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20-F 1 attoform20f_2020.htm FORM 20-F
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2020
Commission file number: 001-36671
Atento S.A.
(Exact name of Registrant as specified in its charter)
Atento S.A.
(Translation of Registrant’s name into English)
Grand Duchy of Luxembourg
(Jurisdiction of incorporation or organization)
1, rue Hildegard Von Bingen, L-1282, Luxembourg
Grand Duchy of Luxembourg
(Address of principal executive offices)
Jose Antonio de Souza Azevedo, Chief Financial Officer
Address: Rua Paul Valery, 255, 4º andar, Chácara Santo Antonio, 04719-050, São Paulo, Brazil
Telephone No.: +55 (11) 3779-0881
e-mail: investor.relations@atento.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Ordinary Shares, no par value
Title of each class
Trading
Symbol(s)
ATTO
Name of each exchange on which registered
New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital stock or common stock as of the close of the period covered by the annual report.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
15,000,000 ordinary shares
[_] Yes [X] No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
[_] Yes [X] No
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.
[X] Yes [_] 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 and such files).
[X] Yes [_] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “accelerated filer
and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [_]
Accelerated filer [X]
Non-accelerated filer [_]
Emerging growth copany [_]
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5,
2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [X]
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
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US GAAP [_]
International Financial Reporting Standards as issued by
the International Accounting Standards Board [X]
Other [_]
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
[_] Item 17 [_] Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[_] Yes [X] No
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Atento S.A.
TABLE OF CONTENTS
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
PRESENTATION OF FINANCIAL INFORMATION
TRADEMARKS AND TRADE NAMES
CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A. Directors and Senior Management
B. Advisers
C. Auditors
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
A. Offer Statistics
B. Method and Expected Timetable
ITEM 3. KEY INFORMATION
A. Selected Financial Data
B. Capitalization and Indebtedness
C. Reasons for the Offer and Use of Proceeds
D. Risk Factors
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
B. Business Overview
C. Organizational Structure
D. Property, Plant and Equipment
ITEM 4A. UNRESOLVED STAFF COMMENTS
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
A. Operating Results
B. Liquidity and Capital Resources
C. Research and Development, Patents and Licenses, etc.
D. Trend Information
E. Off-Balance Sheet Arrangements
F. Tabular DisclosureE. Off-Balance Sheet Arrangement of Contractual Obligations
G. Safe harbor
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
B. Compensation
C. Board practices
D. Employees
E. Share Ownership
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
B. Related Party Transactions
C. Interests of Experts and Counsel
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
B. Significant Changes
ITEM 9. THE OFFER AND LISTING
A. Offering and Listing Details
B. Plan of Distribution
C. Markets
D. Selling Shareholders
E. Dilution
F. Expenses of the Issue
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
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B. Memorandum and Articles of Association
C. Material Contracts
D. Exchange Controls
E. Taxation
F. Dividends and Paying Agents
G. Statement by Experts
H. Documents on Display
I. Subsidiary Information
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. Debt Securities
B. Warrants and Rights
C. Other Securities
D. American Depositary Shares
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
ITEM 15. CONTROLS AND PROCEDURES
A. Disclosure Controls and Procedures
B. Management’s Annual Report on Internal Control over Financial Reporting
C. Attestation Report of the Registered Public Accounting Firm
D. Changes in Internal Control over Financial Reporting
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
ITEM 16B. CODE OF ETHICS
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
ITEM 16G. CORPORATE GOVERNANCE
ITEM 16H. MINE SAFETY DISCLOSURE
PART III
ITEM 17. FINANCIAL STATEMENTS
ITEM 18. FINANCIAL STATEMENTS
ITEM 19. EXHIBITS
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Basis of Presentation and Other Information
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Except where the context otherwise requires or where otherwise indicated, the terms “Atento”, “we”, “us”, “our”, “the Company”, and “our
business” refer to Atento S.A., a public limited liability company (société anonyme) incorporated under the laws of Luxembourg on March 5, 2014,
together with its consolidated subsidiaries.
Atento S.A. was formed as a direct subsidiary of Atalaya Luxco Topco S.C.A. (“Topco”). In April 2014, Topco also incorporated Atalaya
Luxco PIKCo S.C.A. (“PikCo”) and on May 15, 2014 Topco contributed to PikCo: (i) all of its equity interests in its then direct subsidiary, Atalaya
Luxco Midco S.à.r.l. (“Midco”), the consideration for which was an allocation to PikCo’s account “capital contributions not remunerated by shares”
(the “Reserve Account”) equal to €2 million, resulting in Midco becoming a direct subsidiary of PikCo; and (ii) all of its debt interests in Midco
(comprising three series of preferred equity certificates (the “Original Luxco PECs”)), the consideration for which was the issuance by PikCo to
Topco of preferred equity certificates having an equivalent value. On May 30, 2014, Midco authorized the issuance of, and PikCo subscribed for, a
fourth series of preferred equity certificates (together with the Original Luxco PECs, the “Luxco PECs”).
On October 7, 2014, we completed our IPO and issued 4,819,511 ordinary shares at a price of $15.00 per share. As a result of the IPO, the
Share Split and the Reorganization Transaction, we had 73,619,511 ordinary shares outstanding and owned 100% of the issued and outstanding share
capital of Midco, as of November 9, 2015.
On August 4, 2015, our Board of Directors (“The Board”) approved a share capital increase and issued 131,620 shares, increasing the
number of outstanding shares to 73,751,131.
On July 28, 2016, the Board approved a share capital increase and issued 157,925 shares, increasing the number of outstanding shares to
73,909,056.
On November 6, 2018, the Board approved a share capital increase and issued 1,161,870 shares, increasing the number of outstanding shares to
75,070,926.
On January 18, 2019, the Board approved a share capital increase and issued 335,431 shares, increasing the number of outstanding shares to
75,406,357.
On July 28, 2020, an extraordinary shareholder’s meeting approved the conversion of 75,406,357 ordinary shares without nominal value,
representing the entire share capital of the Company, into 15,000,000 ordinary shares without nominal value using a ratio of conversion of
5.027090466672970, and subsequently amending article 5 of the articles of association of the Company.
Acquisition and Divestment Transactions
On September 2, 2016, the Company through its direct subsidiary Atento Brasil acquired 81.49%, the controlling interest of RBrasil Soluções
S.A. (RBrasil).
On May 9, 2017, we announced an extended partnership with Itaú, a leading financial institution in Brazil, through which we will leverage the
industry-leading capabilities of RBrasil and Atento Brasil S.A. (“Atento Brasil”) to serve Itaú’s increasing demand for end-to-end collections solutions,
customer service and back office services.
On June 9, 2017, the Company, through its subsidiary, Atento Brasil, acquired 50.00002% of Interfile Serviços de BPO Ltda. and 50.00002% of
Interservicer – Serviços em Crédito Imobiliário Ltda. (jointly, “Interfile”), a leading provider of BPO services and solutions, including credit origination,
for the banking and financial services sector in Brazil. Through this acquisition, we expect to be able to expand our capabilities in the financial services
segment, especially in credit origination, accelerate our penetration into higher value-added solutions, strengthen our leadership position in the Brazilian
market and facilitate the expansion of our credit origination segment into other Latin American markets.
On June 30, 2017, we announced the signing of a strategic partnership and the acquisition of a minority stake in Keepcon, a leading provider of
semantic technology-based automated customer experience management, through our subsidiary Contact US Teleservices Inc. The acquisition of a
minority stake in Keepcon follows our overall strategy to develop and expand our digital capabilities. Our goal is to integrate all of our digital assets to
generate additional value for clients and drive growth across verticals and geographies. We aim to turn the business disruption generated by the digital
revolution into differentiated customer experience solutions generating competitive advantages for customers. We expect that the investment in Keepcon
by Atento will expand the artificial intelligence and automatization capabilities of our omnichannel platform.
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On June 7, 2019, the Company acquired the minority interest corresponding to 18.51% of the shares of RBrasil, now holding 100% of the
company's shares.
On May 17, 2019, the Company acquired the minority interest corresponding to 49.99998% of Interfile Serviços de BPO Ltda. and
49.99989% of Interservicer - Serviços em Crédito Imobiliário Ltda., now holding a 100% interest in these companies.
On June 23, 2019, Contact US Teleservices, Inc. signed with Keepcon a first amendment to the Put&Call option agreement. In addition to this,
Atento Brasil, also signed an Offer Letter with Keepcon on October 29, 2019, for the provision of certain monitoring and classification services on
processes of social media and other channels, through out 36 months as from the date of its signature.
Other Transactions
On August 10, 2017, Atento completed a refinancing transaction of its financing structure throughout its subsidiary Atento Luxco 1. The new
financing structure included an offering of US$400.0 million aggregate principal amount of 6.125% Senior Secured Notes due 2022 (the “Offering”).
Atento used the net proceeds from the Offering, together with cash on hand, to redeem all of the Issuer’s outstanding 7.375% Senior Secured Notes due
2020 and all of the existing debentures due 2019 of its subsidiary Atento Brasil. The Senior Secured Notes are guaranteed on a senior secured basis by
certain of Atento’s wholly-owned subsidiaries on a joint and several basis.
On August 18, 2017, Atento filed a Form F-3 with the SEC, for the sake of up to $200,000,000 Ordinary Shares by Atento and 62,660,015
Ordinary Shares Offered by the selling shareholder. In consequence, the selling shareholder may offer and sell from time to time up to 62,660,015 of
Ordinary Shares, covered by the Form F-3. These Ordinary Shares were offered in amounts, at prices and on terms to be determined at the time of their
offering, if any.
On September 21, 2017, the Board of Directors approved a dividend policy for the Company with a goal of paying annual cash dividends pay-
out in line with industry peers and practices. The declaration and payment of any interim dividends will be subject to approval of Atento’s corporate
bodies and will be determined based upon, amongst other things, Atento’s performance, growth opportunities, cash flow, contractual covenants,
applicable legal requirements and liquidity factors. The Board of Directors intends to review the dividend policy regularly and so accordingly is subject
to change at any time.
On October 31, 2017, our Board of Directors declared a cash interim dividend with respect to the ordinary shares of $0.3384 per share paid on
November 28, 2017 to shareholders of record as of the close on November 10, 2017.
On November 13, 2017, Atento filed a Supplemental Prospectus with the SEC, for the sale of Pikco of 12,295,082 ordinary shares. After the
offering Pikco owns 48,520,671 ordinary shares in Atento, representing 64.34% of the outstanding shares.
On July 26, 2018, our Board of Directors approved the share buyback program. We estimated a repurchased amount of 30 million US. Dollars
to be concluded in up to 12 months. The total shares repurchased was 1,106,158 corresponding to $8.2 million.
On April 4, 2019 Atento Luxco 1 S.A., a wholly-owned subsidiary of Atento S.A., closed an offering of an additional US$100 million aggregate
principal amount of its 6.125% Senior Secured Notes due 2022 in a private placement transaction. The Additional Notes were offered as additional notes
under the indenture, dated as of August 10, 2017, pursuant to which the Issuer previously issued US$400 million aggregate principal amount of its
6.125% Senior Secured Notes due 2022.
On February 4, 2020, a general meeting of shareholders of the Company approved a new authorization by the general meeting of the Company
to the Board of Directors of the Company to acquire its own fully paid-up shares on the New York Stock Exchange or any other exchange without
making an acquisition offer to the shareholders of the Company, for a period of 5 years, for a maximum number of shares to be acquired, which shall be
up to 30% of the Company’s share capital, at a redemption price per share which shall represent (i) not less than 50% of the lowest closing price per share
and (ii) not more than 50% above the highest closing price per share, in each case as reported by the New York edition of the Wall Street Journal, or, if
not reported therein, any other authoritative sources to be selected by the Board of Directors of the Company over the ten (10) trading days preceding the
date of the purchase of the shares (or the date of the commitment to purchase the shares).
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On May 6, 2020, Atento S.A. (the “Company”) announced the arrangements to facilitate HPS Investment Partners, LLC and certain of its
affiliates’ (collectively, “HPS”), GIC’s, and an investment fund affiliated with Farallon Capital Management, L.L.C. (“Farallon”)’s (collectively, the
“Institutional Investors”) acquisition of ordinary shares of the Company currently held indirectly by Bain Capital in exchange for senior PIK notes
currently held by the Institutional Investors (the “Transaction”). Following the completion of certain regulatory conditions, including antitrust filings in
Brazil and Mexico, the Director Nomination Agreements, each dated May 6, 2020, by and between the Company and each of HPS, GIC and Farallon
(each, a “Director Nomination Agreement”), and the Registration Rights Agreement, dated May 6, 2020, by and among the Company, HPS, GIC and
Farallon (the “Registration Rights Agreement”), have become effective as of June 22, 2020. Atento will also terminate the existing registration rights
agreement, dated as of October 6, 2014, by and between the Company and Atalaya Luxco Pikco S.C.A., which has become effective upon completion of
the Transaction on June 22, 2020.
Exchange Rate Information
In this Annual Report, all references to “U.S. dollar” and “$” are to the lawful currency of the United States and all references to “euro” or
“€” are to the single currency of the participating member states of the European and Monetary Union of the Treaty Establishing the European
Community, as amended from time to time. In addition, all references to Brazilian Reais (BRL), Mexican Peso (MXN), Chilean Peso (CLP),
Argentinean Peso (ARS), Colombian Peso (COP) and Peruvian Nuevos Soles (PEN) are to the lawful currencies of Brazil, Mexico, Chile, Argentina,
Colombia and Peru, respectively.
The following table shows the exchange rates of the U.S. dollar to these currencies for the years and dates indicated as reported by the
relevant central banks of the European Union and each country, as applicable.
Euro (EUR)
Brazil (BRL)
Mexico (MXN)
Average
0.90
3.48
18.69
Colombia (COP)
3,054.33
Chile (CLP)
Peru (PEN)
Argentina (ARS)
676.73
3.38
14.78
2016
December 31 Average
0.89
0.95
2017
December 31 Average
0.85
0.83
2018
December 31 Average
0.89
0.87
2019
December 31 Average
0.88
0.89
2020
December 31
0.81
3.26
20.62
3,000.71
667.29
3.36
15.89
3.19
18.92
2,951.28
648.86
3.26
16.56
3.31
19.66
2,984.00
615.22
3.25
18.65
3.65
19.24
2,955.34
641.38
3.29
28.12
3.87
19.65
3,249.75
695.69
3.38
37.70
3.94
19.25
3,281.35
702.77
3.34
48.22
4.03
18.86
3,277.14
744.62
3.32
59.89
5.15
21.49
3,694.46
792.17
3.50
70.64
5.20
19.91
3,432.50
711.24
3.62
84.15
We present our historical financial information under International Financial Reporting Standards (“IFRS”) as issued by the International
PRESENTATION OF FINANCIAL INFORMATION
Accounting Standards Board (the “IASB”).
Atento’s Financial Information
The consolidated financial information of Atento are the consolidated results of operations of Atento, which includes the years ended
December 31, 2016, 2017, 2018, 2019 and 2020.
Rounding
Certain numerical figures set out in this Annual Report, including financial data presented in millions or thousands and percentages, have
been subject to rounding adjustments, and, as a result, the totals of the data in this Annual Report may vary slightly from the actual arithmetic totals
of such data. Percentages and amounts reflecting changes over time periods relating to financial and other data set forth in “Item 3. Key Information–
A. Selected Financial Data” and “Item 5. Operating and Financial Review and Prospects–A. Operating Results–Management’s Discussion and
Analysis of Financial Condition and Results of Operations” are calculated using the numerical data in the financial statements or the tabular
presentation of other data (subject to rounding) contained in this Annual Report, as applicable, and not using the numerical data in the narrative
description thereof.
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TRADEMARKS AND TRADE NAMES
This Annual Report includes our trademarks as “Atento,” which are protected under applicable intellectual property laws and are the
property of the Company or our subsidiaries. This Annual Report also contains trademarks, service marks, trade names and copyrights of other
companies, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this Annual Report
may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent
under applicable law, our rights or the right of the applicable licensor to these trademarks and trade names.
In 2017, Atento launched its digital business unit under the brand “Atento Digital”. Atento Digital’s mainstream offering encompasses a
wide range of digital capabilities that enhance customer experience and increase efficiency across the customer lifecycle, from acquiring to managing
and retaining customers. Atento Digital’s offer also includes consultancy services and solutions for advancing digital transformation processes while
fully leveraging existing systems. Atento Digital is a trademark registered by Atento.
In 2020, Atento launches its Startup accelerator named “Atento Next”. In line with the objective of having innovation at the center of its
business strategies, Atento Next, will put the company close to the selected startups, to bring even more innovation to the company and its customers.
CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS
This Annual Report contains estimates and forward-looking statements, principally in “Item 3. Key Information—D. Risk Factors”, “Item 4.
Information on the Company—B. Business Overview” and “Item 5. Operating and Financial Review and Prospects”. Some of the matters discussed
concerning our business operations and financial performance include estimates and forward-looking statements within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995.
Our estimates and forward-looking statements are based mainly on our current expectations and estimates on projections of future events
and trends, which affect or may affect our businesses and results of operations. Although we believe that these estimates and forward-looking
statements are based upon reasonable assumptions, they are subject to certain risks and uncertainties and are made in light of information currently
available to us. Our estimates and forward-looking statements may be influenced by the following factors, among others:
· the impact of the COVID-19 pandemic on our business and its effects on our customers ability or desire to purchase our services;
· disruption caused by the COVID-19 pandemic in jurisdictions in which we operate and globally and government measures in response to
the COVID-19 pandemic;
· the competitiveness of the customer relationship management and business process (“CRM BPO”) market;
· the loss of one or more of our major clients, a small number of which account for a significant portion of our revenue, in particular
Telefónica;
· risks associated with operating in Latin America, where a significant proportion of our revenue is derived and where a large number of
our employees are based;
· our clients deciding to enter or further expand their own CRM BPO businesses in the future;
· any deterioration in global markets and general economic conditions, in particular in Latin America and in the telecommunications and
the financial services industries from which we derive most of our revenue;
· increases in employee benefit expenses, changes to labor laws and labor relations;
· failure to attract and retain enough sufficiently trained employees at our service delivery centers to support our operations;
· inability to maintain our pricing and level of activity and control our costs;
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· consolidation of potential users of CRM BPO services;
· the reversal of current trends towards CRM BPO solutions;
· fluctuations of our operating results from one quarter to the next due to various factors including seasonality;
· the significant leverage our clients have over our business relationships;
· the departure of key personnel or challenges with respect to labor relations;
· the long selling and implementation cycle for CRM BPO services;
· difficulty controlling our growth and updating our internal operational and financial systems as a result of our increased size;
· inability to fund our working capital requirements and new investments;
· fluctuations in, or devaluation of, the local currencies in the countries in which we operate against our reporting currency, the U.S. dollar;
· current political and economic volatility, particularly in Brazil, Mexico, Argentina and Europe;
· our ability to acquire and integrate companies that complement our business;
· the quality and reliability of the technology provided by our technology and telecommunications providers, our reliance on a limited
number of suppliers of such technology and the services and products of our clients;
· our ability to invest in and implement new technologies;
· disruptions or interruptions in our client relationships;
· actions of the Brazilian, EU, Spanish, Argentinian, Mexican and other governments and their respective regulatory agencies, including
adverse competition law rulings and the introduction of new regulations that could require us to make additional expenditures;
· damage or disruptions to our key technology systems or the quality and reliability of the technology provided by technology
telecommunications providers;
· an increase in the cost of telecommunications services and other services on which we and our industry rely;
· an actual or perceived failure to comply with data protection regulations, in particular any actual or perceived failure to ensure secure
transmission of sensitive or confidential customer data through our networks and other cybersecurity issues;
· the effect of labor disputes on our business; and
· other risk factors listed in the section of this Annual Report entitled “Item 3. Key Information—D. Risk Factors”.
The words “believe”, “may”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect” and similar words are intended to identify
estimates and forward-looking statements. Estimates and forward-looking statements are intended to be accurate only as of the date they were made,
and we undertake no obligation to update or to review any estimate and/or forward-looking statement because of new information, future events or
other factors. Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. Our future
results may differ materially from those expressed in these estimates and forward-looking statements. You should therefore not make any investment
decision based on these estimates and forward-looking statements.
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The forward-looking statements contained in this Annual Report speak only as of the date of this Annual Report. We do not undertake to
update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A. Directors and Senior Management
Not applicable.
B. Advisers
Not applicable.
C. Auditors
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
A. Offer Statistics
Not applicable.
B. Method and Expected Timetable
Not applicable.
ITEM 3. KEY INFORMATION
A.
Selected Financial Data
The following selected financial information should be read in conjunction with the section “Item 5. Operating and Financial Review and
Prospects” and our consolidated financial statements, included elsewhere in this Annual Report.
Following the Reorganization Transaction and the IPO, our financial statements present the results of operations of Atento. The consolidated
financial statements of Atento are substantially the same as the consolidated financial statements of Midco prior to the IPO, as adjusted for the
Reorganization Transaction. Upon consummation, the Reorganization Transaction was reflected retroactively in the Company’s earnings per share
calculations.
The following table sets forth selected historical financial data of Atento. We prepare our financial statements in accordance with IFRS as
issued by the IASB. Our financial reporting periods presented in the table below reflects the consolidated results of operations of Atento, as of and
for the years ended December 31, 2016, 2017, 2018, 2019 and 2020.
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Selected Consolidated Other Financial Information
($ in millions other than share and per share data)
Revenue
Operating profit
Profit/(loss) from continuing operations
Loss from discontinued operations
Profit/(loss) for the year
Earnings/(loss) per share-basic from continuing operations (**)
Loss per share-basic from discontinued operations (**)
Earnings/(loss) per share-diluted from continuing operations (**)
Loss per share-diluted from discontinued operations (**)
Dividends declared per share (**)
Number of shares (**)
Weighted average number of shares outstanding-basic (**)
Weighted average number of shares outstanding-diluted (**)
Balance sheet data:
Total assets
Equity
Capital stock
2016 (*)
1,757.5
116.4
3.4
(3.2)
0.2
0.25
(0.20)
0.25
(0.20)
-
14,702,154
14,683,828
14,738,092
1,377.6
430.2
0.048
As of and for the year ended December 31,
2017
1,921.3
92.4
(13.6)
-
(13.6)
(1.16)
-
(1.16)
-
1.64
14,702,154
14,702,154
14,702,154
1,330.3
377.8
0.048
2018
1,818.2
89.5
20.5
-
20.5
1.26
-
1.25
-
-
14,933,275
14,688,705
14,875,018
1,213.4
340.1
0.049
2019
1,707.3
12.6
(80.7)
-
(80.7)
(5.63)
-
(5.63)
-
-
15,000,000
14,446,297
14,446,297
1,304.6
207.0
0.049
2020
1,412.3
40.3
(46.9)
-
(46.9)
(3.33)
-
(3.33)
-
-
15,000,000
14,082,904
14,082,904
1,176.1
119.7
0.049
(*) Exclude discontinued operations - Morocco.
(**) As a consequence of the reverse share split occurred on July 28, 2020, number of shares, earnings/(loss) per share and dividends per share were retrospective adjusted by applying the
ratio of conversion of 5.027090466672970 into the previous amount.
Summary Consolidated Historical Financial Information
($ in millions)
Revenue
Profit/(loss) from continuing
operations
Loss from discontinued operations
Profit/(loss) for the year
EBITDA (1)
Adjusted EBITDA (1)
Adjusted Earnings (2)
Adjusted Earnings per share (in U.S.
dollars) (3) (**)
Adjusted Earnings attributable to
Owners of the parent (2)
Adjusted Earnings per share
attributable to Owners of the parent
(in U.S. dollars) (3) (**)
Capital Expenditure (4)
Total Debt
As of and for the year ended December 31,
2016 (*)
2017
2018
2019
Change
(%)
Change
excluding
FX (%)
As of and for
the year ended
December 31,
2020
Change
(%)
Change
excluding
FX (%)
(***)
1,921.3
1,818.2
1,707.3
(13.6)
-
(13.6)
196.9
221.0
58.4
3.99
55.2
3.77
(67.5)
486.3
20.5
-
20.5
184.8
184.8
59.1
4.03
57.2
3.89
(89.9)
459.8
(6.1)
N.M.
N.M.
N.M.
(17.0)
(17.0)
2.1
N.M.
N.M.
N.M.
(9.9)
(9.9)
(80.7)
-
(80.7)
153.4
153.4
(23.2)
(139.2)
(149.2)
1,412.3
(46.9)
-
(46.9)
161.2
161.2
(10.2)
(17.3)
(41.9)
N.M.
(41.9)
5.1
5.1
(56.1)
(1.61)
(139.9)
(147.4)
(0.72)
(55.0)
(23.9)
N.M.
(128.7)
(10.2)
(57.2)
(1.65)
(66.3)
720.6
N.M.
(26.3)
56.7
(128.7)
(20.5)
57.5
(0.72)
(35.9)
726.6
(56.1)
(45.9)
0.8
(2.8)
(35.5)
N.M.
(35.5)
23.1
23.1
(64.2)
(63.3)
(64.7)
(63.8)
(18.0)
6.0
1,757.5
3.4
(3.2)
0.2
213.7
221.9
48.2
3.27
48.1
3.27
(48.2)
534.9
194.0
340.9
Cash and cash equivalents
Net debt with third parties (5)
(*) Exclude discontinued operations - Morocco.
(**) As a consequence of the reverse share split occurred on July 28, 2020, number of shares, earnings/(loss) per share and dividends per share were retrospective adjusted by applying
the ratio of conversion of 5.027090466672970 into the previous amount.
(***) Uses the current currency FX for the variation of 2019 versus 2020.
N.M. means not meaningful
(13.1)
141.8
344.5
133.5
326.2
124.7
209.0
595.9
517.6
(3.5)
(6.6)
67.6
75.3
82.7
81.5
(8.6)
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(1)
In considering the financial performance of the business, our management analyzes the financial performance measures of EBITDA and
Adjusted EBITDA at a company and operating segment level, to facilitate decision-making. EBITDA is defined as profit/(loss) for the period
from continuing operations before net finance expense, income taxes and depreciation and amortization. Adjusted EBITDA is defined as
EBITDA adjusted to exclude restructuring costs, site relocation costs and other items not related to our core results of operations. EBITDA and
Adjusted EBITDA are not measures defined by IFRS. The most directly comparable IFRS measure to EBITDA and Adjusted EBITDA is
profit/(loss) for the year/period from continuing operations.
We believe EBITDA and Adjusted EBITDA are useful metrics for investors to understand our results of continuing operations and profitability
because they permit investors to evaluate our recurring profitability from underlying operating activities. We also use these measures internally
to establish forecasts, budgets and operational goals to manage and monitor our business, as well as to evaluate our underlying historical
performance. We believe EBITDA facilitates comparisons of operating performance between periods and among other companies in industries
similar to ours because it removes the effect of variances in capital structures, taxation, and non-cash depreciation and amortization charges,
which may differ between companies for reasons unrelated to operating performance. We believe Adjusted EBITDA better reflects our
underlying operating performance because it excludes the impact of items which are not related to our core results of continuing operations.
EBITDA and Adjusted EBITDA measures are frequently used by securities analysts, investors and other interested parties in their evaluation of
companies comparable to us, many of which present EBITDA-related performance measures when reporting their results.
EBITDA and Adjusted EBITDA have limitations as analytical tools. These measures are not presentations made in accordance with IFRS, are
not measures of financial condition or liquidity and should not be considered in isolation or as alternatives to profit or loss for the period from
continuing operations or other measures determined in accordance with IFRS. EBITDA and Adjusted EBITDA are not necessary comparable to
similarly titled measures used by other companies. These non-GAAP measures should be considered supplemental in nature and should not be
construed as being more important than comparable GAAP measures.
See below under the heading “Reconciliation of EBITDA and Adjusted EBITDA to profit/(loss)” for a reconciliation of profit/(loss) for the
period from continuing operations to EBITDA and Adjusted EBITDA.
EBITDA and adjusted EBITDA reported are presented applying the accounting and disclosure standard in highly inflationary economy our
operations in Argentina.
(2)
In considering the Company’s financial performance, our management analyzes the performance measure of Adjusted Earnings. Adjusted
Earnings is defined as profit/(loss) for the periods from continuing operations adjusted for certain amortization of acquisition related intangible
assets, restructuring costs, site relocation costs and other items not related to our core results of operations, net foreign exchange impacts and
their tax effects. Adjusted Earnings is not a measure defined by IFRS. The most directly comparable IFRS measure to Adjusted Earnings is
profit/(loss) for the periods from continuing operations.
We believe Adjusted Earnings is a useful metric for investors and is used by our management for measuring profitability because it represents a
group measure of performance which excludes the impact of certain non-cash charges and other charges not associated with the underlying
operating performance of the business, while including the effect of items that we believe affect shareholder value and in-year returns, such as
income tax expense and net finance costs.
Our management uses Adjusted Earnings to (i) provide senior management with monthly reports of our operating results; (ii) prepare strategic
plans and annual budgets; and (iii) review senior management’s annual compensation, in part, using adjusted performance measures.
Adjusted Earnings is defined to exclude items that are not related to our core results of operations. Adjusted Earnings measures are frequently
used by securities analysts, investors and other interested parties in their evaluation of companies comparable to us, many of which present an
Adjusted Earnings related performance measure when reporting their results.
Adjusted Earnings has limitations as an analytical tool. Adjusted Earnings is neither a presentation made in accordance with IFRS nor a measure
of financial condition or liquidity, and should not be considered in isolation or as an alternative to profit or loss for the period from continuing
operations or other measures determined in accordance with IFRS. Adjusted Earnings is not necessarily comparable to similarly titled measures
used by other companies. These non-GAAP measures should be considered supplemental in nature and should not be construed as being more
important than comparable GAAP measures.
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See below under the heading “Reconciliation of Adjusted Earnings to profit/(loss)” for a reconciliation of Adjusted Earnings to our profit/(loss)
for the period from continuing operations.
(3) Adjusted Earnings per share is calculated based on weighted average number of ordinary shares outstanding. As a consequence of the reverse
split occurred on July 28, 2020, weighted average number of ordinary shares outstanding was calculated by applying the ratio of conversion of
5.027090466672970 into the previous weighted average number of ordinary shares outstanding, being 14,683,828, 14,702,154, 14,688,705,
14,446,297 and 14,082,904 for the years ended December 31, 2016, 2017, 2018, 2019 and 2020, respectively.
(4) We define capital expenditure as the sum of the additions to property, plant and equipment and the additions to intangible assets during the
period.
(5) Total debt as of December 31, 2019 and 2020 is impacted by IFRS 16, which requires lease liabilities relating to former operating leases not
related to short term or low value leases to be recognized as debt. Such additional lease liabilities were $187.9 million and $144.1 million as of
December 31, 2019 and 2020, respectively.
In considering our financial condition, our management analyzes net debt with third parties, which is defined as total debt less cash, cash
equivalents (net of any outstanding bank overdrafts) and short-term financial investments.
Net debt with third parties has limitations as an analytical tool. Net debt with third parties is neither a measure defined by or presented in
accordance with IFRS nor a measure of financial performance, and should not be considered in isolation or as an alternative financial measure
determined in accordance with IFRS. Net debt with third parties is not necessarily comparable to similarly titled measures used by other
companies. These non-GAAP measures should be considered supplemental in nature and should not be construed as being more important than
comparable GAAP measures.
See below under the heading “Financing Arrangements” for a reconciliation of total debt to net debt with third parties utilizing IFRS reported
balances obtained from the financial information included elsewhere in this Annual Report. The most directly comparable IFRS measure to net
debt with third parties is total debt.
Cash Flow Selected Data:
($ in millions)
Cash flows from operating activities
Cash flows used in investing activities
Cash flows (used in)/provided by financing activities
Net increase/(decrease) in cash and cash equivalents
Effect of changes in exchange rates
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
2016
141.9
(75.1)
(62.7)
4.2
5.8
184.0
194.0
For the year ended December 31,
2019
2018
2017
114.5
(90.9)
(84.3)
(60.8)
8.6
194.0
141.8
81.2
(41.2)
(33.7)
6.3
(14.5)
141.8
133.5
46.5
(55.9)
5.0
(4.4)
(4.5)
133.5
124.7
2020
127.0
(38.2)
1.0
89.8
(5.5)
124.7
209.0
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Reconciliation of EBITDA and Adjusted EBITDA to profit/(loss):
($ in millions)
Profit/(loss) from continuing operations
Net finance expense (**)
Income tax expense (a)
Depreciation and amortization
EBITDA (non-GAAP) (unaudited) (***)
Restructuring costs (b)
Site relocation costs (c)
Contingent Value Instrument (d)
Other (e)
Total non-recurring items (****)
Adjusted EBITDA (non-GAAP) (unaudited) (***)
(*)
Exclude discontinued operations – Morocco.
For the year ended December 31,
2016 (*)
2017
2018
2019
2020
3.4
107.8
5.2
97.3
213.7
33.7
9.3
(41.7)
6.9
8.2
221.9
(13.6)
93.5
12.5
104.4
196.9
16.8
-
-
7.3
24.1
221.0
20.5
55.6
13.4
95.2
184.8
-
-
-
-
-
184.8
(80.7)
57.1
36.2
140.8
153.4
-
-
-
-
-
153.4
(46.9)
82.4
4.8
120.9
161.2
-
-
-
-
-
161.2
(**) Net finance expense includes finance income, finance costs, changes in fair value of financial instruments and net foreign exchange loss.
(***) For the year ended December 31, 2019, the EBITDA was positively impacted in $52.4 million due to the application of IFRS 16. Depreciation
and finance costs were negatively impacted in $49.3 million and $17.5 million, respectively, due to the application of the IFRS 16. For the
year ended December 31, 2020, the EBITDA was positively impacted in $46.7 million due to the application of IFRS 16. Depreciation and
finance costs were negatively impacted in $44.0 million and $14.4 million, respectively, due to the application of the IFRS 16.
(a)
In the first quarter of 2019, in connection with a global tax audit of the 2013-2016 tax periods, Atento Spain, as the representative
company of a Spanish tax group composed of Atento S.A.’s direct Spanish subsidiaries (the “Spanish Tax Group”), signed a tax
agreement with the Spanish tax authorities. The Spanish Tax Administration audited various aspects of the Spanish Tax Group
including the deductibility of certain specific intercompany financing and operating expenses incurred during the acquisition of Atento
Spain. The Spanish Tax Administration found that the tax treatment applied by the Company does not comply with the relevant tax
rules leading to a discrepancy. As a result of this discrepancy, the amount of tax credits of the Spanish Tax Group, together with the
corresponding effects in subsequent tax periods, has been reduced in an amount of $37.8 million.
Accordingly, the tax credits for losses carryforward in our financial statements for the first quarter of 2019, was negatively affected by
$37.8 million.
(****) We define non-recurring items as items that are limited in number, clearly identifiable, unusual, are unlikely to be repeated in the near future in
the ordinary course of business and that have a material impact on the consolidated results of operations. Non-recurring items can be
summarized as demonstrated below:
(b)
Restructuring costs incurred in 2016 primarily included several restructuring activities and other personnel costs that were not related to
our core result of operations. Restructuring costs for the year ended December 31, 2016 and 2017 are compounded of two main
concepts: i) investments to lower our variable cost structure, which is mostly labor and ii) investments to drive a more sustainable
lower-cost and competitive operating model. Both were direct response to the exceptional and severe adverse macroeconomic
conditions in key markets such as Spain, Argentina, Brazil, Mexico and Puerto Rico, which drove significant declines in volume. The
restructuring program carried out in 2017 to adjust the indirect costs structure has been finalized in the fourth quarter of 2017.
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(c)
(d)
(e)
Site relocation costs incurred for the year ended December 31, 2016 include costs associated with our strategic initiative to relocate call
centers from tier 1 cities to tier 2 cities in Brazil to achieve efficiencies through lower rental costs, attrition and absenteeism. Site
relocation costs incurred for the year ended December 31, 2016, are related to the investments in Brazil, to relocate and consolidate our
sites from higher to lower costs locations. This program started in 2014 when 53 percent of our sites were in Tier 2 cities.
On November 8, 2016 the CVI nominal value of ARS666.8 million, or $135.6 million, was terminated. As a result, in 2016 we
recognized a gain of $41.7 million in “Other gains” representing the principle amount of the CVI.
Other non-recurring items for the year ended December 31, 2016 refer mainly to other costs with the sale of Morocco operation related
to the accrual of the reserve in amount of $3.1 million as guarantee to the buyer for potential indemnity related to eventual liability
assessed from the period before the sale. For 2017, other non-recurring items relates mostly to the recognition of the costs incurred or
expected to be incurred to recover the operations in Mexico and Puerto Rico affected by recent natural disasters. These estimated costs
of $3.2 million are related to third quarter of 2017 and includes costs that were incurred but could not be charged to customers (mainly
salaries and benefits) and other extraordinary costs related to the natural disasters. In addition, there were costs incurred on the
secondary offer process occurred in November 2017.
Reconciliation of Adjusted Earnings to profit/(loss):
($ in millions)
Profit/(loss) from continuing operations
Amortization of acquisition related intangible assets (a)
Restructuring costs (b) (**)
Site relocation costs (c) (**)
Other (d) (**)
Change in fair value of financial instruments (e)
Net foreign exchange loss
Contingent Value Instrument (f)
Financial non-recurring (g)
Depreciation non-recurring (h)
Tax effect (i)
Total of add-backs
Adjusted Earnings (non-GAAP) (unaudited)
Adjusted basic Earnings per share (in U.S. dollars) (***) (unaudited)
(*)
Exclude discontinued operations – Morocco.
For the year ended December 31,
2016 (*)
2017
2018
2019
2020
3.4
24.2
33.6
9.3
6.9
(0.7)
21.1
(26.2)
-
-
(23.5)
44.7
48.2
3.27
(13.6)
22.4
16.8
-
7.3
(0.2)
23.4
-
17.7
2.8
(18.2)
72.0
58.4
3.99
20.5
21.2
-
-
-
-
28.8
-
-
-
(11.3)
38.7
59.1
4.03
(80.7)
20.6
-
-
-
-
9.1
-
-
-
27.7
57.5
(23.2)
(1.61)
(46.9)
18.3
-
-
-
-
27.8
-
-
-
(9.4)
36.7
(10.2)
(0.72)
(**) We define non-recurring items as items that are limited in number, clearly identifiable, unusual, are unlikely to be repeated in the near future in
the ordinary course of business and that have a material impact on the consolidated results of operations. Non-recurring items can be
summarized as demonstrated below:
(a)
(b)
Amortization of acquisition related intangible assets represents the amortization expense of customer base, recorded as intangible
assets. This customer base represents the fair value (within the business combination involving the acquisition of control of Atento
Group) of the intangible assets arising from service agreements (tacit or explicitly formulated in contracts) with Telefónica Group and
with other customers.
Restructuring costs incurred in 2016 primarily included several restructuring activities and other personnel costs that were not related to
our core result of operations. Restructuring costs for the year ended December 31, 2016 and 2017 are compounded of two main
concepts: i) investments to lower our variable cost structure, which is mostly labor and ii) investments to drive a more sustainable
lower-cost and competitive operating model. Both were direct response to the exceptional and severe adverse macroeconomic
conditions in key markets such as Spain, Argentina, Brazil, Mexico and Puerto Rico, which drove significant declines in volume. The
restructuring program carried out in 2017 to adjust the indirect costs structure has been finalized in the fourth quarter of 2017.
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(c)
(d)
(e)
(f)
(g)
(h)
(i)
Site relocation costs incurred for the year ended December 31, 2016 include costs associated with our strategic initiative to relocate call
centers from tier 1 cities to tier 2 cities in Brazil to achieve efficiencies through lower rental costs, attrition and absenteeism. Site
relocation costs incurred for the year ended December 31, 2016, are related to the investments in Brazil, to relocate and consolidate our
sites from higher to lower costs locations. This program started in 2014 when 53 percent of our sites were in Tier 2 cities.
Other non-recurring items for the year ended December 31, 2016 refer mainly to other costs with the sale of Morocco operation related
to the accrual of the reserve in amount of $3.1 million as guarantee to the buyer for potential indemnity related to eventual liability
assessed from the period before the sale. For 2017, non-recurring items relates mostly to the recognition of the costs incurred or
expected to be incurred to recover the operations in Mexico and Puerto Rico affected by recent natural disasters. These estimated costs
of $3.2 million are related to third quarter of 2017 and includes costs that were incurred but could not be charged to customers (mainly
salaries and benefits) and other extraordinary costs related to the natural disasters. In addition, there were costs incurred on the
secondary offer process occurred in November 2017. In 2018 we did not have any other non-recurring items.
Since April 1, 2015, the Company designated the foreign currency risk on certain of its subsidiaries as net investment hedges using
financial instruments as the hedging items. As a consequence, any gain or loss on the hedging instrument, related to the effective
portion of the hedge is recognized in other comprehensive income (equity) as from that date. The gains or losses related to the
ineffective portion are recognized in the statements of operations. For comparability, these adjustments are added back to calculate
Adjusted Earnings.
On November 8, 2016 the CVI nominal value of ARS666.8 million, or $135.6 million was terminated. As a result, in 2016 we
recognized a gain of $41.7 million in “Other gains” representing the principle amount of the CVI. The interest reversal of $19.9 million
was recognize on “Finance Cost”.
Financial non-recurring relates to the costs incurred in the debt refinance process occurred in August 2017, which includes: (i) 2020
Senior Secured Notes call premium of $11.1 million and amortization of issuance costs of $4.9 million; (ii) Brazilian debentures due
2019 penalty fee of $0.7 million and remaining balance of the issuance cost of $1.0 million.
Non-recurring depreciation relates to the provision for accelerated depreciation of fixed assets in Puerto Rico and Mexico, due to the
recent natural disasters (See “Cautionary note regarding forward looking statements”).
The tax effect represents the impact of the taxable adjustments based on tax nominal rate by country. For the years ended December 31,
2018, 2019 and 2020, the effective tax rate after moving non-recurring items is 30.5%, 57.4% and 354.9%, respectively.
In the first quarter of 2019, in connection with a global tax audit of the 2013-2016 tax periods, Atento Spain, as the representative
company of a Spanish tax group composed of Atento S.A.’s direct Spanish subsidiaries (the “Spanish Tax Group”), signed a tax
agreement with the Spanish tax authorities. The Spanish Tax Administration audited various aspects of the Spanish Tax Group
including the deductibility of certain specific intercompany financing and operating expenses incurred during the acquisition of Atento
Spain. The Spanish Tax Administration found that the tax treatment applied by the Company does not comply with the relevant tax
rules leading to a discrepancy. As a result of this discrepancy, the amount of tax credits of the Spanish Tax Group, together with the
corresponding effects in subsequent tax periods, has been reduced in an amount of $37.8 million.
Accordingly, the tax credits for losses carryforward in our financial statements for the first quarter of 2019 was negatively affected by
$37.8 million.
(***) Adjusted Earnings per share is calculated based on weighted average number of ordinary shares outstanding. As a consequence of the reverse
split occurred on July 28, 2020, weighted average number of ordinary shares outstanding was calculated by applying the ratio of conversion of
5.027090466672970 into the previous weighted average number of ordinary shares outstanding, being 14,683,828, 14,702,154, 14,688,705,
14,446,297 and 14,082,904 for the years ended December 31, 2016, 2017, 2018, 2019 and 2020, respectively.
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Reconciliation of total debt to net debt with third parties
($ in millions, except Net Debt/Adj. EBITDA LTM)
Debt:
Senior Secured Notes
Super Senior Credit Facility
Brazilian Debentures
BNDES
Lease Liabilities (1)
Other Borrowings
Total Debt
Cash and cash equivalents
Net debt with third parties (2) (unaudited)
Adjusted EBITDA LTM (3) (non-GAAP) (unaudited)
Net Debt/Adjusted EBITDA LTM (non-GAAP) (unaudited)
2016
As of December 31,
2018
2017
2019
2020
303.3
-
156.6
71.4
3.6
-
534.9
(194.0)
340.9
221.9
1.6x
398.3
-
21.1
50.4
10.5
6.0
486.3
(141.8)
344.5
221.0
1.6x
400.0
-
14.7
24.0
5.5
15.5
459.8
(133.5)
326.2
184.8
1.8x
501.9
-
-
1.2
194.8
22.8
720.6
(124.7)
595.9
153.4
3.9x
505.6
30.0
-
0.6
152.7
38.9
727.8
(209.0)
518.8
161.2
3.2x
(1) Consider the impact on December 31, 2020 of application of IFRS 16 (former operating leases not related to short-term or low-value leases are
now shown as debt) was $144.1 million and $8.6 million of other financial leases.
(2) In considering our financial condition, our management analyzes Net debt, which is defined as total debt less cash and cash equivalents. Net
debt is not a measure defined by IFRS and it has limitations as an analytical tool. Net debt is neither a measure defined by or presented in
accordance with IFRS nor a measure of financial performance and should not be considered in isolation or as an alternative financial measure
determined in accordance with IFRS. Net debt is not necessarily comparable to similarly titled measures used by other companies.
(3) Adjusted EBITDA LTM (Last Twelve Months) is defined as EBITDA adjusted to exclude certain acquisition and integration
related costs, restructuring costs, site relocation costs, financing fees, IPO costs, asset impairments and other items not related to
our core results of operations.
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
External Risks
The CRM BPO market is very competitive.
Our industry is very competitive, and we expect competition to remain intense from a number of sources in the future. We believe the
principal competitive factors in the markets in which we operate are industry expertise, service quality, price, and the ability to add value to a client’s
business. We face competition primarily from other CRM BPO companies and IT services companies. In addition, the trend toward offshore
outsourcing, international expansion by foreign and domestic competitors and continued technological changes may result in new and different
competitors entering our existing markets. These competitors may include entrants from the communications, software and data networking
industries or entrants in geographical locations with lower costs than those in which we operate.
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Some of these existing and future competitors may have greater financial, human and other resources, longer operating histories, greater
technological expertise and more established relationships in the industries that we currently serve or may serve in the future. In addition, some of our
competitors may enter into strategic or commercial relationships among themselves or with larger, more established companies in order to increase
their ability to address the needs of existing customers and reduce operating costs, or enter into similar arrangements with potential clients. Further,
trends of consolidation in our industry and among CRM BPO competitors may result in new competitors with greater scale, a broader geographic
footprint, better technologies and price efficiencies attractive to our clients and potential clients. Increased competition, our inability to compete
successfully, and pricing pressures or loss of market share could result in reduced operating profit margins which could have a material adverse effect
on our business, financial condition, results of operations and prospects.
A substantial portion of our revenue, operations and investments are in Latin America and we are therefore exposed to risks inherent in
operating and investing in the region.
For the year ended December 31, 2020, we derived 41.2% of our revenue from the Americas and 43.2% from Brazil. We intend to continue
to develop and expand our facilities in the Americas and Brazil. Our operations and investments in the Americas and Brazil are subject to various
risks related to the economic, political and social conditions of the countries in which we operate, including risks related to the following:
· inconsistent regulations, licensing and legal requirements may increase our cost of operations as we endeavor to comply with myriad of
laws that differ from one country to another in an unpredictable and adverse manner;
· currencies may be devalued or may depreciate or currency restrictions or other restraints on transfer of funds may be imposed;
· the effects of inflation and currency depreciation and fluctuation may require certain of our subsidiaries to undertake a mandatory
recapitalization;
· certain governments may expropriate or nationalize assets or increase their participation in companies;
· certain governments may impose burdensome regulations, taxes or tariffs;
· political changes may lead to changes in the business environments in which we operate; and
· economic downturns, political instability, civil disturbances may negatively affect our operations, pandemics or disease outbreaks, such
as the novel coronavirus (COVID-19 virus).
Any deterioration in global market and economic conditions, especially in Latin America, and, particularly in the telecommunications
and financial services industries from which we generate most of our revenue, may adversely affect our business, financial condition,
results of operations and prospects.
Global market and economic conditions, including in Latin America, in the past several years have presented volatility and increasing risk
perception, with tighter credit conditions and recession or slower growth in most major economies continuing into 2019. Our results of operations are
affected directly by the level of business activity of our clients, which in turn is affected by the level of economic activity in the industries and
markets that they serve. Many of our clients’ industries are especially vulnerable to any crisis in the financial and credit markets or to economic
downturns. A substantial portion of our clients are concentrated in the telecommunications and financial services industries, which were especially
vulnerable to the global financial crisis and economic downturn that began in 2008. For the year ended December 31, 2020, 39.0% of our revenue
was derived from clients in the telecommunications industry, which Telefónica corresponds for 31.8%, and 34.6% of our revenue was derived from
clients in the financial services industry, including insurance, which there are two customers that individually corresponds for more than 5% of the
Company level. Our business and future growth largely depend on continued demand for our services from clients in these industries.
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As our business has grown, we have become increasingly exposed to adverse changes in general global economic conditions, which may
result in reductions in spending by our clients and their customers. Global economic concerns such as the varying pace of global economic recovery
continue to create uncertainty and unpredictability and may have an adverse effect on the cost and availability of credit, leading to decreased
spending by businesses. Any deterioration of general economic conditions, or weak economic performance in the economies of the countries in
which we operate, particularly in Brazil and the Americas may have a material adverse effect on our business, financial condition, results of
operations and prospects. Brazil and the Americas, for example, comprised 87.3%, 87.1% and 84.4% of our revenue respectively, for the years ended
December 31, 2018, 2019 and 2020. In addition, key markets such as the telecommunications and financial services industries comprised 73.6% of
our revenue for the year ended December 31, 2020.
Increases in employee benefit expenses as well as changes to labor laws could reduce our profit margin.
Employee benefit expenses is our largest expense and accounted for $1,365.2 million in 2018, $1,301.0 million in 2019 and $1,060.4 million
in 2020, or 75.1%, 76.2% and 75.1%, respectively, of our revenue in those periods.
Employee salaries and benefits expenses in many of the countries in which we operate, principally in Latin America, have increased during
the periods presented in this Annual Report as a result of economic growth, increased demand for CRM BPO services and increased competition for
trained employees such as employees at our service delivery centers in Latin America. See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Total operating expenses.”
We will attempt to control costs associated with salaries and benefits as we continue to add capacity, but we may not be successful in doing
so. We may need to increase salaries more significantly and rapidly than in previous periods to remain competitive, which may have a material
adverse effect on our business, financial condition, results of operations and prospects. Wage increases or other expenses related to the termination of
our employees may reduce our profit margins and have a material adverse effect on our business, financial condition, results of operations and
prospects. If we expand our operations into new jurisdictions, we may be subject to increased operating costs, including higher employee benefit
expenses in these new jurisdictions relative to our current operating costs, which could have a negative effect on our results of operations.
Furthermore, most of the countries in which we operate have labor protection laws, including statutorily mandated minimum annual wage
increases, legislation that imposes financial obligations on employers and laws governing the employment of workers. These labor laws in one or
more of the key jurisdictions in which we operate, particularly Brazil, may be modified in the future in a way that is detrimental to our business. If
these labor laws become more stringent, or if there are continued increases in statutory minimum wages or higher labor costs in these jurisdictions, it
may become more difficult for us to discharge employees, or cost effectively downsize our operations as our level of activity fluctuates, both of
which would likely have a material adverse effect on our business, financial condition, results of operations and prospects.
Brazil has approved changes in the payroll exemption policy, which benefited most of the sectors. The modifications were made by Law
13,670, dated May 30, 2018. Taxation on the gross revenue of call center companies, with a 3% tax on gross revenue, was maintained.
For our economic activity, it is much more advantageous to collect an aliquot ranging from 1% to 4.5% on gross revenue, called Social
Security Contribution on Gross Revenue (CPRB), as stipulated by the law, than to collect a 20% social security contribution on total payroll, as
occurs with companies outside the tax exemption system.
The new law stipulates the end of taxation on gross revenue for all sectors as of December 31, 2020. When the law comes into effect, non-
exempt companies will be required to collect a Social Security contribution of 20% of payroll. The new Brazilian Government, installed on the
January 1, 2019, announced it is examining a new modification to the law, wishing to continue with the exemption of payroll for some sectors. We
intend to monitor this situation.
Our operating results may fluctuate from one quarter to the next due to various factors including seasonality.
Our operating results may differ significantly from quarter to quarter and our business may be affected by factors such as: client losses, the
timing of new contracts and of new product or service offerings, termination of existing contracts, variations in the volume of business from clients
resulting from changes in our clients’ operations or the onset of certain parts of the year, such as the summer vacation period in our geographically
diverse markets and the year-end holiday season in Latin America, the business decisions of our clients regarding the use of our services, startup
costs, delays or difficulties in expanding our operational facilities and infrastructure, changes to our revenue mix or to our pricing structure or that of
our competitors, inaccurate estimates of resources and time required to complete ongoing projects, currency fluctuations and seasonal changes in the
operations of our clients.
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We typically generate less revenue in the first quarter of the year, which is related of the fact that our clients and their customers generally
spend less after the year-end holiday season. We have also found that our revenue increases in the last quarter of the year, particularly in November
and December when our business benefits from the increased activity of our clients and their customers, who generally spend more money and are
otherwise more active during the year-end holiday season. These seasonal effects also cause differences in revenue and income among the various
quarters of any financial year, which means that the individual quarters of a year should not be directly compared with each other or used to predict
annual results of operations.
In addition, the sales cycle for our services, typically from six to 12 months (from the date the contract is entered into until the beginning of
the provision of services), and the internal budget and approval processes of our prospective clients, make it difficult to predict the timing of new
client engagements. Also, we recognize revenue only upon actual provision of the contracted services and when the criteria for recognition are met.
The financial benefit of gaining a new client may not be realized at the intended time due to delays in the implementation of our services or due to an
increase in the startup costs required in building related infrastructure. These factors may make it difficult for us to prepare accurate internal financial
forecasts or replace anticipated revenue that is not received as a result of these delays.
Natural events, including pandemics or disease outbreaks, such as the novel coronavirus (COVID-19), wars, cyberattacks, terrorist
attacks and other acts of violence involving any of the countries in which we or our clients have operations could adversely affect our
operations and client confidence.
Natural events (such as floods, earthquakes and disease outbreaks), terrorist attacks and other acts of violence or war may adversely disrupt
our operations, lead to economic weakness in the countries in which they occur and affect worldwide financial markets, and could potentially lead to
economic recession in our markets, which could have a material adverse effect on our business, financial condition, results of operations and
prospects. These events could adversely affect our clients’ levels of business activity and precipitate sudden significant changes in regional and
global economic conditions and cycles. These events also pose significant risks to our people and to our business operations around the world.
If we experience a temporary or permanent interruption in our operations at one or more of our data or contact centers, through natural
disaster, casualties, operating malfunction, cyberattack, terrorist attack, sabotage or other causes, we may be unable to provide the services we are
contractually obligated to deliver. Failure to provide contracted services could result in contractual damages or clients’ termination or renegotiation of
their contracts. The results of these incidents could include, but are not limited to, business interruption, disclosure of non-public information,
decreased customer revenues, misstated financial data, liability for stolen assets or information, increased cybersecurity protection costs, litigation
and reputational damage adversely affecting customer confidence. Although we maintain internal controls to protect our company and our clients
from events that could interrupt our delivery of services, there is no guarantee that such controls will be effective or that any interruption will not be
prolonged. Any prolonged interruption in our ability to provide services to our clients for which our plans and precautions fail to adequately protect
us could have a material adverse effect on our business, results of operations and financial condition.
Fluctuations in, or devaluation of, the local currencies in the countries in which we operate against the U.S. dollar could have a material
adverse effect on our business, financial condition, results of operations and prospects.
As of December 31, 2020, the majority of our revenue was generated in countries that use currencies other than the U.S. dollar, mostly the
local currencies of the Latin American countries in which we operate (particularly, currencies such as the Brazilian Reais, the Mexican Peso, the
Chilean Peso and the Argentinean Peso). Both Brazil and Mexico have experienced inflation and currency volatility in the past and Argentina is
classified as a hyperinflationary economy. While inflation may not have a significant effect on the profit and loss of a local subsidiary itself,
depreciation of the local currency against the U.S. dollar would reduce the value of the dividends payable to us from our operating companies. We
report our financial results in U.S. dollars and our results of operations would be adversely affected if these local currencies depreciate significantly
against the U.S. dollar, which may also affect the comparability of our financial results from period to period, as we convert our subsidiaries’
statements of financial position into U.S. dollars from local currencies at the period-end exchange rate, and statements of operations and cash flows at
average exchange rates for the year, except for Argentina. Conversely, where we provide offshore services to U.S. clients and our revenue is earned in
U.S. dollars, an appreciation in the currency of the country in which the services are provided could result in an increase in our costs in proportion to
the revenue we earn for those services. The exchange rates between these local currencies and the U.S. dollar have changed substantially in recent
years and may fluctuate substantially in the future. For the years ended December 31, 2016, 2017, 2018, 2019 and 2020, these fluctuations had a
significant effect on our results of operations.
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In addition, future government action, including changes in interest rates and monetary policy or intervention in the currency exchange
markets and other government actions to adjust the value of the local currency may trigger inflationary increases. For example, governmental
measures to control inflation may include maintaining a tight monetary policy with high interest rates, thereby restricting the availability of credit and
reducing economic growth. As a result, interest rates may fluctuate significantly. Furthermore, losses incurred based on the exchange rate used for
reporting purposes may be exacerbated if regulatory restrictions are imposed when these currencies are converted into U.S. dollars.
The occurrence of such fluctuations, devaluations or other currency risks could have a material adverse effect on our business, financial
condition, results of operations and prospects.
The Brazilian government exercises significant influence over the Brazilian economy. This influence, as well as Brazilian political and
economic conditions, could adversely impact our business, financial condition, results of operations and prospects.
For the years ended December 31, 2018, 2019 and 2020, revenue from our operations in Brazil accounted for 48.3%, 48.5% and 43.2% of
our total revenue, respectively, and Adjusted EBITDA from our operations in Brazil accounted for 53.8%, 72.8% and 50.7% of our total Adjusted
EBITDA, respectively (in each case, before holding company level revenue, expenses and consolidation adjustments).
Historically, the Brazilian government has frequently intervened in the Brazilian economy and occasionally made drastic changes in policy
and regulations. The Brazilian government’s actions to control inflation and implement macroeconomic policies have in the past often involved wage
and price controls, currency devaluations, capital controls and limits on imports, among other things. Our business, financial condition, results of
operations and prospects may be adversely affected by changes in policies or regulations, such as:
· devaluations and other currency fluctuations;
· inflation;
· interest rates;
· liquidity of domestic capital and lending markets;
· energy shortages;
· exchange controls and restrictions on remittances abroad (such as those that were briefly imposed in 1989 and early 1990);
· monetary policy;
· minimum wage policy;
· tax policy; and
· other political, diplomatic, social and economic developments in or affecting Brazil.
Currently, Brazilian markets are experiencing heightened volatility due to the uncertainties derived from the ongoing “Lava Jato”
investigation, being conducted by the Office of the Brazilian Federal Prosecutor, which has impacted the Brazilian economy and political
environment. Members of the Brazilian federal government and of the legislative branch, as well as senior officers of large state-owned companies
and privately held companies, have faced allegations of political corruption, including allegedly accepting bribes by means of kickbacks on contracts
granted by the government. The profits of these kickbacks allegedly financed the political campaigns of political parties of the current federal
government coalition that were unaccounted for or not publicly disclosed, and personally enriched the recipients of bribes under this bribery scheme.
The potential outcome of these investigations is uncertain, but they have already had an adverse impact on the image and reputation of the implicated
companies, and on the general market perception of the Brazilian economy.
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We cannot predict whether such allegations will lead to further political and economic instability or whether new allegations against
government officials will arise in the future. In addition, we cannot predict the outcome of any such allegations nor their effect on the Brazilian
economy. Further, the President of Brazil has considerable power to determine governmental policies and actions that relate to the Brazilian economy
that could consequently affect our business, financial condition and results of operations. Further still, future developments in policies of the
Brazilian government and/or the uncertainty of whether and when such policies and regulations may be implemented, all of which are beyond our
control, could have a material adverse effect on us.
The Brazilian government regularly implements changes to tax policies that may increase our and our clients’ tax burdens. These changes
can include modifications in the rate of assessments, non-renewal of existing tax relief, such as the “Plano Brasil Maior” and, on occasion, enactment
of temporary taxes, the proceeds of which are earmarked for designated governmental purposes. Because we derive a significant portion of our
revenue, EBITDA and Adjusted EBITDA from our operations in Brazil, if the “Plano Brasil Maior” is not extended or not made permanent, it would
have a significant negative impact on our total costs. Our inability to pass through such increase in costs to our customers would materially and
adversely affect our results of operations. Furthermore, increases in our overall tax burden could negatively affect our overall financial performance
and profitability.
The Brazilian currency has been devalued over the past four decades. Throughout this period, the Brazilian government has implemented
various economic plans and used various exchange rate policies, including sudden devaluations, periodic mini devaluations (such as daily
adjustments), exchange controls, dual exchange rate markets and a floating exchange rate system. From time to time, there have been significant
fluctuations in the exchange rate between the Brazilian currency and the U.S. dollar and other currencies.
In the past, Brazil’s economy has experienced balance of payment deficits and shortages in foreign exchange reserves, and the government
has responded by restricting the ability of persons or entities, Brazilian or foreign, to convert Brazilian currency into any foreign currency. The
government may institute a restrictive exchange control policy in the future. Any restrictive exchange control policy could prevent or restrict our
access to other currencies to meet our financial obligations and our ability to pay dividends out of our Brazilian activities.
In recent years, there has been considerable changes in the tax policy in Brazil, including tax increases that have impacted our business, and
further changes have been proposed.
Uncertainty over whether possible changes in policies or rules affecting these or other factors may contribute to economic uncertainties in
Brazil, which could adversely affect our business, financial condition, results of operations and prospects.
Our business depends in part on our capacity to invest in technology and these costs of technology and telecommunications services,
which we rely on from third parties, could have a material adverse effect on our business, financial condition, results of operations and
prospects.
