SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------
FORM 8-K/A
AMENDMENT NO. 1
TO CURRENT REPORT
PURSUANT TO RULE 12B-15 AND SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
--------------------
APRIL 18, 1997
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
DOLLAR FINANCIAL GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
NEW YORK 333-18221 13-2997911
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
1436 LANCASTER AVENUE, SUITE 210
BERWYN, PENNSYLVANIA 19312-1288
(Address of Principal Executive Offices)
610-296-3400
(Registrant's telephone number, including area code)
<PAGE>
This Amendment No. 1 (this "Amendment") amends and restates in its
entirety each of Item 2 and Item 7 of the Current Report on Form 8-K of Dollar
Financial Group, Inc. (the "Company"), as filed with the Securities and Exchange
Commission on May 5, 1997 (the "Form 8-K").
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
The Company, Dollar Financial Canada, LTD., an indirect
wholly owned subsidiary of the Company (the "Acquiror"), Canadian
Capital Corporation ("CCC"), Dollar Ontario LTD., an indirect wholly
owned subsidiary of the Company ("Dollar Ontario"), and Gus E.
Baril, Leslie A. Baril and the Baril Family Trust (collectively, the
"Barils") entered into a Purchase Agreement (the "Agreement") dated
as of March 31, 1997. Pursuant to the Agreement, on April 18, 1997,
the Acquiror acquired from the Barils and CCC all of the outstanding
capital stock of Dollar Ontario (the "Acquisition") for cash
consideration of C$18.6 million (or US$13.3 million using the
exchange rate of US$1.00 = C$1.397 as of April 18, 1997) plus
initial working capital of approximately C$2.5 million (US$1.8
million). The Acquisition was funded with cash from the Company. The
purchase price of Dollar Ontario was determined through arm's length
negotiations among the Company, the Barils and CCC.
Prior to the Acquisition, Dollar Ontario acquired from CCC
and the Barils, CCC's Canadian check cashing and consumer financial
product business, consisting of CCC's 43 stores that operate in
Ontario, Canada under the name "Money Mart". These 43 stores are
franchisees of National Money Mart Inc., an indirect wholly owned
subsidiary of the Company.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The following financial statements of CCC are attached
hereto and made a part hereof:
(i) Auditors' Report
(ii) Balance Sheets as of May 31, 1995 and 1996 and
Interim Unaudited Balance Sheet as of February
28, 1997
(iii) Statement of Operations and Retained Earnings
for the years ended May 31, 1995 and 1996 and
Interim Unaudited Statement of Operations and
Retained Earnings for the nine months ended
February 29, 1996 and February 28, 1997
(iv) Statement of Cash Flows for the years ended
May 31, 1996 and 1995 and Interim Unaudited
Statement of Cash Flows for the nine months
ended February 29, 1996 and February 28, 1997
(v) Notes to Audited Financial Statements and
Interim Unaudited Financial Statements
2
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION.
The following unaudited condensed combined pro forma financial
statements of the Company, reflecting the acquisition of Dollar
Ontario, are attached hereto and made a part hereof:
(i) Unaudited Condensed Combined Pro Forma Financial Data
(ii) Unaudited Condensed Combined Pro Forma Balance Sheet as of
December 31, 1996
(iii) Unaudited Condensed Combined Pro Forma Income Statement for
the Fiscal Year ended June 30, 1996
(iv) Unaudited Condensed Combined Pro Forma Income Statement for
the six months ended December 31, 1996
(v) Notes to Unaudited Condensed Combined Pro Forma Financial
Data
(c) EXHIBITS.
2.1 Purchase Agreement, dated as of March 31, 1997, among Dollar
Financial Group, Inc., Dollar Financial Canada, LTD.,
Canadian Capital Corporation, Dollar Ontario LTD. and Gus E.
Baril, Leslie A. Baril and the Baril Family Trust. The
schedules to the Purchase Agreement and the exhibits thereto
have been omitted. The Company will furnish supplementally
to the Commission any of the schedules or exhibits upon
request.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
as amended, the registrant has duly caused this Amendment to be signed on its
behalf by the undersigned hereunto duly authorized.
DOLLAR FINANCIAL GROUP, INC.
Date: May 9, 1997 By: /s/ Donald F. Gayhardt
---------------------------------
Donald F. Gayhardt,
Executive Vice President
and Chief Financial Officer
4
<PAGE>
AUDITORS' REPORT
To the Directors of
Canadian Capital Corporation
We have audited the balance sheets of Canadian Capital Corporation
as at May 31, 1996 and 1995 and the statements of operations and retained
earnings and cash flows for the two years then ended. These financial statements
are the responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the company as at May 31, 1996 and
1995 and the results of its operations and the changes in its cash flows for the
years then ended in accordance with generally accepted accounting principles.
