UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	September 30, 2019

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

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbols	Name of Each Exchange on Which Registered
Class A Shares, par value $0.01 per share	LILA	The NASDAQ Stock Market LLC
Class C Shares, par value $0.01 per share	LILAK	The NASDAQ Stock Market LLC

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 every Interactive Data File required to be submitted 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 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.

Large Accelerated Filer	☑	Accelerated Filer	☐	Non-Accelerated Filer	☐
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 October 31, 2019 was: 48,773,157 Class A; 1,934,686 Class B; and 131,136,248 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 September 30, 2019 and December 31, 2018 (unaudited)	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	3
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	4
	Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	43
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	69
Item 4.	CONTROLS AND PROCEDURES	71
	PART II - OTHER INFORMATION
Item 1A.	RISK FACTORS	72
Item 6.	EXHIBITS	73

LIBERTY LATIN AMERICA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

 

	September 30, 2019		December 31, 2018
	in millions
ASSETS
Current assets:
Cash and cash equivalents	$	1,004.1	$	631.0
Trade receivables, net of allowances of $148.7 million and $144.4 million, respectively	629.0		607.3
Prepaid expenses	67.3		73.2
Other current assets, net	232.1		333.3
Total current assets	1,932.5		1,644.8
Goodwill	4,973.0		5,133.3
Property and equipment, net	4,282.0		4,236.9
Intangible assets subject to amortization, net	986.9		1,165.7
Intangible assets not subject to amortization	561.5		562.5
Other assets, net	806.4		703.4
Total assets	$	13,542.3	$	13,446.6

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

1

LIBERTY LATIN AMERICA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS – (Continued)

(unaudited)

	September 30, 2019			December 31, 2018
	in millions
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	295.3		$	297.4
Current portion of deferred revenue	163.4			161.7
Current portion of debt and finance lease obligations	181.6			302.5
Accrued capital expenditures	52.6			75.0
Accrued interest	80.5			118.7
Accrued income taxes	26.5			29.8
Accrued payroll and employee benefits	84.7			86.0
Other accrued and current liabilities	638.7			537.6
Total current liabilities	1,523.3			1,608.7
Long-term debt and finance lease obligations	6,906.3			6,379.6
Deferred tax liabilities	389.8			543.0
Deferred revenue	210.2			239.0
Other long-term liabilities	581.0			552.9
Total liabilities	9,610.6			9,323.2
Commitments and contingencies
Equity:
Liberty Latin America shareholders:
Class A, $0.01 par value; 500,000,000 shares authorized; 48,697,612 and 48,501,803 shares issued and outstanding, respectively	0.5			0.5
Class B, $0.01 par value; 50,000,000 shares authorized; 1,934,817 and 1,935,949 shares issued and outstanding, respectively	—			—
Class C, $0.01 par value; 500,000,000 shares authorized; 130,972,040 and 130,526,158 shares issued and outstanding, respectively	1.3			1.3
Undesignated preference shares, $0.01 par value; 50,000,000 shares authorized; nil shares issued and outstanding at each period	—			—
Additional paid-in capital	4,563.0			4,494.1
Accumulated deficit	(1,489.4		)	(1,367.0		)
Accumulated other comprehensive loss, net of taxes	(51.3		)	(16.3		)
Total Liberty Latin America shareholders	3,024.1			3,112.6
Noncontrolling interests	907.6			1,010.8
Total equity	3,931.7			4,123.4
Total liabilities and equity	$	13,542.3		$	13,446.6

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 September 30,						Nine months ended September 30,
	2019			2018			2019			2018
	in millions, except share and per share amounts
Revenue	$	966.8		$	925.2		$	2,892.4		$	2,757.2
Operating costs and expenses (exclusive of depreciation and amortization, shown separately below):
Programming and other direct costs of services	218.5			218.3			672.7			652.5
Other operating	177.9			165.5			519.8			502.5
Selling, general and administrative (SG&A)	205.8			189.0			612.2			570.8
Depreciation and amortization	226.0			204.8			665.3			614.7
Impairment, restructuring and other operating items, net	208.3			8.8			235.3			55.4
	1,036.5			786.4			2,705.3			2,395.9
Operating income (loss)	(69.7		)	138.8			187.1			361.3
Non-operating income (expense):
Interest expense	(123.9		)	(110.2		)	(359.4		)	(322.1		)
Realized and unrealized gains (losses) on derivative instruments, net	51.4			8.9			(96.6		)	82.5
Foreign currency transaction losses, net	(110.8		)	(16.4		)	(98.1		)	(121.1		)
Losses on debt modification and extinguishment	(3.5		)	—			(13.0		)	(13.0		)
Other income (expense), net	4.4			(12.0		)	9.4			(1.9		)
	(182.4		)	(129.7		)	(557.7		)	(375.6		)
Earnings (loss) before income taxes	(252.1		)	9.1			(370.6		)	(14.3		)
Income tax benefit (expense)	182.4			(27.9		)	148.5			(86.3		)
Net loss	(69.7		)	(18.8		)	(222.1		)	(100.6		)
Net loss (earnings) attributable to noncontrolling interests	105.0			(6.7		)	99.7			(11.6		)
Net earnings (loss) attributable to Liberty Latin America shareholders	$	35.3		$	(25.5	)	$	(122.4	)	$	(112.2	)
Basic and diluted net earnings (loss) per share attributable to Liberty Latin America shareholders	$	0.19		$	(0.15	)	$	(0.67	)	$	(0.65	)
Weighted average shares outstanding - basic	181,588,912			171,378,608			181,378,721			171,299,958
Weighted average shares outstanding - diluted	181,943,750			171,378,608			181,378,721			171,299,958