The CRM BPO industry in which we operate is subject to the periodic introduction of new technologies which often can enable us to service
our clients more efficiently and cost effectively. Our business success is partly linked to our ability to recognize these new technological innovations
from industry-leading providers of such technologies and to apply these technological innovations to our business. If we do not recognize the
importance of new technologies to our business in a timely manner or are not committed to investing in and developing such new technologies and
applying these to our business, our current products and services may be less attractive to existing and new clients, and we may lose market share to
competitors who have recognized these trends and invested in such technologies. There can be no assurance that we will have sufficient capacity or
capital to meet these challenges. Any such failure to recognize the importance of such technologies or a decision not to invest and develop such
technologies that keeps pace with evolving industry standards and changing client demands could have a material adverse effect on our business,
financial condition, results of operations and prospects.
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In addition, any increases in the cost of telecommunications services and products provided by third parties, including telecommunications
equipment, software, IT products and related IT services and call center workstations have a direct effect on our operating costs. The cost of
telecommunications services is subject to several factors, including changes in regulations and the telecommunications market as well as competitive
factors, for example, the concentration and bargaining power of technology and telecommunications suppliers, most of which are beyond our control
or which we cannot predict. The increase in the costs of these essential services and products could have a material adverse effect on our business,
financial condition, results of operations and prospects.
During 2018, Atento implemented in Spain the new obligations of the GDPR – Global Data Protection Regulation - through the review of
our main processes relating to employees, clients and providers, working hand-in-hand with Information Security. This implementation has required:
· re-definition of certain processes;
· updating or drafting of new policies;
· renegotiation of many agreements with clients and providers to include the new provisions of the GDPR and to assign certain new
responsibilities; and
· also, staff training materials have been elaborated and GDRP training sessions have been given throughout different company sites.
Brazil has adopted in 2018, a General Data Protection Law (LGPD). The law will come into effect, after an 18-month adaptation period, in
early 2020. At the moment, Atento Brazil is dedicated to the analysis and implementation of the new obligations and process that this regulation
brings along. The LGPD has transversal and multi-sectoral applications, both in public and private sectors, online and offline. This law deals with the
concept of personal data and lists the legal bases that authorize its use, basic rights of the data subject — such as right to access, exclusion of data,
and to explanation of use - and the obligations and limits that should be applied to any entity that processes personal data.
Damage or disruptions to our key technology systems and facilities either through events beyond or within our control that adversely
affect our clients’ businesses, could have a material adverse effect on our business, financial condition, results of operations and
prospects.
Our key technology systems and facilities may be damaged in natural disasters such as earthquakes or fires or subject to damage or
compromise from human error, technical disruptions, power failure, computer glitches and viruses, telecommunications failures, adverse weather
conditions and other unforeseen events, all of which are beyond our control, or through bad service or poor performance which are within our
control. Such events may cause disruptions to information systems, electrical power and telephone service for sustained periods. Any significant
failure, damage or destruction of our equipment or systems, or any major disruptions to basic infrastructure such as power and telecommunications
systems in the locations in which we operate, could impede our ability to provide services to our clients and thus adversely affect their businesses,
have a negative impact on our reputation and may cause us to incur substantial additional expenses to repair or replace damaged equipment or
facilities.
While we currently have property damage insurance in force, our insurance coverage may not be sufficient to guarantee costs of repairing
the damage caused from such disruptive events and such events may not be covered under our policies. Prolonged disruption of our services, even if
due to events beyond our control, could also entitle our clients to terminate their contracts with us, which would have a material adverse effect on our
business, financial condition, results of operations and prospects.
Tax matters, new legislation and actions by tax authorities may have an adverse effect on our operations, effective tax rate, financial
condition, results of operations and prospects.
We may not be able to predict our future tax liabilities due to the international nature of our operations, as we are subject to the complex and
varying tax laws and rules of several foreign jurisdictions. Our results of operations and financial condition could be adversely affected if tax
contingencies are resolved adversely or if we become subject to increased levels of taxation.
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We are subject to income taxes in numerous foreign jurisdictions. Our tax expense and cash tax liability in the future could be adversely
affected by numerous factors, including, but not limited to, changes in tax laws, regulations, accounting principles or interpretations and the potential
adverse outcome of tax examinations and pending tax related litigation. Changes in the valuation of deferred tax assets and liabilities, which may
result from a decline in our profitability or changes in tax rates or legislation, could have a material adverse effect on our tax expense. The
governments of foreign jurisdictions from which we deliver services may assert that certain of our clients have a “permanent establishment” in such
foreign jurisdictions because of the activities we perform on their behalf, particularly those clients that exercise control over or have substantial
dependency on our services. Such an assertion could affect the size and scope of the services requested by such clients in the future.
Transfer pricing regulations to which we are subject require that any transaction among us and our subsidiaries be on arm’s length terms. If
the applicable tax authorities were to determine that the transactions among us and our subsidiaries do not meet arm’s length criteria, we may incur
increased tax liability, including accrued interest and penalties. Such adverse determinations and changes in tax laws or regulations could increase our
tax expenses, reducing our profitability and cash flows.
If we are unable to accurately predict our future tax liabilities or become subject to increased levels of taxation or our tax contingencies
are unfavorably resolved, our results of operations and financial condition could be adversely affected.
Due to the global nature of our operations, we are subject to the complex and varying tax laws and rules of several jurisdictions and have
material tax-related contingent liabilities that are difficult to predict or quantify. In preparing our financial statements, we calculate our effective
income tax rate based on current tax laws and regulations and our estimated taxable income within each of these jurisdictions. The United States
adopted tax reform legislation commonly known as the Tax Cuts and Jobs Act, which will increase our effective income tax rate by imposing a new
tax regime impacting our non-U.S. operations. The U.S. tax changes also provide flexibility related to repatriating non-U.S. earnings to the United
States without additional U.S. taxation, and as a result, we have changed classification of certain earnings that were previously deemed to be
permanently reinvested offshore and recorded deferred tax liabilities for the associated withholding taxes. Other changes in tax laws or regulations in
the jurisdictions in which we do business, including the United States, or changes in how the Tax Cuts and Jobs Act or other tax laws are
implemented or interpreted, could further increase our effective tax rate, further restrict our ability to repatriate undistributed offshore earnings, or
impose new restrictions, costs or prohibitions on our current practices and reduce our results of operations and adversely affect our cash flows.
We are also subject to tax inspections, including with respect to transfer pricing, and our tax positions may be challenged by tax authorities.
Although we believe that our current tax provisions are reasonable and appropriate, there can be no assurance that these items will be settled for the
amounts accrued, that additional tax exposures will not be identified in the future or that additional tax reserves will not be necessary for any such
exposures. Any increase in the amount of taxation incurred as a result of challenges to our tax filing positions could result in a material adverse effect
on our business, results of operations and financial condition.
Prompted by Brazil’s current economic and political turmoil, the tax authorities have intensified the number of tax inspections. The judicial
and administrative courts, for their part, have been extremely careful in ruling out tax liabilities. As a result, several tax issues are now on their
agenda, including goodwill amortization expenses and corporate restructuring and tax planning, to name a few. Given this scenario, there are risks
and uncertainties regarding the decisions taken by the Conselho Administrativo de Recursos Fiscais (the Brazilian Tax Appeal Administrative
Council, “CARF”), which could negatively impact the Brazil tax environment and consequently us.
If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations
regarding our ordinary shares or if our operating results do not meet their expectations, the price of our ordinary shares could decline.
The market price of our ordinary shares is influenced by the research and reports that industry or securities analysts publish about us or our
business. If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, we could lose visibility in the
financial markets, which in turn could cause the market price of our ordinary shares or its trading volume to decline. Moreover, if one or more of the
analysts who cover our Company downgrade our ordinary shares or if our operating results or prospects do not meet their expectations, the market
price of our ordinary shares could decline.
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We have significant global operations and face risks related to health epidemics that could impact our sales and operating results.
Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, including the recent outbreak of
respiratory illness caused by a novel strain of coronavirus (COVID-19) first identified in Wuhan, Hubei Province, China. Any outbreak of contagious
diseases, and other adverse public health developments, could have a material adverse effect on our business operations. These could include
temporary closures of our facilities or the facilities of our customers (which may be mandated by local health or government authorities), a disruption
of supply chain for our customers, the temporary suspension of operations by us or our customers, travel restrictions on our employees and other
disruptions to our business. Additionally, because our revenues are, in part, tied to the revenues of our customers, any impact on the business or
revenues of our customers may result in an impact on our own business or revenues. While the duration of business interruption from this outbreak
and related financial impact cannot be reasonably estimated at this time, we expect that any disruption of our operations, or those of our customers,
would likely impact our results of operations. In addition, a significant outbreak of contagious diseases in the human population could result in a
widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that
could affect demand for our services and likely impact our operating results and cash flows.
Internal Risks
Telefónica S.A., certain of its affiliates and a few other major clients account for a significant portion of our revenue and any loss of a
large portion of business from these clients could have a material adverse effect on our business, financial condition, results of
operations and prospects.
We have derived and believe that we will continue to derive a significant portion of our revenue from companies within the Telefónica S.A.
and a few other major client groups. For the years ended December 31, 2018, 2019 and 2020, we generated 39.0%, 35.6% and 31.8%, respectively, of
our revenue from the services provided to the Telefónica S.A. Our contracts with Telefónica S.A. companies in Brazil and Spain comprised 58.8%,
59.5% and 56.5%, respectively, of our revenue from the Telefónica S.A. for the years ended December 31, 2018, 2019 and 2020. Our 15 largest client
groups (including the Telefónica S.A.) on a consolidated basis accounted for a total of 68.3% of our revenue for the year ended December 31, 2020.
We are party to a master services agreement (the “MSA”) with Telefónica S.A. for the provision of certain CRM BPO services to Telefónica
S.A. companies which governs the services agreements entered with the Telefónica S.A. companies. As of December 31, 2020, 31 companies within
the Telefónica S.A. were a party to 106 arm’s length contracts with us. While our service contracts with the Telefónica S.A. companies have
traditionally been renewed, there can be no assurance that such contracts will be renewed upon their expiration. Although the MSA is an umbrella
agreement which governs our services agreements with the Telefónica S.A. companies, the termination of the MSA on December 31, 2021 (except in
Brazil and Spain, where the MSA terminates on December 31, 2023) does not automatically result in a termination of any of the local services
agreements in force after those dates. In addition, there can be no assurance that the MSA will be renewed upon its expiration. Furthermore, the MSA
or any other agreement with any of the Telefónica S.A. companies may be amended in a manner adverse to us or terminated early.
In addition, there can be no assurance that the volume of work to be performed by us for the various Telefónica S.A. companies will not vary
significantly from year to year in the aggregate, particularly since we are not the exclusive outsourcing provider for the Telefónica S.A.
Consequently, our revenue or margins from the Telefónica S.A. may decrease in the future. A number of factors other than the price and quality of
our work and the services we provide could result in the loss or reduction of business from Telefónica S.A. companies, including the impacts of
adverse macro-economic conditions on Telefónica S.A.’s business, and we cannot predict the timing or occurrence of any such event. For example, a
Telefónica S.A. company may demand price reductions, increased quality standards, change its CRM BPO strategy, or under certain circumstances
transfer some or all the work and services we currently provide to Telefónica S.A. in-house.
The loss of a significant part of our revenue derived from these clients, particularly the Telefónica S.A., as a result of the occurrence of one
or more of the above events would have a material adverse effect on our business, financial condition, results of operations and prospects.
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Our profitability will suffer if we are not able to maintain our pricing and/or control costs.
Our profit margins, and therefore our profitability, is largely a function of our level of activity and the rates we are able to charge for our
services. If we are unable to maintain the pricing for our services and/or an appropriate seat utilization rate, without corresponding cost reductions,
our profitability will decline. The pricing and levels of activity we are able to achieve are affected by a number of factors, including our clients’
perceptions of our ability to add value through our services, the length of time it takes for service volume of new clients to ramp up, competition, the
introduction of new services or products by us or our competitors, our ability to accurately estimate, attain and sustain revenue from client contracts,
margins and cash flows over increasingly longer contract periods and general economic and political conditions.
Our profitability is also a function of our ability to control our costs and improve our efficiency. As we increase the number of our
employees and execute our strategies for growth, we may not be able to manage the significantly larger and more geographically diverse workforce,
which could adversely affect our ability to control our costs or improve our efficiency. Further, because there is no certainty that our business will
grow at the rate that we anticipate, we may incur expenses for the increased capacity for a significant period without corresponding growth in our
revenue.
Our success depends on our key employees.
Our success depends on the continued service and performance of our executive officers and other key personnel in each of our business
units and corporate sites. There is competition for experienced senior management and personnel with expertise in the CRM BPO industry, and we
may not be able to retain our key personnel or recruit skilled personnel with appropriate qualifications and experience. Although we have entered into
employment contracts with our executive officers, it may not be possible to require specific performance under a contract for personal services, and
in any event, these agreements do not ensure the continued service of these executive officers. The loss of key members of our personnel, particularly
to competitors, could have a material adverse effect on our business, financial condition, results of operations and prospects.
If we experience challenges with respect to labor relations, our overall operating costs and profitability could be adversely affected and
our reputation could be harmed.
While we believe we have good relations with our employees, any work disruptions or collective labor actions may have an adverse impact
on our services. Approximately 74.3% of our workforce is under collective bargaining agreements. Collective bargaining agreements are generally
renegotiated every one to three years with the principal labor unions in seven of the countries in which we operate. If these labor negotiations are not
successful or we otherwise fail to maintain good relations with employees, we could suffer a strike or other significant work stoppage or other form
of industrial action, which could have a material adverse effect on our business, financial condition, results of operations and prospects and
reputation.
For Atento Argentina, the recent Resolution n° 810 issued by the Ministry of Production and Labor, has extended the application of the
Collective Labor Agreement 688/14 (related to the ATACC - Association of Argentine Workers of Contact Centers) to the city of Buenos Aires,
Province of Buenos Aires, Buenos Aires, Tucumán, Chaco, San Luis, Mendoza and Salta. Since this administrative action is considered legitimate
and taking into account that Atento has not been notified of any measure (administrative or judicial) ordering the suspension of the effects of
Resolution n° 810, the staff of Atento Argentina SA will no longer be governed by CCT 130/75 (corresponding to the Commerce Employees Union)
and will be governed by CCT 688/14.
Rapid growth may make it difficult for us to maintain our internal operational and financial systems.
Since our foundation in 1999, and particularly from 2004 onwards, we have experienced rapid growth and significantly expanded our
operations in key regions and client industries. Our number of workstations increased from 92,271 as of December 31, 2018 to 92,572 as of
December 31, 2019 and increased to 93,308 as of December 31, 2020. The average number of employees (excluding internships) decreased from
153,038 for the year ended December 31, 2018 to 149,129 for the year ended December 31, 2019 and decreased to 139,805 for the year ended
December 31, 2020.
To manage growth effectively, we must recruit new employees and implement improved operational systems, procedures and internal
controls on a timely basis. In addition, we need to update our existing internal accounting, financial and cost control systems to ensure we can access
all necessary financial information. If we fail to implement these systems, procedures and controls or update these systems on a timely basis, we may
not be able to service our clients’ needs, hire and retain new employees, pursue new business, complete future acquisitions or operate our business
effectively. Failure to effectively transfer new client business to our delivery centers, properly budget transfer costs, accurately estimate operational
costs associated with new contracts, or access financial, accounting or cost control information in a timely fashion could result in delays in executing
client contracts, trigger service level penalties or cause our profit margins not to meet our expectations. Any inability to control such growth or
update our systems could materially adversely affect our business, financial condition, results of operations and prospects.
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If we are unable to fund our working capital requirements and new investments, our business, financial condition, results of operations
and prospects could be adversely affected.
The CRM BPO industry is characterized by high working capital requirements and the need to make new investments in operating sites and
employee resources to meet the evolving requirements of our clients. Similar to our competitors in this industry, we incur significant startup costs
related to investments in infrastructure to provide our services and to the hiring and training of employees, such expenses being historically incurred
before revenue is generated.
In addition, we are exposed to adverse changes in our main clients’ payment policies, which could have a material adverse impact on our
ability to fund our working capital needs. During the year ended December 31, 2020, our average days sales outstanding (“DSO”) was approximately
66 days. If our key clients implement policies which extend the payment terms of our invoices, our working capital levels could be adversely affected
and our finance costs may increase. As a result, under the service contracts we entered into since that time, the provisions relating to the time by
which Telefónica S.A. must satisfy its payment obligations to us was extended. If we are unable to fund our working capital requirements, access
financing at competitive prices or make investments to meet the expanding business of our existing and potential new clients, our business, financial
condition, results of operations and prospects could be adversely affected.
Our ability to provide our services depends in part upon the quality and reliability of the facilities, machinery and equipment provided by
our technology and telecommunications providers, our reliance on a limited number of suppliers of such technology and the services and
products of our clients.
The success of our business depends in part on our ability to provide high quality and reliable services, which in part depends on the proper
functioning of facilities, machinery and equipment (including appropriate hardware and software and technological applications) provided by third
parties and our reliance on a limited number of suppliers of such technology, and is, therefore, beyond our control.
We also depend on the communication services provided by local communication companies in the countries in which we operate, and any
significant disruptions in these services would adversely affect our business. If these or other third-party providers fail to maintain their equipment
properly or fail to provide proper services in a timely or reliable manner our clients may experience service interruptions. If interruptions adversely
affect our services or the perceived quality and reliability of our services, we may lose client relationships or be forced to make significant unplanned
investments in the purchase of additional equipment from other providers to ensure that we can continue to provide high quality and reliable services
to our clients. In addition, if one or more of the limited number of suppliers of our technology could not deliver or provide us with the requisite
technology on a timely basis, our clients could suffer further interruptions. Any such interruptions may have a material adverse effect on our
business, financial condition, results of operations and prospects.
In addition, in some areas of our business, we depend upon the quality and reliability of the services and products of our clients which we
help to sell to their end-customers. If the services and products we provide to our clients experience technical difficulties, we may have a harder time
selling these services and products to other clients, which may have an adverse effect on our business, financial condition, results of operations and
prospects.
Our results of operations could be adversely affected if we are unable to maintain effective internal controls.
Any internal and disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. The design of a control system must consider the benefits of controls relative to their
costs. Inherent limitations within a control system include the realities that judgments in decision-making can be faulty, and that breakdowns can
occur because of simple errors or mistakes. Additionally, controls can be circumvented by individuals acting alone or in collusion with others to
override controls. Accordingly, because of the inherent limitations in the design of a cost- effective control system, misstatements due to error or
fraud may occur and may not always be prevented or detected in a timely way. If we are unable to assert that our internal controls over financial
reporting are effective now or in the future, or if our auditors are unable to express an opinion on the effectiveness of our internal controls, we could
lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our stock price.
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We are a party to a number of labor disputes related to our operations in Brazil, mainly to the reiterated jurisprudence in the labor courts
in the absence of a law for outsourced activity. Nevertheless, a Labor Reform law was approved in the country in July 2017 (effective as
from November 2017, 120 days after it was sanctioned), resulting in a new legal environment and which we expect to reduce the number
of future labor claims.
Despite the probable positive effects of this new legal environment, Atento has been named in numerous labor-related disputes initiated by
Atento’s employees or former employees for various reasons, including dismissals or claims concerning employment conditions, in general, our
internal structuring, reorganizations and operational shutdowns. In addition, we are regularly party to ongoing disputes with local tax authorities and
social security authorities in the jurisdictions in which we operate. In the normal course of business, we are also party to various other lawsuits and
regulatory proceedings, including, among other matters, daily and general work routines, overtime rules, health and safety in the workplace, and
commercial claims. The estimated amount involved in these claims total $54.7 million, of which $14.4 million have been classified as probable,
$33.6 million classified as possible and $6.7 million classified as remote, based on inputs from external and internal advisors as well as historical
statistics. In connection with such disputes, Atento Brasil and its affiliates have, in accordance with local laws, deposited $26.8 million with the
Brazilian courts as security for claims made by employees or former employees. In addition, considering the levels of litigation in Brazil and our past
experience with these types of claims, as of December 31, 2020, we have recognized $14.4 million of provisions. If our provisions for any of our
labor claims are insufficient or the claims against us rise significantly in the future, this could have a material adverse effect on our business, financial
condition, results of operations and prospects. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—
Legal Proceedings”.
Our existing debt may affect our flexibility in operating and developing our business and our ability to satisfy our obligations.
As of December 31, 2020, we had total indebtedness of $727.8 million. Our level of indebtedness may have significant negative effects on
our future operations, including:
· impairing our ability to obtain additional financing in the future (or to obtain such financing on acceptable terms) for working capital,
capital expenditure, acquisitions or other important needs;
· requiring us to dedicate a substantial portion of our cash flow to the payment of principal and interest on our indebtedness, which could
impair our liquidity and reduce the availability of our cash flow to fund working capital, capital expenditure, acquisitions and other
important needs;
· increasing the possibility of an event of default under the financial and operating covenants contained in our debt instruments; and
· limiting our ability to adjust to rapidly changing conditions in the industry, reducing our ability to withstand competitive pressures and
making us more vulnerable to a downturn in general economic conditions or business than our competitors with less debt.
If we are unable to generate sufficient cash flow from operations to service our debt, we may be required to refinance all or a portion of our
existing debt or obtain additional financing. We cannot assure that any such refinancing would be possible or that any additional financing could be
obtained. Our inability to obtain such refinancing or financing may have a material adverse effect on our business, financial condition, results of
operations and prospects.
In addition, several of our financing arrangements contain a number of covenants and restrictions, including limits on our ability and our
subsidiaries’ ability to incur additional debt, pay dividends and make certain investments. Complying with these covenants may cause us to take
actions that make it more difficult to successfully execute our business strategy and we may face competition from companies not subject to such
restrictions. Moreover, our failure to comply with these covenants could result in an event of default or refusal by our creditors to renew certain of
our loans.
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The market price of our ordinary shares may be volatile.
The stock market can be highly volatile. As a result, the market price of our ordinary shares may be volatile, and investors in our ordinary
shares may experience a decrease, which could be substantial, in the value of their ordinary shares, including decreases unrelated to our operating
performance or prospects, or a complete loss of their investment. The price of our ordinary shares could be subject to wide fluctuations in response to
a number of factors, including those listed elsewhere in this “Risk Factors” section and others, such as:
· variations in our operating performance and the performance of our competitors;
· actual or anticipated fluctuations in our quarterly or annual operating results;
· changes in our revenue or earnings estimates or recommendations by securities analysts;
· publication of research reports by securities analysts about us or our competitors or our industry;
· our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;
· additions or departures of key personnel;
· strategic decisions by us or our competitors, such as acquisitions, divestitures, spinoffs, joint ventures, strategic investments or changes in
business strategy;
· announcement of technological innovations by us or our competitors;
· the passage of legislation, changes in interpretations of laws or other regulatory events or developments affecting us;
· speculation in the press or investment community;
· changes in accounting principles;
· terrorist acts, acts of war or periods of widespread civil unrest;
· changes in general market and economic conditions;
· changes or trends in our industry;
· investors’ perception of our prospects; and
· adverse resolution of any new or pending litigation against us.
In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price.
This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make
substantial payments to satisfy judgments or to settle or defend litigation.
Any determination to pay dividends is at the discretion of our board of directors, and we may not pay any dividends. Accordingly,
investors may only realize future gains on their investments if the price of their ordinary shares increases, which may never occur.
On September 21, 2017, the Board of Directors approved a dividend policy for the Company with a goal of paying annual cash dividend
pay-outs in line with industry peers and practices. The declaration and payment of any interim dividends is subject to approval of Atento’s corporate
bodies and will be determined based upon, amongst other things, Atento’s performance, growth opportunities, cash flow, contractual covenants,
applicable legal requirements and liquidity factors. The Board of Directors intends to review the dividend policy regularly and, accordingly, is subject
to change at any time.
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Future equity issuances may dilute the holdings of ordinary shareholders and could materially affect the market price of our ordinary
shares.
We may in the future decide to offer additional equity to raise capital or for other purposes. Any such offering could reduce the proportionate
ownership and voting interests of holders of our ordinary shares, as well as our earnings per ordinary share and net asset value per ordinary share.
Future sales of substantial amounts of our ordinary shares in the public market, whether by us or by our existing shareholders, or the perception that
sales could occur, may adversely affect the market price of our shares, which could decline significantly.
Cyberattacks and operational frauds, including unauthorized disclosure of sensitive or confidential client and customer data, whether
through breach of our computer systems or otherwise, could expose us to protracted and costly litigation and cause us to lose clients.
There are risks related to losing clients, reputational harm and increases of global insurance policy premiums due operational frauds. Atento
delivers its services to its clients through a complex technological platform that integrates many aspects of information technology, including
powerful telephonic, hardware and software. The Company ensures that requisite security and insurance coverage are applied in the context of its
activities. The Company requests that each subsidiary adhere to internal data security and protection standards, as well as to international security and
quality standards, however in our regular course of business Atento operates client systems that might not comply with our Company’s IT Security
rules.
While we take actions to improve our controls, it is possible that our technology controls over our client’s operations and other practices we
follow may not prevent fraud whithin our platforms. If any person, including any of our employees, negligently disregards or intentionally breaches
our established controls with respect to such data or otherwise mismanages or misappropriates that data, we could be subject to monetary damages,
fines and/or criminal prosecution. Failure of security controls related to client or customer information and data, whether through system failure,
employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients.
We are typically required to collect and store sensitive data in connection with our services, including names, addresses, social security
numbers, credit card account numbers, checking and savings account numbers and payment history records, such as account closures and returned
checks. As the complexity of information infrastructure continuous to grow, the potential risk of security breaches and cyberattacks increases. Such
breaches can lead to shutdowns or system interruptions, and potential unauthorized disclosure of sensitive or confidential information. We are also
subject to numerous laws and regulations designed to protect this information. Laws and regulations that impact our business are increasing in
complexity, change frequently, and at times conflict among the various jurisdictions where we do business. In addition, many of our service
agreements with our clients do not include any limitation on our liability to clients with respect to breaches of our obligation to keep the information
we receive confidential. We take precautions to protect confidential client and customer data. However, if any person, including any of our
employees, gains unauthorized access or penetrates our network security or otherwise mismanages or misappropriates sensitive data or violates our
established data and information security controls, we could be subject to significant liability with our clients or their customers for breaching
contractual confidentiality provisions or privacy laws, including legal proceedings, monitory damages, significant remediation costs and regulatory
enforcement actions. Penetration of the network security of our data centers could have a negative impact on our reputation, which could have a
material adverse effect on our business, results of operations, financial condition and prospects.
Continuity and Reputation Risks
If our clients decide to enter or further expand their own CRM BPO businesses in the future or current trends towards providing CRM
BPO services and/or outsourcing activities slow or are reversed, it may materially adversely affect our business, results of operations,
financial condition and prospects.
None of our current agreements with our clients prevent them from competing with us in our CRM BPO business and none of our clients
have entered into any non-compete agreements with us. Our current clients may seek to provide CRM BPO services similar to those we provide.
Some clients conduct CRM BPO services for other parts of their own businesses and for third parties. Any decision by our key clients to enter into or
further expand their CRM BPO business activities in the future could cause us to lose valuable clients and suppliers and may materially adversely
affect our business, financial condition, results of operations and prospects.
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Moreover, we have based our strategy of future growth on certain assumptions regarding our industry, legal framework, services and future
demand in the market for such services. However, the trend to outsource business processes may not continue and could be reversed by factors
beyond our control, including negative perceptions of outsourcing activities or government regulations against outsourcing activities.
In addition, our business may be adversely affected by potential new laws and regulations prohibiting or limiting outsourcing of certain core
business activities of our clients in key jurisdictions in which we conduct our business, such as in Brazil. The introduction of such laws and
regulations or a change in interpretation of existing laws and regulations could adversely affect our business, financial condition, results of operations
and prospects.
We have a long selling cycle for our CRM BPO services that requires significant investments and management resources, and a long
implementation cycle that requires significant resource commitments.
We have a long selling cycle for our CRM BPO services, which requires significant investment of capital, resources and time by both our
clients and us. Before committing to use our services, potential clients require us to expend substantial time and resources educating them as to the
value of our services and assessing the feasibility of integrating our systems and processes with theirs. Our clients then evaluate our services before
deciding whether to use them. Therefore, our selling cycle, which generally ranges from six to 12 months, is subject to many risks and delays over
which we have little or no control, including our clients’ decision to choose alternatives to our services (such as other providers or in-house offshore
resources) and the timing of our clients’ budget cycles and approval processes.
Implementing our services involves a significant commitment of resources over an extended period of time from both our clients and us. Our
clients may also experience delays in obtaining internal approvals or delays associated with technology or system implementations, thereby delaying
further the implementation process. Our current and future clients may not be willing or able to invest the time and resources necessary to implement
our services, and we may fail to close sales with potential clients to which we have devoted significant time and resources, which could have a
material adverse effect on our business, financial condition, results of operations and prospects.
If our services do not comply with the quality standards required by our clients or we are in breach of our obligations under our
agreements with our clients, our clients may assert claims for reduced payments to us or substantial damages against us, which could
have a material adverse effect on our business, financial condition, results of operations and prospects.
Most of our contracts with clients contain service level and performance requirements, including requirements relating to the quality of our
services and the timing and quality of responses to the client’s customer inquiries. In some cases, the quality of services that we provide is measured
by quality assurance indicators and surveys which are based in part on the results of direct monitoring by our clients of interactions between our
employees and their customers. Failure to consistently meet service requirements of a customer or errors made by our employees in the course of
delivering services to customers could disrupt our client’s business and result in a reduction in revenue or a claim for substantial damages against us.
For example, some of our agreements stipulate standards of service that, if not met by us, would result in lower payments to us. We also enter into
variable pricing arrangements with certain clients and the quality of services provided may be a component of the calculation of the total amounts
received from such clients under these arrangements.
In addition, in connection with our service contracts, certain representations may be made, including representations relating to the quality of
our services, the ability of our employees and our project management techniques. A failure or inability to meet these requirements or a breach of
such representations could seriously damage our reputation and affect our ability to attract new business or result in a claim for damages against us,
which could have a material adverse effect on our business, financial condition, results of operations and prospects.
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Our business operations are subject to various regulations and changes to these regulations or enactment of new regulations could
require us to make additional expenditures, restrict our business operations or expose us to significant fines or penalties in the case of
noncompliance with such regulations.
Our business operations must be conducted in accordance with a number of sometimes conflicting government regulations, including but not
limited to, data protection laws and consumer laws, and labor conditions laws, as well as trade restrictions and sanctions, tariffs, taxation, data
privacy and labor relations.
Under data protection laws, we are typically required to manage, protect, utilize and store sensitive or confidential customer data in
connection with the services we provide. Under the terms of our client contracts, we represent that we will keep such information confidential in
compliance with regulations. Furthermore, we are subject to local data protection laws, consumer laws and/or “do not call list” regulations in most of
the countries in which we operate, all of which may require us to make additional expenditures to ensure compliance with these regulations. We also
believe that we will be subject to additional laws and regulations in the future that may be stricter than those currently in force to protect consumers
and end users. We seek to implement measures to protect sensitive and confidential customer data in accordance with client contracts and data
protection laws and consumer laws. If any person, including any of our employees, penetrates our network security or otherwise mismanages or
misappropriates sensitive or confidential customer data, we could be subject to significant fines for breaching privacy or data protection and
consumer laws or lawsuits from our clients or their customers for breaching contractual confidentiality provisions which could result in negative
publicity, legal liability, loss of clients and damage to our reputation, each of which could have a material adverse effect on our business, financial
condition, results of operations and prospects. In addition, our business operations may be impacted if current regulations are made stricter or more
broadly applied or if new regulations are adopted. Violations of these regulations could impact our reputation and result in financial liability, criminal
prosecution, unfavorable publicity, restrictions on our ability to process information and breach of our contractual commitments. Any broadening of
current regulations or the introduction of new regulations may require us to make additional expenditures, restrict our business operations or expose
us to significant fines or penalties, even the temporary shut down our facilities. Any such violations or changes in regulations could, as a result, have
a material adverse effect on our business, financial condition, results of operations and prospects.
Specific Risks
The consolidation of the potential users of CRM BPO services may adversely affect our business, financial condition, results of
operations and prospects.
Consolidation of existing and potential users of CRM BPO services may decrease the number of clients who contract our services. Any
significant reduction in or elimination of the use of the services we provide as a result of consolidation would result in reduced net revenue to us and
could harm our business. Such consolidation may encourage clients to apply increasing pressure on us to lower the prices we charge for our services,
which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Our key clients have significant leverage over our business relationships, upon which we are dependent.
We are dependent upon the business relationships we have developed with our clients. Our service contracts generally allow our clients to
modify such relationships and our commensurate level of work. Typically, the initial term of our service contracts is one to two years. Generally, our
specific service contracts provide for early termination, in some cases without cause, by either party, provided 30 to 90 days prior written notice is
given. Clients may also unilaterally reduce the use and number of services under our contracts without penalty. The termination or reduction in
services by a substantial percentage or a significant reduction in the price of these contracts could adversely affect our business and reduce our
margins. The revenue generated from our 15 largest client groups (including Telefónica S.A. companies) for the year ended December 31, 2020
represented 68.3% of our revenue. Excluding revenue generated from the Telefónica S.A., our next 15 largest client groups for the year ended
December 31, 2020 represented in aggregate 37.4% of our revenue. In addition, a contract termination or significant reduction in the services
contracted with us by a major client could result in a higher-than-expected number of unassigned employees, which would increase our employee
benefit expenses associated with terminating employees. We may not be able to replace any major client that elects to terminate or not to renew its
contract with us, which would have a material adverse effect on our business, financial condition, results of operations and prospects.
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We may seek to acquire suitable companies in the future and if we cannot find suitable targets or cannot integrate these companies
properly into our business after acquiring them, it could have a material adverse effect on our business, results of operations, financial
condition and prospects.
While we have grown almost exclusively organically, we may in the future pursue transactions, including acquisitions of complementary
businesses, to expand our product offerings and geographic presence as part of our business strategy. These transactions could be material to our
financial condition and results of operations. We may not complete future transactions in a timely manner, on a cost-effective basis, or at all, and we
may not realize the expected benefits of any acquisition or investments. Other companies may compete with us for these strategic opportunities. We
also could experience negative effects on our results of operations and financial condition from acquisition related charges, amortization of intangible
assets and asset impairment charges, and other issues that could arise in connection with, or as a result of an acquisition. This includes regulatory or
compliance issues that could exist for an acquired company or business and potential adverse short-term effects on results of operations through
increased costs or otherwise. These effects, individually or in the aggregate, could cause a deterioration of our credit profile and result in reduced
availability of credit to us or increased borrowing costs and interest expenses in the future. Additionally, the inability to identify suitable acquisition
targets or investments or the inability to complete such transactions may affect our competitiveness. Furthermore, we may not be able to integrate
effectively such future acquisitions into our operations and may not obtain the profitability we expect from such acquisitions. Any such risks related
to future acquisitions could have a material adverse effect on our business, results of operations, financial condition and prospects.
We are a Luxembourg public limited liability company (société anonyme) and it may be difficult for you to obtain or enforce judgments
against us or our executive officers and directors in the United States.
We are organized under the laws of the Grand Duchy of Luxembourg. Most of our assets are located outside the United States. Furthermore,
some of our directors and officers named in this Annual Report reside outside the United States and most of their assets are located outside the United
States. As a result, investors may find it difficult to effect service of process within the United States upon us or these persons or to enforce outside
the United States judgments obtained against us or these persons in U.S. courts, including judgments in actions predicated upon the civil liability
provisions of the U.S. federal securities laws. Likewise, it may also be difficult for an investor to enforce in U.S. courts judgments obtained against
us or these persons in courts located in jurisdictions outside the United States, including actions predicated upon the civil liability provisions of the
U.S. federal securities laws. It may also be difficult for an investor to bring an original action in a Luxembourg court predicated upon the civil
liability provisions of the U.S. federal securities laws against us or these persons.
Luxembourg law, furthermore, does not recognize a shareholder’s right to bring a derivative action on behalf of the Company except where
such shareholder or a group of shareholders holds shares representing at least ten percent (10%) of the Company’s share capital at the annual general
meeting of shareholders of the Company resolving upon the discharge to be granted to the directors.
As there is no treaty in force on the reciprocal recognition and enforcement of judgments in civil and commercial matters between the
United States and the Grand Duchy of Luxembourg, courts in Luxembourg will not automatically recognize and enforce a final judgment rendered by
a U.S. court. The enforceability in Luxembourg courts of judgments entered by U.S. courts will depend upon the conditions set forth in the
Luxembourg procedural code, which may include the following:
· the judgment of the U.S. court is enforceable (exécutoire) in the United States;
· the U.S. court had jurisdiction over the subject matter leading to the judgment (that is, its jurisdiction was in compliance both with
Luxembourg private international law rules and with the applicable domestic U.S. federal or state jurisdictional rules);
· the U.S. court has applied to the dispute the substantive law designated by the Luxembourg conflict of law rules (although one first
instance decision rendered in Luxembourg—which had not been appealed—no longer applies this condition);
· the judgment was granted following proceedings where the counterparty had the opportunity to appear, and if appeared, there was no
violation of the rights of the defendant;
· the U.S. court has acted in accordance with its own procedural rules; and
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· the judgment of the U.S. court does not contravene Luxembourg international public policy.
Our directors and officers, past and present, are entitled to indemnification from us to the fullest extent permitted by Luxembourg law
against liability and all expenses reasonably incurred or paid by him/her in connection with any losses or liabilities, claim, action, suit or proceeding
in which he/she is involved by virtue of his/her being or having been a director or officer and against amounts paid or incurred by him in the
settlement thereof, subject to limited exceptions. To the extent allowed by law, the rights and obligations among us and any of our current or former
directors and officers will be governed exclusively by the laws of Luxembourg and subject to the jurisdiction of the Luxembourg courts, unless such
rights or obligations do not relate to or arise out of their capacities as directors or officers. Although there is doubt as to whether U.S. courts would
enforce such a provision in an action brought in the United States under U.S. securities laws, such provision could make enforcing judgments
obtained outside Luxembourg more difficult to enforce against our assets in Luxembourg or in jurisdictions that would apply Luxembourg law.
Our shareholders may have more difficulty protecting their interests than they would as shareholders of a U.S. corporation.
Our corporate affairs are governed by our articles of association and by the laws governing public limited liability companies organized
under the laws of the Grand Duchy of Luxembourg. The rights of our shareholders and the responsibilities of our directors and officers under
Luxembourg law are different from those applicable to a corporation incorporated in the United States. Luxembourg law and regulations in respect of
corporate governance matters might not be as protective of minority shareholders as state corporation laws in the United States. Therefore, our
shareholders may have more difficulty in protecting their interests in connection with actions taken by our directors and officers or our principal
shareholders than they would as shareholders of a corporation incorporated in the United States.
You may not be able to participate in equity offerings, and you may not receive any value for rights that we may grant.
Pursuant to Luxembourg law on commercial companies, dated August 10, 1915, as amended (the “Luxembourg Corporate Law”), existing
shareholders are generally entitled to preemptive subscription rights in the event of capital increases and issues of shares against cash contributions.
However, our articles of association provide that preemptive subscription rights can be limited, waived or cancelled by our board of directors for a
period ending on the fifth anniversary of the date of publication of the notarial deed recording the minutes of the extraordinary general shareholders’
meeting which adopted the authorized capital of the Company in the Recueil électronique des sociétés et associations approving an increase of the
share capital by the board of directors within the limits of the authorized share capital, which publication has occurred on December 3, 2014. The
general meeting of our shareholders may renew, expand or amend such authorization. See Item IOB “Articles of association” for additional detail.
Luxembourg insolvency laws may offer our shareholders less protection than they would have under U.S. insolvency laws.
As a company organized under the laws of the Grand Duchy of Luxembourg and with our registered office in Luxembourg, we are subject to
Luxembourg insolvency laws in the event any insolvency proceedings are initiated against us including, among other things, Regulation (EU)
2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings. Should courts in another European country
determine that the insolvency laws of that country apply to us in accordance with and subject to such EU regulations, the courts in that country could
have jurisdiction over the insolvency proceedings initiated against us. Insolvency laws in Luxembourg or the relevant other European country, if any,
may offer our shareholders less protection than they would have under U.S. insolvency laws and make it more difficult for them to recover the
amount they could expect to recover in a liquidation under U.S. insolvency laws.
As a foreign private issuer, we are permitted to, and rely on exemptions from certain corporate governance standards applicable to U.S.
issuers, including the requirement that a majority of an issuer’s directors consist of independent directors. This may afford less
protection to holders of our ordinary shares.
The New York Stock Exchange listing rules require listed companies to have, among other things, a majority of their board members be
independent, and to have independent director oversight of executive compensation, nomination of directors and corporate governance matters. As a
foreign private issuer, however, while we intend to comply with these requirements within the permitted phase-in periods, we are permitted to follow
home country practice in lieu of the above requirements. Luxembourg law, the law of our home country, does not require that a majority of our board
consist of independent directors or the implementation of a nominating and corporate governance committee, and our board may thus in the future
not include, or include fewer, independent directors than would be required if we were subject to the New York Stock Exchange listing rules, or they
may decide that it is in our interest not to have a Compensation Committee or Nominating and Corporate Governance Committee, or have such
committees governed by practices that would not comply with New York Stock Exchange listing rules. Since a majority of our board of directors may
not consist of independent directors if we decide to rely on the foreign private issuer exemption to the New York Stock Exchange listing rules, our
board’s approach may, therefore, be different from that of a board with a majority of independent directors, and as a result, the management oversight
of our Company could, in the future, be more limited than if we were subject to the New York Stock Exchange listing rules.
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Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as companies that
are not foreign private issuers whose securities are registered under the U.S. Exchange Act. In addition, we are not required to comply with
Regulation FD, which restricts the selective disclosure of material information. As a result, our shareholders may not have access to information they
deem important, which may result in our shares being less attractive to investors.
We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to
U.S. Holders of our ordinary shares.
Based on the composition of our income, assets and operations, we do not expect to be treated as a passive foreign investment company
(“PFIC”) for U.S. federal income tax purposes for the current taxable year or in the foreseeable future. However, the application of the PFIC rules is
subject to uncertainty in several respects, and we cannot assure you the U.S. Internal Revenue Service will not take a contrary position. Furthermore,
this is a factual determination that must be made annually after the close of each taxable year. If we are a PFIC for any taxable year during which a
“U.S. Holder” (a beneficial owner of ordinary shares that is for U.S. federal income tax purposes: (a) an individual who is a citizen or resident of the
U.S.; (b) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the
U.S., any state thereof or the District of Columbia; (c) an estate the income of which is subject to U.S. federal income taxation regardless of its
source; or (d) a trust (i) if a court within the U.S. can exercise primary supervision over its administration, and one or more U.S. persons have the
authority to control all of the substantial decisions of that trust, or (ii) that was in existence on August 20, 1996 and validly elected under applicable
Treasury Regulations to continue to be treated as a domestic trust that holds our ordinary shares, certain adverse U.S. federal income tax
consequences could apply to such U.S. Holder.
Future sales of our ordinary shares, or the perception in the public markets that these sales may or may not occur, could impact our
share price.
The market price of our ordinary shares could decline as a result of sales of a large number of our ordinary shares in the market, and the
perception that these sales could occur may also depress the market price of our ordinary shares. We have 15.0 million ordinary shares outstanding as
of December 31, 2020.
All of our outstanding ordinary shares may be sold in the public market by existing stockholders subject to applicable volume and other
limitations imposed under federal securities laws.
Sales of our ordinary shares or pursuant to registration rights may make it more difficult for us to sell equity securities in the future at a time
and at a price that we deem appropriate. These sales, or the perception that such sales could occur, also could cause the market price for our ordinary
shares to fall and make it more difficult for you to sell our ordinary shares.
We may incur non-cash goodwill and deferred tax asset impairment charges in the future.
We carry a significant goodwill balance on our balance sheet. We test goodwill for impairment annually as of December 31 and at other
times if events have occurred or circumstances exist that indicate the carrying value of goodwill may no longer be recoverable.
Also, the Company regularly reviews its deferred tax assets for recoverability and determines if a portion or all of a deferred tax asset will
not be realized. The determination as to whether a deferred tax asset will be realized is made on a jurisdictional basis and is based on the evaluation
of positive and negative evidence. This evidence includes historical pretax and taxable income, projected future taxable income, the expected timing
of the reversal of existing temporary differences and the implementation of tax planning strategies. Projected future taxable income is based on
expected results and assumptions as to the jurisdiction in which the income will be earned. The expected timing of the reversals of existing temporary
differences is based on current tax law and the Company’s tax methods of accounting.
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The result of the impairment test performed for the year ended December 31, 2019 was an impairment charge of $30.9 million of the
goodwill related to Argentina subsidiary, triggered by the Macroeconomic crisis and hyperinflation in the country.
Although no indications of other goodwill and deferred tax asset impairments have been identified, there can be no assurance that we will
not incur impairment charges in the future, particularly in the event of a prolonged economic slowdown. A significant impairment could have a
material adverse effect on our results of operations.
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
History and Structure
Our legal name is Atento S.A. We are a public limited liability company (“société anonyme”) organized and existing under the laws of the
Grand Duchy of Luxembourg on March 5, 2014 and have our registered office at 1, rue Hildegard Von Bingen, L-1282, Luxembourg Grand Duchy of
Luxembourg. American Stock Transfer & Trust Company, LLC is our U.S. agent.
Our principal executive offices are located at Rua Paul Valery, 255, 4º andar, Condomínio Chácara Santo Antonio, 04719-050, São Paulo,
Brazil, telephone number +55 11 3293 5926 / +55 11 3779 8119, and C/ Santiago de Compostela 94, 28035 Madrid, Spain. Our agent for service of
process in the United States is American Stock Transfer & Trust Company, LLC.
We were founded in 1999 to consolidate the Telefónica S.A.’s CRM services into a single company to take advantage of the expected
demand for CRM services and to capture efficiencies of scale, with the start-up of our operations in Brazil, Chile, El Salvador, Guatemala, Peru,
Puerto Rico and Spain. By 2000, we had launched our operations in other countries, including Argentina, Colombia, and Morocco, while further
expanding our Brazilian operations and in 2001 our operations in Mexico. We then began to increase our focus on consolidation and business
profitability.
We continued our geographic expansion by launching our Uruguay operations and our commercial offices in France in 2006 and Panama in
2007. From 2003 to 2007, we focused on implementing our differentiation strategy by offering higher-quality services and the development and
maintenance of long-term relationships with our clients. This strategy was very successful, driving a significant increase in revenue and operating
profit from 2003 to 2007.
In 2008, we broadened our strategic goals to include the pursuit and provision of new business opportunities, while continuing to implement
our strategy of differentiation by offering higher-quality solutions, superior value-added services and building and maintaining long-term
relationships. We also expanded our geographical presence in 2008 in the Czech Republic and in 2009 we began operations in the United States.
In December 2012, Atento was acquired by funds affiliated with Bain Capital. In connection with Bain Capital’s acquisition, Atento further
reinforcing its partnership with Telefónica. In 2012 we signed a Master Services Agreement (MSA) with Telefónica with a nine-year term through
2021, which includes annual minimum revenue commitments in all jurisdictions (except for Argentina).
On November 8, 2016, Atento entered into an Amendment Agreement to the MSA with Telefónica S.A., reinforced and strengthening the
Company’s strategic relationship with Telefónica, its largest client. The Amendment provides for the following: a reset of volume targets in Brazil
and Spain, as well as a two-year extension of the MSA for those countries until December 31, 2023.
In November 2019, the parties agreed on decreasing the minimum revenue thresholds for Spain. In consideration of this reduction, the entity
Telefónica de España S.A. (a Subsidiary of Telefónica, “Telefónica España”) and Atento Teleservicios España S.A.U. (an entity fully owned by the
provider “Atento España”), entered into an agreement on November 1, 2019, with the purpose to, among other agreements, boost the digitalization of
the services delivered to Telefónica España. Additionally, Telefónica España, will, subject to the conditions stated in such agreement, collaborate with
certain amount to Atento España.
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In October 2014, Atento became a publicly-listed company on the New York Stock Exchange (NYSE), under the ticker “ATTO”.
On September 2, 2016, the Company, through its subsidiary Atento Brasil S.A. (“Atento Brasil”), acquired 81.49% of the shares of RBrasil
Soluções S.A. (“RBrasil”), a leading provider of late-stage collection services in Brazil. On June 7, 2019, the Company acquired the minority interest
corresponding to 18.51% of the shares of RBrasil and now holds 100% of the company's shares.
On June 9, 2017, the Company, through its subsidiary Atento Brasil, acquired 50.00002% of Interfile Serviços de BPO Ltda. and 50.00002%
of Interservicer-Serviços em Crédito Imobiliário Ltda. (jointly, "Interfile"), a leading provider of BPO services and solutions, including credit
origination, for the banking and financial services sector in Brazil. On May 17, 2019, the Company acquired the minority interests corresponding to
49.99998% of Interfile Serviços de BPO Ltda. and 49.99989% of Interservicer-Serviços em Crédito Imobiliário Ltda. and now holds a 100% interest
in both of these companies.
On June 29, 2017, we launched a new business unit, Atento Digital, to drive the customer experience in the Age of Digitalization. Atento
Digital's mainstream offering encompasses a wide range of digital capabilities that enhance the customer experience and increase efficiency across
the customer lifecycle, from acquiring to managing and retaining customers.
On June 23, 2019, Contact US Teleservices, Inc. signed with Keepcon a first amendment to a Put&Call option agreement. In addition to this,
Atento Brasil also signed an Offer Letter with Keepcon on October 29, 2019, for the provision of certain monitoring and classification services
related to processes for social media and other channels for a period of 36 months, commencing on the date of its signature.
On May 6, 2020, Atento S.A. (the “Company”) announced the arrangements to facilitate HPS Investment Partners, LLC and certain of its
affiliates’ (collectively, “HPS”), GIC’s, and an investment fund affiliated with Farallon Capital Management, L.L.C. (“Farallon”)’s (collectively, the
“Institutional Investors”) acquisition of ordinary shares of the Company currently held indirectly by Bain Capital in exchange for senior PIK notes
currently held by the Institutional Investors (the “Transaction”). Following the completion of certain regulatory conditions, including antitrust filings
in Brazil and Mexico, the Director Nomination Agreements, each dated May 6, 2020, by and between the Company and each of HPS, GIC and
Farallon (each, a “Director Nomination Agreement”), and the Registration Rights Agreement, dated May 6, 2020, by and among the Company, HPS,
GIC and Farallon (the “Registration Rights Agreement”), have become effective as of June 22, 2020. Atento will also terminate the existing
registration rights agreement, dated as of October 6, 2014, by and between the Company and Atalaya Luxco Pikco S.C.A., which has become
effective upon completion of the Transaction on June 22, 2020.
Capital Expenditure
Our business has significant capital expenditure requirements, including for the construction and initial fit-out of our service delivery
centers; improvements and refurbishment of leased facilities for our service delivery centers; acquisition of various items of property, plant and
equipment, mainly composed of furniture, computer equipment and technology equipment; and acquisition and upgrades of our software or specific
customer software.
The funding of the majority of our capital expenditure is covered by existing cash and EBITDA generation. The table below shows our
capital expenditure by segment for the years ended December 31, 2018, 2019 and 2020:
($ in millions)
Brazil
Americas
EMEA
Total capital expenditure
For the year ended December 31,
2019
2018
2020
42.2
41.5
6.2
89.9
40.6
22.4
3.3
66.3
23.7
8.9
3.2
35.9
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The capital expenditures for the year ended December 31, 2020 include costs associated with shifting a portion of Atento’s call center
employees to the work@home model. Owing to the impact of the COVID-19 pandemic on Atento’s markets, all non-essential capital expenditures
remained largely suspended in April and May 2020.
B. Business Overview
Our Company
Atento is the largest provider of CRM BPO services and solutions in Latin America and among the top five providers globally based on
revenues. Our business was founded in 1999 as the CRM BPO provider to the Telefónica S.A. Since then, we have significantly diversified our client
base, becoming an independent company in December 2012 when we were acquired by funds affiliated with Bain Capital. In October 2014, Atento
became a publicly-listed company on the New York Stock Exchange (NYSE), under the ticker “ATTO”.
Latin America is one of the most attractive CRM BPO markets globally and we believe Atento is uniquely positioned to capture the region’s
long-term growth potential as one of its few scale players. According to Frost & Sullivan, Latin America is one of the fastest growing CRM BPO
markets in the world, with a market size of approximately $10.5 billion in 2019.
The potential for long-term growth in the markets where we operate is strong and is driven by a number of demographic and business trends,
including (i) sustained demand and growth driven by an improving macroeconomic environment over the long-term, a rapidly growing population
and an emerging middle class, (ii) further outsourcing of CRM BPO operations, (iii) potential for further penetration in existing markets, (iv)
development of new industry vertical expertise, such as with healthcare and born-digital companies, and (v) North America’s continued offshoring
trend, as U.S.-based businesses continue to offshore call center services to other geographies.
We are the largest provider of CRM BPO services in Latin America, where we had a market share of 15.2% for the year ended December
31, 2019, according to Frost & Sullivan. We hold the number-one market share position in almost all of the countries in Latin America where we
operate, including Brazil, the largest market in the region, Mexico (domestic market), Argentina, Chile and Central America/Caribbean (domestic
market), based on revenues for the year ended December 31, 2019. We have achieved our regional leadership position over our 20-year history
through our dedicated focus on superior client service, scaled and reliable technology and operational platforms, a deep understanding of our clients’
diverse local needs, and our highly-engaged employee base. Given its long-term growth outlook, Latin America continues to be one of the most
attractive CRM BPO markets globally and we believe we are distinctly positioned as one of the few scale operators in the region, where we have 4.5
p.p. more market share than the next-largest player.
We offer a comprehensive portfolio of CRM BPO services for a company’s customer journey, including sales, customer care, technical
support, collections and back office. We have adapted our value proposition to become a market leader and are now setting foundations to lead the
next generation of customer experience (CX) services. We deliver end-to-end solutions across the customer lifecycle that generate higher value for
client companies and better experiences for their consumers by combining the power of technology and the human touch. We believe our customized
end-to-end solutions provide an improved experience for our clients’ customers, create stronger customer relationships that reinforce our clients’
brand recognition and strength, and enhance our clients’ customer loyalty. Our individual services and solutions are delivered across multiple
channels, including digital (SMS, email, chats, social media and apps, among others) and voice, and are enabled by process design, technology and
intelligence functions.
We also enjoy longstanding client relationships across a variety of industries and we work with market leaders in telecommunications,
banking, financial services, and multisector, which for us is comprised of the consumer goods, services, public administration, healthcare,
transportation, technology and media industries. In 2020, our revenue from clients in telecommunications, financial services and multisector
represented 39.0%, 34.6% and 26.4% of our total revenue, respectively. Since our founding in 1999, we have significantly diversified the sectors we
serve and our client base has grown to over 400 separate clients. Revenue from non-Telefónica clients accounted for 68.2% of our total revenue in
2020, compared to 10.0% of our total revenue when we were founded in 1999. At the same time, we have also been leveraging Atento’s strong brand
and reputation to attract more born-digital clients, as well as other high-growth companies, to establish a stronger and more profitable growth
trajectory in 2020 and beyond
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Atento benefits from a highly-engaged employee base. Our over 139,000 employees worldwide are critical to our ability to deliver best-in-
class customer service. In 2019, we were recognized by Great Place to Work® as one of the 25 World’s Best Multinational Workplaces. The ranking,
derived from the world's largest annual study of workplace excellence, identifies the top 25 best multinationals in terms of workplace culture. Atento
remains the only company in its sector to be included in this global ranking. In 2019 we were also recognized for the ninth year in a row as one of the
25 Best Multinational Workplaces in Latin America by Great Place to Work®.
We have a strong relationship with Telefónica, underpinned by a long-term Master Services Agreement (the “MSA”). On November 8,
2016, we entered into an Amendment Agreement to the MSA (the “Amendment”) with Telefónica, reinforcing and strengthening the strategic
relationship with our largest client. The Amendment provides for the following: a reset of volume targets in Brazil and Spain, as well as a two-year
extension of the MSA for those countries until December 31, 2023; revised invoicing and collection processes in all key markets; maintaining at least
our current share of Telefónica’s spending in all key contracts; and certain other amendments. We are currently serving 31 companies of the
Telefónica S.A. under 106 arm’s length contracts. Although the MSA is an umbrella agreement which governs our services agreements with the
Telefónica S.A. companies, the termination of the MSA on December 31, 2021 (except in Brazil and Spain, where the MSA terminates on December
31, 2023) does not automatically result in a termination of any of the local services agreements in force after those dates.
On August 4, 2016, we, through our direct subsidiary Atento Teleservicios España, S.A.U., entered into a Share Sale and Purchase
Agreement with Intelcia Group, S.A. for the sale of 100% of Atento Morocco S.A., which encompassed Atento’s operations in Morocco and
provided services to the Moroccan and French markets (the “Morocco Transaction”). The Morocco Transaction was consummated on September 30,
2016, upon receipt of regulatory approval. Atento’s operations in Morocco that provide services to the Spanish market were excluded from the
Morocco Transaction and continue to operate as part of the Atento Teleservicios España, S.A.U. branch in Morocco. The Morocco Transaction
allowed the Company to continue strengthening its focus on its core markets of Spain and Latin America.
On September 2, 2016, the Company, through its subsidiary Atento Brasil S.A. (“Atento Brasil”), acquired 81.49% of the shares of RBrasil
Soluções S.A. (“RBrasil”), a leading provider of late-stage collection services in Brazil. The total amount paid for this acquisition was R$27.1 million
(equivalent to $8.6 million). On June 7, 2019, the Company acquired the minority interest corresponding to 18.51% of the shares of RBrasil and now
holds 100% of the company's shares. We believe the combination of Atento Brasil and RBrasil:
· creates the largest provider of collection services in Brazil, with more than 6,600 professionals with a strong combination of know-how
and expertise, optimally positioning Atento to expand its share of the $2.7 billion collections market in Latin America;
· provides new and existing clients with a fully-integrated platform and delivers customized collections solutions;
· enhances the effectiveness of collections solutions through the extensive use of technology, business intelligence and analytics
capabilities; and
· drives consolidation in this highly fragmented and compelling market in Latin America.
Following the acquisition of RBrasil, we have pursued several opportunities to grow in the late-stage collection services segment, including
long-term contracts with relevant clients in key sectors.
On May 9, 2017, we announced an arrangement with Itaú Unibanco, a leading financial institution in Brazil, through which we will leverage
the industry-leading capabilities of RBrasil and Atento Brasil to serve Itaú Unibanco’s increasing demand for end-to-end collections solutions,
customer service and back office services.
On June 9, 2017, the Company, through its subsidiary Atento Brasil, acquired 50.00002% of Interfile Serviços de BPO Ltda. and 50.00002%
of Interservicer—Serviços em Crédito Imobiliário Ltda. (jointly, “Interfile”), a leading provider of BPO services and solutions, including credit
origination, for the banking and financial services sector in Brazil. The total amount paid for this acquisition was $14.7 million, net of cash acquired.
On May 17, 2019, the Company acquired the minority interests corresponding to 49.99998% of Interfile Serviços de BPO Ltda. and 49.99989% of
Interservicer - Serviços em Crédito Imobiliário Ltda. And now holds a 100% interest in these companies. Through this acquisition, we expect to be
able to expand our capabilities in the financial services segment, especially in credit origination; accelerate our penetration of higher value-added
solution; strengthen our leadership position in the Brazilian market; and facilitate the expansion of our credit origination segment into other Latin
America markets.
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On June 29, 2017, we launched a new business unit, Atento Digital, to drive customer experience in the Age of Digitalization. Atento
Digital’s mainstream offering encompasses a wide range of digital capabilities that enhance customer experience and increase efficiency across the
customer lifecycle, from acquiring to managing and retaining customers. Atento Digital’s proposal incorporates the use of digital marketing tools,
automation, artificial intelligence, cognitive technology based on Keepcon’s semantic engine and analytics to deliver a new level of customer
experience and process efficiency for Atento’s core service categories such as sales, customer care, technical support, collections and back office. The
business unit is structured to develop and deliver digital solutions and is consistent with our customer-centric vision, based on four pillars:
· Data Driven: Integration and use of client’s data and analytics to understand profiles, habits and preferences, in order to develop models
of propensity;
· User Experience: We understand customer interaction and experience with design, interface, usability and operation diagnostics;
· Omnichannel & Social: We understand where and how clients prefer to interact and we act in an integrated, fluid and resilient way, with
lean and agile development, Robotic Process Automation (RPA) use and systems integration;
· Journey Automation: Based on User Experience (UX), we design new journeys for customers and automate repetitive processes through
digital tools, use of artificial intelligence and semantic technology.
On June 30, 2017, we announced the signing of a strategic partnership and the acquisition of a minority stake in Keepcon, a leading provider
of semantic technology-based automated customer experience management through our subsidiary Contact US Teleservices Inc. The acquisition of a
minority stake in Keepcon follows our overall strategy to develop and expand our digital capabilities, grouped under the newly created global digital
business unit. Our goal is to integrate all of our digital assets to generate additional value for clients and drive growth across verticals and
geographies. We aim to turn the business disruption generated by the digital revolution into differentiated customer experience solutions, generating
competitive advantages for customers. We expect that the investment in Keepcon by Atento will expand the artificial intelligence and automatization
capabilities of our omnichannel platform.
On June 23, 2019, Contact US Teleservices, Inc. signed with Keepcon a first amendment to a Put&Call option agreement. In addition to this,
Atento Brasil also signed an Offer Letter with Keepcon on October 29, 2019 for the provision of certain monitoring and classification services related
to processes for social media and other channels for a period of 36 months, commencing on the date of its signature.
