.6
    %
    
    
    41.2
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 Discussion and analysis for each geographic segment
  Three Months Ended March 31, 2009 compared to Three Months Ended March 31, 2008
 United States (US)
  40




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##### Table of Contents



Canada
     41




---



##### Table of Contents



United Kingdom (UK)
     Nine Months Ended March 31, 2009 compared to Nine Months Ended March 31, 2008
 United States (US)
    42




---



##### Table of Contents



Canada
     United Kingdom (UK)
  43




---



##### Table of Contents



Changes in Financial Condition
  Liquidity and Capital Resources
     44




---



##### Table of Contents



Credit Facilities.
   Revolving Credit Facilities.
 United States Revolving Credit Facility.
 Canadian Revolving Credit Facility.
 United Kingdom Overdraft Facility
 45




---



##### Table of Contents



Debt Due Within One Year.
 Long-Term Debt.
 Operating Leases.
  Less than
    
    
    1-3
    
    
    4-5
    
    
    After 5Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsLong-term debt:Term loans due 2012
    
    $
    367,339
    
    
    $
    3,768
    
    
    $
    7,535
    
    
    $
    356,036
    
    
    $
    2.875% Senior Convertible Notes
due 2027
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000Operating lease obligations
    
    
    123,425
    
    
    
    31,750
    
    
    
    44,538
    
    
    
    24,419
    
    
    
    22,718Total contractual cash obligations
    
    $
    690,764
    
    
    $
    35,518
    
    
    $
    52,073
    
    
    $
    380,455
    
    
    $
    222,718
  Balance Sheet Variations
 March 31, 2009 compared to June 30, 2008 .
  
    
    Due to improved US collections and our deliberate actions to decrease our risk exposure
by reducing the amount that we are willing to loan to certain customer segments, the
historical loss rate, which is expressed as a percentage of loan amounts
 46




---



##### Table of Contents



originated for the
last twelve months applied against the principal balance of outstanding loans declined, and
as a result, the ratio of the allowance for loan losses related to US short-term consumer
loans decreased by 22.6% from 5.73% at June 30, 2008 compared to 4.44% at March 31, 2009.
    
    In constant dollars, the UKs allowance for loan losses increased from approximately
7.8% of outstanding principal at June 30, 2008 to 10.2% of
outstanding principal at March
31, 2009. The percentage increase was the result of changes in loan product mix
(short-term consumer loans  pawn lending  longer-term installment loans) as well as some
level of increased loan loss requirements related to historical loss rates related to all
three loan products.
      Seasonality and Quarterly Fluctuations
  Impact of Recent Accounting Pronouncement
 Fair Value Measurements
 The Fair
Value Option for Financial Assets and Financial Liabilities  Including an Amendment of FASB
Statement No. 115 Accounting
for Certain Investments in Debt and Equity Securities
 47




---



##### Table of Contents



Business
Combinations (a revision of Statement No. 141
 Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No.51
 Disclosures
about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133
 Accounting for Convertible Debt
Instruments That May Be Settled Upon Conversion (Including Partial Cash Settlement)
  Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995
  48




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49




---



##### Table of Contents



DOLLAR FINANCIAL CORP.
SUPPLEMENTAL STATISTICAL DATA
 March 31,2008
    
    
    2009Company Operating Data:Stores in operation:Company-owned
    
    
    1,111
    
    
    
    1,078Franchised stores and check cashing merchants
    
    
    343
    
    
    
    186Total
    
    
    1,454
    
    
    
    1,264
 Three Months Ended
    
    Nine Months EndedMarch 31,
    
    March 31,2008
    
    2009
    
    2008
    
    2009Check Cashing Data:Face amount of checks cashed (in millions)
    
    $
    1,395
    
    
    $
    1,059
    (1)
    
    $
    3,860
    
    
    $
    3,514
    (1)Face amount of average check
    
    $
    541
    
    
    $
    492
    (2)
    
    $
    535
    
    
    $
    493
    (2)Average fee per check
    
    $
    19.96
    
    
    $
    17.31
    (3)
    
    $
    20.24
    
    
    $
    17.87
    (3)Number of checks cashed (in thousands)
    
    
    2,580
    
    
    
    2,152
    
    
    
    7,215
    
    
    
    7,132
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2008
    
    
    2009
    
    
    2008
    
    
    2009Check Cashing Collections Data (in thousands):Face amount of returned checks
    
    $
    15,516
    
    
    $
    9,512
    
    
    $
    44,527
    
    
    $
    42,912Collections
    
    
    (11,736
    )
    
    
    (7,700
    )
    
    
    (32,919
    )
    
    
    (32,087
    )Net write-offs
    
    $
    3,780
    
    
    $
    1,812
    
    
    $
    11,608
    
    
    $
    10,825Collections as a percentage of returned checks
    
    
    75.6
    %
    
    
    81.0
    %
    
    
    73.9
    %
    
    
    74.8
    %Net write-offs as a percentage of check
cashing revenues
    
    
    7.3
    %
    
    
    4.9
    %
    
    
    7.9
    %
    
    
    8.5
    %Net write-offs as a percentage of the face
amount of checks cashed
    
    
    0.27
    %
    
    
    0.17
    %
    
    
    0.30
    %
    
    
    0.31
    %
 
 (1)
    