/s/ BDO DUNWOODY
Chartered Accountants
Toronto, Ontario
July 26, 1996
5
<PAGE>
CANADIAN CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
As at
As at May 31, February 28,
----------------------------------------- -----------------------
1995 1996 1997
------------------ ------------------ -----------------------
$CN $CN $CN
(unaudited)
<S> <C> <C> <C>
ASSETS
Current
Cash.......................................... 3,925,080 4,134,716 2,743,104
Accounts receivable........................... 279,704 334,630 442,763
Prepaid expenses.............................. 320,500 452,748 247,668
Loan receivable (Note 2)...................... 28,545 36,375 2,373,039
Income taxes receivable ...................... 1,560 --- ---
------------------ ------------------ -----------------------
4,555,389 4,958,469 5,806,574
Capital assets (Note 3).......................... 4,329,415 4,367,409 4,232,914
Other assets (Note 4)............................ 455,500 424,234 400,784
Deferred taxes................................... 22,759 9,290 9,290
------------------ ------------------ -----------------------
9,363,063 9,759,402 10,449,562
================== ================== =======================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable.............................. 2,136,586 1,907,243 1,623,124
Management salaries payable................... 2,610,000 3,050,000 3,000,000
Income taxes payable.......................... --- 6,320 14,416
Current portion of long-term debt (Note 5).... 500,664 391,466 70,469
------------------ ------------------ -----------------------
5,247,250 5,355,029 4,708,009
Long-term debt (Note 5) 391,979 --- ---
Due to shareholders (Note 6) 3,490,804 4,290,683 4,848,363
Other Liabilities (Note 7)....................... --- --- 688,285
------------------ ------------------ -----------------------
Total liabilities................................ 9,130,033 9,645,712 10,244,657
------------------ ------------------ -----------------------
Shareholders' equity
Share capital ................................ 105 105 105
Retained earnings 232,925 113,585 204,800
------------------ ------------------ -----------------------
Total shareholders' equity....................... 233,030 113,690 204,905
------------------ ------------------ -----------------------
9,363,063 9,759,402 10,449,562
================== ================== =======================
</TABLE>
On behalf of the board:
____________________________Director
____________________________Director
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
CANADIAN CAPITAL CORPORATION
STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Year ended May 31, Nine months ended
------------------------------------------ ---------------------------------------
February 29, February 28,
1995 1996 1996 1997
------------------- ------------------ ------------------- ---------------
$CN $CN $CN $CN
(unaudited)
<S> <C> <C> <C> <C>
Revenue................................... 13,689,864 14,847,823 10,873,798 11,770,158
Expenses
Amortization........................... 292,936 309,325 215,196 244,494
Amortization of goodwill............... 31,266 31,266 23,450 23,450
Franchise royalties.................... 976,196 1,046,015 783,358 826,604
General and administrative............. 3,174,509 3,324,246 2,238,719 2,144,252
Interest and bank charges ............. 523,910 508,469 376,510 321,176
Interest on long-term debt............. 99,650 55,372 46,804 11,375
Loss on disposal of capital assets..... 9,023 --- --- 11,886
Management salaries.................... 2,610,000 3,050,000 2,287,500 3,000,000
Rent................................... 1,183,054 1,139,382 838,136 943,415
Salaries and benefits ................. 4,600,769 5,208,762 3,738,270 4,043,213
------------------- ------------------ ------------------- ----------------
13,501,313 14,672,837 10,547,943 11,569,865
------------------- ------------------ ------------------- ----------------
Income before income taxes................ 188,551 174,986 325,855 200,293
------------------- ------------------ ------------------- ----------------
Income taxes
Current................................ 45,181 48,857 43,959 44,078
Deferred............................... 5,080 13,469 --- ---
------------------- ------------------ ------------------- ----------------
50,261 62,326 43,959 44,078
------------------- ------------------ ------------------- ----------------
Net income................................ 138,290 112,660 281,896 156,215
Retained earnings, beginning of year...... 159,635 232,925 232,925 113,585
------------------- ------------------ ------------------- ----------------
297,925 345,585 514,821 269,800
------------------- ------------------ ------------------- ----------------
Dividends
Common shares ......................... --- 167,000 167,000 ---
Preference shares...................... 65,000 65,000 65,000 65,000
------------------- ------------------ ------------------- ----------------
65,000 232,000 232,000 65,000
------------------- ------------------ ------------------- ----------------
Retained earnings, end of year............ 232,925 113,585 282,821 204,800
=================== ================== =================== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
CANADIAN CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended May 31, Nine months ended
--------------------------------- -------------------------------
February 29, February 28,
1995 1996 1996 1997
--------------- ---------------- -------------------------------
$CN $CN $CN $CN
Cash provided by (used in) (unaudited)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................................. 138,290 112,660 281,896 156,215
Items not involving cash
Amortization............................................ 324,202 340,591 238,646 267,944
Deferred income taxes................................... 5,080 13,469 --- ---
Loss on disposal of capital assets...................... 9,023 --- --- ---
--------------- ---------------- ---------------- -------------
476,595 466,720 520,542 424,159
Changes in non-cash working capital balances
Accounts receivable........................................ (150,718) (54,926) (19,212) (108,133)
Prepaid expenses........................................... (4,776) (132,248) (172,871) 205,080
Accounts payable and other liabilities..................... 36,604 (229,343) (444,174) 404,166
Income taxes............................................... (7,996) 7,880 6,908 8,096
Management salaries payable................................ 200,000 440,000 (322,500) (50,000)
--------------- ---------------- ---------------- -------------
549,709 498,083 (431,307) 883,368
--------------- ---------------- ---------------- -------------
INVESTING ACTIVITIES
Loans receivable........................................... 3,550 (7,830) (2,329,800) (2,336,664)
Purchase of capital assets................................. (296,380) (347,319) (255,971) (109,999)
--------------- ---------------- ---------------- -------------
(292,830) (355,149) (2,585,771) (2,446,663)
--------------- ---------------- ---------------- -------------
FINANCING ACTIVITIES
Long-term debt............................................. (500,110) (501,177) (375,839) (320,997)
Due to shareholder......................................... 786,529 799,879 1,443,730 557,680
Dividends paid............................................. (65,000) (232,000) (232,000) (65,000)
--------------- ---------------- ---------------- -------------
221,419 66,702 835,891 171,683
--------------- ---------------- ---------------- -------------
Increase in cash.............................................. 478,298 209,636 (2,181,187) (1,391,612)
Cash and equivalents, beginning of year....................... 3,446,782 3,925,080 3,925,080 4,134,716
--------------- ---------------- ---------------- -------------
Cash and equivalents, end of year............................. 3,925,080 4,134,716 1,743,893 2,743,104
=============== ================ ================ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
CANADIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO FEBRUARY 29, 1996 AND FEBRUARY 28, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Capital Assets Capital assets are stated at cost less
accumulated amortization.
