Quarterly Report for Quarter Ending October 31, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Certain matters contained in this filing with the United States Securities and Exchange Commission ("SEC") may contain forward-looking statements and are being made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report on Form 10-Q, the words "project," "believe," "plan," "will," "anticipate," "expect" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any one, or all, of the following factors could cause actual financial results to differ materially from those financial results mentioned in the forward-looking statements: overall economic and market conditions (including current levels of inflation) and worldwide political events and the resultant impact on consumer spending patterns and our pricing power, the difficulty in predicting and responding to shifts in fashion trends, changes in the level of competitive pricing and promotional activity and other industry factors, the effects of the implementation of the United Kingdom's withdrawal from membership in the European Union (commonly referred to as "Brexit"), including currency fluctuations, economic conditions and legal or regulatory changes, any effects of war, including geopolitical instability, impacts of the conflict in the Middle East and impacts of the war between Russia and Ukraine and from related sanctions imposed by the United States, European Union, United Kingdom and others, terrorism and civil unrest, natural disasters, severe or unseasonable weather conditions (including as a result of climate change) or public health crises (such as the coronavirus (COVID-19)), labor shortages and increases in labor costs, raw material costs and transportation costs, availability of suitable retail space for expansion, timing of store openings, risks associated with international expansion, seasonal fluctuations in gross sales, response to new concepts, our ability to integrate acquisitions, risks associated with digital sales, our ability to maintain and expand our digital sales channels, any material disruptions or security breaches with respect to our technology systems, our effective utilization of technological advancements, including in artificial intelligence, the departure of one or more key senior executives, import risks (including any shortage of transportation capacities or delays at ports), changes to U.S. and foreign trade policies (including the enactment of tariffs such as retaliatory tariffs), border adjustment taxes or increases in duties or quotas, the unexpected closing or disruption of, or any damage to, any of our distribution centers, our ability to protect our intellectual property rights, failure of our manufacturers and third-party vendors to comply with our social compliance program, risks related to environmental, social and governance activities, changes in our effective income tax rate, changes in accounting standards and subjective assumptions, regulatory changes and legal matters and other risks identified in our filings with the SEC, including those set forth in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025, filed on April 1, 2025. We disclaim any intent or obligation to update forward-looking statements even if experience or future changes make it clear that actual results may differ materially from any projected results expressed or implied therein.

Unless the context otherwise requires, all references to the "Company," "we," "us" or "our" refer to Urban Outfitters, Inc., together with its subsidiaries.

Overview

We operate under three reportable segments - Retail, Subscription and Wholesale. Our Retail segment primarily includes our Anthropologie, Free People, FP Movement and Urban Outfitters brands. Our Retail segment products and services are sold directly to our customers through our retail locations, websites, mobile applications, social media and third-party digital platforms, catalogs and customer contact centers and franchisee-owned stores. Our Subscription segment includes the Nuuly brand, which offers customers a more sustainable way to explore fashion primarily through a monthly women's apparel subscription rental service. Our Wholesale segment includes our Free People, FP Movement and Urban Outfitters brands that sell through department and specialty stores worldwide, third-party digital businesses and our Retail segment. Our Wholesale segment primarily designs, develops and markets apparel, intimates, activewear and shoes.

Our fiscal year ends on January 31. All references to our fiscal years refer to the fiscal years ended on January 31 in those years. For example, our fiscal year 2026 will end on January 31, 2026, and our fiscal year 2025 ended on January 31, 2025.

As used in this document, unless otherwise defined, "Anthropologie" refers to our Anthropologie and Terrain brands and "Free People" refers to our Free People and FP Movement brands.

Macroeconomic Environment and Other Recent Developments

During 2025, the U.S. government enacted significant changes to its tariff regime that increased rates on virtually all imports. Certain foreign jurisdictions have responded with reciprocal tariffs which resulted in corresponding actions by the U.S. government. Certain of these tariffs have been paused or modified from time to time and the uncertainty of tariff rates among multiple jurisdictions is contributing to overall macroeconomic volatility and increasing recessionary concerns. The potential for additional tariff increases may continue to result in increased reciprocal tariffs or other restrictive trade measures by the U.S. or foreign jurisdictions. These factors may continue to contribute to uncertain global economic conditions (including inflationary costs, consumer spending patterns and volatility in foreign currencies), which may impact our operations.