    Net of a $143 million and $328 million decrease as a result of the impact of exchange rates for the three and nine months ended March 31, 2009, respectively.(2)
    
    Net of a $66 and $46 decrease as a result of the impact of exchange rates for the three and nine months ended March 31, 2009, respectively.(3)
    
    Net of a $2.88 and $1.98 decrease as a result of the impact of exchange rates for the three and nine months ended March 31, 2009,
respectively. 50




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2008
    
    
    2009
    
    
    2008
    
    
    2009U.S. company-funded consumer loan
originations (1)
    
    $
    152,725
    
    
    $
    128,647
    
    
    $
    377,974
    
    
    $
    456,094
    (3)Canadian company-funded consumer loan
originations (2)
    
    
    226,111
    
    
    
    165,470
    (4)
    
    
    723,003
    
    
    
    591,054
    (4)U.K. company-funded consumer loan
originations (2)
    
    
    92,953
    
    
    
    82,891
    (5)
    
    
    260,341
    
    
    
    285,095
    (5)Total company-funded consumer loan
originations
    
    $
    471,789
    
    
    $
    377,008
    
    
    $
    1,361,318
    
    
    $
    1,332,243U.S. Servicing revenues
    
    $
    574
    
    
    $
    433
    
    
    $
    2,003
    
    
    $
    1,550U.S. company-funded consumer loan revenues
    
    
    21,471
    
    
    
    17,533
    
    
    
    55,754
    
    
    
    61,407Canadian company-funded consumer loan
revenues
    
    
    34,839
    
    
    
    25,851
    
    
    
    111,265
    
    
    
    93,054U.K. company-funded consumer loan revenues
    
    
    16,432
    
    
    
    14,734
    
    
    
    46,397
    
    
    
    54,043Total consumer lending revenues, net
    
    $
    73,316
    
    
    $
    58,551
    
    
    $
    215,419
    
    
    $
    210,054Gross charge-offs of company-funded
consumer loans
    
    $
    55,297
    
    
    $
    38,324
    
    
    $
    161,235
    
    
    $
    146,582Recoveries of company-funded consumer
loans
    
    
    (42,504
    )
    
    
    (25,073
    )
    
    
    (124,813
    )
    
    
    (106,244
    )Net charge-offs on company-funded
consumer loans
    
    $
    12,793
    
    
    $
    13,251
    
    
    $
    36,422
    
    
    $
    40,338Gross charge-offs of company-funded
consumer loans as a percentage of total
company-funded consumer loan originations
    
    
    11.7
    %
    
    
    10.2
    %
    
    
    11.8
    %
    
    
    11.0
    %Recoveries of company-funded consumer
loans as a percentage of total
company-funded consumer loan originations
    
    
    9.0
    %
    
    
    6.7
    %
    
    
    9.1
    %
    
    
    8.0
    %Net charge-offs on company-funded
consumer loans as a percentage of total
company-funded consumer loan originations
    
    
    2.7
    %
    
    
    3.5
    %
    
    
    2.7
    %
    
    
    3.0
    %
 
 (1)
    
    Our company operated stores in the United States offer company-funded single-payment consumer loans in all markets, with the exception of Texas. In Texas, the Company offers
single-payment consumer loans under a credit services organization model. (2)
    
    All consumer loans originated in Canada and the UK are company funded.(3)
    
    The increase for the nine months ended March 31, 2009 is primarily related to the CCS and APL acquisitions in fiscal 2008.(4)
    
    Net of a $39.7 million and $84.1 million decline as a result of the impact of exchange rates for the three and nine months ended March 31, 2009.(5)
    
    Net of a $31.4 million and $66.5 million decline as a result of the impact of exchange rates for the three and nine months ended March 31, 2009 51




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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Generally
  
    
    interest rates on revolving credit facilities; and
    
    foreign exchange rates generating translation gains and losses.
  Interest Rate Risk
  Foreign Currency Exchange Rate Risk
 Put Options
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Cross-Currency Interest Rate Swaps
    
 
 Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  53




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
 
 
 Item 1A. Risk Factors
  Unexpected changes in foreign tax rates and political and economic conditions could negatively
impact our operating results.
  Demand for our products and services is sensitive to the level of transactions effected by our
customers, and accordingly, our revenues could be affected negatively by a recession or general
economic slowdown in the geographic markets in which we operate.
  The price of our common stock after may be volatile.
  If the national and world-wide financial crisis continues, potential disruptions in the credit
markets may negatively impact the availability and cost of short-term borrowing under our credit
facility, which could adversely affect our results of operations, cash flows and financial
condition.
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Potential for Goodwill Impairment
  Risks Relating to Our Outstanding Convertible Notes
  
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Item
6. Exhibits
 Exhibit No.
    
    Description of Document10.1
    
    Employment Agreement by and between
National Money Mart and Sydney Franchuk dated March 18, 2009 (1)31.1
    
    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
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SIGNATURE
  DOLLAR FINANCIAL CORP.Date: May 11, 2009
    
    *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. 57