Dollar Financial Corp Announces Strong First Quarter Results

http://www.businesswire.com/news/home/20091102006257/en

Record Quarterly Adjusted EBITDA of $41.0 Million Grew by 21.6% on a Sequential
Quarter Basis Exceeding Consensus Expectations; Company Raises Guidance for
Fiscal 2010
BERWYN, Pa.--(Business Wire)--
Dollar Financial Corp (NASDAQ:DLLR), a leading international diversified
financial services company primarily serving unbanked and under-banked consumers
for nearly 30 years, today announced its results for the fiscal first quarter
ended September 30, 2009.

Fiscal 2010 First Quarter Highlights

* Total consolidated revenue, which was $141.8 million for the quarter, was
unfavorably impacted by higher unemployment and the Company`s more conservative
approach to consumer lending and cashing checks in the midst of the weakened
global economy, as well as the closure of a number of underperforming U.S.
financial services stores during the prior fiscal year. However, on a constant
currency basis, consolidated revenue was $151.8 million representing a slight
year-over-year decline of less than 1.0% compared to the first quarter of the
prior fiscal year.
* On a sequential quarter basis, total consolidated revenue for the three months
ended September 30, 2009 increased by $11.3 million or 9.1%, on a constant
currency basis, compared to the three months ended June 30, 2009.
* The consolidated loan loss provision, expressed as a percentage of gross
consumer lending revenue, improved to 14.8% for the fiscal first quarter
compared to 18.7% for the three months ended September 30, 2008, again
reflecting the Company`s conservative approach to extending consumer credit in
the midst of the weakened economy, and the implementation of what the Company
believes to be industry leading proprietary credit scoring models for the
Company`s global loan products.
* On a constant currency basis, consolidated adjusted EBITDA was $44.9 million
for the quarter compared to $39.3 million for the three months ended September
30, 2008, representing an increase of 14.4%.
* On a sequential quarter basis, consolidated adjusted EBITDA for the three
months ended September 30, 2009 increased by $6.8 million or 21.6%, on a
constant currency basis, compared to the quarter ended June 30, 2009.
* On a constant currency basis, pro forma income before income taxes excluding
non-recurring charges and the adoption of FSP APB-14-1 was $28.3 million for the
quarter compared to $24.1 million for the three months ended September 30, 2008,
while pro forma net income, considering a pro forma effective income tax rate of
43.0%, was $16.1 million for the quarter compared to $13.7 million for the first
quarter of the prior fiscal year.
* Income before income taxes on a GAAP basis was $13.3 million for the quarter,
including non-cash mark-to-market losses, compared to $16.5 million for the
three months ended September 30, 2008. Net income, which was also impacted by
non-cash mark-to-market losses and the related tax effects thereof, was $5.3
million for the fiscal first quarter compared to $11.3 million for the first
quarter of the prior fiscal year.
* Pro forma fully-diluted earnings per share, excluding non-recurring charges
and the adoption of FSP APB-14-1, and considering a pro forma effective income
tax rate of 43.0%, was $0.66 for the quarter on a constant currency basis
compared to $0.56 for the first quarter of the prior fiscal year, representing
an increase of 17.9%.
* Fully-diluted earnings per share on a GAAP basis was $0.22 for the quarter,
including non-cash mark-to-market losses, compared to $0.46 for the three months
ended September 30, 2008.

Discussion on Presentation of Information

The U.S. Dollar was stronger for the three months ended September 30, 2009
compared to the prior year`s first quarter, with the relative value of the
Canadian Dollar down approximately 5% to the U.S. Dollar, while the U.K. Pound
Sterling was down about 13% to the U.S. currency. However, compared to the
preceding sequential quarter for the three months ended June 30, 2009, the U.S.
currency weakened further this quarter with the relative value of the Canadian
Dollar and U.K. Pound Sterling both increasing by approximately 5% during the
fiscal first quarter ended September 30, 2009. As a strong majority of the
Company`s consolidated revenue is generated outside of the United States in
Canada and the U.K., the reported results for the Company`s foreign subsidiaries
are impacted by fluctuations in currency exchange rates when translated into
U.S. Dollars, as required by U.S. generally accepted accounting principles. As a
result, to facilitate comparisons of operating performance with prior quarter
results, we are continuing to provide metrics on our year-over-year financial
results on a constant currency basis.

