Form type: 10-Q
Period end: 2026-03-31
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | |
|---|---|---|
| Revenue | 309,450,000.00 | 290,433,000.00 |
| Total Revenue | ||
| Total COGS | ||
| Gross Profit | ||
| Discontinued operations, net of tax | 2,389,000.00 | -16,171,000.00 |
| Income tax expense (benefit) | 54,408,000.00 | -8,123,000.00 |
| Net income attributable to noncontrolling interests | 32,444,000.00 | 4,494,000.00 |
| Operating expenses | 165,632,000.00 | 324,367,000.00 |
| Other income (expense), net | -90,017,000.00 | -21,604,000.00 |
| Total Expenses | ||
| Net Income | ||
| Less: preferred stock dividends | -17,306,000.00 | -17,306,000.00 |
| Net income (loss) available to common stockholders | - | |
| Basic earnings per share |
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Assets | ||
| Accounts receivable | 63,433,000.00 | 68,737,000.00 |
| Assets held for sale | 737,437,000.00 | 1,598,131,000.00 |
| Cash and cash equivalents | 1,366,604,000.00 | 765,952,000.00 |
| Intangible assets, net | 124,391,000.00 | 131,673,000.00 |
| Inventory | 3,746,000.00 | 4,062,000.00 |
| Licenses and indefinite-lived intangibles | 1,642,824,000.00 | 1,642,972,000.00 |
| Operating lease right-of-use assets | 513,237,000.00 | 515,081,000.00 |
| Other assets (derived) | 521,385,000.00 | 500,260,000.00 |
| Other current assets | 12,987,000.00 | 13,976,000.00 |
| Other noncurrent assets | 161,905,000.00 | 159,600,000.00 |
| Prepaid expenses and other current assets | 33,858,000.00 | 28,206,000.00 |
| Property, plant and equipment | 3,025,322,000.00 | 2,965,455,000.00 |
| Restricted cash and equivalents | 4,198,000.00 | 4,198,000.00 |
| Total Assets | ||
| Liabilities | ||
| Accrued compensation | 27,630,000.00 | 56,774,000.00 |
| Debt and finance lease obligations | 672,700,000.00 | 828,638,000.00 |
| Deferred revenue | 84,165,000.00 | 125,140,000.00 |
| Deferred tax liabilities | 699,150,000.00 | 743,633,000.00 |
| Liabilities held for sale | 20,242,000.00 | 20,242,000.00 |
| Operating lease liabilities, current | 26,297,000.00 | 26,180,000.00 |
| Operating lease liabilities, noncurrent | 548,420,000.00 | 549,617,000.00 |
| Other current liabilities | 38,855,000.00 | 41,322,000.00 |
| Other liabilities (derived) | 107,998,000.00 | 117,458,000.00 |
| Other noncurrent liabilities | 584,484,000.00 | 574,025,000.00 |
| Taxes payable | 138,488,000.00 | 46,721,000.00 |
| Total Liabilities | ||
| Temporary equity | ||
| Redeemable noncontrolling interests | 0.00 | 1,200,000.00 |
| Total temporary equity | ||
| Equity | ||
| Stockholders equity | 4,924,282,000.00 | 4,801,607,000.00 |
| Total stockholders equity attributable to parent | ||
| Noncontrolling interests | 338,616,000.00 | 465,746,000.00 |
| Total Equity | ||
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | |
|---|---|---|
| Operating activities | ||
| Net income | 144,594,000.00 | 7,470,000.00 |
| Stock-based compensation | 4,159,000.00 | 12,749,000.00 |
| Changes in operating assets and liabilities, net | -81,292,000.00 | 165,390,000.00 |
| Net cash from operating activities | ||
| Investing activities | ||
| Investing activities, net | 867,833,000.00 | -122,678,000.00 |
| Net cash from investing activities | - | |
| Financing activities | ||
| Financing activities, net | -334,642,000.00 | -74,966,000.00 |
| Net cash from financing activities | - | - |
| Net change in cash | - | |
| Cash at beginning of period | 383,222,000.00 | |
| Cash at end of period | 371,187,000.00 | |
| Amount | |
|---|---|
| Balance at beginning of period | 5,267,353,000.00 |
| Net income | 144,594,000.00 |
| Other equity movements | -149,049,000.00 |
| Balance at end of period | 5,262,898,000.00 |
Telephone & Data Systems Inc /DE/ is a public reporting company classified under Telephone Communications (No Radiotelephone). The accompanying condensed financial statements have been prepared from the Company's connected books and records as of and for the period ended March 31, 2026, are unaudited, and, in the opinion of management, reflect all adjustments necessary for a fair statement of the interim results; the results for the interim period are not necessarily indicative of the results to be expected for the full year.
Revenue for the period was $309,450,000, compared with $290,433,000 in the prior period, an increase of 6.5%, while operating expenses decreased 48.9% to $165,632,000 from $324,367,000. Income tax expense was $54,408,000 for the current period, compared with an income tax benefit of $8,123,000 in the prior period. Net income for the period was $144,594,000. Basic earnings per share were $1.12 for the period, based on weighted-average basic shares outstanding of 113,882,000. Net income attributable to noncontrolling interests was $32,444,000 for the current period, compared with $4,494,000 in the prior period.
Debt and finance lease obligations totaled $672,700,000 as of March 31, 2026, a decrease of 83.4% from $4,042,000,000 in the prior period, and operating lease liabilities consisted of $26,297,000 classified as current and $548,420,000 classified as noncurrent. Operating lease right-of-use assets were $513,237,000 as of March 31, 2026, compared with $978,000,000 in the prior period, a decrease of 47.5%. The substantial reduction in debt and finance lease obligations during the period has correspondingly reduced the Company's exposure to interest rate fluctuations on borrowed funds.
Stockholders' equity was $4,924,282,000 as of March 31, 2026, compared with $5,078,000,000 in the prior period, a decrease of 3.0%, and noncontrolling interests were $338,616,000, compared with $774,000,000 in the prior period. Total liabilities were $2,948,429,000 and total equity was $5,262,898,000 as of the end of the period.
| Current | Prior | |
|---|---|---|
| Debt and finance lease obligations | 672,700,000.00 | 828,638,000.00 |
| Operating lease liabilities, current | 26,297,000.00 | 26,180,000.00 |
| Operating lease liabilities, noncurrent | 548,420,000.00 | 549,617,000.00 |
| Total debt | 1,247,417,000.00 | 1,404,435,000.00 |
| Current | Prior | |
|---|---|---|
| Property, plant and equipment | 3,025,322,000.00 | 2,965,455,000.00 |
| Total property and equipment | 3,025,322,000.00 | 2,965,455,000.00 |
| Current | Prior | |
|---|---|---|
| Stockholders equity | 4,924,282,000.00 | 4,801,607,000.00 |
| Total stockholders' equity | 4,924,282,000.00 | 4,801,607,000.00 |
The following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this report. TELEPHONE & DATA SYSTEMS INC /DE/ is a public reporting company classified under Telephone Communications (No Radiotelephone). Revenue for the period was $309,450,000, an increase of 6.5% from $290,433,000 in the comparable prior-year period. [COMPLETE: description of specific drivers of the revenue increase]. Operating expenses decreased 48.9% to $165,632,000 from $324,367,000 in the prior period. [COMPLETE: description of specific drivers of the operating expense decrease]. Other income, net, was $90,017,000, compared to $21,604,000 in the prior period. Income tax expense was $54,408,000, compared to an income tax benefit of $8,123,000 in the prior period, a change of 769.8%. Results from discontinued operations, net of tax, reflected a loss of $2,389,000, compared to income of $16,171,000 in the prior period.
Net income attributable to TDS shareholders was $144,594,000 after deducting net income attributable to noncontrolling interests, net of tax, of $32,444,000, and net income attributable to TDS common shareholders was $127,288,000 after TDS Preferred Share dividends of $17,306,000. Net income attributable to noncontrolling interests increased 621.9% from $4,494,000 in the prior period. Basic earnings per share was $1.12, computed using weighted-average basic shares outstanding of 113,882,000.
As of March 31, 2026, we held cash and cash equivalents of $1,366,604,000, compared to $348,000,000 in the prior period, an increase of 292.7%, along with restricted cash and equivalents of $4,198,000, compared to $23,187,000 in the prior period. Our primary market risk exposure is interest rate risk on our cash, cash equivalents, and short-term investments, and because these balances are generally invested in short-duration instruments, changes in prevailing interest rates affect the amount of interest income we earn on these holdings; a decline in market interest rates would reduce interest income, while an increase would have the opposite effect. At the balance sheet date, debt and finance lease obligations totaled $672,700,000, a decline of 83.4% from $4,042,000,000 in the prior period, while current operating lease liabilities of $26,297,000 and noncurrent operating lease liabilities of $548,420,000 decreased 82.6% and 36.7%, respectively, from $151,000,000 and $867,000,000. Management believes that existing cash and cash equivalents and other available resources are sufficient to meet our anticipated operating and capital requirements for at least the next twelve months.
Operating lease right-of-use assets were $513,237,000 at period end, down 47.5% from $978,000,000 in the prior period. Property, plant and equipment declined 37.9% to $3,025,322,000 from $4,871,000,000, and licenses and indefinite-lived intangibles declined 64.2% to $1,642,824,000 from $4,590,000,000. At period end, assets held for sale of $737,437,000 and liabilities held for sale of $20,242,000 were recorded, compared to none in the prior period. [COMPLETE: description of the transaction or business event giving rise to the held-for-sale classification and related balance sheet changes]. Stockholders' equity was $4,924,282,000 as of the end of the period, a decrease of 3.0% from $5,078,000,000 in the prior period, and noncontrolling interests declined 56.3% to $338,616,000 from $774,000,000.
Our primary market risk exposure is interest rate risk associated with our cash, cash equivalents, and short-term investments. The primary market risk exposure is interest rate risk on cash, cash equivalents, and short-term investments. As of March 31, 2026, we held cash and cash equivalents of $1,366,604,000, compared with $348,000,000 in the prior period, an increase of 292.7%, along with restricted cash and equivalents of $4,198,000. Because these balances are invested in short-duration instruments, changes in prevailing interest rates affect the amount of interest income we earn, and a decline in market interest rates would reduce the return generated on these holdings.
We are also exposed to interest rate risk on our borrowings. Debt and finance lease obligations totaled $672,700,000 as of March 31, 2026, a decrease of 83.4% from $4,042,000,000 in the prior period, and operating lease liabilities consisted of $26,297,000 classified as current and $548,420,000 classified as noncurrent. The substantial reduction in debt and finance lease obligations during the period has correspondingly reduced our exposure to interest rate fluctuations on borrowed funds. Total liabilities were $2,948,429,000 and total equity was $5,262,898,000 as of the end of the period, and we believe our capital structure positions us to manage the effects of changes in interest rates on our results of operations and financial condition.
We do not have material foreign currency or commodity price exposure. Accordingly, management does not believe that changes in foreign exchange rates or commodity prices would have a material effect on our financial position, results of operations, or cash flows. We will continue to monitor our market risk exposures and may adjust our risk management practices in the future as conditions warrant.
Management of Telephone and Data Systems, Inc., with the participation of its principal executive officer and principal financial officer, evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report. Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. This evaluation covers the period ended March 31, 2026.
Based on that evaluation, management concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period. Any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that its objectives will be met.
With respect to changes in internal control over financial reporting, there were no changes during the quarter ended March 31, 2026 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
[COMPLETE: Management's conclusion language above must be reviewed and adopted by management before filing.]
Telephone and Data Systems, Inc. is involved in legal proceedings arising in the ordinary course of business from time to time. These matters may include claims, litigation, and regulatory inquiries incidental to the operation of the Company's business.
Management does not currently believe that any pending legal matter is material to the Company's financial statements. The Company will continue to monitor its pending legal matters and assess the potential impact, if any, on its financial condition, results of operations, and cash flows, and will provide additional disclosure in future filings to the extent required.
The following discussion supplements the risk factors previously disclosed in our filings with the Securities and Exchange Commission, and readers should consider these risks together with the other information contained in this report. On May 7, 2026, TDS delivered to the Array Board of Directors a letter setting forth a non-binding proposal to acquire all of the outstanding Array Common Shares that are not owned by TDS, and additional information is available in TDS' Current Report on Form 8-K, filed with the U.S. Securities and Exchange Commission on May 8, 2026. There is no guarantee that any definitive agreement will be entered into or that any transaction will be accepted, rejected, consummated or abandoned, and the terms of any such transaction may differ materially from those originally proposed by TDS. The uncertainty regarding the proposal, whether it is accepted, rejected, consummated or abandoned, could result in a diversion of management's attention from TDS' existing business; a failure to achieve financial and operating objectives; adverse effects on TDS' financial condition or results of operations; a failure to retain key personnel, customers, business partners or contracts; and volatility in TDS' stock price. In addition, the proposal, whether accepted, rejected, consummated or abandoned, may result in the incurrence of significant expenses.
Any of the foregoing outcomes could adversely affect our results of operations and financial condition in future periods. For the period ended March 31, 2026, we reported revenue of $309,450,000 and net income of $144,594,000, and these results may not be indicative of future performance if the risks described above materialize. Our primary market risk exposure is interest rate risk on cash, cash equivalents, and short-term investments, and we do not have material foreign currency or commodity price exposure. Changes in prevailing interest rates could accordingly affect the returns we earn on these balances. Cash and cash equivalents increased 292.7% to $1,366,604,000 at period end from $348,000,000 in the prior period, while restricted cash and equivalents were $4,198,000 compared to $23,187,000, a decrease of 81.9%, which increases the sensitivity of our investment income to movements in interest rates.
We are also subject to risks arising from litigation and other legal matters. We are involved in legal proceedings arising in the ordinary course of business from time to time, and management does not currently believe any pending matter is material to the financial statements. However, the outcome of legal proceedings is inherently uncertain, and an adverse resolution of one or more matters could have an adverse effect on our business, financial condition or results of operations. Although debt and finance lease obligations declined 83.4% to $672,700,000 from $4,042,000,000, and stockholders' equity was $4,924,282,000 at period end compared to $5,078,000,000 in the prior period, a decrease of 3.0%, our capital structure and liquidity position could be affected by the risks described above, including any significant expenses associated with the proposal regarding Array.
The following disclosure is provided pursuant to Item 408(a) of Regulation S-K regarding the adoption and termination of Rule 10b5-1 trading arrangements by directors and officers of Telephone & Data Systems, Inc. during the quarter ended March 31, 2026. [COMPLETE: Rule 10b5-1 trading arrangement adoptions and terminations from the D&O questionnaires]