Amortization is provided as follows:
Buildings - 5% declining balance basis
Furniture and fixtures - 20% declining balance basis
Signs - 20% declining balance basis
Automobiles - 30% declining balance basis
Computer equipment - 30% declining balance basis
Leasehold improvements - Straight line basis over term
of lease plus one renewal
period
Franchise fees - Straight line basis over the
ten year life of the franchise
agreement
Deferred Income
Taxes Deferred income taxes result from recording amortization in
the accounts in excess of capital cost allowance claimed for
income tax purposes.
Interim Financial
Information The financial information presented as of and for the
periods ending February 29, 1996 and February 28, 1997 has
been prepared by management from the books and records
without audit or review. Such financial information does not
include all disclosures required by generally accepted
accounting principles. In the opinion of management, all
adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the
financial informationfor the periods indicated have been
included. The data disclosed in these notes to financial
statements related to the interim information is also
unaudited.
9
<PAGE>
CANADIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO FEBRUARY 29, 1996 AND FEBRUARY 28, 1997
2. LOAN RECEIVABLE
<TABLE>
<CAPTION>
May 31, February 28,
----------------------------------------------- -----------------------
1995 1996 1997
------------------- ------------------- -----------------------
$CN $CN $CN
(unaudited)
<S> <C> <C> <C>
Baril Equities LTD., affiliated company(a) 28,545 36,375 53,661
Willelco Financial, Inc., affiliated company --- --- 1,669,378
Commission Exchange, affiliated company --- --- 650,000
------------------- ------------------- -----------------------
28,545 36,375 2,373,039
==================== =================== =======================
</TABLE>
(a)The loan is interest free and due on demand.
3. CAPITAL ASSETS
<TABLE>
<CAPTION>
May 31,
--------------------------------------------------------------------------------------------
1995 1996
------------------------------------------ --------------------------------------------
Accumulated Accumulated
Cost Amortization Cost Amortization
------------------ --------------------- -------------------- -------------------
$CN $CN $CN $CN
<S> <C> <C> <C> <C>
Land 1,492,462 --- 1,492,462 ---
Buildings....................... 2,419,496 429,385 2,419,496 532,841
Furniture and fixtures.......... 795,092 441,372 868,905 519,229
Signs ........................ 234,036 131,290 247,143 153,284
Automobiles..................... 24,168 18,365 24,163 20,106
Computer equipment.............. 193,919 141,155 413,168 175,584
Leasehold improvements.......... 493,737 252,213 534,891 301,708
Franchise fees.................. 233,613 143,328 233,613 163,680
------------------ --------------------- -------------------- --------------------
5,886,523 1,557,108 6,233,841 1,866,432
------------------ --------------------- -------------------- --------------------
Net Book Value.................. 4,329,415 4,367,409
===================== ====================
</TABLE>
10
<PAGE>
CANADIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO FEBRUARY 29, 1996 AND FEBRUARY 28, 1997
3. CAPITAL ASSETS-CONTINUED
February 28, 1997
--------------------------------------------
Accumulated
Cost Amortization
------------------- -------------------
$CN $CN
(unaudited)
Land 1,492,462 ---
Buildings....................... 2,436,495 606,657
Furniture and fixtures.......... 886,790 572,172
Signs ........................ 268,242 170,126
Computer equipment.............. 418,277 223,644
Leasehold improvements.......... 498,900 251,291
Franchise fees.................. 233,613 177,975
------------------- -------------------
6,234,779 2,001,865
------------------- -------------------
Net Book Value.................. 4,232,914
===================
4. OTHER ASSETS
<TABLE>
<CAPTION>
May 31,
----------------------------------------------------------------------------------------------------
1995 1996
----------------------------------------------- -----------------------------------------------
Accumulated Accumulated
Cost Amortization Cost Amortization
-------------------- --------------------- --------------------- -------------------
$CN $CN $CN $CN
<S> <C> <C> <C> <C>
Goodwill................... 535,805 107,161 535,805 133,951
Acquisition costs.......... 44,760 17,904 44,760 22,380
-------------------- --------------------- --------------------- -------------------
580,565 125,065 580,565 156,331
-------------------- --------------------- --------------------- -------------------
Net book value............. 455,500 424,234
===================== ===================
</TABLE>
February 28, 1997
-----------------------------------------------
Accumulated
Cost Amortization
-------------------- ---------------------
$CN $CN
(unaudited)
Goodwill.................... 535,805 154,044
Acquisition costs........... 44,760 25,737
-------------------- ---------------------
580,565 179,781
-------------------- ---------------------
Net book value.............. 400,784
=====================
11
<PAGE>
CANADIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO FEBRUARY 29, 1996 AND FEBRUARY 28, 1997
5. LONG-TERM DEBT
<TABLE>
<CAPTION>
May 31, February 28,
------------------------------- ---------------
1995 1996 1997
------------- ------------ ------------
$CN $CN $CN
(unaudited)
<S> <C> <C> <C>
First mortgage, repayable $CN 550 per month plus interest at 7% per annum,
secured by property at 1576 Queen Street,
maturing September 1996 ........................................................ 82,795 76,282 ---
First mortgage, repayable $CN 530 per month plus interest at 7% per annum,
secured by property at 1576 Queen Street, maturing
September --- --- 65,292
1998.............................................................................