We have been and continue to regularly evaluate global trade policies and take appropriate actions when necessary to mitigate the risks associated with tariffs. These actions include:

Even with these mitigation strategies in place, we believe that tariffs could have a negative impact on our financial results.

On July 4, 2025, the United States enacted legislation commonly referred to as the One Big Beautiful Bill Act which includes various tax provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions like bonus depreciation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. This legislation, enacted during the second quarter of fiscal 2026, did not have a material impact on the Company's interim period income tax provision for the three and nine months ended October 31, 2025. The Company continues to assess the impact of the legislation on our consolidated financial statements. We do not expect a material impact to our financial statements for the fiscal year ending January 31, 2026, however, additional guidance from the Internal Revenue Service and U.S. Treasury may affect the interpretation and application of certain provisions.

Retail Segment

Our Retail segment omni-channel strategy enhances our customers' brand experience by providing a seamless approach to the customer shopping experience. All Company-owned Retail segment shopping channels are closely integrated, including retail locations, websites, mobile applications, social media and third-party platforms, catalogs and customer contact centers. Our investments in areas such as marketing campaigns and technology advancements are designed to generate demand for the Retail segment omni-channel and not the separate store or digital channels. We manage and analyze our performance based on a single Retail segment omni-channel rather than separate channels and believe that the Retail segment omni-channel results present the most meaningful and appropriate measure of our performance.

Our comparable Retail segment net sales data is equal to the sum of our comparable store and comparable digital channel net sales. A store is considered to be comparable if it has been open at least 12 full months, unless it was materially expanded or remodeled within that year or was not otherwise operating at its full capacity within that year due to store specific closures from events such as damage from fire, flood and natural weather events. A digital channel is considered to be comparable if it has been operational for at least 12 full months. Sales from stores and digital channels that do not fall within the definition of comparable store or digital channel are considered to be non-comparable. Franchise net sales and the effects of foreign currency translation are also considered non-comparable.

We monitor Retail segment metrics including customer traffic, conversion rates and average units per transaction at our stores and on our websites and mobile applications. We also monitor average unit selling price and transactions at our stores and average order value on our websites and mobile applications. We believe that changes in any of these

metrics may be caused by a response to our brands' fashion offerings, our marketing campaigns, circulation of our catalogs and an overall growth in brand recognition.

Net sales from the Retail segment accounted for approximately 85.2% of consolidated net sales for the nine months ended October 31, 2025, compared to 87.9% for the comparable period in fiscal 2025.

The Anthropologie brand tailors its merchandise and inviting store environment to sophisticated and contemporary women aged 28 to 45. The internally designed and third-party brand product assortment includes women's apparel, accessories, intimates, shoes, furniture, home decor and beauty and wellness. The brand also has a bridal collection consisting of wedding, bridesmaid and party dresses, accessories and decor. The Terrain brand is designed to appeal to women and men interested in a creative and sophisticated outdoor living and gardening experience. Merchandise includes lifestyle home, garden and outdoor living products, antiques, live plants, flowers, wellness products and accessories. Anthropologie stores are located in specialty centers, upscale street locations and enclosed malls. Anthropologie operates websites and mobile applications that capture the spirit of its brands by offering a similar yet broader selection of merchandise as found in its stores, offers catalogs in North America that markets select merchandise, most of which is also available in Anthropologie brand stores and sells merchandise through franchisee-owned stores in the Middle East. Anthropologie's North American Retail segment net sales accounted for approximately 47.0% of total Retail segment net sales for the nine months ended October 31, 2025, compared to approximately 47.1% for the comparable period in fiscal 2025. European Retail segment net sales accounted for approximately 1.8% of total Retail segment net sales for both the nine months ended October 31, 2025, and the comparable period in fiscal 2025.

