UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of September, 2017
Commission File Number 001-36671

Atento S.A.
(Translation of Registrant's name into English)
 
4, rue Lou Hemmer, L-1748 Luxembourg Findel
Grand Duchy of Luxembourg 
 (Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F: x Form 40-F: o
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes: o No: x
 
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes: o No: x
 
Note : Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

ATENTO S.A.
INDEX
Financial Information
For the Three and Nine Months Ended September 30, 2017

PART I - PRESENTATION OF FINANCIAL AND OTHER INFORMATION	3	
SELECTED HISTORICAL FINANCIAL INFORMATION	5	
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL INFORMATION	6	
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12	
PART II - OTHER INFORMATION	63	
LEGAL PROCEEDINGS	63	
RISK FACTORS	63	

 
   
PART I - PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Atento S.A. (“Atento”, the “Company”, “we” or the “Organization”) 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”).
In connection with the completion of Atento’s initial public offering (the “IPO”) in October 2014, Topco transferred its entire interest in Midco (€31,000 of share capital) to PikCo, the consideration for which was an allocation of €31,000 to PikCo’s Reserve Account. PikCo then contributed all of the Luxco PECs to Midco (the “Contribution”), the consideration for which was an allocation to Midco’s Reserve Account equal to the value of the Luxco PECs immediately prior to the Contribution. Upon completion of the Contribution, the Luxco PECs were capitalized by Midco. PikCo then transferred the remainder of its interest in Midco (€12,500 of share capital) to the Company, in consideration for which the Company issued two new shares of its capital stock to PikCo. The difference between the nominal value of these shares and the value of Midco’s net equity will be allocated to the Company’s share premium account. As a result of this transfer, Midco became a direct subsidiary of the Company. The Company completed a share split (the “Share Split”) whereby it issued approximately 2,219.212 ordinary shares for each ordinary share outstanding as of September 3, 2014. The foregoing is collectively referred as the “Reorganization Transaction”.
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.
Acquisition and Divestment Transactions
On August 4, 2016, the Company through its direct subsidiary Atento Teleservicios España entered into an agreement (the “Share Sale and Purchase Agreement”) with Intelcia Group, S.A. for the sale of 100% of Atento Morocco S.A., encompassing Atento’s operations in Morocco providing 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, which provide services to the Spanish market, are excluded from the Morocco Transaction and will continue operating as part of Atento Spain.
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.
3

   
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 a 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 combination of Keepcon and Atento will expand the artificial intelligence and automatization capabilities of our omnichannel platform.
On August 18, 2017, Atento filed a Form F-3 with the SEC, for up to $200,000,000 Ordinary Shares 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 this Form F3. These Ordinary Shares will be 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.
 
Exchange Rate Information
In this Interim Report, all references to “U.S. dollar” and “$” (USD) are to the lawful currency of the United States and all references to “Euro” or “€” are to the single currency of the participating member states of the European and Monetary Union of the Treaty Establishing the European Community, as amended from time to time. In addition, all references to Brazilian Reais or “R$” (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 periods and dates indicated as reported by the relevant central banks of the European Union and each country, as applicable.
 
 	2016	 	2016	 	2017	
 	Average FY	 	December 31	 	Average Q3	 	Average nine months	 	September 30	 	Average Q3	 	Average nine months	 	September 30	
Euro (EUR)	0.90	 	0.95	 	0.90	 	0.90	 	0.90	 	0.85	 	0.90	 	0.85	
Brazil (BRL)	3.48	 	3.26	 	3.25	 	3.55	 	3.25	 	3.16	 	3.17	 	3.17	
Mexico (MXN)	18.69	 	20.62	 	18.76	 	18.30	 	19.38	 	17.82	 	18.90	 	18.16	
Colombia (COP)	3,054.33	 	3,000.71	 	2,948.13	 	3,067.39	 	2,880.60	 	2,976.69	 	2,939.43	 	2,941.07	
Chile (CLP)	676.73	 	667.29	 	661.47	 	680.47	 	658.02	 	642.76	 	653.99	 	636.85	
Peru (PEN)	3.38	 	3.36	 	3.34	 	3.37	 	3.40	 	3.25	 	3.27	 	3.27	
Argentina (ARS)	14.78	 	15.89	 	14.94	 	14.54	 	15.31	 	17.28	 	16.23	 	17.31	
 
4

   
SELECTED HISTORICAL FINANCIAL INFORMATION 
The consolidated financial statements of Atento are the consolidated results of operations of Atento for the three and nine months ended September 30, 2016 and 2017.
We present our historical financial information under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”). The unaudited interim consolidated financial statements for the nine months ended September 30, 2017 (the “interim consolidated financial statements”) have been prepared in accordance with International Accounting Standard (“IAS”) 34 - Interim Financial Reporting.
As described in Note 4 of the interim consolidated financial statements, included elsewhere in this document, the accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the consolidated annual financial statements for the year ended December 31, 2016.
Rounding
Certain numerical figures set out in this Interim 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 Interim 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 “Summary Consolidated Historical Financial Information” and “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 Form 6-K, as applicable, and not using the numerical data in the narrative description thereof.
5

   
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
The following tables present a summary of the consolidated historical financial information for the periods as of the dates indicated and should be read in conjunction with the section of this document entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Selected Historical Financial Information” included elsewhere in this document.

