Using the following information, capitalize Abercrombie & Fitchs operating leases and make the appropriate adjustments to the relevant balance sheet and income statement items. Assume an average lease term of 10 years, long-term interest rate of 11%, and tax rate of 35%.

(in 000's)	1/30/14		1/30/13
Less than 1 year	$421,226		$421,577
1-3 years	715,719		758,711
3-5 years	466,589		586,752
More than 5 years	774,031		868,479
Total	$2,377,025		$2,635,519
PV of Min. Obligations	$1,664,562		$1,821,845

How does capitalizing operating leases impact your assessment of the long-term financial risk of the company?

	Adjustments to 2/1/14			Adjustments to 2/2/13
	A	L & E		A	L & E
Balance Sheet
Long-term assets
Long-term debt
Deferred taxes
Shareholders' equity
Income Statement
Cost of sales
Net interest expense
Tax expense
Net income