Fiscal 2010 First Quarter Overview and Business Updates

Commenting on the first quarter results, Jeff Weiss, the Company`s Chairman and
Chief Executive Officer, stated, "I am pleased to announce another quarter of
strong financial results with all of our business units reporting higher
year-over-year store margins. Primarily as a result of an increased focus on
improving the efficiency and reducing the cost structure of our global store
base and field support groups, total consolidated adjusted EBITDA for the
Company, on a constant currency basis increased by $5.6 million or 14.4% for the
three months ended September 30, 2009 compared to the prior year`s first quarter
ended September 30, 2008. This growth was achieved despite slightly lower
year-over-year revenue on a constant currency basis amid the significantly
weakened global economy."

Jeff Weiss continued, "Our customer base is generally composed of small business
owners and service sector workers who typically work non-discretionary jobs,
such as working cash registers in gas stations and convenience stores, providing
daily required services in hospitals, and stocking shelves in grocery stores and
supermarkets. The nature of these jobs tends to dampen fluctuations in
employment from cyclical swings in the overall economy, which is a significant
reason for our strong business performance throughout this historically long
recession. However, with unemployment rates near 10% in all of our markets, a
segment of our customer base has been moderately impacted by job losses,
furloughs, and a reduction in working hours. We do believe, though, there is a
real need for the basic services provided by our customers and expect that
employment for this socio-economic group will rebound faster than most other
sectors of the economy as economic growth resumes.

We believe we are witnessing early signs of just such a dynamic, as past
customers are beginning to return to our store locations to take advantage of
the many products and services we provide. As a result, including the effects of
a number of recent acquisitions and growth initiatives, total consolidated
revenue for the fiscal first quarter grew by $11.3 million or 9.1% compared to
the most recent quarter ended June 30, 2009, while adjusted EBITDA over the same
time period increased by a robust $6.8 million or 21.6%, all on a constant
currency basis."

In conclusion, Jeff Weiss stated, "Despite the significantly weakened global
economy, our business continues to perform very well, as our diversified
multi-product, multi-country, and multi-channel business model continued to
deliver strong earnings and cash flow throughout the long recession, and is
continuing in what we now believe is the early stage of global economic
recovery. During the economic downturn, we steadfastly focused on reducing our
cost structure and improving the operating efficiency of our global store base
and field support network. We implemented what we believe to be industry leading
proprietary credit scoring models for our global loan products, and leveraged
new technologies and expertise in our debt collection processes. These
activities are beginning to pay large dividends, as the profitability of our
business has never been better from the perspective of how much an incremental
dollar of revenue translates into store margins. We are excited about the very
strong start to fiscal 2010 and look to build upon this early success as we move
through the remainder of the fiscal year."

In Canada, check cashing fees and consumer lending revenue declined modestly in
the first quarter compared to the prior year period, reflecting significantly
higher unemployment rates across all of our geographic markets compared to this
point in time last year. However, over the past few months, the Company has
begun to see signs of moderate employment recovery amongst its customer base, as
total consolidated revenue in Canada grew by C$5.3 million or 8.1% for the
quarter compared to the three months ended June 30, 2009. Previous declines in
check cashing revenue, primarily due to fewer and smaller payroll checks being
cashed, appears to have stabilized this quarter with check cashing fees
approximately flat on a sequential quarter basis. Consumer lending revenue, for
which the primary requirement to get a loan is that the customer be employed at
the time of application, increased by C$5.5 million or 16.5% compared to the
immediately preceding quarter ended June 30, 2009.

In the U.K., the Company`s extensive geographic coverage and strong brand
recognition continues to drive organic customer growth despite the significantly
weakened economy, as same store sales from consumer lending increased by 8.7%
when compared to the prior year`s first quarter. Furthermore, total revenue in
the U.K. for the quarter on a year-over-year basis increased by £5.1 million or
23.6%. Store and regional margin in the U.K., as a result of a number of
operating efficiency improvements and higher same store sales, improved to 41.8%
of gross revenue for the fiscal first quarter compared to 40.6% for the prior
year`s first quarter. On a sequential quarter basis, including the acquisition
of an internet lending business in April 2009, total consolidated revenue in the
U.K. increased by £3.6 million or 15.6% compared to the three months ended June
30, 2009, with higher revenues across all of the major product categories.
Consumer lending revenue in the U.K. increased by 16.2% or £2.1 million,
compared to the three months ended June 30, 2009, while check cashing fees were
slightly higher on a sequential quarter basis.