On July 31, 2019, we launched our Three Horizons Plan to improve profitability in existing operations, accelerate the development of
Atento’s next-generation services and digital capabilities, and accelerate exposure to services, verticals and geographies with higher growth and
margins. This plan is defined as:
(a) Implement Operational Improvements: a range of initiatives to accelerate the transformation of Atento’s core operations, from driving
sales and operational excellence to optimizing indirect costs;
(b) Accelerate Build-out of Next Generation Services Portfolio and Digital Capabilities: a set of strategic initiatives to accelerate the
development and expansion of Atento’s value offering, with a focus at the beginning on three next-generation services lines (high-value voice,
integrated multichannel and automated back office) and four next-generation digital capabilities (Artificial Intelligence (AI)/Cognitive, Analytics,
Automation/ Robotic Process Automation (RPA) and Customer Experience (CX) consulting), combined with the implementation of new
methodologies for product development and go-to-market processes;
(c) Pursue New Growth Avenues: build upon stronger foundations to unlock and drive new growth by accelerating the Company’s
penetration of higher-growth and higher-margin services verticals and by expanding in the US market.
Driving this plan will be a culture of innovation and transformation.
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Our revenue for the year ended December 31, 2020, was $1,412.3 million, our EBITDA was $161.2 million and our loss for the year was
$46.9 million. For the years ended December 31, 2019 and 2020, our revenue decreased by 6.1% (2018 x 2019), and decreased by 17.3% (2019 x
2020), respectively, and our EBITDA decreased by 17.0% and increased 5.1%, respectively. The following table sets forth a breakdown of revenue
based on geographic region for the years ended December 31, 2018, 2019 and 2020:
Revenue
($ in millions, except percentage changes)
Brazil
Americas
EMEA
Other and eliminations (1)
Total
(1) Includes holding company level revenues and consolidation adjustments.
2018
For the year ended December 31,
2019
2020
877.7
708.7
240.9
(9.1)
1,818.2
827.3
660.1
232.8
(12.9)
1,707.3
609.4
582.0
234.7
(13.8)
1,412.3
We operate in 13 countries worldwide and organize our business into the following three geographic markets: (i) Brazil, (ii) Americas,
excluding Brazil (“Americas”) and (iii) EMEA. For the year ended December 31, 2020, Brazil accounted for 43.2% of our revenue and 50.7% of our
Adjusted EBITDA; Americas accounted for 41.2% of our revenue and 41.4% of our Adjusted EBITDA; EMEA accounted for 16.6% of our revenue
and 13.2% of our Adjusted EBITDA (in each case, before holding company level revenue and consolidation adjustments). The following table sets
forth a breakdown of revenue by country for the years ended December 31, 2018, 2019 and 2020:
Revenue by country
($ in millions)
Country
Spain
Other and eliminations (*)
EMEA
Argentina
Chile
Colombia
El Salvador
United States
Guatemala
Mexico
Peru
Puerto Rico
Uruguay
Panama
Nicaragua
Costa Rica
Other and eliminations (*)
Americas
Brazil
Other and eliminations (*)
Total revenue
For the years ended December 31,
2018
2019
2020
% of Total revenue
240.9
-
240.9
134.6
112.7
71.2
14.3
42.3
16.2
177.6
136.3
9.4
2.9
4.1
4.4
7.4
(24.5)
708.7
877.7
(9.1)
1,818.2
232.7
0.1
232.8
98.2
99.9
72.6
16.9
43.6
11.6
179.8
116.2
12.3
2.3
3.7
3.9
7.5
(8.5)
660.1
827.3
(12.9)
1,707.3
234.7
-
234.7
67.9
82.2
71.0
17.5
62.3
6.2
161.5
85.4
16.7
2.3
3.6
3.3
8.0
(5.8)
582.0
609.4
(13.8)
1,412.3
16.6
-
16.6
4.8
5.8
5.0
1.2
4.4
0.4
11.4
6.0
1.2
0.2
0.3
0.2
0.6
(0.4)
41.2
43.2
(1.0)
100.0
(*) Includes holding company level revenues and consolidation adjustments.
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The amounts of revenue by country reported are impacted by foreign exchange effects, which can be significant between the years in some
countries. For additional information, see Item 5. Operating and Financial Review and Prospects–A. Operating Results–Management’s Discussion
and Analysis of Financial Condition and Results of Operations.
Seasonality
Our performance is subject to seasonal fluctuations. For each of the years presented herein, our performance was lower in the first quarter of
the year than in the remaining three quarters of the year. This is primarily due to (i) our clients generally spending less in the first quarter of the year
after the year-end holiday season, (ii) the initial costs to train and hire new employees at new service delivery centers to provide additional services to
our clients which are usually incurred in the first quarter of the year, and (iii) statutorily mandated minimum wage and salary increases of operators,
supervisors and coordinators in many of the countries in which we operate which are generally implemented at the beginning of the first quarter of
each year, whereas revenue increases related to inflationary adjustments and contracts negotiations generally take effect after the first quarter. We
have also found that growth in our revenue increases in the last quarter of the year, especially in November and December, as the year-end holiday
season begins and we have an increase in business activity resulting from the handling of holiday season promotions offered by our clients. These
seasonal effects also cause differences in revenue and expenses among the various quarters of any year, which means that the individual quarters of a
year should not be directly compared with each other or used to predict annual operating results.
Our Strategy
Our mission is to be the number-one customer experience solutions provider in the markets we serve by being a truly multi-client business.
Atento’s tailored CRM BPO solutions are designed to enable our clients to create a best-in-class experience for their customers, enabling our clients
to focus on operating their core businesses. Atento utilizes its industry expertise, commitment to customer care and consultative approach to offer
superior and scalable solutions across the entire value chain and customer life cycle, customizing each solution to the individual client’s needs. Our
goal is to significantly outperform expected market growth by being our clients’ service-provider-of-choice for customer experience while driving
margin efficiencies.
We are focused on our clients’ needs and, therefore, developing and delivering value-added, multi-channel services and solutions is an
absolute priority for us. We believe our offer is a strong component of our growth equation as well as our ability to generate value for our clients in
an environment impacted by digital technologies. We will continue evolving our service offering to best serve our clients, consistent with our Three
Horizons Plan, and driving a culture of innovation and transformation, that despite the situation of the pandemic (COVID-19) we have continued
with our transformation plan according to the established agenda:
• Operational Improvements - transforming the core. Improve the way we operate our business and address the factors that affect the
profitability of our operations. The operational improvements we have been implementing, in addition to forming a new leadership team,
are establishing a stronger footing to accelerate the development and expansion of innovative digital solutions that significantly enhance
Atento’s growing portfolio of high-value voice, integrated multichannel and back office services. At the same time, we have also been
leveraging Atento’s strong brand and reputation to attract more born-digital clients, as well as other high-growth companies, to establish
a stronger and more profitable growth trajectory. This area of our Three Horizons strategy can be divided in four sub-areas:
·
·
Sales Excellence: We have transformed our sales model to accelerate profitable growth under a “sell more, sell better, sell what
we want” approach. We are highly focused on the relationships we have with our client base and consider it to be a key
competitive advantage. We are implementing a new sales model that helps us manage global customer accounts and further
penetrate the born-digital area of the market. Our commercial team is responsible for End-to-End client lifecycle, namely new
sales to new clients, account development, scope changes, renewals and IPT (insert full term) negotiations, driving increases in
sales through a War Room model and a compensation model focused on profitable growth. Also, prioritizing strategic product
sales among current and future clients will be main focus for Atento in 2020, to ensure the right product portfolio at each of
our customers, a key lever to drive healthy growth in future.
Operational Excellence: We are executing a series of initiatives to achieve operational excellence, such as operational KPIs
management, Shared Services optimization, etc. These initiatives are expected to generate savings and eliminate redundant
activities in operating areas such as quality, workforce management, reporting and training, and client value programs, in
addition to other specific operating improvement actions being implemented at regional levels, all with a focus on increasing
our contribution margins and improving the experience of our clients’ customers.
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·
·
Optimization initiatives to reduce SG&A and other costs: We are transforming our business support areas, generating savings
that can reduce our Indirect Costs. We have analyzed the major cost components of our business in the human resources,
technology, facilities and infrastructure areas, and we have developed specific solutions to lower the cost to serve in each
category. One of the actions we are taking is the digitalization of HR processes. For example, our HR team uses digital tools
for recruiting and retaining the best talent in the market to support our clients operations. We are innovators in massive HR
processes related to the contact center, using Predictive Agent Recruitment processes across geographies, increasing skills
suitability for the role while reducing screening costs up to 40%.
Setting up an enhanced governance model and new organization to drive improved business performance: We have
implemented an operating model for greater simplification and alignment of commercial and operational/delivery roles and
responsibilities. We believe that this new organizational structure will foster agility and simplicity while ensuring that leaders
are focused on coordinating, communicating and pursuing new solutions and innovation.
Next-Gen Services and Digital Acceleration. We are accelerating our move into next generation services to ensure Atento remains
competitive in an evolving digital world. We are focusing on three key service offerings with significant current and future market potential.
·
·
·
High Value Voice: We maximize our clients high-value processes by providing highly skilled agents, assisted by AI and
analytics technologies that optimize decision making or complex problem solving. As a result, we provide memorable
experiences to end- customers.
Integrated multichannel: Is a full range of orchestrated and integrated digital channels (Automated and Agent-Led) that deliver
a unique and seamless customer experience. Integrated multichannel provides a far richer experience than the one delivered by
each channel in isolation.
Automated Back Office: We go beyond front-end customer processes to automate our clients back office. By shortening the
time it takes to manage all those tasks behind the scenes, we boost our clients efficiency and ensure an exceptional end-to-end
customer experience.
We are also focusing on four next-generation digital capabilities:
·
·
Artificial Intelligence and Cognitive Technologies: We are using Artificial Intelligence and cognitive technologies to deliver
sentiment analysis and more humanized customer interactions. For example, we are providing journey mapping, planning, and
design, development and implementation of front- and back-office Robotic Process Automation (RPA), intelligent Interactive
Voice Response (IVR) and virtual assistants, chatbots and voice bots, document management automation and orchestration,
Optical Character Recognition (OCR)/ Intelligent Character Recognition (ICR), Natural Language Processing (NLP)/ Natural
Language Understanding (NLU) and sentiment analytics, Machine Learning (ML) and Artificial Intelligence (AI), and
function-specific automation in marketing, collections, and credit management. We also offer conversation design and
communication persona creation.
Analytics: As experts in end-to-end customer relationships management, we use Data Science to improve business efficiency
by generating value through Data, developing predictive analyses that generate insights that maximize clients’ businesses,
mitigate risks, increase retention in self-service channels, minimize recall and complaints, increasing First Call Resolution
(FRC). Our Analytica value proposition is focused on business performance (e.g. propension models and people analytics),
cost reduction per interaction, and machine learning to empower AI platforms.
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·
·
Automation: We automate the redundant work of back- and front-office activities to improve efficiency and customer
experience. Our value proposition for BPA (Business Process Automation), through our wholly-owned company Interfile,
includes business process management (document capture, verification, analysis, fraud prevention, etc.), process control and
productivity, agility and efficiency, and assertive demand sizing. We also have entered into a partnership with UiPath to
enhance our automation capabilities and train traditional contact center agents as Blueprism programmers.
Customer Experience Process Consulting: We optimize customer journeys and business processes to provide differentiated
CX. As a third-party provider, we perform a complete mapping of the end-customer journey, processes that generate a better
and more optimized brand experience, maximizing customer retention, resolution effectiveness, conversion (in terms of sales)
and a complete vision of the service users of a brand. We develop the Language User Interfaces, considering a value
proposition based on Traditional IVR for Humanized IVR and VDA as well as bots to achieve higher retention levels. We
create language for conversational interfaces based on a brand´s persona, dynamic and progressive navigation, propensity
analysis, NLP and applied AI.
• New Growth Avenues. Building upon stronger foundations to unlock and accelerate new growth. Our third horizon for change is to
advance in new growth avenues that relate to the way we expand our business in the highly attractive markets, such as the US and other
potential geographies. We will also accelerate our penetration of high growth/margin verticals and segments, such as retail/e-commerce,
high-tech/new economy or healthcare, and improve the way we make use of strategic partnerships and initiatives to accelerate our
growth strategy (selective carve-outs in high-growth verticals and capability building via acquisitions). A key sector to drive growth is
born-digital companies. These companies are not only a key target in the short-term, they will also lead Atento’s future growth, as they
are focused on driving their own growth.
• Culture Transformation. People are our key asset. We believe that our people are a key enabler of the success of our business model and
a strategic pillar of our competitive advantage. We have created, and constantly reinforce, a culture that we believe is unique in the
industry. We have developed processes to identify talent (both internally and externally), created individualized development plans, and
designed incentive programs that, together with permanent motivation initiatives, foster a work environment that aligns our professional
development with our clients’ objectives and business goals.
Our Clients
Over the years, we have steadily grown our client base, resulting in what we believe is a world-class roster of clients. Our longstanding,
blue-chip client base spans a variety of industries and includes the Telefónica S.A., Banco Bradesco, Banco Santander, HSBC, Samsung and
Whirlpool, among others. Our clients are leaders in their respective industries and require best-in-class service from their outsourcing partners. We
serve clients primarily in telecommunications, financial services and multisector, which includes consumer goods, retail, public administration,
healthcare, travel, transportation and logistics, and technology and media. For the year ended December 31, 2020, our revenue from clients in
telecommunications, financial services and multisector represented 39.0%, 34.6% and 26.4% of total revenue.
At December 31, 2020, our top 15 clients accounted for 68.3% of our revenue and, excluding the Telefónica Group companies, our next 15
clients accounted for 37.4% of our revenue. With each of these clients we have worked closely over many years across multiple countries, building
strong partnerships and commercial relationships.
We have also grown in born-digital clients in the last year We are strategic partners of companies that have the consumer at the center of
their strategy and demand differentiated relationships with their customers. We have a team of consultants and specialists in Customer Experience,
who design the ideal moments for interactions between customers and brands, each customized to the needs of individual clients. Through our Data
Science area and our Customer Engagement HUB, we integrate and monitor events from multiple data sources, systems, as well as digital and human
channels, maximizing results and generating new knowledge.
Development of Client Base
As of December 31, 2020, our client base consisted of over 400 separate clients. Since 1999, when our former parent company, Telefónica,
and its subsidiaries contributed approximately 90.0% of our revenue, we have diversified our client base by sources of revenue. For the years ended
December 31, 2018, 2019 and 2020, we generated 39.0%, 35.6% and 31.8% of our revenue, respectively, from Telefónica Group companies.
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As of December 31, 2020, 31 companies within the Telefónica S.A. were party to 106 arm’s length contracts with Atento. Our service
agreements with Telefónica S.A. companies remained in effect following the consummation of the Acquisition. Additionally, we entered into a
Master Service Agreement (MSA), a framework agreement that replaced our prior framework agreement with Telefónica and which is intended to
govern our relationship with Telefónica through 2021, with the exception of Brazil and Spain, through 2023.
Telefónica S.A. Master Service Agreement
Our service agreements with Telefónica remained in effect following the consummation of the Acquisition, and we entered into the MSA, a
framework agreement that replaced the framework agreement with Telefónica that was in place prior to the Acquisition. The term of the MSA expires
on December 31, 2021, with the exception of Brazil and Spain ending on December 31, 2023 according to the agreement.
The MSA requires the Telefónica S.A. companies to meet the minimum annual revenue commitments to us in each jurisdiction where we
currently conduct business (other than Argentina). The MSA commitment is meant to be a minimum commitment, or floor, rather than a target or
budget. If the Telefónica S.A. companies fail to meet country specific revenue commitments, which are measured on an annual basis, Telefónica S.A.
will be required to compensate us in cash for any shortfalls. If the Telefónica S.A. companies fail to meet the annual aggregate minimum revenue
commitments for all jurisdictions covered by the MSA, Telefónica, S.A. will be required to compensate us in the same manner. Any such
compensation payments will be in amounts calculated as a percentage of the revenue shortfalls, ranging from 8% to 20% of the shortfall depending
on the scope of such shortfall and the relevant calendar year. In May 2014, we and Telefónica amended the MSA to adjust the minimum revenue
commitments in Spain and Morocco by an average of €46.0 million ($62.6 million, based on the May 31, 2014 month-end close foreign exchange
rates) per year to reflect the lower level of activities in these geographies and a corresponding €25.4 million ($34.6 million, based on the May 31,
2014 month-end close foreign exchange rates) payment was made by Telefónica representing the discounted value of the reduction in minimum
revenue commitments, which was subsequently applied to repay the Vendor Loan Note.
In November 2016, we entered into an amendment that decreased the annual targets (MRT) for the remaining years of the MSA, with a one-
off reset/reduction, starting in 2017, of €100.0 million for Brazil and €20.0 million for Spain. In return, Atento obtained an extension of the Brazil
and Spain MSA targets for an additional 2 years (2022 and 2023) and an adjustment of Payment Terms. This change was the implementation of 30-
day payment terms in Brazil, Spain, Peru, Mexico, Chile, Colombia and Argentina and the elimination of the Argentine CVI contract.
Although the MSA is an umbrella agreement that governs our services agreements with the Telefónica S.A. companies, the eventual
termination of the MSA does not automatically result in a termination of any of the local services agreements already in force. The MSA
contemplates a right of termination before the end of the MSA in the different countries, in the event of a change of control of the Company
occurring as a result of a sale to a Telefónica competitor.
In November 2016, we entered into another three-year contract in Brazil with Vivo (Telefónica’s subsidiary), maintaining volume levels
through the expansion of our business and improved profitability supported by changes in our operating model.
The Company also amended the MSA with Telefónica to include:
· Brazil and Spain extended to 2023 (previously 2021), aligning revenue targets to current operating conditions and retaining total level of
commitment;
· Atento’s guaranteed to maintain at least current share of wallet, remaining the largest service provider to Telefónica;
· Improvements in payment terms and invoicing process in all key markets;
· Elimination of an Argentine $24.0 million Contingent Value Obligation, or CVI, further strengthening our balance sheet.
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In November 2019, the parties agreed to decreasing the minimum revenue thresholds in Spain. In consideration of this reduction, the entity
Telefónica de España S.A. (a subsidiary of Telefónica, “Telefónica España”) and Atento Teleservicios España S.A.U. (entity fully owned by the
provider “Atento España”), entered into an agreement dated November 1, 2019, with the purpose to, among other agreements, boost the digitalization
of the services rendered to Telefónica España. Additionally, Telefónica España, will, subject to the conditions stated in such agreement, collaborate
with Atento España.
CRM/BPO industry recognitions
Over the years, the quality and innovation of Atento’s solutions to enhance the customer experience of our clients have been consistently
recognized with the most prestigious awards within the CRM/BPO industry.
Our Company takes great pride in these recognitions. They are a direct result of our eagerness to meet clients' expectations and to create
customer experience solutions that become a source of competitive advantage.
Listed below some of the most relevant recognitions achieved in 2020:
· Gartner
On February 16, 2021, we announced that we have been positioned among the top 4 leading global players in Gartner’s Magic Quadrant for
BPO Customer Management. The Gartner Magic Quadrant assesses, among other things, key service providers for customer management
business process outsourcing
· Everest
In 2020, the Everest Group has selected Atento as one of the leading companies in Customer Experience Management (CXM) in its annual
PEAK Matrix Assessment 2020 report. This recognition is based on the companies' ability to improve and evolve.
· Frost & Sullivan
In 2020, Frost & Sullivan confirmed the Company’s leading position in Latin América customer experience outsourcing services market,
based on the research and consulting firm’s annual analysis of this $10.5 billion market.
· ISO 56002 certification
In 2020, we were recognized with the ISO certification for innovation management. This is the first time at a global scale that a company in
the customer relationship sector has received this seal of approval. We were also the fourth company in Brazil to achieve this certification.
· Top Employer
In 2020, Atento received the Top Employer certificate, awarded by the CRF institute (Corporate Research Foundation) in Spain and Brazil.
· Grupo Fleury award
Atento was the winner in the ‘Services’ category, which recognized the main suppliers of Grupo Fleury, one of the main providers of
medical services in Brazil. Atento achieved the best results in five dimensions: Quality, Terms & Conditions, Sustainability, Compliance and
Creativity & Innovation, surpassing nine other companies.
· ABEMD Awards - Best Direct Marketing Practices in Brazil
The ABEMD awards recognize the best solutions in Brazil’s direct marketing industry. They analyze the strategy, planning, creativity and
results of each solution. In 2020, Atento was recognized as company of the year specialized in Contact Center Category.
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· ESR Distinction
The Socially Responsible Company Distinction (Empresa Socialmente Responsable ESR) is one of the most important recognitions in the
field of corporate social responsibility in Latin America. Atento received this distinction for the 1th time in Mexico.
· Ranking Valor Inovação
Atento was recognized as the 3rd most innovative company in Brazil's service sector in Valor Inovação’s ranking. The study is prepared by
Valor Econômico, one of the country's most renowned business publications, in partnership with the strategic consultancy firm of the PwC
Network.
· Premio Cliente SA
Atento was recognized as Outsourcing Company of the Year by the Aloic organization, the Latin American Alliance of Organizations for
Customer Interaction, which aims to recognize the best practices in the management of customer culture in Latin America.
Competitive Landscape
Global Competitive Landscape
Atento is the largest provider of CRM BPO services and solutions in Latin America and among the top five providers globally, based on
revenues. Relative to CRM BPO market share in Latin America, we hold the number one regional position with 15.2% of the market, 5.4 p.p. ahead
of our closest competitor. Atento also holds number-one positions in almost all countries in which we operate, including Brazil, the largest market,
México (domestic market), Chile, Argentina and Central America/Caribbean (domestic market), based on revenues for the year ended December 31,
2019.
In 2020, the Everest Group has selected Atento as one of the leading companies in Customer Experience Management (CXM) in its annual
PEAK Matrix Assessment 2020 report. This recognition is based on the companies' ability to improve and evolve. Atento has been at the forefront
among the main international competitors as Major Contender and Star Performer. As one of the leading companies in this field, Atento was
distinguished both for its impact in the market and for its evolution, vision, and capabilities displayed in 2019. The company was recognized for
increasing its US and European footprint, and for its proactive search for new deals with rapidly evolving industries, such as e-commerce and the
healthcare sector. In turn, as a Star Performer, Atento has stood out for promoting a culture of co-innovation, offering integrated multi-channel
capabilities based on programming, Artificial Intelligence, IoT (Internet of Things) and RPA (Robotic Process automation), as well as advisory
services such as process consulting and building an increasingly satisfying customer experience.
Recently, we have been positioned among the top 4 leading global players in Gartner’s Magic Quadrant for BPO Customer Management.
The Gartner Magic Quadrant assesses, among other things, key service providers for customer management business process outsourcing. In order to
do so, it has evaluated 19 suppliers, taking into account their implementation capacity and the integrity of their vision. Gartner's opinions are a
reference for companies around the world when both considering and selecting BPO providers for contact center customer management. The
companies analyzed in this research in the Magic Quadrant provide application and management services that encompass global operations, industry
expertise in multiple areas, digital services, agent-assisted services, technology expertise, customer and project management expertise, business
process management, innovation and thought leadership.
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C. Organizational Structure
At December 31, 2020, none of the Group’s subsidiaries was listed on a stock exchange, except for Atento Luxco 1 S.A., which has debt
securities listed on the International Stock Exchange (TISE) in Guernsey. All subsidiaries use year-end December 31 as their reporting date.
D. Property, Plants and Equipment
Property
We perform our business in service delivery centers leased from third parties, and we did not own any real estate as of December 31, 2020,
except for one plot of land in Morocco and part of a building in Peru. Additionally, in April 2006, we obtained a grant of use by the Consorcio para el
Desarrollo (development consortium) of the province of Jaen in Spain, of a 2,400 square meter field for 30 years, extendable for 15-year periods, up
to a maximum of 75 years. In 2006, we built a service delivery center at this site. As of December 31, 2020, the rest of our service delivery centers
around the world were under lease agreements. Our lease agreements are generally long-term, between one to ten years, some of which provide for
extensions.
Our infrastructure is designed according to our clients’ needs. Our technology systems possess the flexibility to integrate with our clients’
existing infrastructure. This approach enables us to deliver the optimal infrastructure mix through on-shoring, off-shoring or near-shoring, as
required. Our deployment team is trained to accomplish timely implementation to minimize our clients’ time-to-market. We address client capacity
needs by providing solutions such as software-based platforms, high-level infrastructure mobility, process centralization and high concentration of
delivery centers.
As of December 31, 2020, we had 93,308 workstations globally, with 49,294 in Brazil, 38,761 in the Americas (excluding Brazil) and 5,253
in EMEA. As of December 31, 2020, we had 94 delivery centers globally, 31 in Brazil, 49 in the Americas (excluding Brazil) and 14 in EMEA.
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The following table shows the number of workstations and delivery centers in each of the jurisdictions in which we operated as of December
31, 2018, 2019, 2020.
Brazil
Americas
Argentina (2)
Central America (3)
Chile
Colombia
Mexico
Peru
United States (4)
EMEA
Spain
Total
Number of Workstations
2019
2020
2018
Number of Service Delivery Centers (1)
2020
2019
2018
49,185
37,610
4,455
2,424
2,948
8,477
9,384
8,569
1,353
5,476
5,476
92,271
49,486
37,765
4,363
2,319
2,595
9,006
9,800
8,479
1,203
5,321
5,321
92,572
49,294
38,761
4,025
2,842
2,310
9,184
10,179
8,918
1,303
5,253
5,253
93,308
34
52
12
4
4
10
15
4
3
15
15
101
33
48
12
3
4
9
14
3
3
15
15
96
31
49
12
3
4
9
15
3
3
14
14
94
(1)
Includes service delivery centers at facilities operated by us and those owned by our clients where we provide operations personnel and
workstations.
(2) Includes Uruguay.
(3)
Includes Guatemala and El Salvador.
(4) Includes Puerto Rico.
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The following is a list of our principal workstations as of December 31, 2018, 2019, 2020:
Brazil
São Bernando do Campo
Bra-Uruguay
São Paulo (Nova São Paulo)
São Paulo (Belenzinho I)
São Paulo (São Bento I)
Salvador (Cabula)
São Jose dos Campos
São Paulo (Santana)
Rio de Janeiro (Madureira)
São Paulo (Santo Antonio)
Americas
Peru-LaMolina
Peru-Maquinarias
Colombia-Telares
Colombia-Bucaramanga
Sal-El Salvador
Colombia-Royal
EMEA
Spain-Glorias
Spain-Ilustración
Spain Madrid Rivas
Spain-Coruña
Number of Workstations
2019
2020
2018
3,134
2,106
2,229
2,351
2,204
1,771
2,088
2,227
2,151
1,980
5,275
2,209
2,169
1,553
1,165
1,222
875
931
-
350
3,002
2,180
2,506
2,015
2,187
1,785
2,087
2,101
2,089
1,980
5,351
2,216
2,156
1,838
1,251
1,249
867
910
426
310
3,061
2,608
2,336
2,331
2,240
2,093
2,088
2,063
2,052
1,985
5,682
2,308
2,177
1,848
1,477
1,324
864
697
661
355
Telecommunications Infrastructure. We work with the main telephone carriers at the local and international levels. We have recently
implemented a network to interconnect the main countries in which we operate, allowing us to offer new options of connectivity and to run new
applications for videoconferencing. Since almost all our voice platform is based on IP technology, we have implemented a solid and flexible
telecommunications infrastructure, which provides business continuity through redundant architectures and interconnection schemes in most of our
facilities.
ITEM 4A. UNRESOLVED STAFF COMMENTS
The Company has no unresolved comments from the staff of the U.S. Securities and Exchange Commission with respect to its periodic
reports under the Securities Exchange Act.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Critical accounting estimates and assumptions
The preparation of consolidated financial statements under IFRS, as issued by the IASB, requires the use of certain assumptions and
estimates that affect the carrying amount of assets and liabilities within the next financial year.
Some of the accounting policies applied in preparing the accompanying consolidated financial statements required Management to apply
significant judgments in order to select the most appropriate assumptions for determining these estimates. These assumptions and estimates are based
on Management experience, the advice of consultants and experts, forecasts and other circumstances and expectations prevailing at year end.
Management’s evaluation takes into account the global economic situation in the sector in which the Atento Group operates, as well as the future
outlook for the business. By virtue of their nature, these judgments are inherently subject to uncertainty. Consequently, actual results could differ
substantially from the estimates and assumptions used. Should this occur, the values of the related assets and liabilities would be adjusted
accordingly.
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Although these estimates were made on the basis of the best information available at each reporting date on the events analyzed, events that
take place in the future might make it necessary to change these estimates in coming years. Changes in accounting estimates would be applied
prospectively in accordance with the requirements of IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, recognizing the
effects of the changes in estimates in the related consolidated income statements.
An explanation of the estimates and judgments that entail a significant risk of leading to a material adjustment in the carrying amounts of
assets and liabilities is as follows:
Useful lives of property, plant and equipment and intangible assets
The accounting treatment of items of property, plant and equipment and intangible assets entails the use of estimates to determine their
useful lives for depreciation and amortization purposes. In determining the useful life, it is necessary to estimate the level of use of assets as well as
forecast technological trends in the assets. Assumptions regarding the level of use, the technological framework and the future development require a
significant degree of judgment, bearing in mind that these aspects are rather difficult to foresee. Changes in the level of use of assets or in their
technological development could result in a modification of their useful lives and, consequently, in the associated depreciation or amortization.
Estimated impairment of goodwill
The Atento Group tests goodwill for impairment annually, in accordance with the accounting principle described in Note 3h. Goodwill is
subject to impairment testing as part of the cash-generating unit to which it has been allocated. The recoverable amounts of cash-generating units
defined in order to identify potential impairment in goodwill are determined on the basis of value in use, applying five-year financial forecasts based
on the Company’s strategic plans, approved and reviewed by Management. These calculations entail the use of assumptions and estimates and require
a significant degree of judgment. The main variables considered in the sensitivity analyses are growth rates, discount rates using the Weighted
Average Cost of Capital (“WACC”) and the key business variables.
Deferred taxes
The Atento Group assesses the recoverability of deferred tax assets based on estimates of future earnings. The ability to recover these
deferred amounts depends ultimately on the Company’s ability to generate taxable earnings over the period in which the deferred tax assets remain
deductible. This analysis is based on the estimated timing of the reversal of deferred tax liabilities, as well as estimates of taxable earnings, which are
sourced from internal projections and are continuously updated to reflect the latest trends.
The appropriate classification of tax assets and liabilities depends on a series of factors, including estimates as to the timing and realization
of deferred tax assets and the projected tax payment schedule. Actual income tax receipts and payments could differ from the estimates made by the
Company as a result of changes in tax legislation or unforeseen transactions that could affect the tax balances.
The Company has recognized deferred tax assets corresponding to losses carried forward since, based on internal projections, it is probable
that it will generate future taxable profits against which they may be utilized.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of that deferred tax asset to be utilized. Unrecognized deferred income tax assets are
reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
Provisions and contingencies
Provisions are recognized when the Company has a present obligation as a result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. This obligation may be legal or
constructive, deriving from, inter alia, regulations, contracts, customary practice or public commitments that would lead third parties to reasonably
expect that the Company will assume certain responsibilities. The amount of the provision is determined based on the best estimate of the outflow of
resources embodying economic benefit that will be required to settle the obligation, taking into account all available information as of the reporting
date, including the opinions of independent experts such as legal counsel or consultants.
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No provision is recognized if the amount of liability cannot be estimated reliably. In such cases, the relevant information is disclosed in the
notes to the consolidated financial statements.
Given the uncertainties inherent in the estimates used to determine the amount of provisions, actual outflows of resources may differ from
the amounts recognized originally on the basis of these estimates.
Fair value of derivatives
The Company uses derivative financial instruments to mitigate risks, primarily derived from possible fluctuations in exchange rates.
Derivatives are recognized at the inception of the contract at fair value.
The fair values of derivative financial instruments are calculated on the basis of observable market data available, either in terms of market
prices or through the application of valuation techniques. The valuation techniques used to calculate the fair value of derivative financial instruments
include the discounting of future cash flows associated with the instruments, applying assumptions based on market conditions at the valuation date
or using prices established for similar instruments, among others. These estimates are based on available market information and appropriate
valuation techniques. The fair values calculated could differ significantly if other market assumptions and/or estimation techniques were applied.
Update On COVID-19
The estimates and assumptions included in the financial statements include our assessment of potential impacts arising from the COVID-19
pandemic that may affect the amounts reported and the accompanying notes. To-date, no significant impacts on our collection experience and
expected credit losses have been noted and we do not currently anticipate any material impairments of our long-lived assets or of our indefinite-lived
intangible assets as a result of the COVID-19 pandemic. We will continue to monitor the impacts and will prospectively revise our estimates as
appropriate.
Refer to Notes 3u of our consolidated financial statements, included elsewhere in this document for details regarding new amendments
standards and interpretations.
A. Operating Results
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s discussion and analysis of our financial condition and results of operations should be read for the years ended December 31,
2018, 2019 and 2020 and the related notes there-to, and with the financial information presented under the section entitled “Item 3. Key Information
—A. Selected Financial Data” included elsewhere in this Annual Report. The preparation of the consolidated financial statements referred to in this
section required the adoption of assumptions and estimates that affect the amounts recorded as assets, liabilities, revenue and expenses in the years
presented and are subject to certain risks and uncertainties. Our future results may vary substantially from those indicated as a result of various
factors that affect our business, including, among others, those mentioned in the sections “Cautionary Statement with respect to Forward Looking
Statements” and “Item 3. Key Information—D. Risk Factors”, and other factors discussed elsewhere in this Annual Report. The consolidated
financial statements for the years ended December 31, 2018, 2019 and 2020, prepared in accordance with IFRS, as issued by the IASB, are included
in “Item 18. Financial Statements”.
The following discussion includes forward-looking statements. Our actual results could differ materially from those that are discussed in
these forward-looking statements.
Overview
Atento is the largest provider of customer-relationship management and business-process outsourcing (“CRM BPO”) services and solutions
in Latin America, and among the top five providers globally, each based on revenue. Our business was founded in 1999 as the CRM BPO provider to
Telefónica and its subsidiaries (together, the “Telefónica Group”). Since then, we have significantly diversified our client base, and we became an
independent company in December 2012, when we were acquired by funds affiliated with Bain Capital Partners, LLC. In October 2014, Atento
became a publicly listed company on the New York Stock Exchange under the ticker symbol “ATTO.” In May 2020, Bain Capital transferred
substantially all of its remaining shares to HPS Investment Partners, LLC, GIC and an investment fund affiliated with Farallon Capital Management,
L.L.C.
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The potential for long-term growth in the markets where we operate is strong and is driven by a number of demographic and business trends,
including (i) sustained demand and growth driven by an improving macroeconomic environment over the long term, a rapidly growing population
and an emerging middle class, (ii) further outsourcing of CRM BPO operations, (iii) potential for further penetration in existing markets, (iv)
development of new industry vertical expertise, such as with healthcare and born-digital companies (i.e., companies that have relied on digital
products/services since inception, such as social networks and Fintechs), and (v) North America’s continued offshoring trend as U.S.-based
businesses continue to offshore call center services to other geographies.
We operate in 13 countries worldwide, including Brazil, Spain, Mexico, Peru, Argentina, Chile, Colombia, the United States, El Salvador,
Guatemala, Puerto Rico, Panama and Uruguay. We organize our business into three geographic markets: (i) Brazil, (ii) Americas, excluding Brazil
(“Americas”) and (iii) EMEA. For the year ended December 31, 2020, Brazil accounted for 43.2% of our revenue, Americas accounted for 41.2% of
our revenue and EMEA accounted for 16.6% of our revenue (in each case, before holding company level revenue and consolidation adjustments).
Our number of workstations increased from 92,572 as of December 31, 2019 to 93,308 as of December 31, 2020 due to volatility within our
operations. Our number of service delivery centers decreased slightly over the same period.
For a table showing the number of delivery centers and workstations in each of the jurisdictions in which we operated as of December 31,
2018, 2019 and 2020, see “Item 4. Information on the Company—D. Property, Plant and Equipment”.
For the years ended December 31, 2018, 2019 and 2020, revenue generated from our 15 largest client groups represented 75.2%, 73.8% and
68.3% of our revenue, respectively. Excluding revenue generated from the Telefónica S.A., for the years ended December 31, 2018, 2019 and 2020,
our next 15 largest client groups represented 38.1%, 39.3% and 37.4% of our revenue, respectively. The decrease in client concentration reflects our
strategy to improve our revenue mix, one of the pillars of our Three Horizon Plan, which we announced in the second quarter of 2019 to improve the
profitability of our existing operations, accelerate the development of our next generation services and digital capabilities and strengthen our position
in segments and geographies which we believe have the potential for higher growth margins.
Our vertical industry expertise in telecommunications, banking and financial services, and more recently, with born-digital companies allows
us to tailor our services and solutions for our customers, further embedding us into their value chain while delivering meaningful business results. In
2019, as part of our Three Horizon Plan, we initiated the build-out of Next Generation Services Portfolio and Digital Capabilities, a set of strategic
initiatives designed to accelerate the development and expansion of our value offering, with a focus on three next generation services lines (namely,
high value voice, integrated multichannel and automated back office) and four next generation capabilities (namely, AI/Cognitive, Analytics,
Automation/RPA and CX consulting). During the years ended December 31, 2018, 2019 and 2020, telecommunications represented 45.8%, 41.1%
and 39.0% of our revenue, respectively, and financial services represented 34.8%, 35.9% and 34.6% of our revenue, respectively. Additionally,
during the years ended December 31, 2018, 2019 and 2020 the sales by service were:
Customer Service
Sales
Collection
Back Office
Technical Support
Others
Total
For the years ended December 31,
2019
2018
2020
50.7%
17.7%
8.2%
12.9%
6.9%
3.6%
100.0%
52.8%
16.6%
7.5%
12.7%
6.4%
4.0%
100.0%
58.5%
12.3%
6.9%
12.7%
5.8%
3.8%
100.0%
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Average headcount
The average headcount in the Company in 2018, 2019 and 2020 and the breakdown by country is presented as follow:
Brazil
Central America
Chile
Colombia
Spain
Mexico
Peru
Puerto Rico
United States
Argentina and Uruguay
Corporate
Total
2018
December 31,
2019
2020
81,158
5,020
5,902
8,742
11,345
17,128
14,550
455
512
8,154
72
79,430
4,916
5,524
8,843
12,267
17,323
12,303
620
408
7,420
75
153,038
149,129
71,234
5,290
5,246
9,011
12,457
17,656
11,084
743
355
6,636
93
139,805
The reduction in our average headcount reflects the implementation of two pillars of our Three Horizon Plan, namely:
·
·
operational excellence: we have taken a number of steps to improve our operations, such as management of key operational performance
indicators and shared services optimization. These initiatives are expected to generate savings and eliminate redundant activities in operating
areas such as quality, workforce management, reporting and training, and customer value programs, in addition to other specific operating
improvement actions being implemented at regional levels. The focus of these initiatives is on increasing our contribution margins and
improving the experience of our customers’ customers; and
optimization initiatives to reduce selling, general and administrative expenses and other costs: we are transforming our business support
areas in order to generate savings and reduce costs. We have analyzed the major cost components of our business in the human resources,
technology, facilities and infrastructure areas, and we have developed specific solutions to lower the cost of services in each category. One of
the actions we are taking is the ongoing digitalization of human resources processes. For example, our human resources team has recently
implemented the use of digital tools for recruiting and retaining the best talent in the market to support our customers’ operations.
Impact of COVID-19 Outbreak
Since December 2019, a novel strain of coronavirus, or COVID-19, spread from China to other countries throughout the world leading to a
global pandemic. The COVID-19 pandemic prompted a global health crisis and led to a number of government actions at the federal, state and local
level across several countries in an effort to address the viral outbreak. Government measures included, among other things, stay-at-home orders and
the closure of businesses not deemed essential to the provision of the basic welfare of society. The COVID-19 pandemic and government measures
taken in response to it have disrupted regional and global economic activity, which initially reduced the need for and our ability to deliver our
services and, therefore, directly and adversely affected our business operations, financial condition and results of operations for the first nine months
of 2020 as a result of lower volumes during April and May.
The services offered by us or by our customers to the end-customers have been declared, in different countries, to be essential, as many of
our services allow citizens to remain in their homes while maintaining access to crucial services, such as healthcare, emergency services and banking.
One relevant example is Praxair in Mexico, for which we provide a service that helps both hospitals and patients request oxygen supplies. Similarly,
since March 24, 2020, Atento Guatemala has been providing physical, technology infrastructure and logistical support services for the government of
Guatemala’s COVID-19 services.
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To address the needs of our customers, employees and society in light of the government measures to address the COVID-19 pandemic, we
are focused on maintaining a good level of service for our customers. To this end, our technology and operations teams are working to provide
remote work options to more of our employees throughout our operations. These teams are committed to continuing to optimize our operations
during the COVID-19 pandemic by overcoming technical and logistical limitations so we can fulfill our commitments to our employees, customers
and society. We endeavor to continue serving many of the more than 500 million people of Latin America, the United States and Spain.
Traditionally, we have endeavored to guarantee our services and to safeguard the health and safety of our employees. We have implemented
a series of measures intended to maintain this guarantee and safeguards during the COVID-19 pandemic, such as higher grade cleaning and
disinfection of our facilities, social distancing, limiting access to common areas, offering flexible work shifts to facilitate the care of families, and the
cancellation of all business travel and in-person meetings.
By December 31, 2020, we had over 59,000 work-at-home agents, or approximately 56% of our operations’ employees. For agents still
working at our facilities, distances between workstations have been increased and personal work equipment (individual headset, keyboard, mouse,
etc.) made available. With operating capacity at approximately 97%, we have a broad capacity to meet the needs of all customers. The transition to
our work@home model by our employees has been facilitated by the digital transformation process underway since 2019, under our Three Horizons
Plan, which has included re-skilling as well as digital recruiting, onboarding and training.
This model as well as other enhanced digital capabilities are allowing us to capture medium- and long-term CRM and BPO opportunities
arising from dramatic shifts in consumer behaviors and related changes being implemented by emerging and established companies seeking to attract
and retain more customers in Latin America, the United States and Europe. The growing strength of our digital capabilities, evolving portfolio of next
generation services and journey orchestration, coupled with accelerated operational improvements that are resulting in a more competitive cost
structure, are allowing us to continue leading next generation customer experience in the future.
While we believe we are now past the most severe impacts to our operations of the COVID-19 pandemic, the extent to which COVID-19
will impact our business, financial condition, results of operations and prospects will depend on future developments which are uncertain and cannot
be predicted, including new information which may emerge concerning the severity of COVID-19 or the actions of governments and other entities to
contain COVID-19 in Brazil and the other countries in which we operate. Therefore, it is not possible to reasonably estimate the extent of potential
impacts to our business, financial condition, results of operations and prospects. We are continuously monitoring the situation as closely as possible
and are actively evaluating potential impacts to our business and implementing measures to help mitigate existing and potential risks.
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Consolidated Statements of Operations for the Year Ended December 31, 2018, 2019 and 2020
($ in millions, except percentage changes)
2018
2019
Change (%)
For the year ended
December 31,
For the year
ended
December
31,
2020
Change (%)
Change
excluding
FX (%) (*)
Change
excluding
FX (%)
Revenue
Other operating income
Other gains and own work capitalized
Operating expenses:
Supplies
1,818.2
1,707.3
19.4
0.2
4.5
10.5
(70.8)
(66.4)
Employee benefit expenses
(1,365.2)
(1,301.0)
(6.1)
(76.6)
N.M.
(6.2)
(4.7)
2.1
1,412.3
(76.3)
N.M.
5.6
0.1
(0.6)
3.8
(72.3)
(1,060.4)
-
(100.0)
(100.0)
(16.2)
(118.7)
6.2
(1,377.6)
(17.3)
22.8
(99.1)
8.8
(18.5)
(11.5)
(17.9)
41.9
(2.8)
31.0
(99.1)
27.5
(4.6)
4.7
(4.3)
65.3
(28.8)
(19.4)
N.M.
(21.8)
3.2
N.M.
44.3
(5.3)
(86.8)
(41.9)
(17.0)
(5.5)
N.M.
7.2
14.3
N.M.
81.1
22.8
(87.5)
(35.5)
(73.9)
(47.0)
(5.3)
40.3
15.7
(70.3)
(27.8)
(82.4)
(42.1)
(4.8)
(46.9)
(46.9)
(42.3)
(35.9)
-
(100.0)
(100.0)
(46.9)
(41.9)
(35.5)
161.2
161.2
5.1
5.1
23.1
23.1
Depreciation
Amortization
Changes in trade provisions
Impairment charges
(36.6)
(58.7)
(1.0)
-
(83.6)
(57.2)
(3.7)
(30.9)
Other operating expenses
(215.9)
(166.8)
Total operating expenses
(1,748.2)
(1,709.7)
Operating profit
Finance income
Finance costs
Net foreign exchange loss
Net finance expense
Profit/(loss) before income tax
Income tax expense
Profit/(loss) for the year
Profit/(loss) attributable to:
Owners of the parent
Non-controlling interest
Profit/(loss) for the year
Other financial data:
EBITDA (1) (unaudited)
Adjusted EBITDA (1) (unaudited)
89.5
18.8
(45.6)
(28.8)
(55.6)
33.9
(13.4)
20.5
18.5
1.9
20.5
184.8
184.8
12.6
20.0
(68.1)
(9.1)
(57.1)
(44.5)
(36.2)
(80.7)
(81.3)
0.6
(80.7)
153.4
153.4
54
128.5
143.6
(2.5)
N.M.
N.M.
(22.7)
(2.2)
(85.9)
6.4
49.3
4.7
N.M.
N.M.
(84.5)
46.1
56.4
(68.5)
(58.1)
2.7
N.M.
N.M.
N.M.
N.M.
(68.5)
N.M.
(17.0)
(17.0)
10.9
N.M.
N.M.
N.M.
N.M.
N.M.
N.M.
(9.9)
(9.9)
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(*) Uses the current currency FX for the variation of 2019 versus 2020.
(1) In considering the financial performance of the business, our management analyzes the financial performance measure of EBITDA at a company and operating
segment level, to facilitate decision-making. EBITDA is defined as profit/(loss) for the period from continuing operations before net finance expense, income
taxes and depreciation and amortization. EBITDA is not a measure defined by IFRS. The most directly comparable IFRS measure to EBITDA is profit/(loss)
for the year/period.
We believe that EBITDA is a useful metric for investors to understand our results of continuing operations and profitability because it permits investors to
evaluate our recurring profitability from underlying operating activities. We also use this measure internally to establish forecasts, budgets and operational
goals to manage and monitor our business, as well as to evaluate our underlying historical performance. We believe that EBITDA facilitates comparisons of
operating performance between periods and among other companies in industries similar to ours because it removes the effect of variances in capital structures,
taxation, and non-cash depreciation and amortization charges, which may differ between companies for reasons unrelated to operating performance.
EBITDA is a measure that is frequently used by securities analysts, investors and other interested parties in their evaluation of companies comparable to us,
many of which present EBITDA-related performance measures when reporting their results.
EBITDA has its limitations as an analytical tool. This measure is not a presentation made in accordance with IFRS, is not a measure of financial condition or
liquidity and should not be considered in isolation or as alternatives to profit or loss for the period from continuing operations or other measures determined in
accordance with IFRS. EBITDA is not necessarily comparable to similarly titled measures used by other companies. This non-GAAP measure should be
considered supplemental in nature and should not be construed as being more important than comparable GAAP measures.
The application of IFRS 16 from January 1, 2019 means EBITDA for the year ended December 31, 2019 and 2020 is positively impacted by a decrease in
operating expenses relating to rental payments for leases recorded under IFRS 16 that would not otherwise have been recorded prior to the application of IFRS
16. EBITDA reported are presented applying the accounting and disclosure standard in highly inflationary economies for our operations in Argentina.
N.M. means not meaningful
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Consolidated Statements of Operations by Segment for the Year Ended December 31, 2018, 2019 and 2020
($ in millions, except percentage
changes)
For the year ended
December 31,
2018
2019
Change
(%)
Change
Excluding FX
(%)
For the
year ended
December
31,
2020
Change
(%)
Change
Excluding FX
(%) (*)
Revenue:
Brazil
Americas
EMEA
Other and eliminations (1)
Total revenue
Operating expenses:
Brazil
Americas
EMEA
Other and eliminations (1)
Total operating expenses
Operating profit/(loss):
Brazil
Americas
EMEA
Other and eliminations (1)
Total operating profit
Net finance expense:
Brazil
Americas
EMEA
Other and eliminations (1)
Total net finance expense
Income tax benefit/(expense):
Brazil
Americas
EMEA
Other and eliminations (1)
Total income tax expense
Profit/(loss) for the year:
877.7
708.7
240.9
827.3
660.1
232.8
(5.7)
(6.9)
(3.3)
2.1
2.8
2.0
609.4
582.0
234.7
(9.1)
(12.9)
42.5
49.7
(13.8)
(26.3)
(11.8)
0.8
6.9
1,818.2
1,707.3
(6.1)
2.1
1,412.3
(17.3)
(847.6)
(701.4)
(240.2)
(807.4)
(679.5)
(244.1)
(4.7)
(3.1)
1.6
3.2
6.6
7.5
(594.5)
(576.7)
(235.1)
41.0
21.4
(47.8)
(42.2)
28.7
(26.4)
(15.1)
(3.7)
34.1
(1,748.2)
(1,709.7)
(2.2)
6.2
(1,377.6)
(19.4)
33.1
21.5
2.5
32.3
21.1
(18.2)
1.2
8.6
(36.3)
N.M.
(52.8)
(73.5)
(31.7)
N.M.
(49.3)
(70.9)
15.0
7.7
2.8
14.8
89.5
12.6
(85.9)
(84.5)
40.3
(30.3)
(46.5)
(5.5)
(1.6)
(18.1)
(5.6)
(1.4)
(3.6)
53.4
1.4
(12.7)
(80.2)
66.4
35.8
(6.6)
(42.5)
(9.6)
(1.3)
(80.0)
(29.1)
(29.0)
(142.5)
133.9
72.9
N.M.
(8.6)
71.2
(10.9)
N.M.
(55.6)
(57.1)
2.7
10.9
(82.4)
44.3
(1.4)
(2.1)
(0.9)
(9.0)
7.4
(2.0)
(22.0)
(19.6)
(13.4)
(36.2)
N.M.
(0.3)
N.M.
116.7
N.M.
N.M.
(7.1)
N.M.
129.0
N.M.
5.8
(8.1)
3.6
(6.2)
(21.4)
N.M.
(116.6)
(68.6)
(4.8)
(86.8)
(4.4)
(1.5)
(0.9)
14.7
(2.8)
(4.5)
(4.2)
(5.7)
68.0
(5.5)
(5.0)
N.M.
N.M.
N.M.
N.M.
19.1
88.3
(10.9)
N.M.
81.1
0.7
N.M.
(115.4)
(65.2)
(87.5)
Brazil
1.4
(18.0)
N.M.
N.M.
(21.7)
20.5
53.4
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Americas
EMEA
Other and eliminations (1)
Profit/(loss) for the year
Profit/(loss) attributable to:
Owners of the parent
Non-controlling interest
Other financial data:
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13.9
-
5.1
(25.9)
(22.2)
(14.6)
20.5
(80.7)
18.5
1.9
(81.3)
0.6
N.M.
N.M.
N.M.
N.M.
N.M.
(68.5)
56
N.M.
N.M.
N.M.
N.M.
N.M.
N.M.
(9.9)
5.2
(61.6)
(123.4)
(20.4)
39.6
(46.9)
(41.9)
(46.9)
(42.3)
-
(100.0)
(45.4)
(121.2)
28.6
(35.5)
(35.9)
(100.0)
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EBITDA (2):
Brazil
Americas
EMEA
Other and elimina ons (1)
Total EBITDA (unaudited)
Adjusted EBITDA (2):
Brazil
Americas
EMEA
Other and elimina ons (1)
Total Adjusted EBITDA (unaudited)
83.5
56.2
12.3
32.8
96.9
30.7
17.0
8.8
16.0
(45.3)
38.5
(73.1)
25.2
(40.5)
46.7
(70.4)
78.2
52.6
15.3
15.1
(19.3)
71.1
(9.6)
71.0
184.8
153.4
(17.0)
(9.9)
161.2
5.1
99.4
73.5
19.5
(7.6)
184.8
111.7
32.4
21.8
(12.6)
153.4
12.4
(55.9)
11.9
65.5
(17.0)
21.1
(51.9)
18.3
61.5
(9.9)
81.8
66.8
21.3
(8.6)
161.2
(26.8)
105.8
(2.3)
(31.2)
5.1
5.2
53.6
(9.6)
N.M.
23.1
(4.8)
35.2
(2.8)
(67.1)
23.1
(*) Uses the current currency FX for the variation of 2019 versus 2020.
(1) Included revenue and expenses at the holding-company level (such as corporate expenses and acquisition related expenses), as applicable, as well as
consolidation adjustments.
(2) Adjusted EBITDA is defined as EBITDA adjusted to exclude restructuring costs, site relocation costs and other items not related to our core results of
operations. We believe that Adjusted EBITDA better reflects our underlying operating performance because it excludes the impact of items which are not related to
our core results of continuing operations. Adjusted EBITDA is a measure that is frequently used by securities analysts, investors and other interested parties in their
evaluation of companies comparable to us, many of which present EBITDA-related performance measures when reporting their results.
N.M. means not meaningful
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Year Ended December 31, 2019 Compared to Year Ended December 31, 2020
Revenue
Revenue decreased by $295.0 million, or 17.3%, from $1,707.3 million for the year ended December 31, 2019 to $1,412.3 million for the
year ended December 31, 2020. Excluding the impact of foreign exchange, revenue decreased 2.8%, primarily due to lower revenues from
Telefónica, partially offset by a 4.9% increase in revenue from multisector clients.
Revenue from Telefónica decreased by $152.7 million, or 25.4%, contributing $449.5 million in revenue for the year ended December 31,
2020, against $602.1 million in the year ended December 31, 2019. Excluding the impact of foreign exchange, revenue from Telefónica decreased by
15.9%, due to (i) the discontinuation of unprofitable programs in Brazil since the fourth quarter of 2019 and (ii) lower volumes due to COVID-19’s
impact in all regions mainly during the second half of March, April and May. However, we sold more next generation services to Telefónica in the
year ended December 31, 2020 compared to the year ended December 31, 2019, which is reshaping our relationship with our largest client.
Multisector clients presented a revenue decrease of $142.3 million, or 12.9%, from $1,105.2 million for the year ended December 31, 2019
to $962.8 million for the year ended December 31, 2020. Excluding the impact of foreign exchange, revenue from multisector clients increased 4.9%,
supported by multisector growth across all regions. The increase in multisector customers despite the challenges raised by the COVID-19 crisis
reflects the effectiveness of the “sales excellence” pillar of our Three Horizon Plan. Under the “sales excellence” pillar, we have transformed our
sales model to accelerate profitable growth under a “sell more, sell better, sell what we want” approach. We are highly focused on the relationships
we have with our customer base and consider these to be a key competitive advantage. We are implementing a new sales model that helps us manage
global customer accounts and strengthen our position in the born-digital area of the market. Our commercial team is responsible for end-to-end
customer life cycle, namely new sales to new customers, account development, changes in the scope of service we provide, renewals and inflation
pass-through negotiations, driving increases in sales through a War Room model and a compensation model focused on profitable growth. We have
also been prioritizing strategic product sales among current and future customers, to ensure the right product portfolio at each of our customers,
which we believe to be a key lever to drive healthy growth in future.
For the year ended December 31, 2020, revenue from multisector clients was 68.2% of total revenue, compared to 64.7% for the year ended
December 31, 2019, an increase of 3.4 percentage points.
The following chart sets forth a breakdown of revenue by geographical region for the years ended December 31, 2019 and 2020 including as
a percentage of revenue and the percentage change between those periods (both with and excluding the effect of foreign exchange).
($ in millions, except percentage
changes)
Brazil
Americas
EMEA
Other and eliminations (1)
Total
For the year ended December 31,
2019
(%)
2020
(%)
Change (%)
827.3
660.1
232.8
(12.9)
1,707.3
48.5
38.7
13.6
(0.8)
100.0
609.4
582.0
234.7
(13.8)
1,412.3
43.2
41.2
16.6
(1.0)
100.0
(26.3)
(11.8)
0.8
6.9
(17.3)
Change
excluding FX
(%) (*)
(4.4)
(1.5)
(0.9)
14.7
(2.8)
(*) Uses the current currency FX for the variation of 2019 versus 2020.
(1) Includes holding company level revenues and consolidation adjustments.
Brazil
Revenue in Brazil for the year ended December 31, 2019 and 2020 was $827.3 million and $609.4 million, respectively, a decrease of
$217.9 million, or 26.3%. Excluding the impact of foreign exchange, revenue in Brazil decreased by 4.4% due to a 24.6% decrease in revenue from
Telefónica, partially offset by a 3.4% increase in revenue from multisector clients. The increase in revenue from multisector clients was primarily due
to the Company focus in continuing to sell Next Generation Services and further penetrating fast-growing verticals, such as born-digital, tech and
media. The decrease in revenue from Telefónica was mainly due to (i) the discontinuation of unprofitable programs since the fourth quarter of 2019
and (ii) the COVID-19 pandemic’s impact on volumes, mostly during April and May, as Atento focused its delivery capacity on multisector clients.
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Americas
Revenue in Americas for the year ended December 31, 2019 and 2020 was $660.1 million and $582.0 million, respectively, a decrease of
$78.1 million, or 11.8%. Excluding the impact of foreign exchange, revenue in Americas decreased by 1.5% due to a 13.0% decrease in revenue from
Telefónica, partially offset by a 5.7% increase in revenue from multisector clients, mainly in the United States and Colombia. The decrease in
revenue from Telefónica in the region was primarily due to lower volumes resulting from the COVID-19 pandemic, mainly in Peru where the
lockdown effects were more severe in this country. The increase in multisector sales was attributable to higher volumes in tech and born-digital
companies and by the 17% expansion of US revenues in the year of 2020.
EMEA
Revenue in EMEA for the year ended December 31, 2019 and 2020 was $232.8 million and $234.7 million, respectively, an increase of $1.9
million, or 0.8%. Excluding the impact of foreign exchange, revenue in EMEA decreased by 0.9%. The decrease in revenue was primarily due to a
9.3% decrease in revenue from Telefónica due to the impact of COVID-19 in the region, mainly in April and May, offset by a 9.7% increase in
revenue from multisector clients, mainly from higher volumes in telco, utilities and public services verticals.
Other operating income
Other operating income totaled $4.5 million and $5.6 million for the year ended December 31, 2019 and 2020, respectively.
Other gains and own work capitalized
Other gains and own work capitalized totaled $10.5 million for the year ended December 31, 2019 and $0.1 million for the year ended
December 31, 2020. This decrease was due to one-off non-operational revenue in the year ended December 31, 2019.
Total operating expenses
Total operating expenses decreased by $332.0 million, or 19.4%, from $1,709.7 million for the year ended December 31, 2019 to $1,377.6
million for the year ended December 31, 2020. Excluding the impact of foreign exchange, operating expenses decreased by 5.5%, mainly due to the
acceleration of operational improvements under our improved efficiencies program, which seeks to further optimize our cost structure through right-
sizing of operations as well as implementation of shared services, a zero-based budgeting system and the work@home model. As a percentage of
revenue, operating expenses represented 100.1% and 97.5% for the years ended December 31, 2019 and 2020, respectively.
Supplies: Supplies expenses increased by $5.8 million, or 8.8%, from $66.4 million for the year ended December 31, 2019 to $72.3 million
for the year ended December 31, 2020. Excluding the impact of foreign exchange, supplies expenses increased by 27.5%, mainly due to Brazil and
EMEA regions. As a percentage of revenue, supplies represented 3.9% and 5.1% for the year ended December 31, 2019 and 2020, respectively.
Employee benefit expenses: Employee benefit expenses decreased by $240.6 million, or 18.5%, from $1,301.0 million for the year ended
December 31, 2019 to $1,060.4 million for the year ended December 31, 2020. Excluding the impact of foreign exchange, employee benefit expenses
decreased by 4.6%, mainly due to the impact of the operational improvements made as a result of our improved efficiencies program, including lower
headcount, mainly in Brazil. As a percentage of revenue, employee benefit expenses represented 76.2% and 75.1% for the years ended December 31,
2019 and 2020, respectively.
Depreciation and amortization: Depreciation and amortization expenses decreased by $19.9 million, or 14.1%, from $140.8 million for the
year ended December 31, 2019 to $120.9 million for the year ended December 31, 2020. Excluding the impact of foreign exchange, depreciation and
amortization expense increased by 1.0%, mainly due to Brazil region.
Changes in trade provisions: Changes in trade provisions amounted to a loss of $3.7 million and a loss of $5.3 million for the years ended
December 31, 2019 and 2020, respectively.
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Impairment charges: The year ended December 31, 2019 was impacted by a goodwill impairment of $30.9 million related to Argentina
subsidiary and as a consequence of the Macroeconomic crisis and hyperinflation in the country.
Other operating expenses: Other operating expenses decreased by $48.1 million, or 28.8%, from $166.8 million for the year ended
December 31, 2019 to $118.7 million for the year ended December 31, 2020. Excluding the impact of foreign exchange, other operating expenses
decreased by 17.0%, mainly due to the impact of the operational improvements made as a result of our improved efficiencies program. As a
percentage of revenue, other operating expenses totaled 9.8% and 8.4% for the years ended December 31, 2019 and 2020, respectively.
Brazil
Total operating expenses in Brazil decreased by $212.9 million, or 26.4%, from $807.4 million for the year ended December 31, 2019 to
$594.5 million for the year ended December 31, 2020. Excluding the impact of foreign exchange, operating expenses in Brazil decreased by 4.5%,
reflecting the impact of the operational improvements made as a result of our improved efficiencies program to offset lower revenues from the
pandemic. Operating expenses as a percentage of revenue in Brazil was stable 97.6% for the years ended December 31, 2019 and 2020.