The Free People brand focuses its product offering on private label merchandise targeted to young contemporary women aged 25 to 30 and provides a unique merchandise mix of casual women's apparel, intimates, activewear, shoes, accessories, home products, gifts and beauty and wellness. The FP Movement brand offers performance-ready activewear, beyond-the-gym staples and wellness essentials. Free People stores are located in enclosed malls, upscale street locations and specialty centers. Free People operates websites and mobile applications that capture the spirit of its brands by offering a similar yet broader selection of merchandise as found in its stores, as well as substantially all of the Free People and FP Movement brands' wholesale offerings. Free People also offers catalogs that market select merchandise, most of which is also available in our Free People stores. Free People's North American Retail segment net sales accounted for approximately 24.0% of total Retail segment net sales for the nine months ended October 31, 2025, compared to approximately 23.7% for the comparable period in fiscal 2025. European Retail segment net sales accounted for approximately 1.3% of total Retail segment net sales for the nine months ended October 31, 2025, compared to approximately 1.2% for the comparable period in fiscal 2025.

Urban Outfitters targets young adults aged 18 to 28 through a unique merchandise mix, compelling store environment, social media and third-party digital platforms, websites and mobile applications and a product offering that includes women's and men's fashion apparel, activewear, intimates, footwear, accessories, home goods, electronics and beauty. A large portion of our merchandise is exclusive to Urban Outfitters, consisting of an assortment of products designed internally or designed in collaboration with third-party brands. Urban Outfitters stores are located in street locations in large metropolitan areas and select university communities, specialty centers and enclosed malls that accommodate our customers' propensity not only to shop, but also to congregate with their peers. Urban Outfitters operates websites and mobile applications that capture the spirit of the brand by offering a similar yet broader selection of merchandise as found in its stores and sells merchandise through franchisee-owned stores in the Middle East. Urban Outfitters' North American Retail segment net sales accounted for approximately 15.3% of total Retail segment net sales for the nine months ended October 31, 2025, compared to approximately 16.5% for the comparable period in fiscal 2025. European Retail segment net sales accounted for approximately 9.8% of total Retail segment net sales for the nine months ended October 31, 2025, compared to approximately 8.9% for the comparable period in fiscal 2025.

Menus & Venues focuses on a dining and event experience that provides excellence in food, beverage and service. Menus & Venues net sales accounted for less than 1.0% of total Retail segment net sales for both the nine months ended October 31, 2025, and the comparable period in fiscal 2025.

Store data for the nine months ended October 31, 2025 was as follows:

Selling square footage by brand as of October 31, 2025 and 2024 was as follows:

We plan for future store growth for our brands to come from expansion domestically and internationally, which may include opening stores in new and existing markets or entering into additional franchise or joint venture agreements. We plan for future digital channel growth to come from expansion domestically and internationally.

Projected store openings and closings for fiscal 2026 are as follows:

Subscription Segment

Our Subscription segment includes the Nuuly brand, which is primarily a monthly women's apparel subscription rental service. For a monthly fee, Nuuly subscribers can rent product from a wide selection of the Company's own brands, third-party brands and one-of-a-kind vintage pieces via a custom-built digital platform. Subscribers select their products each month, wear them as often as they like and then swap into new products the following month. Subscribers are also able to purchase rental product. Our Subscription segment net sales accounted for approximately 9.3% of consolidated net sales for the nine months ended October 31, 2025, compared to approximately 6.8% for the comparable period in fiscal 2025.

Wholesale Segment

Our Wholesale segment includes the Free People, FP Movement and Urban Outfitters brands that sell through department and specialty stores worldwide, third-party digital businesses and our Retail segment. The Wholesale segment primarily designs, develops and markets young women's contemporary casual apparel, intimates, FP Movement activewear and shoes under the Free People and FP Movement brands and the BDG and "iets frans" apparel collections under the Urban Outfitters brand. Our Wholesale segment net sales accounted for approximately 5.5% of consolidated net sales for the nine months ended October 31, 2025, compared to 5.3% for the comparable period in fiscal 2025.