In the U.S., the Company closed a number of underperforming financial services
stores during the fiscal year ended June 30, 2009 and significantly reduced the
related field management and store support functions, as components of a plan to
divest underperforming stores and focus its domestic store footprint in states
with more favorable and stable regulatory environments. Primarily due to these
initiatives, adjusted EBITDA for the Company`s domestic financial services
business was approximately flat for the quarter on a year-over-year basis
despite $9.0 million of lower revenues. Store and regional margin in the U.S.,
as a percent of gross revenue, improved to 15.9% for the quarter compared to
12.0% for the first quarter of the previous year.

In July 2009, the Company announced its initial entry onto the European
continent with the acquisition of an established consumer lending business in
Poland. The acquired company, Optima, S.A., founded in 1999 and headquartered in
Gdansk, offers unsecured loans of generally 40 - 50 week durations with an
average loan amount of $250 to $500. The loan transaction includes a convenient
in-home servicing feature, whereby loan disbursement and collection activities
take place in the customer`s home according to a mutually agreed upon and
pre-arranged schedule. Customer sales and service activities are managed through
an extensive network of local commission based representatives across five
provinces in northwestern Poland. The country has a population of nearly 40
million people with a significant percentage of the population currently
underserved by the traditional banking industry. This acquisition represents a
planned first step into mainland Europe, and also provides a platform for
further expansion throughout Poland and other Eastern European countries. The
demographics of the neighboring Eastern European countries are similar to
Poland, with the entire population of Eastern Europe nearing 200 million people
across several countries, with a significant percentage of the population
residing in urban-industrial areas. The Company is very pleased with the
performance of this business thus far and is positioning it for further
expansion throughout the region.

On October 21, 2009, the Company announced the acquisition of a merchant cash
advance business in the United Kingdom. The acquired company primarily provides
working capital funding to small retail businesses by providing cash advances
against a percentage of future credit card sales. As part of the business model,
the merchant`s credit card processor, typically a third party bank, directs a
predetermined percentage of the merchant`s future daily credit card receivables
to the acquired company until the advance is paid back in full. We believe this
repayment process substantially reduces any risk of repayment default. The
acquired company was "first to market" in the United Kingdom in 2005 and is
still the only significant participant in this emerging industry. The
acquisition further diversifies the Company by expanding into the small business
financial services market. The Company believes financing the working capital
requirements of small businesses is a significantly under-served market
globally, with the potential opportunity in the United Kingdom alone
encompassing approximately 400,000 small retail merchants.

On October 28, 2009, the Company announced the acquisition of Dealers` Financial
Services, LLC, or "DFS". DFS, which is headquartered in Lexington, Kentucky, was
founded in 1996. The acquired company provides services to military personnel
who apply for auto loans to purchase new and low mileage used vehicles. The
loans are funded and serviced under an exclusive agreement with a major third
party national bank based in the United States. DFS operates through an
established network of arrangements with more than 545 franchised and
independent new and used car dealerships, according to underwriting protocols
specified by the third party bank lender and servicer. The partner third party
bank funds and maintains the loan portfolio on its balance sheet, as well as
bears any risk of repayment default. DFS`s revenues come from fees paid to the
Company by the third party lender and by the sale of ancillary products such as
warranty and GAP insurance coverage. DFS maintains strong relationships with an
extensive network of franchised and independent new and used car dealerships
through an experienced group of local, DFS sales agents. To be part of the DFS
network, dealerships must first be certified by DFS and agree to comply with a
number of vehicle quality and sale stipulations. The Company intends to operate
DFS as a standalone business unit of Dollar, in order to focus on leveraging the
existing dealership network and lending platform to other customer segments
through a number of proprietary strategic growth initiatives. The acquisition,
which is contingent upon obtaining financing, is anticipated to be completed in
early December.

Commenting on another recent event, Randy Underwood, the Company`s Executive
Vice President and CFO stated, "I am very pleased to announce that on October
30, 2009, the Company entered into an amendment to the employment agreement of
Jeff Weiss, our Chairman and CEO, which extended the stated term of his
agreement from December 31, 2010 until June 30, 2012."