Royal Bank of Canada, repayable $CN 16,028 monthly plus interest at prime plus
3/4%, secured by property at 1022 Bloor Street West and 1702 Eglington Avenue
West, and a second charge on
1576 Queen Street due December 1996............................................. 275,146 82,810 ---
Royal Bank of Canada, repayable $CN 8,333 monthly plus interest at prime plus
3/4%, secured by property at 268 Parliament Street,
due December 1996 120,339 44,343 ---
Royal Bank of Canada, repayable $CN 9,722 monthly plus interest at prime plus
3/4%, secured by property at 492 Bloor Street West,
due March 1997 204,170 87,506 ---
Royal Bank of Canada, repayable $CN 9,139 monthly plus interest at prime plus
3/4%, secured by property at 7051-7055 Yonge
Street, due April 1997.......................................................... 210,193 100,525 5,177
------------- ------------ -------------
892,643 391,466 70,469
Less: current portion 500,664 391,466 70,469
------------- ------------ -------------
391,979 --- ---
============= ============ =============
</TABLE>
6. DUE TO SHAREHOLDERS
<TABLE>
<CAPTION>
May 31, February 28,
--------------------------------------------- ---------------------------
1995 1996 1997
------------------ --------------------- ---------------------------
$CN $CN $CN
(unaudited)
<S> <C> <C> <C>
Interest bearing at 8% per annum ...... 1,586,150 2,219,029 2,781,718
Non-Interest bearing .................. 1,904,654 2,071,654 2,066,645
------------------ --------------------- ---------------------------
3,490,804 4,290,683 4,848,363
================== ===================== ===========================
</TABLE>
The loans are secured by a second charge against the assets of the company.
12
<PAGE>
CANADIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO FEBRUARY 29, 1996 AND FEBRUARY 28, 1997
7. OTHER LIABILITIES
In June 1996, the Company entered into a six year agreement with Western
Union retroactive to January 1, 1996. A signing bonus of $CN 901,000 was
received by the Company. The bonus will be recognized in income over the
term of the Agreement. Revenue of $CN 62,500 and $CN 150,000 was recorded
for the year ended May 31, 1996 and the unaudited nine months ended
February 28, 1997, respectively.
8. SHARE CAPITAL
Authorized
Unlimited number of common shares
Unlimited number of non-voting preference
shares, redeemable and retractable at $CN 1,000
per share, non-cumulative dividends at 1/2%
per month of the redemption amount
Issued
<TABLE>
<CAPTION>
May 31, February 28,
----------------------------------------------------- --------------------------
1995 1996 1997
------------------------- ------------------------ --------------------------
$CN $CN $CN
(unaudited)
<S> <C> <C> <C>
843 Common shares............. 88 88 88
1,300 Preference shares......... 17 17 17
------------------------- ------------------------ --------------------------
105 105 105
========================= ======================== ==========================
</TABLE>
9. BANK LOAN FACILITY
The Company has a revolving credit facility for operations which is
secured by a general security agreement providing a first charge over all
assets of the Company other than real estate, hypothecation of deposit
balances, a debenture in the amount of $CN 3,000,000, a personal guarantee
and a postponement of claim by two shareholders in the amount of $CN
4,905,000. The debenture, the guarantee and the postponement of claim are
secured by personal and corporate owned real estate. The Company had
outstanding loans of $CN 3,140,000, $CN 3,050,000 and $CN 2,760,000 at May
31, 1995 and 1996 and at February 28, 1997, respectively, under this
facility which have been reflected in these financial statements as an
offset against the compensating deposit balances.
13
<PAGE>
CANADIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO FEBRUARY 29, 1996 AND FEBRUARY 28, 1997
10. RELATED PARTY TRANSACTIONS
During the year the Company paid and received the following amounts from
related party transactions with a shareholder of the Company:
<TABLE>
<CAPTION>
May 31, February 29, February 28,
------------------------------------------------ ----------------- ---------------------
1995 1996 1996 1997
-------------------- ------------------ ----------------- ---------------------
$CN $CN $CN $CN
(unaudited)
<S> <C> <C> <C> <C>
Rent expense.................... 138,872 129,684 97,263 126,868
Interest expense................ 118,807 165,318 120,684 85,105
Rental income................... 31,880 35,460 24,595 20,895
Management fee income........... 18,719 12,000 16,306 14,200
------ ------ ------ ------
308,278 342,462 258,848 247,068
======= ======= ======= =======
</TABLE>
11. COMMITMENTS
The Company has leased realty and other equipment at an annual rental for
the next five years as follows:
$CN
1997..................... 948,562
1998..................... 820,552
1999..................... 614,862
2000..................... 388,407
2001..................... 162,658
The Company has contracted to pay royalties in the amount of approximately
7% of revenue to the national franchisor.
12. CONTINGENT LIABILITIES
The Company had outstanding letters of guarantee in the amount of $CN
196,000, $CN 245,000 and $CN 61,000 as at May 31, 1995 and 1996 and at
February 28, 1997, respectively.
13. DIFFERENCES BETWEEN CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
("CN GAAP") AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
("US GAAP") (UNAUDITED)
The accompanying consolidated financial statements have been prepared in
accordance with CN GAAP, and are presented in Canadian Dollars. The
accounting policies of the Company also comply, in all material respects,
with US GAAP as at May 31, 1995 and 1996, and at February 28, 1997 and
therefore the financial results would not require amendment if the
financial statements were to be prepared in accordance with US GAAP.
