Required a. Prepare the statement of cash flows with a total column for the three-year period. (Do not include reconciliation of net income to net cash provided by operating activities). b. Comment on significant cash flow items in the statement prepared in (a). c. Prepare the statement of cash flows for the 52 weeks ended January 1, 2011, with inflows separated from outflows. Present the data in dollars and percentages. Do not include reconciliation of net income to net cash provided by operating activities. d. Comment on significant cash flow items on the statement prepared in (c).

CASE 10-2 CASH FLOW - THE DIRECT METHOD ARDEN GROUP, INC. AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Fifty-Two Fifty-Two Fifty-Three Weeks Ended Weeks Ended Weeks Ended January 1, January 2, January 3, (In thousands) 2011 2010 2009 Cash flows from operating activities: Cash received from customers $ 417,580 $ 431,108 $ 479,578 Cash paid to suppliers and employees (384,624) (391,957) (437,970) Interest and dividends received 1,580 565 2,513 Interest paid (94) (87) (109) Income taxes paid (11,354) (13,895) (15,545) Net cash provided by operating activities 23,088 25,734 28,467 Cash flows from investing activities: Capital expenditures (2,597) (2,890) (5,159) Purchases of investments (29,861) (30,164) (25,130) Sales of investments 51,926 13,127 35,556 Proceeds from the sale of property, plant and equipment 16 48 Net cash provided by (used) in investing activities 19,484 (19,879) 5,288 Cash flows from financing activities: Cash dividends paid (3,161) (3,161) (82,188) Net cash used in financing activities (3,161 (3,161 (82,188) Net increase decrease) in cash and cash equivalents 39,411 2,694 (48,433) Cash and cash equivalents at beginning of year 13,180 10,486 58,919 Cash and cash equivalents at end of year $ 52,591 13,180 10,486 Reconciliation of Net Income to Net Cash Provided by Operating Activities: Net income $ 18,085 $ 21,624 $ 24,667 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,307 6,110 Provision for losses on accounts receivable 44 94 169 Deferred income taxes 1,129 108 1,923 Net loss from the disposal of property, plant and equipment 54 Realized loss on investments, net 0 907 Amortization of nremium on investments 960 472 259 5,599 89 8 66 Amortization of premium on investments 960 472 259 Stock appreciation rights compensation expense (income) (394) (273) 1,823 Changes in assets and liabilities net of effects from noncash investing and financing activities: (Increase) decrease in assets: Accounts and notes receivable 799 (246) 527 Inventories (1,302) 972 3,712 Other current assets 95 204 (281) Other assets 27 16 (69) Increase (decrease) in liabilities: Accounts payable, trade and other current liabilities: (1,090) (2,402) (9,148) Federal and state income taxes payable (237) 668 (608) Deferred rent (61) 99 154 Other liabilities (348) (1,255) (1,767) Net cash provided by operating activities $ 23,088 $ 25,734 28,467 **The Registrant, Arden Group, Inc. (Company or Arden), is a holding company which conducts operations through its wholly- owned subsidiary, Arden-Mayfair, Inc. (Arden-Mayfair) and Arden-Mayfair's wholly-owned subsidiary, Gelson's Markets (Gelson's), which operates supermarkets in Southern California. The Company also owns certain real estate properties through a subsidiary, Mayfair Realty, Inc. (Mayfair Realty) which is wholly-owned by the Company and Arden-Mayfair. The Company is a Delaware Corporation organized in 1988." 10-K Source: ARDEN GROUP, INC. AND CONSOLIDATED SUBSIDIARIES, 2010 10-K