Americas
Total operating expenses in Americas decreased by $102.8 million, or 15.1%, from $679.5 million for the year ended December 31, 2019 to
$576.7 million for the year ended December 31, 2020. Excluding the impact of foreign exchange, operating expenses in Americas decreased by
4.2%, reflecting the impact of the operational improvements made as a result of our improved efficiencies program, more than offsetting lower
revenues from the pandemic. Operating expenses as a percentage of revenue in Americas decreased from 102.9% for the year ended December 31,
2019 to 99.1% for the year ended December 31, 2020.
EMEA
Total operating expenses in EMEA decreased by $9.0 million, or 3.7%, from $244.1 million for the year ended December 31, 2019 to
$235.1 million for the year ended December 31, 2020. Excluding the impact of foreign exchange, operating expenses in EMEA decreased by 5.7%,
reflecting the impact of the operational improvements made as a result of our improved efficiencies program, more than offsetting lower revenues
from the pandemic. Operating expenses as a percentage of revenue in EMEA decreased from 104.9% for the year ended December 31, 2019 to
100.2% for the year ended December 31, 2020.
Operating profit/(loss)
Operating profit increased by $27.7 million, from $12.6 million for the year ended December 31, 2019 to $40.3 million for the year ended
December 31, 2020, an increase due to the reasons mentioned above. Operating profit margin increased from 0.7% for the year ended December 31,
2019 to 2.9% for the year ended December 31, 2020.
Brazil
Operating profit in Brazil decreased by $6.1 million, or 29.0%, from $21.1 million for the year ended December 31, 2019 to $15.0 million
for the year ended December 31, 2020 due to the reasons mentioned above. Excluding the impact of foreign exchange, operating profit decreased by
5.0%. Operating profit margin in Brazil decreased from 2.6% for the year ended December 31, 2019 to 2.5% for the year ended December 31, 2020.
Americas
Operating profit/(loss) in Americas changed by $26.0 million, from a loss of $18.2 million for the year ended December 31, 2019 to a profit
of $7.7 million for the year ended December 31, 2020. Excluding the impact of foreign exchange, operating profit/(loss) increased by $18.1 million,
for the reasons mentioned above. Operating profit margin in Americas increased from negative 2.8% for the year ended December 31, 2019 to 1.3%
for the year ended December 31, 2020.
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EMEA
Operating profit in EMEA increased by $1.6 million, from $1.2 million for the year ended December 31, 2019 to $2.8 million for the year
ended December 31, 2020, due to the reasons mentioned above. Operating profit margin in EMEA increased from 0.5% for the year ended December
31, 2019 to 1.2% for the year ended December 31, 2020.
Finance income
Finance income was $20.0 million for the year ended December 31, 2019 as compared to $15.7 million for the year ended December 31,
2020. The decrease in finance income was mainly due to a lower effect from Argentina hyperinflation in the year ended in 2020, compared to year
ended 2019.
Finance costs
Finance costs increased by $2.2 million, or 3.2%, from $68.1 million for the year ended December 31, 2019 to $70.3 million for the year
ended December 31, 2020. Excluding the impact of foreign exchange, finance costs increased by 14.3% during the year ended December 31, 2020.
The increase in finance costs was driven by (i) higher interest costs from the higher use of credit lines to ensure adequate liquidity during the
COVID-19 pandemic and (ii) higher average debt with third parties as we issued an additional $100 million under our 2022 Senior Secured Notes in
April 2019.
Net foreign exchange gain/(loss)
Net foreign exchange loss increased by $18.7 million, from a loss of $9.1 million for the year ended December 31, 2019 to a loss of $27.8
million for the year ended December 31, 2020, primarily due to Brazilian Reais and Mexican Peso depreciations against the U.S. dollar that impacted
our intercompany balances, but with no significant cash effect.
Income tax expense
Income tax expense for the year ended December 31, 2019 totaled $36.2 million as compared to $4.8 million for the year ended December
31, 2020. Income tax expense for the year ended December 31, 2019 contained a negative one-off tax impact of $37.8 million due to a settlement
with the Spanish Tax Authority in the first quarter of 2019 in connection with a claim against us for certain differences in historical tax payments.
Profit/(loss) for the year
As a result of the foregoing, loss for the year ended December 31, 2019 and 2020 was $80.7 million and $46.9 million, respectively.
EBITDA and Adjusted EBITDA
EBITDA increased by $7.8 million, or 5.1%, from $153.4 million for the year ended December 31, 2019 to $161.2 million for the year
ended December 31, 2020. Excluding the impact of foreign exchange, EBITDA increased by 23.1%, primarily due to a better revenue mix of
Multisector clients and Next Generation services as well as improved operational efficiencies and stricter cost control, especially in Brazil region.
EBITDA margin, defined as EBITDA over revenue, increased from 9.0% for the year ended December 31, 2019 to 11.4% for the year ended
December 31, 2020, despite the global pandemic and approximately 30% BRL devaluation in the period. This demonstrates positive results of our
Three Horizon Plan strategic plan implemented during 2019.
Brazil
Adjusted EBITDA in Brazil decreased by $30.0 million, or 26.8%, from $111.7 million for the year ended December 31, 2019 to $81.8
million for the year ended December 31, 2020. Excluding the impact of foreign exchange, Adjusted EBITDA decreased by 4.8%. The decrease in
Adjusted EBITDA in Brazil was mainly due to the impact of COVID-19 during April and May, partially offset by the better revenue mix combined
with higher efficiencies.
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Adjusted EBITDA margin in Brazil for the year ended December 31, 2020 decreased slightly to 13.4% from 13.5% for the year ended
December 31, 2019.
Americas
Adjusted EBITDA in Americas increased by $34.3 million, or 105.8%, from $32.4 million for the year ended December 31, 2019 to $66.8
million for the year ended December 31, 2020. Excluding the impact of foreign exchange, Adjusted EBITDA increased by 35.2% primarily due to an
improved revenue mix, higher efficiencies and a low comparison base due to the $30.9 million impact from the Argentina impairment on Q4 2019.
Adjusted EBITDA margin in Americas for the year ended December 31, 2020 increased to 11.5% from 4.9% for the year ended December
31, 2019.
EMEA
Adjusted EBITDA in EMEA decreased by $0.5 million, or 2.3%, from $21.8 million for the year ended December 31, 2019 to $21.3 million
for the year ended December 31, 2020. Excluding the impact of foreign exchange, Adjusted EBITDA decreased by 2.8%.
Adjusted EBITDA margin in EMEA for the year ended December 31, 2020 decreased to 9.1% from 9.4% for the year ended December 31,
2019, mainly due to the impact of COVID-19 during the second half of March, April and May, partially offset by better revenue mix, including Next
Generation services, combined with higher operating efficiencies.
Year Ended December 31, 2018 Compared to Year Ended December 31, 2019
For this discussion, see our Annual Report on Form 20-F for the fiscal year ended December 31, 2019 filed with the SEC on April 16, 2020.
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B. Liquidity and Capital Resources
As of December 31, 2020, we had cash and cash equivalents of $209.0 million. We fund our ongoing capital and working capital
requirements through a combination of cash flow from operations and financing activities. Based on our current and anticipated levels of operations
and conditions in our markets and industry, we believe that our cash on hand and cash flow from our operating, investing and financing activities,
including funds available under the Revolving Credit Facility, will enable us to meet our working capital, capital expenditure, debt service and other
funding requirements for the foreseeable future. We have ample liquidity: as of December 31, 2020, the total amount of credit available to us was
$88.1 million under our Revolving Credit Facility, out of which $61.8 million was drawn as of December 31, 2020.
Our ability to fund our working capital needs, debt payments and other obligations, and to comply with the financial covenants under our
debt agreements, depends on our future operating performance and cash flow, which are subject to prevailing economic conditions, and other factors,
many of which are beyond our control. Any future acquisitions, joint ventures or other similar transactions will likely require additional capital and
such capital may not be available to us on acceptable terms, if at all.
As of December 31, 2020, our outstanding debt was $727.8 million, which includes $505.6 million of our 6.125% Senior Secured Notes due
2022, $30.0 million of financing under a super senior revolving credit facility, $0.6 million of financing provided by BNDES, $152.7 million of lease
liabilities and $38.9 million of other bank borrowings, especially short-term financing for working capital needs.
For the year ended December 31, 2020, our cash flow from operating activities was $127.0 million, which includes interest paid of $46.2
million. Our cash flow from operating activities, before giving effect to the payment of interest, was $173.2 million.
Cash Flows
As of December 31, 2020, we had cash and cash equivalents of $209.0 million. We believe that our current cash flow used in operating
activities and financing arrangements will provide us with sufficient liquidity to meet our working capital needs.
($ in millions)
Cash flows from operating activities
Cash flows used in investing activities
Cash flows (used in)/provided by financing activities
Net increase/(decrease) in cash and cash equivalents
Effect of changes in exchange rates
For the year ended December 31,
2019
2018
2020
81.2
(41.2)
(33.7)
6.3
(14.5)
46.5
(55.9)
5.0
(4.4)
(4.5)
127.0
(38.2)
1.0
89.8
(5.5)
For a discussion on the cash flow for the year ended December 31, 2019 compared to the year ended December 31, 2018, see on Annual
Report on Form 20-F for the year ended December 31, 2019 filed with the SEC on April 16, 2020.
Cash Flows from Operating Activities
Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
For the year ended December 31, 2020, cash from operating activities was $127.0 million compared to cash from operating activities of
$46.5 million in the same period of prior year. The increase is mainly due to the positive changes of $49.8 million in working capital resulting from
the implementation of stricter treasury policies with the reduction of our overdue receivables.
Cash Flows used in Investing Activities
Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
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For the year ended December 31, 2020, cash used in investing activities was $38.2 million compared to cash used in investing activities of
$55.9 million in the same period of prior year, mainly due to the acquisitions of minority interests in Interfile and RBrasil in 2019.
Cash Flows from/(used in) Financing Activities
Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
For the year ended December 31, 2020 cash provided by financing activities was $1.0 million compared to cash provided by financing
activities of $5.0 million in the same period of prior year.
Financing Arrangements
Certain of our debt agreements contain financial ratios as instruments to monitor the Company’s financial condition and as preconditions to
certain transactions (e.g. the incurrence of new debt, permitted payments). The following is a brief description of the financial ratios.
1. Fixed Charge Coverage Ratio (applies to Atento S.A.) – measures the Company’s ability to pay interest expenses and dividends (fixed
charges) in relation to EBITDA, as described in the debt agreements. The contractual ratio indicates that the EBITDA for the last
twelve months should represent at least 2.0 times the fixed charge of the same period. As of December 31, 2020, the ratio was 3.4
times. This financial covenant applies only as a restriction for certain actions (e.g. issuance a new debt) and, if breached, will not
trigger a default or an event of default.
The Company regularly monitors all financial ratios under the debt agreements. As of December 31, 2020, we were in compliance with the
terms of our covenants.
Description
Senior Secured Notes
Super Senior Credit Facility
BNDES
Lease Liabilities
Other Borrowings
Total Debt
Senior Secured Notes
Currency
USD
USD
BRL
BRL, USD
BRL, USD
Interest rate
As of December 31, 2020
($ in millions)
Maturity
2022
2021
6.125%
Libor + 4.25
2022
2025
2021
Energy Efficiency Project: TJLP
+ 2%
7.0%-12.0%
4.5%-8.9%
505.6
30.0
0.6
152.7
38.9
727.8
On August 10, 2017, Atento Luxco 1 S.A. closed an offering of a $400.0 million aggregate principal amount of 6.125% Senior Secured
Notes due 2022 in a private placement transaction. The notes are due on August 2022. The 2022 Senior Secured Notes are guaranteed on a senior
secured basis by certain of Atento’s wholly owned subsidiaries. The issuance costs of $12.0 million related to this new issuance were recorded at
amortized cost using the effective interest method.
On April 4, 2019, Atento Luxco 1 S.A. closed an offering of an additional $100.0 million in aggregate principal amount of its 6.125% Senior
Secured Notes due 2022 (the "Additional Notes"). The Additional Notes were offered as additional notes under the indenture, dated as of August 10,
2017, pursuant to which the Issuer previously issued a $400.0 million aggregate principal amount of its 6.125% Senior Secured Notes due 2022 (the
"Existing Notes"). The Additional Notes and the Existing Notes are treated as the same series for all purposes under the indenture and collateral
agreements, each as amended and supplemented, that govern the Existing Notes and the Additional Notes.
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The terms of the Indenture governing the 2022 Senior Secured Notes, among other things, limit, in certain circumstances, the ability of
Atento Luxco 1 and its restricted subsidiaries to: incur certain additional indebtedness; make certain dividends, distributions, investments and other
restricted payments; sell property or assets to another person; incur additional liens; guarantee additional debt; and enter into transactions with
affiliates. As of December 31, 2020, we were in compliance with these covenants. The outstanding amount on December 31, 2020 is $505.6 million.
All interest payments are made on a half-yearly basis.
The fair value of the Senior Secured Notes, calculated on the basis of their quoted price at December 31, 2020, is $500.2 million.
The fair value hierarchy of the Senior Secured Notes is Level 1, as the fair value is based on the quoted market price at the reporting date.
On February 10, 2021, Atento Luxco 1 S.A., closed an offering of a $500.0 million aggregate principal amount of 8.0% Senior Secured
Notes due February 10, 2026 in a private placement transaction. Atento Luxco 1 used the net proceeds to repurchase and redeemed all of its 6.125%
Senior Secured Notes due 2022.
The terms of the Indenture governing the 2026 Senior Secured Notes, among other things, limit, in certain circumstances, the ability of
Atento Luxco 1 and its restricted subsidiaries to: incur certain additional indebtedness; make certain dividends, distributions, investments and other
restricted payments; sell property or assets to another person; incur additional liens; guarantee additional debt; and enter into transactions with
affiliates.
On February 10, 2021, Atento Luxco 1 S.A., closed an offering of 500,000 thousand U.S. dollars aggregate principal amount of 8.0% Senior
Secured Notes due February 10, 2026 in a private placement transaction. During February 2021, Atento Luxco I S.A. used the net proceeds to fully
redeem all of its 6.125% Senior Secured Notes due 2022, completing the refinancing and extending the Company’s average life to 4.5 years from 1.5
years. For more details, please see “Item 27 – Subsequent Events”.
Other Financial Instruments
On April 25, 2017, Atento Brasil S.A. entered into a bank credit certificate (cédula de crédito bancário) with Banco Santander (Brasil) S.A.
in an aggregate principal amount of up to 80.0 million Brazilian reais (the “2017 Santander Bank Credit Certificate”), equivalent to approximately
$25.0 million as of April 30, 2017. The interest rate of the 2017 Santander Bank Credit Certificate equals the average daily rate of the One Day “over
extra-group” – DI – Interbank Deposits (this rate is disclosed by CETIP in the daily release available on its web page), plus a spread of 2.70% per
annum. The 2017 Santander Bank Credit Certificate matures every 180 days and has been renewed on a regular basis. On April 7, 2020, we paid the
full outstanding balance, and the “2017 Santander Bank Credit Certificate” was terminated by mutual agreement between the parties.
On October 16, 2017, Atento El Salvador S.A. de C.V. entered into an overdraft credit line agreement with Banco de America Central, S.A. -
BAC for an amount of $1.600 million, maturing on one year, extendable with simple exchange of letters with an annual interest rate of 8.0% per
annum. As of December 31, 2020, the outstanding balance was $0.002 million.
On August 13, 2019, Atento Brasil S.A. entered into an overdraft credit line agreement with Banco do Brasil for an amount of 30.0 million
Brazilian Reais, with maturity every six months, with an annual interest rate of CDI plus 2.127% per annum. On February 27, 2020, the amount of
the agreement was increased up to 40.0 million Brazilian Reais, with an annual interest rate of CDI plus 5.54% per annum, with maturity date on July
27, 2020. On July 22, 2020, the amount of the agreement was maintained at up to 40.0 million Brazilian Reais, with an annual interest rate of CDI
plus 5.54% per annum, with next maturity date on October 20, 2020. On October 14, 2020, Atento Brasil paid the full outstanding balance.
On August 20, 2019, Atento Brasil S.A. entered into an agreement with Banco ABC Brasil for an amount of 7.8 million Euros, maturing on
February 18, 2020, with an annual interest rate of 1.25%. In connection with the loan, Atento Brasil S.A. entered into a swap agreement through
which it receives fixed interest rates in Euros, in the same amount of the loan agreement, and pays a variable interest rate at a rate per annum equal to
the average daily rate of the One Day “over extragroup” – DI – Interbank Deposits (this rate is disclosed by CETIP in the daily release available on
its web page), plus a spread of 1.80% over 35.0 million Brazilian Reais. The total outstanding balance was paid on the due date.
On February 14, 2020, Atento Brasil S.A. entered into a loan agreement with Banco ABC Brasil for an amount of 7.4 million Euros
maturing on August 13, 2020 with an annual interest rate of 1.49%. In connection with the loan, Atento Brasil S.A. entered into a swap agreement
through which it receives fixed interest rates in EURO, in the same amount of the loan agreement, and pays variable interest rate at a rate per annum
equal to the average daily rate of the one day “over extragroup” – DI – Interbank Deposits (as such rate is disclosed by CETIP in the daily release
available on its web page), plus a spread of 1.95% over 35.0 million Brazilian Reais. The total outstanding balance was paid on the due date.
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On February 20, 2020, Atento Brasil S.A. entered into a bank credit certificate (cédula de crédito bancário) with Banco Itaú for an amount of
35.2 million Brazilian Reais, maturing on May 20, 2020 with an annual interest rate of CDI plus 1.95% per annum. The total outstanding balance was
paid on the due date.
On March 13, 2020, Atento Brasil S.A. entered into a financing agreement with Banco Itaú (“Risco Sacado”) for the annual Microsoft
software licenses, for an amount of 24.5 million Brazilian Reais, maturing on April 1, 2021, with an annual interest rate of 7.2%. As of December 31,
2020, the outstanding balance was $4.7 million.
On April 06, 2020, Atento Brasil S.A. entered into a loan agreement with Banco Santander for an amount of 110.0 million Brazilian Reais,
maturing on April 06, 2021 with an annual interest rate of CDI plus 4.96% per annum. On July 13, Atento Brasil S.A. amortized the principal amount
of 60.0 million Brazilian Reais plus accrued interest. As of December 31, 2020, the outstanding balance was $9.9 million.
On May 12, 2020, Atento Peru entered a loan agreement with Scotiabank Peru, under the government financing program related to Covid-19
(Reactiva Peru), for an aggregate principal amount of 10.0 million Peruvian Soles, with an annual interest rate of 1.0% per annum. This facility
should be repaid in 36 months. The first payment would be due on May 12, 2021 and the last payment would be due on May 12, 2023. On November
13, Atento Peru prepaid the total outstanding balance.
On June 12, 2020, Atento Brasil entered into a financing agreement with Banco De Lage Landen for an amount of 10.0 million Brazilian
Reais to finance the purchase of Microsoft software licenses, maturing on June 30, 2023 with an annual interest rate of 9.0% per annum. Atento
Brasil drew down on the financing agreement on July 1, 2020. The outstanding balance as of December 31, 2020 was $1.9 million
On August 26, 2020, Atento Brasil entered into a bank credit certificate with Banco ABC Brasil for an amount 50.0 million Brazilian Reais,
maturing on February 22, 2021 with an annual interest rate of CDI plus 2.70% per annum. The balance under the loan agreement as of December 31,
2020 was $9.8 million.
On October 14, 2020, Atento Brasil entered into a bank credit certificate with Banco do Brasil for an amount of 30.0 million Brazilian Reais,
maturing on February 28, 2021 with an annual interest rate of CDI plus 2,127%. As of December 31, 2020, the outstanding balance was $5.8 million.
On December 15, 2020, Atento Brasil entered into a bank credit certificate with Banco ABC Brasil for an amount 35.0 million Brazilian
Reais, maturing on June 14, 2021 with an annual interest rate of CDI plus 2.50% per annum. The balance under the loan agreement as of December
31, 2020 was $6.7million.
Revolving Credit Facility
On August 10, 2017, Atento Luxco 1 S.A. entered into a new Super Senior Revolving Credit Facility (the “Super Senior Revolving Credit
Facility”), which provides borrowings capacity of up to $50.0 million and will mature on February 10, 2022. Banco Bilbao Vizcaya Argentaria, S.A.,
as the Collateral Agent, and BBVA Bancomer, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer, Morgan Stanley Bank N.A.
and Goldman Sachs Bank USA are acting as arrangers and lenders under the Super Senior Revolving Credit Facility.
The Super Senior Revolving Credit Facility may be utilized in the form of multi-currency advances for terms of one, two, three or six
months. The Super Senior Revolving Credit Facility bears interest at a rate per annum equal to LIBOR or, for borrowings in Euros, EURIBOR or, for
borrowings in Mexican Pesos, TIIE plus an opening margin of 4.25% per annum. The margin may be reduced under a margin ratchet to 3.75% per
annum by reference to the consolidated senior secured net leverage ratio and the satisfaction of certain other conditions.
The terms of the Super Senior Revolving Credit Facility Agreement limit, among other things, the ability of the Issuer and its restricted
subsidiaries to (i) incur additional indebtedness or guarantee indebtedness; (ii) create liens or use assets as security in other transactions; (iii) declare
or pay dividends, redeem stock or make other distributions to stockholders; (iv) make investments; (v) merge, amalgamate or consolidate, or sell,
transfer, lease or dispose of substantially all of the assets of the Issuer and its restricted subsidiaries; (vi) enter into transactions with affiliates; (vii)
sell or transfer certain assets; and (viii) agree to certain restrictions on the ability of restricted subsidiaries to make payments to the Issuer and its
restricted subsidiaries. These covenants are subject to a number of important conditions, qualifications, exceptions and limitations that are described
in the Super Senior Revolving Credit Facility Agreement.
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The Super Senior Revolving Credit Facility Agreement includes a financial covenant requiring the drawn super senior leverage ratio not to
exceed 0.35:1.00 (the “SSRCF Financial Covenant”). The SSRCF Financial Covenant is calculated as the ratio of consolidated drawn super senior
facilities debt to consolidated pro forma EBITDA for the twelve-month period preceding the relevant quarterly testing date and is tested quarterly on
a rolling basis, subject to the Super Senior Revolving Credit Facility being at least 35% drawn (excluding letters of credit (or bank guarantees),
ancillary facilities and any related fees or expenses) on the relevant test date. The SSRCF Financial Covenant only acts as a draw stop to new
drawings under the Revolving Credit Facility and, if breached, will not trigger a default or an event of default under the Super Senior Revolving
Credit Facility Agreement. The Issuer has four equity cure rights in respect of the SSRCF Financial Covenant prior to the termination date of the
Super Senior Revolving Credit Facility Agreement, and no more than two cure rights may be exercised in any four consecutive financial quarters.
On March 25, 2020, Atento Luxco 1 S.A. withdrew the full amount of $50.0 million maturing on September 21, 2020 with an annual interest
rate of Libor + 4.25%. On September 21, 2020, the full amount of $50.0 million was rolled over until December 20, 2020, at the same interest rate.
On December 20, 2020, Atento Luxco 1 S.A. repaid $20.0 million and the outstanding $30.0 million as of such date was rolled over and
matures on March 22, 2021.
As of December 31, 2020, we were in compliance with this covenant and the outstanding amount under this facility was $30.0 million.
On September 14, 2017, Atento Luxco 1 S.A. and Atento Brasil S.A. entered into an Agreement for a Common Revolving Credit Facility
Line with Santander Brasil, Estabelecimento Financeiro de Crédito S.A. in respect of bi-lateral, multi-currency revolving credit facilities. Up to $20.0
million of commitments are available for the drawing of cash loans in Euros and Mexican Pesos (MXN). The original borrowers under this facility
are Atento Teleservicios España, S.A.U and Atento Servicios, S.A. de C.V. This facility is guaranteed by Atento Luxco 1 S.A. and Atento Brasil S.A.
on a joint and several basis and matures one year after the date of the Agreement. As of December 31, 2019, the outstanding amount under this
facility was zero. On April 7, 2020, the “2017 Santander Bank Credit Certificate” was terminated by mutual agreement between the parties.
Brazil BNDES Credit Facility
On February 3, 2014, Atento Brasil S.A. entered into a credit agreement with Banco Nacional de Desenvolvimento Econômico e Social -
BNDES (“BNDES”) for an aggregate principal amount of BRL300.0 million (the “BNDES Credit Facility”), equivalent to $109.7 million as of each
disbursement date.
The total amount of the BNDES Credit Facility is divided into five tranches subject to the following interest rates:
Tranche
Tranche A
Tranche B
Tranche C
Tranche D
Tranche E
Interest Rate
Long-Term Interest Rate (Taxa de Juros de Longo Prazo -TJLP) plus 2.5% per annum
SELIC Rate plus 2.5% per annum
4.0% per year
6.0% per year
Long-Term Interest Rate (Taxa de Juros de Longo Prazo -TJLP)
Each tranche intends to finance different purposes, as described below:
· Tranche A and B: investments in workstations, infrastructure, technology, services and software development, marketing and
commercialization, within the scope of BNDES program – BNDES Prosoft.
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· Tranche C: IT equipment acquisition, covered by law 8.248/91, with national technology, necessary to execute the project described for
tranches “A” and “B”.
· Tranche D: acquisitions of domestic machinery and equipment, within the criteria of FINAME, necessary to execute the project
described for tranches “A” and “B”.
· Tranche E: investments in social projects to be executed by Atento Brasil S.A.
BNDES releases amounts under the credit facility once the debtor meets certain requirements in the contract, including delivering the
guarantee (stand-by letter) and demonstrating the expenditure related to the project. Since the beginning of the credit facility, the following amounts
were released:
($ in millions)
Date
March 27, 2014
April 16, 2014
July 16, 2014
August 13, 2014
Subtotal 2014
March 26, 2015
April 17, 2015
December 21, 2015
Subtotal 2015
October 27, 2016
Subtotal 2016
Total
Tranche A
Tranche B
Tranche C
Tranche D Tranche E
Total
11.1
4.7
-
27.6
43.4
5.8
12.0
7.2
25.0
-
-
68.4
5.5
2.4
-
3.0
10.9
1.4
3.0
1.8
6.3
-
-
17.2
7.7
3.3
-
4.4
15.4
2.0
4.3
-
6.3
-
-
21.7
0.5
0.2
-
0.5
1.2
0.2
0.3
-
0.5
-
-
1.7
-
-
0.3
-
0.3
-
-
0.2
0.2
0.2
0.2
0.7
24.8
10.6
0.3
35.5
71.2
9.4
19.6
9.2
38.3
0.2
0.2
109.7
This facility should be repaid in 48 monthly installments. The first payment was made on March 15, 2016 and the last payment would be
due on February 15, 2020, however Atento Brasil S.A. repaid in advance on April 30, 2019 all the outstanding amount. The amount repaid was
BRL61.7 million (equivalent to $15.6 million) plus interest accrued and a penalty of BRL 0.7 million (equivalent to $0.2 million).
The BNDES Credit Facility contains covenants that restrict Atento Brasil S.A.’s ability to transfer, assign, change or sell the intellectual
property rights related to technology and products developed by Atento Brasil S.A., with the proceeds from the BNDES Credit Facility. As of
December 31, 2020, Atento Brasil S.A. was in compliance with these covenants. The BNDES Credit Facility does not contain any other financial
maintenance covenant.
The BNDES Credit Facility contains customary events of default including the following: (i) reduction of the number of employees without
providing program support for outplacement, such as training, job search assistance and obtaining pre-approval of BNDES; (ii) existence of an
unfavorable court decision against the Company for the use of children as workforce, slavery or any environmental crimes and (iii) inclusion in the
by-laws of Atento Brasil S.A. of any provision that restricts Atento Brasil S.A’s ability to comply with its financial obligations under the BNDES
Credit Facility.
On September 26, 2016, Atento Brasil S.A. entered into a new credit agreement with BNDES in an aggregate principal amount of 22,100
million Brazilian Reais, equivalent to $5.7 million as of December 31, 2018. The interest rate of this facility is the Long-Term Interest Rate (Taxa de
Juros de Longo Prazo - TJLP) plus 2.0% per annum. The facility should be repaid in 48 monthly installments. The first payment was due on
November 15, 2018 and the last payment will be due on October 15, 2022. This facility is intended to finance an energy efficiency project to reduce
power consumption by implementing new lightening, air conditioning and automation technology. On November 24, 2017, 6.5 million Brazilian
Reais (equivalent to $1.7 in million) were released under this facility.
As of December 31, 2020, the outstanding amount under BNDES Credit Facility was $0.6 million.
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Lease liabilities
The present value of future lease liabilities is as follow:
($ in millions)
Up to 1 year
Between 1 and 5 years
Total
As of December 31,
2019
2020
Net carrying amount of asset
52.0
142.7
194.8
53.2
99.5
152.7
C. Research and Development, Patents and Licenses, etc.
We believe the “Atento” trademark is a recognized and trusted brand in the CRM BPO services industry in each of the markets where we
operate. We believe we have a strong corporate brand that gives credibility to our products and may offer and facilitate our entrance and growth in
future markets. This also allows us to attract and retain the best talent, to generate a sense of pride in our staff and to develop a relationship of
commitment, confidence and trust with our clients. In December 2012 Atento Spain Holdco S.L.U. purchased all trademarks and domain names
relevant for its business. In relation to copyrights, under the Berne Convention for the Protection of Literary and Artistic Works, copyrights are
recognized in all countries that are signatories to the convention and no other registration or license is required for its use. As of December 2016, all
the countries in which we operate have signed the Berne Convention. We do not have any other material intellectual property such as patents or
licenses.
In 2017, Atento launched its digital business unit under the brand “Atento Digital”. Atento Digital’s mainstream offering encompasses a
wide range of digital capabilities that enhance customer experience and increase efficiency across the customer lifecycle, from acquiring to managing
and retaining customers. Atento Digital’s offer also includes consultancy services and solutions for advancing digital transformation processes while
fully leveraging existing systems. Atento Digital is a trademark registered by Atento.
In 2020, Atento launches its Startup accelerator named “Atento Next”. In line with the objective of having innovation at the center of its
business strategies, Atento Next, will put the company close to the selected startups, to bring even more innovation to the company and its customers.
D. Trend Information
We believe that the following significant market trends are the most important trends affecting our results of operations, and we believe
these will continue to have a material impact on our results of operations in the future.
Trend for Further Outsourcing for CRM BPO Services
In recent years, companies have increasingly sought to outsource certain non-core business activities, such as customer care services and
sales functions, especially in the regions in which we have significant business operations, including Latin America. This trend towards outsourcing
non-core business activities has, in our view, principally been driven by rising costs, competitive pressures and increased operational complexity,
resulting in the need for our clients to outsource these non-core business activities so they can focus on their core competencies. The penetration of
individual clients in the market for CRM BPO services has increased significantly in recent years. We believe there are three main drivers of this
increase: first, existing users of CRM BPO are outsourcing more of their CRM operations to specialist third-party BPO providers; secondly, new
clients are adopting third party solutions for these services versus using in-house solutions, largely to take advantage of lower labor costs, specialist
knowledge and cost efficiencies. Finally, we believe the digital transformation processes that our clients face provide opportunities for Atento to go
deeper in the value chain of our clients and expand the range of services and solutions that we can deliver to these clients, thanks to our expanded
digital and business process automatization capabilities.
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Growth in Our Business Directly Linked to Growth in the Businesses of Key Clients
We structure our contracts with our clients such that, while the price of our services is agreed, the volume of CRM BPO services we deliver
during a particular period is dependent on the performance of our clients’ business. We have significant exposure to the telecommunications and
banking and financial services sectors and our business is dependent upon the continued growth of our clients’ business in these sectors. If the
business of one of our key clients increases and generates more customer activity, our business with that client also increases. Conversely, if the
business of one of our key clients decreases and there is a reduction of customer activity, our business with that client also decreases.
Development of CRM BPO Solutions
This industry is in transition as more complex multi-channel, end-to-end and digital solutions are being outsourced, thus creating an
opportunity for CRM BPO providers, including us, to up-sell and cross-sell our services as well as expand the range of services we provide by
leveraging our digital capabilities. Our vertical industry expertise in telecommunications, banking and financial services and other customer-intensive
industry verticals, allows us to develop tailored solutions for our clients, embedding us further into their value chain while we deliver impactful
business results and increase the portion of our client’s CRM BPO services that we provide. We have proactively diversified and expanded our
solutions offering, increasing their sophistication and developing customized solutions such as means of payment, credit management, trade
marketing, insurance services management and other CRM BPO processes. We expect the share of revenue from CRM BPO solutions to increase
going forward. Most recently we have expanded our digital, business process automatization and business process consulting capabilities to increase
the value we can generate for our clients and to develop a wide range of innovative customer experience solutions adapted to the digital era.
Growth in technologies related to automation
Front-office customer management (CM), or customer experience management, business process outsourcing (BPO) services are rapidly
evolving. This is due to increasing functional and process complexity; prolific use of digital channels (such as mobile applications, social and chat);
and self-service channels. In addition, service innovation is being delivered through key technologies related to automation, such as robotic process
automation (RPA), virtual customer assistants (VCAs), artificial intelligence (AI), advanced analytics and a growing number of interaction channels.
This evolution is taking place while traditional voice-based agent services are going through their own redesign or quasi-evolution, with a keen focus
on customer experience (CX). CM BPO services through technologies that help enable digital services — such as mobile applications, chat and social
CRM — continue to expand, with adoption rates gradually expected to peak through 2019. New opportunities in visual- and video-based services,
enabled through various technologies such as virtual assistants, natural-language processing (NLP), speech analytics and facial recognition, will gain
traction over the next two to three years. The catalysts for the adoption of visual- and video-based services will be technological advancements and
social acceptance driven by millennials and Gen Y.
Hybrid models between human agents and Artificial Intelligence (AI).
Call centers have become a hybrid of customer contact channels, and the future of call centers will see an increased hybrid setting - a mix of
human agents and Artificial Intelligence (AI). As Artificial Intelligence (AI) becomes increasingly sophisticated, more efficient and more accurate,
bringing many advantages to call centers in terms of productivity and cost. This means that the future of call centers requires a mix of AI and human
interaction. The hybrid model will see automation and self-service rise to improve efficiency, with technology like AI chatbots dealing with FAQs
and simple customer questions. Meanwhile, human agents will answer more complicated queries and problem-solving, still providing the
personalized and human centered customer service when needed. In that sense, automation and AI-based tools are currently transforming the CX
outsourcing services landscape and their relevance in the market is only expected to increase in the coming years.
The consolidation of the mix between face-to-face and remote work is expected.
Remote work grew exponentially during the pandemic. The incidence of COVID-19 led many companies to adopt teleworking as a
contingency strategy and this model is currently maintained in organizations. The benefits have gone beyond survival, allowing employees to
optimize their time and improve the balance between their personal and work lives. It has also enabled companies to expand their networks and work
with the most talented people, regardless of where they are; improve infrastructure costs by being able to save on working space; reduce worker
absenteeism and improve productivity, among others. This has allowed the need to have 100% digital processes, as recruitment, selection and training
remotely that allow recruiting and managing resources anywhere. The future is likely to be hybrid, in which part of the operations will be carried out
in contact centers and another part in remote work, allowing providers to take advantage of the best of both worlds.
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Highly skilled and trained agents
All these changes to the future of call centers will naturally mean a change in the role of agents too. As AI takes over the customer service
for the more simple queries, agents will focus on dealing with complex issues. As a result, they will need to have more advanced problem-solving
skills and greater knowledge of the product/service, which means they will require more advanced and detailed training. With data becoming an
increasing part of customer service, agents will also need to have good analytical skills in order to make the most of all of the data they can access in
the CRM.
New Pricing Models for Our CRM BPO Services
We operate in a competitive industry which, from time to time, exhibits pressure on pricing for CRM BPO services. We believe we have a
strong track record in successful pricing negotiations with our clients by offering flexible pricing models with fixed pricing, variable pricing, and
outcome-based pricing if certain performance indicators are achieved, depending on the type of CRM BPO services our clients purchase from us and
their business objectives. We also believe that new contracts will increasingly be based on more outcome-based pricing and hybrid pricing models as
means of making services more transparent, further driving demand for our CRM BPO services. In addition, our service contracts with most of our
key clients include inflation-based adjustments to offset adverse inflationary effects which (depending on the movements in the applicable consumer
price indices (“CPIs”) of the countries in which our clients operate) will have the effect of increasing, if the CPI of an applicable jurisdiction
increases, or decreasing, if the CPI decreases, the employee benefit expenses which we can pass onto our clients. We believe that our flexible pricing
models allow us to maximize our revenue in a price competitive environment while maintaining the high quality of our CRM BPO services.
Potential Customers May be Reluctant to Change Their CRM BPO Service Provider
As companies begin to use the services of CRM BPO services providers more extensively as their businesses grow, they become more
reliant on the CRM BPO services provider because the companies often expand the range and scope of the CRM BPO services which they use. For
example, for the year ended December 31, 2020, 45.8% of our revenue from client groups other than the Telefónica S.A. came from clients that had
relationships with us for ten or more years. Furthermore, for the years ended December 31, 2018, 2019 and 2020, our retention rates (calculated
based on prior year revenue of clients retained in current year, as a percentage of total prior year revenues) were 98.3%, 94.5% and 98.6%,
respectively. We believe it is difficult for clients to switch a large number of workstations to competitors principally because of the following factors:
(i) the extensive training required for the service provider’s employees; (ii) the level of process integration with the provider, which can be time
consuming and costly; and (iii) the potential disruption caused to the client’s customers by introducing a new end-service provider. As a result, absent
a compelling reason to change CRM BPO service provider, such as significant differences in quality or price, companies generally tend to stay with
their CRM BPO services provider, making it difficult for another CRM BPO services provider to acquire the client’s work.
E. Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements other than short-term or low-value leases and guarantees.
The following table shows the decrease in the number of the customer performance guarantees we have provided to third parties for the
indicated periods, in connection with agreements under which we provide our services and as part of our ordinary course of business. Of these
guarantees, as of December 2020 the majority relate to commercial purposes, financial and rental activities, the bulk of the remaining guarantees
relates to tax and labor related procedures.
The Company’s directors consider that no contingencies will arise from these guarantees in addition to those already recognized.
There has not been any material instance of a guarantee, outside of the ordinary course of the business, being drawn upon for the periods
indicated, nor does management anticipate any liability as a result of a draw upon a guarantee in the future.
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($ in millions)
Guarantees
Financial, labor-related, tax and rental transactions
Other
Total
F. Tabular Disclosure of Contractual Obligations
2018
As of December 31,
2019
2020
125.4
257.8
383.3
152.3
198.3
350.6
119.4
188.0
307.4
The following table presents our expected future cash outflows resulting from debt obligations, lease liabilities, operating lease obligations
and other long-term liabilities as of December 31, 2020.
($ in millions)
Debt obligations
Lease liabilities
Derivative financial instrument
Trade and other payables
Total
As of December 31,
Payments due by period
Total
Less than 1
year
1-3 years
3-5 years
More than 5
years
561.3
179.1
5.2
140.1
885.6
30.6
52.7
-
135.8
219.1
530.6
97.5
5.2
4.3
637.7
-
12.1
-
-
12.1
-
16.7
-
-
16.7
Debt obligations are comprised of bonds and bank loans (as of December 31, 2020; see Note 17 to the Atento’s consolidated financial
statements). The bonds consist of Senior Secured Notes, and bank loans are mainly comprised of the Super Senior Revolving Credit Facility, Banco
Nacional de Desenvolvimento Economico e Social (BNDES), Banco ABC, Banco Santander, Banco do Brasil, Banco De Lage Landen and overdraft
lines.
We enter into lease arrangements related to properties, furniture, tools and other tangible assets. Our assets acquired under finance leases are
located in Brasil and Peru.
G. Safe Harbor
See the disclaimer with respect to Forward-Looking Statements.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
Below is a list of the names and ages of Atento’s executive officers and directors and a brief account of the business experience of each of
them.
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Name
Carlos López-Abadía
José Azevedo (1)
Virginia Beltramini Trapero
Gustavo Tasner (3)
Cathrine Jooste (2)
Dimitrius de Oliveira
José María Pérez Melber
(1) Joined as of November 11th, 2019.
(2) Joined as of January 2nd, 2020.
(3) Joined as of November 4th, 2019.
Name
Carlos López-Abadía
Antonio Viana-Baptista
John Madden (1)
Thomas Iannotti
Roberto Rittes (2)
Antenor Camargo (3)
David Garner
Robert W. Payne (4)
(1) Joined as of June 24th, 2020.
(2) Joined as of June 24th, 2020.
(3) Joined as of June 24th, 2020.
(4) Joined as of October 16th, 2020.
Our Executive Officers
Age
Position
58 Chief Executive Officer and Director
47 Chief Financial Officer
48 Chief Legal Officer
52
Chief Operations Officer and South America Regional
Director
46 Commercial Director and US Nearshore Regional Director
48 Brazil Regional Director
49
Spain Director
Age
Position
58 Director
63 Director
47 Director
63 Director
46 Director
35 Director
63 Director
62 Director
Carlos López-Abadía, Chief Executive Officer and Director. Mr. López-Abadía boasts a long-standing international professional career in
the technology, consulting and digital transformation sectors at the global level. His successful professional career spans over thrity years. Prior to his
appointment as Atento’s Chief Executive Officer, he served as DXC Technology’s Vice President and General Manager Consulting, responsible for
digital transformation advisory services, including strategic partnerships in the consulting domain. Previously he served as Vice President Global
Services for Misys where he led the transformation of the services and software support business and managed a global service delivery network
based in major global financial centers and offshore locations. Prior experience also includes, Managing Partner at Accenture and leadership
positions at Level 3, McKinsey&Co and AT&T. He holds an MS in electrical engineering from Purdue University and an MBA from Washington
University, where he was a Charles F. Knight Scholar. He has recently been named to the Hispanic IT Executive Council’s HITEC Top 100, Class of
2017-2018, for his career achievements in information technology.
José Azevedo, Chief Financial Officer. José Azevedo joins Atento with 15 years of experience managing global financial operations from C-
suite and Board positions. He has steered major financial turnarounds and corporate mergers at high-profile organizations while implementing
financial and business development strategies that drove value for all stakeholders of these companies. Before joining Atento, Mr. Azevedo served as
Chief Financial Officer and Investor Relations Officer at Unidas, Brazil’s largest fleet management provider and the country’s second-largest car
rental company. From 2016 to 2017, he served as Country Manager Brazil for Softline Group, a leading global IT solutions and services provider
focused on emerging markets. Prior to that role, Mr. Azevedo was Chief Executive Officer at Globalweb Data Services in 2015 and Chief Financial
Officer at this company from 2014 to 2015. He also served as Chief Financial Officer of Estre Ambiental from 2013 to 2014 and held several
leadership positions at Latam Airlines from 2008 to 2013.Mr. Azevedo holds an MBA from Hamburg University, a BBA from the Automous
University of Lisbon, and has CBA training in finance and management from Harvard University.
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Virginia Beltramini Trapero, Chief Legal Officer. Virginia has more than thirteen years of experience in management positions in the legal
field, in large companies from different sectors. Prior to joining Atento, she held the position of Director of Legal Advice, at Oesia, a multinational
consultancy specialized in technology, present in Spain and Latin America, where she was responsible for the legal and corporate governance of the
group. Previously, she held management positions at Grupo Lar and Metrovacesa, and worked as a lawyer for 5 years at the firm EY, at its offices in
Madrid and New York. She joined Atento in July 2011 and from that date until March 2017 she held the position of Corporate Legal Director. As of
March 2017, she was named General Counsel and Secretary of the Board. Virginia has a degree in Law and Legal Practice and a holds a Master's
Degree in Legal Business Consulting from the IE Business School.
Gustavo Tasner, Chief Operations Officer and South America Regional Director, Has +25 years career leading business service operations in
the North and Latin America regions. Before joining Atento, Mr. Tasner served 14 years at Capgemini, where he drove significant operational
transformations, developed digital capabilities and held key positions, such as Head of Business Services Operations for the Americas overseeing 10
delivery centers in the US, Canada, Brazil and Guatemala and servicing 22 countries. Prior to that he was Head of LatAm Operations for Capgemini
Business Services and lead Delivery Operations for Capgemini Latin America BPO division among others. Prior to Capgemini, Mr. Tasner spent 17
years in management roles in the financial services and automotive industries mainly, where he was actively involved in the development of high-
profile finance and HR projects as well as company start-ups. Mr. Tasner holds a BA in Economics from Universidad Argentina de la Empresa
(UADE), a Masters in Industrial Business Administration from Universidad Católica Argentina (UCA) & EOI (Madrid), and an Advanced
Management Program certification from IAE Business School in Argentina.
Cathrine Jooste, Chief Commercial Officer and USNS Director, has a successful career spanning over 20 years in the technology and
consultancy industries. Before joining Atento, she worked as the Microsoft Offering General Manager at DXC Technology. Prior to that, she worked
at companies such as Computer Sciences Corporation (CSC), Cognizant Technology Solutions, Systems West Computer Resources, Avanade and
Accenture, always working to build and grow her teams successfully within the different global commitments with the clients. Cathrine holds a
Bachelor's of Science in Business Administration and Information System Management from the University of Florida.
Dimitrius de Oliveira, Brazil Regional Director. Dimitrius has more than 20 years’ experience in the technology and business services
sectors leading sales, after-sales and operations functions for multinational companies such as Atento, Avaya, Ericsson, Nokia, Siemens, Genesys and
Contax. Most recently he has served as Vice President of Operations for Mutant, former Genesys Prime, a leading provider of digital customer
experience solutions in Brazil. Before joining Mutant, de Oliveira served as Atento Global Commercial Director and Brazil Multisector Director from
2015 to 2017. Dimitrius de Oliveira has a degree in engineering, with a specialization in building and leading customer centric organizations, from
Harvard Business School, as well as an MBA in Marketing from ESPM School of Advertising and Marketing, a specialization in Leadership from the
São Paulo Business School and an electrical engineering degree from Universidade de Mogi das Cruzes in Brazil.
José María Pérez Melber, Spain Director. José María is a renowned professional with over twelve years’ general management experience in
the services industry and the CRM/BPO sector in particular. He joined Atento in 2014 as Director of EMEA to lead all company activities in the
region. Prior to joining Atento, Jose María Pérez worked as General Director of Operations and was a member of the Management Committee of
Orange Spain, leading customer service, customer loyalty and retention, as well as billing and credit management at the company. José María was
previously General Manager for Southern Europe, Latin America and North Africa for Transcom, a BPO/CRM sector company at which he worked
for most of his career. Before joining Transcom, José María led marketing and customer relationships departments in the insurance sector for Mapfre
and Hannover International. José María holds a degree in Business Administration from the Pontifical University of Salamanca.
Our Directors
We believe that our board of directors is, and we intend that it continue to be, composed of individuals with sophistication and experience in
many substantive areas that impact our business. We believe that all of our current board members possess the professional and personal
qualifications necessary for board service, and have highlighted the specific experience, qualifications, attributes, and skills that led to the conclusion
that each board member should serve as a director in the individual biographies below (information with respect to Mr. López-Abadía, our Chief
Executive Officer and a member of our board of directors, is set forth above).
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Antonio Viana-Baptista, Director. Mr. Viana-Baptista boasts a long-standing and distinguished career in the telecommunications, technology
and investment banking sectors as well as in strategic consultancy. He has been over the years an active investor and advisor in technology
companies. Most recently, he held the role of Credit Suisse Senior Advisor for Portugal and from 2011 to 2015, Chief Executive Officer for Spain
and Portugal. Before joining Credit Suisse, he spent over a decade in a number of chief executive roles at Telefonica, including CEO of Telefonica
International, Telefonica Spain and Chairman and CEO of Telefonica Moviles among others. Prior to this, he spent seven years at Banco Portugues
de Investimento (BPI) as an Executive Board member and was a Partner in the Iberia office of McKinsey & Co. He is currently a Non-Executive
Board member at Semapa and Jeronimo Martins. Mr. Viana-Baptista holds a degree in Economics and a Master’s in European Economics from
Universidad Catolica Portuguesa and an M.B.A. from INSEAD.
Roberto Rittes, Director.Mr. Rittes is the CEO of Nextel Telecom. Prior to joining Nextel, Mr. Rittes was a principal at H.I.G. Capital, a
leading global private equity firm. He also served as COO of Boa Vista Serviços, a Brazilian credit bureau managed by TMG Capital, as CFO of
Estre Ambiental, an environmental services group managed by BTG and Angra, and as key officer for Brazilian telecom companies Brasil Telecom
and Oi. Mr. Rittes has a Master’s degree in Business Administration from Harvard Business School and a Bachelor degree s in Business
Administration (BBA) with a focus in Public Administration from Fundação Getulio Vargas in Sao Paulo, Brazil (FGV).
Thomas Iannotti, Director. Mr. Iannotti has served as a member of our board of directors since November 2014. Mr. Iannotti has extensive
international experience, including direct leadership of HP’s services business in Latin America. Prior to his retirement in 2011, Mr. Iannotti served
as Senior Vice President and General Manager of HP Enterprise Services which provides applications, business process and infrastructure technology
outsourcing services, consulting and support to business and government clients around the world. During his last two roles at HP, he was directly
responsible for, and had significant exposure to, Latin America, focused on Brazil, Argentina, Chile, Columbia and Costa Rica. Earlier in his career,
Mr. Iannotti served as the Vice President and General Manager of Customer Service for the EMEA region at Compaq Computers. Mr. Iannotti holds
a BA from Rhode Island College. He also pursued a management development program from Harvard Business School in 1993.
Robert W. Payne, Director. Bill Payne has over 30 years of executive and management experience in both small, entrepreneurial, and large
corporate environments and cultures, having also served in several non-executive, mentoring, advisory and consulting roles. In addition to his current
roles at several global start-up companies, such as Room Rocket, Usable Media and Excello, he is a board mentor at Critical Eye, a venture capitalist
with UK-based Octopus Investments. He is an experienced Non-Executive Director and Chair as well as a visiting Professor at several business
schools, including Lancaster University, Henley Management School, Lyon Business School and the University of Surrey, where he was President of
the Surrey Business School MBA program. Earlier in his career, Mr. Payne was a senior executive at IBM, where he held leadership roles in
consulting, strategy and process outsourcing in Europe and other geographies, including as General manager of the Global Customer Experience
(CRM) Outsourcing Group. Mr. Payne also leads his own strategic consultancy Acadameus, which advises start-ups, mid-caps and high-growth
companies.
John Madden, Director. Mr. Madden is a Managing Director at HPS Investment Partners. Mr. Madden built his career in global financial
institutions in the US and UK. He spent 16 years at Arcapita, a private equity firm, where he worked in both the US and London offices. Mr. Madden
holds a BA in Political Economy from Williams College.
David Garner, Director. From 2013 through March 2016, Mr. Garner served as executive Chairman and a member of the board of directors
of BellSystem24. From 2010 through 2013, he served as Chairman and Chief Executive Officer of Sitel Worldwide. From 1998 through 2003, Mr.
Garner was President and Chief Executive Officer of SHPS, Inc. Mr. Garner currently serves as a member of the board of directors of National
Directory Assistance, LLC. He holds a B.A. in Technical Communications from Louisiana Tech University.
Antenor Camargo, Director. Mr. Camargo is Co-Founder of Farallon Capital Latin America, part of Farallon Capital Management. Prior to
joining Farallon, Antenor was co-founding partner at FKG Capital, a hedge fund focused on Latin America and founded in 2011 in partnership with
Farallon and Daniel Goldberg (former CEO of Morgan Stanley in Brazil). Antenor earned his Bachelor’s in Business Administration (BBA) with a
focus in Business Administration, Management and Finance from Fundação Getulio Vargas in Sao Paulo, Brazil (FGV).
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B. Compensation
Long-Term Incentive Plan
Effective as of October 2014, Atento adopted the 2014 Omnibus Incentive Plan (the “2014 Incentive Plan” or “the Plan”). The plan provides
for grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards. Directors, officers and
other employees of Atento and its subsidiaries, are eligible for grants under the Plan.
On July 3, 2017, Atento granted a new share-based payment arrangement to directors, officers and other employees, for the Company and its
subsidiaries (a total of 886,187 RSUs) in a one-time award with a three-year vesting period.
On July 2, 2018, Atento granted a new share-based payment arrangement to directors, officers and other employees, for the Company and its
subsidiaries (a total of 1,065,220 RSUs) in a one-time award with a three-year vesting period.
On March 1, 2019, Atento granted a new share-based payment arrangement to Board directors and an Extraordinary Grant (a total of
109,785 and 704,057 RSUs, respectively) for a total in a one-time award with a one-year vesting period.
On March 1, 2019, Atento granted a new share-based payment arrangement to Board directors (a total of 238,663 RSUs) in a one-time
award with a five-year vesting period of 20% each year.
On June 3, 2019, Atento granted a new share-based payment arrangement to directors, officers and other employees, for the Company and
its subsidiaries (a total of 2,560,666 RSUs) in a one-time award with a three-year vesting period.
As of January 2, 2020, a total of 1,305,065 TRSUs vested, which is composed of 443,490 RSUs of the 2017 Plan, 109,785 RSUs of the
Board of directors Plan, 704,057 RSUs of the Board and Extraordinary Plan and 47,733 RSUs of the 20% of the 5 Years Plan.
On March 2, 2020, Atento granted a new share-based payment arrangement to Board directors and an Extraordinary Grant (a total of
153,846 and 16,722 RSUs, respectively) for a total in a one-time award with a one-year vesting period.
On July 28, 2020, a Reverse Share Split occurred according to the Company’s Extraordinary General Meeting of Shareholders. The
Company’s shareholders have approved a conversion of the Company’s entire share capital of 75,406,357 ordinary shares into 15,000,000 ordinary
shares, without nominal value, using a ratio of conversion of 5.027090466672970, impacting in the number of RSUs agreed in the signed contract on
the Grant date of the plans in force until that time.
On August 3, 2020, Atento granted a new share-based payment arrangement composed by Stock Options and a Long-Term Performance
Award to directors, officers and other employees, for the Company and its subsidiaries a total of 1,524,065 SOPs with a 1/3 per year vesting
conditions and a Performance Award of USD 4,305,100 linked to the degree of achievement of the objective – 3-year average EBITDA margin
(external view / as reported) and the possibility to opt to receive part of this incentive in shares – at least 50% in a one-time award respectively.
On August 3, 2020, Atento granted a new share-based payment arrangement composed by Stock Options to directors as an Extraordinary
Grant (a total of 195,000 SOPs) for a total in a one-time award with a three-year vesting period.
As of December 31, 2020, there are 105,728 Time RSUs outstanding related to 2018 Grant, 37,981 Time RSUs outstanding related to 2019 –
Plan 5Y Grant, 424,373 Time RSUs outstanding related to 2019 Grant and 30,604 and 3,327 Time RSUs outstanding related to 2020 Board and
Extraordinary Grant. Holders of RSUs will receive the equivalent in shares of Atento S.A. without cash settlement of stock values when the RSUs
vest.
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Compensation of Atento’s Board Directors, Chief Executive and Other Executive Officers
Atento has established a Compensation Committee that is responsible for the administration of the compensation policies, plans and
programs in alignment with the Company’s compensation strategy.
This committee is also responsible for reviewing and approving: the compensation package for Atento’s Board Directors, Chief Executive
and Other Executive Officers; any employment agreements and other similar arrangements between Atento and the executive officers; and the
administration of stock option plans and other incentive compensation plans.
Atento’s Compensation Committee consists of John Madden and Thomas Iannotti. Our board of directors adopted a written charter for the
Compensation Committee, which is available on our corporate website at www.atento.com.
The approximate aggregated annual total cash received by all executive Board Director and Executive Officers for the year ended December
31, 2020, was $4.3 million.
C. Board Practices
Board of Directors Composition
Our board of directors is divided into three classes of directors, with the classes as nearly equal in number as possible. As a result,
approximately one third of our board of directors will be elected each year. The classification of directors will have the effect of making it more
difficult for stockholders to change the composition of our board.
Our board of directors consists of eight members and it is composed by Thomas Iannotti and David Garner, as class I directors; Antenor
Camargo, Carlos López-Abadía and Roberto W. Payne as class II directors and Antonio Viana, John Madden and Roberto Rittes as class III directors.
Unless revoked in accordance with the Articles of Association, the term of office of the class I directors shall expire at the first annual
meeting of shareholders occurring after the date of publication of the general meeting of shareholders taken on September 29, 2014 (the “Filing
Date”); the term of office of the class II directors shall expire at the second annual meeting of shareholders occurring after the Filing Date; and the
term of office of the class III directors shall expire at the third annual meeting of shareholders occurring after the Filing Date. At each annual meeting
after the first annual meeting of shareholders occurring after the Filing Date, each director appointed to the class of directors expiring at such annual
meeting shall be appointed to hold office until the third succeeding annual meeting and until his or her successor shall have been duly elected and
qualified, or until his or her earlier death, resignation, removal or retirement.
Foreign Private Issuer
We are exempt from certain corporate governance requirements, including the requirements:
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· that a majority of our board of directors consists of “independent directors,” as defined under the rules of the New York Stock Exchange;
· that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter
addressing the committee’s purpose and responsibilities;
· that we have a Compensation Committee that is composed entirely of independent directors with a written charter addressing the
committee’s purpose and responsibilities; and
· for an annual performance evaluation of the nominating and governance committees and Compensation Committee.
These exemptions do not modify the independence requirements for our Audit Committee requiring it to be comprised exclusively of
independent directors, and we comply with the applicable requirements of the Sarbanes-Oxley Act and rules with respect to our Audit Committee
within the applicable time frames. These rules require that our Audit Committee be composed of at least three members.
As a foreign private issuer, under the corporate governance standards of the New York Stock Exchange, foreign private issuers are permitted
to follow home country corporate governance practices instead of the corporate governance practices of the New York Stock Exchange. Accordingly,
we follow certain corporate governance practices of our home country, Luxembourg in lieu of certain of the corporate governance requirements of the
New York Stock Exchange. Specifically, we do not have a board of directors composed of a majority of independent directors or a Compensation
Committee or Nominating and Corporate Governance Committee composed entirely of independent directors.
As a foreign private issuer, we are exempt from the rules and regulations under the Exchange Act, related to the furnishing and content of
proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short swing profit recovery provisions
contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly and current reports and
financial statements with the SEC as frequently or as promptly as domestic companies whose securities are registered under the Exchange Act.
Board Committees
Our board of directors established an Audit Committee and a Compensation Committee. The composition, duties and responsibilities of
these committees is as set forth below. In the future, our board may establish other committees, as it deems appropriate, to assist it with its
responsibilities.
Audit Committee. The Audit Committee is responsible for, among other matters: (1) appointing, compensating, retaining, evaluating,
terminating and overseeing our independent registered public accounting firm; (2) discussing with our independent registered public accounting firm
their independence from management; (3) reviewing with our independent registered public accounting firm the scope and results of their audit; (4)
approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; (5) overseeing the
financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial
statements that we file with the SEC; (6) reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls
and compliance with legal and regulatory requirements; (7) overseeing our legal compliance process; (8) establishing procedures for the confidential
anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters; and (9) reviewing and approving related
party transactions.
Our Audit Committee consists of Antonio Viana, David Garner and Thomas Iannotti. Our board of directors has determined that Antonio
Viana qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5)(ii) of Regulation S-K. Our board of directors
adopted a written charter for the Audit Committee, which is available on our corporate website at www.atento.com.
Compensation Committee. The Compensation Committee is responsible for, among other matters: (1) reviewing key associate compensation
goals, policies, plans and programs; (2) reviewing and approving the compensation of our directors, chief executive officer and other executive
officers; (3) reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and (4) the
administration of stock plans and other incentive compensation plans.
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Our Compensation Committee consists of John Madden and Thomas Iannotti. Our board of directors adopts a charter for the Compensation
Committee, which is available on our corporate website at www.atento.com.
Compensation Committee Interlocks and Insider Participation
No interlocking relationships exist between the members of our board of directors and the board of directors or Compensation Committee of
any other company.
Code of Ethics
We have adopted a Code of Ethic (the “Code”) applicable to all of our directors, officers and employees, including our principal executive
officer, principal financial officer and accounting officers, and all persons performing similar functions. A copy of the Code is available on our
corporate website at www.atento.com. We will provide any person, without charge, upon request, a copy of our Code. Such requests should be made
in writing to the attention of our Legal Global Director at the following address: C/ Santiago de Compostela, 94, 9th Floor, 28035, Madrid, Spain.
D. Employees
For the year ended December 31, 2020, our average and period end numbers of employees, excluding internships, were 139,805 and
145,166, respectively. The following table sets forth the average number of employees, excluding internships, we had on a geographical basis for
2018, 2019 and 2020.
Brazil
Americas
EMEA
Corporate
Total
2018
Yearly Average
2019
2020
81,158
60,463
11,345
72
153,038
79,430
57,357
12,267
75
149,129
71,234
56,021
12,457
93
139,805
For the year ended December 31, 2020, an average of 88.5% of our staff had permanent employment contracts as compared to an average of
87.2% as of December 31, 2019 and 88.1% as of December 31, 2018.
We believe that our people are key enablers to our business model and a strategic pillar to our competitive advantage. We focus on
reinforcing our culture named “One Atento” and it defines our way of doing business: as a global company, with the strength of a united team, to
leverage our leading position in the market.
Our culture is sustained by five values: (i) Integrity, (ii) Accountability, (iii) Agility, (iv) Customer Orientation and (v) One Team. These
values guide our actions in order to make our Change Agenda a reality and help us deliver our mission. The critical success factor is to ensure that
our entire leadership is aligned with the drivers of our culture that best fit into our business strategy and vision.
As a result of that, we received different certifications in 2020 such as Top Employers in Brazil and Spain, and Best Place to Work in Spain
by Forbes.
Incentive Model
Atento has established an incentive model in alignment with the Company’s strategy using as the key drivers (i) the creation of shareholder
value, (ii) increased growth in our business (especially with new clients), (iii) business profitability.
To pursue the delivery of our strategic goals, we periodically evaluate the contribution and development of our employees. The evaluation of
our employees is performed in our annual management review, which impacts many performance management processes, including compensation
reviews, training and development initiatives and mobility moves. The management review process is based on reviewing an employee’s
performance, competencies and potential assessment (i.e., director, managers and leaders).