Fiscal 2010 First Quarter Results Reflect Non-Cash Charges

In May 2009, the Company executed an early settlement of its cross-currency
interest rate swaps held in its United Kingdom subsidiary, realizing $14.4
million of net cash proceeds. With the termination of the swaps, the U.K. term
loans are subject to variable interest rates and non-cash mark-to-market
adjustments based on fluctuations in currency exchange rates. Due to the
strengthening of the U.K. Pound Sterling for the quarter ending September 30,
2009, the Company recorded a net $7.8 million non-cash mark-to-market charge on
its U.K. term loans and intercompany debt balances.

Furthermore, effective July 1, 2009, the Company adopted FSP APB14-1, which
resulted in $2.3 million of additional non-cash interest expense for the first
quarter associated with the Company`s $200 million, 2.875% U.S. convertible
notes. Since the Company does not currently receive a tax benefit from
additional charges in the U.S., as a result of its historical net operating loss
tax position, the unfavorable non-cash earnings per share impact from the
adoption of FSP APB-14-1 was ($0.09) per fully-diluted share for the quarter on
a GAAP basis. The Company`s historical financial results included in this news
release have been restated to include the adoption of FSP APB14-1.

Income before income taxes, on a GAAP basis, including $9.8 million of
non-recurring charges for the three months ended September 30, 2009 primarily
related to a $7.8 million unfavorable mark-to-market adjustment on the Company`s
term loans and intercompany debt and $1.3 million of litigation settlement
charges during the quarter, was $13.3 million compared to $16.5 million for the
previous year`s quarter. The consolidated effective income tax rate for the
three months ended September 30, 2009, which reflects the impact of the non-cash
mark-to-market adjustment of the Company`s U.K. term loans and intercompany debt
and the litigation settlement charges for the quarter, was thereby higher at
59.9%. The consolidated effective income tax rate for the first quarter of the
prior fiscal year was 31.8% and included a favorable tax settlement resulting
from an appeal to the competent tax authorities on the deductibility of certain
intercompany charges between the Company`s U.S. and Canadian business units.
Accordingly, the large differences in the effective tax rates between the
respective quarters contributed significantly to the reduction of fully-diluted
earnings per share on an actual reported basis to $0.22 for the quarter compared
to $0.46 for the first quarter of the previous fiscal year.

On a constant currency basis, excluding non-recurring charges and the adoption
of FSP APB-14-1, pro forma income before income taxes was $28.3 million for the
quarter compared to $24.1 million for the previous year`s fiscal first quarter,
an increase of 17.7%. Likewise, pro forma net income, considering a pro forma
effective income tax rate of 43.0%, was $16.1 million representing an increase
of $2.4 million compared to the three months ended September 30, 2008, while pro
forma fully-diluted earnings per share was $0.66 for the quarter compared to
$0.56 for the first quarter of the prior fiscal year.

Company`s Liquidity Position

The Company continues to maintain approximately $75.0 million of excess cash
available to fund additional growth and acquisition activities, or alternatively
to pay down indebtedness. At September 30, 2009, the Company had not drawn on
any of its global revolving credit facilities and as a result, had a $75.0
million undrawn balance on its U.S. facility, a C$28.5 million undrawn balance
in Canada, and a £5.0 million undrawn balance in the U.K., all of which are in
addition to the substantial continuing free cash flow the Company realizes from
its business operations. The Company intends to continue to manage its cash flow
prudently by balancing its near term strategy to maintain reserve cash holdings,
while at the same time judiciously reviewing the active pipeline of
international acquisition candidates and continuing to take advantage of
selected attractively priced opportunities.

The Company purchased foreign currency option contracts designated as cash flow
hedges, which provide a relative floor for a portion of its earnings for the
period October 2009 to December 2009 at option rates of $0.92 and $0.93 for the
Canadian currency and $1.65 for the Pound Sterling.