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States. These generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses during the reporting period.

Our significant accounting policies are described in Note 2, "Summary of Significant Accounting Policies," in the Notes to our Consolidated Financial Statements for the fiscal year ended January 31, 2025, which are included in our Annual Report on Form 10-K filed with the SEC on April 1, 2025. Critical accounting policies are those that are most important to the portrayal of our financial condition, results of operations and cash flows and require management's most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. If actual results were to differ significantly from estimates made, the reported results could be materially affected. We are not currently aware of any reasonably likely events or circumstances that would cause our actual results to be materially different from our estimates. There have been no significant changes to our critical accounting policies during the nine months ended October 31, 2025.

Results of Operations

As a Percentage of Net Sales

The tables below set forth, for the periods indicated, certain income statement data and the percentage of our net sales represented by such data. The tables should be read in conjunction with the discussion that follows.

Three Months Ended October 31, 2025 (Fiscal 2026) Compared To

Three Months Ended October 31, 2024 (Fiscal 2025)

Net sales for the third quarter of fiscal 2026 were $1.53 billion, compared to $1.36 billion in the third quarter of fiscal 2025. The $167.5 million increase was attributable to a $113.9 million, or 9.6%, increase in Retail segment net sales, a $47.4 million, or 48.7%, increase in Subscription segment net sales and a $6.2 million, or 7.6%, increase in Wholesale segment net sales.

The increase in our Retail segment net sales during the third quarter of fiscal 2026 was due to an increase of $91.2 million, or 8.0%, in Retail segment comparable net sales and an increase of $22.7 million in non-comparable net sales. Retail segment comparable net sales increased 12.5% at Urban Outfitters, 7.6% at Anthropologie and 4.1% at Free People. Retail segment comparable net sales increased in both North America and Europe. The overall increase in Retail segment comparable net sales was driven by high single-digit positive growth in both digital channel net sales and retail store net sales. The digital channel comparable net sales increase was driven by increases in sessions and units per transaction, while conversion rate was flat and average order value decreased. Comparable store net sales increased as a result of higher store traffic, transactions and average unit retail, while conversion rate was flat and units per transaction decreased. The increase in non-comparable net sales during the third quarter of fiscal 2026 was primarily due to the impact of the 52 net new Company-owned stores opened since the prior comparable period.

The increase in Subscription segment net sales was primarily driven by a 42.2% increase in the average number of active subscribers in the third quarter of fiscal 2026 as compared to the third quarter of fiscal 2025. The increase in Wholesale segment net sales in the third quarter of fiscal 2026 was driven by a $6.5 million, or 8.4%, increase in Free People wholesale net sales as compared to the third quarter of fiscal 2025, primarily due to an increase in net sales to specialty customers.

Gross profit percentage for the third quarter of fiscal 2026 increased by 31 basis points to 36.8% of net sales compared to 36.5% of net sales in the third quarter of fiscal 2025. Gross profit increased to $563.3 million in the third quarter of fiscal 2026 from $497.3 million in the third quarter of fiscal 2025. The increase in gross profit rate was primarily due to improved Retail segment markdowns driven by lower markdowns at Urban Outfitters and Free People and leverage in store occupancy costs due to the increase in comparable Retail segment net sales, partially offset by deleverage in initial merchandise costs. Additionally, the Company recorded store impairment charges of $2.0 million during the third quarter of fiscal 2026. The increase in gross profit dollars was due to higher net sales and the improved gross profit rate.

Total inventory at October 31, 2025, as compared to October 31, 2024, increased by $46.5 million, or 5.9%, to $839.8 million. Total Retail segment inventory increased by 6.3% and Retail segment comparable inventory increased by 7.4%. Wholesale segment inventory was flat. The increase in Retail segment inventory was due to increased net sales.