14
<PAGE>
CANADIAN CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO FEBRUARY 29, 1996 AND FEBRUARY 28, 1997
14. SUBSEQUENT EVENTS (UNAUDITED)
On April 18, 1997, substantially all of the operating assets of the
Company, other than land and buildings, were sold to Dollar Ontario LTD.,
a newly formed company owned by the Company's shareholders. All of the
outstanding common stock of Dollar Ontario LTD was in turn acquired by
Dollar Financial Canada, LTD., a wholly owned subsidiary of Dollar
Financial Group Inc. The sale of the Company's operating assets was
effected through an interim amalgamation of the Company and several other
entities under common control.
15
<PAGE>
UNAUDITED CONDENSED COMBINED PRO FORMA FINANCIAL DATA
The following unaudited condensed combined pro forma balance sheet
as of December 31, 1996 and the unaudited condensed combined pro forma
statements of income for the fiscal year ended June 30, 1996 and for the six
months ended December 31, 1996 set forth herein give effect to the acquisitions
by Dollar Financial Group, Inc. (The "Company" or "DFG") of Chex$Cashed on
September 18, 1995, Anykind Check Cashing Centers, Inc. ("Anykind") on August 8,
1996, ABC Check Cashing, Inc. ("ABC") on August 28, 1996, National Money Mart
Inc. ("Money Mart") and Cash-N-Dash Check Cashing, Inc. ("Cash-N-Dash") on
November 15, 1996, C&C Check Cashing, Inc. ("C&C") on November 21, 1996 and
Dollar Ontario LTD. ("DOL") on April 18, 1997 (collectively the "Acquisitions").
The unaudited condensed combined balance sheet assumes the acquisition of DOL
occurred on December 31, 1996. The unaudited condensed combined pro forma
statements of income assume all of the Acquisitions occurred as of July 1, 1995.
The unaudited condensed combined pro forma statements of income also give effect
to the use of the net proceeds of $105.7 million from the November 15, 1996
issuance of 107/8% Senior Notes due 2006 (the "Offering") by the Company, a
wholly owned subsidiary of DFG Holdings, Inc. ("Holdings"), and the net proceeds
of $21.7 million from the sale of $22.0 million of Holdings Common Stock on
August 8, 1996 (the "Equity Transaction") as if such transactions had occurred
on July 1, 1995. See notes to the unaudited condensed combined pro forma
financial statements for further explanation of these transactions.
The unaudited condensed combined pro forma financial statements are
not necessarily indicative of what the Company's results of operations and
balance sheet would have been had the Acquisitions, the Equity Transaction and
the Offering been consummated at the indicated dates, nor are they necessarily
indicative of the Company's results of operations and balance sheet for any
future period.
For convenient translations purposes, an exchange rate of
$1.00=C$1.364 as of December 31, 1996 has been utilized in connection with the
acquisitions of Money Mart and DOL, both of which are Canadian corporations. For
purposes of translating Money Mart's and DOL's operating results for the year
ended June 30, 1996, an average exchange rate of $1.00=C$1.364 has been used;
for purposes of translating Money Mart's and DOL's operating results for the six
months ended December 31, 1996, an average exchange rate of $1.00=C$1.362 has
been used.
16
<PAGE>
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
DFG DOL(a) ADJUSTMENTS(a) COMBINED
--- --- -------------- --------
<S> <C> <C> <C> <C>
ASSETS:
Cash..................................................... $61,911 --- $(13,457) $48,454
Accounts receivable...................................... 7,892 324 --- 8,216
Properties and equipment, net............................ 6,868 615 --- 7,483
Intangible assets........................................ 94,028 --- 13,000 107,028
Prepaid expenses and other assets........................ 11,189 120 --- 11,309
-------- ------ ----- --------
Total assets...................................... $181,888 $1,059 (457) $182,490
======== ====== ===== ========
LIABILITIES AND SHAREHOLDER'S EQUITY:
Accounts payable and accrued expenses.................... $32,259 $602 --- $32,861
Revolving credit facility................................ --- --- --- ---
Long-term debt and subordinated notes payable............ 3,006 --- --- 3,006
10 7/8% Senior Notes due 2006............................. 110,000 --- --- 110,000
Shareholder's Equity..................................... 36,623 457 (457) 36,623
-------- ------ ------ --------
Total liabilities and shareholder's equity........ $181,888 $1,059 $(457) $182,490
======== ====== ====== ========
</TABLE>
17
<PAGE>
UNAUDITED CONDENSED COMBINED PRO FORMA INCOME
STATEMENT AND OTHER OPERATING DATA FOR THE
FISCAL YEAR ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL(b)
--------------------------------------------------------------------------------------
CASH
CHEX$ MONEY -N-
DFG CASHED ANYKIND ABC MART DASH C&C DOL
---- ------- ------- - ---- ---- ---- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........................... $ 42,430 $ 1,269 $ 22,748 $ 4,807 $ 9,413 $ 6,232 $ 4,831 $10,968
Store and regional expenses:
Salaries and benefits........... 13,975 441 6,757 1,564 2,233 1,837 1,882 3,052
Occupancy....................... 4,031 160 2,602 620 737 811 699 1,141
Depreciation.................... 893 12 201 156 295 129 196 138
Other........................... 11,709 229 5,624 1,072 2,243 1,119 1,219 2,567
------- ---- ----- ----- ----- ----- ------ -----
Total store and regional
expenses........................ 30,608 842 15,184 3,412 5,508 3,896 3,996 6,898
Corporate expenses................. 5,360 544 4,827 1,141 3,573 839 910 3,588
Loss on store closings
and sales....................... 4,501(b) -- -- 3 -- -- -- ---
Other depreciation and
amortization.................... 1,858 1 7 34 68 57 21 115
Interest expense................... 3,385 27 509 129 174 83 53 233
------ --- --- --- --- -- --- ---
Income (loss) before
income taxes.................... (3,282) (145) 2,221 88 90 1,357 (149) 134
-------- ----- ----- -- -- ----- ----- ---
Income tax (benefit)
provision ...................... (1,214)(i) (40) 639 2 18 26 (6) 43
---------- ---- --- - -- -- --- --
Net income (loss).................. $ (2,068) $ (105) $ 1,582 $ 86 $ 72 $ 1,331 $ (143) $91
======== ====== ======= ==== ==== ======= ====== ===
Pro forma Adjusted
EBITDA (l)......................