Fiscal 2010 Outlook

Commenting on the Company`s current expectations for fiscal 2010, Randy
Underwood, the Company`s Executive Vice President and CFO, stated, "Although we
believe we are seeing early signs of employment recovery amongst our customer
base, it is uncertain as to how strong these recent positive trends will carry
through the remaining nine months of the fiscal year. Furthermore, we are still
in the early stages of the transition to new provincial regulation in Canada,
which should provide additional growth opportunities in fiscal 2010 as the year
progresses. It is also noteworthy that the recent trend of a weaker U.S. Dollar
positively impacts our reported results on a GAAP basis. Therefore, at this
early juncture of the fiscal year and given the expected continuing fluctuations
in the relative value of the U.S. Dollar, we are increasing our fiscal 2010
guidance to account for the stronger than anticipated first quarter results, and
an expected moderate continuation thereof for the remainder of the fiscal year.
Accordingly, for fiscal 2010, we presently anticipate adjusted EBITDA for our
current business operations of between $155.0 million and $165.0 million.
Fully-diluted earnings per share for fiscal 2010, excluding one-time charges and
the impact of adopting FSP APB14-1, is anticipated to be between $2.10 and $2.30
considering a 43.0% pro forma effective income tax rate.

Furthermore, we issued a news release on October 28, 2009 regarding the expected
closing of the acquisition of Dealers Financial Services, LLC (DFS) later this
year in December, and noted that we anticipate this acquisition would further
increase our expected EBITDA on an annualized basis by $20.0 million to $23.0
million. We would expect to adjust the Company`s guidance for fiscal 2010 to
reflect the inclusion of the expected contributions of DFS following the closing
of the acquisition."

The reconciliation between adjusted EBITDA and income before income taxes is
consistent with the historical reconciliation presented at the end of this news
release.

Investors Conference Call

Dollar Financial Corp will be holding an investor`s conference call on Monday,
November 2, 2009 at 5:00 pm ET to discuss the Company`s results for the fiscal
first quarter ended September 30, 2009 and the Company`s fiscal 2010 outlook.
Investors can participate in the conference by dialing (888) 200-2794 (U.S. and
Canada) or (973) 935-8766 (International); use the confirmation code "Dollar".
Hosting the call will be Jeff Weiss, Chairman and CEO and Randy Underwood,
Executive Vice President and CFO. For your convenience, the conference call can
be replayed in its entirety beginning from two hours after the end of the call
through November 9, 2009. If you wish to listen to the replay of this conference
call, please dial (706) 645-9291 and enter passcode "36017622".

The conference call will also be broadcast live through a link on the Investor
Relations page on the Dollar Financial web site at http://www.dfg.com. Please go
to the web site at least 15 minutes prior to the call to register, download and
install any necessary audio software.

About Dollar Financial Corp

Dollar Financial Corp is a leading diversified international financial services
company primarily serving unbanked and under-banked consumers. Its customers are
typically service sector individuals who require basic financial services but,
for reasons of convenience and accessibility, purchase some or all of their
financial services from the Company rather than from banks and other financial
institutions. To meet the needs of these customers, the Company provides a range
of consumer financial products and services primarily consisting of check
cashing, short-term consumer loans, pawn lending, Western Union money order and
money transfer products, currency exchange, gold buying, reloadable VISA and
MasterCard branded debit cards, electronic tax filing, and bill payment
services.

At September 30, 2009, the Company`s global store network consisted of 1,188
stores, including 1,032 company-operated financial services stores and 156
franchised and agent locations in the United States, Canada, United Kingdom,
Republic of Ireland, and Poland. The financial services store network is the
largest network of its kind in each of Canada and the United Kingdom and the
second-largest network of its kind in the United States. The Company`s
customers, many of whom receive income on an irregular basis or from multiple
employers, are drawn to the convenient neighborhood locations, extended
operating hours and high-quality customer service. The Company`s financial
products and services, principally check cashing, money transfer, pawn lending
and short-term consumer loan programs, provide immediate access to cash for
living expenses or other needs. For more information, please visit the Company's
website at www.dfg.com.