Selling, general and administrative expenses increased by $50.4 million, or 13.7%, in the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. Selling, general and administrative expenses as a percentage of net sales increased in the third quarter of fiscal 2026 to 27.4% of net sales, compared to 27.1% of net sales in the third quarter of fiscal 2025. The deleverage in selling, general and administrative expenses as a percentage of net sales was primarily related to increased marketing expenses to support customer growth and increased sales in the Retail and Subscription segments, partially offset by leverage in store payroll expenses due to the Retail segment stores net sales growth. The dollar growth in selling, general and administrative expenses was primarily related to increased marketing expenses to support customer growth and increased sales in the Retail and Subscription segments, as well as increased store payroll expenses to support the Retail segment stores net sales growth.

Income from operations was 9.4% of net sales, or $144.3 million, for the third quarter of fiscal 2026 compared to 9.4% of net sales, or $128.7 million, for the third quarter of fiscal 2025. The increase in operating income dollars was driven by the increase in gross profit dollars.

Our effective tax rate for the third quarter of fiscal 2026 was 23.6%, compared to 24.2% in the third quarter of fiscal 2025. The decrease in the effective tax rate for the three months ended October 31, 2025, was primarily attributable to the ratio of foreign taxable earnings to global taxable earnings and the release of certain valuation allowances.

Nine Months Ended October 31, 2025 (Fiscal 2026) Compared To

Nine Months Ended October 31, 2024 (Fiscal 2025)

Net sales for the nine months ended October 31, 2025 were $4.36 billion, compared to $3.91 billion in the comparable period of fiscal 2025. The $449.1 million increase was attributable to a $274.6 million, or 8.0%, increase in Retail segment net sales, a $142.0 million, or 53.4%, increase in Subscription segment net sales and a $32.5 million, or 15.7%, increase in Wholesale segment net sales.

The increase in our Retail segment net sales during the first nine months of fiscal 2026 was due to an increase of $203.5 million, or 6.1%, in Retail segment comparable net sales and an increase of $71.1 million in non-comparable net sales. Retail segment comparable net sales increased 6.8% at Anthropologie, 6.4% at Urban Outfitters and 4.7% at Free People. Retail segment comparable net sales increased in both North America and Europe. The overall increase in Retail segment comparable net sales was driven by mid single-digit positive growth in both retail store net sales and digital channel net sales. Comparable store net sales increased as a result of higher store traffic, transactions and conversion rate, while average unit retail was flat and units per transaction decreased. The digital channel comparable

net sales increase was driven by increases in sessions and units per transaction, while conversion rate was flat and average order value decreased. The increase in non-comparable net sales during the first nine months of fiscal 2026 was primarily due to the impact of the 62 net new Company-owned stores opened since the prior comparable period.

The increase in Subscription segment net sales was primarily driven by a 47.3% increase in the average number of active subscribers in the first nine months of fiscal 2026 as compared to the comparable period of fiscal 2025. The increase in Wholesale segment net sales in the first nine months of fiscal 2026 was driven by a $32.6 million, or 16.8%, increase in Free People wholesale net sales as compared to the first nine months of fiscal 2025, primarily due to an increase in net sales to specialty customers.

Gross profit percentage for the first nine months of fiscal 2026 increased by 135 basis points to 37.1% of net sales compared to 35.7% of net sales in the comparable period of fiscal 2025. Gross profit increased to $1.62 billion in the first nine months of fiscal 2026 from $1.40 billion in the comparable period of fiscal 2025. The increase in gross profit rate was primarily due to improved Retail segment markdowns driven by lower markdowns at Urban Outfitters and Free People and leverage in store occupancy costs due to the increase in comparable Retail segment net sales, partially offset by deleverage in initial merchandise costs. Additionally, the Company recorded store impairment charges of $2.0 million during the first nine months of fiscal 2026 and store impairment and lease abandonment charges of $4.6 million during the first nine months of fiscal 2025. The increase in gross profit dollars was due to higher net sales and the improved gross profit rate.

Selling, general and administrative expenses increased by $121.1 million, or 11.5%, in the first nine months of fiscal 2026, compared to the first nine months of fiscal 2025. Selling, general and administrative expenses as a percentage of net sales was essentially flat in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025. The dollar growth in selling, general and administrative expenses was primarily related to increased marketing expenses to support customer growth and increased sales in the Retail and Subscription segments, as well as increased store payroll expenses to support the Retail segment stores net sales growth.