</TABLE>
{TABLE CONTINUED ON FOLLOWING PAGE]
18(a)
<PAGE>
[TABLE CONTINUED FROM PREVIOUS PAGE]
ADJUSTMENTS
FOR
ACQUISITIONS,
EQUITY PRO
TRANSACTION FORMA
AND THE AS
OFFERING ADJUSTED
--------- --------
Revenues........................... $(762)(d) $101,936
Store and regional expenses:
Salaries and benefits........... -- 31,741
Occupancy....................... 190(e) 10,991
Depreciation.................... -- 2,020
Other........................... -- 25,782
--- ------
Total store and regional
expenses........................ 190 70,534
Corporate expenses................. (11,427)(f) 9,355
Loss on store closings
and sales....................... -- 4,504
Other depreciation and
amortization.................... 3,075 (g) 5,236
Interest expense................... 8,197 (h) 12,790
--------- ------
Income (loss) before
income taxes.................... (797) (483)
------ -----
Income tax (benefit)
provision ...................... 1,191 (j) 659
--------- ---
Net income (loss).................. $ (1,988) $ (1,142)
======== =========
Pro forma Adjusted
EBITDA (l)...................... $ 24,067
18(b)
<PAGE>
UNAUDITED CONDENSED COMBINED PRO FORMA INCOME
STATEMENT AND OTHER OPERATING DATA FOR THE
SIX MONTHS ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL(c)
----------------------------------------------------------------------------------------
CASH
MONEY -N-
DFG ANYKIND ABC MART DASH C&C DOL
---- ------- ---- ---- ---- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues........................... $ 32,900 $2,571 $727 $3,840 $2,170 $2,126 $5,889
Store and regional expenses:
Salaries and benefits........... 11,174 518(k) 237 873 716 816 1,711
Occupancy....................... 3,317 291 99 327 314 288 585
Depreciation.................... 570 36 25 111 32 55 74
Other........................... 8,542 722 190 722 343 418 1,314
----- --- --- --- --- --- -----
Total store and regional
expenses........................ 23,603 1,567 551 2,033 1,405 1,577 3,684
Corporate expenses................. 3,023 2,032 182 1,711 337 493 1,869
Gain on store closings
and sales....................... 7 -- -- -- -- -- --
Other depreciation and
amortization.................... 1,590 1 4 26 57 11 49
Interest expense................... 3,712 8 5 47 29 18 61
----- - - -- -- -- --
Income (loss) before
income taxes and
extraordinary item............. 965 (1,037) (15) 23 342 27 226
Income tax provision .............. 617 6 -- -- 5 1 22
--- - -- -- - - --
Income (loss) before ex-
traordinary item 348 (1,043) (15) 23 337 26 204
Extraordinary loss on debt
extinguishment (net of
income tax benefit of
$(1,042) (2,023) -- -- -- -- -- --
--------- -- -- -- -- -- --
Net income (loss).................. $ (1,675) $(1,043) $ (15) $ 23 $ 337 $ 26 $204
========== ======== ======= ====== ======= ======= ====
Pro forma Adjusted
EBITDA (l)......................
</TABLE>
[TABLE CONTINUED ON FOLLOWING PAGE]
19(a)
<PAGE>
[TABLE CONTINUED FROM PREVIOUS PAGE]
UNAUDITED CONDENSED COMBINED PRO FORMA INCOME
STATEMENT AND OTHER OPERATING DATA FOR THE
SIX MONTHS ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
ADJUSTMENTS
FOR
ACQUISITIONS,
EQUITY PRO
TRANSACTION FORMA
AND THE AS
OFFERING ADJUSTED
-------- --------
Revenues........................... $(418)(d) $49,805
Store and regional expenses:
Salaries and benefits........... -- 16,045
Occupancy....................... 95(e) 5,316
Depreciation.................... -- 903
Other........................... -- 12,251
-- ------
Total store and regional
expenses........................ 95 34,515
Corporate expenses................. (5,279)(f) 4,368
Gain on store closings
and sales....................... -- 7
Other depreciation and
amortization.................... 814(g) 2,552
Interest expense................... 2,515(h) 6,395
-------- -----
Income (loss) before
income taxes and
extraordinary item............. 1,437 1,968
Income tax provision .............. 592(j) 1,243
------ -----
Income (loss) before ex-
traordinary item 845 725
Extraordinary loss on debt
extinguishment (net of
income tax benefit of
$(1,042) -- (2,023)
-- -------
Net income (loss).................. $845 $(1,298)
==== ========
Pro forma Adjusted
EBITDA (l)...................... $11,825
19(b)
<PAGE>
NOTES TO UNAUDITED CONDENSED COMBINED
PRO FORMA FINANCIAL DATA
ACQUISITIONS
As indicated below, the Company has made the following acquisitions
since July 1995:
BUSINESS DATE OF PURCHASE PURCHASE PRICE
- ------------------ ------------------------- --------------------------
Chex$Cashed 9/95 $ 7.4 million
AnyKind 8/96 31.0 million
ABC ............ 8/96 6.0.million
Money Mart........ 11/96 17.7.million
Cash-N-Dash....... 11/96 7.3.million
C&C ............ 11/96 3.8.million
DOL............... 4/97 13.3 million
The acquisitions of AnyKind and ABC were funded in part through the
Equity Transaction, the issuance of $2.0 million of Holdings Common Stock to the
selling shareholders of AnyKind and additional borrowings of $35.0 million under
a credit facility then existing ("the "Existing Credit Facility").