Forward Looking Statement

This news release contains forward looking statements, including statements
regarding the following: the Company`s future results, growth, guidance,
expansion plans, the financing of potential acquisitions and operating strategy;
the global economy; the effects of currency exchange rates on reported operating
results; the developing regulatory environment in Canada, the U.K., Poland and
the United States; the impact of future development strategy, new stores and
acquisitions; the implementation and expected results of restructuring
initiatives; and of the performance of new products and services. These forward
looking statements involve risks and uncertainties, including uncertainties
related to the effects of changes in the value of the U.S. dollar compared to
foreign currencies, risks related to the regulatory environments, current and
potential future litigation, the integration and performance of acquired stores,
the performance of new stores, the implementation and expected results of
restructuring initiatives, the impact of debt financing transactions, the
results of certain ongoing income tax appeals, and the effects of new products
and services on the Company`s business, results of operations, financial
condition, prospects and guidance. There can be no assurance that the Company
will attain its expected results, successfully integrate any of its
acquisitions, attain its published guidance metrics, or that ongoing and
potential future litigation or that the various FDIC, Federal, state, Canadian
or foreign legislative or regulatory activities affecting the Company or the
banks with which the Company does business will not negatively impact the
Company`s operations. A more complete description of these and other risks,
uncertainties and assumptions is included in the Company`s filings with the
Securities and Exchange Commission, the Company`s annual reports and form 10-Q`s
and 10-K`s. You should not place any undue reliance on any forward-looking
statements. We disclaim any obligation to update any such factors or to publicly
announce results of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.

Presentation of Information in this Press Release

In an effort to provide investors with additional information regarding the
Company`s results, the Company has also disclosed in this press release the
following information which management believes provides useful information to
investors:

* Constant currency results (the Company calculates constant currency operating
results by comparing current period operating results with prior period
operating results, with both periods converted at the currency exchange rates
for the prior period).
* Pro forma operating results excluding non-recurring charges and adjusted for
pro forma effective income tax rates.

DOLLAR FINANCIAL CORP
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)

June 30, September 30,
2009 2009
Assets:
Cash and cash equivalents $ 209,602 $ 226,665
Loans receivable, net:
Loans receivable 126,826 137,398
Less: Allowance for loan losses (12,132 ) (13,393 )
Loans receivable, net 114,694 124,005
Loans in default, net 6,436 6,831
Prepaid expenses and other current assets 30,093 25,209
Deferred tax assets, net 40,641 38,736
Property and equipment, net 58,614 59,204
Goodwill and other intangibles 454,347 467,255
Debt issuance costs, net and other assets 20,578 21,103

Total Assets $ 935,005 $ 969,008

Liabilities:
Accounts payable $ 36,298 $ 33,345
Income taxes payable 14,834 10,503
Accrued expenses and other liabilities 95,780 100,090
Fair value of derivatives 10,223 36,239
Deferred tax liability 32,487 35,612
Revolving credit facilities - -
Long-term debt 536,305 533,351
Total Liabilities 725,927 749,140

Stockholders' Equity:
Common stock 24 24
Additional paid-in capital 311,301 312,675
Accumulated deficit (110,581 ) (105,308 )
Accumulated other comprehensive income 8,018 12,103
Total Dollar Financial Corp. Stockholders' Equity 208,762 219,494
Non-controlling interest 316 374
Total Stockholders' Equity 209,078 219,868
Total Liabilities and Stockholders' Equity $ 935,005 $ 969,008

DOLLAR FINANCIAL CORP
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except share and per share amounts)

Three Months Ended
September 30,
2008 2009

Revenues:
Check cashing $ 48,532 $ 37,802
Fees from consumer lending 81,498 78,989
Money transfer fees 7,610 6,823
Other 15,436 18,194
Total revenues 153,076 141,808

Store and regional expenses:
Salaries and benefits 40,803 36,736
Provision for loan losses 15,251 11,696
Occupancy costs 11,324 10,847
Returned checks, net and cash shortages 6,135 2,264
Depreciation 3,592 3,374
Bank charges and armored carrier services 3,633 3,466
Telephone and communication costs 2,079 1,838
Advertising 2,812 3,447
Other 13,637 12,244
Total store and regional expenses 99,266 85,912
Store and regional margin 53,810 55,896

Corporate and other expenses:
Corporate expenses 19,521 20,351
Interest expense, net 11,547 11,624
Other depreciation and amortization 1,040 1,052
Mark to market debt adjustment - 7,827
Reserve for litigation settlements 509 1,267
Loss on store closings 4,938 318
Other (income) expense, net (258 ) 160
Income before income taxes 16,513 13,297
Income tax provision 5,226 7,966
Net income $ 11,287 $ 5,331
Less net income attributable to non-controlling interest $ 0 $ 58
Net income attributable to Dollar Financial Corp. $ 11,287 $ 5,273

Net income per share
Basic $ 0.47 $ 0.22
Diluted $ 0.46 $ 0.22

Weighted average shares outstanding
Basic 24,178,350 23,998,357
Diluted 24,371,126 24,480,544