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 September 30,						Nine months ended September 30,
	2019			2018			2019			2018
	in millions
Net loss	$	(69.7	)	$	(18.8	)	$	(222.1	)	$	(100.6	)
Other comprehensive loss, net of taxes:
Foreign currency translation adjustments	(6.8		)	(66.6		)	(32.5		)	(110.4		)
Reclassification adjustments included in net loss	(0.8		)	(0.1		)	(4.3		)	2.6
Pension-related adjustments and other, net	3.2			(0.4		)	1.3			8.0
Other comprehensive loss	(4.4		)	(67.1		)	(35.5		)	(99.8		)
Comprehensive loss	(74.1		)	(85.9		)	(257.6		)	(200.4		)
Comprehensive loss (earnings) attributable to noncontrolling interests	105.3			(6.2		)	100.2			(9.2		)
Comprehensive earnings (loss) attributable to Liberty Latin America shareholders	$	31.2		$	(92.1	)	$	(157.4	)	$	(209.6	)

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

4

LIBERTY LATIN AMERICA LTD.

CONDENSED CONSOLIDATED STATEMENTS 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 July 1, 2018	$	0.5	$	—	$	1.2	$	4,404.2		$	(1,108.5	)	$	(87.8	)	$	3,209.6		$	1,351.8		$	4,561.4
Net loss	—		—		—		—			(25.5		)	—			(25.5		)	6.7			(18.8		)
Other comprehensive loss	—		—		—		—			—			(66.6		)	(66.6		)	(0.5		)	(67.1		)
Shared-based compensation	—		—		—		10.0			—			—			10.0			0.4			10.4
Other	—		—		—		(0.6		)	—			—			(0.6		)	—			(0.6		)
Balance at September 30, 2018	$	0.5	$	—	$	1.2	$	4,413.6		$	(1,134.0	)	$	(154.4	)	$	3,126.9		$	1,358.4		$	4,485.3
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	—		—		—		—			(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	—		—		—		—			(112.2		)	—			(112.2		)	11.6			(100.6		)
Other comprehensive loss	—		—		—		—			—			(97.4		)	(97.4		)	(2.4		)	(99.8		)
C&W Jamaica NCI Acquisition	—		—		—		(13.7		)	—			7.2			(6.5		)	(15.1		)	(21.6		)
Capital contribution from noncontrolling interest owner	—		—		—		—			—			—			—			18.0			18.0
Distributions to noncontrolling interest owners	—		—		—		—			—			—			—			(19.8		)	(19.8		)
Shared-based compensation	—		—		—		23.0			—			—			23.0			1.5			24.5
Other	—		—		—		1.5			—			—			1.5			—			1.5
Balance at September 30, 2018	$	0.5	$	—	$	1.2	$	4,413.6		$	(1,134.0	)	$	(154.4	)	$	3,126.9		$	1,358.4		$	4,485.3

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

5

LIBERTY LATIN AMERICA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY – (Continued)

(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 July 1, 2019	$	0.5	$	—	$	1.3	$	4,549.3	$	(1,524.7	)	$	(47.2	)	$	2,979.2		$	1,024.7		$	4,003.9
Net income	—		—		—		—		35.3			—			35.3			(105.0		)	(69.7		)
Other comprehensive loss	—		—		—		—		—			(4.1		)	(4.1		)	(0.3		)	(4.4		)
Distributions to noncontrolling interest owners	—		—		—		—		—			—			—			(0.1		)	(0.1		)
UTS NCI Acquisition	—		—		—		0.1		—			—			0.1			(11.7		)	(11.6		)
Share-based compensation	—		—		—		12.9		—			—			12.9			—			12.9
Other	—		—		—		0.7		—			—			0.7			—			0.7
Balance at September 30, 2019	$	0.5	$	—	$	1.3	$	4,563.0	$	(1,489.4	)	$	(51.3	)	$	3,024.1		$	907.6		$	3,931.7
Balance at January 1, 2019	$	0.5	$	—	$	1.3	$	4,494.1	$	(1,367.0	)	$	(16.3	)	$	3,112.6		$	1,010.8		$	4,123.4
Net loss	—		—		—		—		(122.4		)	—			(122.4		)	(99.7		)	(222.1		)
Other comprehensive loss	—		—		—		—		—			(35.0		)	(35.0		)	(0.5		)	(35.5		)
Impact of the UTS Acquisition	—		—		—		—		—			—			—			11.6			11.6
Distributions to noncontrolling interest owners	—		—		—		—		—			—			—			(2.6		)	(2.6		)
Conversion Option, net	—		—		—		77.3