From the perspective of the new Finance Manager of FA to respond to the Board of Directors' request to present a "big picture" brief report on FA's financial performance from 2000 to 2004. In particulars, the Board of Directors like to hear from you whether FA is able to generate "value" as measured by ROE going forward; in particular, whether there are any concerns about FA's financial performance. Calculate the ROE from this info.

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Financial Analysis and Forecasting EXHIBIT 2 | Balance Sheets Fiscal Year Three Months Ended Ended Jan. 30, Jan. 28, Feb. 3, Feb. 2, Feb. 1, May 2, Aug. 1, (In thousands) 2000 2001 2002 2003 2004 2004 2004 ASSETS Current Assets: Cash and cash equivalents 3, 183 7,026 21,904 32,203 20,300 13,715 19,309 Short-term Investments 0 18,103 15,292 22,976 Accounts receivable 17,965 19,855 26,894 34,373 45,283 47,434 44,329 Accounts receivable, affiliates 1,608 2,599 9,017 11,062 20,482 20,740 19,933 Other receivables 794 2,279 2,771 884 2,363 3,169 4,868 Notes receivable, affiliates 458 4,404 5.440 Inventories 9,979 12,031 16,159 24,365 28,573 32,974 33,076 Prepaid expenses 3,148 1,909 2,591 . 3,478 5,399 4,675 6,749 Income taxes refundable 861 2,534 1,963 7,946 : 7,449 8,139 Deferred income taxes 3,500 3,809 4,607 9,824 6,453 13,280 20,005 Assets held for sale 36,856 3,374 3,325 Total current assets 41,038 67.611 101,769 141.128 174,113 151,214 165,173 Property and equipment, net 60,584 78,340 112,577 202,558 281, 103 301,160 297,154 Deferred income taxes 1,398 Long-term Investments 17,877 12,700 4,344 0 Long-term notes receivable, affiliates 0 0 0 1,000 7,609 2,988 2,925 - Investments In unconsolidated Joint ventures 2,827 3,400 6,871 12,426 10,728 9,921 Reacquired franchise rights, goodwill, other Intangibles 0 0 16,621 49,354 175,957 176,078 176,045 Other assets 1,938 4,838 8,309 5,232 9,456 12,315 10,390 Total assets 104,958 171,493 255,376 410,487 660,664 654,483 661,60848% Sun Feb 6 4:29 PM Q E Adobe Reader File Edit View Window Help ... 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EXHIBIT 2 | Balance Sheets (continued) Fiscal Year Three Months Ended Ended Jan. 30, Jan. 28, Feb. 3, Feb. 2 Feb. 1, May 2, Aug. 1 (in thousands) 2000 2001 2002 2003 2004 2004 2004 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable 13,106 8,211 12,095 14,055 18,784 18,866 18,817 Book overdraft 0 5,147 9,107 11,375 8,123 12,670 13,107 Accrued expenses 14,080 1,243 26,729 20,981 23,144 27,107 32,249 Arbitration award 9.075 Revolving line of credit 3,526 3,871 Current maturities of long-term debt 2,400 131 3.301 2,842 4,663 5.566 Short-term deb 0 200 Income taxes payable In Total current liabilities 29.586 38.168 52.53 59.687 53.493 63.306 69.739 Deferred Income taxes 579 3,930 3,849 6,374 16,468 25,564 Compensation deferred (unpaid) 190 .106 O 0 Revolving lines of credit 7,288 87,000 72,000 62,000 Long-term debt, net of current portion 20,502 3,912 49,900 48,056 58,469 50,135 Accrued restructuring expenses 4,258 3.109 C 0 Other long-term obligations 1.866 1.736 4,843 5,218 11,211 10,774 12,078 Total long-term liabilities 27,617 6,529 12,685 72,25 152,641 157,711 149,777 Minority Interest ,117 2,491 5,193 2,323 2,815 2.593 SHAREHOLDERS' EQUITY: Common stock, no par value 300,000 shares authorized; Issued and outstanding 85,060 121,052 173,112 294,477 296,812 299,865 Common stock, 10 par value, 1,000 shares authorized; issued and outstanding 4,670 Pald-In capital 10,805 Unearned compensation (188) (186) 119) (62) (47) (31) Notes receivable, employees (2,547) (2,349) (2,580) (558) (383) (383 ) (383) Nonquallfled employee benefit plan assets (126) 138) (339) (369) (264) (264) Nonqualified employee benefit . plan llablity 126 138 369 264 264 Accumulated other comprehensive income (loss) 609 456 (1,486) (1,315) (783) (768) Retained earnings 34,827 421047 68,925 102,403 159,490 135,052 140,816 Total shareholders' equity 47,755 125,679 187,667 273,352 452,207 430,651 439,499 Total Ifabilities and shareholders' equity 104,958 . 