the assets acquired and liabilities assumed following the closing of the AT&T Acquisition; and

the closing of the AT&T Acquisition, which includes, among other things, the:

purchase price of the AT&T Acquisition;

preliminary fair value adjustments of the assets acquired;

adjustments associated with aligning the accounting policies of the AT&T Acquired Entities to those used by Liberty Latin America; and

the B2B Asset Sale, as defined and described below.

the closing of the AT&T Acquisition, which includes, among other things, the:

impacts related to preliminary fair value adjustments of the assets acquired, for example adjustments related to depreciation and amortization;

adjustments associated with aligning the accounting policies of the AT&T Acquired Entities to those used by Liberty Latin America;

elimination of certain intercompany transactions and Allocations, as defined and described below, between AT&T and the AT&T Acquired Entities included in the historical financial statements of the AT&T Acquired Entities; and

impacts of the TSA, as defined below, and certain other agreements;

the B2B Asset Sale; and

the Debt Transactions and Refinancing Transaction, each as defined and described below.

Liberty Latin America’s unaudited condensed consolidated financial statements included in our September 30, 2020 Quarterly Report on Form 10-Q;

Liberty Latin America’s audited consolidated financial statements included in our December 31, 2019 Annual Report on Form 10-K;

AT&T Acquired Entities’ audited combined financial statements as of December 31, 2019, as filed herewith; and

AT&T Acquired Entities’ unaudited combined financial statements as of September 30, 2020, as filed herewith.

Current assets:

Cash and cash equivalents

Trade receivables, net of allowances

Related-party notes receivable

Other current assets, net

Total current assets

Goodwill

Property and equipment, net

Restricted cash

Intangible assets subject to amortization, net

Intangible assets not subject to amortization

Other assets, net

Total assets

Current liabilities:

Accounts payable

Current portion of debt and finance lease obligations

Other accrued and current liabilities

Total current liabilities

Long-term debt and finance lease obligations

Deferred tax liabilities

Other long-term liabilities

Total liabilities

Total equity

Total liabilities and equity

Revenue

Operating costs and expenses (exclusive of depreciation and amortization, shown separately below):

Programming and other direct costs of services

Other operating costs and expenses (including stock-based compensation of $75.3 million for Liberty Latin America)

Depreciation and amortization

Impairment, restructuring and other operating items, net

Operating income (expense)

Non-operating income (expense):

Interest income (expense), net

Realized and unrealized losses on interest rate derivative instruments, net

Foreign currency transaction losses, net

Losses on debt modification and extinguishment, net

Other income, net

Net earnings (loss) before income taxes

Income tax benefit (expense)

Net earnings (loss)

Net loss attributable to noncontrolling interests

Net earnings (loss) attributable to Liberty Latin America shareholders

Basic and diluted net loss per share attributable to Liberty Latin America shareholders

Weighted average shares outstanding – basic and diluted (a)

Represents the weighted average number of Liberty Latin America shares outstanding during the period.

Revenue

Operating costs and expenses (exclusive of depreciation and amortization, shown separately below):

Programming and other direct costs of services

Other operating costs and expenses (including stock-based compensation of $57.5 million for Liberty Latin America)

Depreciation and amortization

Impairment, restructuring and other operating items, net

Operating income

Non-operating income (expense):

Interest expense, net

Realized and unrealized losses on derivative instruments, net

Foreign currency transaction losses, net

Losses on debt modification and extinguishment, net

Other income, net

Net earnings (loss) before income taxes

Income tax benefit (expense)

Net earnings (loss)

Net loss attributable to noncontrolling interests

Net earnings (loss) attributable to Liberty Latin America shareholders

Basic and diluted net loss per share attributable to Liberty Latin America shareholders

Weighted average shares outstanding – basic and diluted (a)

Represents the weighted average number of Liberty Latin America shares outstanding during the year.

Represents the purchase price of the AT&T Acquisition and the preliminary application of acquisition accounting. For purposes of these Pro Forma Financial Statements, it has been assumed that, with the exception of the preliminary fair value adjustments reflected in the table below, the historical cost bases of existing assets and liabilities of the AT&T Acquired Entities approximate their fair value. The details of the preliminary acquisition accounting are set forth below (in millions):

Stated Acquisition Agreement purchase price

Less: Purchase price allocated to purchase of prepaid roaming services (a)

Working capital and other purchase price adjustments:

Preliminary closing adjustments (b)

Additional working capital consideration (c)

Net cash paid for the AT&T Acquisition (d)

Contingent consideration (e)

Adjusted purchase price

Reconciliation from the historical net assets of the AT&T Acquired Entities to the estimated increase in goodwill:

Total assets

Less assets not acquired:

Related-party notes receivable

Goodwill

Total liabilities

Historical acquired net assets of the AT&T Acquired Entities before preliminary fair value adjustments

Preliminary fair value adjustments:

Other current assets, net - deferred contract costs (f)

Customer relationships intangible asset (g)

Other assets, net - deferred contract costs (f)

Total preliminary fair value adjustments

Adjusted net assets of the AT&T Acquired Entities after preliminary fair value adjustments

Estimated increase to goodwill

Represents the portion of the stated Acquisition Agreement purchase price that has been allocated to the purchase of prepaid roaming services as further described in note 2 below.