Pro forma Net Income Reconciliation

Pro forma net income is not an item prepared in accordance with GAAP. Pro forma
net income is net income adjusted to exclude one-time charges as described below
and also excludes the impact of adopting FSP APB14-1. Dollar presents pro forma
net income as an indication of the Company`s financial performance excluding
one-time and other non-cash charges to show comparative results of its
operations. Not all companies calculate pro forma net income in the same
fashion, and therefore these amounts as presented may not be comparable to other
similarly titled measures of other companies. The table below reconciles income
before income taxes as reported on Dollar`s Unaudited Consolidated Statements of
Operations to pro forma net income (dollars in thousands):

DOLLAR FINANCIAL CORP
PRO FORMA NET INCOME
(EXCLUDING ONE-TIME CHARGES & EFFECTS OF FSP APB14-1)
(In thousands except share and per share amounts)

Three Months Ended
September 30,
2008 2009

Income before income taxes - as reported $ 16,513 $ 13,297

Pro forma adjustments:
Adoption of FSP APB14-1 2,098 2,310
Loss on store closings 4,938 318
Provision for litigation settlements 509 1,267
Mark to market debt adjustment - 7,827
Write-off of acquisition costs - 338
Pro forma income before income taxes 24,058 25,357
Pro forma income taxes 10,345 10,904
Pro forma net income $ 13,713 $ 14,453
Pro forma effective income tax rate 43.0 % 43.0 %

Weighted average fully-diluted shares outstanding 24,371,126 24,480,544

Pro forma fully-diluted earnings per share $ 0.56 $ 0.59

GAAP fully-diluted earnings per share $ 0.46 $ 0.22

Adjusted EBITDA Reconciliation

Adjusted EBITDA is not an item prepared in accordance with GAAP. Adjusted EBITDA
includes earnings before interest expense, income tax provision, depreciation,
amortization, charges related to non-qualified stock options and restricted
shares, provisions for loss on store closings and litigation settlements, and
other items described below. Dollar presents Adjusted EBITDA as an indication of
operating performance, as well as its ability to service its debt and capital
expenditure requirements. Adjusted EBITDA does not indicate whether Dollar`s
cash flow will be sufficient to fund all of its cash needs. Adjusted EBITDA
should not be considered in isolation or as a substitute for net income, cash
flows from operating activities, or other measures of operating performance or
liquidity determined in accordance with GAAP. Not all companies calculate
Adjusted EBITDA in the same fashion, and therefore these amounts as presented
may not be comparable to other similarly titled measures of other companies. The
table below reconciles income before income taxes as reported on Dollar`s
Unaudited Consolidated Statements of Operations to Adjusted EBITDA (dollars in
thousands):

Three Months Ended
September 30,
2008 2009

Income before income taxes $ 16,513 $ 13,297

Add:
Depreciation and amortization 4,632 4,426
Interest expense, net 11,547 11,624
Mark to market debt adjustment - 7,827
Stock based compensation expense 1,153 1,912
Loss on store closings 4,938 318
Provision for litigation settlements 509 1,267
Write-off of acquisition costs - 338
Other (26 ) (37 )
Adjusted EBITDA $ 39,266 $ 40,972

DOLLAR FINANCIAL CORP
UNAUDITED STORE DATA

Three Months Ended
September
2008 2009
Beginning Company-Operated Stores
U.S. 467 358
Canada 419 399
U.K. 236 274
Total Beginning Company-Operated Stores 1,122 1,031

De novo Store Builds
U.S. 3 0
Canada 0 1
U.K. 7 8
Total 10 9

Acquired Stores
U.S. 0 0
Canada 0 0
U.K. 1 0
Total 1 0

Closed Stores
U.S. 52 6
Canada 17 1
U.K. 0 1
Total 69 8

Ending Company-Operated Stores
U.S. 418 352
Canada 402 399
U.K. 244 281
Total Ending Company-Operated Stores 1,064 1,032

Ending Franchise/Agent Stores
U.S. 86 39
Canada 61 62
U.K. 166 55
Total Ending Franchise/Agent Stores 313 156

Total Ending Store Count 1,377 1,188

Dollar Financial Corp
Financial Dynamics
Julie Prozeller/Grace Su, 212-850-5600

Copyright Business Wire 2009