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Our compensation model is principally driven by our vision and mission, organizational culture, external and internal environment, business
strategy and our organizational model. These considerations are translated into a “Total Compensation Model,” under which we consider
compensation, benefits, work/life balance, performance and recognition, development and career opportunities to attract, retain, engage and motivate
our current and future employees. The main pillars of the model, particularly in relation to structure personnel, are job grading methodology, base
salary, bonus scheme, long-term incentives, international mobility and other benefits.
Talent Attraction and Development
A specialized team ensures value generation through the incorporation of the required talent to realize the strategy of our company. Our
methodology consists in a global selection process with common phases for each profile and a consistent methodology, as well as integrated selection
tools and systems with well- defined criteria in identifying desired employee profiles. This integrated approach allows us to create a consistent
selection process across geographies, promoting adherence of new employees to our core values, with the ultimate goal of improving business
performance.
We develop a high performance workforce that drives organizational goals, promoting and facilitating individual and organizational
effectiveness through the design and implementation of programs that reinforce Atento’s commitment to employee development and company
enrichment. We also work to enhance Atento’s employee experience in order to count on the best and most engaged team, that guarantees business
results and an excellent customer experience.
Employee Satisfaction
Employee’s satisfaction and engagement level is important to us. Thus, we have deployed the Internal Engagement Survey. This survey
measures perceptions of employees about the work environment. In 2020, 113,388 people answered it.
The Employee Net Promote Score (eNPS) is a method of measuring how willing your employees to recommend their workplace to their
family or friends. An eNPS score can range from -100 to 100. Generally, a score of 50 is excellent. In Atento, the 2020 eNPS was 58%.
Labor/Collective Negotiation
We closely monitor the management of labor relations and it is an important element for the success of our business and results of
operations.
As of December 31, 2020, we had in place collective bargaining agreements in six countries, including Argentina, Brazil, Chile, Uruguay,
Mexico and Spain, which govern our relationships with most of the employees in those countries. As of December 31, 2020, 74.3% of our employees
were under collective bargaining agreements. See “Item 3. Key Information—D. Risk Factors—Internal Risks—If we experience challenges with
respect to labor relations, our overall operating costs and profitability could be adversely affected and our reputation could be harmed”. Our
collective bargaining agreements are generally renegotiated on every one-to-three years with the principal labor unions in the countries where we
have such agreements. In general, the collective bargaining agreements include terms that regulate remuneration, minimum salary, salary
complements, overtime, benefits, bonuses and partial disability.
In Brazil, our most important collective bargaining agreement is in São Paulo, and it is re-negotiated every year. In 2020, due to the
pandemic, there was no raise salaries.
In Mexico, our most significant collective bargaining agreement, in terms of number of employees, is in Mexico City and it is re-negotiated
every year. In 2020, a 3.5% salary increase was agreed for all employees under the collective bargaining agreement, compared to a 4.7% increase in
2019 and a 5% increase in 2018.
In Spain, there is a collective bargaining agreement for all contact center companies in the country, which is negotiated through the
“Asociación de Contact Center Española,” a committee comprised of representatives from five of the six largest contact center companies in Spain,
of which we are one. The current collective bargaining agreement is automatically renewed unless a union opposes it, requesting a change in any of
the current terms.
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Termination benefits
Termination benefits are paid to employees when the Atento Group decides to terminate their employment contracts prior to the usual
retirement age or when the employee agrees to voluntarily resign in exchange for these benefits. The Atento Group recognizes these benefits as an
expense for the year, at the earliest of the following dates: (a) when the Atento Group is no longer able to withdraw the offer for these benefits; or (b)
when the Atento Group company recognizes the costs of a restructuring effort as per IAS 37, “Provisions, Contingent Liabilities and Contingent
Assets”, and when this restructuring entails the payment of termination benefits. When benefits are offered in order to encourage the voluntary
resignation of employees, termination benefits are measured on the basis of the number of employees expected to accept the offer. Benefits to be paid
in more than twelve months from the reporting date are discounted to their present value.
E.
Share Ownership
In July 2013, the Shareholders of Atento Group implemented a Management Incentive Plan (the “MIP”) pursuant to which certain of the
Group’s senior management are granted the opportunity to invest in the Group. The eligibility of managers to participate is determined by the
Compensation Committee of the Company.
In June 27, 2019, the Management Incentive Plan was dissolved by its shareholders, being the shares pertaining to each of the eligible
managers also liquidated.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
Beneficial ownership for the purposes of the following tables is determined in accordance with the rules and regulations of the SEC. These
rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or
to dispose or direct the disposition thereof or has the right to acquire such powers within 60 days. Shares subject to options that are currently
exercisable or exercisable within 60 days of December 31, 2020 are deemed to be outstanding and beneficially owned by the person holding the
options. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Percentage
of beneficial ownership of our ordinary shares is based on ordinary shares outstanding as of December 31, 2020. Except as disclosed in the footnotes
to this table and subject to applicable community property laws, we believe that each shareholder identified in the table possesses sole voting and
investment power over all ordinary shares shown as beneficially owned by the shareholder. Unless otherwise indicated in the table or footnotes
below, the address for each beneficial owner is C/ Santiago de Compostela, 94, 9th floor, 28035, Madrid, Spain.
As of December 31, 2020, Atento had 15,000,000 ordinary shares. The table below presents certain information of December 31, 2020,
regarding (i) any person known to us as the owner of more than 5% of our outstanding ordinary shares, (ii) the total amount of ordinary shares owned
by the members of our Board of Directors and Executive Officers, and (iii) any person that were Executive Officer during 2020:
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Name
Principal Shareholder (1):
HPS Investment Partners, LLC
GIC Asset Management Pte., LTD
Farallon Capital Mangement, LLC
Santa Lucia Asset Management, SGIIC, SA
Executive Officers and Directors (2):
Virginia Beltramini Trapero
Carlos Lopez-Abadía
Dimitrius de Oliveira
José María Pérez Melber
Antonio Viana-Baptista
Thomas Iannotti
David Garner
Shares Beneficially Owned
Number of Shares
Percentage
3,804,729
3,278,035
2,230,357
851,721
-
2,091
76,513
-
5,466
4,173
54,606
80,685
25.36%
21.85%
14.87%
5.68%
-
0.01%
0.51%
-
0.04%
0.03%
0.36%
0.54%
(1)
(2)
Addresses on main shareholders are reported by the principal shareholders through 13G/A and SC13D.
Addresses on Executive Officers and Directors are: 1, rue Hildegard Von Bingen, 1282, Luxembourg, C/ Santiago de Compostela 94, 28035,
Madrid and Rua Paul Valery, 255, 8º andar, CEP 04719-050 | São Paulo/SP | Brasil
B. Related Party Transactions
2014 Incentive Plan
We adopted the 2014 Omnibus Incentive Plan (the “2014 Incentive Plan”). The 2014 Incentive Plan provided for grants of stock options,
stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards. Directors, officers and other employees of us and
our subsidiaries, as well as others performing consulting or advisory services for us, are eligible for grants under the 2014 Incentive Plan. The
purpose of the 2014 Incentive Plan is to provide incentives that will attract, retain and motivate high performing officers, directors, employees and
consultants by providing them with appropriate incentives and rewards either through a proprietary interest in our long-term success or compensation
based on their performance in fulfilling their personal responsibilities.
Limitations of Liability and Indemnification Matters
We have entered into indemnification agreements with each of our current directors and executive officers. These agreements will require us
to indemnify these individuals to the fullest extent permitted under Luxembourg law against liabilities that may arise by reason of their service to us,
and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We also intend to enter into
indemnification agreements with our future directors and executive officers.
Policies and Procedures with Respect to Related Party Transactions
We have adopted policies and procedures whereby our Audit Committee and Compliance Committee is responsible for reviewing and
approving related party transactions. In addition, our Code of Ethics requires that all of our employees and directors inform the Company of any
material transaction or relationship that comes to their attention that could reasonably be expected to create a conflict of interest. Further, at least
annually, each director and executive officer is required to report any business relationship that may give rise to a conflict of interest and all
transactions in which we are involved and in which the executive officer, a director or a related person has a direct or indirect material interest.
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C.
Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
Consolidated Financial Statements
See “Item 18. Financial Statements”, which contains our audited consolidated financial statements prepared in accordance with IFRS as
issued by IASB.
Legal Proceedings
In March 2018, Atento Brasil S.A. an indirect subsidiary of Atento S.A. received a tax notice from the Brazilian Federal Revenue Service,
related to Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL) for the period from 2012 to 2015, due to the disallowance of
the expenses on tax amortization of goodwill the deductibility of certain financing costs originated of the acquisition of Atento Brasil S.A. by Bain
Capital in 2012, and the withholding taxes on payments made to certain of our former shareholders.
The amount of the tax assessment from the Brazilian Federal Revenue Service, not including interest and penalties, was approximately
$105.3 million, and was assessed by the Company’s outside legal counsel as possible loss. We disagree with the proposed tax assessment and we are
defending our position, which we believe is meritorious, through applicable administrative and, if necessary, judicial remedies. On September 26,
2018, the Federal Tax Office issued a decision accepting the application of the statute of limitation on the withholding tax discussion. We and the
Public Attorney appealed to the Administrative Tribunal (CARF). On February 11, 2020, CARF issued a partially favorable decision, ruling in favor
of Atento, recognizing the application of the statute of limitation on the withholding tax discussion and reducing the penalty imposed. On September
18, 2020, the decision issued by CARF become final. Thus, the amount at stake, not including interest and penalties was reduced from $105.3 million
to $69.3 million. Based on our interpretation of the relevant law and based on the advice of our legal and tax advisors, we believe the position we
have taken is sustainable. Consequently, no provisions are recognized regarding these proceedings.
Afterward of the issuance of the tax notice in March 2018, the Brazilian tax administration started a procedure to audit the Corporate Income
Tax (IRPJ) and Social Contribution on Net Income (CSLL) of Atento Brasil S.A. for the period from 2016 to 2017. This tax audit was concluded on
July 10, 2020 with the notification of a tax assessment that reject the deductibility of the above-mentioned financing expenses and the deductibility of
the tax amortization of goodwill.
The tax assessment notified by the Brazilian Federal Revenue Service was approximately $60.0 million, including penalties and interest.
Company’s external legal advisors considered $45.7 million as possible loss while the remaining $14.2 million was assessed as remote loss. We
disagree with the proposed tax assessment and we are defending our position, which we believe is meritorious, through applicable administrative and,
if necessary, judicial remedies.
Tax Litigation
As of December 31, 2020, Atento Brasil is party to 42 disputes ongoing with the tax authorities and social security authorities for various
reasons relating to infraction proceedings filed (29 on December 31, 2019) which, according to the Company’s external attorneys, materialization of
the risk event is possible. The total amount of these claims is $38.2 million ($36.5 million on December 31, 2019).
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Labor Litigation
Brazil
At December 31, 2020, Atento Brasil was involved in 9,208 labor-related disputes (9,408 labor as of December 31, 2019), being 9,054 of
labor massive and 41 of outliers and others, filed by Atento’s employees or ex-employees for various reasons, such as dismissals or claims over
employment conditions in general. The total amount of the main claims classified as possible was $33.6 million ($62.5 million on December 31,
2019), of which $18.9 million Labor Massive-related, $1.6 million Labor Outliers-related and $13.1 million Special Labor cases related.
Civil Litigation
As of December 31, 2020, Atento Brasil S.A. is party to 10 civil lawsuits ongoing for various reasons (5 on December 31, 2019) which,
according to the Company’s external attorneys, materialization of the risk event is possible. The total amount of the claims is $3.5 million ($2.4
million on December 31, 2019).
Dividend Distributions
Although we are well capitalized and have sufficient liquidity, our ability to pay dividends on our ordinary shares is limited in the near-term
by the indenture governing our Senior Secured Notes (6% of the Company’s market value), and may be further restricted by the terms of any of our
future debt or preferred securities. In addition, under Luxembourg law, at least 5% of our net profits per year must be allocated to the creation of a
legal reserve until such reserve has reached an amount equal to 10% of our issued share capital. If the legal reserve subsequently falls below the 10%
threshold, 5% of net profits again must be allocated toward the reserve until such reserve returns to the 10% threshold. If the legal reserve exceeds
10% of our issued share capital, the legal reserve may be reduced. The legal reserve is not available for distribution. Additionally, because we are a
holding company, our ability to pay dividends on our ordinary shares is limited by restrictions on the ability of our subsidiaries to pay dividends or
make distributions to us, including restrictions under the terms of the agreements governing our indebtedness.
Pursuant to our articles of incorporation, our board of directors has the power to distribute interim dividends in accordance with applicable
Luxembourg law. The amount to be distributed by the board of directors may not exceed the total profits made since the end of the last financial year
for which the accounts have been approved, plus any profits carried forward and sums drawn from reserves available for this purpose, less losses
carried forward and any sums to be placed to reserve pursuant to the requirements of Luxembourg law or of our articles of incorporation.
Notwithstanding the foregoing, dividends may also be declared by a simple majority vote of our shareholders at an annual general shareholders
meeting, typically but not necessarily, based on the recommendation of our board of directors. All shares of our capital stock grant pari passu rights
with respect to the payment of dividends. Any future determination to pay dividends will be subject to compliance with covenants in current and
future agreements governing our indebtedness, and will depend upon our results of operations, financial condition, capital requirements and other
factors that our board of directors deems relevant.
On September 21, 2017, the Board of Directors approved a dividend policy for the Company with a goal of paying annual cash dividends
pay-out in line with industry peers and practices. The declaration and payment of any interim dividends will be subject to approval of Atento’s
corporate bodies and will be determined based upon, amongst other things, Atento’s performance, growth opportunities, cash flow, contractual
covenants, applicable legal requirements and liquidity factors. The Board of Directors intends to review the dividend policy regularly and so
accordingly is subject to change at any time.
On October 31, 2017, our Board of Directors declared a cash interim dividend with respect to the ordinary shares of $0.3384 per share paid
on November 28, 2017 to shareholders of record as of the close on November 10, 2017.
B.
Significant Changes
Except as otherwise disclosed in our consolidated financial statements and in this Annual Report, there have been no significant changes in
our business, financial conditions or results since December 31, 2020.
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ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
Price Information
Ordinary Stock
The following table presents high and low market prices in U.S. dollars for Atento S.A. ordinary stock (ATTO) listed on the New York
Security Exchange for the periods shown below.
As of July 28, 2020, Atento S.A. announced a reverse share split that converted the Company’s entire share capital of 75,406,357 into
15,000,000 shares. In this sense we adjusted the stock prices to consider the reverse share split.
Closing Price ATTO - Annual Basis
Year
2020
2019
2018
2017
2016
Closing Price ATTO - Quarterly Basis
2020
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Closing Price ATTO - Monthly Basis
Month
March (until March 16, 2021)
February 2021
January 2021
December 2020
November 2020
October 2020
September 2020
B. Plan of Distribution
Not applicable.
C. Markets
The Company’s ordinary shares trade on the NYSE under the symbol “ATTO”.
85
U.S. dollars per Share
Low
3.71
10.56
17.85
38.96
34.69
Closing
13.60
14.48
20.16
51.02
38.46
High
18.59
24.33
52.53
63.34
50.77
U.S. dollars per Share
Low
8.10
5.52
3.71
4.82
Closing
13.60
9.21
5.93
5.53
High
13.78
18.59
7.89
17.29
U.S. dollars per Share
Low
20.50
16.72
13.14
9.87
8.16
8.10
8.75
Closing
22.02
22.52
16.42
13.60
10.26
8.47
9.21
High
23.93
25.26
18.56
13.78
12.21
9.54
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D.
Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A.
Share Capital
Not applicable.
B. Memorandum and Articles of Association
The following is a summary of some of the terms of our ordinary shares, based on our articles of association and the Luxembourg Corporate
Law. In this section we refer to our articles of association as amended and in effect as our “articles of association”.
The following summary is subject to, and is qualified in its entirety by reference to, the provisions of our articles of association, the form of
which has been filed as an exhibit to the registration statement of which this Annual Report is a part.
General
Atento is a Luxembourg public limited liability company (société anonyme). The Company’s legal name is “Atento S.A.” and was
incorporated on March 5, 2014 as a Luxembourg public limited liability company (société anonyme).
Atento is registered with the Luxembourg Registry of Trade and Companies under number B.185.761. Atento has its registered office at 1,
rue Hildegard Von Bingen, 1282 Luxembourg, Grand Duchy of Luxembourg.
The corporate purpose of Atento, as stated in Article 2 of our articles of association (Purpose), may be summarized as follow:
The object of Atento, is the holding of participations, in any form whatsoever, in Luxembourg and foreign companies and in any other form
of investment, the acquisition by purchase, subscription, or in any other manner as well as the transfer by sale, exchange or otherwise of securities of
any kind and the administration, management, control and development of its portfolio.
Atento may further guarantee, grant security, grant loans or otherwise assist the companies in which it holds a direct or indirect participation
or right of any kind or which form part of the same group of companies as Atento.
Atento may raise funds especially through borrowing in any form or by issuing any kind of notes, securities or debt instruments, bonds and
debentures and generally issue any debt, equity and/or hybrid or other securities of any type in accordance with Luxembourg law.
Finally, Atento may carry out any commercial, industrial, financial, real estate or intellectual property or other activities which it considers
useful for the accomplishment of these purposes.
Share Capital
As of December 31, 2020, our issued share capital amounts to €33,978.85, represented by 15,000,000 shares, after the reverse split adopted
by the EGM on July 28th, 2020. The extraordinary general meeting of shareholders resolved to approve to convert the seventy-five million four
hundred and six thousand three hundred and fifty-seven (75,406,357) ordinary shares without nominal value, representing the then current entire
share capital of the Company, into fifteen million (15,000,000) ordinary shares without nominal value using a ratio of conversion of
5.027090466672970 (the “Conversion”) and subsequently to amend article 5.1 of the articles of association of the Company to read as follows:
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“5.1 The Company’s share capital is set at thirty-three thousand nine hundred and seventy-eight euro eighty-five cents (EUR 33,978.85),
represented by fifteen million (15,000,000) shares without nominal value.”
The extraordinary general meeting of shareholders subsequently resolved to approve to authorize the board of directors of the Company to
amend accordingly the shares register of the Company whereby in case the new amount of shares to be held by a shareholder as a result of the
Conversion would lead to such shareholder holding a fractional number of shares, since as per the article 7.2 of the articles of association of the
Company, the Company could not issue fractional shares, such new amount of new shares to be held by such shareholder would be rounded up to the
nearest whole number of shares and the number of shares held by the Company in treasury would be adjusted accordingly.
All issued shares were fully paid. A shareholder in a Luxembourg société anonyme holding fully paid shares is not liable, solely because of
his or her or its shareholder status, for additional payments to the Company or the Company’s creditors.
Our articles of association authorize our board of directors to issue ordinary shares within the limits of the authorized share capital at such
times and on such terms as our board or its delegates may decide for a period ending five years after the date on which the minutes of the
shareholders’ meeting approving such authorization are published in the then in force Luxembourg official gazette Mémorial C, Recueil des Sociétés
et Associations (unless such period is extended, amended or renewed). Accordingly, our board is authorized to issue ordinary shares up to the
authorized share capital until such date. We currently intend to seek renewals and/or extensions as required from time to time.
Our authorized share capital is determined by our articles of association and is set at €999,997,023.15, as amended from time to time, and
may be increased, reduced or extended by amending the articles of association by approval of the extraordinary general shareholders’ meeting subject
to the necessary quorum and majority requirements (see “—General Meeting of Shareholders” and “—Amendment to the Articles of Association”).
Under Luxembourg law, existing shareholders benefit from a pre-emptive subscription right on the issuance of shares for cash consideration.
However, our shareholders have, in accordance with Luxembourg law, authorized the board of directors to suppress, waive or limit any pre-emptive
subscription rights of shareholders provided by law to the extent the board deems such suppression, waiver or limitation advisable for any issuance or
issuances of shares within the scope of our authorized share capital. Such shares may be issued above, at or below market value but in any event not
below the accounting par value per ordinary share as well as by way of incorporation of available reserves (including premium), except in limited
cases provided for by Luxembourg law.
Form and Transfer of Shares
Our ordinary shares are issued in registered form only and are freely transferable under Luxembourg law and our articles of association. Our
board of directors may however impose transfer restrictions for shares that are registered, listed, quoted, dealt in, or that have been placed in certain
jurisdictions in compliance with the requirements applicable therein. Luxembourg law does not impose any limitations on the rights of Luxembourg
or non-Luxembourg residents to hold or vote our ordinary shares.
Under Luxembourg law, the ownership of registered shares is prima facie established by the inscription of the name of the shareholder and
the number of shares held by him or her in the shareholders register. Without prejudice to the conditions for transfer by book entry where shares are
recorded in the shareholder register on behalf of one or more persons in the name of a depository, each transfer of shares shall be affected by written
declaration of transfer to be recorded in the shareholder register, such declaration to be dated and signed by the transferor and the transferee or by
their duly appointed agents. We may accept and enter into the shareholder register any transfer affected pursuant to an agreement or agreements
between the transferor and the transferee, true and complete copies of which have been delivered to us.
Our articles of association provide that we may appoint registrars in different jurisdictions, each of whom may maintain a separate register
for the shares entered in such register and the holders of shares shall be entered into one of the registers. Shareholders may elect to be entered into
one of these registers and to transfer their shares to another register so maintained. Entries in these registers are reflected in the shareholders’ register
maintained at our registered office.
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In addition, our articles of association also provide that our ordinary shares may be held through a securities settlement system or a
professional depository of securities. Ordinary shares held in such manner have the same rights and obligations as ordinary shares recorded in our
shareholders’ register. Furthermore, ordinary shares held through a securities settlement system or a professional depository of securities may be
transferred in accordance with customary procedures for the transfer of securities in book-entry form.
Issuance of Shares
Pursuant to the Luxembourg Corporate Law, the issuance of ordinary shares requires the approval by the general meeting of shareholders at
the quorum and majority provided for the amendment of articles (see “—General Meeting of Shareholders” and “—Amendment to the Articles of
Association”). The general meeting may approve an authorized share capital and authorize the board of directors to issue ordinary shares up to the
maximum amount of such authorized share capital for a maximum period of five years as from the date of publication in the then in force
Luxembourg official gazette (Mémorial, Recueil des Sociétés et Associations) of the minutes of the relevant general meeting. The general meeting
may amend, renew or extend such authorized share capital and such authorization to the board of directors to issue shares.
Our articles of association provide that no fractional shares shall be issued.
Our ordinary shares have no conversion rights and there are no redemption or sinking fund provisions applicable to our ordinary shares.
Pre-Emptive Rights
Unless limited, waived or cancelled by our board of directors (see “—Share Capital”), holders of our ordinary shares have a pro rata pre-
emptive right to subscribe for any new shares issued for cash consideration. Our articles of association provide that pre-emptive rights can be limited,
waived or cancelled by our board of directors for a period ending on the fifth anniversary of the date of publication of the notarial deed recording the
minutes of the extraordinary general shareholders’ meeting which adopted the authorized capital of the Company in the Recueil électronique des
sociétés et associations in the event of an increase of the share capital by the board of directors within the limits of the authorized share capital. The
general meeting of shareholders duly convened to consider an amendment to the articles of association may by majority vote also limit, waive or
cancel such pre-emptive rights or to renew, amend or extend them, each time for a period not to exceed five years.
Repurchase of Shares
We cannot subscribe for our own ordinary shares.
We may, however, repurchase issued ordinary shares or have another person repurchase issued ordinary shares for our account, subject to the
following conditions:
· prior authorization by a simple majority vote at an ordinary general meeting of shareholders, which authorization sets forth the terms and
conditions of the proposed repurchase and in particular the maximum number of ordinary shares to be repurchased, the duration of the
period for which the authorization is given (which may not exceed five years) and, in the case of repurchase for consideration, the
minimum and maximum consideration per share;
· the repurchase may not reduce our net assets on a non-consolidated basis to a level below the aggregate of the issued and subscribed
share capital and the reserves that we must maintain pursuant to Luxembourg law or our articles of association; and
· only fully paid up shares may be repurchased.
On July 26, 2018, our Board of Directors approved a share buyback program in the total amount of $30 million to be concluded in up to 12
months. The buyback program was communicated to the market in the Second Quarter Earnings Release, dated July 30, 2018. During 2018, the
Company repurchased 1,106,158 shares at the total cost of $8.2 million. These shares are being held in treasury. During 2019, the Company
repurchased 4,425,499 shares at the total cost of $11.1 million. On February 26, 2020, our Board of Directors approved a share buyback program in
the total amount of $30.0 million to be concluded in up to 12 months. During 2020, the Company repurchased 169,739 shares at the total cost of $1.3
million.
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In addition, pursuant to Luxembourg law, Atento, may directly or indirectly repurchase ordinary shares by decision of our board of directors
without the prior approval of the general meeting of shareholders if such repurchase is deemed by the board of directors to be necessary to prevent
serious and imminent harm to us or if the acquisition of shares has been made in view of the distribution thereof to employees.
Capital Reduction
Our articles of association provide that our issued share capital may be reduced, subject to the approval by the general meeting of
shareholders at the quorum and majority provided for the amendment of the articles of association (See “—Voting Rights—Extraordinary General
Meeting”).
General Meeting of Shareholders
Any regularly constituted general meeting of shareholders of Atento represents the entire body of shareholders of the Company.
Each of our ordinary shares entitles the holder thereof to attend our general meeting of shareholders, either in person or by proxy, to address
the general meeting of shareholders and to exercise voting rights, subject to the provisions of our articles of association. Each ordinary share entitles
the holder to one vote at a general meeting of shareholders. Our articles of association provide that our board of directors shall adopt all other
regulations and rules concerning the attendance to the general meeting, availability of access cards and proxy forms in order to enable shareholders to
exercise their right to vote as it deems fit.
When convening a general meeting of shareholders, we will publish two notices (which must be published at least eight days apart and, in
the case of the second notice, at least eight days before the meeting) in the current Luxembourg official gazette, (Recueil électronique des sociétés et
associations, the central electronic platform of the Grand Duchy of Luxembourg), and in a Luxembourg newspaper. One or several shareholders
holding together at least ten percent (10%) of the share capital or the voting rights may submit questions in writing to the board of directors relating
to transactions in connection with the management of the Company as well as companies controlled by the Company; with respect to the latter, such
questions shall be assessed in consideration of the relevant entities’ corporate interest. In the absence of a response within one (1) month, the relevant
shareholders may request the president of the chamber of the district court of Luxembourg dealing with commercial matters and sitting as in
summary proceedings to appoint one or several experts in charge of drawing up a report on such related transactions. Our articles of association
provide that if our shares are listed on a regulated market, the general meeting will also be convened in accordance with the publicity requirements of
such regulated market applicable to us.
A shareholder may participate in general meetings of shareholders by appointing another person as his proxy, the appointment of which shall
be in writing. Our articles of association also provide that, in the case of shares held through the operator of a securities settlement system or
depository, a holder of such shares wishing to attend a general meeting of shareholders should receive from such operator or depository a certificate
certifying the number of shares recorded in the relevant account on the record date. Such certificates as well as any proxy forms should be submitted
to us no later than three (3) business days before the date of the general meeting unless our board of directors fixes a different period.
The annual ordinary general meeting of shareholders shall be held in Luxembourg at the registered office of the Company or at such other
place in Luxembourg as may be specified in the convening notice of such meeting or by any telecommunications means as authorized by Luxemburg
legislation pursuant the Covid-19 declaration of State of Emergency. If such day is a legal or banking holiday, the annual general meeting shall be
held on the next following business day. Other meetings of shareholders may be held at such place and time as may be specified in the respective
convening notices.
Luxembourg law provides that the board of directors is obliged to convene a general meeting of shareholders if shareholders representing, in
the aggregate, 10% of the issued share capital so request in writing with an indication of the meeting agenda. In such case, the general meeting of
shareholders must be held within one-month of the request. If the requested general meeting of shareholders is not held within one-month,
shareholders representing, in the aggregate, 10% of the issued share capital may petition the competent president of the district court in Luxembourg
to have a court appointee convene the meeting. Luxembourg law provides that shareholders representing, in the aggregate, 10% of the issued share
capital may request that additional items be added to the agenda of a general meeting of shareholders. That request must be made by registered mail
sent to the registered office of the Company at least five days before the general meeting of shareholders.
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Voting Rights
Each share entitles the holder thereof to one vote at a general meeting of shareholders. Luxembourg law distinguishes general meetings of
shareholders and extraordinary general meetings of shareholders. Extraordinary general meetings of shareholders relate to proposed amendments to
the articles of association and certain other limited matters.
Ordinary General Meeting
At an ordinary general meeting there is no quorum requirement and resolutions are adopted by a simple majority of votes validly cast on
such resolution is sufficient. Abstentions are not considered votes.
Extraordinary General Meeting
Extraordinary resolutions are required for any of the following matters, among others: (a) an increase or decrease of the authorized or issued
capital, (b) a limitation or exclusion of preemptive rights, (c) approval of a statutory merger or de-merger (scission), (d) dissolution and liquidation of
Atento, and (e) any and all amendments to our articles of association. Pursuant to our articles of association, for any resolutions to be considered at an
extraordinary general meeting of shareholders the quorum shall be at least one half (50%) of the issued share capital of the Company unless
otherwise mandatorily required by law. If the said quorum is not present, a second meeting may be convened at which Luxembourg Corporate Law
does not prescribe a quorum. Any extraordinary resolution shall be adopted at a quorate general meeting (save as otherwise provided by mandatory
law) by at least two thirds (2/3) majority of the votes validly cast on such resolution. Abstentions are not considered votes.
Appointment and Removal of Directors
Members of our board of directors may be elected by simple majority of the votes cast at a general meeting of shareholders. Our articles of
association provide that the directors shall be elected on a staggered basis, with one third (1/3) of the directors being elected each year, and each
director elected for a period of three years. Any director may be removed with or without cause by resolution at a general meeting of shareholders
adopted by a simple majority of votes validly cast at the meeting.
Our articles of association provide that in case of a vacancy the board of directors may fill such vacancy.
Neither Luxembourg law nor our articles of association contain any restrictions as to the voting of our shares by non-Luxembourg residents.
Amendment to the Articles of Association
Shareholder Approval Requirements
Luxembourg law requires an extraordinary general meeting of shareholders to resolve upon an amendment of the articles of association to be
made by extraordinary resolution. The agenda of the extraordinary general meeting of shareholders must indicate the proposed amendments to the
articles of association. An extraordinary general meeting of shareholders convened for the purposes of amending the articles of association must have
a quorum of at least 50% of our issued share capital. If the said quorum is not present, a second meeting may be convened at which Luxembourg
Corporate Law does not prescribe a quorum. Irrespective of whether the proposed amendments will be subject to a vote at any duly convened
extraordinary general shareholders’ meeting, the amendment is subject to the approval of at least two thirds (2/3) of the votes cast at such
extraordinary general meeting of shareholders.
Formalities
Any resolutions to amend our articles of association must be taken before a Luxembourg notary and such amendments must be published in
accordance with Luxembourg law.
Merger and Demerger
A merger by absorption whereby one Luxembourg company after its dissolution without liquidation transfers to another company all of its
assets and liabilities in exchange for the issuance of shares in the acquiring company to the shareholders of the company being acquired, or a merger
effected by transfer of assets to a newly incorporated company, must, in principle, be approved at a general meeting by an extraordinary resolution of
the Luxembourg company, and the general meeting must be held before a notary. Similarly, a demerger of a Luxembourg company is generally
subject to the approval by an extraordinary general meeting of shareholders.
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Dissolution and Liquidation
In the event of our dissolution and liquidation of the Company the assets remaining after allowing for the payment of all liabilities of the
Company will be paid out to the shareholders pro rata according to their respective shareholdings. The decisions to dissolve and liquidate require the
approval by an extraordinary general meeting of shareholders of the Company to be held before a notary.
No Appraisal Rights
Neither Luxembourg law nor our articles of association provide for any appraisal rights of dissenting shareholders.
Dividend Distributions
Subject to Luxembourg law, if and when a dividend distribution is declared by the general meeting of shareholders or the board of directors
in the case of interim dividend distributions, each ordinary share is entitled to participate equally in such distribution of funds legally available for
such purposes. Pursuant to our articles of association, the general meeting of shareholders may approve a dividend distribution and the board of
directors may declare an interim dividend distribution, to the extent permitted by Luxembourg law.
Declared and unpaid dividend distributions held by us for the account of the shareholders shall not bear interest. Under Luxembourg law,
claims for unpaid dividend distributions will lapse in our favor five years after the date such dividend distribution were declared.
Annual Accounts
Under Luxembourg law, the board of directors must prepare each year annual accounts, i.e., an inventory of the assets and liabilities of
Atento together with a balance sheet and a profit and loss account each year. Our board of directors must also annually prepare consolidated accounts
and management reports on the annual accounts and consolidated accounts. The annual accounts, the consolidated accounts, the management report
and the auditor’s reports must be available for inspection by shareholders at our registered office at least 15 calendar days prior to the date of the
annual ordinary general meeting of shareholders.
The annual accounts and the consolidated accounts, after approval by the annual ordinary general meeting of shareholders, will need to be
filed with the Luxembourg Registry of Trade and Companies within seven months of the close of the financial year.
Information Rights
Luxembourg law gives shareholders limited rights to inspect certain corporate records 15 calendar days prior to the date of the annual
ordinary general meeting of shareholders, including the annual accounts with the list of directors and auditors, the consolidated accounts, the notes to
the annual accounts and the consolidated accounts, a list of shareholders whose shares are not fully paid up, the management reports and the auditor’s
report.
The annual accounts, the consolidated accounts, the auditor’s report and the management report are sent to registered shareholders at the
same time as the convening notice for the annual general meeting. In addition, any registered shareholder is entitled to receive a copy of such
documents free of charge prior to the date of the annual ordinary general meeting of shareholders.
Under Luxembourg law, it is generally accepted that a shareholder has the right to receive responses at the shareholders’ general meeting to
questions concerning items on the agenda of that general meeting of shareholders, if such responses are necessary or useful for a shareholder to make
an informed decision concerning such agenda item, unless a response to such questions could be detrimental to our interests.
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Board of Directors
The management of Atento is vested in a board of directors. Our articles of association will provide that the board must comprise at least
three members. The board meets as often as Company interests require.
A majority of the members of the board present or represented at a board meeting constitutes a quorum, and resolutions are adopted by the
simple majority vote of the board members present or represented. The board may also take decisions by means of resolutions in writing signed by all
directors. Each director has one vote.
The general shareholders’ meeting elects’ directors and decides their respective terms. Under Luxembourg law, directors may be re-elected
but the term of their office may not exceed 6 years. Our articles of association will provide that the directors shall be elected on a staggered basis,
with one third (1/3) of the directors being elected each year. The general shareholders’ meeting may dismiss one or more directors at any time, with
or without cause by a simple majority of votes cast at a general meeting of shareholders. If the board has a vacancy, the remaining directors have the
right to fill such vacancy on a temporary basis pursuant to the affirmative vote of a majority of the remaining directors. The term of a temporary
director elected to fill a vacancy expires at the end of the term of office of the replaced director, provided, however, that the next general
shareholders’ meeting shall be requested definitively to elect any temporary director.
Within the limits provided for by law, our board may delegate to one or more persons the daily management of the Company and the
authority to represent the Company.
No director shall, solely as a result of being a director, be prevented from contracting with us, either with regard to his tenure in any office or
place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any contract in which any director is in any way interested be
liable to be voided merely on account of his position as director, nor shall any director who is so interested be liable to account to us or the
shareholders for any remuneration, profit or other benefit realized by the contract by reason of the director holding that office or of the fiduciary
relationship thereby established.
Any director having an interest in a transaction submitted for approval to the board may not participate in the deliberations and vote thereon,
unless the transaction is not in the ordinary course of the Company’s business and that conflicts with the Company’s interest, in which case the
director shall be obliged to advise the board thereof and to cause a record of his statement to be included in the minutes of the meeting. He may not
take part in these deliberations nor vote on such a transaction. At the next general meeting, before any other resolution is put to a vote, a special
report shall be made on any transactions in which any of the directors may have had an interest that conflicts with our interest.
No shareholding qualification for directors is required.
Our articles of association provide that directors and officers, past and present, are entitled to indemnification from us to the fullest extent
permitted by Luxemburg law against liability and all expenses reasonably incurred or paid by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his being or having been a director or officer and against amounts paid or incurred by him in the
settlement thereof. We may purchase and maintain insurance for any director or other officer against any such liability.
No indemnification is provided against any liability to us or our shareholders (i) by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties of a director or officer; (ii) with respect to any matter as to which any director or officer shall have been finally
adjudicated to have acted in bad faith and not in the interest of the Company; or (iii) in the event of a settlement, unless approved by a court or the
board of directors.
Transfer Agent and Registrar
The transfer agent and registrar for our ordinary shares is American Stock Transfer & Trust Company, LLC. with an address of 6201 15th
Avenue, Brooklyn, New York 11219.
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C. Material Contracts
We are party to a Master Service Agreement with Telefónica. On November 7, 2016, Atento Luxco 1, S.A. (“Luxco”), a subsidiary of Atento
S.A. (the “Company”), entered into Amendment Agreement No.2 (the “Amendment”) to the Master Services Agreement by and between Luxco
(f/k/a BC Luxco 1, S.A.) and Telefónica, S.A. (“Telefónica”), dated December 11, 2012 (as amended, the “MSA”). The Amendment strengthens and
extends the Company’s strategic relationship with Telefónica, its largest client.
The Amendment provides for the following: a guaranty the Company will maintain at least our current share of Telefónica’s spending in all
key contracts, revised invoicing and collection processes in all key markets, a two-year extension of the MSA for Brazil and Spain until December
31, 2023 as well as a reset of volume targets for these countries; and certain other amendments.
On November 2019, the parties agree on decreasing the minimum revenue thresholds for Spain. In consideration of this reduction, the entity
Telefónica de España S.A. (a Subsidiary of Telefónica, “Telefónica España”) and Atento Teleservicios España S.A.U. (entity fully owned by the
provider “Atento España”), have entered into an agreement dated on November 1, 2019, with the purpose to, among other agreements, boost the
digitalization of the services rendered to Telefónica España. Additionally, Telefónica España, will, subject to the conditions stated in such agreement,
collaborate with certain amount to Atento España.
For a description of the MSA see “Item 4. Information on the Company—B. Business Overview—Our Clients—Telefónica S.A. Master
Service Agreement” as well as the full text of the agreement and its amendment executed in November 2016, a copy of which is filed as Exhibit 4.5.
D. Exchange Controls
There are no legislative or other legal provisions currently in force in Luxembourg or arising under ours articles of association that restrict
the payment of dividends to holders of Atento shares by reason of such holders not being resident in Luxembourg, except for regulations restricting
the remittance of dividends and other payments in compliance with United Nations and EU sanctions. There are no limitations, either under the laws
of Luxembourg or in the articles of association, on the right of non-Luxembourg nationals to hold or vote Atento shares.
E. Taxation
Luxembourg Tax Considerations
The following is a summary discussion of the material Luxembourg tax considerations of the acquisition, ownership and disposition of your
ordinary shares that may be applicable to you if you acquire our ordinary shares.
It is not intended to be, nor should it be construed to be, legal or tax advice. This discussion is based on Luxembourg laws and regulations as
they stand on the date of this Annual Report and is subject to any change in law or regulations or changes in interpretation or application thereof (and
which may possibly have a retroactive effect). Prospective investors should therefore consult their own professional advisers as to the effects of state,
local or foreign laws and regulations, including Luxembourg tax law and regulations, to which they may be subject.
As used herein, a “Luxembourg individual” means an individual resident in Luxembourg who is subject to personal income tax (impôt sur le
revenu) and a solidarity surcharge (contribution au fonds pour l’emploi) on his or her worldwide income from Luxembourg or foreign sources, and a
“Luxembourg corporate holder” means a company (that is, a fully taxable collectivity within the meaning of Article 159 of the Luxembourg Income
Tax Law) resident in Luxembourg subject to corporate income tax (impôt sur le revenu des collectivités), municipal business tax (impôt commercial
communal) and a solidarity surcharge (contribution au fonds pour l’emploi) on its worldwide income from Luxembourg or foreign sources.
Luxembourg corporate holders may also be subject to net wealth tax (impôt sur la fortune) as well as other duties, levies and taxes. For purposes of
this summary, Luxembourg individuals and Luxembourg corporate holders are collectively referred to as “Luxembourg Holders”. A “non-
Luxembourg Holder” means any investor in shares of the Company other than a Luxembourg Holder.
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Tax Regime Applicable to Capital Gains Realized Upon Disposal of Shares
Luxembourg Holders
Luxembourg individual holders. For Luxembourg individuals holding (together, directly or indirectly, with his or her spouse or civil partner
or underage children) 10% or less of the share capital of the Company, capital gains will only be taxable if they are realized on a sale of shares, which
takes place before their acquisition or within the first six months following their acquisition. The capital gain or liquidation proceeds will be taxed at
progressive income tax rates (ranging from 0 to 45.78% in 2018 and 2019).
For Luxembourg individuals holding (together with his/her spouse or civil partner and underage children) directly or indirectly more than
10% of the capital of the Company, capital gains will be taxable as follow:
· within six months from the acquisition, the capital gain or liquidation proceeds will be taxed at progressive income tax rates (currently
ranging from 0 to 45.78%);
· after six months the capital gain or the liquidation proceeds will be taxed at a reduced tax rate (i.e. half of the investor’s global tax rate).
An allowance of €50,000 (doubled for taxpayers filing jointly), available during a ten-year period, is applicable.
Luxembourg corporate holders. Capital gains realized upon the disposal of shares by a Luxembourg corporate holder will in principle be
subject to corporate income tax and municipal business tax. The combined applicable rate (including an unemployment fund contribution) is 26.01%
for the fiscal year ended 2018 and 26.01% for the fiscal year ended 2019 for a Luxembourg corporate holder established in Luxembourg-City. An
exemption from such taxes may be available to the Luxembourg corporate holder pursuant to article 166 of the Luxembourg Income Tax law and by
the Grand Ducal Decree of December 21, 2001 subject to anti-abuse rules and to the fulfillment of the conditions set forth therein.
Non-Luxembourg Holders
Subject to any applicable tax treaty, an individual non-Luxembourg Holder of shares (who has no permanent establishment or permanent
representative in Luxembourg to which or to whom the shares would be attributable) will only be subject to Luxembourg taxation on capital gains
arising upon disposal of such shares if such holder has (together with his or her spouse or civil partner or underage children) directly or indirectly
held more than 10% of the capital of the Company, at any time during the five years preceding the disposal, and either (i) such holder has been a
resident of Luxembourg for tax purposes for at least 15 years and has become a non-resident within the five years preceding the realization of the
gain, subject to any applicable tax treaty, or (ii) the disposal of shares occurs within six months from their acquisition (or prior to their actual
acquisition). If we and a U.S. relevant holder are eligible for the benefits of the Convention between the Government of the Grand Duchy of
Luxembourg and the Government of the United States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to
Taxes on Income and Capital (the “Luxembourg-U.S. Treaty”), such U.S. relevant holder generally should not be subject to Luxembourg tax on the
gain from the disposal of such shares unless such gain is attributable to a permanent establishment or permanent representative of such U.S. relevant
holder in Luxembourg. Subject to any restrictions imposed by the substantially and regularly traded clause in the limitation on benefits article of the
Luxembourg-U.S. treaty, we expect to be eligible for the benefits of the Luxembourg-U.S. Treaty.
A corporate non-Luxembourg Holder, which has a permanent establishment or a permanent representative in Luxembourg to which or
whom the shares would be attributable, will bear corporate income tax and municipal business tax on a gain realized on a disposal of such shares as
set forth above for a Luxembourg corporate holder. In the same way, gains realized on the sale of the shares through a permanent establishment or a
permanent representative may benefit from the full exemption provided for by Article 166 of the Luxembourg Income Tax Law and by the Grand
Ducal Decree of December 21, 2001 subject in each case to anti-abuse rules and to the fulfillment of the conditions set out therein.
A corporate non-Luxembourg Holder, which has no permanent establishment or permanent representative in Luxembourg to which or whom
the shares would be attributable will not be subject to any Luxembourg tax on a gain realized on a disposal of such shares unless such holder holds,
directly or through tax transparent entities, more than 10% of the share capital of the Company, and the disposal of shares occurs within six months
from their acquisition (or prior to their actual acquisition), subject to any applicable tax treaty. If we and a U.S. corporate holder without a permanent
establishment in Luxembourg to which or whom the shares would be attributable are eligible for the benefits of the Luxembourg-U.S. Treaty, such
U.S. corporate holder generally should not be subject to Luxembourg tax on the gain from the disposal of such shares.
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Tax Regime Applicable to Distributions
Withholding Tax. Dividend distributions by the Company are subject to a withholding tax of 15%. Distributions by the Company sourced
from a reduction of capital as defined in Article 97 (3) of the Luxembourg Income Tax Law including, among others, share premium should not be
subject to withholding tax provided no newly accumulated fiscal profits, or profit reserves carried forward are recognized by the Company on a
standalone basis. We or the applicable paying agent will withhold on a distribution if required by applicable law.
Where a withholding needs to be applied, the rate of the withholding tax may be reduced pursuant to the double tax treaty existing between
Luxembourg and the country of residence of the relevant holder, subject to the fulfillment of the conditions set forth therein. If we and a U.S. relevant
holder are eligible for the benefits of the Luxembourg-U.S. Treaty, the rate of withholding on distributions generally is 15%, or 5% if the U.S.
relevant holder is a beneficial owner that owns at least 10% of our voting stock.
No withholding tax applies if the distribution is made to (i) a Luxembourg resident corporate holder (that is, a fully taxable collectivité
within the meaning of Article 159 of the Luxembourg Income Tax Law), (ii) a corporation which is resident of a Member State of the European
Union and is referred to by article 2 of the Council Directive 2011/96/EU of November 30, 2011 on the common system of taxation applicable in the
case of parent companies and subsidiaries of different member states, (iii) a corporation or a cooperative resident in Norway, Iceland or Liechtenstein
and subject to a tax comparable to corporate income tax as provided by Luxembourg Income Tax Law, (iv) a corporation resident in Switzerland
which is subject to corporate income tax in Switzerland without benefiting from an exemption, (v) a corporation subject to a tax comparable to
corporate income tax as provided by Luxembourg Income Tax Law which is resident in a country that has concluded a tax treaty with Luxembourg
and (vi) a Luxembourg permanent establishment of one of the above-mentioned categories, provided each time that at the date of payment, the holder
has held or commits itself to continue to hold directly or through a tax transparent vehicle, during an uninterrupted period of at least twelve months,
shares representing at least 10% of the share capital of the Company or which had an acquisition price of at least €1,200,000.
Non-Luxembourg Holders
Non-Luxembourg holders of the shares who have neither a permanent establishment nor a permanent representative in Luxembourg to
which or whom the shares would be attributable are not liable for any Luxembourg tax on dividends paid on the shares, other than a potential
withholding tax as described above.
Net Wealth Tax
Luxembourg Holders. Luxembourg net wealth tax will not be levied on a Luxembourg Holder with respect to the shares held unless the
Luxembourg Holder is an entity subject to net wealth tax in Luxembourg.
Net wealth tax is levied annually at the rate of 0.5% and 0.05% for the tranche exceeding EUR 500 million on the net wealth of enterprises
resident in Luxembourg, as determined for net wealth tax purposes. The shares may be exempt from net wealth tax subject to the conditions set forth
by Article 60 of the Law of October 16, 1934 on the valuation of assets (Bewertungsgesetz), as amended.
A minimum net wealth tax is levied on Luxembourg corporate holders. For entities for which the sum of fixed financial assets, transferable
securities and cash at bank exceeds 90% of their total gross assets and EUR 350,000, the minimum net wealth tax is set at EUR 4,815. For all other
Luxembourg corporate holders which do not fall within the scope of the EUR 4,815 minimum net wealth tax, the minimum net wealth tax ranges
from EUR 535 to EUR 32,100, depending on the Luxembourg corporate holders’s total gross assets.
Non-Luxembourg Holders
Luxembourg net wealth tax will not be levied on a non-Luxembourg Holder with respect to the shares held unless the shares are attributable
to an enterprise or part thereof which is carried on through a permanent establishment or a permanent representative in Luxembourg.
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Stamp and Registration Taxes
No registration tax or stamp duty will be payable by a holder of shares in Luxembourg solely upon the disposal of shares or by sale or
exchange unless registered in a notarial deed or otherwise registered in Luxembourg.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
The Company makes its filings in electronic form under the EDGAR filing system of the U.S. Securities and Exchange Commission. Its
filings are available through the EDGAR system at www.sec.gov. The Company’s filings are also available to the public through the Internet at
Atento’s website at www.atento.com. Such filings and other information on its website are not incorporated by reference in this Annual Report.
Interested parties may request a copy of this filing, and any other report, at no cost, by writing to the Company at the following address: C/ Santiago
de Compostela 94, 28035 Madrid—Spain or calling +34 917 407 440 or by e-mail at investor.relations@atento.com. In compliance with New York
Stock Exchange Corporate Governance Rule 303A.11, the Company provides on its website a summary of the differences between its corporate
governance practices and those of U.S. domestic companies under the New York Stock Exchange listing standards.
I.
Subsidiary Information
Refer to Note 3t to the consolidated financial statements.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our board of directors is currently responsible for overseeing our risk management process. The board of directors focuses on our general
risk management strategy and the most significant risks facing us, and ensures that appropriate risk mitigation strategies are implemented by
management. The board of directors is also apprised of particular risk management matters in connection with its general oversight and approval of
corporate matters and significant transactions.
Our board of directors delegated to the Audit Committee oversight of our risk management process. Our other board committees also
consider and address the risks as they perform their respective committee responsibilities. All committees report to the full board of directors as
appropriate, including when a matter rises to the level of a material or enterprise level risk.
Our management is responsible for day-to-day risk management. This oversight includes identifying, evaluating and addressing potential
risks that may exist at the enterprise, strategic, financial, operational, compliance and reporting levels.
The Atento Group’s activities are exposed to market risks: (foreign currency risk and interest rate risk). The Atento Group’s global risk
management policy aims to minimize the potential adverse effects of these risks on the Atento Group’s financial returns. The Atento Group also uses
derivative financial instruments to hedge certain risk exposures.
a) Market risk
Interest rate risk in respect of cash flow and fair value
Interest risk arises mainly as a result of changes in interest rates which affect: finance costs of debt bearing interest at variable rates (or short-
term maturity debt expected to be renewed), as a result of fluctuations in interest rates, and the value of non-current liabilities that bear interest at
fixed rates.
Atento Group’s finance costs are exposed to fluctuations in interest rates. At December 31, 2020, 4.5% of financial debt with third parties
bore interests at variable rates, while at December 31, 2019 this amount was 0.2%. In both 2019 and 2020, the exposure was to the Brazilian CDI rate
and the TJLP (Brazilian Long-Term Interest Rate).
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The Atento Group’s policy is to monitor the exposure to interest at risk. As of December 31, 2020, there were no outstanding interest rate
hedging instruments.
Foreign currency risk
Our foreign currency risk arises from our local currency revenues, receivables and payables, while the U.S. dollar is our reporting currency.
We benefit to a certain degree from the fact that the revenue we collect in each country, in which we have operations, is generally denominated in the
same currency as the majority of the expenses we incur.
In accordance with our risk management policy, whenever we deem it appropriate, we manage foreign currency risk by using derivatives to
hedge any exposure incurred in currencies other than those of the functional currency of the countries.
The main source of our foreign currency risk is related to the Senior Secured Notes due 2022 denominated in U.S. dollars. Upon issuance of
the Notes, we entered into cross-currency swaps pursuant to which we exchange an amount of U.S. dollars for a fixed amount of Euro, Mexican
Pesos, Peruvian Soles and Brazilian Reais. The total amount of interest (coupon) payments are covered (until maturity date) and also a portion of the
principal (until August 2020).
As of December 31, 2020, the estimated fair value of the cross-currency swaps totaled a net asset of $5.9 million (asset of $3.1 million as of
December 31, 2019).
The table below shows the impact of a +/-10 percentage points variation in the exchange rate on the value of the cross-currency swaps.
CROSS-CURRENCY
FAIR VALUE
+10.0%
-10.0%
Thousands of U.S. dollars
2020
5,868
9,884
872
For additional information on the interest rate risk and foreign currency risk, see Notes 4 and 14 to our consolidated financial statements.
Sensitivity analysis of foreign currency risk
The Atento Group has reasonable control over its foreign currency risks, as its financial assets (cash and cash equivalents) and financial
liabilities (Finance Leases and other borrowings) denominated in currencies other than their functional are adequately matched. We performed a
sensitivity analysis based on the outstanding volume of financial assets and liabilities and we applied a 10% appreciation of each asset/liability
currency versus the functional currency which highlights the limited impact that such event would have on the income statements is U.S. dollars. A
sensitivity analysis of foreign currency risk for the Atento Group’s is provided in Note 4 of the consolidated financial statements.
Country risk
To manage or mitigate country risk, we repatriate the funds generated in the Americas and Brazil that are not required for the pursuit of new
profitable business opportunities in the region and subject to the restrictions of our financing agreements.
b) Credit risk
The Atento Group seeks to conduct all of its business with reputable national and international companies and institutions established in
their countries of origin, to minimize credit risk. As a result of this policy, the Atento Group has no material adjustments to make to its credit
accounts.
Credit risk arising from cash and cash equivalents is managed by placing cash surpluses in high quality and highly liquid money-market
assets. These placements are regulated by a master agreement revised annually on the basis of the conditions prevailing in the markets and the
countries where Atento operates. The master agreement establishes: (i) the maximum amounts to be invested per counterparty, based on their ratings
(long- and short-term debt ratings); (ii) the maximum period of the investment; and (iii) the instruments in which the surpluses may be invested.
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The Atento Group’s maximum exposure to credit risk is primarily limited to the carrying amounts of its financial assets. The Atento Group
holds no guarantees as collection insurance.
c) Liquidity risk
The Atento Group seeks to match its debt maturity schedule to its capacity to generate cash flows to meet the payments falling due, factoring
in a degree of cushion. In practice, this has meant that the Atento Group’s average debt maturity must be longer enough to support business operation
normal conditions (assuming that internal projections are met). A maturity schedule for the Atento Group’s financial liabilities is provided in Note 16
of the consolidated financial statements.
($ in millions, except Net Debt/Adj. EBITDA LTM)
Cash and cash equivalents
Debt:
Senior Secured Notes
Super Senior Credit Facility
Brazilian Debentures
BNDES
Lease Liabilities (3)
Other Borrowings
Total Debt
Net Debt with third parties (1) (unaudited)
Adjusted EBITDA LTM (2) (*) (non-GAAP) (unaudited)
Net Debt/Adjusted EBITDA LTM (non-GAAP) (unaudited)
2018
As of December 31,
2019
2020
133.5
400.0
-
14.7
24.0
5.5
15.5
459.8
326.2
184.8
1.8x
124.7
501.9
-
-
1.2
194.8
22.8
720.6
595.9
153.4
3.9x
209.0
505.6
30.0
-
0.6
152.7
38.9
727.8
518.8
161.2
3.2x
(1)
In considering our financial condition, our management analyzes Net debt, which is defined as total debt less cash and cash equivalents.
Net debt is not a measure defined by IFRS and it has limitations as an analytical tool. Net debt is neither a measure defined by or
presented in accordance with IFRS nor a measure of financial performance and should not be considered in isolation or as an alternative
financial measure determined in accordance with IFRS. Net debt is not necessarily comparable to similarly titled measures used by other
companies.
(2) Adjusted EBITDA LTM (Last Twelve Months) is defined as EBITDA adjusted to exclude restructuring costs and other items not related
to our core results of operations.
(3) Consider the impact on December 31, 2020 of application of IFRS 16 (former operating leases not related to short-term or low-value
leases are now shown as debt) was $144.1 million and $8.6 million of other financial leases.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. Debt Securities
Not applicable.
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B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
D. American Depository Shares
Not applicable.
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
A. Disclosure Controls and Procedures
As of December 31, 2020, under management’s supervision and with its participation, including our Chief Executive Officer and Chief
Financial Officer, we performed an evaluation of our disclosure controls and procedures for the period relating to the information contained in this
Annual Report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of December 31, 2020 to enable the Company to record, process, summarize, and report information required to be
included in the reports that it files or submits under the Securities Exchange Act of 1934, within the time periods required.
B. Management’s Annual Report on Internal Control over Financial Reporting
The Management of Atento S.A. is responsible for establishing and maintaining adequate internal control over financial reporting as defined
in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934.
The Company’s internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer
and Chief Financial Officer, and effected by our Board of Directors, Management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting
Standards.
The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the
Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
Company’s assets that could have a material effect on the financial statements. Because of inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper Management override of controls, material misstatements due to error or fraud may not
be prevented or detected on a timely basis. Therefore, even those systems determined to be effective can provide only reasonable assurance with
respect to financial statements preparation and presentation.
Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 based on the
criteria established in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”).
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Based on such assessment and criteria, Management has concluded that the Company’s internal controls over financial reporting are
effective as of December 31, 2020.
C. Attestation Report of the Registered Public Accounting Firm
Ernst & Young Auditores Independentes S.S., the independent registered public accounting firm that has audited our consolidated financial
statements, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2020 dated March
22, 2021 and included herein, expressed an unqualified opinion. This attestation report appears on page F-2.
D. Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting for the year ended December 31, 2020 that has materially affected, or
is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Audit Committee consists of Antonio Viana, Thomas Iannotti and David Garner. Our board of directors has determined that Antonio
Viana qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5)(ii) of Regulation S-K. Our board of directors has
adopted a written charter for the Audit Committee, which is available on our corporate website at www.atento.com. Our website is not part of this
Annual Report.
ITEM 16B. CODE OF ETHICS
We have adopted a Code of Ethics applicable to all of our directors, officers and employees, including our principal executive officer,
principal financial officer and accounting officers, and all persons performing similar functions. A copy of the Code is available on our corporate
website at www.atento.com. The Code of Ethics as of December 31, 2020 is set forth in Exhibit 11.1 to this Annual Report.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth by category of service the total fees for services performed in 2019 and 2020 by our principal accountants,
Ernst & Young Auditores Independentes S.S., including fees from member firms Ernst & Young.
Audit-fees (*)
Audit-related fees (**)
All other fees (***)
Total
Thousands of U.S. dollars
2019
2020
1,341
-
143
1,484
1,327
422
106
1,855
All services and fees were pre-approved by the Audit Committee Chair.
(*)
Audit fees: includes audit of the annual financial statements, the review of the Form 20-F Report filed with the Securities and Exchange
Commission (SEC) and local statutory audits of subsidiaries of the Atento Group.
(**) Audit-related fees: includes fees related to issue comfort letters.
(***) Other fees in 2019 services related to support Atento on its contract management process. In 2020 related include service of evaluating
industries key trends and potential strategic for the Brazilian market. The fees which were pre-approved by Audit Committee as determined by
the section 201 and 202 of the Sarbanes Oxley Act.
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ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
The following table reflects purchases of our equity securities by us or our affiliates in 2020.
Atento S.A. – Buyback Program
Period
Total Number of
Shares Purchased
(3)
Average Price Paid
per Share in USD
(4)
May 2020
June 2020
July 2020
August 2020
September 2020
October 2020
November 2020
December 2020
Total
5,532
84,066
18,711
7,635
16,430
8,981
11,790
16,594
169,739
4.55
6.28
6.98
10.21
9.90
9.03
10.62
12.24
7.86
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs in
2020 (1) (5)
5,532
89,598
108,309
115,944
132,374
141,355
153,145
169,739
169,739
Maximum Number (or
Approximate Dollar Value) of
Shares that May Yet Be
Purchased Under the Plans
or Programs (2)
-
-
-
-
-
-
-
(1) On February 4, 2020, the shareholder’s meeting of the Company approved the renewal of the authorization to the Board of Directors to acquire
its own fully paid-up shares on the New York Stock Exchange or any other exchange without making an acquisition offer to the shareholders of
the Company, for a period of 5 years, for a maximum number of shares to be acquired, which shall be up to 30% of the Company’s share capital.
On February 26, 2020, our Board of Directors approved a new share buyback program, pursuant to the program approved by shareholders on
February 4, 2020. The program authorized by the Board of Directors is limited to $30.0 million in up to 12 months, beginning March 2020.
(2) Conform the new program approved by the Board on February 26, 2020, the share buyback is limited to $30.0 million in up to 12 months,
starting in March 2020. We believe the share treasury program approved by the Board of Directors as confidence in our business prospects
moving forward.
(3) The “Total Number of Shares Purchased” was 5,532 in May 2020, 84,066 in June 2020, 18,711 in July 2020, 7,635 in August 2020, 16,430 in
September 2020, 8,981 in October 2020, 11,790 in November 2020 and 16,594 in December 2020. In 2019, the “Total Number of Shares
Purchased” was 4,425,499.
(4) The “Average Price Paid per Share in USD” was USD 4.55 in May 2020, USD 6.28 in June 2020, USD 6.98 in July 2020, USD 10.21 in
August 2020, USD 9.90 in September 2020, USD 9.03 in October 2020, USD 10.62 in November 2020 and USD 12.24 in December 2020. In
2019, the “Average Price Paid per Share in USD” was USD 2.52.
(5) The “Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs” in 2020 was 5,532 in May 2020 89,598 in June
2020, 108,309 in July 2020, 115,944 in August 2020, 132,374 in September 2020, 141,355 in October 2020, 153,145 in November 2020 and
169,739 in December 2020. In 2019, the “Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs” was 4,425,499.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
Our ordinary shares are listed on the NYSE. For purposes of NYSE rules, so long as we are a foreign private issuer, we are eligible to take
advantage of certain exemptions from NYSE corporate governance requirements provided in the NYSE rules. We are required to disclose the
significant ways in which our corporate governance practices differ from those that apply to U.S. companies under NYSE listing standards. Set forth
below is a summary of these differences:
Director Independence—The NYSE rules require domestic companies to have a majority of independent directors, but as a foreign private
issuer we are exempt from this requirement. Our board of directors consists of eight members and we believe that five of our board members satisfy
the “independence” requirements of the NYSE rules.