Represents adjustments to the purchase price under the terms of the Acquisition Agreement for closing working capital balances, outstanding indebtedness and shortfalls in equipment subsidies made by AT&T prior to the AT&T Closing.

Represents cash paid subsequent to the AT&T Closing related to certain liabilities of the AT&T Acquired Entities that were not assumed by us under the terms of the Acquisition Agreement.

The net cash paid for the AT&T Acquisition is comprised of (i) $1,353 million of restricted cash that was initially placed into escrow and was released from restriction upon the AT&T Closing, as further described in the headnote to these Pro Forma Financial Statements, and (ii) $536 million of cash and cash equivalents from available liquidity.

Represents contingent consideration related to income tax payments made by AT&T to the tax authorities of Puerto Rico and the U.S. Virgin Islands, which we expect to pay back to AT&T as we utilize such payments against our future income tax liabilities.

Represents the fair value adjustment to deferred contract costs, which do not have a fair value upon the consummation of the AT&T Acquisition. As a result, we have included pro forma adjustments to reduce other current assets and other assets, net, to reflect the fair value adjustment associated with deferred contract costs as of September 30, 2020. For information regarding the related pro forma adjustments included in the Pro Forma Statements of Operations, see note 14 below.

Represents the preliminary fair value assessment related to the customer relationships of the AT&T Acquired Entities. The valuation of customer relationships is primarily based on an excess earnings methodology, which is a form of a discounted cash flow analysis. The excess earnings methodology for customer relationship intangible assets requires us to estimate the specific cash flows expected from the acquired customer relationships, considering such factors as estimated customer life, the revenue expected to be generated over the life of the customer relationships, contributory asset charges and other factors. For information regarding the related pro forma adjustments included in the Pro Forma Statements of Operations, see note 15 below.

In connection with the Acquisition Agreement, AT&T agreed to provide us with a $75 million credit against certain roaming services that AT&T will provide to the AT&T Acquired Entities over a seven-year period following the AT&T Closing. If the credits are not used for roaming services in that time period, any remaining credit may be used to acquire certain other services from AT&T thereafter. These service credits have been reflected as a prepaid asset at a discounted value of $70 million based on the estimated timing of the underlying services.

As further outlined in the headnote to the Pro Forma Financial Statements, as a condition to the AT&T Closing, we were required to divest certain B2B operations in Puerto Rico. Accordingly, these pro forma adjustments relate to the elimination of the assets, revenue and expenses related to the B2B operations that were divested as part of the B2B Asset Sale.

Represents debt issuance fees associated with the 2027 LPR Senior Secured Notes and 2026 SPV Credit Facility paid in connection with, and contingent upon, the consummation of the AT&T Acquisition. For additional information regarding the amortization of deferred financing costs, see note 17 below.

Represents direct acquisition costs of $23 million that were contingent upon the AT&T Closing. Due to their nonrecurring nature, these direct acquisition costs have not been reflected in the accompanying Pro Forma Statements of Operations.

Represents pro adjustments to equity related to adjustments further described in notes 1, 3 and 5, as set forth in the table below (in millions):

Elimination of historical equity of the AT&T Acquired Entities

Elimination of historical equity related to the B2B operations required to be divested

Payments of direct acquisition costs

Represents revenue included in the historical financial statements of the AT&T Acquired Entities associated with certain enterprise contracts that are not acquired as part of the AT&T Acquisition. Accordingly, we have included pro forma adjustments to reduce revenue by $6 million and $11 million for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively.

The pro forma adjustments, which are provided for in order to align accounting policies of the AT&T Acquired Entities to those applied by Liberty Latin America, reflect reclassifications from programming and other direct costs of services to revenue related to (i) receipt of funds from the U.S. Federal Communications Commission of $23 million and $28 million, for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively, and (ii) data roaming

We have entered into agreements with AT&T for services with respect to (i) inbound and outbound roaming, (ii) ethernet, and (iii) subsea (the New Rate Agreements). The fees charged pursuant to these agreements differ from the rates charged for these services as reflected in the historical financial statements of the AT&T Acquired Entities. Accordingly, we have included pro forma adjustments for the periods set forth in the table below reflecting the net impact of changes in rates per the New Rate Agreements (in millions).