171,493 255,376 410,487 660,664 654,483 6 661,608 Source of data: Company filings with the Securities and Exchange Commission (SEC). 2... Open Adobe Reader File Edit View Window Help 3 EXHIBIT 1 | Income Statements (SUS thousands, except per-share amounts ) Three Months Ended Three Months Ended Jan. 30, Jan. 28 Feb. 3 Feb. 2, Feb. 1, Income Statement May 5 May 2. 2000 2001 2002 Aug. 3 2003 Aug. 1, 2004 2003 2004 2003 2004 Total revenues 220,243 300,715 394,354 491.549 665,592 148,660 184,356 Operating expenses 190,003 250,690 159,176 177,448 316,946 381,489 507,396 112,480 141,383 General and administrative 120,573 145,633 expenses 14,856 20,061 27,562 28,897 36,912 8,90 10,664 Depreciation and 9,060 11,845 80% amortization expenses 4,546 6,457 7,959 12,271 Arbitration award 19,723 4,101 6,130 4,536 6,328 (525) Provision for restructuring 9,075 (525) FA Financial Statement Analysis.pdf Impairment charges and closing costs 7,543 1,802 Income from operations 10,838 23,507 41,887 59,817 Interest income 102,086 23,702 18,636 293 2.325 2,980 25,007 11,840 1,966 921 227 Interest expense 176 205 226 (1,525) (607) (337) Equity loss in joint ventures 1,181) (4,409) (866) (1,433) (997) (1,366) (602) (2,008) (1,836) Minority interest (694) (575) (802) (399) (716) 1,147) (2,287) (2,072) (616) Other expense, ne (126) (616) (20) 267 (235) (934) (13) (25) (156) (343) 114 Income before income taxes 9,606 23.783 42,546 54,773 94,677 21,728 Provision for income taxes 16,522 22,454 10,682 3,650 9,058 16,168 21,295 37,590 Discontinued operations 8,588 6,675 9,014 4,438 34,285 439 480. Net income 5,956 14,725 26,378 33,478 57,087 13,140 (24,438) 13,001 5,764 Diluted earnings per share 0.15 0.27 0.45 0.56 0.92 0.22 (0.38) 0.21 0.09 Share price (fiscal year close) 16.22 39.85 30.41 35.64 Number of shares outstanding (millions 39.7 54.5 58.6 59.8 62.1 60.7 63.6 62.1 63.4 B Update Apple ID Settings available until you sign in again. Some account services will not be 48% Sun Feb 6 4:30 PM Q E View... Open Adobe Reader File Edit View Window Help 4 14 Fiscal Year Ended Jan. 30, Jan. 28, Feb. 3 Feb. 2 Feb. 1 2000 2001 2002 2003 2004 Ratio definitions + Liquidity ratios Quick (acid-test) ratio 1.05 1.46 1.63 1.96 2.72 (current assets-inventories)/curr.liab. Current ratio 1.39 1.77 1.94 2.36 3.25 current assets/curr.liab Leverage ratios 80% Debt-to equity (book) 47.96% 0.00% 2.47% 19:46%% 11:26% LT debt/shareholders' equity Debt-to-capital 32.41% 0.00% 2.41% 16.29% 10.12% LT debt/(shareholders' equity + debt) Times interest earned 7.11 38.73 124.29 33.59 23.15 EBIT/interest expense FA Financial Statement Analysis.pdf Assets to equit 2.20 1:36 1.36 1.50 1.46 total assets/shareholders' equity Activity ratios Receivables turnover 10.81 12.16 10.19 10.61 9.70 sales/accounts receivables Inventory turnover 19.04 20.84 19.61 15.66 17.76 cost of goods sold/inventory Asset turnover 2.10 1.75 1.54 1.20 1.01 sales/total assets Cash turnover 69.19 42.80 18.00 15.26 32.79 sales/cash and cash equivalents Profitability ratios Return on asset 5.67% 8.59% 10.33% 8.16%% 8.64% net income/assets Return on equity 12.47% 11.72% 14.06% 12.25% 12.62% net income/shareholders' equity Operating profit margin 4:92% 7 82% 10.62% 12.17% 15.34% operating incomeet sales Net profit margin 2.70% 4.90% 5.69% 6.81% 8.58% net income/sales Update Apple ID Settings available until you sign in again. 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