The aforementioned purchase prices for Cash-N-Dash and C&C include
contingent payments to the sellers of up to $750,000 payable over four years for
Cash-N-Dash and up to $300,000 payable over three years for C&C based on future
revenues of the Company.
The acquisitions of ABC and Cash-N-Dash were made through the
acquisition of assets and the assumption of certain liabilities, while the
acquisitions of Chex$Cashed, AnyKind, Money Mart, C&C and DOL were made through
the purchase of substantially all of the outstanding common stock of each
company. Each acquisition was accounted for under the purchase method of
accounting.
The pro forma results of operations adjustments for the year ended
June 30, 1996 and for the six months ended December 31, 1996 are those necessary
to reflect the Company's net income as if the Acquisitions, the Equity
Transaction and the Offering had taken place as of July 1, 1995.
The pro forma adjustments are based upon available information and
upon certain assumptions that the Company believes are reasonable. The unaudited
pro forma financial statement data are provided for informational purposes only
and do not purport to be indicative of the Company's results of operations that
would actually have been obtained had such acquisitions been completed as of
July 1, 1995, or that may be obtained in the future.
OFFERING
The Company has implemented a financing plan which included the
Offering with gross proceeds of $110.0 million and the establishment of a new
revolving credit facility (the "New Revolving Credit Facility"), which provides
the Company with up to $25.0 million of availability. The proceeds of the
Offering, together with borrowings under the New Revolving Credit Facility, were
used to repay all outstanding indebtedness under the Existing Credit Facility,
to fund the cash purchase price of the C&C, CND, Money Mart and DOL
acquisitions, including initial working capital, and fees and expenses of the
20
<PAGE>
Offering. The repayment of all of the Company's existing indebtedness under the
Existing Credit Facility resulted in an extraordinary loss, net of taxes, in the
six months ended December 31, 1996 of approximately $2.0 million.
NOTES
(a) Represents the recording of assets and liabilities of DOL under the
purchase method of accounting as though the acquisition had occurred on
December 31, 1996. These amounts include recording the excess of cost over
the fair value of net assets acquired (goodwill).
(b) Represents (i) the historical consolidated statement of income of the
Company, (ii) the historical results of operations of Chex$Cashed for the
period from July 1, 1995 to September 18, 1995 (date of acquisition) and
(iii) the historical consolidated statements of income of AnyKind, ABC,
Money Mart, Cash-N-Dash, C&C and DOL, respectively, for the twelve months
ended June 30, 1996. The historical results of operations of the Company
for the year ended June 30, 1996 include a pretax charge of approximately
$4,400,000 associated with the sale and closure of 19 store locations
purchased in February 1995. The charge includes $3,300,000 for the
write-off of the goodwill associated with the original acquisition of these
stores, $600,000 for the write-off of store fixtures and equipment,
$350,000 for the early termination of store leases and $150,000 for the
accrual for other costs related to closing these store locations. Included
in the accompanying historical results of operations of the Company are
revenues of $1,470,000, store expenses of $2,352,000 and amortization
expense of $56,000 related to these stores.
(c) Represents (i) the historical consolidated statement of income of the
Company for the six months ended December 31, 1996, (ii) the historical
results of operations of AnyKind for the period July 1, 1996 to August 8,
1996 (date of acquisition), (iii) the historical results of operations of
ABC for the period from July 1, 1996 to August 28, 1996 (date of
acquisition), (iv) the historical results of operations of Money Mart and
Cash-N-Dash for the period from July 1, 1996 to November 15, 1996 (date of
acquisitions), (v) the historical results of operations of C&C for the
period from July 1, 1996 to November 21, 1996 (date of acquisition) and
(vi) the historical results of operations of DOL for the period from July
1, 1996 to December 31, 1996.
(d) Reflects a decrease in revenues by the franchise fees paid to Money Mart
from DOL of $762,000 and $418,000 for the year ended June 30, 1996 and the
six months ended December 31, 1996, respectively.
(e) Reflects an increase in rent expense for properties owned by the previous
shareholders of DOL but not acquired by the Company. Coincident with the
acquisition of DOL, the Company has entered into lease agreements to rent
the retail locations of these properties. The pro forma adjustment reflects
rent expense associated with these leases.
21
<PAGE>
(f) Corporate expenses were reduced by (dollars in thousands):
<TABLE>
<CAPTION>
Year Ended Six Months Ended December
June 30, 1996 31, 1996
----------------------------- -----------------------------
<S> <C> <C>
Consulting and management fees paid
to former shareholders of
AnyKind............................... $4,154 $ 1,301
Money Mart............................ 1,946 1,046
ABC................................... 422 53
Chex$Cashed........................... 171 ---
DOL................................... 2,236 1,469
Compensation and benefits paid to
certain former executives of
AnyKind.......................... $ 646 $ 419
ABC.............................. 281 58
C&C.............................. 682 428
Chex$Cashed...................... 127 87
Franchise fees paid to acquiror......... $ 762 $ 418
------ ------
$11,427 $5,279
======= ======
</TABLE>
Pursuant to the respective purchase agreements, the above shareholders' and
executives' consulting and/or employment agreements were cancelled or
revised at the time of acquisition. The Company believes that the inclusion
in the unaudited condensed combined pro forma income statements of the full
amounts paid under these agreements would be inappropriate since they
represent expenses incurred which the Company would not have recognized
during the period had the Company acquired the companies at the beginning
of the period.