Income from operations was 10.2% of net sales, or $446.9 million, for the first nine months of fiscal 2026 compared to 8.9% of net sales, or $348.5 million, for the comparable period of fiscal 2025. The increase in operating income dollars was primarily driven by the increase in gross profit dollars. The increase in operating income rate was primarily driven by the improved gross profit rate.

Our effective tax rate for the first nine months of fiscal 2026 was 22.2%, compared to 23.6% in the first nine months of fiscal 2025. The decrease in the effective tax rate for the nine months ended October 31, 2025, was primarily attributable to the ratio of foreign taxable earnings to global taxable earnings and the release of certain valuation allowances.

Liquidity and Capital Resources

The following tables set forth certain balance sheet and cash flow data for the periods indicated. These tables should be read in conjunction with the discussion that follows:

The increase in working capital as of October 31, 2025, as compared to January 31, 2025, was primarily due to an increase in inventory, partially offset by the timing of disbursements. The increase in working capital as of October 31, 2025, as compared to October 31, 2024, was primarily due to an increase in cash, cash equivalents and current marketable securities and inventory, partially offset by the timing of disbursements.

During the last two years, we have satisfied our cash requirements primarily through our cash flow from operating activities and through the sales and maturities of marketable securities. Our primary uses of cash have been to fund business operations, purchase inventory and rental product, repurchase our common shares, open new stores and expand and improve our distribution network.

Cash Flows from Operating Activities

Our major source of cash from operations was merchandise sales and our primary outflow of cash from operations was for the payment of operational costs. The increase in cash provided by operating activities in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025 was primarily due to higher net income and a lower increase in inventory in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025.

Cash Flows from Investing Activities

Cash used in investing activities in the first nine months of fiscal 2026 and fiscal 2025 primarily related to the purchases of marketable securities and property and equipment, partially offset by the sales and maturities of marketable securities. Cash paid for property and equipment in the first nine months of fiscal 2026 and 2025 was $191.4 million and $144.1 million, respectively, which was primarily used to expand our store base and distribution network in both periods, as well as expand our home office in the first nine months of fiscal 2026 to support our growing business.

Cash Flows from Financing Activities

Cash used in financing activities in the first nine months of fiscal 2026 and the first nine months of fiscal 2025 primarily related to repurchases of our common shares under our share repurchase program and from employees to meet payroll tax withholding requirements on vested share-based awards.

Credit Facilities

See Note 5, "Debt," of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information regarding the Company's debt.

Capital and Operating Expenditures

During fiscal 2026, we plan to open approximately 69 new Company-owned retail locations, expand or relocate certain existing retail locations, expand our home office to support our growing business, invest in our distribution network, invest in new products, markets and brands, purchase inventory and rental product for our operating segments at levels appropriate to maintain our planned sales volumes, upgrade our systems, improve and expand our digital capabilities, invest in omni-channel marketing at appropriate levels and repurchase our common shares. We believe that our new brand initiatives, new store openings, merchandise expansion programs, international growth opportunities and our marketing, social media, website and mobile initiatives are significant contributors to our sales growth and plan to continue our investment in these initiatives for all brands. We anticipate our capital expenditures during fiscal 2026 will be approximately $300 million which increased from prior estimates largely due to the timing of expenditures for our distribution network. All fiscal 2026 capital expenditures are expected to be financed by cash flow from operating activities and existing cash and cash equivalents. We believe that our new store investments generally have the potential to generate positive cash flow within a year. We may also enter into one or more acquisitions or transactions related to the expansion of our brand offerings, including additional franchise and joint venture agreements. We believe that our existing cash and cash equivalents, availability under our current credit facility and future cash flows provided by operations will be sufficient to fund these initiatives.

Share Repurchases

See Note 8, "Shareholders' Equity," of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information regarding the Company's share repurchases.

Other Matters

See Note 1, "Basis of Presentation," Recent Accounting Pronouncements, of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements.