UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2018

OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission file number 001-38335

Liberty Latin America Ltd.

(Exact name of Registrant as specified in its charter)

Bermuda	98-1386359
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2 Church Street, Hamilton	HM 11
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (441) 295-5950 or (303) 925-6000

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ        No  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  þ        No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Check one:

Large Accelerated Filer  ¨	Accelerated Filer  ¨	Non-Accelerated Filer þ (Do not check if a smaller reporting company)
Smaller Reporting Company  ¨	Emerging Growth Company ¨

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  ¨

Indicate by check mark whether the Registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes ¨ No þ

The number of outstanding common shares of Liberty Latin America Ltd. as of April 30, 2018 was: 48,441,023 Class A; 1,936,035 Class B; and 120,859,778 Class C.

LIBERTY LATIN AMERICA LTD.

TABLE OF CONTENTS

		Page Number
	PART I - FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS
	Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 (unaudited)	1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2018 and 2017 (unaudited)	3
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2018 and 2017 (unaudited)	4
	Condensed Consolidated Statement of Equity for the Three Months Ended March 31, 2018 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	54
Item 4.	CONTROLS AND PROCEDURES	56
	PART II - OTHER INFORMATION
Item 6.	EXHIBITS	57

LIBERTY LATIN AMERICA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

 

	March 31, 2018		December 31, 2017
	in millions
ASSETS
Current assets:
Cash and cash equivalents	$	510.6	$	529.9
Trade receivables, net of allowances of $142.4 million and $142.2 million, respectively	581.2		556.5
Prepaid expenses	64.8		65.5
Other current assets	245.7		222.9
Total current assets	1,402.3		1,374.8
Goodwill	5,663.6		5,673.6
Property and equipment, net	4,236.2		4,169.2
Intangible assets subject to amortization, net	1,251.6		1,316.2
Intangible assets not subject to amortization	565.9		565.4
Other assets, net	579.4		517.7
Total assets	$	13,699.0	$	13,616.9

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

LIBERTY LATIN AMERICA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS – (Continued)

(unaudited)

	March 31, 2018			December 31, 2017
	in millions
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	276.7		$	286.8
Deferred revenue	159.3			143.4
Current portion of debt and capital lease obligations	212.3			263.3
Accrued capital expenditures	108.3			128.6
Accrued interest	58.8			115.6
Accrued income taxes	88.7			91.5
Other accrued and current liabilities	691.2			557.7
Total current liabilities	1,595.3			1,586.9
Long-term debt and capital lease obligations	6,207.1			6,108.2
Deferred tax liabilities	516.6			533.4
Other long-term liabilities	783.1			697.8
Total liabilities	9,102.1			8,926.3
Commitments and contingencies
Equity:
Liberty Latin America shareholders:
Class A, $0.01 par value; 500,000,000 shares authorized; 48,438,433 and 48,428,841 shares issued and outstanding, respectively	0.5			0.5
Class B, $0.01 par value; 50,000,000 shares authorized; 1,938,625 and 1,940,193 shares issued and outstanding, respectively	—			—
Class C, $0.01 par value; 500,000,000 shares authorized; 120,859,778 and 120,843,539 shares issued and outstanding, respectively	1.2			1.2
Undesignated preference shares, $0.01 par value; 50,000,000 shares authorized; nil shares issued and outstanding at each period	—			—
Additional paid-in capital	4,397.5			4,402.8
Accumulated deficit	(1,066.3		)	(1,010.7		)
Accumulated other comprehensive loss, net of taxes	(86.2		)	(64.2		)
Total Liberty Latin America shareholders	3,246.7			3,329.6
Noncontrolling interests	1,350.2			1,361.0
Total equity	4,596.9			4,690.6
Total liabilities and equity	$	13,699.0		$	13,616.9

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

LIBERTY LATIN AMERICA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three months ended March 31,
	2018			2017
	in millions
Revenue	$	909.9		$	910.9
Operating costs and expenses (exclusive of depreciation and amortization, shown separately below):
Programming and other direct costs of services	215.8			221.9
Other operating	166.5			170.5
Selling, general and administrative (SG&A)	193.3			176.4
Depreciation and amortization	202.3			193.9
Impairment, restructuring and other operating items, net	33.7			13.4
	811.6			776.1
Operating income	98.3			134.8
Non-operating income (expense):
Interest expense	(102.5		)	(94.3		)
Realized and unrealized losses on derivative instruments, net	(41.5		)	(27.3		)
Foreign currency transaction gains, net	15.9			14.5
Loss on debt modification and extinguishment	(13.0		)	—
Other income, net	5.3			6.0
	(135.8		)	(101.1		)
Earnings (loss) before income taxes	(37.5		)	33.7
Income tax expense	(16.8		)	(23.1		)
Net earnings (loss)	(54.3		)	10.6
Net loss (earnings) attributable to noncontrolling interests	9.8			(16.4		)
Net loss attributable to Liberty Latin America shareholders	$	(44.5	)	$	(5.8	)
Basic and diluted net loss per share attributable to Liberty Latin America shareholders	$	(0.26	)	$	(0.03	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

LIBERTY LATIN AMERICA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

	Three months ended March 31,
	2018			2017
	in millions
Net earnings (loss)	$	(54.3	)	$	10.6
Other comprehensive loss, net of taxes:
Foreign currency translation adjustments	(31.8		)	(10.6		)
Reclassification adjustments included in net earnings (loss)	1.6			1.0
Pension-related adjustments and other, net	0.9			(3.5		)
Other comprehensive loss	(29.3		)	(13.1		)
Comprehensive loss	(83.6		)	(2.5		)
Comprehensive loss (earnings) attributable to noncontrolling interests	10.3			(15.9		)
Comprehensive loss attributable to Liberty Latin America shareholders	$	(73.3	)	$	(18.4	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

LIBERTY LATIN AMERICA LTD.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(unaudited)

	Liberty Latin America shareholders																		Non-controlling interests			Total equity
	Common shares						Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive loss, net of taxes			Total Liberty Latin America shareholders
	Class A		Class B		Class C
	in millions
Balance at January 1, 2018, before effect of accounting change	$	0.5	$	—	$	1.2	$	4,402.8		$	(1,010.7	)	$	(64.2	)	$	3,329.6		$	1,361.0		$	4,690.6
Accounting change (note 2)	—		—		—		—			(11.1		)	—			(11.1		)	3.6			(7.5		)
Balance at January 1, 2018, as adjusted for accounting change	0.5		—		1.2		4,402.8			(1,021.8		)	(64.2		)	3,318.5			1,364.6			4,683.1
Net loss	—		—		—		—			(44.5		)	—			(44.5		)	(9.8		)	(54.3		)
Other comprehensive loss	—		—		—		—			—			(28.8		)	(28.8		)	(0.5		)	(29.3		)
C&W Jamaica NCI Acquisition	—		—		—		(12.0		)	—			6.8			(5.2		)	(14.9		)	(20.1		)
Capital contribution from noncontrolling interest owner	—		—		—		—			—			—			—			10.0			10.0
Shared-based compensation	—		—		—		7.4			—			—			7.4			—			7.4
Other	—		—		—		(0.7		)	—			—			(0.7		)	0.8			0.1
Balance at March 31, 2018	$	0.5	$	—	$	1.2	$	4,397.5		$	(1,066.3	)	$	(86.2	)	$	3,246.7		$	1,350.2		$	4,596.9

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

LIBERTY LATIN AMERICA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Three months ended March 31,
	2018			2017
	in millions
Cash flows from operating activities:
Net earnings (loss)	$	(54.3	)	$	10.6
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Share-based compensation expense	6.5			5.6
Depreciation and amortization	202.3			193.9
Impairment, restructuring and other operating items, net	33.7			13.4
Amortization of debt financing costs, premiums and discounts, net	(0.5		)	(3.8		)
Realized and unrealized losses on derivative instruments, net	41.5			27.3
Foreign currency transaction gains, net	(15.9		)	(14.5		)
Loss on debt modification and extinguishment	13.0			—
Deferred income tax benefit	(7.5		)	(17.3		)
Changes in operating assets and liabilities, net of the effect of an acquisition	(55.6		)	(140.2		)
Net cash provided by operating activities	163.2			75.0
Cash flows from investing activities:
Capital expenditures	(188.2		)	(124.4		)
Other investing activities, net	0.4			(2.6		)
Net cash used by investing activities	(187.8		)	(127.0		)
Cash flows from financing activities:
Borrowings of debt	190.0			136.5
Repayments of debt and capital lease obligations	(190.4		)	(73.9		)
Distributions to noncontrolling interest owners	—			(14.6		)
Capital contribution from noncontrolling interest owner	10.0			—
Distributions to Liberty Global	—			(18.8		)
Cash payment related to the C&W Jamaica NCI Acquisition	(18.6		)	—
Other financing activities, net	(2.8		)	5.3
Net cash provided (used) by financing activities	(11.8		)	34.5
Effect of exchange rate changes on cash, cash equivalents and restricted cash	0.1			(0.5		)
Net decrease in cash, cash equivalents and restricted cash	(36.3		)	(18.0		)
Cash, cash equivalents and restricted cash:
Beginning of period	568.2			580.8
End of period	$	531.9		$	562.8
Cash paid for interest	$	156.3		$	168.2
Net cash paid for taxes	$	29.1		$	34.6

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Liberty Latin America Ltd.

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

(1) Basis of Presentation

General

Liberty Latin America Ltd. (Liberty Latin America) is a registered company in Bermuda that primarily includes (i) Cable & Wireless Communications Limited and its subsidiaries (C&W), (ii) VTR Finance B.V. (VTR Finance) and its subsidiaries, which includes VTR.com SpA (VTR), and (iii) LiLAC Communications Inc. and its subsidiaries, which includes Liberty Cablevision of Puerto Rico LLC (Liberty Puerto Rico), an entity in which Liberty Latin America owns a 60.0% interest. C&W owns less than 100% of certain of its consolidated subsidiaries, including Cable & Wireless Panama, SA (C&W Panama) (a 49.0%-owned entity that owns most of our operations in Panama), The Bahamas Telecommunications Company Limited (a 49.0%-owned entity that owns all of our operations in the Bahamas) and Cable & Wireless Jamaica Limited (C&W Jamaica) (a 91.7%-owned entity that owns the majority of our operations in Jamaica).

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) and with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by U.S. GAAP or Securities and Exchange Commission rules and regulations for complete financial statements. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our 2017 Annual Report on Form 10-K (2017 Form 10-K).

These condensed consolidated financial statements include the historical financial information of (i) Liberty Latin America and its consolidated subsidiaries for the period following the Split-Off, as defined below, and (ii) certain former subsidiaries of Liberty Global plc (Liberty Global) for periods prior to the Split-Off. Although Liberty Latin America was reported on a combined basis prior to the Split-Off, these financial statements present all prior periods as consolidated. In these notes, the terms “we,” “our,” “our company” and “us” may refer, as the context requires, to Liberty Latin America or collectively to Liberty Latin America and its subsidiaries. Unless otherwise indicated, ownership percentages and convenience translations into United States (U.S.) dollars are calculated as of March 31, 2018.

We are an international provider of video, broadband internet, fixed-line telephony and mobile services. We provide residential and business-to-business (B2B) services in (i) 18 countries, primarily in Latin America and the Caribbean, through C&W, (ii) Chile through VTR and (iii) Puerto Rico through Liberty Puerto Rico. C&W also provides (i) B2B communication services in certain other countries in Latin America and the Caribbean and (ii) wholesale communication services over its sub-sea and terrestrial fiber optic cable networks that connect over 40 markets in that region.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

Split-off of Liberty Latin America from Liberty Global

On December 29, 2017, Liberty Global completed the split-off (the Split-Off) of our company, which at such time was one of Liberty Global's wholly-owned subsidiaries. In the Split-Off, 48,428,841 Class A common shares, 1,940,193 Class B common shares and 120,843,539 Class C common shares of Liberty Latin America (collectively Liberty Latin America Shares) were issued. As a result of the Split-Off, Liberty Latin America became an independent, publicly traded company, and its assets and liabilities as of the time of the Split-Off consisted of the businesses, assets and liabilities that were formerly attributed to Liberty Global’s “LiLAC Group.” The Split-Off was accounted for at historical cost due to the pro rata distribution of Liberty Latin America Shares to holders of Liberty Global’s LiLAC Shares, as defined below.

Several agreements were entered into in connection with the Split-Off (the Split-Off Agreements) between Liberty Latin America, Liberty Global and/or certain of their respective subsidiaries, including the Tax Sharing Agreement, the Reorganization Agreement, the Services Agreement, the Sublease Agreement and the Facilities Sharing Agreement, each as defined and described in note 11.

7

Liberty Latin America Ltd.

Notes to Condensed Consolidated Financial Statements – (Continued)

March 31, 2018

(unaudited)

LiLAC Transaction

On July 1, 2015, Liberty Global completed the “LiLAC Transaction,” pursuant to which each holder of Class A, Class B and Class C Liberty Global ordinary shares (Liberty Global Shares) received one share of the corresponding class of Liberty Global’s LiLAC ordinary shares (LiLAC Shares) for each 20 Liberty Global Shares held as of the record date for such distribution.

(2) Accounting Changes and Recent Accounting Pronouncements

Accounting Changes

ASU 2014-09

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. We adopted ASU 2014-09 effective January 1, 2018 by recording the cumulative effect to the opening balance of our accumulated deficit. We applied the new standard to contracts that were not complete as of January 1, 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The most significant impacts of ASU 2014-09 on our revenue recognition policies relate to our accounting for (i) long-term capacity contracts, (ii) subsidized handset plans and (iii) certain installation and other upfront fees, each as set forth below:

• We enter into certain long-term capacity contracts with customers where the customer pays the transaction consideration at inception of the contract. Under previous accounting standards, we did not impute interest for advance payments from customers related to services that are provided over time. Under ASU 2014-09, payment received from a customer significantly in advance of the provision of services is indicative of a financing component within the contract. If the financing component is significant, interest expense is accreted over the life of the contract with a corresponding increase to revenue.

• ASU 2014-09 requires the identification of deliverables in contracts with customers that qualify as performance obligations. The transaction price consideration from customers is allocated to each performance obligation under the contract on the basis of relative standalone selling price. Under previous accounting standards, when we offered discounted equipment, such as handsets under a subsidized contract, upfront revenue recognition was limited to the upfront cash collected from the customer as the remaining monthly fees to be received from the customer, including fees associated with the equipment, were contingent upon delivering future airtime. This limitation is not applied under ASU 2014-09. The primary impact on revenue reporting is that when we sell discounted equipment together with airtime services to customers, revenue allocated to equipment and recognized when control of the device passes to the customer will increase and revenue recognized as services are delivered will decrease.

• When we enter into contracts to provide services to our customers, we often charge installation or other upfront fees. Under previous accounting standards, installation fees related to services provided over our fixed networks were recognized as revenue during the period in which the installation occurred to the extent those fees were equal to or less than direct selling costs. Under ASU 2014-09, these fees are generally deferred and recognized as revenue over the contractual period for those contracts with substantive termination penalties, or for the period of time the upfront fees convey a material right for month-to-month contracts and contracts that do not include substantive termination penalties.

ASU 2014-09 also impacted our accounting for certain upfront costs directly associated with obtaining and fulfilling customer contracts. Under our previous policy, these costs were expensed as incurred unless the costs were in the scope of other accounting standards that allowed for capitalization. Under ASU 2014-09, the upfront costs associated with contracts that have substantive termination penalties and a term of longer than one year are recognized as assets and amortized to other operating expenses over the applicable period benefited. 

We implemented internal controls to ensure we adequately evaluated our contracts and properly assessed the impact of ASU 2014-09 on our condensed consolidated financial statements. We do not believe such new controls represent significant changes to our internal control over financial reporting.

8

Liberty Latin America Ltd.

Notes to Condensed Consolidated Financial Statements – (Continued)

March 31, 2018

(unaudited)

For information regarding changes to our accounting policies following the adoption of ASU 2014-09 and our contract assets and deferred revenue balances, see note 3.

The cumulative effect of the changes made to our condensed consolidated balance sheet as of January 1, 2018 is as follows:

	Balance at December 31, 2017			Cumulative catch up adjustments upon adoption			Balance at January 1, 2018
	in millions
Assets:
Other current assets	$	222.9		$	15.8		$	238.7
Other assets, net	$	517.7		$	15.6		$	533.3
Liabilities:
Deferred revenue	$	143.4		$	13.3		$	156.7
Other long-term liabilities	$	697.8		$	25.6		$	723.4
Equity:
Accumulated deficit	$	(1,010.7	)	$	(11.1	)	$	(1,021.8	)
Noncontrolling interests	$	1,361.0		$	3.6		$	1,364.6

The impact of our adoption of ASU 2014-09 to our condensed consolidated statement of operations for the three months ended March 31, 2018 is as follows:

	Before adoption of ASU 2014-09		Impact of ASU 2014-09 Increase (decrease)			As reported
	in millions
Revenue	$	909.0	$	0.9		$	909.9
Operating costs and expenses – selling, general and administrative	$	193.6	$	(0.3	)	$	193.3
Non-operating expense – interest expense	$	98.3	$	4.2		$	102.5
Income tax expense	$	17.3	$	(0.5	)	$	16.8
Net loss	$	51.8	$	2.5		$	54.3

ASU 2016-18

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows-Restricted Cash (ASU 2016-18), which addresses the presentation of restricted cash in the statement of cash flows. This ASU requires that the statement of cash flows explain the change in the beginning-of-period and end-of-period totals of cash, cash equivalents and restricted cash balances. We adopted ASU 2016-18 on January 1, 2018, which resulted in an increase (decrease) to our operating, financing and investing cash flows of ($1 million), $3 million, and $6 million, respectively, during the three months ended March 31, 2017. At March 31, 2018 and December 31, 2017, the balance of our restricted cash was $21 million and $38 million, respectively.

9

Liberty Latin America Ltd.

Notes to Condensed Consolidated Financial Statements – (Continued)

March 31, 2018

(unaudited)

ASU 2017-07

In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits—Improving the Presentation of the Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07), which includes changes to the presentation of periodic benefit cost components. Under ASU 2017-07, we will continue to present the service component of our net benefit cost as a component of operating income but present the other components of our net benefit cost computation, which can include credits, within non-operating income (expense) in our consolidated statements of operations. We adopted ASU 2017-07 on January 1, 2018. The change in presentation to our condensed consolidated statements of operations from ASU 2017-07 was applied on a retrospective basis. As a result of the adoption of ASU 2017-07, we have presented $3 million of pension-related credits in other income, net in our condensed consolidated statements of operations for each of the three months ended March 31, 2018 and 2017.

Recent Accounting Pronouncements

ASU 2016-02

In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02), which, for most leases, will result in lessees recognizing lease assets and lease liabilities on the balance sheet with additional disclosures about leasing arrangements. ASU 2016-02 requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach and additional guidance provided by ASU 2018-01, Leases (Topic 842)—Land Easement Practical Expedient for Transition to Topic 842, includes a number of optional practical expedients an entity may elect to apply. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We will adopt ASU 2016-02 on January 1, 2019. Although we are currently evaluating the effect that ASU 2016-02 will have on our consolidated financial statements, the main impact of the adoption of this standard will be the recognition of lease assets and lease liabilities in our consolidated balance sheets for those leases classified as operating leases under previous U.S. GAAP. ASU 2016-02 will not have significant impacts on our consolidated statements of operations or cash flows.

(3)    Summary of Changes in Significant Accounting Policies

The following accounting policies reflect updates to our Summary of Significant Accounting Policies included in our 2017 Form 10-K as a result of the adoption of ASU 2014-09. For additional information regarding the adoption of ASU 2014-09, see note 2.

Contract Assets

When we transfer goods or services to a customer but do not have an unconditional right to payment, we record a contract asset. Contract assets are reclassified to trade receivables, net in our consolidated balance sheet at the point in time we have the unconditional right to payment. Our contract assets were $12 million and $13 million as of March 31, 2018 and January 1, 2018, respectively. The change in our contract assets during the three months ended March 31, 2018 were not material. The current and long-term portion of contract assets are included in other current assets and other assets, net, respectively, in our condensed consolidated balance sheet.

Deferred Contract Costs

Incremental costs to obtain a contract with a customer, such as incremental sales commissions, are recognized as an asset and amortized to SG&A expenses over the applicable period benefited, which is the longer of the contract life or the economic life of the commission. If, however, the amortization period is one year or less, we expense such costs in the period incurred. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained are recognized as an expense when incurred. Our deferred contract costs were $10 million and $9 million as of March 31, 2018 and January 1, 2018, respectively. The change in our contract assets during the three months ended March 31, 2018 were not material. The current and long-term portion of deferred contract costs are included in other current assets and other assets, net, respectively, in our condensed consolidated balance sheet.

10

Liberty Latin America Ltd.

Notes to Condensed Consolidated Financial Statements – (Continued)

March 31, 2018

(unaudited)

Deferred Revenue

We record deferred revenue when we have received payment prior to transferring goods or services to a customer. Deferred revenue primarily relates to (i) advanced payments on fixed subscription services and mobile airtime services and (ii) deferred installation and other upfront fees. Our aggregate current and long-term deferred revenue as of March 31, 2018 and December 31, 2017, was $417 million and $397 million, respectively. Long-term deferred revenue is included in other long-term liabilities in our condensed consolidated balance sheets. We recorded an aggregate of $19 million of current and long-term deferred revenue on January 1, 2018 upon the adoption of ASU 2014-09. The remaining change in the current portion and long-term deferred revenue balances during the three months ended March 31, 2018 were not material.

Revenue Recognition

General. Most of our fixed and mobile residential contracts are not enforceable or do not contain substantive early termination penalties. Accordingly, revenue relating to these customers is recognized on a basis consistent with these customers that are not subject to contracts.

Subscription Revenue – Fixed Networks. We recognize revenue from video, broadband internet and fixed-line telephony services over our fixed networks to customers in the period the related subscription services are provided. Installation or other upfront fees related to services provided over our fixed networks are generally deferred and recognized as subscription revenue over the contractual period, or longer if the upfront fee results in a material renewal right.

We may also sell video, broadband internet and fixed-line telephony services to our customers in bundled packages at a rate lower than if the customer purchased each product on a standalone basis. Arrangement consideration from bundled packages generally is allocated proportionally to the individual service based on the relative standalone price for each respective product or service.

Mobile Revenue – General. Consideration from mobile contracts is allocated to airtime services and handset sales based on the relative standalone prices of each performance obligation.

Mobile Revenue – Airtime Services. We recognize revenue from mobile services in the period the related services are provided. Payments received from prepay customers are recorded as deferred revenue prior to the commencement of services and are recognized as revenue as the services are rendered or usage rights expire.

Mobile Revenue – Handset Revenue. Arrangement consideration allocated to handsets is recognized as revenue when the goods have been transferred to the customer.

B2B Revenue – Installation Revenue. We defer upfront installation and certain nonrecurring fees received on B2B contracts where we maintain ownership of the installed equipment. The deferred fees are amortized into revenue on a straight-line basis over the term of the arrangement or the expected period of performance.

Sub-sea Network Revenue – Long-term Capacity Contracts. We enter into certain long-term capacity contracts with customers where the customer either pays a fixed fee over time or prepays for the capacity upfront and pays a portion related to operating and maintenance of the network over time. We assess whether prepaid capacity contracts contain a significant financing component. If the financing component is significant, interest expense is accreted over the life of the contract using the effective interest method. The revenue associated with prepaid capacity contracts is deferred and recognized on a straight-line basis over the life of the contract.

(4) Acquisitions

Pending Acquisition

Cabletica. On February 12, 2018, we entered into a definitive agreement to acquire 80% of Costa Rican cable operator, “Cabletica,” which is part of Televisora de Costa Rica S.A. in an all cash transaction. In the transaction, Cabletica was valued at an enterprise value in Costa Rican Colon (CRC) of CRC 143 billion ($252 million). We intend to finance the acquisition of the 80% equity stake in Cabletica through a combination of incremental debt and existing liquidity. The current owners of Cabletica will retain the remaining 20% interest. The transaction is subject to customary closing adjustments and conditions, including regulatory approvals, and is expected to close during the second half of 2018.

11

Liberty Latin America Ltd.

Notes to Condensed Consolidated Financial Statements – (Continued)

March 31, 2018

(unaudited)

2017 Acquisition

Carve-out Entities. On May 16, 2016, Liberty Global acquired C&W (the C&W Acquisition), which was contributed to our company as part of the Split-Off. In connection with the C&W Acquisition and C&W’s acquisition of Columbus International Inc. and its subsidiaries in 2015 (the Columbus Acquisition), certain entities (the Carve-out Entities) that hold licenses granted by the U.S. Federal Communications Commission (the FCC) were transferred to entities not controlled by C&W (collectively, New Cayman).The arrangements with respect to the Carve-out Entities, which were executed in connection with the Columbus Acquisition and the C&W Acquisition, contemplated that upon receipt of regulatory approval, we would acquire the Carve-out Entities. On March 8, 2017, the FCC granted its approval for Liberty Global’s acquisition of the Carve-out Entities. Accordingly, on April 1, 2017, subsidiaries of C&W acquired the Carve-out Entities (the C&W Carve-out Acquisition) for an aggregate purchase price of $86 million, which represents the amount due under notes receivable that were exchanged for the equity of the Carve-out Entities.

(5) Derivative Instruments

In general, we seek to enter into derivative instruments to protect against (i) increases in the interest rates on our variable-rate debt and (ii) foreign currency movements, particularly with respect to borrowings that are denominated in a currency other than the functional currency of the borrowing entity. In this regard, through our subsidiaries, we have entered into various derivative instruments to manage interest rate exposure and foreign currency exposure with respect to the U.S. dollar ($), the British pound sterling (£), the Chilean peso (CLP), the Jamaican dollar (JMD) and the Colombian peso (COP). With the exception of certain foreign currency forward contracts, we do not apply hedge accounting to our derivative instruments. Accordingly, changes in the fair values of most of our derivative instruments are recorded in realized and unrealized gains or losses on derivative instruments in our condensed consolidated statements of operations.

The following table provides details of the fair values of our derivative instrument assets and liabilities:

	March 31, 2018						December 31, 2017
	Current (a)		Long-term (a)		Total		Current (a)		Long-term (a)		Total
	in millions
Assets:
Cross-currency and interest rate derivative contracts (b)	$	16.5	$	100.6	$	117.1	$	2.9	$	38.4	$	41.3
Foreign currency forward contracts	—		0.4		0.4		—		—		—
Total	$	16.5	$	101.0	$	117.5	$	2.9	$	38.4	$	41.3
Liabilities:
Cross-currency and interest rate derivative contracts (b)	$	62.1	$	125.2	$	187.3	$	29.4	$	51.9	$	81.3
Foreign currency forward contracts	13.4		—		13.4		12.8		—		12.8
Total	$	75.5	$	125.2	$	200.7	$	42.2	$	51.9	$	94.1

(a) Our current derivative assets, current derivative liabilities, long-term derivative assets and long-term derivative liabilities are included in other current assets, other accrued and current liabilities, other assets, net, and other long-term liabilities, respectively, in our condensed consolidated balance sheets.

(b) We consider credit risk relating to our and our counterparties’ nonperformance in the fair value assessment of our derivative instruments. In all cases, the adjustments take into account offsetting liability or asset positions within each of our primary borrowing groups (see note 8). The changes in the credit risk valuation adjustments associated with our cross-currency and interest rate derivative contracts resulted in a net gain (loss) of ($12 million) and $7 million during the three months ended March 31, 2018 and 2017, respectively. These amounts are included in realized and unrealized losses on derivative instruments, net, in our condensed consolidated statements of operations. For further information regarding our fair value measurements, see note 6.

12

Liberty Latin America Ltd.

Notes to Condensed Consolidated Financial Statements – (Continued)

March 31, 2018

(unaudited)

The details of our realized and unrealized losses on derivative instruments, net, are as follows:

	Three months ended March 31,
	2018			2017
	in millions
Cross-currency and interest rate derivative contracts	$	(38.9	)	$	(25.5	)
Foreign currency forward contracts	(2.6		)	(1.8		)
Total	$	(41.5	)	$	(27.3	)

The following table sets forth the classification of the net cash outflows of our derivative instruments:

	Three months ended March 31,
	2018			2017
	in millions
Operating activities	$	(11.7	)	$	(10.7	)
Investing activities	(1.7		)	(1.2		)
Total	$	(13.4	)	$	(11.9	)

Counterparty Credit Risk

We are exposed to the risk that the counterparties to the derivative instruments of our borrowing groups will default on their obligations to us.  We manage these credit risks through the evaluation and monitoring of the creditworthiness of, and concentration of risk with, the respective counterparties. In this regard, credit risk associated with our derivative instruments is spread across a relatively broad counterparty base of banks and financial institutions. Collateral has not been posted by either party under the derivative instruments of our borrowing groups. At March 31, 2018, our exposure to counterparty credit risk included derivative assets with an aggregate fair value of $54 million.

Each of our borrowing groups has entered into derivative instruments under agreements with each counterparty that contain master netting arrangements that are applicable in the event of early termination by either party to such derivative instrument. The master netting arrangements under each of these master agreements are limited to the derivative instruments governed by the relevant master agreement within each individual borrowing group and are independent of similar arrangements of our other subsidiary borrowing groups.

13

Liberty Latin America Ltd.

Notes to Condensed Consolidated Financial Statements – (Continued)

March 31, 2018

(unaudited)

Details of our Derivative Instruments

Cross-currency Derivative Contracts

As noted above, we are exposed to foreign currency exchange rate risk in situations where our debt is denominated in a currency other than the functional currency of the operations whose cash flows support our ability to repay or refinance such debt. Although we generally seek to match the denomination of our subsidiaries’ borrowings with the functional currency of the operations that are supporting the respective borrowings, market conditions or other factors may cause us to enter into borrowing arrangements that are not denominated in the functional currency of the underlying operations (unmatched debt). Our policy is generally to provide for an economic hedge against foreign currency exchange rate movements, whenever possible and when cost effective to do so, by using derivative instruments to synthetically convert unmatched debt into the applicable underlying currency. The following table sets forth the total notional amounts and the related weighted average remaining contractual lives of our cross-currency swap contracts at March 31, 2018:

Borrowing group	Notional amount due from counterparty		Notional amount due to counterparty		Weighted average remaining life
	in millions				in years
C&W	$	108.3	JMD	13,817.5	4.8
	$	35.4	COP	106,000.0	4.3
	£	146.7	$	194.3	1.0
VTR Finance	$	1,400.0	CLP	951,390.0	4.2

Interest Rate Derivative Contracts

As noted above, we enter into interest rate swaps to protect against increases in the interest rates on our variable-rate debt. Pursuant to these derivative instruments, we typically pay fixed interest rates and receive variable interest rates on specified notional amounts. The following table sets forth the total U.S. dollar equivalents of the notional amounts and the related weighted average remaining contractual lives of our interest rate swap contracts at March 31, 2018:

Borrowing group	Notional amount due from counterparty		Weighted average remaining life
	in millions		in years
C&W (a)	$	2,975.0	6.1
Liberty Puerto Rico	$	675.0	3.0

(a) Includes forward-starting derivative instruments.

Basis Swaps

Basis swaps involve the exchange of attributes used to calculate our floating interest rates, including (i) the benchmark rate, (ii) the underlying currency and/or (iii) the borrowing period. We typically enter into these swaps to optimize our interest rate profile based on our current evaluations of yield curves, our risk management policies and other factors. At March 31, 2018, the U.S. dollar equivalent of the notional amounts of these derivative instruments was $3,750 million and the related weighted average remaining contractual life of our basis swap contracts was 1.2 years. At March 31, 2018, our basis swaps were all held by subsidiaries of our C&W borrowing group.

14

Liberty Latin America Ltd.

Notes to Condensed Consolidated Financial Statements – (Continued)

March 31, 2018

(unaudited)

Interest Rate Caps

We enter into interest rate cap agreements that lock in a maximum interest rate if variable rates rise, but also allow our company to benefit from declines in market rates. At March 31, 2018, the total U.S. dollar notional amounts of our interest rate caps was $436 million, all of which are held by Liberty Puerto Rico.

Impact of Derivative Instruments on Borrowing Costs

The weighted average impact of the derivative instruments, excluding forward-starting derivative instruments, on our borrowing costs at March 31, 2018 was as follows:

Borrowing group	Increase (decrease) to borrowing costs
C&W	0.43	%
VTR Finance	(0.52	)%
Liberty Puerto Rico	0.44	%
Liberty Latin America borrowing groups	0.22	%

Foreign Currency Forwards

We enter into foreign currency forward contracts with respect to non-functional currency exposure. As of March 31, 2018, the total U.S. dollar equivalent of the notional amount of foreign currency forward contracts was $228 million, all of which are held by subsidiaries of our VTR borrowing group.

(6) Fair Value Measurements

We use the fair value method to account for our derivative instruments and the available-for-sale method to account for our investment in the United Kingdom (U.K.) Government Gilts. The reported fair values of our derivative instruments as of March 31, 2018 likely will not represent the value that will be paid or received upon the ultimate settlement or disposition of these assets and liabilities, as we expect that the values realized generally will be based on market conditions at the time of settlement, which may occur at the maturity of the derivative instrument or at the time of the repayment or refinancing of the underlying debt instrument.

U.S. GAAP provides for a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. We record transfers of assets or liabilities into or out of Levels 1, 2 or 3 at the beginning of the quarter during which the transfer occurred. During the three months ended March 31, 2018, no such transfers were made.

In order to manage our interest rate and foreign currency exchange risk, we have entered into various derivative instruments, as further described in note 5. The recurring fair value measurements of these derivative instruments are determined using discounted cash flow models. Most of the inputs to these discounted cash flow models consist of, or are derived from, observable Level 2 data for substantially the full term of these derivative instruments. This observable data mostly includes interest rate futures and swap rates, which are retrieved or derived from available market data. Although we may extrapolate or interpolate this data, we do not otherwise alter this data in performing our valuations. We incorporate a credit risk valuation adjustment in our fair value measurements to estimate the impact of both our own nonperformance risk and the nonperformance risk of our counterparties. Our and our counterparties’ credit spreads represent our most significant Level 3 inputs, and these inputs are used to derive the credit risk valuation adjustments with respect to these instruments. As we would not expect changes in our or our counterparties’ credit spreads to have a significant impact on the valuations of these instruments, we have determined that these valuations fall under Level 2 of the fair value hierarchy. Due to the lack of Level 2 inputs for the valuation of the U.S dollar to the Jamaican dollar cross-currency swaps (the Sable Currency Swaps) held by a subsidiary of C&W, we believe this valuation falls under Level 3 of the fair value hierarchy. The Sable Currency Swaps are our only Level 3 financial instruments. The fair values of the Sable Currency Swaps at March 31, 2018 and December 31, 2017 were $27 million and $22 million, respectively, which are included in other

15

Liberty Latin America Ltd.

Notes to Condensed Consolidated Financial Statements – (Continued)

March 31, 2018

(unaudited)

long-term liabilities in our condensed consolidated balance sheets. The change in the fair values of the Sable Currency Swaps resulted in net losses of $5 million and $4 million during the three months ended March 31, 2018 and 2017, respectively, which are reflected in realized and unrealized losses on derivative instruments, net, in our condensed consolidated statements of operations. Our credit risk valuation adjustments with respect to our cross-currency and interest rate swaps are quantified and further explained in note 5.

Our investment in the U.K. Government Gilts falls under Level 1 of the fair value hierarchy. At March 31, 2018 and December 31, 2017, the carrying values of our investment in the U.K. Government Gilts, which are included in other assets, net, in our condensed consolidated balance sheets, was $33 million and $37 million, respectively.

(7) Long-lived Assets

Goodwill

Changes in the carrying amount of our goodwill during the three months ended March 31, 2018 are set forth below:

	January 1, 2018		Foreign currency translation adjustments			March 31, 2018
	in millions
C&W	$	4,962.5	$	(18.3	)	$	4,944.2
VTR	433.4		8.3			441.7
Liberty Puerto Rico	277.7		—			277.7
Total	$	5,673.6	$	(10.0	)	$	5,663.6

Based on the results of our October 1, 2017 goodwill impairment test, a hypothetical decline of 20% or more in the fair value of C&W reporting units that carry a goodwill balance or the Liberty Puerto Rico reporting unit could result in the need to record additional goodwill impairment charges. If, among other factors, (i) our equity values were to decline significantly or (ii) the adverse impacts of economic, competitive, regulatory or other factors, including macro-economic and demographic trends, were to cause C&W’s or Liberty Puerto Rico’s results of operations or cash flows to be worse than anticipated, we could conclude in future periods that additional impairment charges are required in order to reduce the carrying values of the goodwill, cable television franchise rights and, to a lesser extent, other long-lived assets of these entities.

Property and Equipment, Net

The details of our property and equipment and the related accumulated depreciation are set forth below:

	March 31, 2018			December 31, 2017
	in millions
Distribution systems	$	4,047.2		$	3,878.4
Customer premises equipment	1,438.8			1,382.8
Support equipment, buildings and land	1,338.6			1,306.3
	6,824.6			6,567.5
Accumulated depreciation	(2,588.4		)	(2,398.3		)
Total	$	4,236.2		$	4,169.2

During the three months ended March 31, 2018 and 2017, we recorded non-cash increases to our property and equipment related to vendor financing arrangements aggregating $21 million and $14 million, respectively.

16

Liberty Latin America Ltd.

Notes to Condensed Consolidated Financial Statements – (Continued)

March 31, 2018

(unaudited)

Intangible Assets Subject to Amortization, Net

The details of our intangible assets subject to amortization are set forth below:

	March 31, 2018			December 31, 2017
	in millions
Gross carrying amount:
Customer relationships	$	1,459.3		$	1,415.1
Licenses and other	184.2			199.8
Total gross carrying amount	1,643.5			1,614.9
Accumulated amortization:
Customer relationships	(374.6		)	(284.2		)
Licenses and other	(17.3		)	(14.5		)
Total accumulated amortization	(391.9		)	(298.7		)
Net carrying amount	$	1,251.6		$	1,316.2

(8) Debt and Capital Lease Obligations

The U.S. dollar equivalents of the components of our debt are as follows:

	March 31, 2018							Estimated fair value (c)				Principal Amount
	Weighted average interest rate (a)		Unused borrowing capacity (b)
			Borrowing currency			US $ equivalent		March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017
			in millions
C&W Credit Facilities	4.95	%		$	746.5	$	746.5	$	2,243.7	$	2,216.4	$	2,235.9	$	2,212.2
C&W Notes	7.09	%		—		—		1,712.3		1,749.7		1,655.9		1,648.4
VTR Finance Senior Secured Notes	6.88	%		—		—		1,452.3		1,479.6		1,400.0		1,400.0
VTR Credit Facility	—	%		(d)		232.9		—		—		—		—
LPR Bank Facility