Board Committees—The NYSE rules require domestic companies to have a Compensation Committee and a nominating and corporate
governance committee composed entirely of independent directors, but as a foreign private issuer we are exempt from these requirements. We have a
Compensation Committee comprised of two members, one of which we believe satisfies the “independence” requirements of the NYSE rules. We do
not have a nominating and corporate governance committee. However, we have an audit committee that we believe consists entirely of “independent”
directors, as required by the NYSE listing standards.
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ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
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PART III
ITEM 17. FINANCIAL STATEMENTS
The Company has responded to Item 18 in line of this item.
ITEM 18. FINANCIAL STATEMENTS
Consolidated financial statements of Atento S.A. are filed as part of this Annual Report.
ITEM 19. EXHIBITS
(a)
Index to Consolidated Financial Statements
Consolidated Financial Statements of Atento S.A.
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Financial Position as of December 31, 2019 and 2020
Consolidated Statements of Operations for the years ended December 31, 2018, 2019 and 2020
Consolidated Statements of Comprehensive Income/(Loss) for the years ended December 31, 2018, 2019 and 2020
Consolidated Statements of Changes in Equity for the years ended December 31, 2018, 2019 and 2020
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2019 and 2020
Notes to the Consolidated Financial Statements for the years ended December 31, 2018, 2019 and 2020
(b) List of Exhibits
Page
F-1
F-4
F-5
F-7
F-8
F-9
F-11
F-12
Exhibit
Number
1.1
2.1
4.3
4.4
4.5
4.6
Description
Amended and Restated Articles of Association of Atento S.A., incorporated by reference to Exhibit 1.1 to Atento S.A.’s Amendment
No. 1 to Annual Report on Form 20-F (File No. 001-36671), initially filed on April 20, 2016.
Indenture, dated as of August 10, 2017, among Atento Luxco 1 S.A., the guarantors from time to time party thereto, Wilmington Trust,
National Association, as trustee, and Wilmington Trust (London) Limited, in its capacity as security agent under the intercreditor
agreement, as collateral agent, incorporated by reference to Exhibit 4.1 to Atento S.A.’s Report on Form 6-K (File No. 001-36671),
filed on August 15, 2017.
Subscription and Securityholder’s Agreement, dated as of December 4, 2012, by and among BC Luxco Topco, BC Luxco and each of
the investors party thereto, incorporated by reference to Exhibit 10.4 to Atento S.A.’s Registration Statement on Form F-1 (File No.
333-195611), initially filed on May 1, 2014.
Subscription and Securityholder’s Agreement, dated as of December 4, 2012, by and among BC Luxco Topco, BC Luxco and each of
the investors party thereto, incorporated by reference to Exhibit 10.5 to Atento S.A.’s Registration Statement on Form F-1 (File No.
333-195611), initially filed on May 1, 2014.
Master Services Agreement between BC Luxco 1 and Telefónica S.A., dated as of December 11, 2012, as amended by Amendment
Agreement No. 1 thereto dated as of May 16, 2014, and as amended by Amendment Agreement No.2 dated November 10, 2016,
incorporated by reference to Exhibit 10.6 to Atento S.A.’s Registration Statement on Form F-1 (File No. 333-195611), initially filed
on May 1, 2014.**
Super Senior Revolving Credit Facilities Agreement, dated as of August 8, 2017, among Atento Luxco 1 S.A., the guarantors party
thereto, BBVA Bancomer, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer, Goldman Sachs Bank USA and
Morgan Stanley Senior Funding, Inc., as arrangers, Banco Bilbao Vizcaya Argentaria, S.A., as agent, and Wilmington Trust (London)
Limited, as security agent, incorporated by reference to Exhibit 4.2 to Atento S.A.’s Report on Form 6-K (File No. 001-36671), filed
on August 15, 2017.
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4.8
4.9
4.10
4.11
Exhibit
Number
4.12
4.13
4.14
4.15
8.1
11.1
12.1
12.2
13.1
13.2
Instrumento Particular de Escritura (Brazilian debentures), incorporated by reference to Exhibit 10.9 to Atento S.A.’s Registration
Statement on Form F-1 (File No. 333-195611), initially filed on May 1, 2014.
2014 Omnibus Incentive Plan, incorporated by reference to Exhibit 4.2 to Atento S.A.’s Registration Statement on Form S-8 (File No.
333-203101), filed on March 30, 2015. Amendment to 2014 Omnibus Incentive Plan 6 K July 28, 2020.
Form of Performance Restricted Stock Unit Agreement, incorporated by reference to Exhibit 10.11 to Atento S.A.’s Registration
Statement on Form F-1 (File No. 333-195611), initially filed on May 1, 2014.
Form of Time Restricted Stock Unit Agreement, incorporated by reference to Exhibit 10.12 to Atento S.A.’s Registration Statement on
Form F-1 (File No. 333-195611), initially filed on May 1, 2014.
Description
Registration Rights Agreement, incorporated by reference to Exhibit 4.12 to Atento S.A.’s Annual Report on Form 20-F (File No.
001-36671), filed on March 31, 2015.
Consulting Services and Information Rights Agreement, incorporated by reference to Exhibit 4.13 to Atento S.A.’s Annual Report on
Form 20-F (File No. 001-36671), filed on March 31, 2015.
Form of Directors and Officers Indemnification Agreement, incorporated by reference to Exhibit 10.15 to Atento S.A.’s Registration
Statement on Form F-1 (File No. 333-195611), initially filed on May 1, 2014.
Amendment Agreement No. 2, dated as of November 8, 2016, to the Master Services Agreement, by and between Luxco (f/k/a BC
Luxco 1, S.A.) and Telefónica, S.A., dated as of December 11, 2012, incorporated by reference to Exhibit 99.1 to Atento S.A.’s Report
on Form 6-K (File No. 001-36671), filed on November 10, 2016.**
List of subsidiaries of Atento S.A., incorporated by reference to Exhibit 8.1 to Atento S.A.’s Annual Report on Form 20-F (File No.
001-36671), filed on March 31, 2015.*
Code of ethics, incorporated by reference to Exhibit 11.1 to Atento S.A.’s Annual Report on Form 20-F (File No. 001-36671), filed on
March 31, 2015.
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.*
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.*
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.*
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.*
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
* Filed herewith.
** Application has been granted by the Securities and Exchange Commission for confidential treatment of certain provisions of these exhibits.
Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: March 22, 2021
ATENTO S.A.
By:
Name:
Title:
By:
Name:
Title:
/s/ Carlos López-Abadía
Carlos López-Abadía
Chief Executive Officer
/s/ Jose Carlos Antonio de Souza Azevedo
Jose Carlos Antonio de Souza Azevedo
Chief Financial Officer
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Atento S.A.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Atento S.A. and subsidiaries (the
“Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income
(loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2020, and the
related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019,
and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in
conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB).
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) and our report dated March 22, 2021 expressed an unqualified opinion thereon.
Adoption of IFRS 16
As discussed in Note 3(u) to the consolidated financial statements, the Company changed its method of accounting for
leases in 2019, due to the adoption of IFRS 16 - Leases, using the modified retrospective method of adoption.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of
the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide
a reasonable basis for our opinion.
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Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements
that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex
judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Description of
the Matter
Recognition of unbilled revenue
As discussed in Note 3(i) to the consolidated financial statements, the Company recognizes revenue
on an accrual basis during the period in which services are rendered. For services delivered and not
yet invoiced the Company recognizes unbilled revenue and trade receivables based on pricing
contractually agreed by its customers and volume of services rendered.
Auditing the Company´s unbilled revenue and trade receivables was specially challenging as the
process to accrue unbilled revenue and trade receivables is highly dependent on manual data
collection and calculations. The Company’s disclosures concerning revenue recognition in respect of
unbilled revenue are included in Note 3(i) to the consolidated financial statements.
We obtained an understanding, evaluated the design and tested the operating effectiveness of the
related controls over the Company’s accounting for unbilled revenue and trade receivables. For
example, we tested controls over management’s data gathering process and computations used to
calculate the unbilled revenue and trade receivables.
How We
Addressed the
Matter in Our
Audit
To test unbilled trade receivables, our audit procedures included, among others, obtaining copies of
customer contracts and comparing terms and conditions with the Company’s evaluation of the related
performance obligations; testing the mathematical accuracy of the Company’s calculation of the
amount of revenue to be recognized; assessing whether the prices applied to those services were in
accordance with the contractual agreement with the customer and comparing the actual
subsequently invoiced services with the unbilled trade receivables. We also assessed the Company’s
disclosures in respect to its recognition of unbilled revenue in Note 3(i) to the consolidated financial
statements.
Description of
the Matter
Goodwill impairment assessment
At December 31, 2020, the Company’s goodwill balance was U.S.$103,014 thousand. As discussed
in Note 8 of the financial statements, goodwill is tested for impairment at least annually, as required
by IAS 36. Management uses projections of cash flows for the cash generating units to which
goodwill is assigned that are based on estimations of future business results and market conditions.
Auditing the goodwill impairment testing was complex due to the significant estimation uncertainty
that is involved in management´s goodwill impairment assessment. That significant estimation
uncertainty is primarily derived from the sensitivity of the respective value in use to the assumptions
about future business performance and market conditions. The significant assumptions used to
determine the value in use include expected growth rates, the discount rate applied, the terminal
growth rate, among others. Such assumptions may be materially affected by market conditions or
future economic scenarios. The Company’s disclosures concerning goodwill impairment assessment
are included in Note 8 to the consolidated financial statements.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the
related controls over the Company’s goodwill impairment assessment process. For example, we
tested controls over management’s forecasting process and the review of significant assumptions
used in estimating the value in use.
To test the estimated value in use of the Company’s reporting units, our audit procedures included,
among others, involving our valuation specialists to assist in assessing methodologies, testing
significant assumptions and underlying data used by the Company in its analysis. We compared the
significant assumptions used by management to current industry and economic trends, changes to
the Company’s business model and other relevant factors. We assessed the historical accuracy of
management’s estimates and performed sensitivity analyses of significant assumptions to evaluate
the changes in the value in use of the reporting units that would result from changes in the
assumptions. We also compared management’s forecasts used in the goodwill impairment
assessment to the ones approved by the Board of Directors. We also assessed the Company’s
disclosures in respect to its goodwill impairment assessment in Note 8 to the consolidated financial
statements.
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Description of
the Matter
Recoverability of deferred tax assets
At December 31, 2020, the Company recognized deferred tax assets for U.S.$102,353 thousand.
The Company operates in various countries which are subject to their respective local tax
regulations. In assessing the recoverability of deferred tax assets management uses projections of
taxable income that are based on estimations of future business performance and market conditions,
including applicable tax regulations.
Auditing the Company´s assessment of recoverability of deferred tax assets was specially
challenging as management assessment involves significant judgment by management in relation to
underlying assumptions such as the timing and level of future taxable income, which may be affected
by future regulatory changes, economic events or market conditions. The Company’s disclosures
concerning deferred taxes are included in Note 20 to the consolidated financial statements.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the
related controls over the Company’s deferred tax asset recoverability assessment process. For
example, we tested controls over management’s forecasting process and the review of significant
assumptions used in estimating future taxable income.
To test the deferred tax assets recoverability assessment, our audit procedures included, among
others, comparing the forecast used in assessing the recoverability of deferred tax assets to the one
approved by the Board of Directors; involving our tax professionals to assist in evaluating the
application of tax law and regulations in the estimation of future taxable income and performing
sensitivity analyses and testing the key assumptions used. We also assessed the Company’s
disclosures in respect to its deferred tax assets in Note 20 to the consolidated financial statements.
/s/ ERNST & YOUNG
Auditores Independentes S.S.
We have served as the Company’s auditor since 2005.
São Paulo, Brazil,
March 22, 2021
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Atento S.A.
Opinion on Internal Control over Financial Reporting
We have audited Atento S.A. and subsidiaries’ internal control over financial reporting as of December 31, 2020, based on
criteria established in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Atento S.A. and subsidiaries (the Company)
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on
the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s consolidated statements of financial position as of December 31, 2020 and 2019, and the
related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for each of
the three years in the period ended December 31, 2020, and the related notes and our report dated March 22, 2021
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ ERNST & YOUNG
Auditores Independentes S.S.
São Paulo, Brazil
March 22, 2021
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ATENTO S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of December 31, 2019 and 2020
(In thousands of U.S. dollars, unless otherwise indicated)
ASSETS
NON-CURRENT ASSETS
Intangible assets
Goodwill
Right-of-use assets
Property, plant and equipment
Non-current financial assets
Trade and other receivables
Other non-current financial assets
Derivative financial instruments
Other taxes recoverable
Deferred tax assets
CURRENT ASSETS
Trade and other receivables
Trade and other receivables
Current income tax receivable
Other taxes recoverable
Other current financial assets
Cash and cash equivalents
TOTAL ASSETS
The accompanying notes are an integral part of the consolidated financial statements.
F-5
Notes
6
7
10
9
13
12
14
20c)
20b)
13
20c)
20c)
12
15
December 31,
2019
765,839
2020
604,327
160,041
119,902
181,564
116,893
82,158
22,124
54,652
5,382
5,650
99,631
538,772
388,308
359,599
28,709
24,664
1,094
124,706
106,643
103,014
137,842
90,888
70,275
20,995
38,192
11,088
4,815
90,850
571,796
324,850
299,086
25,764
36,794
1,158
208,994
1,304,611
1,176,123
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ATENTO S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of December 31, 2019 and 2020
(In thousands of U.S. dollars, unless otherwise indicated)
EQUITY AND LIABILITIES
TOTAL EQUITY
EQUITY ATTRIBUTABLE TO:
OWNERS OF THE PARENT COMPANY
Share capital
Share premium
Treasury shares
Retained losses
Translation differences
Hedge accounting effects
Stock-based compensation
NON-CURRENT LIABILITIES
Deferred tax liabilities
Debt with third parties
Derivative financial instruments
Provisions and contingencies
Non-trade payables
Other taxes payable
CURRENT LIABILITIES
Debt with third parties
Derivative financial instruments
Trade and other payables
Trade payables
Income tax payables
Other taxes payables
Other non-trade payables
Provisions and contingencies
TOTAL EQUITY AND LIABILITIES
The accompanying notes are an integral part of the consolidated financial statements.
F-6
Notes
19
20b)
17
14
21
18
20c)
17
14
18
20c)
20c)
18
21
December 31,
2019
207,020
2020
119,676
207,020
119,676
49
619,461
(19,319)
(127,070)
(271,273)
(8,872)
14,044
49
613,619
(12,312)
(178,988)
(280,715)
(37,360)
15,383
718,989
651,662
20,378
633,498
2,289
48,326
11,744
2,754
-
594,636
5,220
45,617
4,296
1,893
378,602
404,785
87,117
167
272,547
71,676
12,671
93,765
94,435
18,771
1,304,611
133,187
-
249,723
59,415
16,838
97,104
76,366
21,875
1,176,123
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ATENTO S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2018, 2019 and 2020
(In thousands of U.S. dollars, unless otherwise indicated)
Revenue
Other operating income
Other gains and own work capitalized
Operating expenses:
Supplies
Employee benefit expenses
Depreciation
Amortization
Changes in trade provisions
Impairment charges
Other operating expenses
OPERATING PROFIT
Finance income
Finance costs
Net foreign exchange loss
NET FINANCE EXPENSE
PROFIT/(LOSS) BEFORE INCOME TAX
Income tax expense
PROFIT/(LOSS) FOR THE YEAR
PROFIT/(LOSS) ATTRIBUTABLE TO:
OWNERS OF THE PARENT
NON-CONTROLLING INTEREST
PROFIT/(LOSS) FOR THE YEAR
EARNINGS/(LOSS) PER SHARE:
Basic earnings/(loss) per share (in U.S. dollars)
Diluted earnings/(loss) per share (in U.S. dollars)
The accompanying notes are an integral part of the consolidated financial statements.
F-7
Notes
22a)
22b)
22c)
22d)
22e)
22f)
22f)
8
22g)
22h)
22h)
22h)
20a)
For the years ended December 31,
2020
2018
2019
1,412,262
1,818,180
5,574
19,377
99
180
1,707,286
4,539
10,477
(70,816)
(1,365,181)
(36,566)
(58,679)
(1,032)
-
(215,958)
89,505
(66,427)
(1,301,031)
(83,556)
(57,226)
(3,730)
(30,909)
(166,778)
12,645
(72,276)
(1,060,408)
(73,939)
(46,981)
(5,293)
-
(118,711)
40,327
18,843
(45,612)
(28,836)
(55,605)
33,900
(13,414)
20,486
18,540
1,946
20,486
20,045
(68,085)
(9,080)
(57,120)
(44,475)
(36,218)
(80,693)
(81,306)
613
(80,693)
15,683
(70,293)
(27,818)
(82,428)
(42,101)
(4,779)
(46,880)
(46,880)
-
(46,880)
24
24
1.26
1.25
(5.63)
(5.63)
(3.33)
(3.33)
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ATENTO S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME /(LOSS)
For the years ended December 31, 2018, 2019 and 2020
(In thousands of U.S. dollars, unless otherwise indicated)
Profit/(loss) for the year
Other comprehensive income/(loss) to be reclassified to profit and loss in subsequent periods:
Net investment hedge
Exchange differences on translation of foreign operations
Translation differences
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Total comprehensive income/(loss) attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive income/(loss)
The accompanying notes are an integral part of the consolidated financial statements.
F-8
For the years ended December 31,
2020
2019
2018
(46,880)
(80,693)
20,486
(1,190)
-
(88,754)
(89,944)
(69,458)
(69,709)
251
(69,458)
(10,346)
(6,930)
(14,953)
(32,229)
(112,922)
(112,733)
(189)
(112,922)
13,838
(42,326)
(9,442)
(37,930)
(84,810)
(84,810)
-
(84,810)
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ATENTO S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the years ended December 31, 2018, 2019 and 2020
(In thousands of U.S. dollars, unless otherwise indicated)
Balance at January 1,
2018
Comprehensive
income/(loss) for the
year
Profit for the year
Other comprehensive
income/(loss), net of taxes
Compensation of
retained losses
Increase of share capital
Dividends
Stock-based
compensation
Acquisition of treasury
shares
Monetary correction
caused by hyperinflation
Balance at December 31,
2018
Share
capital
48
Share
premium
639,435
-
-
-
-
1
-
-
-
-
-
-
-
(24,147)
-
-
-
-
-
49
615,288
Treasury
shares
-
-
-
-
-
-
-
-
(8,178)
-
(8,178)
Reserve
for
acquisition
of non-
controlling
interest
Retained
earnings/
(losses)
(23,531)
(94,535)
Translation
differences
(170,063)
Hedge
accounting
effects
9,594
-
-
-
-
-
-
-
-
-
18,540
18,540
(87,059)
(1,190)
-
-
-
(87,059)
(1,190)
24,147
-
-
-
-
35,524
-
-
-
-
-
-
-
-
-
-
-
-
Stock-based
compensation
Total
owners
of the
parent
company
368,363
Non-
controlling
interest
9,476
Total equity
377,839
(69,709)
251
(69,458)
7,415
-
-
-
-
-
-
18,540
(88,249)
1,946
(1,695)
-
1
-
-
-
(1,186)
5,551
5,551
-
-
(8,178)
35,524
-
-
-
20,486
(89,944)
-
1
(1,186)
5,551
(8,178)
35,524
(23,531)
(16,325)
(257,122)
8,404
12,966
331,551
8,541
340,092
Reserve to
acquisition
of non-
controlling
interest
Retained
(losses)
Treasury
shares
(8,178)
(23,531)
(16,325)
Translation
differences
(257,122)
Share
capital
49
Share
premium
615,288
Hedge
accounting
effects
Stock-based
compensation
8,404
12,966
Total
owners
of the
parent
company
331,551
Non-
controlling
interest
8,541
Total equity
340,092
Balance at January 1,
2019
Comprehensive
income/(loss) for the
year
Loss for the year
Other comprehensive
income/(loss), net of taxes
Acquisition of non-
controlling interest
Stock-based
compensation
Shares delivered
Acquisition of treasury
shares
Monetary correction
caused by hyperinflation
Balance at December 31,
2019
-
-
-
-
-
-
-
-
-
-
-
-
-
4,173
-
-
-
-
-
-
-
-
(11,141)
-
49
619,461
(19,319)
-
-
-
(81,306)
(14,151)
(17,276)
(81,306)
-
-
-
(14,151)
(17,276)
-
-
-
-
-
-
-
-
-
-
23,531
(8,096)
-
-
-
-
-
-
-
-
(21,343)
(127,070)
F-9
(112,733)
(189)
(112,922)
-
-
-
-
5,251
(4,173)
-
-
(81,306)
(31,427)
15,435
5,251
-
(11,141)
(21,343)
613
(802)
(8,352)
-
-
-
-
-
(80,693)
(32,229)
7,083
5,251
-
(11,141)
(21,343)
207,020
(271,273)
(8,872)
14,044
207,020
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Balance at January 1, 2020
Comprehensive income/(loss) for the
year
Loss for the year
Other comprehensive income/(loss), net
of taxes
Stock-based compensation
Shares delivered
Acquisition of treasury shares
Monetary correction caused by
hyperinflation
Balance at December 31, 2020
Share
capital
49
Share
premium
619,461
Treasury
shares
(19,319)
Retained
(losses)
(127,070)
Translation
differences
(271,273)
-
-
-
-
(5,842)
-
-
-
-
-
-
8,335
(1,328)
(46,880)
(46,880)
(9,442)
-
-
-
-
-
(9,442)
(28,488)
-
-
-
-
-
-
-
-
-
(5,038)
Hedge
accounting
effects
(8,872)
(28,488)
-
Stock-based
compensation
14,044
Total owners
of the parent
company
207,020
Total equity
207,020
-
-
-
3,832
(2,493)
-
-
(84,810)
(46,880)
(37,930)
3,832
-
(1,328)
(5,038)
(84,810)
(46,880)
(37,930)
3,832
-
(1,328)
(5,038)
613,619
(12,312)
(178,988)
(280,715)
(37,360)
15,383
119,676
119,676
-
-
-
-
-
-
-
49
The accompanying notes are an integral part of the consolidated financial statements.
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ATENTO S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2018, 2019 and 2020
(In thousands of U.S. dollars, unless otherwise indicated)
Notes
22f)
22b)
22h)
22h)
22h)
5
Operating activities
Profit/(loss) before income tax
Adjustments to reconcile profit/(loss) before tax to net cash flows:
Amortization and depreciation
Impairment losses
Changes in trade provisions
Share-based payment expense
Change in provisions
Grants released to income
Losses on disposal of property, plant and equipment
Losses on disposal of financial assets
Finance income
Finance costs
Net foreign exchange differences
Changes in other (gains)/losses and own work capitalized
Changes in working capital:
Changes in trade and other receivables
Changes in trade and other payables
Other payables
Interest paid
Interest received
Income tax paid
Other payments
Net cash flows from operating activities
Investing activities
Payments for acquisition of intangible assets
Payments for acquisition of property, plant and equipment
Acquisition of subsidiaries, net of cash acquired
Net cash flows used in investing activities
Financing activities
Proceeds from borrowings from third parties
Repayment of borrowings from third parties
Payments of lease liabilities
Acquisition of treasury shares
Dividends paid
Net cash flows provided by/(used in) financing activities
Net (decrease)/increase in cash and cash equivalents
Foreign exchange differences
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The accompanying notes are an integral part of the consolidated financial statements.
F-11
For the years ended December 31,
2019
2020
2018
33,900
(44,475)
(42,101)
95,245
-
1,656
4,088
11,124
(1,000)
1,568
416
(18,843)
45,612
28,896
(180)
168,582
(6,936)
(259)
(36,094)
(43,289)
(49,477)
674
(20,446)
(8,757)
(78,006)
81,187
(24,813)
(16,355)
-
(41,168)
58,462
(81,675)
-
(8,178)
(2,318)
(33,709)
6,310
(14,546)
141,762
133,526
140,782
30,909
3,730
5,251
33,917
(1,165)
190
(2)
(20,045)
68,085
9,080
(23,013)
247,719
(55,730)
47
(4,837)
(60,520)
(48,737)
1,406
(31,308)
(17,561)
(96,200)
46,524
(18,709)
(21,359)
(15,827)
(55,895)
173,717
(101,479)
(56,088)
(11,141)
-
5,009
(4,362)
(4,458)
133,526
124,706
120,920
-
5,293
4,316
27,955
(878)
306
-
(15,683)
70,293
27,818
(592)
239,748
2,205
1,589
(14,524)
(10,730)
(46,199)
11,844
(11,222)
(14,349)
(59,926)
126,991
(6,913)
(31,268)
-
(38,181)
121,771
(70,543)
(48,947)
(1,328)
-
953
89,763
(5,475)
124,706
208,994
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ATENTO S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018, 2019 and 2020
(In thousands of U.S. dollars, unless otherwise indicated)
1) COMPANY ACTIVITY AND CORPORATE INFORMATION
(a) Description of business
Atento S.A. (the “Company”) and its subsidiaries (“Atento Group”) offer customer relationship management services to their clients through
contact centers or multichannel platforms.
The Company was incorporated on March 5, 2014 under the laws of the Grand-Duchy of Luxembourg, with its registered office in
Luxembourg at 4, Rue Lou Hemmer.
The majority direct shareholders of the Company are Mezzanine Partners II Offshore Lux Sarl II, Mezzanine Partners IIOnshore Lux Sarl II,
Mezzanine Partners II Institutional Lux Sarl II, Mezzanine Partners II AP LUX SARL II, Chesham Investment Pte Ltd. and Taheebo Holdings LLC,
Arch Reinsurance Ltd.
The Company may act as the guarantor of loans and securities, as well as assisting companies in which it holds direct or indirect interests or
that form part of its group. The Company may secure funds, with the exception of public offerings, through any kind of lending, or through the
issuance of bonds, securities or debt instruments in general.
The Company may also carry on any commercial, industrial, financial, real estate business or intellectual property related activity that it
deems necessary to meet the aforementioned corporate purposes.
The corporate purpose of its subsidiaries, with the exception of the intermediate holding companies, is to establish, manage and operate CRM
centers through multichannel platforms; provide telemarketing, marketing and “call center” services through service agencies or in any other format
currently existing or which may be developed in the future by the Atento Group; provide telecommunications, logistics, telecommunications system
management, data transmission, processing and internet services and to promote new technologies in these areas; offer consultancy and advisory
services to clients in all areas in connection with telecommunications, processing, integration systems and new technologies, and other services
related to the above. The Company’s ordinary shares are traded on NYSE under the symbol “ATTO”.
2) BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
a) Statement of compliance with IFRS and basis of preparation
The consolidated financial statements of December 31, 2020 were prepared in accordance with International Financial Reporting Standards
(“IFRS”) issued by the International Accounting Standard Board (“IASB”) prevailing at December 31, 2020. The consolidated financial statements
have been prepared on a historical costs basis, except for Argentina that is adjusted for inflation as required by IAS 29 Financial Reporting in
Hyperinflationary Economies in Argentina, and derivative financial instruments and financial liability related to the option for acquisition of non-
controlling interest, which have been measured at fair value.
The consolidated financial statements have been authorized for issue and publication by the Company's Management and Audit Committee
on March 22, 2021.
The preparation of financial statements under IFRS as issued by the IASB requires the use of certain key accounting estimates. IFRS also
requires Management to exercise judgment throughout the process of applying the Atento Group’s accounting policies. Note 3s discloses the areas
requiring a more significant degree of judgment or complexity and the areas where assumptions and estimates are more relevant to the consolidated
financial statements. Also, Note 3 contains a detailed description of the most significant accounting policies used to prepare these consolidated
financial statements.
The amounts in these consolidated financial statements, comprising the consolidated statements of financial position, the consolidated
statements of operations, the consolidated statements of comprehensive income/(loss), the consolidated statements of changes in equity, the
consolidated statements of cash flows, and the notes thereto are expressed in thousands of U.S. dollars and all values are rounded to the nearest
thousand, unless otherwise indicated.
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b) Consolidated statements of cash flows
The consolidated statements of cash flows have been prepared using the indirect method pursuant to IAS 7, “Statement of Cash Flows”.
Foreign currency transactions are translated at the average exchange rate for the period, in those cases where the currency differs from the
presentation currency of Atento Group (U.S. dollar), as indicated in Note 3c. The effect of exchange rate fluctuations on cash and cash equivalents,
maintained or owed, in foreign currency, is presented in the statements of cash flows to reconcile cash and cash equivalents at the beginning of the
year and at year-end.
3) ACCOUNTING POLICIES
The main accounting policies used to prepare the accompanying consolidated financial statements are set out below.
a) Principles of consolidation, business combinations and goodwill
(i) Subsidiaries
Subsidiaries are all entities over which the Atento Group has control. The Atento Group controls an entity when the Atento Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct
the activities of the entity. Subsidiaries are fully consolidated from the date on which control is obtained by the Group, until the Group loses control
of the entity.
Intercompany transactions, balances and unrealized gains on transactions between the Atento Group companies are eliminated on
consolidation, except those arisen from exchange variations. Unrealized losses are also eliminated unless the transaction provides evidence of an
impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Atento Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statements of operations,
statement of comprehensive income/(loss), statement of changes in equity and financial position.
(ii) Business combinations and goodwill
When the Atento Group acquires a business, it assesses the financial assets acquired and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the
separation of embedded derivatives in host contracts by the acquire.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Contingent
consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified
as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value with the changes
in fair value recognized in the statement of profit or loss in accordance with IFRS 9. Other contingent consideration that is not within the scope of
IFRS 9 is measured at fair value at each reporting date with changes in fair value recognized in profit or loss.
Goodwill is initially measured as any excess of the total consideration transferred over the net identifiable assets acquired and liabilities
assumed. If the fair value of the net assets acquired is greater than the total consideration transferred, the difference is recognized in the statements of
operations as a gain from a bargain purchase. Goodwill acquired in a business combination is allocated to each cash-generating unit, or group of
cash-generating units, that are expected to benefit from the synergies arising in the business combination. Goodwill is tested for impairment annually
or whenever there are certain events or changes in circumstances indicating potential impairment. The carrying amount of the assets allocated to each
cash-generating unit is then compared with its recoverable amount, which is the greater of its value in use or fair value less costs to sell. Any
impairment loss is immediately taken to the statements of operations and may not be reversed (see Note 3h).
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b) Functional and presentation currency
Items included in the financial statements of each of the Atento Group’s entities are measured using the currency of the primary economic
environment in which the entities operate (‘the functional currency’). The consolidated financial statements are presented in thousands of U.S.
dollars, which is the presentation currency of the Atento Group.
c) Foreign currency translation
The results and financial position of all Atento Group entities whose functional currency is different from the presentation currency are
translated into the presentation currency as follow:
· Statements of financial position assets and liabilities are translated at the exchange rate prevailing at the reporting date.
· Statements of operations items are translated at average exchange rates for the year (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated
at the rate on the dates of the transactions).
· Hyperinflationary economies: Under IAS 29, the non-monetary assets and liabilities, the equity and the statements of operations of
subsidiaries operating in hyperinflationary economies are restated applying a general price index. The financial statements of an entity
whose functional currency is the currency of a hyperinflationary economy, whether they are based on a historical cost approach or a
current cost approach, shall be stated in terms of the measuring unit current at the end of the reporting period and translated to U.S. dollar
at the closing rate of the period, for the purposes of conversion, applying IAS 21.
· Proceeds and payments shown on the statements of cash flows are translated at the average exchange rates for the period (unless this
average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case proceeds
and payments are translated at the rate on the dates of the transactions). Proceeds and payments for the subsidiary located in Argentina
shown on the statements of cash flows are translated at the exchange rates prevailing at the reporting date.
· Retained earnings are translated at historical exchange rates.
· All resulting exchange differences are recognized in other comprehensive income/(loss).
Goodwill and fair value adjustments to net assets arising from the acquisition of a foreign company are considered to be assets and liabilities
of the foreign company and are translated at year-end exchange rates. Exchange differences arising are recognized in other comprehensive
income/(loss).
d) Foreign currency transactions
Transactions in foreign currency are translated into the functional currency using the exchange rates prevailing at the date of the transactions
or valuation date, in the case of items being remeasured. Foreign exchange gains and losses resulting from the settlement of these transactions and
from the translation at reporting date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the
statements of operations, except when deferred in other comprehensive income/(loss).
All differences arising on non–trading activities are taken to other operating income/expense in the statements of operations, with the
exception of the effective portion of the differences on cash flows and net investment hedges that are accounted for as an effective hedge against a net
investment in a foreign entity. These differences are recognized in other comprehensive income/(loss) (OCI) until the hedge settlement and disposal
of the net investment, at which time, they are recognized in the statements of operations. Tax charges and credits attributable to exchange differences
on those monetary items are also recorded in OCI.
Non–monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the date of
recognition.
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e) Segment information
Segment information is presented in accordance with management information reviewed by the Chief Operating Decision Maker
(“CODM”). The CODM, responsible for allocating resources and assessing performance of operational segments, has been identified as the Chief
Executive Officer (“CEO”) responsible for strategic decisions.
The CODM considers the business from a geographical perspective and analyzes it across three operational segments-EMEA, Americas and
Brazil.
No operating segments have been aggregated to form the reportable operating segments as compared to the previous years.
f) Intangible assets
Intangible assets are stated at acquisition cost, less any accumulated amortization and any accumulated impairment losses.
The intangible assets acquired in a business combination are initially measured at their fair value as of the acquisition date.
The useful lives of intangible assets are assessed on a case-by-case basis to be either finite or indefinite. Intangible assets with finite lives are
amortized on a straight-line basis over their estimated useful life and assessed for impairment whenever events or changes indicate that their carrying
amount may not be recoverable. Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for
impairment. The amortization charge on intangible assets is recognized in the consolidated statements of operations under “Amortization”.
Amortization methods and useful lives are revised annually at the end of each reporting period and, where appropriate, adjusted
prospectively.
Customer base
Customer base acquired in a business combination is recognized at fair value at the acquisition date and have finite useful lives and are
subsequently carried at cost less accumulated amortization, which has been estimated to be between seven and twelve years. The customer base relate
to all agreements, tacit or explicit, entered into between the Atento Group and the former owner of the Atento Group and between the Atento Group
and other customers, in relation to the provision of services, and that were acquired as part of the business combinations.
Software
Software is measured at cost (at acquisition or development costs) and amortized on a straight-line basis over its useful life, generally
estimated to be between three and ten years. Maintenance cost of software is expensed as incurred.
Development costs directly attributable to the design and creation of software that are identifiable and unique, and that may be controlled by
the Group, are recognized as an intangible asset providing the following conditions are met:
· It is technically feasible for the intangible asset to be completed so that it will be available for use or sale.
· Management intends to complete the asset for use or sale.
· The Group has the capacity to use or sell the asset.
· It is possible to show evidence of how the intangible asset will generate probable future economic benefits.
· Adequate technical, financial and other resources are available to complete the development and to use or sell the intangible asset.
· The outlay attributable to the intangible asset during its development can be reliably determined.
Directly attributable costs capitalized in the value of the software include the cost of personnel developing the programs and an appropriate
percentage of overheads.
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Costs that do not meet the criteria listed above are recognized as an expense as incurred. Expenditure for an intangible asset that is initially
recognized within expenses for the period may not be subsequently recognized as intangible assets.
Other intangible assets
Other intangible assets mainly include payment of loyalty incentives which are amortized on a straight-line basis over the term of the
agreements which range from four to ten years.
g) Property, plant and equipment
Property, plant and equipment are measured at cost, less accumulated depreciation and any impairment losses.
Acquisition costs include, when appropriate, the initial estimates of decommissioning, withdrawal and site reconditioning costs when the
Atento Group is obliged to bear this expenditure as a condition of using the assets. Repairs that do not prolong the useful life of the assets and
maintenance costs are recognized directly in the statements of operations. Costs that prolong or improve the life of the asset are capitalized as an
increase in the cost of the asset.
Property, plant and equipment acquired in a business combination are initially measured at fair value as of the acquisition date.
The Atento Group assesses the need to write down, if appropriate, the carrying amount of each item of property, plant and equipment to its
period-end recoverable amount whenever there are indications that the assets’ carrying amount may not be fully recoverable through the generation
of sufficient future revenue. The impairment allowance is reversed if the factors giving rise to the impairment cease to exist.
The depreciation charge for items of property, plant and equipment is recognized in the consolidated statements of operations under
“Depreciation”.
Depreciation is calculated on a straight-line basis over the useful life of the asset applying individual rates to each type of asset, which are
reviewed at the end of each reporting period.
The useful lives generally used by the Atento Group are as follow:
Buildings
Plant and machinery
Furniture, tools
Other tangible assets
h) Impairment of non-current assets
Years of useful life
5 - 40
3 - 6
1 - 10
5 - 8
The Atento Group assesses as of each reporting date whether there is an indicator that a non-current asset may be impaired. If any such
indicator exists, or when annual impairment testing for an asset is required (e.g. goodwill), the Atento Group estimates the asset’s recoverable
amount. An asset’s recoverable amount is the higher of its fair value less costs to sell or its value in use. In assessing the value in use, the estimated
future cash flow is discounted to its present value using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered to be impaired. In
this case, the carrying amount is written down to its recoverable amount, and the resulting loss is recognized in the statements of operations. Future
depreciation/amortization charges are adjusted to reflect the asset’s new carrying amount over its remaining useful life. Management analyzes the
impairment of each asset individually, except in the case of assets that generate cash flow which are interdependent on those generated by other assets
(cash generating units – “CGU”).
The Atento Group bases the calculation of impairment on the business plans of the various cash generating units to which the assets are
allocated. These business plans cover five years. A long-term growth rate is calculated and applied to project future cash flows after the fifth year.
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When there are new events or changes in circumstances that indicate that a previously recognized impairment loss no longer exists or has
been decreased, a new estimate of the asset’s recoverable amount is made. A previously recognized impairment loss is reversed only if there has been
a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the
carrying amount of the asset is increased to its recoverable amount. The reversal is limited to the carrying amount that would have been determined if
no impairment loss been recognized for the asset in prior years. This reversal is recognized in the statements of operations and the depreciation
charge is adjusted in future periods to reflect the asset’s revised carrying amount. Impairment losses relating to goodwill cannot be reversed in future
periods.
i) Financial assets and liabilities
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive
income (OCI), and fair value through profit or loss.
The Atento Group has classified all financial assets as amortized cost, except for derivative financial instruments.
All purchases and sales of financial assets are recognized on the statement of financial position on the transaction date, i.e. when the
commitment is made to purchase or sell the asset.
A financial asset is fully or partially derecognized from the statement of financial position only when:
1. The rights to receive cash flow from the asset have expired.
2. The Atento Group has assumed an obligation to pay the cash flow received from the asset to a third party or
3. The Atento Group has transferred its rights to receive cash flow from the asset to a third party, thereby substantially transferring all of
the risks and rewards of the asset.
Financial assets and financial liabilities are offset and presented on a net basis in the statement of financial position when a legally
enforceable right exists to offset the amounts recognized and the Atento Group intends to settle the assets and liabilities net or to simultaneously
realize the asset and cancel the liability.
Amortized cost financial assets include fixed maturity financial assets not listed in active markets and which are not derivatives. They are
classified as current assets, except for those maturing more than twelve months after the reporting date, which are classified as non-current assets.
Loans and receivables are initially recognized at fair value plus any transaction costs, and are subsequently measured at amortized cost, using the
effective interest method. Interest calculated using the effective interest method is recognized under finance income in the statements of operations.
The Atento Group assesses at each reporting date whether a financial asset is impaired. Where there is objective evidence of impairment of a
financial asset valued at amortized cost, the amount of the loss to be taken to the statements of operations is measured as the difference between the
carrying amount and the present value of estimated future cash flow, discounted at the asset’s original effective interest rate. The carrying amount of
the asset is reduced and the amount of the impairment loss is expensed in the consolidated statements of operations.
Trade receivables
Trade receivables are amounts due from customers for the sale of services in the normal course of business. Receivables slated for collection
in twelve months or less are classified as current assets; otherwise, the balances are considered non-current assets.
These are financial assets measured initially at fair value and subsequently, at amortized cost and are evaluated by the value of the services
provided in accordance with the contracted conditions, net of estimated impairment losses. These include the services provided to customers, which
were still not billed at the balance sheet date. In general, cash flow relating to short-term receivables is not discounted.
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Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and in banks, demand deposits and other highly liquid investments with an original
maturity of three months or less, which are subject to an insignificant risk of changes in value.
Financial liabilities
Debt with third parties (Loans and Borrowings)
Debt with third parties is initially recorded at the fair value of the consideration received, less any directly attributable transaction costs.
After initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. Any difference between the cash
received (net of transaction costs) and the repayment value is recognized in the statements of operations over the life of the debt. Debt with third
parties is considered to be non-current when the maturity date is longer than twelve months from the reporting date, or when the Atento Group has
full discretion to defer settlement for at least another twelve months from that date.
Financial liabilities are derecognized in the statement of financial position when the respective obligation is settled, cancelled or matures.
Trade payables
Trade payables are payment obligations in respect of goods or services received from suppliers in the ordinary course of business. Trade
payables falling due in twelve months or less are classified as current liabilities; otherwise, the balances are considered as non-current liabilities.
j) Derivative financial instruments and hedging
Derivative financial instruments are initially recognized at their fair values on the date on which the derivative contract is entered into and
are subsequently remeasured at their fair value.
Any gains or losses resulting from changes in the fair value of a derivative instrument are recorded in the statements of operations, except
for the effective portion of cash flow and net investment hedges, which is recognized in other comprehensive income/(loss) and later reclassified to
profit or loss when the hedge item affects the statements of operations.
At the inception of the derivative instrument contract, the Atento Group documents the relationship between the hedging instruments and the
hedged items, as well as the risk management objectives and the strategy for groups of hedges. The Atento Group also documents its assessment,
both at the inception of the hedge and throughout the term thereof, of whether the derivatives used are highly effective at offsetting changes in the fair
value or cash flow of the hedged items.
The fair value of a hedging derivative is classified as a non-current asset or liability, as applicable, if the remaining maturity of the hedged
item exceeds twelve months, otherwise it is classified as a current asset or liability.
For purpose of hedge accounting the Atento Group designates certain derivatives as either:
Cash flow hedges
Cash flow hedge is defined as a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a
recognized asset or liability (such as all or some future interest payments on variable rate debt) or a highly probable forecast transaction that could
affect profit or loss.
The effective portion of the gain or loss on the hedging instrument is recognized in other comprehensive income in the cash flow hedge
reserve in equity. If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, any gain or loss
on the hedging instrument that was previously recognized directly in equity is recycled from reserves into the statements of operations in the same
period(s) in which the financial asset or liability affects profit or loss.
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Net investment hedges
Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognized in other comprehensive income. Gains
or losses relating to the ineffective portion are recognized in the statements of operations. Gains and losses accumulated in equity are included in the
statements of operations when the foreign operation is partially disposed of or sold.
k) Share capital
The ordinary shares of the Company are classified in equity (see Note 19).
Issuance costs directly attributable to the issuance of new shares or options are deducted from the proceeds raised in equity, net of the tax
effect.
l) Treasury shares
Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized
in profit or loss on the purchase, sale, issue or cancellation of the Atento Group’s own equity instruments. Any difference between the carrying
amount and the consideration, if reissued, is recognized in the share premium.
m) Provisions
Provisions are recognized when the Atento Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount
of the obligation. Provisions for restructuring include penalties for the cancellation of leases and other contracts, as well as employee termination
payments. Provisions are not recognized for future operating losses.
When the Atento Group is virtually certain that some or all of a provision is to be reimbursed, for example under an insurance contract, a
separate asset is recognized in the statement of financial position, and the expense relating to the provision is recorded in the statements of operations,
net of the expected reimbursement.
Provisions are measured at the present value of expenditure expected to be required to settle the obligation, using a pre-tax rate that reflects
current market assessments of the time value of money and the specific risks inherent to the obligation.
Contingent liabilities represent possible obligations to third parties, and existing obligations that are not recognized, given that it is not likely
that an outflow of economic resources will be required in order to settle the obligation or because the amount cannot be reliably estimated.
Contingent liabilities are not recognized on the consolidated statement of financial position unless they are recorded as part of a business
combination.
n) Employee benefit
Share-based payments
Atento S.A. has a share-based compensation plan, under which the subsidiaries of Atento S.A. receive services from employees as
consideration for the equity instruments of Atento S.A. The subsidiaries themselves are not party to any of the contracts; Atento S.A. settles these
agreements. The plan offers various instruments (award agreements, stock options, restricted stock units, etc.), but some types of restricted stock
units (“RSUs”) have been granted to selected employees, as described in Note 19.
The fair value of the employee services received in exchange for the grant of the RSUs is recognized as an expense in the consolidated
financial statements of Atento S.A. The total amount to be expensed is determined with reference to the fair value of the RSUs granted:
· Including any market performance conditions (for example, an entity’s share price);
· Excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and
remaining an employee of the entity over a specified time period); and
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· Including the impact of any non-vesting conditions (for example, the requirement for employees to save or hold shares for a specific
period of time).
At the end of each reporting period, the group revises its estimates of the number of RSUs that are expected to vest based on the non-market
vesting conditions and service conditions. It recognizes the impact of the revisions to original estimates, if any, in the statements of operations, with a
corresponding adjustment to equity.
When the RSUs vest, Atento S.A. issues new shares or buys them back in the market. The proceeds received, net of any directly attributable
transaction costs, are credited to share capital (nominal value) and share premium.
The social security contributions payable in connection with the granting of the share options is considered an integral part of the grant itself,
and the charge will be treated as a cash-settled transaction.
Termination benefits
Termination benefits are paid to employees when the Atento Group decides to terminate their employment contracts prior to the usual
retirement age or when the employee agrees to resign voluntarily in exchange for these benefits. The Atento Group recognizes these benefits as an
expense for the year, at the earliest of the following dates: (a) when the Atento Group is no longer able to withdraw the offer for these benefits; or (b)
when the Atento Group company recognizes the costs of a restructuring effort as per IAS 37, “Provisions, Contingent Liabilities and Contingent
Assets”, and when this restructuring entails the payment of termination benefits. When benefits are offered in order to encourage the voluntary
resignation of employees, termination benefits are measured on the basis of the number of employees expected to accept the offer. Benefits to be paid
in more than twelve months from the reporting date are discounted to their present value.
o) Income tax
The income tax expense includes all the expenses and credits arising from the corporate income tax levied on all the Atento Group
companies.
Income tax expenses for each period represent the aggregate amounts of current and deferred taxes, if applicable.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the
tax authorities. The tax rates and tax laws used to compute the amounts are those that are enacted at the reporting date in each country in which the
Atento Group operates. The Atento Group determines deferred tax assets and liabilities by applying the tax rates that will be effective when the
corresponding asset is received or the liability settled, based on tax rates and tax laws that are enacted (or substantively enacted) at the reporting date.
Deferred taxes are calculated on temporary differences arising from differences between the tax basis of assets and liabilities and their
carrying amounts for financial reporting purposes.
Deferred tax assets also arise from unused tax credits and tax loss carryforwards.
The carrying amounts of deferred income tax assets are reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient future taxable profits will be available to allow all or part of that deferred tax asset to be utilized. Unrecognized deferred
income tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will
allow the deferred tax asset to be recovered.
Deferred tax liabilities associated with investments in subsidiaries and branches are not recognized when the timing of the reversal can be
controlled by the parent company, and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax relating to items directly recognized in equity is also recognized in equity. Deferred tax assets and liabilities resulting
from business combinations are added to or deducted from goodwill.
Deferred tax assets and liabilities are offset only if a legally enforceable right exists to offset current tax assets against current income tax
liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
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p) Revenue and Expenses
Revenue and Expenses are recognized in the statements of operations an accrual basis, regardless of when actual payment or collection
occurs.
The Atento Group’s incorporation, start-up and research expenses, as well as expenses that do not qualify for capitalization under IFRS, are
recognized in the consolidated statements of operations when incurred and classified in accordance with their nature.
q) Interest income and expenses
Interest expenses incurred in the construction of any qualified asset are capitalized during the time necessary to complete the asset and
prepare it for the intended use. All other interest expenses are expensed as incurred.
Interest income is recognized using the effective interest method. When a loan or a receivable has been impaired, the carrying amount is
reduced to the recoverable amount, discounting the estimated future cash flow at the instrument’s original effective interest rate and recognizing the
discount as a decrease in interest income. Interest income on impaired loans is recognized when the cash is collected or on the basis of the recovery
of the costs when the loan is secured.
r) Leases (as lessee)
Until December 31, 2018, the Atento Group rented certain properties. Leases where the lessor does not transfer substantially all of the risks
and benefits of ownership of the asset were classified as operating leases. Operating lease payments were recognized as an expense in the statements
of operations on a straight-line basis over the lease term.
Those lease arrangements under which the Atento Group holds the significant risks and benefits inherent in owning the leased item were
treated as finance leases. Finance leases were capitalized as an asset at the inception of the lease period and classified according to their nature.
Finance leases were capitalized at the lower of the present value of the minimum lease payments agreed, and the fair value of the leased asset. Lease
payments were proportionally allocated to the principal of the lease liability and to finance charges. Finance charges are reflected in the statements of
operations over the lease term so as to achieve a constant rate of interest on the balance pending repayment in each period.
From January 1, 2019, the Group has adopted IFRS 16 Leases, but has not restated comparatives for the 2018 reporting period, as permitted
under the specific transition provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore
recognized in the opening balance sheet on January 1, 2019. As explained in Note 3u below, the Group has changed its accounting policy for leases
where the Group is the lessee.
The Atento Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for consideration.
Atento Group as a lessee
The Atento Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value
assets. The Group recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
(i) Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use).
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at
or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of
the lease term and the estimated useful lives of the assets.
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(ii) Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made
over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable
lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because
the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate
used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
(iii) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery (i.e., those leases that have a lease term
of 12 months or less from the commencement date). It also applies the lease of low-value assets recognition exemption to leases of office equipment
that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognized as expense on a straight-line
basis over the lease term.
s) Critical accounting estimates and assumptions
The preparation of consolidated financial statements under IFRS as issued by the IASB requires the use of certain assumptions and estimates
that affect the carrying amount of assets and liabilities within the next financial year.
Some of the accounting policies applied in preparing the accompanying consolidated financial statements required Management to apply
significant judgments in order to select the most appropriate assumptions for determining these estimates. These assumptions and estimates are based
on Management experience, the advice of consultants and experts, forecasts and other circumstances and expectations prevailing at year end.
Management’s evaluation takes into account the global economic situation in the sector in which the Atento Group operates, as well as the future
outlook for the business. By virtue of their nature, these judgments are inherently subject to uncertainty. Consequently, actual results could differ
substantially from the estimates and assumptions used. Should this occur, the values of the related assets and liabilities would be adjusted
accordingly.
Although these estimates were made on the basis of the best information available at each reporting date on the events analyzed, events that
take place in the future might make it necessary to change these estimates in coming years. Changes in accounting estimates would be applied
prospectively in accordance with the requirements of IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, recognizing the
effects of the changes in estimates in the related consolidated statements of operations.
An explanation of the estimates and judgments that entail a significant risk of leading to a material adjustment in the carrying amounts of
assets and liabilities is as follow:
Impairment of goodwill
The Atento Group tests goodwill for impairment annually, in accordance with the accounting policies described in Note 3h. Goodwill is
subject to impairment testing as part of the cash-generating unit to which it has been allocated. The recoverable amounts of cash-generating units
defined in order to identify potential impairment in goodwill are determined on the basis of value in use, applying five-year financial forecasts based
on the Atento Group’s strategic plans, approved and reviewed by Management. These calculations entail the use of assumptions and estimates, and
require a significant degree of judgment. The main variables considered in the sensitivity analyses are growth rates, discount rates using the Weighted
Average Cost of Capital (“WACC”) and the key business variables.
Deferred taxes
The Atento Group assesses the recoverability of deferred tax assets based on estimates of future earnings. The ability to recover these
deferred amounts depends ultimately on the Atento Group’s ability to generate taxable earnings over the period in which the deferred tax assets
remain deductible. This analysis is based on the estimated timing of the reversal of deferred tax liabilities, as well as estimates of taxable earnings,
which are sourced from internal projections.
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The appropriate classification of tax assets and liabilities depends on a series of factors, including estimates as to the timing and realization
of deferred tax assets and the projected tax payment schedule. Actual income tax receipts and payments could differ from the estimates made by the
Atento Group as a result of changes in tax legislation or unforeseen transactions that could affect the tax balances (see Note 20).
The Atento Group has recognized deferred tax assets corresponding to losses carried forward since, based on internal projections, it is
probable that it will generate future taxable profits against which they may be utilized.
The carrying amount of deferred income tax assets is reviewed at each reporting date, and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of that deferred tax asset to be utilized. Unrecognized deferred income tax assets are
reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
Provisions and contingencies
Provisions are recognized when the Atento Group has a present obligation as a result of a past event, it is probable that an outflow of
resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. This obligation may be legal or
constructive, deriving from, inter alia, regulations, contracts, customary practice or public commitments that would lead third parties to reasonably
expect that the Atento Group will assume certain responsibilities. The amount of the provision is determined based on the best estimate of the
outflow of resources embodying economic benefit that will be required to settle the obligation, taking into account all available information as of the
reporting date, including the opinions of independent experts such as legal counsel or consultants.
No provision is recognized if the amount of liability cannot be estimated reliably. In such cases, the relevant information is disclosed in the
notes to the consolidated financial statements.
Given the uncertainties inherent in the estimates used to determine the amount of provisions, actual outflows of resources may differ from
the amounts recognized originally on the basis of these estimates (see Note 21).
Fair value of derivatives
The Atento Group uses derivative financial instruments to mitigate risks, primarily derived from possible fluctuations in exchange rates.
Derivatives are recognized at the inception of the contract at fair value.
The fair values of derivative financial instruments are calculated on the basis of observable market data available, either in terms of market
prices or through the application of valuation techniques. The valuation techniques used to calculate the fair value of derivative financial instruments
include the discounting of future cash flow associated with the instruments, applying assumptions based on market conditions at the valuation date or
using prices established for similar instruments, among others. These estimates are based on available market information and appropriate valuation
techniques. The fair values calculated could differ significantly if other market assumptions and/or estimation techniques were applied.
Update On COVID-19
The estimates and assumptions included in the financial statements include our assessment of potential impacts arising from the COVID-19
pandemic that may affect the amounts reported and the accompanying notes. To-date, no significant impacts on our collection experience and
expected credit losses have been noted and we do not currently anticipate any material impairments of our long-lived assets or of our indefinite-lived
intangible assets as a result of the COVID-19 pandemic. We will continue to monitor the impacts and will prospectively revise our estimates as
appropriate.
t) Interest in subsidiaries
All subsidiaries are fully consolidated. Where necessary, the accounting policies of subsidiaries have been aligned to those adopted in the
Atento Group.
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The details of Atento Group subsidiaries at December 31, 2018, 2019 and 2020 are as follow:
Name
Atento Luxco Midco, S.à.r.l.
Atento Luxco 1 S.A.
Atalaya Luxco 2. S.à.r.l.
Atento Argentina. S.A
Registered address
Luxembourg
Luxembourg
Luxembourg
Buenos Aires
(Argentina)
Line of business
Holding company
Holding company
Holding company
Operation of call
centers
Atento Estrategias de Transformación,
S.L.U. (former Global Rossolimo. S.L.U)
Atento Spain Holdco. S.L.U
Atento Spain Holdco 6. S.L.U
Atento Spain Holdco 2. S.A.U
Atento Teleservicios España. S.A.U
Madrid (Spain)
Madrid (Spain)
Madrid (Spain)
Madrid (Spain)
Madrid (Spain)
Atento Servicios Técnicos y Consultoría
S.A.U
Madrid (Spain)
Atento Impulsa. S.A.U
Barcelona (Spain)
Atento Servicios Auxiliares de Contact
Center. S.A.U
Madrid (Spain)
Atento B V
Teleatento del Perú. S.A.C
Amsterdam
(Netherlands)
Lima (Peru)
Holding company
Holding company
Holding company
Holding company
Operation of call
centers
Execution of
technological projects
and services, and
consultancy services
Management of
specialized
employment centers
for disabled workers
Execution of
technological projects
and services, and
consultancy services
Holding company
Operation of call
centers
Woknal. S.A.
Montevideo (Uruguay) Operation of call
centers
Atento Colombia. S.A.
Bogotá DC
(Colombia)
Operation of call
centers
Atento Holding Chile. S.A.
Atento Chile. S.A.
Atento Educación Limitada
Atento Centro de Formación Técnica
Limitada
Santiago de Chile
(Chile)
Holding company
Santiago de Chile
Operation of call
(Chile)
centers
Santiago de Chile
Operation of call
(Chile)
centers
Santiago de Chile
Operation of call
(Chile)
centers
Atento Spain Holdco 4. S.A.U
Madrid (Spain)
Atento Brasil. S.A
São Paulo (Brazil)
R Brasil Soluções S.A.
São Paulo (Brazil)
Holding company
Operation of call
centers
Operation of call
centers
F-24
% interest
2019
100
100
100
14.03
85.97
100
100
100
100
100
100
2018
100
100
100
90
10
100
100
100
100
100
100
2020
100
100
100
12.99
87.01
100
100
100
100
100
Holding company
Atento S.A.
Atento Luxco Midco, S.à.r.l
Atento Luxco 1. S.A.
Atalaya Luxco 2. S.à.r.l.
Atento Luxco 1. S.A.
Atento Spain Holdco. S.L.U.
Atento Luxco 1. S.A.
Atento Spain Holdco. S.L.U.
Atento Spain Holdco 6. S.L.U.
Atento Spain Holdco 2. S.A.U.
100
Atento Teleservicios España S.A.U.
100
100
100
Atento Teleservicios España S.A.U.
100
100
100
100
100
Atento Teleservicios España. S.A.U.
100
Atento Spain Holdco 2. S.A.U.
83.3333 83.3333 83.3333 Atento B.V.
(Class A) (Class A) (Class A)
16.6667 16.6667 16.6667 Atento Holding Chile. S.A.
(Class B) (Class B) (Class B)
100
Atento B.V.
94.97871 94.97871 94.97871 Atento B.V.
100
100
0.00424 0.00424 0.00424 Atento Servicios Auxiliares de Contact
0.00854 0.00854 0.00854 Atento Servicios Técnicos y Consultoría.
5.00427 5.00427 5.00427 Atento Teleservicios España. S.A.U.
0.00424 0.00424 0.00424 Teleatento del Perú SAC.
99.9999 99.9999 99.9999 Atento B.V.
Center. S.L.U.
S.L.U.
0.0001
0.0001
0.0001
99.99
0.01
99
1
99
1
100
99.99
0.01
99
1
99
1
100
99.99
0.01
99
1
99
1
100
99.999
99.999
99.999
0.001
81.4885
9.25
9.25
0.001
100
-
-
0.001
100
-
-
Atento Spain Holdco 2
Atento Holding Chile. S.A.
Atento B.V.
Atento Chile. S.A.
Atento Holding Chile. S.A.
Atento Chile. S.A.
Atento Holding Chile. S.A.
Atento Spain Holdco. S.L.U.
Atento Spain Holdco 4. S.A.U.
Atento Spain Holdco. S.L.U.
Atento Brasil. S.A.
Flávio Luiz Rossetto
Jorge Luiz Rossetto
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Atento Spain Holdco 5. S.L.U
Madrid (Spain)
Holding company
Atento Mexico Holdco S. de R.L. de C.V.
Mexico
Holding company
Atento Puerto Rico. Inc.
Contact US Teleservices Inc.
Atento Panamá. S.A.
Atento Atención y Servicios. S.A. de C.V.
Rico)
centers
Guaynabo (Puerto
Operation of call
Houston, Texas (USA) Operation of call
Operation of call
Administrative,
professional and
consultancy services
Mexico City (Mexico)
Panama City
centers
centers
Atento Servicios. S.A. de C.V.
Mexico City (Mexico)
Atento Centroamérica. S.A.
Atento de Guatemala. S.A.
Guatemala
(Guatemala)
Guatemala
(Guatemala)
Sale of goods and
services
Holding company
Operation of call
centers
Atento El Salvador. S.A. de C.V.
City of San Salvador
Operation of call
(El Salvador)
centers
Atento Nicaragua S.A.
Atento Costa Rica S.A.
Nicaragua
Costa Rica
Interservicer - Serviços de BPO Ltda
Interfile Serviços de BPO Ltda.
São Paulo (Brasil)
São Paulo (Brasil)
Operation of call
centers
Operation of call
centers
Operation of call
centers
Operation of call
centers
Nova Interfile Holding Ltda.
Interservicer - Serviços em Crédito
Imobiliário Ltda.
São Paulo (Brasil)
São Paulo (Brasil)
Holding company
Operation of call
centers
100
99.966
0.004
100
100
100
99.966
0.004
100
100
100
99.966
0.004
100
100
Atento Spain Holdco. S.L.U.
Atento Spain Holdco 5. S.L.U.
Atento Spain Holdco. S.L.U.
Atento Mexico Holdco S. de R.L. de C.V.
Atento Mexico Holdco S. de R.L. de C.V.
100
100
100
0.002
99.998
99.998
99.998
Atento Mexico Holdco S. de R.L. de C.V.
Atento Mexico Holdco S. de R.L. de C.V.
Atento Servicios. S.A. de C.V.
Atento Mexico Holdco S. de R.L. de C.V.
Atento Atención y Servicios. S.A. de C.V.
99.9999 99.9999 99.9999 Atento Mexico Holdco S. de R.L. de C.V.
99.998
99.998
99.998
0.002
0.002
0.002
0.002
0.002
0.0001
0.0001
0.0001
99.99999 99.99999 99.99999 Atento Centroamérica. S.A.
0.00001 0.00001 0.00001 Atento El Salvador S.A. de C.V.
Atento El Salvador S.A. de C.V.