(g) Reflects an increase in amortization expense in excess of historical
amounts as a result of the following factors: (i) aggregate excess of the
purchase price over the fair value of identifiable net assets, or goodwill,
of approximately $75.5 million, amortized using the straight-line method
over a useful life of thirty years, resulting in additional amortization of
approximately $2.5 million and (ii) other intangible assets of
approximately $700,000 (primarily costs assigned to contracts acquired),
amortized on a straight-line method over a the remaining contractual lives
of the underlying contracts, resulting in additional amortization of
approximately $600,000. The total purchase price for each acquisition has
been allocated to the assets acquired, including identifiable intangible
assets, and liabilities assumed based on estimated fair values.
(h) Reflects an adjustment for interest expense ($11,963,000 and $5,981,000 for
the year ended June 30, 1996 and for the six months ended December 31,
1996, respectively) to give effect to the Offering assuming an interest
rate of 107/8% and gross proceeds of $110 million plus amortization of
related deferred financing fees less elimination of interest expense
($4,290,000 and $3,728,000 for the year ended June 30, 1996 and for the six
months ended December 31, 1996, respectively) as a result of the repayment
of all outstanding indebtedness under the Existing Credit Facility and a
reduction in principal of revolving indebtedness under the Existing Credit
Facility through the use of the proceeds from the Equity transaction and
the Offering, as if such transactions had occurred at July 1, 1995. This
adjustment includes non-cash amortization of deferred financing fees
associated with the Offering of $430,000 and $215,000 for the year ended
June 30, 1996, respectively. The adjustment also includes the commitment
fee of 3/8% on the estimated unused portion of the New Revolving Credit
Facility of $25.0 million ($94,000 and $47,000 for the year ended June 30,
1996 and the six months ended December 31, 1996, respectively).
22
<PAGE>
(i) The income tax expense for the twelve months ended June 30, 1996 includes
a benefit of $456,000 due to the change in the Company's valuation
allowance. Although realization is not assured, management has determined,
based on the Company's history of earnings and its expectation for the
future, that taxable income of the Company will more likely than not be
sufficient to fully utilize its deferred income tax assets.
(j) Represents the income tax impact of the Acquisitions as if the acquired
companies were wholly owned by the Company for the year ended June 30,
1996 and for the six months ended December 31, 1996, based on the
Company's estimated tax rate of 34%, after giving effect to the pro forma
adjustments including the non-deductible amortization of intangible assets
(goodwill). The pro forma adjustment for income taxes is less than the
statutory federal rate of 34% due to non deductible amortization of
intangible assets and a provision for income taxes on the historical
results of operations of certain acquired companies which previously
elected to be taxed as "S" corporations as defined in the United States
Internal Revenue Code of 1986, as amended, and for which no federal taxes
were provided in their respective historical income statements.
(k) The unaudited results of AnyKind for the period July 1, 1996 through
August 8, 1996 (the date of the acquisition by the Company) are presented
herein. The Company has determined that the salaries and benefits
component of AnyKind's store expenses (approximately 20.1% of revenues)
for this period immediately preceding the acquisition are abnormally low
as compared to AnyKind's historical expense levels (29.7% of revenues for
the twelve months ended June 30, 1996.) For the period August 8, 1996
through December 31, 1996, the salaries and benefits expenses of the
acquired stores as a percentage of revenues was approximately 33.2%.
Furthermore, the Company's consolidated store salaries and benefits
expenses for the six months ended December 31, 1996 as a percentage of
revenues were 34.0%.
(l) Adjusted EBITDA is earnings before interest, taxes, depreciation,
amortization, loss on store closings and sales, and extraordinary losses.
Adjusted EBITDA does not represent cash flows as defined by generally
accepted accounting principles and does not necessarily indicate that cash
flows are sufficient to fund all of the Company's cash needs. Adjusted
EBITDA should not be considered in isolation or as a substitute for net
income (loss), cash flows from operating activities or other measures of
liquidity determined in accordance with generally accepted accounting
principles. Management believes that EBITDA should be reviewed by
prospective investors because the Company uses EBITDA as one means of
analyzing its ability to service its debt, the Company's lenders use
EBITDA for the purpose of analyzing the Company's performance and the
Company understands that EBITDA is used by certain investors as one
measure of a company's historical ability to service its debt. Not all
companies calculate EBITDA in the same fashion and therefore EBITDA as
presented may not be comparable to other similarly titled measures of
other companies.
23
<PAGE>
Exhibit Index
-------------
Exhibit
Number Description
- ------ -----------
2.1 Purchase Agreement, dated as of March 31, 1997, among Dollar Financial
Group, Inc., Dollar Financial Canada, LTD., Canadian Capital
Corporation, Dollar Ontario LTD. and Gus E. Baril, Leslie A. Baril and
the Baril Family Trust. The schedules to the Purchase Agreement and
the exhibits thereto have been omitted. The Company will furnish
supplementally to the Commission any of the schedules or exhibits upon
request.*
- -------------------------------
* Incorporated by reference to the Form 8-K.
24