Net increase (decrease)

Represents the elimination of (i) $27 million and $40 million of equipment sales and other revenue allocated to the AT&T Acquired Entities by AT&T during the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively, and (ii) $13 million and $27 million of equipment cost of goods sold allocated to the AT&T Acquired Entities by AT&T during the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively, that will not occur after the AT&T Closing.

Represents the reclassification of $112 million and $150 million for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively, primarily related to lease expense, network and personnel-related costs from programming and other direct costs of services to other operating costs and expenses included in the historical financial statements of the AT&T Acquired Entities, to conform to the presentation of the historical financial statements of Liberty Latin America.

Represents the net effect of the (i) elimination of Allocations included in the historical financial statements of the AT&T Acquired Entities that are replaced by costs for services provided through the TSA, which generally relate to network operations, customer service, finance and accounting, information technology, and sales and marketing, and (ii) costs related to recurring content-related services provided through the TSA that are not included in the historical financial statements of the AT&T Acquired Entities, as set forth below (in millions):

Elimination of Allocations

Estimated TSA expenses (a)

Net decrease

Includes content-related charges of $9 million and $12 million for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively, which are reflected in programming and other direct costs of services in the Pro Forma Statements of Operations.

Represents royalty expense included in the historical financial statements of the AT&T Acquired Entities related to the use of AT&T’s tradename. The royalty fee will not be charged after the consummation of the AT&T Acquisition and accordingly, we have included pro forma adjustments of $2 million and $3 million to eliminate such costs for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively.

Represents pro forma adjustments of $6 million and $14 million for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively, related to amortization of deferred contract costs included within other operating costs and expenses in the historical financial statements of the AT&T Acquired Entities. The pro forma adjustments represent the elimination of amortization expense related to the incremental costs to obtain a contract with a customer that were incurred prior to January 1, 2019.

Represents the estimated increase in amortization expense of $2 million and $3 million, for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively, resulting from preliminary fair value assessments associated with customer relationships of the AT&T Acquired Entities with a weighted-average estimated useful life of 10 years.

Represents direct acquisition costs of $32 million and $5 million expensed by Liberty Latin America associated with the AT&T Acquisition during the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively. Due to their nonrecurring nature, these direct acquisition costs have been eliminated in the accompanying Pro Forma Statements of Operations.

Represents the assumed net increase in interest expense resulting from the borrowings under the Debt Financings, as if such transactions occurred on January 1, 2019, as set forth below (in millions):

Assumed increases in interest expense associated with:

2027 LPR Senior Secured Notes

2027 LPR Senior Secured Notes Add-on

2026 SPV Credit Facility (a)

Decrease in interest expense associated with the Refinancing Transaction (b)

Assumed net increase associated with the amortization of deferred financing costs and original issue discount and premium

Assumed net increase in interest expense

Interest expense on borrowings under the 2026 SPV Credit Facility is based on the base rate in effect at September 30, 2020, which resulted in an interest rate on this debt instrument of 5.15% for the year ended December 31, 2019. An increase in the interest rate of 0.125% on the 2026 SPV Credit Facility would result in incremental annual interest expense of $1 million.

Represents elimination of historical interest expense associated with the bank facility in place prior to the completion of the Refinancing Transaction.

Represents interest income (expense), net included in the historical financial statements of the AT&T Acquired Entities associated with related-party debt and notes receivable that were not assumed with the AT&T Acquisition. Accordingly, we have included for pro forma adjustments to increase (decrease) interest income (expense), net by $3 million and ($25 million) for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively.

Represents the elimination of $7 million of losses on debt extinguishment for the year ended December 31, 2019, relating to the write-off of unamortized original issue discount and deferred financing costs incurred in connection with the Refinancing Transaction. Due to their nonrecurring nature, the losses on debt extinguishment have been eliminated in the accompanying Pro Forma Statements of Operations.

Represents the elimination of $7 million and $3 million of interest income included in the historical financial statements of Liberty Latin America for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively. As this income was earned on the funds held in escrow that were ultimately used to fund a portion of the AT&T Acquisition, it has been removed in the accompanying Pro Forma Statements of Operations.

The income tax impact of the pro forma adjustments related to the Pro Forma Statements of Operations, as described above, have been computed based on a blended statutory corporate income tax rate of 36.1% based upon the activity in the U.S., the U.S. Virgin Islands and Puerto Rico, for which statutory rates are 21.0%, 23.1% and 37.5%, respectively. Where applicable, the adjustments have been assessed for their impact on valuation allowances, primarily arising from the excess of, and limitation on use for, foreign tax credits.