4.35
4.35
95.65
95.65
7.4054
7.4054
Atento Centroamerica. S.A.
7.4054
92.5946 92.5946 92.5946 Atento de Guatemala. S.A.
Atento Centroamerica. S.A.
4.35
Atento Mexico Holdco S. de R.L. de C.V.
95.65
99.999 Atento Mexico Holdco S. de R.L. de C.V.
0.0001
Atento Centroamerica. S.A.
50.00002
Nova Interfile Holding Ltda.
50.00002 50.00002 50.00002 Nova Interfile Holding Ltda.
0.0001
99.999
99.999
0.0001
100
100
49.99998 49.99998 Interfile Holding Ltda.
100
100
100
Atento Brasil. S.A.
50.00011 50.00011 50.00011 Nova Interfile Holding Ltda.
49.99989 49.99989 Interfile Holding Ltda.
At December 31, 2018, 2019 and 2020, none of the Group’s subsidiaries is listed on a stock exchange, except for Atento Luxco 1 S.A.,
which has debt securities listed in the International Stock Exchange (TISE) in Guernsey. All subsidiaries use year-end December 31 as their reporting
date.
u) New standards adopted in 2019
IFRS 16 was issued in January 2016. It resulted in almost all leases being recognized on the balance sheet, as the distinction between
operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are
recognized. The only exceptions are short-term and low-value leases. The standard affected primarily the accounting for the Group’s operating leases.
On January 1, 2019, lease commitments that the group recognized as right-of-use assets amount 184,099 thousand U.S. dollars, and lease
liabilities in the same amount. The Group adopted IFRS 16 in accordance with the modified retrospective approach. The prior-year figures were not
adjusted.
The consolidated statement of operations was impacted by a decrease of operating expenses and an increase of the amortization of the right-
of-use assets and interest on the lease liability.
As at the reporting date, lease commitments of the Group are recognized as right-of-use assets amount to 181,564 thousand U.S. dollars and
lease liabilities in the amount of 194,765 thousand U.S. dollars on December 31, 2019.
The following reconciliation to the opening balance for the lease liabilities as at January 1, 2019 is based upon the operating lease
obligations as at December 31, 2018:
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Assets
Right-of-use assets (*)
Liabilities (**)
Non-current liabilities
Lease liabilities
Current liabilities
Lease liabilities
December 31,
2018
IFRS 16
January 1,
2019
5,798
184,099
189,897
(2,369)
(132,551)
(134,920)
(3,158)
(51,548)
(54,706)
(*) Recorded in property, plant and equipment as of December 31, 2018.
(**) Recorded as lease liabilities in Debt with third parties.
IFRIC 23 Uncertainty over Income Tax Treatment
Atento reviewed the tax treatment under the terms of IFRIC 23 in all subsidiaries and as at the reporting date, the Group did not identify any
material impact on the financial statements.
Atento implemented a process for periodically review the income tax treatments consistent under IFRIC 23 requirements across the Group.
v) New and amended standards adopted by the Group
The Atento Group applied the amendments to IAS 1 and IAS 8 and to IFRS 3 for the first time in 2020. The nature and effect of the changes
as a result of adoption of these new accounting standards are described below.
Amendments to IAS 1 and IAS 8 Definition of Material
In October 2018, the IASB issued changes to IAS 1 and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, to clarify
the definition of “material” and to align the definition used in the Conceptual Framework and the standards themselves. The new definition states that
“the information is material if its omission, distortion or obscuration can reasonably influence decisions that the main users of the general purpose
financial statements make based on these financial statements, which provide financial information on the entity’s specific report”.
Amendments to IFRS 3 Definition of a Business
In October 2018, the IASB issued changes to the definition of a business in IFRS 3, to help entities determine whether it has acquired a
business or a group of assets. They clarify minimum requirements, eliminate the assessment of whether market participants are able to replace any
missing elements, add guidance and illustrative examples to help entities assess whether a substantive process has been acquired, better define
business and product definitions, and introduce an optional concentration test.
The adoption of these changes had no impact on the consolidated financial statements in the initial adoption period (January 1, 2020).
w) Standards issued but not yet effective
There are no other standards that are not yet effective and that would be expected to have a material impact on the Atento Group in the
current or future reporting periods and on foreseeable future transactions.
4) MANAGEMENT OF FINANCIAL RISK
4.1 Financial risk factors
The Atento Group’s activities are exposed to various types of financial risk: market risk (including foreign currency risk and interest rate
risk), credit risk and liquidity risk. The Atento Group’s global risk management policy aims to minimize the potential adverse effects of these risks on
the Atento Group’s financial returns. The Atento Group also uses derivative financial instruments to hedge certain risk exposures.
a) Market risk
Interest rate risk in respect of cash flow and fair value
Interest risk arises mainly as a result of changes in interest rates which affect: finance costs of debt bearing interest at variable rates (or short-
term maturity debt expected to be renewed), as a result of fluctuations in interest rates, and the value of non-current liabilities that bear interest at
fixed rates.
Atento Group’s finance costs are exposed to fluctuations in interest rates. At December 31, 2020, 4.5% of financial debt with third parties
bore interests at variable rates, while at December 31, 2019 this amount was 0.2%. In both 2019 and 2020, the exposure was to the Brazilian CDI rate
and the TJLP (Brazilian Long-Term Interest Rate).
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The Atento Group’s policy is to monitor the exposure to interest at risk. As of December 31, 2020, there were no outstanding interest rate
hedging instruments.
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Foreign currency risk
Our foreign currency risk arises from local currency revenues, receivables and payables, while the U.S. dollar is our functional and reporting
currency. We benefit to a certain degree from the fact that the revenue we collect in each country, in which we have operations, is generally
denominated in the same currency as the majority of the expenses we incur.
In accordance with our risk management policy, whenever we deem it appropriate, we manage foreign currency risk by using derivatives to
hedge any exposure incurred in currencies other than those of the functional currency of the countries.
The main source of our foreign currency risk is related to the Senior Secured Notes due 2022 denominated in U.S. dollars. Upon issuance of
the Notes, we entered into cross-currency swaps pursuant to which we exchange an amount of U.S. dollars for a fixed amount of Euro, Mexican
Pesos, Peruvian Soles and Brazilian Reais. The total amount of interest (coupon) payments are covered (until maturity date). The referred cross-
currency swaps are the only derivative transactions we have in place in Atento Group.
As of December 31, 2020, the estimated fair value of the cross-currency swaps totaled a net asset of 5,868 thousand U.S. dollars (net asset of
3,093 thousand U.S. dollars as of December 31, 2019).
The table below shows the impact of a +/-10 percentage points variation in the exchange rate on the value of the cross-currency swaps.
CROSS-CURRENCY
FAIR VALUE
+10.0%
-10.0%
Thousands of U.S. dollars
2020
5,868
9,884
872
2020
Functional
currency -
financial
asset/liability
currency
Euro -
Colombian
Pesos
Euro -
Dirham
Moroccan
Euro -
Peruvian
Nuevos
Soles
Euro - USD
Chilean
Pesos –
USD
Mexican
Pesos –
USD
Brazilian
Reais –
USD
Guatemalan
Quetzal –
USD
Colombian
Pesos –
USD
Peruvian
Nuevos
Soles - USD
United
States Dolar
- Euro
United
States Dolar
- MXN
Chilean
Pesos –
Euro
Financial assets (*)
Financial liabilities (*)
Sensitivity analysis
Functional
currency
(thousands)
Asset
currency
(thousands)
U.S. Dollar
(thousands)
Functional
currency
(thousands)
Liability
currency
(thousands)
U.S. Dollar
(thousands)
Appreciation
of
asset/liability
currency vs
functional
currency
Appreciation
of financial
assets in
functional
currency
Statements
of operations
(thousands of
U.S. dollar)
Appreciation
of financial
liabilities in
functional
currency
Statements
of operations
(thousands of
U.S. dollar)
385 1,645,647
473
883
9,648
1,083
863
3,838
1,059
2,812
2,155,420
2,810
3,031
3,448
-
-
-
-
-
-
-
-
-
-
-
-
10% 3,845.6
10%
9.8
428
981
10%
4.0
959
10%
1.1
2,544
53
120
118
(329)
337
-
-
-
-
-
-
-
-
59,707
(8)
3,031
53,736
76
76 10%
0.0
2,394,911
87,481
4,394
4,394
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10%
0.0
97,202
488
10%
0.2
10%
0.1
-
-
-
-
-
-
-
1,630,642
468
468 2,229,450
649
649 10%
0.0
1,811,824
52
2,511,929
17,103
4,719
4,719
4,631
1,278
1,278 10%
0.2
19,003
524
5,146
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10%
0.7
10%
17.9
10%
0.0
-
-
-
-
-
-
-
-
-
-
-
-
(81)
(142)
-
-
-
(*) Financial liabilities correspond to borrowing in currencies other than functional currencies. Financial assets correspond to cash and cash
equivalents in currencies other than functional currencies.
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b) Credit risk
The Atento Group seeks to conduct all of its business with reputable national and international companies and institutions established in
their countries of origin, to minimize credit risk. As a result of this policy, the Atento Group has no material adjustments to make to its credit
accounts (see Note 13).
Accordingly, the Atento Group’s commercial credit risk management approach is based on continuous monitoring of the risks assumed and
the financial resources necessary to manage the Group’s various units, in order to optimize the risk-reward relationship in the development and
implementation of business plans in the course of their regular business.
Credit risk arising from cash and cash equivalents is managed by placing cash surpluses in high quality and highly liquid money-market
assets. These placements are regulated by our Corporate Treasury policy on the basis of the conditions prevailing in the markets and the countries
where Atento operates. The Corporate Treasury policy establishes: (i) the maximum amounts to be invested per counterparty, based on their ratings
(long- and short-term debt ratings); (ii) the maximum period of the investment; and (iii) the instruments in which the surpluses may be invested.
The Atento Group’s maximum exposure to credit risk is primarily limited to the carrying amounts of its financial assets. The Atento Group
holds no guarantees as collection insurance.
c) Liquidity risk
The Atento Group seeks to match its debt maturity schedule to its capacity to generate cash flows to meet the payments falling due, factoring
in a degree of cushion. In practice, this has meant that the Atento Group’s average debt maturity must be long enough to support business operation
normal conditions (assuming that internal projections are met). A maturity schedule for the Atento Group’s financial liabilities is provided in Note 16.
4.2 Capital Management
The Atento Group’s Finance Department, which is in charge of the capital management, takes various factors into consideration when
determining the Group’s capital structure.
The Atento Group’s capital management goal is to determine the financial resources necessary both to continue its recurring activities, as
going concern, and to maintain a capital structure that optimizes own and borrowed funds.
The Atento Group sets an optimal debt level in order to maintain a flexible and comfortable medium-term borrowing structure, in order to be
able to carry out its routine activities under normal conditions and to address new opportunities for growth. Debt levels are kept in line with
forecasted future cash flows and with quantitative restrictions imposed under financing contracts.
In addition to these general guidelines, we take into account other considerations and specifics when determining our financial structure,
such as country risk, tax efficiency and volatility in cash flow generation.
The Super Senior Revolving Credit Facility, described in Note 17, carries no financial covenant obligations regarding debt levels. However,
the notes do impose limitations on dividend distributions, payments or distributions to the shareholders, the incurrence of additional debt, and on
investments and disposal of assets.
As of the date of these consolidated financial statements, the Atento Group was in compliance with all restrictions established in the
aforementioned financing contracts and does not foresee any future non-compliance. To that end, the Atento Group regularly monitors figures for net
financial debt with third parties and EBITDA.
Net financial debt with third parties at December 31, 2019 and 2020 is as follows:
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Senior Secured Notes (Note 17)
Super Senior Credit Facility (Note 17)
Bank borrowings (Note 17)
Lease liabilities (Note 17)
Less: Cash and cash equivalents (Note 15)
Net financial debt with third parties
5) ACQUISITION OF NON-CONTROLLING INTERESTS
a)RBrasil Soluções S.A.
Thousands of U.S. dollars
2019
2020
501,922
-
23,928
194,765
(124,706)
595,909
505,611
30,038
39,475
152,699
(208,994)
518,829
On September 2, 2016, the Company through its indirect subsidiary Atento Brasil S.A. acquired the control and 81.49%, of the shares of
RBrasil Soluções S.A. (“RBrasil”), a leading provider of late-stage collection services in Brazil.
Put/Call options
As per the Shareholders' Agreement, the Company had a purchase option, where non-controlling shareholders irrevocably and irreversibly
granted to the Company, through that instrument, the right, but not the obligation, at the sole discretion of the Company, to acquire all of their shares,
and the non-controlling shareholders, through the exercise of that right, would be obliged to sell their shares to the Company ("call option"). The call
option might be exercised by any controlling shareholder between January 1, 2019 and December 31, 2020. The Shareholders' Agreement also
provided for a put option, where the non-controlling shareholders had the right, irrevocable and irreversible, but not the obligation, to sell all of their
shares to the Company ("put option"). The put option might be exercised by non-controlling shareholders between January 1, 2019 and December 31,
2020.
On the basis of the above, the Company recognized as of September 2, 2016 a financial liability related to the potential for acquisition of
non-controlling interest for an amount of 3,444 thousand Brazilian Reais (1,057 thousand U.S. dollars). The financial liability was initially
recognized against specific reserve in equity. In the acquisition of non-controlling interest this reserve was reversed.
The exercise price of the call option would be determined by multiples, already defined in the Shareholders' Agreement, of the EBITDA of
the year immediately prior to the exercise of the option, multiplied by the percentage of participation to be acquired.
On June 7, 2019, the Company acquired to the remaining interest of 18.51% of the shares of RBrasil.
The total amount paid for this acquisition was 1,738 thousand U.S. dollars.
b) Nova Interfile Holding Ltda
On June 9, 2017, the Company through its indirect subsidiary Atento Brasil S.A. acquired the control and 50.00002% of Interfile Serviços
de BPO Ltda. and 50.00002% of Interservicer – Serviços em Crédito Imobiliário Ltda, (“Interfile”) leading providers of BPO services and solutions,
including credit origination, for the banking and financial services sector in Brazil.
Put/Call options
As per the Shareholders' Agreement, the Company had a purchase option, where non-controlling shareholders granted to Atento Brasil S.A.,
through that instrument, the right, to acquire all of their shares, and the non-controlling shareholders, through the exercise of that right, would be
obliged to sell their shares to Atento Brasil S.A. ("call option"). The call option might be exercised by Atento Brasil S.A. between January 1, 2020
and April 15, 2020. The Shareholders' Agreement also provided for put options, where the non-controlling shareholders had the right, to sell partial
or all of their shares to the Atento Brasil S.A. ("put options"). Many put options were understood by Management as protective clauses with remote
possibility of being exercised. The assessment of the put options were made taking into account the following; (i) probability of occurrence; (ii)
degree of importance (primary or secondary, in this case as term extension or acceleration of other options) and (iii) function: effective options or
clauses protecting the parties.
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Considering the valuation of the acquired entity and Management’s best estimates, the put option that would likely to be exercised by the
non-controlling shareholders was between January 1, 2020 and April 15, 2020 – which was symmetrical with the call option. According to IAS 32, a
parent must recognize a financial liability when it has an obligation to pay cash in the future to purchase the minority’s shares, even if the payment is
conditional on the option being exercised by the holder.
The exercise price of the put option would be determined by multiples, already defined in the Shareholders' Agreement, of the EBITDA of
the year immediately prior to the exercise of the option, multiplied by the percentage of participation to be acquired.
On the basis of the above, the Company recognized on June 9, 2017 a financial liability related to the potential acquisition of non-controlling
interest of 74,401 thousand Brazilian Reais (22,474 thousand US dollars). The financial liability was recognized against specific reserve in equity,
considering that these are transactions between shareholders. In the acquisition of non-controlling interest this reserve was reversed.
On May 17, 2019, the Company acquired to the remaining interest of 49.99998% of Interfile.
The total amount paid for this acquisition was 14,089 thousand U.S. dollars.
6) INTANGIBLE ASSETS
The following table presents the breakdown of intangible assets at December 31, 2019 and 2020 and respective changes in the year:
Cost
Development
Customer base
Software
Other intangible assets
Work in progress
Total cost
Accumulated amortization
Development
Customer base
Software
Other intangible assets
Total accumulated amortization
Impairment
Net intangible assets
Thousands of U.S. dollars
Reclassifications
between
Intangible and
PP&E
Additions Disposals Transfers
Balance at
December 31,
2018
Translation
differences
Hyperinflation
Adjustments
Balance
at
December
31, 2019
5,090
262,927
194,966
69,062
1,089
533,134
184
-
1,065
-
-
1,249
(647)
(143,290)
(113,845)
(40,159)
(297,941)
(23,991)
211,202
(154)
(22,570)
(25,025)
(9,477)
(57,226)
-
(55,977)
(41)
-
(2,771)
(1,410)
(25)
(4,247)
41
-
2,212
83
2,336
-
(1,911)
F-30
(1)
-
507
52
(505)
53
-
(234)
-
181
(53)
-
-
-
-
12,623
-
-
12,623
-
-
-
-
-
-
12,623
(3,213)
(5,202)
(7,371)
(6,336)
(459)
(22,581)
251
2,083
2,425
4,705
9,465
1,070
(12,046)
434
5,226
2,386
279
-
8,325
2,453
262,951
201,405
61,647
100
528,556
(148)
(1,434)
(370)
(223)
(2,175)
-
6,150
(657)
(165,445)
(134,603)
(44,890)
(345,594)
(22,921)
160,041
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Cost
Development
Customer base
Software
Other intangible assets
Work in progress
Total cost
Accumulated amortization
Development
Customer base
Software
Other intangible assets
Total accumulated amortization
Impairment
Net intangible assets
Balance at
December 31, 2019 Additions Disposals Transfers
Thousands of U.S. dollars
Reclassifications
between
Intangible and
PP&E
Translation
differences
Hyperinflation
Adjustments
Balance at
December
31, 2020
2,453
262,951
201,405
61,647
100
528,556
99
-
2,859
-
-
2,958
(657)
(165,445)
(134,603)
(44,890)
(345,594)
(22,921)
160,041
(165)
(19,848)
(23,405)
(3,563)
(46,981)
-
(44,023)
-
(622)
(9,748)
(97)
(25)
(10,492)
-
720
9,721
-
10,441
-
(51)
403
639
8,327
1,062
-
10,431
(400)
(630)
(9,966)
565
(10,431)
-
-
-
-
12,572
-
-
12,572
-
-
-
-
-
-
12,572
(28)
(22,656)
(28,647)
(5,835)
-
(57,166)
59
15,695
18,228
2,396
36,378
(2,116)
(22,904)
174
3,029
1,349
181
-
4,733
(172)
(2,497)
(833)
(223)
(3,725)
-
1,008
3,101
243,341
188,117
56,958
75
491,592
(1,335)
(172,005)
(140,858)
(45,715)
(359,913)
(25,037)
106,643
“Customer base” represents the fair value, of the intangible assets arising from customer relationships (tacit or explicitly formulated in
contracts) with Telefónica Group and with other customers identified in business combination transactions.
Of the total customer base in 2020, the fair value assigned to commercial relationships with Telefónica at the acquisition date amounts to
187,916 thousand U.S. dollars, while the remaining amount relates to other customers.
In terms of geographic distribution, in 2020 the customer base corresponds to businesses in Brazil (83,071 thousand U.S. dollars), Spain
(54,165 thousand U.S. dollars) net of impairment, Mexico (47,579 thousand U.S. dollars), Peru (14,591 thousand U.S. dollars), Colombia (2,941
thousand U.S. dollars), Chile (8,745 thousand U.S. dollars) and Argentina and Uruguay (7,205 thousand U.S. dollars).
“Other intangible assets” mainly include payment of loyalty incentives established with customers of the Atento Brasil S.A. and the
intangible asset arising from the directory services business in Atento Teleservicios España.
7) GOODWILL
Goodwill was mainly generated on December 1, 2012 from the acquisition of the Customer Relationship Management (“CRM”) business
from Telefónica, S.A and on December 30, 2014 from the acquisition of CBCC. On September 2, 2016, additional goodwill was generated from the
acquisition of RBrasil on June 9, 2017 an additional goodwill from the acquisition of Interfile in the amount of 8,400 thousand U.S. dollars was
recorded in Brazil.
The breakdown and changes in goodwill in 2019 and 2020 are as follow:
12/31/2018
Hyperinflation
Translation
differences
Thousands of U.S. dollars
Impairment
12/31/2019
Hyperinflation
Peru
Chile
Colombia
Mexico
Brazil
Argentina
Total
29,069
16,608
5,770
1,844
68,118
33,580
154,989
-
-
-
-
-
11,415
11,415
543
(1,091)
(48)
77
(2,636)
(12,438)
(15,593)
29,612
15,517
5,722
1,921
65,482
1,648
119,902
-
-
-
-
-
(30,909)
(30,909)
F-31
-
-
-
-
-
419
419
Translation
differences
12/31/2020
(2,509)
728
(259)
(101)
(14,692)
(474)
(17,307)
27,103
16,245
5,463
1,820
50,790
1,593
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8) IMPAIRMENT OF ASSETS
As of December 31, 2020, the impairment assessment on goodwill performed by the Atento Group’s management indicated that the carrying
amount of goodwill is recoverable. Such assessment was based on the calculation of the recoverable amount of goodwill through the calculation of
the expected future cash flow from the cash-generating units to which goodwill is allocated.
The Atento Group carries out its goodwill impairment tests to all CGUs using the various cash-generating units’ five-year strategic plans and
budgets. The three-year plan used as the basis for the impairment test was approved by the board of directors on the date of February 24, 2021.
Recoverable amount is based on value in use calculated using cash flow from projected results adjusted for amortization/depreciation,
finance costs, and taxes, based on the last period, and using the expected growth rates obtained from studies published in the sector and assuming said
growth to be constant from the fifth year. Estimated cash flow determined in this manner is discounted using the WACC applicable to that CGU. The
discount rates used reflect the current assessment of specific market risks in each of the cash-generating units, considering the time value of money
and individual country risks not included in the cash flow estimates. WACC takes both the cost of debt and capital into account. The latter is obtained
based on the return expected by the shareholders of the Atento Group, while the former is obtained based on the Atento Group’s finance costs. In
addition, the risks specific to each country were included in the WACC using corrective factors.
These tests are performed annually and whenever it is considered that the recoverable amount of goodwill may be impaired.
At December 31, 2020, the tests conducted did not identify any impairment in the value of goodwill, since the related recoverable amounts
calculated using value in use were in all cases higher than the carrying amount of the related cash-generating units, even after sensitivities were
applied to the variables used. At December 31, 2019, all CGUs, except Argentina, passed in the impairment tests with projections to support all
assets. We wrote-off those assets in Argentina in 2019. In Argentina, with the deterioration of the economic situation, discount rates increased
significantly, making discounted cash flow of the operations not enough to cover its asset base. The test resulted in an impairment of 30,909 thousand
U.S. dollars in 2019.
The calculation of values in use for the CGUs is most sensitive to the revenues, EBITDA and discount rates assumptions.
The CGUs revenues projection has a variation based on management expectations growth plus inflation and the EBITDA margin has a
variability range from +1.7p.p. to +4.8p.p.
The pre-tax discount rates, which factor in country and business risks, and the projected terminal growth rates were as follow:
December 2019
December 2020
December 2019
December 2020
Discount rate
Brazil
Mexico
Colombia
Peru
Chile
Argentina
14.87%
16.47%
15.82%
15.94%
10.42%
12.58%
11.82%
14.41%
9.52%
13.92%
92.14%
80.25%
Terminal Growth rate
Brazil
Mexico
Colombia
Peru
Chile
Argentina
4.81%
4.31%
5.47%
2.65%
6.40%
6.29%
7.11%
3.33%
6.41%
3.88%
30.29%
40.50%
The carrying amounts per CGUs were as follow:
Thousand U.S. dollars
Carrying Amount
December 2019
December 2020
Brazil
275,231
188,847
Mexico
99,070
79,610
Colombia
33,824
31,242
Peru
69,214
59,153
Chile
36,654
35,991
Argentina
36,442
1,778
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In the event of a 3% increase in the discount rate used to calculate the recoverable amount of the abovementioned CGUs in each country,
with the other variables remaining unchanged, the recoverable amount would still be higher than the corresponding carrying amount. This sensitivity
is on the reasonability of the management expectations. Management also considers that the appearance of potential competitors in the market in
which the Atento Group operates could negatively affect the growth of its CGUs. As an additional sensitivity analysis, assuming that there is a fall in
demand or an increase in costs and, as such, results before amortization/depreciation, finance cost and taxes margin (EBITDA margin) used for
estimating cash flow were to keep constant for the five years in each CGU, with all other variables remaining unchanged, the recoverable amount
from each cash generating unit would continue to be higher than its corresponding carrying amount.
In addition to the above, specifically for certain countries, the following assumptions were used:
Cash flow for Brazil, Mexico, Spain, Colombia, Peru Chile and Argentina CGUs were estimated based on growth projections considering
the management expectation of the business performance, using predicted inflation levels taken from external sources.
9) PROPERTY, PLANT AND EQUIPMENT (PP&E)
Details of property, plant and equipment at December 31, 2019 and 2020 are as follow:
Balance
at
December
31, 2018
12,129
8,187
Thousands of U.S. dollars
Reclassification
to right-of-use
assets
Additions Disposals Transfers
Reclassifications
between
Intangible and
PP&E
Translation
differences
Hyperinflation
Adjustments
Balance
at
December
31, 2019
-
-
236
95
(302)
(123)
-
(574)
-
-
(1,302)
(114)
651
-
11,412
7,471
294,548
(24,427)
19,687
(10,801)
21,319
4,119
(3,227)
-
301,218
22,420
337,284
-
(24,427)
38,803
58,821
(163)
(11,389)
(20,929)
(184)
(16,742)
(12,623)
(8,510)
(13,153)
-
651
14,879
334,980
(4,425)
(6,332)
-
-
(107)
(741)
(202,587)
18,629
(29,201)
-
155
866
(213,344)
18,629
(30,049)
1,021
123,940
(5,798)
28,772
(10,368)
-
-
184
184
-
-
-
-
-
888
78
4,867
5,833
(361)
-
(4,005)
(6,840)
-
(207,242)
(361)
(218,087)
(12,623)
(7,320)
290
116,893
Cost
Buildings
Plant and machinery
Furniture, tools and
other tangible assets
PP&E under
construction
Total cost
Accumulated
depreciation
Buildings
Plant and machinery
Furniture, tools and
other tangible assets
Total accumulated
depreciation
Property, plant and
equipment
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Cost
Buildings
Plant and machinery
Furniture, tools and
other tangible assets
PP&E under
construction
Total cost
Accumulated
depreciation
Buildings
Plant and machinery
Furniture, tools and
other tangible assets
Total accumulated
depreciation
Property, plant and
equipment
11,412
7,471
301,218
14,879
334,980
(4,005)
(6,840)
Balance
at
December
31, 2019
Reclassification
to right-of-use
assets
Additions Disposals Transfers
Reclassifications
between
Intangible and
PP&E
Translation
differences
Hyperinflation
Adjustments
Balance
at
December
31, 2020
Thousands of U.S. dollars
-
-
-
55
(3)
-
3,606
(2,938)
-
-
811
(90)
(2)
21
15,824
4,519
1,331
4,179
(12,837)
48,963
800
(33,400)
5,194
315,448
-
1,331
28,682
32,916
(1,113)
(13,953)
(13,162)
36,469
(13,372)
(12,572)
(1,844)
(34,523)
-
5,213
14,070
349,861
-
-
(217)
(530)
149
3
(149)
(1,051)
(207,242)
(3,401)
(25,935)
12,424
(35,269)
(218,087)
(3,401)
(26,682)
12,576
(36,469)
-
-
-
-
(384)
162
20
(9)
(4,586)
(8,265)
18,098
(4,797)
(246,122)
17,876
(4,786)
(258,973)
116,893
(2,070)
6,234
(1,377)
-
(12,572)
(16,647)
427
90,888
For 2019, the additions reflect mainly the new operations and remodeling in Atento Brasil in the amount of 32,415 thousand U.S. dollars. In
Americas there are 5,907 thousand U.S. dollars due to Atento Mexico sites remodeling for attending new clients, 2,409 thousand U.S. dollars in
software’s licenses and equipment’s for Atento Peru and 2,335 thousand U.S. dollars in sites remodeling and equipment’s for Atento Colombia.
The capital expenditures for the year ended December 31, 2020 include costs associated with shifting a portion of Atento’s call center
employees to the work@home model. Owing to the impact of the COVID-19 pandemic on Atento’s markets, all non-essential capital expenditures
remained largely suspended in April and May 2020.
No impairment was recognized on items of property, plant and equipment in 2019 and 2020.
All Atento Group companies have contracted insurance policies to cover potential risks to their items of PP&E. Management considers that
coverage of these risks was sufficient at December 31, 2019 and 2020.
10) LEASES
The Atento Group holds the following right-of-use assets:
Furniture, tools and other tangible assets
Plant and machinery
Buildings
Total
F-34
Thousands of U.S. dollars
Net carrying amount of asset
2020
2019
6,512
495
174,557
181,564
9,518
-
128,324
137,842
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Leases are shown as follows in the balance sheet as at December 31, 2019 and 2020:
Assets
Right-of-use assets
(-) Accumulated depreciation
Assets
Right-of-use assets
(-) Accumulated depreciation
11) FINANCIAL ASSETS
January
1, 2019
Additions/
(Disposals)
Reclassification
between PPEQ and
right-of-use
assets
Translation
difference
December
31, 2019
208,526
(18,629)
189,897
49,261
(53,507)
(4,246)
24,427
(18,629)
5,798
(28,790)
18,905
(9,885)
253,424
(71,860)
181,564
December
31, 2019
Additions/
(Disposals)
Reclassification
between PPEQ and
right-of-use assets
Translation
difference
December
31, 2020
253,424
(71,860)
181,564
32,723
(47,256)
(14,533)
(1,331)
3,401
2,070
(47,165)
15,906
(31,259)
237,651
(99,809)
137,842
As of December 31, 2019 and 2020 all the financial assets of the Company are classified as amortized cost.
As of December 31, 2020, all Cross-Currency Swaps is designated as Net Investment Hedges.
Credit risk arises from the possibility that the Atento Group might not recover its financial assets at the amounts recognized and in the
established terms. Atento Group Management considers that the carrying amount of financial assets is similar to the fair value.
As of December 31, 2020, Atento Teleservicios España S.A., Atento Chile S.A., Teleatento del Perú S.A.C, Atento Brasil S.A. and Atento
Mexico have entered into factoring agreements without recourse, anticipating an amount of 117,295 thousand U.S. dollars, receiving cash net of
discount, the related trade receivables were realized and interest expenses was recognized in the statement of operations. As of December 31, 2019,
Atento Teleservicios España S.A., Atento Chile S.A., Atento Colombia S.A., Teleatento del Perú S.A.C and Atento Brasil S.A. have entered into
factoring agreements without recourse, anticipating an amount of 258,313 thousand U.S. dollars, receiving cash net of discount, the related trade
receivables were realized and interest expenses was recognized in the statement of operations.
12) OTHER FINANCIAL ASSETS
Details of other financial assets at December 31, 2019 and 2020 are as follow:
Other non-current receivables (*)
Non-current guarantees and deposits
Total non-current
Other current receivables
Current guarantees and deposits
Total current
Total
Thousands of U.S. dollars
2019
2020
9,457
45,195
54,652
76
1,018
1,094
55,746
5,972
32,220
38,192
12
1,146
1,158
39,350
(*) “Other non-current receivables” as of December 31, 2019 and 2020 primarily comprise a loan granted by the subsidiary RBrasil to third parties.
The effective annual interest rate is CDI + 3.75% p.a., maturity in five years beginning on May 4, 2017, when the value of the loan will be amortized
in a single installment.
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13) TRADE AND OTHER RECEIVABLES
The breakdown of “Trade and other receivables” at December 31, 2019 and 2020 is as follow:
Non-current trade receivables
Other non-financial assets (*)
Total non-current
Current trade receivables
Other receivables
Prepayments
Personnel
Total current
Total
Thousands of U.S. dollars
2020
2019
6,321
15,803
22,124
334,949
5,953
12,675
6,022
359,599
381,723
8,477
12,518
20,995
274,355
4,678
14,698
5,355
299,086
320,081
(*) "Other non-financial assets" as of December 31, 2019 and 2020 primarily comprise tax credits with the Brazilian social security authority
(Instituto Nacional do Seguro Social), recorded in Atento Brasil S.A.
Trade receivables
Allowances of trade receivables
Trade receivables, net
Thousands of U.S. dollars
2019
2020
347,703
(6,433)
341,270
286,403
(3,571)
282,832
As of December 31, 2020, trade receivables not yet due for which no allowance has been made amounted to 247,902 thousand U.S. dollars
(311,552 thousand U.S. dollars as of December 31, 2019).
As of December 31, 2020, trade receivables due for which no allowance has been made amounted to 16,033 thousand U.S. dollars (26,999
thousand U.S. dollars as of December 31, 2019). These balances relate to certain customers with no recent history of default. The aging analysis of
these accounts is as follow:
Less than 90 days
Between 90 and
180 days
Between 180 and 360
days
Over
360 days
Thousands of U.S. dollars
12/31/2019
12/31/2020
22,606
13,197
1,224
739
1,233
782
1,936
1,315
Total
26,999
16,033
Changes in allowances of trade receivables in 2019 and 2020 were as follow:
Opening balance
Allowance of trade receivables(*)
Reversal (*)
Use of provision
Translation differences
Total
Thousands of U.S. dollars
2019
2020
(2,175)
(4,588)
277
-
53
(6,433)
(6,433)
(6,649)
1,356
7,930
225
(3,571)
(*) The total of allowance of trade provision and reversal are the impact in change in trade provisions in the consolidated statements of operations.
The Atento Group’s maximum exposure to credit risk at the reporting date is equivalent to the carrying amount of each of the
aforementioned trade receivables categories. The Atento Group holds no guarantees as collection insurance.
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14) DERIVATIVE FINANCIAL INSTRUMENTS
Details of derivative financial instruments at December 31, 2019 and 2020 are as follow:
Cross currency swaps - net investment hedges
Cross currency swaps - that do not meet the criteria for hedge accounting
Total
Non-current portion
Current portion
Thousands of U.S. dollars
2019
Assets
Liabilities
Assets
5,382
-
5,382
5,382
-
(2,289)
(167)
(2,456)
(2,289)
(167)
11,088
-
11,088
11,088
-
2020
Liabilities
(5,220)
-
(5,220)
(5,220)
-
Atento Luxco1 entered into Cross-Currency Swaps to reduce its foreign exchange risk, since it generates cashflow in local currencies. With
these instruments, the company ensures that its cashflow in local currencies is swapped into a fixed dollar amount, the currency used to pay debt
obligations, therefore reducing foreign exchange risks.
Derivatives held for trading are classified as current assets or current liabilities. The fair value of a hedging derivative is classified as a non-
current asset or a non-current liability, as applicable, if the remaining maturity of the hedged item exceeds twelve months. Otherwise, it is classified
as a current asset or liability.
In connection with the Refinancing process and the repayment of the first Brazilian Debentures, the hedge accounting for the interest rate
swap was discontinued and the OCI balance was transferred to finance cost. Thereafter, any changes in fair value was directly recognized in the
statements of operations.
On April 1, 2015, the Company started a hedge accounting for net investment hedge related to exchange risk between the U.S. dollar and
foreign operations in Euro (EUR), Mexican Peso (MXN), Colombian Peso (COP) and Peruvian Nuevo Sol (PEN). In connection with the
Refinancing process, 8 of the 10 derivatives contracts designated as Net Investment Hedges were terminated between August 1, 2017 and August 4,
2017, generating positive cash of 46,080 thousand U.S. dollars, net of charges. During August 2017, Atento Luxco 1 also entered into new Cross-
Currency Swaps related to exchange risk between U.S. dollars and Euro (EUR), Mexican Peso (MXN), Brazilian Reais (BRL) and Peruvian Nuevo
Sol (PEN). Except for the Cross-Currency Swap between U.S. dollars and Brazilian Reais (BRL), all Cross-Currency Swaps were designated for
hedge accounting as net investment hedge. On January 01, 2019, the Company started to also designate the Cross-Currency Swap between U.S.
dollars and Brazilian Reais (BRL) for hedge accounting as net investment hedge.
On January 1, 2019, the Company designated the Cross-Currency Swap between U.S. dollars and Brazilian Reais for hedge accounting as
net investment hedge. Prior to the date of designation of the Cross-Currency Swap, this hedging instrument was electively not designated as a hedge
accounting because the change in fair value was intended to partially offset changes in the USD-BRL foreign currency component of the BRL
denominated intercompany debt, which were recorded in earnings. Effective January 1, 2019, the intercompany debt was reclassified as “permanent
in equity” (which assumes that the related payable is neither planned nor likely to occur in the foreseeable future, since it is in substance, a part of the
entity’s net investment in that foreign operation) and, as a consequence, the changes arising from the exchange rate are recorded in other
comprehensive income.
On January 1, 2020 Atento decided to assign the loan agreement between Atento Luxco 1 and Atento Mexico Holdco as “permanent in
equity”, with its maturities to be renewed per indefinite time, since the repayment is neither planned nor likely to occur in the foreseeable future.
Therefore, changes related to the USD-MXN exchange rate are now recorded in other comprehensive income.
On February 14, 2020, Atento Brasil S.A. entered into a cross-currency swap to hedge a EURO loan of 7,402 thousand Euros at a fixed rate
of 1.49% exchanged to a 35,000 thousand Brazilian Reais with interest rate of the average daily rate of the one day “over extra-group” – DI –
Interbank Deposits - plus a spread of 1.95% per annum. The transaction was liquidated on August 13, 2020 due to the repayment of the loan.
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At December 31, 2018, 2019 and 2020, details of interest rate swap, cross-currency swaps that do not qualify for hedge accounting and net
investment hedges were as follows:
2018
Bank
Maturity
Notional
currency
Index
Interest Rate Swap
Notional in
contract
currency
(thousands)
Fair
value
assets
Fair
value
liability
D/(C)
D/(C)
Other
comprehensive
income, net of
taxes
D/(C)
Change
in
OCI, net
of taxes
D/(C)
Statements of
operations -
Finance cost
D/(C)
Itaú
Dec-18 BRL
BRL CDI
135,000
-
-
-
-
-
-
-
-
972
972
Cross Currency Swaps - that do not qualify for hedge accounting
Bank
Maturity
Purchase
currency
Selling
currency
Notional
(thousands)
Fair
value
assets
Fair
value
liability
D/(C)
D/(C)
Other
comprehensive
income
D/(C)
Change
in OCI,
net of
taxes
D/(C)
Statements of
operations -
Finance cost
D/(C)
Goldman Sachs
Aug-22
USD
BRL
754,440
6,020
6,020
-
-
-
-
-
-
(4,302)
(4,302)
Bank
Maturity
Purchase
currency
Cross-currency swap- Net Investment Hedges
Fair
value
liability
Fair
value
assets
Notional
(thousands)
Selling
currency
Other
comprehensive
income
Change
in
OCI
Income
statement -
Finance Cost
D/(C)
D/(C)
D/(C)
D/(C)
D/(C)
Nomura International Aug-22 USD
Aug-22 USD
Goldman Sachs
Aug-22 USD
Goldman Sachs
Jan-20 USD
Santander
Jan-20 USD
Santander
Jan-20 USD
Goldman Sachs
Jan-20 USD
Goldman Sachs
Jan-20 USD
Nomura International
Jan-20 USD
Nomura International
Jan-18 USD
Goldman Sachs
Jan-18 USD
Goldman Sachs
Jan-18 USD
BBVA
Jan-18 USD
BBVA
EUR
MXN
PEN
EUR
MXN
EUR
MXN
MXN
EUR
PEN
COP
PEN
COP
Total
Derivative financial instrument-asset
Derivative financial instrument-liability
34,109
1,065,060
194,460
20,000
11,111
48,000
40,000
23,889
22,000
13,800
7,200
55,200
28,800
189
6,025
-
-
-
-
-
-
-
-
-
-
-
6,214
12,234
-
(922)
(682)
-
-
-
-
-
-
-
-
-
-
(1,604)
(1,604)
11,313
(682)
F-38
(257)
(3,094)
2,413
1,742
(2,113)
3,587
(7,600)
(4,357)
1,620
22
(80)
71
(359)
(8,405)
(8,405)
640
(4,163)
2,333
-
-
-
-
-
-
-
-
-
-
(1,190)
(1,190)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,330)
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2019
Cross Currency Swaps - that do not qualify for hedge accounting
Bank
Maturity
Purchase
currency
Selling
currency
Notional
(thousands)
Fair
value
asset
D/(C)
Fair
value
liability
D/(C)
Other
comprehensive
income
D/(C)
Change in
OCI
D/(C)
ABC Brasil S.A.
Aug-20 USD
BRL
12,232
8,740
8,740
(8,907)
(8,907)
-
-
-
-
Statements
of
operations
- Finance
cost
D/(C)
-
-
Derivative financial instrument - liability
(167)
Net Investment Hedges
Bank
Maturity
Purchase
currency
Selling
currency
Notional
(thousands)
Fair
value
asset
Fair
value
liability
D/(C) D/(C)
Other
comprehensive
income
D/(C)
Change
in
OCI
D/(C)
Statements
of
operations
- Finance
cost
D/(C)
Statements
of
operations
- Change
in fair
value
D/(C)
Nomura International Aug-22 USD
Aug-22 USD
Goldman Sachs
Aug-22 USD
Goldman Sachs
Aug-22 USD
Goldman Sachs
Jan-20 USD
Santander
Jan-20 USD
Santander
Jan-20 USD
Goldman Sachs
Jan-20 USD
Goldman Sachs
Jan-20 USD
Nomura International
Jan-20 USD
Nomura International
Jan-18 USD
Goldman Sachs
Jan-18 USD
Goldman Sachs
Jan-18 USD
BBVA
Jan-18 USD
BBVA
Aug-22 USD
Morgan Stanley
Aug-22 USD
Morgan Stanley
EUR
MXN
PEN
BRL
EUR
MXN
EUR
MXN
MXN
EUR
PEN
COP
PEN
COP
BRL
PEN
Derivative financial instrument - asset
Derivative financial instrument - liability
34,109
447
1,065,060 6,696
194,460 2,689
754,440 4,782
-
20,000
-
11,111
-
48,000
-
40,000
-
23,889
-
22,000
-
13,800
-
7,200
-
55,200
-
28,800
135
308,584
13
66,000
-
(6,543)
(4,898)
-
-
-
-
-
-
-
-
-
-
-
(148)
(80)
14,762 (11,669)
5,382
(2,289)
F-39
(714)
4,014
5,124
812
1,742
(2,113)
3,587
(7,600)
(4,357)
1,620
22
(80)
71
(359)
99
74
457
(7,108)
(2,710)
(812)
-
-
-
-
-
-
-
-
-
-
(99)
(74)
1,942 (10,346)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,545)
(1,815)
(5,360)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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2020
Net Investment Hedges
Bank
Maturity
Purchase
currency
Selling
currency
Notional
(thousands)
Fair
value
asset
Fair
value
liability
Nomura International Aug-22 USD
Aug-22 USD
Goldman Sachs
Aug-22 USD
Goldman Sachs
Aug-22 USD
Goldman Sachs
Jan-20 USD
Santander
Jan-20 USD
Santander
Jan-20 USD
Goldman Sachs
Jan-20 USD
Goldman Sachs
Jan-20 USD
Nomura International
Jan-20 USD
Nomura International
Jan-18 USD
Goldman Sachs
Jan-18 USD
Goldman Sachs
Jan-18 USD
BBVA
Jan-18 USD
BBVA
Aug-22 USD
Morgan Stanley
Aug-22 USD
Morgan Stanley
Aug-22 USD
Goldman Sachs
Aug-22 USD
Goldman Sachs
EUR
MXN
PEN
BRL
EUR
MXN
EUR
MXN
MXN
EUR
PEN
COP
PEN
COP
BRL
PEN
MXN
PEN
D/(C) D/(C)
13
34,109
-
1,065,060
194,460
-
754,440 8,866
-
20,000
-
11,111
-
48,000
-
40,000
-
23,889
-
22,000
-
13,800
-
7,200
-
55,200
28,800
-
308,584 2,096
120
66,000
-
1,065,060
-
194,460
11,095
(7)
(3,224)
(1,996)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,227)
Derivative financial instrument - asset
Derivative financial instrument - liability
11,088
(5,220)
The ineffective portion of all our cross-currency swaps is zero.
Other
comprehensive
income
D/(C)
Change
in
OCI
D/(C)
Statements
of
operations
- Finance
cost
D/(C)
Statements
of
operations
- Change
in fair
value
D/(C)
(454)
41
(339)
(6,167)
1,742
(2,113)
3,587
(7,600)
(4,357)
1,620
22
(80)
71
(359)
(2,589)
(115)
2,230
2,965
(260)
3,973
5,463
6,979
-
-
-
-
-
-
-
-
-
-
2,688
189
(2,230)
(2,964)
(11,895) 13,838
-
48
-
(289)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(241)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Gains and losses on net investment hedges accumulated in equity will be taken to the statement of operations when the foreign operation is
partially disposed of or sold.
Summary of Outstanding Derivatives – Rates
Counterparty
Product
Receive Ccy. Receive Rate Notional Receive
Pay Ccy. Pay Rate Notional Pay
Nomura
Goldman Sachs
Goldman Sachs
Goldman Sachs
Morgan Stanley
Morgan Stanley
Cross Currency Swap
Cross Currency Swap
Cross Currency Swap
Cross Currency Swap
Cross Currency Swap
Cross Currency Swap
USD
USD
USD
USD
USD
USD
6.125%
6.125%
6.125%
6.125%
6.125%
6.125%
40,000,000
60,000,000
240,000,000
60,000,000
80,000,000
20,000,000
EUR
MXN
BRL
PEN
BRL
PEN
34,109,320
5.83%
10.255% 1,065,060,000
754,440,000
7.208%
194,460,000
8.715%
308,584,000
6.613%
66,000,000
6.399%
15) CASH AND CASH EQUIVALENTS
Deposits held at call
Short-term financial investments
Total
Thousands of U.S. dollars
2019
2020
96,978
27,728
124,706
139,264
69,730
208,994
“Short-term financial investments” comprises short-term fixed-income securities in Brazil, which mature in less than 90 days and accrue
interest pegged to the CDI.
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16) FINANCIAL LIABILITIES
As of December 31, 2019 and 2020 all the financial liabilities of the Company are classified as other financial liabilities at amortized cost,
except for the derivative financial instruments that are classified as financial liability at fair value through profit or loss.
The payments schedule for other financial liabilities, trade and other payables and liabilities at December 31, 2019 and 2020, including
estimated future interest payments, calculated based on interest rates and foreign exchange rates applicable as at December 31, 2019 and 2020 are as
follow:
Thousands of U.S. dollars
Maturity (years)
2019
2020
2021
2022
2023
2024
More than
5 years
Senior Secured Notes
Lease liabilities
Bank borrowings
Trade and other payables
Total financial liabilities
30,625
66,415
23,248
166,111
286,399
30,625
52,134
449
11,744
94,952
530,625
41,069
351
-
572,045
-
-
-
32,079
21,481
23,826
-
-
-
-
-
-
32,079
21,481
23,826
Thousands of U.S. dollars
Maturity (years)
2020
2021
2022
2023
2024
2025
More than
5 years
Senior Secured Notes
Lease liabilities
Bank borrowings
Trade and other payables
Total financial liabilities
30,625
52,698
68,668
135,781
287,772
530,625
41,047
1,569
4,296
577,537
-
-
-
-
33,500
22,985
12,128
16,744
-
-
-
-
-
-
-
-
33,500
22,985
12,128
16,744
Total
591,875
237,004
24,048
177,855
1,030,782
Total
561,250
179,102
70,237
140,077
950,666
17) FINANCIAL DEBT WITH THIRD PARTIES
Details of debt with third parties at December 31, 2019 and 2020 are as follow:
Senior Secured Notes
Bank borrowing
Lease liabilities
Total non-current
Senior Secured Notes
Super Senior Credit Facility
Bank borrowing
Lease liabilities
Total current
TOTAL DEBT WITH THIRD PARTIES
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Thousands of U.S. dollars
2019
2020
490,012
748
142,738
633,498
11,910
-
23,180
52,027
87,117
720,615
493,701
1,420
99,515
594,636
11,910
30,038
38,055
53,184
133,187
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Senior Secured Notes
On August 10, 2017, Atento Luxco 1 S.A., closed an offering of 400,000 thousand U.S. dollars aggregate principal amount of 6.125%
Senior Secured Notes due 2022 in a private placement transaction. The notes are due in August 2022. The 2022 Senior Secured Notes are guaranteed
on a senior secured basis by certain of Atento’s wholly owned subsidiaries. The issuance costs of 11,979 thousand U.S. dollars related to this new
issuance are recorded at amortized cost using the effective interest method.
On April 4, 2019, Atento Luxco 1 S.A., closed an offering of an additional $100.0 million in aggregate principal amount of its 6.125%
Senior Secured Notes due 2022 (the "Additional Notes"). The Additional Notes were offered as additional notes under the indenture, dated as of
August 10, 2017, pursuant to which the Issuer previously issued $400.0 million aggregate principal amount of its 6.125% Senior Secured Notes due
2022 (the "Existing Notes"). The Additional Notes and the Existing Notes are treated as the same series for all purposes under the indenture and
collateral agreements, each as amended and supplemented, that govern the Existing Notes and the Additional Notes.
The terms of the Indenture governing the 2022 Senior Secured Notes, among other things, limit, in certain circumstances, the ability of
Atento Luxco 1 and its restricted subsidiaries to: incur certain additional indebtedness; make certain dividends distributions, investments and other
restricted payments; sell the property or assets to another person; incur additional liens; guarantee additional debt; and enter into transaction with
affiliates. As of December 31, 2020, we were in compliance with these covenants. The outstanding amount at December 31, 2020 is 505,611
thousand U.S. dollars.
All interest payments are made on a half yearly basis.
The fair value of the Senior Secured Notes, calculated on the basis of their quoted price on December 31, 2020, is 500,200 thousand U.S.
dollars.
The fair value hierarchy of the Senior Secured Notes is Level 1 as the fair value is based on the quoted market price at the reporting date.
On February 10, 2021, Atento Luxco 1 S.A., closed an offering of a $500.0 million aggregate principal amount of 8.0% Senior Secured
Notes due February 10, 2026 in a private placement transaction. Atento Luxco 1 used the net proceeds to repurchase all of its 6.125% Senior Secured
Notes due 2022.
The terms of the Indenture governing the 2026 Senior Secured Notes, among other things, limit, in certain circumstances, the ability of
Atento Luxco 1 and its restricted subsidiaries to: incur certain additional indebtedness; make certain dividends, distributions, investments and other
restricted payments; sell property or assets to another person; incur additional liens; guarantee additional debt; and enter into transactions with
affiliates.
Details of the corresponding debt at each reporting date are as follows:
Currency
Principal
2019
Accrued
interests
Thousands of U.S. dollars
Total debt
Principal
2020
Accrued
interests
Total debt
U.S. dollar
490,012
11,910
501,922
493,701
11,910
505,611
Maturity
2022
Bank borrowings
On February 3, 2014, Atento Brasil S.A. entered into a credit agreement with Banco Nacional de Desenvolvimento Econômico e Social -
BNDES (“BNDES”) in an aggregate principal amount of 300,000 thousand Brazilian Reais (the “BNDES Credit Facility”), equivalent to 109,700
thousand U.S. dollars as of each disbursement date.
The total amount of the BNDES Credit Facility is divided into five tranches subject to the following interest rates:
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Tranche
Tranche A
Tranche B
Tranche C
Tranche D
Tranche E
Long-Term Interest Rate (Taxa de Juros de Longo Prazo — TJLP) plus 2.5% per annum
SELIC Rate plus 2.5% per annum
4.0% per year
6.0% per year
Long-Term Interest Rate (Taxa de Juros de Longo Prazo — TJLP)
Interest Rate
Each tranche intends to finance different purposes, as described below:
• Tranche A and B: investments in workstations, infrastructure, technology, services and software development, marketing and
commercialization, within the scope of BNDES program – BNDES Prosoft.
• Tranche C: IT equipment acquisition, covered by law 8.248/91, with national technology, necessary to execute the project described on
tranches “A” and “B”.
• Tranche D: acquisitions of domestic machinery and equipment, within the criteria of FINAME, necessary to execute the project
described on tranches “A” and “B”.
• Tranche E: investments in social projects to be executed by Atento Brasil S.A.
Date
March 27, 2014
April 16, 2014
July 16,
2014
August 13, 2014
Subtotal 2014
March 26, 2015
April 17, 2015
December 21, 2015
Subtotal 2015
October 27, 2016
Subtotal 2016
Total
Tranche A
Tranche B
(Thousands of U.S. dollars)
Tranche D
Tranche C
Tranche E
Total
11,100
4,714
-
27,584
43,398
5,753
12,022
7,250
25,025
-
-
68,423
5,480
2,357
-
3,013
10,850
1,438
3,006
1,807
6,251
-
-
17,101
7,672
3,300
-
4,430
15,402
2,042
4,266
-
6,308
-
-
21,710
548
236
-
477
1,261
167
349
-
516
-
-
1,777
-
-
270
-
270
-
-
177
177
242
242
689
24,800
10,607
270
35,504
71,181
9,400
19,643
9,234
38,277
242
242
109,700
This facility should be repaid in 48 monthly installments. The first payment was made on March 15, 2016 and the last payment would be
due on February 15, 2020, however Atento Brasil S.A. repaid in advance on April 30, 2019 all the outstanding amount. The amount repaid was
BRL61.7 million (equivalent to $15.6 million) plus interest accrued and a penalty of BRL 0.7 million (equivalent to $0.2 million).
The BNDES Credit Facility contains covenants that restrict Atento Brasil S.A.’s ability to transfer, assign, change or sell the intellectual
property rights related to technology and products developed by Atento Brasil S.A. with the proceeds from the BNDES Credit Facility. As of
December 31, 2020, Atento Brasil S.A. was in compliance with these covenants. The BNDES Credit Facility does not contain any other financial
maintenance covenant.
The BNDES Credit Facility contains customary events of default including the following: (i) reduction of the number of employees without
providing program support for outplacement, as training, job seeking assistance and obtaining pre-approval of BNDES; (ii) existence of unfavorable
court decision against the Company for the use of children as workforce, slavery or any environmental crimes and (iii) inclusion in the by-laws of
Atento Brasil S.A. of any provision that restricts Atento Brasil S.A’s ability to comply with its financial obligations under the BNDES Credit Facility.
On September 26, 2016, Atento Brasil S.A. entered into a new credit agreement with BNDES in an aggregate principal amount of 22,000
thousand Brazilian Reais, equivalent to 6,808 thousand U.S. dollars as of September 30, 2016. The interest rate of this facility is Long-Term Interest
Rate (Taxa de Juros de Longo Prazo - TJLP) plus 2.0% per annum. The facility should be repaid in 48 monthly instalments. The first payment was
due on November 15, 2018 and the last payment will be due on October 15, 2022. This facility is intended to finance an energy efficiency project to
reduce power consumption by implementing new lightening, air conditioning and automation technology. On November 24, 2017, 6,500 thousand
Brazilian Reais (equivalent to 1,993 thousand U.S. dollars as of November 30, 2017) were released under this facility.
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As of December 31, 2020, the outstanding amount under BNDES Credit Facility was 581 thousand U.S. dollars.
The fair value as of December 31, 2020 calculated based on discounted cash flow is 560 thousand U.S. dollars.
On April 25, 2017, Atento Brasil S.A. entered into a bank credit certificate (cédula de crédito bancário) with Banco Santander (Brasil) S.A.
in an aggregate principal amount of up to 80,000 thousand Brazilian Reais (the “2017 Santander Bank Credit Certificate”), equivalent to
approximately 25,012 thousand U.S. dollars as of April 30, 2017. The interest rate of the 2017 Santander Bank Credit Certificate equals to the
average daily rate of the one day “over extra-group” – DI – Interbank Deposits (as such rate is disclosed by CETIP – “Central De Custódia e
Liquidação Financeira de Títulos Privados” in the daily release available on its web page), plus a spread of 2.70% per annum. The 2017 Santander
Bank Credit Certificate matures every 180 days and has been renewed on a regular basis. On April 7, 2020, the Company paid the full outstanding
balance, and the “2017 Santander Bank Credit Certificate” was terminated by mutual agreement between the parties.
On August 10, 2017, Atento Luxco 1 S.A. entered into a new Super Senior Revolving Credit Facility (the “Super Senior Revolving Credit
Facility”) which provides borrowings capacity of up to 50,000 thousand U.S. dollars and will mature on February 10, 2022. Banco Bilbao Vizcaya
Argentaria, S.A., as the agent, the Collateral Agent and BBVA Bancomer, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer,
Morgan Stanley Bank N.A. and Goldman Sachs Bank USA are acting as arrangers and lenders under the Super Senior Revolving Credit Facility.
The Super Senior Revolving Credit Facility may be utilized in the form of multi-currency advances for terms of one, two, three or six
months. The Super Senior Revolving Credit Facility bears interest at a rate per annum equal to LIBOR or, for borrowings in euro, EURIBOR or, for
borrowings in Mexican Pesos, TIIE plus an opening margin of 4.25% per annum. The margin may be reduced under a margin ratchet to 3.75% per
annum by reference to the consolidated senior secured net leverage ratio and the satisfaction of certain other conditions.
The terms of the Super Senior Revolving Credit Facility Agreement limit, among other things, the ability of the Issuer and its restricted
subsidiaries to (i) incur additional indebtedness or guarantee indebtedness; (ii) create liens or use assets as security in other transactions; (iii) declare
or pay dividends, redeem stock or make other distributions to stockholders; (iv) make investments; (v) merge, amalgamate or consolidate, or sell,
transfer, lease or dispose of substantially all of the assets of the Issuer and its restricted subsidiaries; (vi) enter into transactions with affiliates; (vii)
sell or transfer certain assets; and (viii) agree to certain restrictions on the ability of restricted subsidiaries to make payments to the Issuer and its
restricted subsidiaries. These covenants are subject to a number of important conditions, qualifications, exceptions and limitations that are described
in the Super Senior Revolving Credit Facility Agreement.
The Super Senior Revolving Credit Facility Agreement includes a financial covenant requiring the drawn super senior leverage ratio not to
exceed 0.35:1.00 (the “SSRCF Financial Covenant”). The SSRCF Financial Covenant is calculated as the ratio of consolidated drawn super senior
facilities debt to consolidated pro forma EBITDA for the twelvemonth period preceding the relevant quarterly testing date and is tested quarterly on a
rolling basis, subject to the Super Senior Revolving Credit Facility being at least 35% drawn (excluding letters of credit (or bank guarantees),
ancillary facilities and any related fees or expenses) on the relevant test date. The SSRCF Financial Covenant only acts as a draw stop to new
drawings under the Revolving Credit Facility and, if breached, will not trigger a default or an event of default under the Super Senior Revolving
Credit Facility Agreement. The Issuer has four equity cure rights in respect of the SSRCF Financial Covenant prior to the termination date of the
Super Senior Revolving Credit Facility Agreement, and no more than two cure rights may be exercised in any four consecutive financial quarters.
On October 16, 2017, Atento El Salvador S.A. de C.V. entered into an overdraft credit line agreement with Banco de America Central, S.A. -
BAC for an amount of 1,600,000 thousand U.S. dollars, maturing on One Year, extendable with simple exchange of letters with an annual interest
rate of 8.0% per annum. As of December 31, 2020, the outstanding balance was 2 thousand U.S. dollars.
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On March 25, 2020, Atento Luxco 1 S.A. withdrew the full amount of 50,000 thousand U.S. dollars maturing on September 21, 2020 with
an annual interest rate of Libor + 4.25%. On September 21, 2020, the full amount of 50,000 thousand U.S. dollars was rolled over until December 20,
2020, at the same interest rate.
On December 20, 2020, Atento Luxco 1 S.A. repaid 20,000 thousand U.S. dollars and the outstanding 30,000 thousand U.S. dollars as of
such date was rolled over and matures on March 22, 2021.
As of December 31, 2020, we were in compliance with this covenant and the outstanding amount under this facility was 30,038 thousand
U.S. dollars.
On March 13, 2019, Atento Brasil S.A. entered into a financing agreement with Banco Santander Brasil S.A. (“Risco Sacado”) for the
annual Microsoft software licenses, for an amount of 23,254 thousand Brazilian Reais, maturing on March 9, 2020, with an annual interest rate of
8.9% per annum. The total outstanding balance was paid on the due date.
On August 13, 2019, Atento Brasil S.A. entered into an overdraft credit line agreement with Banco do Brasil for an amount of 30,000
thousand Brazilian Reais, with maturity every six months, with an annual interest rate of CDI plus 2.127% per annum. On February 27, 2020, the
amount of the agreement was increased up to 40,000 thousand Brazilian Reais, with an annual interest rate of CDI plus 5.54% per annum, with
maturity date on July 27, 2020. On July 22, 2020, the amount of the agreement was maintained at up to 40,000 thousand Brazilian Reais, with an
annual interest rate of CDI plus 5.54% per annum, with next maturity date on October 20, 2020. On October 14, 2020, Atento Brasil paid the full
outstanding balance.
On October 14, 2020, Atento Brasil entered into a bank credit certificate with Banco do Brasil for an amount of 30,000 thousand Brazilian
Reais, maturing on February 28, 2021 with an annual interest rate of CDI plus 2,127%. As of December 31, 2020, the outstanding balance was 5.821
thousand U.S. dollars.
On August 20, 2019, Atento Brasil S.A. entered into a loan agreement with Banco ABC Brasil for an amount of 7,766 thousand Euros
maturing on February 18, 2020 with an annual interest rate of 1.25%. In connection with the loan, Atento Brasil S.A. entered into a swap agreement
through which it receives fixed interest rates in EURO, in the same amount of the loan agreement, and pays variable interest rate at a rate per annum
equal to the average daily rate of the one day “over extragroup” – DI – Interbank Deposits (as such rate is disclosed by CETIP in the daily release
available on its web page), plus a spread of 1.80% over 35,000 thousand Brazilian Reais. The total outstanding balance was paid on the due date.
On February 14, 2020, Atento Brasil S.A. entered into a loan agreement with Banco ABC Brasil for an amount of 7,402 thousand Euros
maturing on August 13, 2020 with an annual interest rate of 1.49%. In connection with the loan, Atento Brasil S.A. entered into a swap agreement
through which it receives fixed interest rates in EURO, in the same amount of the loan agreement, and pays variable interest rate at a rate per annum
equal to the average daily rate of the one day “over extragroup” – DI – Interbank Deposits (as such rate is disclosed by CETIP in the daily release
available on its web page), plus a spread of 1.95% over 35,000 thousand Brazilian Reais. The total outstanding balance was paid on the due date.
On February 20, 2020, Atento Brasil S.A. entered into a bank credit certificate (cédula de crédito bancário) with Banco Itaú for an amount of
35,217 thousand Brazilian Reais, maturing on May 20, 2020 with an annual interest rate of CDI plus 1.95% per annum. The total outstanding balance
was paid on the due date.
On March 13, 2020, Atento Brasil S.A. entered into a financing agreement with Banco Itaú (“Risco Sacado”) for the annual Microsoft
software licenses, for an amount of 24,499 thousand Brazilian Reais, maturing on April 1, 2021, with an annual interest rate of 7.2%. As of
December 31, 2020, the outstanding balance was 4,714 thousand U.S. dollars.
On April 6, 2020, Atento Brasil S.A. entered into a loan agreement with Banco Santander for an amount of 110,000 thousand Brazilian
Reais, maturing on April 06, 2021 with an annual interest rate of CDI plus 4.96% per annum. On July 13, Atento Brasil S.A. made a partial
amortization in the amount of 60,000 thousand Brazilian Reais plus accrued interest. As of December 31, 2020, the outstanding balance was 9,910
thousand U.S. dollars.
On May 12, 2020, Atento Peru entered a loan agreement with Scotiabank Peru, under the government financing program related to Covid-19
(Reactiva Peru), for an aggregate principal amount of 10,000 thousand Peruvian Soles, with an annual interest rate of 1.0% per annum. This facility
should be repaid in 36 months. The first payment would be due on May 12, 2021 and the last payment would be due on May 12, 2023. On November
13, Atento Peru prepaid the total outstanding balance.
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On June 12, 2020, Atento Brasil entered into a financing agreement with Banco De Lage Landen for an amount of 10,000 thousand
Brazilian Reais to finance the purchase of Microsoft software licenses, maturing on June 30, 2023 with an annual interest rate of 9.0% per annum.
Atento Brasil drew down on the financing agreement on July 01, 2020. The outstanding balance as of December 31, 2020 was 1,924 thousand U.S.
dollars.
On August 26, 2020, Atento Brasil entered into a bank credit certificate with Banco ABC Brasil for an amount 50,000 thousand Brazilian
Reais, maturing on February 22, 2021 with an annual interest rate of CDI plus 2.70% per annum. The balance under the loan agreement as of
December 31, 2020 was 9,776 thousand U.S. dollars.
On December 15, 2020, Atento Brasil entered into a bank credit certificate with Banco ABC Brasil for an amount 35,000 thousand Brazilian
Reais, maturing on June 14, 2021 with an annual interest rate of CDI plus 2.50% per annum. The balance under the loan agreement as of December
31, 2020 was 6,748 thousand U.S. dollars.
Lease liabilities
Liabilities
Current liabilities
Non-current liabilities
January
1, 2019
Additions/
(Disposals)
Payments
Interest
accrued
Interest
paid
Translation
difference
54,706
134,920
189,626
29,474
(1,592)
27,882
(56,088)
-
(56,088)
18,307
-
18,307
(812)
-
(812)
6,440
9,410
15,850
December
31, 2019
52,027
142,738
194,765
Liabilities
Current liabilities
Non-current liabilities
December
31, 2019
Additions/
(Disposals)
Payments
Interest
accrued
Interest
paid
Amortization
(addition)
fees
Transfer
Translation
difference
December
31, 2020
52,027
142,738
194,765
8,514
21,121
29,635
(48,947)
-
(48,947)
14,426
-
14,426
(559)
-
(559)
29
697
726
49,777
(49,777)
-
(22,083)
(15,264)
(37,347)
53,184
99,515
152,699
The future lease liabilities payments are as follows:
Lease liabilities payments
2021
52,698
2022
41,047
2023
33,500
2024
22,985
2025
12,128
Others
16,744
Total
179,102
a) Financing activities
See below the changes in debt with third parties arising from financing activities:
Thousands of U.S. dollars
2018
Senior Secured Notes
Brazilian bonds -
Debentures
Lease liabilities
Other borrowings
Total
Cash flows provided by/(used
in) financing activities
New
borrowing Amortization
December
31, 2017
398,346
21,055
10,498
56,392
486,291
-
-
-
58,462
58,462
-
(3,543)
(4,221)
(73,911)
(81,675)
New leases/
IFRS 16
Interest
accrued
Interest
paid (*)
Amortization
(addition) fees
Translation
differences
December 31,
2018
-
-
-
-
-
24,500
1,809
856
3,491
30,656
(24,500)
(1,920)
(856)
(6,283)
(33,559)
2,245
(118)
-
-
2,127
(556)
(2,575)
(750)
1,347
(2,534)
400,035
14,708
5,527
39,498
459,768
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2019
Senior Secured Notes
Brazilian bonds -
Debentures
Lease liabilities
Other borrowings
Total
Cash flows provided by/(used in)
financing activities
December
31, 2018
New
borrowing
Amortization
New leases/
IFRS 16
Interest
accrued
Interest
paid (*)
Amortization
(addition) fees
Translation
differences
December
31, 2019
Thousands of U.S. dollars
400,035
14,708
5,527
39,498
459,768
100,170
-
-
73,547
173,717
-
(14,513)
(56,088)
(86,966)
(157,567)
-
-
211,981
-
211,981
29,779
441
18,307
2,728
51,255
(27,563)
(676)
(812)
(2,258)
(31,309)
(499)
(295)
-
-
(794)
-
335
15,850
(2,621)
13,564
501,922
-
194,765
23,928
720,615
2020
Cash flows provided by/(used in)
financing activities
December
31, 2019
New
borrowing
Amortization
New leases/
IFRS 16
Interest
accrued
Interest
paid (*)
Amortization
(addition) fees
Translation
differences
December
31, 2020
Thousands of U.S. dollars
Senior Secured Notes
Super Senior Credit Facility
Lease liabilities
Other borrowings
Total
501,922
-
194,765
23,928
720,615
-
50,000
-
71,771
121,771
-
(20,000)
(48,947)
(50,543)
(119,490)
-
-
29,635
-
29,635
30,625
1,910
14,426
71
47,032
(30,625)
(1,872)
(559)
(1,021)
(34,077)
3,689
-
726
-
4,415
-
-
(37,347)
(4,731)
(42,078)
505,611
30,038
152,699
39,475
727,823
(*) For the purposes of the statements of cash flows, it is classified as "interest paid" in operating activities.
18) TRADE AND OTHER NON-TRADE PAYABLES
Details of trade and other payables at December 31, 2019 and 2020 are as follow:
Other payables
Suppliers
Total non-current non-trade payables
Suppliers
Advances
Total current trade payables
Suppliers of fixed assets
Personnel
Other payables
Advances from customers
Total current other non-trade payables
Total current
Total
Thousands of U.S. dollars
2019
2020
10,261
1,483
11,744
71,311
365
71,676
21,276
67,208
4,806
1,145
94,435
166,111
177,855
2,734
1,562
4,296
59,338
77
59,415
12,668
57,010
5,761
927
76,366
135,781
140,077
The carrying amount of trade and other non-trade payables is similar to the fair value.
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19) EQUITY
Share capital
As of December 31, 2020, share capital was 49 thousand U.S. dollars, equivalent to €33,979 (49 thousand U.S. dollars, equivalent to
€33,979 as of December 31, 2019), divided into 15,000,000 shares (15,000,000 shares in December 31, 2019).
On January 18, 2019, the Board approved a share capital increase and issued 335,431 shares increasing outstanding shares to 75,406,357.
On July 28, 2020, an extraordinary shareholder’s meeting approved the reverse share split of 75,406,357 ordinary shares without nominal
value, representing the entire share capital of the Company, into 15,000,000 ordinary shares without nominal value using a ratio of
5.027090466672970, and subsequently amending article 5 of the articles of association of the Company.
Mezzanine Partners II Offshore Lux Sarl II owns 25.36%; Chesham Investment Pte Ltd owns 21.85%, Taheebo Holdings LLC owns 14,87%
of ordinary shares of Atento S.A.
Reserve for acquisition of non-controlling interest
Refers to options attributable to Atento Brasil S.A. in the acquisition of RBrasil and Interfile in the total amount of 23,531 thousand U.S.
dollars as of December 31, 2018.
On May 17, 2019 and June 7, 2019, the Company acquired remaining shares of Interfile and RBrasil, respectively, and therefore the reserve
for acquisition of non-controlling interest was written off.
Share premium
The share premium refers to the difference between the subscription price that the shareholders paid for the shares and their nominal value.
Since this is a capital reserve, it can only be used to increase capital, offset losses, redeem, reimburse or repurchase shares.
On January 2, 2020, the Company vested the total of 1,305,065 TRSUs, issued by treasury shares, with an impact in share premium of 5,842
thousand of U.S. dollars.
Treasury shares
In 2019, Atento S.A. repurchased 4,425,499 shares (corresponding to 880,330 shares of the reserve share split) at a cost of 11,141 thousand
of U.S. dollars and an average price of $2.52 ($12.66 in reverse share split basis), totalizing 5,531,657 shares in treasury (corresponding to 1,100,639
shares of the reserve share split).
As a result of the vesting of 1,305,065 TRSUs (corresponding to 259,606 shares of the reserve share split), Atento S.A. had 4,226,592 shares
in treasury (corresponding to 840,763 shares of the reserve share split).
As of July 28, 2020, Atento S.A. announced a reverse share split that converted the Company’s entire share capital of 75,406,357 into
15,000,000 shares. At that time Atento S.A. had 4,771,076 shares on treasury that became 949,073.
Considering the reverse share split basis, during 2020, Atento S.A. repurchased 169,739 shares at a cost of 1,337 thousand of U.S. dollars
and an average price of $7.87. As of December 31, 2020, Atento S.A. had 1,010,502 shares in treasury (1,100,369 shares as of December 31, 2019, in
the reverse share split basis).
Legal reserve
According to commercial legislation in Luxembourg, Atento S.A. must transfer 5% of its year profits to legal reserve until the amount
reaches 10% of share capital. The legal reserve cannot be distributed.
At December 31, 2019 and 2020, no legal reserve had been established, mainly due to the losses incurred by Atento S.A.
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On February 26, 2020, the Board of Directors has proposed the allocation to legal reserve of the amount of sixty-seven with forty-seven
cents Euros (EUR 67.47).
At July 28, 2020 the Annual Meeting resolves to (i) allocate the amount of EUR 67.47 to the legal reserve of the Company out of the profit
of EUR 1,071,315.52 and (ii) to carry forward the remaining amount of the profit to the next financial year.
Hedge accounting effects
As discussed on Note 14, on January 1, 2019 Atento formalized at a meeting of the “Board of Directors”, which took place on December 20,
2018, its intention to renew the loan agreement between Atento Luxco 1 and Atento Brasil on its maturities per indefinite time and designate it as
permanent equity, as the repayment is neither planned nor likely to occur in the foreseeable future. Therefore, changes in fair value related to the
USD-BRL exchange rate is recorded in equity as part of other comprehensive income.
At the same time the, on January 1, 2019, the Cross-Currency Swap USD BRL was designated as a net investment hedge. Prior to the date of
designation of the Cross-Currency Swap, this hedging instrument was electively not designated as a hedge accounting because the change in fair
value was intended to partially offset changes in the USD-BRL foreign currency component of the BRL denominated intercompany debt, which were
recorded in earnings. Therefore, changes in fair value related to the USD-BRL Cross-Currency Swap are recorded in equity as part of other
comprehensive income.
Also, on January 1, 2020 the Company assigned the loan agreement between Atento Luxco 1 and Atento Mexico Holdco as permanent in
equity, with its maturities to be renewed per indefinite time, since the repayment is neither planned nor likely to occur in the foreseeable future.
Therefore, changes in fair value related to the USD-MXN exchange rate are now recorded in equity as part of other comprehensive income.
Translation differences
Translation differences reflect the differences arising on account of exchange rate fluctuations when converting the net assets of fully
consolidated foreign companies from local currency into Atento Group’s presentation currency (U.S. dollars).
Stock-based compensation
a) Description of share-based payment arrangements
The 2017 Plan
On July 3, 2017, Atento granted a new share-based payment arrangement to directors, officers and other employees, for the Company and its
subsidiaries:
1. Time Restricted Stock Units (“RSU”) (equity settled)
• Grant date: July 3, 2017
• Amount: 886,187 RSUs
• Vesting period: 100% of the RSUs vest on January 2, 2020
• There are no other vesting conditions
The 2018 Plan
On July 2, 2018, Atento granted a new share-based payment arrangement to directors, officers and other employees, for the Company and its
subsidiaries. The share-based payment had the following arrangements:
1.
Time Restricted Stock Units (“RSUs”) (equity settled)
• Grant date: July 2, 2018
• Amount: 1,065,220 RSUs
• Vesting period: 100% of the RSUs vests on January 4, 2021
• There are no other vesting conditions
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As of January 4, 2019, a total of 1,161,870 TRSUs vested, which is composed of 1,109,338 RSUs of the 2016 Plan granted on July 1, 2016,
29,300 RSUs of the Board of directors plan granted on May 31, 2017 and June 3, 2017, and 23,232 RSUs of the Board of directors plan granted on
April 19, 2018.
The 2019 Plan – Board and Extraordinary
On March 1, 2019, Atento granted a new share-based payment arrangement to Board directors and an Extraordinary Grant for a total in a
one-time award with a one-year vesting period.
1. Time Restricted Stock Units (“RSU”) (equity settled)
• Grant date: March 1, 2019
• Amount: 109,785 and 704,057 RSUs
• Vesting period: 100% of the RSUs vests on January 2, 2020
• There are no other vesting conditions
As of January 2, 2020, a total of 813,842 TRSUs vested.
The 5 Years Plan
On March 1, 2019, Atento granted a new share-based payment arrangement to Board directors (a total of 238,663 RSUs) in a one-time
award with a five-year vesting period of 20% each year.
1. Time Restricted Stock Units (“RSU”) (equity settled)
• Grant date: March 1, 2019
• Amount: 238,663 RSUs
• Vesting period: 20% of the RSUs each year beginning on January 2, 2020 and last vested on January 4, 2024.
• There are no other vesting conditions
The 2019 Plan
On June 3, 2019, Atento granted a new share-based payment arrangement to directors, officers and other employees, for the Company and
its subsidiaries. The share-based payment had the following arrangements:
1. Time Restricted Stock Units (“RSU”) (equity settled)
• Grant date: June 3, 2019
• Amount: 2,560,666 RSUs
• Vesting period: 100% of the RSUs vests on January 3, 2022
• There are no other vesting conditions
As of January 2, 2020, a total of 1,305,065 TRSUs vested, which is composed of 443,490 RSUs of the 2017 Plan granted on July 3, 2017,
109,785 RSUs of the Board of directors Plan granted on March 1, 2019, 704,057 RSUs of the Board and Extraordinary Plan granted on March 1,
2019 and 47,733 RSUs of the 20% of the 5 Years Plan granted on March 1, 2019.
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The 2020 Plan – Board and Extraordinary
On March 2, 2020, Atento granted a new share-based payment arrangement to Board directors and an Extraordinary Grant for a total in a
one-time award with a one-year vesting period.
1.
Time Restricted Stock Units (“RSU”) (equity settled)
• Grant date: March 2, 2020
• Amount: 153,846 and 16,722 RSUs
• Vesting period: 100% of the RSUs vests on January 4, 2021
• There are no other vesting conditions
On August 3, 2020, Atento granted a new share-based payment arrangement to directors, officers and other employees, for the Company and
its subsidiaries. The share-based payment is composed by Stock Options with the following arrangements:
1.
Stock Options (“SOP”)
• Grant date: August 3, 2020
• Amount: 1,524,065 SOPs
• Vesting period: 1/3 each year (August 3, 2021, August 3, 2022 and August 3, 2023)
• Expiration date: 4.5 years since the grant date or on February 3, 2025
• There are no other vesting conditions
On August 3, 2020, Atento granted a new share-based payment arrangement to directors, officers and other employees, for the Company and
its subsidiaries. This payment is composed by a Long-Term Performance Award with the following arrangements:
2.
Long-Term Performance Award
• Grant date: August 3, 2020
• Amount: USD 4,305,100
• *Matching shares Amount: USD 2,152,550
• Vesting conditions: linked to the degree of achievement of the objective – 3-year average EBITDA margin (external view / as reported) on
August 3, 2023 and the possibility to opt to receive part of this incentive in shares – at least 50% (*with a 3-year holding restriction
condition until August 2026 to be eligible to receive the additional matching shares)
• There are no other vesting conditions
On August 3, 2020, Atento granted a new share-based payment arrangement to directors as an Extraordinary Grant for a total in a one-time
award with a three-year vesting period.
1.
Stock Options (“SOP”)
• Grant date: August 3, 2020
• Amount: 195,000 SOPs
• Vesting period: 100% of the SOPs vests on August 3, 2023
• There are no other vesting conditions
b) Measurement of fair value
The fair value of the RSUs, for all arrangements, has been measured using the Black-Scholes model. For all arrangements are equity settled
and the fair value of RSUs is measured at grant date and not remeasured subsequently.
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The inputs used in the measurement of the fair values at the grant date of the 2020 Plan – Board and Extraordinary are presented below:
The 2019 Plan – 5 Years:
Time RSU
Comments
Variable
Stock price (USD)
Strike price (USD)
Time (years)
3.96 Stock price of Atento S.A. in USD at grant date March 1, 2019
0.01 For valuation purposes set to 0.01
5 Time to vest as per the contract
The Time RSU reflects the fact that 20% of the RSUs each year beginning on January 2, 2020 and last vested on January 2, 2024.
The 2019 Plan:
Variable
Stock price (USD)
Strike price (USD)
Time (years)
Risk free rate
Expected volatility
Dividend yield
Value RSU in USD
Time RSU
Comments
2.66 Stock price of Atento S.A. in USD at grant date June 3, 2019
0.01 For valuation purposes set to 0.01
2.5 Time to vest as per the contract
1.77% USD risk free rate obtained from Bloomberg
26.74%
Assumption is made to base volatility on the average volatility of main competitors because Atento S.A.
itself is listed in October 2014
0.01% Assumption is made here that no dividends will be paid out as this is not in the line of expectations
2.65
The Time RSU reflects the fact that 100% of the Time RSUs will vest on January 3, 2022.
The 2020 Plan – Board and Extraordinary:
Time RSU
Comments
Variable
Stock price (USD)
Strike price (USD)
Time (years)
2.99 Stock price of Atento S.A. in USD at grant date March 2, 2020
0.01 For valuation purposes set to 0.01
1 Time to vest as per the contract
The Time RSU reflects the fact that 100% of the Time RSUs will vest on January 4, 2021.
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Stock Options
(SOP)
Comments
Variable
Stricke price (USD)
Time (years)
Time (years)
c) Outstanding RSUs
8.35 Strike price of Atento S.A. in USD at grant date August 3, 2020
3 Time to vest as per the contract 1/3 each year for 2020 Plan
3 Time to vest as per the contract for Extraordinary SOP
On July 28, 2020, a Reverse Share Split occurred according to the Company’s Extraordinary General Meeting of Shareholders. The
Company’s shareholders have approved a conversion of the Company’s entire share capital of 75,406,357 ordinary shares into 15,000,000 ordinary
shares, without nominal value, using a ratio of conversion of 5.027090466672970, impacting in the number of RSUs agreed in the signed contract on
the Grant date of the plans in force until that time.
As of December 31, 2020, there are 105,728 Time RSUs outstanding related to 2018 Grant, 37,981 Time RSUs outstanding related to 2019 –
Plan 5Y Grant, 424,373 Time RSUs outstanding related to 2019 Grant and 30,604 and 3,327 Time RSUs outstanding related to 2020 Board and
Extraordinary Grant. Holders of RSUs will receive the equivalent in shares of Atento S.A. without cash settlement of stock values when the RSUs
vest.
The 2017 Plan
Outstanding December 31, 2019
Vested
Outstanding December 31, 2020
The 2018 Plan
Outstanding December 31, 2019
Forfeited (*)
Outstanding December 31, 2020
Outstanding December 31, 2020 after Reverse Split (**)
The 2019 Plan – Board and Extraordinary
Outstanding December 31, 2019
Vested
Outstanding December 31, 2020
The 2019 Plan – 5 Years
Outstanding December 31, 2019
Vested
Outstanding December 31, 2020
Outstanding December 31, 2020 after Reverse Split (**)
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Time RSU
443,490
(443,490)
-
Time RSU
647,215
(115,830)
531,385
105,728
Time RSU
813,842
(813,842)
Time RSU
238,663
(47,733)
190,930
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The 2019 Plan
Outstanding December 31, 2019
Forfeited (*)
Outstanding December 31, 2020
Outstanding December 31, 2020 after Reverse Split (**)
The 2020 Plan – Board and Extraordinary
Outstanding December 31, 2019
Forfeited (*)
Outstanding December 31, 2020
Outstanding December 31, 2020 after Reverse Split (**)
The 2020 Plan – Stock Option
Granted August 3, 2020
Forfeited (*)
Outstanding December 31, 2020
The 2020 Plan – Performance Award
Granted August 3, 2020
Forfeited (*)
Outstanding December 31, 2020
The 2020 Plan – Performance Award (Potential Matching Shares)
Calculated by August 3, 2020
Forfeited (*)
Outstanding December 31, 2020
The 2020 Plan – Extraordinary SOP
Granted August 3, 2020
Forfeited (*)
Outstanding December 31, 2020
Time RSU
2,622,843
(484,401)
2,138,442
424,373
Time RSU
170,568
-
170,568
33,931
SOP
1,524,065
(16,547)
1,507,518
Performance Award
4,305,100
(48,800)
4,256,300
SOP (Matching Shares)
2,152,550
(24,400)
2,128,150
SOP
195,000
-
195,000
(*) RSUs are forfeited during the year due to employees failing to satisfy the service conditions.
(**) Number of RSUs converted by the ratio of 5.027090466672970.
The 2017 Plan
Country
Brazil
Chile
Spain
United States
Total
Time RSU
Balance
December 31,
2018
Transfer
Forfeited
Vested
71,497
66,028
69,398
608,770
815,693
-
-
43,915
(43,915)
-
-
-
(41,418)
(95,718)
(137,136)
-
-
-
(235,067)
(235,067)
Balance
December 31,
2019
71,497
66,028
71,895
234,070
443,490
Vested
(71,497)
(66,028)
(71,895)
(234,070)
(443,490)
Balance
December 31,
2020
-
-
-
-
-
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The 2018 Plan
Country
Argentina
Brazil
Chile
Colombia
Spain
Mexico
Peru
United States
Total
The 2019 Plan – Board and
Extraordinary
Country
United States
Total
The 2019 Plan – 5 Year
Country
Atento Luxembourg
Total
The 2019 Plan
Balance
December
31, 2018
Transfer Forfeited
Vested
Time RSU
Balance
December
31, 2019
-
(3,680)
27,244
282,743
70,009
21,049
105,168 68,591
60,736
20,306
472,965 (64,911)
-
-
-
-
1,060,220
-
-
(58,962)
(4,195)
-
(48,864)
(5,025)
-
(195,595)
(312,641)
-
-
-
-
-
-
-
(100,364)
(100,364)
27,244
220,101
65,814
21,049
124,895
55,711
20,306
112,095
647,215
Time RSU
Forfeited
Balance
December
31, 2020
-
(20,352)
(14,471)
-
(1,279)
(45,215)
(15,010)
(19,503)
(115,830)
27,244
199,749
51,343
21,049
123,616
10,496
5,296
92,592
531,385
Balance
December 31,
2020 after
Reverse Split
(*)
5,420
39,743
10,216
4,188
24,597
2,090
1,054
18,420
105,728
Balance December
31, 2018
Granted
Balance December
31, 2019
Vested
Balance December
31, 2020
- 813,842
- 813,842
Balance
December 31,
2018
Granted
Balance
December 31,
2019
813,842
813,842
Time RSU
Vested
(813,842)
(813,842)
-
-
Balance
December 31,
2020
Balance December
31, 2020 after
Reverse Split (*)
- 238,663
- 238,663
238,663
238,663
(47,733)
(47,733)
190,930
190,930
37,981
37,981
Balance
December
31, 2018
Granted
Additional
Grant
Forfeited
Time RSU
Balance
December
31, 2019
Forfeited
Balance
December
31, 2020
Balance
December 31,
2020 after
Reverse Split
(*)
-
-
-
-
-
-
-
-
-
-
108,352
889,108
147,021
53,972
478,473
-
219,963
61,175
602,602
2,560,666
-
400,000
-
-
133,212
100,000
-
-
-
633,212
-
-
(9,825)
(112,838)
108,352
(174,050) 1,115,058
137,196
53,972
498,847
100,000
214,492
61,175
(268,851)
333,751
(571,035) 2,622,843
(5,471)
-
-
-
-
(9,456)
108,352
(46,731) 1,068,327
52,496
(84,700)
53,972
489,391
100,000
41,307
(173,185)
38,925
(22,250)
(148,079)
185,672
(484,401) 2,138,442
-
21,555
211,489
10,443
10,737
97,357
8,219
7,744
19,893
36,936
424,373
Country
Argentina
Brazil
Chile
Colombia
Spain
Guatemala
Mexico
Peru
United States
Total
The 2020 Plan – Board and Extraordinary
Time RSU
Country
United States
Total
Balance December 31,
2019
Granted
Balance December 31,
2020
Balance December 31, 2020
after Reverse Split (*)
-
-
16,722
16,722
16,722
16,722
3,327
3,327
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The 2020 Plan – Board and Extraordinary
Time RSU
Country
Atento Luxembourg
Total
Balance December 31,
2019
Granted
Balance December 31,
2020
Balance December 31, 2020
after Reverse Split (*)
-
-
153,846
153,846
153,846
153,846
30,604
30,604
The 2020 Plan – Stock Option
SOP
Country
Argentina
Brazil
Colombia
Spain
Mexico
Peru
Chile
Guatemala
El Salvador
United States
Total
The 2020 Plan – Performance
Award
Country
Argentina
Brazil
Colombia
Spain
Mexico
Peru
Chile
Guatemala
El Salvador
United States
Total
The 2020 Plan – Performance
Award (Potential Matching
Shares)
Country
Argentina
Brazil
Colombia
Spain
Mexico
Peru
Chile
Guatemala
El Salvador
United States
Total
Balance December
31, 2019
Granted
Transfer
Forfeited
Balance December
31, 2020
49,355
419,138
21,242
226,740
38,472
19,439
-
-
-
-
-
-
-
63,456
-
1,611
-
-
684,612
- 1,524,065
-
-
-
-
-
-
(8,058)
8,058
-
-
-
-
Balance December
31, 2019
Granted
Transfer
Forfeited
Performance Award
-
152,500
- 1,693,200
158,200
-
972,200
-
194,500
-
-
156,800
-
157,500
-
16,000
-
-
804,200
- 4,305,100
-
-
-
-
-
-
(60,000)
60,000
-
-
-
-
-
(16,547)
-
-
-
-
-
-
-
-
(16,547)
-
(48,800)
-
-
-
-
-
-
-
-
(48,800)
49,355
402,591
21,242
226,740
38,472
11,381
8,058
63,456
1,611
684,612
1,507,518
Balance December
31, 2020
152,500
1,644,400
158,200
972,200
194,500
96,800
60,000
157,500
16,000
804,200
4,256,300
Balance December
31, 2019
Granted
Transfer
Forfeited
Balance December
31, 2020
SOP (Matching Shares)
76,250
846,600
79,100
486,100
97,250
78,400
-
-
-
-
-
-
-
78,750
-
8,000
-
-
402,100
- 2,152,550
-
-
-
-
-
-
(30,000)
30,000
-
-
-
-
-
(24,400)
-
-
-
-
-
-
-
-
(24,400)
76,250
822,200
79,100
486,100
97,250
48,400
30,000
78,750
8,000
402,100
2,128,150
The 2020 Plan – Extraordinary SOP
Time RSU
Country
Brazil
Total
Balance December 31, 2019
Granted
Balance December 31,
2020
-
-
195,000
195,000
195,000
195,000
(*) Number of RSUs converted by the ratio of 5.027090466672970.
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d) Impacts in Profit or Loss
In 2020, 4,723 thousand U.S. dollars (7,302 thousand U.S. dollars in 2019 and 6,417 thousand U.S. dollars in 2018) related to stock-based
compensation were recorded as employee benefit expenses.
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20) TAX MATTERS
a) Income tax
The reconciliation between the income tax expense that would result in applying the statutory tax rate and the income tax expense recorded
is as follow:
Profit/(loss) before income tax
Income tax applying the statutory tax rate
Permanent differences
Adjustments due to international tax rates
Tax credits / Withholding Tax of Spanish Branches
DTA write off
Other adjustments
Total income tax expense
Thousands of U.S. dollars
For the years ended December 31,
2019
2018
2020
33,900
(12,899)
(5,052)
2,240
2,297
-
-
(13,414)
(44,475)
11,726
(78)
(4,718)
(4,705)
(38,639)
196
(36,218)
(42,101)
6,694
(175)
(1,018)
(4,661)
(5,291)
(328)
(4,779)
Permanent differences in 2020 are mainly related to non-deductible expenses in Brazil, Spain and Mexico.
The breakdown of the Atento Group’s income tax expense is as follow:
Current tax expense
Deferred tax
Total income tax expense
b) Deferred tax assets and liabilities
Thousands of U.S. dollars
For the years ended December 31,
2019
2018
2020
(23,165)
9,751
(13,414)
(20,438)
(15,780)
(36,218)
(22,797)
18,018
(4,779)
Details of deferred tax assets and liabilities at December 31, 2019 and 2020 are as follow:
Deferred tax assets
Tax loss carryforwards
Tax credits
Tax credits - IFRS 16
Deferred tax assets from temporary differences
Litigations provisions
Financial costs
Fixed Assets
Operating provisions and others
Total deferred tax assets
Deferred tax liabilities
Intangible assets – PPA
Others
Total deferred tax liabilities
Balance at December 31, 2020(*)
Thousands of U.S. dollars
2019
2020
32,743
4,575
-
10,903
7,942
6,371
37,097
99,631
(19,040)
(1,338)
(20,378)
36,546
7,336
950
4,478
(426)
11,639
41,830
102,353
(9,917)
(1,586)
(11,503)
90,850
(*) DTA assets/liabilities were offset by the entity that has the legal right to settle the tax amounts on a net basis.
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The deferred tax not recognized as of December 31, 2020 is 33,249 thousand of U.S. dollars (22,532 thousand of U.S. dollars in December
31, 2019).
The temporary differences associated with investments in the Atento’s subsidiaries, for which a deferred tax liability has not been
recognized, aggregate to 4,526 thousand of U.S. dollars. Atento has determined that the undistributed profits of its subsidiaries, joint venture or
associate will not be distributed in the foreseeable future.
The breakdown and balances of deferred tax assets and deferred tax liabilities at December 31, 2019 and 2020 are as follow:
DEFERRED TAX ASSETS
Unused tax losses (*)
Unused tax credits
Deferred tax assets (temporary differences) (**)
DEFERRED TAX LIABILITIES
Deferred tax liabilities (temporary differences)
(*) Tax credits for loss carryforwards.
(**) The decrease is mainly due to DTA write off.
DEFERRED TAX ASSETS
Unused tax losses (*)
Unused tax credits
Deferred tax assets (temporary differences) (**)
DEFERRED TAX LIABILITIES
Deferred tax liabilities (temporary differences)
Balance at
12/31/2018
Income Statement
Increases
Decreases
Translation
differences
Balance at
12/31/2019
Thousands of U.S. dollars
125,163
23,414
3,935
97,814
(30,221)
(30,221)
43,128
25,955
6,002
11,171
(1,561)
(1,561)
(69,768)
(20,967)
(3,833)
(44,968)
3,563
3,563
1,108
4,341
(1,529)
(1,704)
7,841
7,841
99,631
32,743
4,575
62,313
(20,378)
(20,378)
Thousands of U.S. dollars
Balance at
12/31/2019
Income
Statement
Increases
Decreases
Translation
differences
Balance at
12/31/2020
99,631
32,743
4,575
62,313
(20,378)
(20,378)
31,605
3,545
2,027
26,033
(735)
(735)
(13,010)
(5,123)
(120)
(7,767)
159
159
(15,873)
5,381
855
(22,109)
9,451
9,451
102,353
36,546
7,337
58,470
(11,503)
(11,503)
(*) Tax credits for loss carryforwards.
(**) The increase is mainly due to the constitution of DTA related to Financial Interests in the Spanish Entities.
There is no expectation of distribute future dividends until this report date. Dividends distribution must be subject to Board approval, and
will depend on the Company’s future earnings, cash flow, financial condition, financial covenants and other relevant factors.
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c) Taxes recoverable/payables
Details of taxes recoverable and payables at December 31, 2019 and 2020 are as follow:
Recoverable
Non-current
Indirect taxes
Current
Indirect taxes
Other taxes
Income tax
Total
Payables
Non-current
Social security
Current
Indirect taxes
Other taxes
Income tax
Total
Thousands of U.S. dollars
As of December 31,
2019
2020
5,650
5,650
17,819
6,845
24,664
28,709
59,023
Thousands of U.S. dollars
As of December 31,
2019
2020
2,754
2,754
35,370
58,395
93,765
12,671
109,190
4,815
4,815
29,340
7,454
36,794
25,764
67,373
1,893
1,893
38,026
59,078
97,104
16,838
115,835
21) PROVISIONS AND CONTINGENCIES
Movements in provisions in 2019 and 2020 are as follow:
Non-current
]Provisions for liabilities
Provisions for taxes
Provisions for dismantling
Other provisions
Total non-current
Current
Provisions for liabilities
Provisions for taxes
Provisions for dismantling
Other provisions
Total current
12/31/2018
Additions
Payments
Reversal
Transfers
Translation
differences
12/31/2019
Thousands of U.S. dollars
24,537
16,871
8,430
1,336
51,174
9,020
2,455
60
7,515
19,050
21,769
3,275
1,464
4,658
31,166
16,249
9
27
4,878
21,163
(12,745)
(386)
-
(27)
(13,158)
(12,728)
(474)
-
(6,925)
(20,127)
F-59
(8,500)
(9,830)
-
(226)
(18,556)
(56)
(8)
(59)
-
(123)
-
-
-
(296)
(296)
1
-
296
(1)
296
(766)
(536)
(295)
(407)
(2,004)
(953)
20
(10)
(545)
(1,488)
24,295
9,394
9,599
5,038
48,326
11,533
2,002
314
4,922
18,771
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Non-current
Provisions for liabilities
Provisions for taxes
Provisions for dismantling
Other provisions
Total non-current
Current
Provisions for liabilities
Provisions for taxes
Provisions for dismantling
Other provisions
Total current
12/31/2019
Additions
Payments
Reversal
Transfers
Translation
differences
12/31/2020
Thousands of U.S. dollars
24,295
9,394
9,599
5,038
48,326
11,533
2,002
314
4,922
18,771
15,709
12,441
579
403
29,132
14,769
29
2
4,116
18,916
(9,836)
(103)
(97)
(64)
(10,100)
(1,689)
-
-
(2,506)
(4,195)
(7,030)
(1,764)
-
(1,600)
(10,394)
(9,096)
-
(120)
(1,564)
(10,780)
-
-
-
78
78
-
-
(78)
-
(78)
(4,973)
(1,997)
(1,702)
(2,753)
(11,425)
(807)
(106)
(94)
248
(759)
18,165
17,971
8,379
1,102
45,617
14,710
1,925
24
5,216
21,875
“Provisions for liabilities” primarily relate to provisions for legal claims underway in Brazil. Atento Brasil S.A. has made payments in
escrow related to legal claims from ex-employees, amounting to 38,823 thousand U.S. dollars and 26,763 thousand U.S. dollars as of December 31,
2019 and 2020, respectively. Also, the variation of the period was impacted by the Brazilian Reais and Argentinian Peso depreciations against the
U.S. dollar.
“Provisions for taxes” mainly relate to probable contingencies in Brazil with respect to social security payments and other taxes, which are
subject to interpretations by tax authorities. Atento Brasil S.A. has made payments in escrow related to taxes claims of 3,468 thousand U.S. dollars
and 2,393 thousand U.S. dollars as of December 31, 2019 and 2020, respectively.
The amount recognized under “Provision for dismantling” corresponds to the necessary cost of dismantling of the installations held under
operating leases to bring them to its original condition.
As of December 31, 2020, lawsuits outstanding in the courts were as follows:
Brazil
At December 31, 2020, Atento Brasil was involved in 9,208 labor-related disputes (9,408 labor disputes as of December 31, 2019), being
9,054 of labor massive and 41 of outliers and others, filed by Atento’s employees or ex-employees for various reasons, such as dismissals or claims
over employment conditions in general. The total amount of the main claims classified as possible was 33,598 thousand U.S. dollars (62,514
thousand U.S. dollars on December 31, 2019), of which 18,916 thousand U.S. dollars Labor Massive-related, 1,553 thousand U.S. dollars Labor
Outliers-related and 13,128 thousand U.S. dollars Special Labor cases related.
On December 31, 2020, the subsidiary RBrasil Soluções S.A. holds contingent liabilities of labor nature classified as possible in the amount
of 62 thousand U.S. dollars.
On December 31, 2020, the subsidiary Interfile holds contingent liabilities of labor nature and social charges classified as possible in the
amount of 294 thousand U.S. dollars.
As of December 31, 2020, Atento Brasil S.A. is party to 10 civil lawsuits ongoing for various reasons (5 on December 31, 2019) which,
according to the Company’s external attorneys, materialization of the risk event is possible. The total amount of the claims is 3,464 thousand U.S.
dollars (2,365 thousand U.S. dollars on December 31, 2019).
As of December 31, 2020, the subsidiary RBrasil Soluções S.A. holds 24 civil lawsuits ongoing for various reasons classified as possible in
the amount of 34 thousand U.S. dollars.
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On December 31, 2020, the subsidiary Interfile holds 4 civil lawsuits ongoing for various reasons classified as possible in the amount of 112
thousand U.S. dollars.
As of December 31, 2020 Atento Brasil is party to 42 disputes ongoing with the tax authorities and social security authorities for various
reasons relating to infraction proceedings filed (29 on December 31, 2019) which, according to the Company’s external attorneys, materialization of
the risk event is possible. The total amount of these claims is 38,198 thousand U.S. dollars (36,508 thousand U.S dollars on December 31, 2019).
In March 2018, Atento Brasil S.A. an indirect subsidiary of Atento S.A. received a tax notice from the Brazilian Federal Revenue Service,
related to Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL) for the period from 2012 to 2015, due to the disallowance of
the expenses on tax amortization of goodwill the deductibility of certain financing costs originated of the acquisition of Atento Brasil S.A. by Bain
Capital in 2012, and the withholding taxes on payments made to certain of our former shareholders.
The amount of the tax assessment from the Brazilian Federal Revenue Service, not including interest and penalties, was approximately
105,268 thousand U.S. dollars, and was assessed by the Company’s outside legal counsel as possible loss. We disagree with the proposed tax
assessment and we are defending our position, which we believe is meritorious, through applicable administrative and, if necessary, judicial
remedies. On September 26, 2018, the Federal Tax Office issued a decision accepting the application of the statute of limitation on the withholding
tax discussion. We and the Public Attorney appealed to the Administrative Tribunal (CARF). On February 11, 2020, CARF issued a partially
favorable decision in favor of Atento, recognizing the application of the statute of limitation on the withholding tax discussion and reducing the
penalty imposed. On September 18, 2020, the decision issued by CARF become final. Thus, the amount at stake, not including interest and penalties
was reduced from 105,268 thousand U.S. dollars to 69,301 thousand U.S. dollars. Based on our interpretation of the relevant law, and based on the
advice of our legal and tax advisors, we believe the position we have taken is sustainable. Consequently, no provisions are recognized regarding these
proceedings.
Afterward of the issuance of the tax notice in March 2018, the Brazilian tax administration started a procedure to audit the Corporate Income
Tax (IRPJ) and Social Contribution on Net Income (CSLL) of Atento Brasil S.A. for the period from 2016 to 2017. This tax audit was concluded on
July 10, 2020 with the notification of a tax assessment that reject the deductibility of the above-mentioned financing expenses and the deductibility of
the tax amortization of goodwill.
The tax assessment notified by the Brazilian Federal Revenue Service was approximately 59,955 thousand U.S. dollars, including penalties
and interest. Company’s external legal advisors considered 45,704 thousand U.S. dollars as possible loss while the remaining 14,244 thousand U.S.
dollars was assessed as remote loss. The Company disagrees with the proposed tax assessment and the Company is defending its position, which
believes is meritorious, through applicable administrative and, if necessary, judicial remedies.
On December 31, 2020, the subsidiaries Interfile and Interservicer hold 22 disputes with the tax authorities and social security authorities
ongoing for various reasons classified as possible in the amount of 490 thousand U.S. dollars.
Spain
At December 31, 2020, Atento Teleservicios España S.A.U. including its branches and our other Spanish companies were party to labor-
related disputes filed by Atento employees or former employees for different reasons, such as dismissals and disagreements regarding employment
conditions. According to the Company’s external lawyers, materialization of the risk event is possible for 950 thousand U.S. dollars.
Mexico
At December 31, 2020, Atento Mexico through its two entities (Atento Servicios, S.A. de C.V. and Atento Atencion y Servicios, S.A. de
C.V.) is a party of labor related disputes filed by Atento employees that abandoned their employment or former employees that base their claim on
justified termination reasons, totaling 12,997 thousand U.S. dollars (Atento Servicios, S.A. de C.V. 8,493 thousand U.S. dollars and Atento Atencion
y Servicios, S.A. de C.V. 4,504 thousand U.S. dollars), according to the external labor law firm for possible risk labor disputes.
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22) REVENUE AND EXPENSES
a) Revenue
The breakdown of revenue for the years ended December 31, 2018, 2019 and 2020 is as follow:
Revenue
Services rendered
Total
b) Other operating income
Thousands of U.S. dollars
2019
2018
2020
1,818,180
1,818,180
1,707,286
1,707,286
1,412,262
1,412,262
Details of other operating income for the years ended December 31, 2018, 2019 and 2020 are as follow:
Other operating income
Other operating income (a)
Grants
Income from indemnities and other non-recurring income
Gain on disposal of data center
Gains on disposal of non-current assets
Total
Thousands of U.S. dollars
2019
2018
2020
15,686
1,000
42
2,265
384
19,377
2,612
1,165
601
-
161
4,539
4,486
878
199
-
11
5,574
(a) December 31, 2018 includes $8.7 million of partial insurance indemnity in Puerto Rico as a result of impacts from the natural disasters in
the country.
c) Other gains and own work capitalized
Other gains and own work capitalized increased from 180 thousand U.S. dollars in the year ended December 31, 2018 to 10,477 thousand
U.S. dollars in the year ended December 31, 2019 mostly due to a specific agreement in 2019.
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d) Supplies
Details of amounts recognized under “Supplies” during the years ended December 31, 2018, 2019 and 2020 are as follow:
Supplies
Subcontracted services
Leases
Purchases of materials
Communications
Expenses with labor unions
Other
Total
e) Employee benefit expenses
Thousands of U.S. dollars
2019
2018
2020
10,630
13,856
2,919
19,460
1,051
22,900
70,816
16,044
15,097
3,061
13,718
1,951
16,556
66,427
25,994
14,678
4,266
11,488
797
15,053
72,276
Details of amounts recognized under “Employee benefit expenses” during the years ended December 31, 2018, 2019 and 2020 are as follow:
Employee benefit expenses
Salaries and wages
Social security
Supplementary pension contributions
Termination benefits
Other welfare costs
Total
f) Depreciation and amortization
Thousands of U.S. dollars
2018
2019
2020
1,024,094
130,161
2,840
26,510
181,576
1,365,181
946,752
120,353
2,972
36,065
194,889
1,301,031
788,297
101,911
3,111
24,262
142,827
1,060,408
The depreciation and amortization expenses for the years ended December 31, 2018, 2019 and 2020 are as follow:
Depreciation and amortization
Intangible assets (Note 6)
Property, plant and equipment (Note 10)
Right-of-use assets
Total
g) Other operating expenses
Thousands of U.S. dollars
2019
2018
2020
58,679
36,566
-
95,245
57,226
30,049
53,507
140,782
46,981
26,683
47,256
120,920
The breakdown of “Other operating expenses” for the years ended December 31, 2018, 2019 and 2020 is as follow:
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Other operating expenses
Services provided by third parties
Losses on disposal of fixed assets
Taxes other than income tax
Other management expenses
Total
Thousands of U.S. dollars
2019
2018
2020
202,543
817
10,038
2,560
215,958
156,868
352
9,494
64
166,778
106,526
316
11,610
259
118,711
Details of “Services provided by third parties” under “Other operating expenses” are as follow:
Services provided by third parties
Leases (*)
Installation and maintenance
Lawyers and law firms
Tax advisory services
Consultants
Audits and other related services
Studies and work performed
Other external professional services
Publicity, advertising and public relations
Insurance premiums
Travel expenses
Utilities
Banking and similar services
Other
TOTAL
Thousands of U.S. dollars
2018
2019
2020
67,902
24,290
7,743
179
8,372
1,576
65
43,404
5,332
548
6,979
27,142
1,771
7,240
202,543
18,029
25,586
4,734
218
17,805
1,628
62
44,070
6,677
547
6,021
25,790
2,307
3,394
156,868
13,202
23,775
3,157
14
11,584
1,187
126
24,779
3,556
1,517
1,631
17,736
971
3,291
106,526
(*) For 2019 and 2020, the amount is related to contracts there are not under IFRS 16, related to the exemptions to short-term leases and lease of low-
value assets.
The amounts recognized under “Consultants” and “Other external professional services” for the years ended December 31, 2018, 2019 and
2020 mainly refers to consulting and other costs in connection with efficiencies and costs reduction projects implemented in Brazil and EMEA.
h) Net finance expense
The breakdown of “Finance income” and “Finance costs” for the years ended December 31, 2018, 2019 and 2020 are as follow:
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Finance income
Interest from third parties and hyperinflationary adjustment in Argentina (a)
Total finance income
Finance costs
Interest accrued to third parties
Discounts to the present value of provisions and other liabilities
Total finance costs (b)
Thousands of U.S. dollars
2019
2018
2020
18,843
18,843
20,045
20,045
(43,351)
(2,261)
(45,612)
(65,680)
(2,405)
(68,085)
15,683
15,683
(66,719)
(3,574)
(70,293)
(a) Contain a positive impact of 5,285 thousand of U.S. dollars for the year ended December 31, 2020 (15,787 thousand of U.S. dollars for the year
ended December 31, 2019 and 10,700 thousand of U.S dollars for the year ended December 31, 2018) due to the application of the IAS 29
Financial Reporting in Hyperinflationary Economies in Argentina. This impact is mainly explained by the effects of monetary correction on the
goodwill generated on December 1, 2012, from the acquisition of the customer relationship management (CRM) business from Telefónica S.A.
(b) The decrease in finance costs in December 31, 2018 was driven by lower interest expenses from the debt refinancing program concluded in
August 2017, combined with a negative effect in the year ended December 31, 2017 of $19.0 million related to the debt refinancing. The
increase in finance costs in 2019 and 2020 was mainly driven by 17,495 thousand of U.S. dollars and 14,435 thousand of U.S. dollars,
respectively, from the application of IFRS 16 adopted in 2019.
The breakdown of “Change in fair value of financial instruments” and “Net foreign exchange gain/(loss)” is shown in the table below:
Thousands of U.S. dollars
Foreign exchange gains/(losses)
Loans and receivables
Other financial transactions
Current transactions
Total
Thousands of U.S. dollars
Foreign exchange gains/(losses)
Loans and receivables
Other financial transactions
Current transactions
Total
Thousands of U.S. dollars
Foreign exchange gains/(losses)
Loans and receivables
Other financial transactions
Current transactions
Total
Gains
2018
Losses
2,928
19,432
43,845
66,205
(433)
(29,786)
(64,822)
(95,041)
Gains
2019
Losses
1,822
15,634
194,611
212,067
261
(278)
(221,130)
(221,147)
Gains
2020
Losses
6,805
16,385
32,607
55,797
(2,995)
(37,626)
(42,994)
(83,615)
Net
2,495
(10,354)
(20,977)
(28,836)
Net
2,083
15,356
(26,519)
(9,080)
Net
3,810
(21,241)
(10,387)
(27,818)
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23) SEGMENT INFORMATION
The CEO is the Chief Operating Decision Maker (“CODM”). Management has determined the operating segments on the basis of the
information reviewed by the CEO for the purposes of allocating resources and assessing performance. The results measurement used by the CEO to
assess the performance of the Atento Group’s segments is the EBITDA and Adjusted EBITDA (as defined below).
The CEO considers the business from the geographical perspective in the following areas:
• EMEA, which combines the activities carried out regionally in Spain.
• The Americas, which includes the activities carried out by the various Spanish-speaking companies in Mexico, Central and South
America. It also includes transactions in the United States.
• Brazil, which is managed separately in view of its different language and major importance.
The Atento Group uses EBITDA to track the performance of its segments and to establish operating and strategic targets. Management
believes that EBITDA and Adjusted EBITDA provides an important measure of the segment’s operating performance because it allows management
to evaluate and compare the segments’ operating results, including their return on capital and operating efficiencies, from period to period by
removing the impact of their capital structure (interest expenses), asset bases (depreciation and amortization), and tax consequences. EBITDA is
defined as profit/(loss) for the period from continuing operations before net finance expense (which includes finance income, finance costs, change in
fair value of financial instruments and net foreign exchange losses), income taxes and depreciation and amortization.
EBITDA is a commonly reported measure and are widely used among analysts, investors and other interested parties in the Atento Group’s
industry, although not a measure explicitly defined in IFRS, and therefore, may not be comparable to similar indicators used by other companies.
EBITDA should not be considered as an alternative to the profit for the year as a measurement of our consolidated earnings or as an alternative to
consolidated cash flow from operating activities as a measurement of our liquidity.
The following tables present financial information for the Atento Group’s operating segments for the years ended December 31, 2018, 2019
and 2020 (in thousand U.S. dollars):
For the year ended December 31, 2018
Sales to other companies
Sales to Telefónica Group
Sales to other group companies
Other operating income and expense
EBITDA
Depreciation and amortization
Operating profit
Net finance expense
Income tax
Profit for the year
Capital expenditure
Intangible, Goodwill and PP&E
Allocated assets
Allocated liabilities
EMEA
Americas
Brazil
Other and
eliminations
Total Group
Thousands of U.S. dollars
388,889
293,945
25,910
(652,531)
56,213
(34,683)
21,530
(5,536)
(2,054)
13,940
41,466
195,369
557,695
254,150
93,173
147,686
-
(228,591)
12,268
(9,733)
2,535
(1,620)
(893)
22
6,192
42,766
394,325
122,784
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609,307
266,596
1,756
(794,148)
83,511
(50,376)
33,135
(30,309)
(1,422)
1,404
42,226
251,520
595,807
437,200
-
-
(9,082)
41,840
32,758
(453)
32,305
(18,140)
(9,045)
5,120
1
476
(334,474)
59,126
1,091,369
708,227
18,584
(1,633,430)
184,750
(95,245)
89,505
(55,605)
(13,414)
20,486
89,885
490,131
1,213,353
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For the year ended December 31, 2019
Sales to other companies
Sales to Telefónica Group
Sales to other group companies
Other operating income and expense
EBITDA
Depreciation and amortization
Operating profit/(loss)
Net finance expense
Income tax
Loss for the year
Capital expenditure
Intangible, Goodwill and PP&E
Allocated assets
Allocated liabilities
For the year ended December 31, 2020
Sales to other companies
Sales to Telefónica Group
Sales to other group companies
Other operating income and expense
EBITDA
Depreciation and amortization
Operating profit
Net finance expense
Income tax
Profit/(loss) for the year
Capital expenditure
Intangible, Goodwill and PP&E
Allocated assets
Allocated liabilities
EMEA
Americas
Brazil
Other and
eliminations
Total Group
Thousands of U.S. dollars
98,545
134,241
22
(215,821)
16,987
(15,791)
1,196
(1,414)
(21,960)
(22,178)
3,312
48,712
388,416
139,834
387,272
245,909
26,933
(629,380)
30,734
(48,951)
(18,217)
(5,612)
(2,048)
(25,877)
22,370
186,111
557,822
294,227
598,297
226,989
2,022
(730,427)
96,881
(75,769)
21,112
(46,504)
7,392
(18,000)
40,570
342,954
711,563
577,009
-
-
(12,944)
21,769
8,825
(271)
8,554
(3,590)
(19,602)
(14,638)
-
623
(353,190)
86,521
1,084,114
607,139
16,033
(1,553,859)
153,427
(140,782)
12,645
(57,120)
(36,218)
(80,693)
66,252
578,400
1,304,611
1,097,591
EMEA
Americas
Brazil
Other and
eliminations
Total Group
Thousands of U.S. dollars
113,859
120,798
5
(219,313)
15,349
(12,551)
2,798
(1,260)
3,643
5,181
3,234
47,759
400,010
153,405
372,462
195,804
13,772
(529,440)
52,598
(44,856)
7,742
(9,604)
(8,076)
(9,938)
8,931
150,100
545,587
309,118
466,701
133,962
8,732
(531,181)
78,214
(63,220)
14,994
(42,487)
5,809
(21,684)
23,699
240,032
539,222
451,376
-
-
(13,833)
28,919
15,086
(293)
14,793
(29,077)
(6,155)
(20,439)
10
496
(308,696)
142,548
953,022
450,564
8,676
(1,251,015)
161,247
(120,920)
40,327
(82,428)
(4,779)
(46,880)
35,874
438,387
1,176,123
1,056,447
"Other and eliminations" includes activities of the intermediate holdings in Spain (Atento Spain Holdco, S.L.U.), Luxembourg holdings, as
well as inter-group transactions between segments.
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The breakdown of sales to customers by the main countries where the Atento Group operates is as follow:
Country
Spain
Other and eliminations (*)
EMEA
Argentina
Chile
Colombia
El Salvador
United States
Guatemala
Mexico
Peru
Puerto Rico
Uruguay
Panama
Nicaragua
Costa Rica
Other and eliminations (*)
Americas
Brazil
Other and eliminations (*)
Brazil
Other and eliminations (*)
Total revenue
For the years ended December 31,
2019
2018
2020
240,859
-
240,859
134,557
112,679
71,219
14,260
42,318
16,195
177,595
136,266
9,439
2,866
4,095
4,360
7,431
(24,536)
708,744
875,903
1,758
877,661
(9,084)
1,818,180
232,697
112
232,809
98,237
99,881
72,609
16,933
43,640
11,620
179,835
116,202
12,278
2,314
3,683
3,864
7,493
(8,475)
660,114
825,286
2,022
827,308
(12,945)
1,707,286
234,662
-
234,662
67,905
82,188
70,970
17,507
62,262
6,232
161,492
85,375
16,689
2,298
3,615
3,314
8,022
(5,831)
582,038
600,663
8,732
609,395
(13,833)
1,412,262
(*) Includes holding company level revenues and consolidation adjustments.
The Atento Group signed a framework contract with Telefónica that expires on December 31, 2023 for Brazil and Spain representing the
majority of Telefónica’s business overall and December 31, 2021 expires for the other countries. In 2020, 31.8% of service revenue were generated
from business with Telefónica Group companies (35.6% in 2019 and 39.0% in 2018).
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24) EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to equity owners of the Company by the weighted
average number of ordinary shares outstanding during the periods as demonstrated below:
For the years ended December 31,
2019
2018
2020
Result attributable to equity owners of the Company
Atento’s profit/(loss) attributable to equity owners of the parent (in thousands of U.S. dollars)
Weighted average number of ordinary shares (*)
Basic earnings/(loss) per share (in U.S. dollars) (*)
18,540
14,688,705
1.26
(81,306)
14,446,297
(5.63)
(46,880)
14,082,904
(3.33)
(*) As a consequence of the reverse share split occurred on July 28, 2020 as described in Note 19, weighted average number of ordinary shares was
calculated by applying the ratio of conversion of 5.027090466672970 into the previous weighted average number of ordinary shares outstanding.
Diluted results per share are calculated by adjusting the weighted average number of ordinary shares outstanding to reflect the conversion of
all dilutive ordinary shares. The weighted average number of ordinary shares outstanding used to calculate both basic and diluted net loss per share
attributable to common stockholders is the same. The losses in the periods presented are anti-dilutive.
For the years ended December 31,
2019
2018
2020
Result attributable to equity owners of the Company
Atento’s profit/(loss) attributable to equity owners of the parent (in thousands of U.S. dollars)
Potential increase in number of ordinary shares outstanding in respect of share-based plan
Adjusted weighted average number of ordinary shares (*)
Diluted earnings/(loss) per share (in U.S. dollars) (*)(1)
18,540
186,314
14,875,018
1.25
(81,306)
-
14,446,297
(5.63)
(46,880)
-
14,082,904
(3.33)
(*) As a consequence of the reverse share split occurred on July 28, 2020 as described in Note 19, adjusted weighted average number of ordinary
shares was calculated by applying the ratio of conversion of 5.027090466672970 into the previous weighted average number of ordinary shares
outstanding.
(1) As of December 31, 2019 and 2020, potential ordinary shares of 610,557 and 1,729,548, respectively, relating to the stock option plan were
excluded from the calculation of diluted loss per share as the losses in the years are anti-dilutive.
25) COMMITMENTS
Guarantees
As of December 31, 2019 and 2020, the Atento Group has guarantees to third parties of 350,602 thousand U.S. dollars and 307,403 thousand
U.S. dollars, respectively.
The transactions guaranteed and their respective amounts at December 31, 2019 and 2020 are as follow:
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Guarantees
Financial, labor-related, tax and rental transactions
Contractual obligations
Other
Total
Thousands of U.S. dollars
2020
2019
152,297
198,283
22
350,602
119,356
187,962
85
307,403
The Company’s directors do not believe that any contingencies will arise from these guarantees other than those already recognized.
The breakdown shown in the table above relates to guarantees extended by Atento Group companies, classified by purpose. Of these
guarantees, the majority relate to commercial purposes and rental activities, the remaining guarantees relates to tax and labor proceedings.
26) RELATED PARTIES
The following table shows the breakdown of the total remuneration paid to the Atento Group’s key management personnel in 2018, 2019
and 2020:
Salaries and variable remuneration
Salaries
Share-based compensation
Variable remuneration
Payment in kind
Medical insurance
Life insurance premiums
Other
Total
27) SUBSEQUENT EVENTS
a) Vesting of stock option
2018
Thousands of U.S. dollars
2019
2020
10,703
9,524
-
1,179
1,116
206
44
866
11,819
11,104
5,828
4,173
1,103
793
177
86
530
11,897
6,137
2,359
2,493
1,285
289
77
64
148
6,426
On February 4, 2021, the Company vested the total of 149,154 TRSUs, issued by treasury shares.
b) Senior Secured Notes
On February 10, 2021, Atento Luxco 1 S.A., closed an offering of 500,000 thousand U.S. dollars aggregate principal amount of 8.0% Senior
Secured Notes due February 10, 2026 in a private placement transaction.
On February 17, 2021, Atento Luxco 1 S.A. purchased 275,815 thousand U.S. dollars of its 6.125% Senior Secured Notes due 2022 in a
tender offer. The notes were purchased at a price equal to 1,015.31 U.S. dollars per 1,000 U.S. dollars principal amount.
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On February 18, 2021, Atento Luxco 1 S.A. redeemed the remainder 224,185 thousand U.S. dollars of its 6.125% Senior Secured Notes due
2022. The redemption price was equal to 1,015.31 U.S. dollars per 1,000 U.S. dollars principal amount, plus accrued and unpaid interest on the
principal amount of the Notes, which was equal to 1,016.67 U.S. dollars per 1,000 U.S. dollars principal amount.
With these transactions, the Company completed the refinancing of all 500,000 thousand U.S. dollars aggregate principal amount of its
6.125% Senior Secured Notes due 2022, extending the Company’s average life to 4.5 years from 1.5 years.
c) Bank Borrowings
On February 22, 2021, Atento Brasil rolled-over the bank credit certificate with Banco ABC Brasil for an amount of 50,000 thousand
Brazilian Reais, until February 22, 2022, with an annual interest rate of CDI plus 2.75%.
On February 28, 2021, Atento Brasil rolled-over the bank credit certificate with Banco do Brasil for an amount of 30,000 thousand Brazilian
Reais, until August 28, 2021, with an annual interest rate of CDI plus 2.65%.
d) Change in Registrant’s Certifying Accountant
On March 15, 2021, the Company filed as Exhibit 99.1 to its Report on Form 6-K a notice and proxy statement with respect to the ordinary
general meeting of shareholders, at which, among other things, shareholders of the Company will be asked to approve the appointment of Deloitte
Touch Tohmatsu Auditores Independentes (“Deloitte”) as independent auditor of the Company with respect to the financial year ending on December
31, 2021, to replace Ernst & Young Auditores Independentes S.S. (“E&Y”) as independent auditor (réviseur d’entreprises agréé). The
recommendation is subject to shareholder approval at the ordinary general meeting to be held on April 2, 2021. The appointment of Deloitte will take
effect on April 2, 2021.
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