 	As of and for the three months ended September 30,	 	Change (%)	 	Change excluding FX (%)	 	As of and for the nine months ended September 30,	 	Change (%)	 	Change excluding FX (%)	
($ millions)	2016		2017	 		 		 	2016		2017	 		 		
 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	
Revenue	443.7	 	501.3	 	13.0	 	10.9	 	1,315.5	 	1,443.0	 	9.7	 	4.8	
Loss from continuing operations	(0.5)	 	(10.1)	 	N.M.	 	N.M.	 	(13.4)	 	(4.7)	 	(64.9)	 	(66.9)	
Loss from discontinued operations	(3.2)	 	-	 	(100.0)	 	(100.0)	 	(3.2)	 	-	 	(100.0)	 	(100.0)	
Loss for the period	(3.7)	 	(10.1)	 	N.M.	 	N.M.	 	(16.6)	 	(4.7)	 	(71.7)	 	(73.3)	
EBITDA (1)	49.4	 	54.4	 	10.1	 	7.7	 	132.7	 	150.8	 	13.6	 	8.3	
Adjusted EBITDA (1)	60.5	 	59.7	 	(1.3)	 	(3.6)	 	163.3	 	165.8	 	1.5	 	(3.4)	
Adjusted Earnings (2)	14.6	 	19.6	 	34.2	 	33.3	 	33.2	 	41.4	 	24.7	 	20.3	
Adjusted Basic Earnings per share (in U.S. dollars) (3)	0.20	 	0.27	 	35.0	 	35.0	 	0.45	 	0.56	 	24.4	 	19.1	
Adjusted Earnings attributable to Owners of the parent (2)	14.5	 	17.6	 	21.4	 	19.7	 	33.1	 	39.1	 	18.1	 	13.7	
Adjusted Basic Earnings per share attributable to Owners of the parent (in U.S. dollars) (3)	0.20	 	0.24	 	20.0	 	20.0	 	0.45	 	0.53	 	17.8	 	12.8	
Capital Expenditure (4)	(9.4)	 	(16.4)	 	74.5	 	69.1	 	(24.4)	 	(35.7)	 	46.3	 	36.8	
Total Debt	613.9	 	505.7	 	(17.6)	 	(18.8)	 	613.9	 	505.7	 	(17.6)	 	(18.8)	
Cash and cash equivalents	177.9	 	162.8	 	(8.5)	 	(11.4)	 	177.9	 	162.8	 	(8.5)	 	(11.4)	
Net debt with third parties (5)	436.0	 	342.9	 	(21.4)	 	(21.8)	 	436.0	 	342.9	 	(21.4)	 	(21.8)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
N.M. means not meaningful	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

(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	
 
6

   

	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 periods from continuing operations to EBITDA and Adjusted EBITDA.	
(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.
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 Basic Earnings per share is calculated based on 73,909,056 weighted average number of ordinary shares outstanding as of September 30, 2017 and 73,786,225 as of September 30, 2016 .	
(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)   	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 statements included elsewhere in this Interim Report. The most directly comparable IFRS measure to net debt with third parties is total debt.	

 
 
7

   
Reconciliation of EBITDA and Adjusted EBITDA to profit/(loss):	
 	 	 	 	 	 	 	 	 	
 	 	For the three months ended
September 30,	 	For the nine months ended
September 30,	
($ in millions)	 	2016		2017	 	2016		2017	
 	 	(unaudited)	
 	 	 	 	 	 	 	 	 	
Loss from continuing operations	 	(0.5)	 	(10.1)	 	(13.4)	 	(4.7)	
Net finance expense	 	22.3	 	37.7	 	70.1	 	68.8	
Income tax expense	 	2.6	 	(2.8)	 	4.1	 	8.3	
Depreciation and amortization	 	25.0	 	29.6	 	71.9	 	78.4	
EBITDA (non-GAAP) (unaudited)	 	49.4	 	54.4	 	132.7	 	150.8	
Restructuring costs (a)	 	6.2	 	1.3	 	19.1	 	10.2	
Site relocation costs (b)	 	0.7	 	-	 	6.5	 	-	
Other (c)	 	4.2	 	4.0	 	5.0	 	4.8	
Total non-recurring items (*)	 	11.1	 	5.3	 	30.6	 	15.0	
Adjusted EBITDA (non-GAAP) (unaudited)	 	60.5	 	59.7	 	163.3	 	165.8	

(*) 	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)	Restructuring costs for the three and nine months ended September 30, 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 and Brazil, which drove significant declines in volume.	
	(b)     	Site relocation costs incurred for three and nine months ended September 30, 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. We have not invested in this program for the three and nine months ended September 30, 2017 as it was substantially completed in 2016.	
	(c)     	Other non-recurring items for three and nine months ended September 30, 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.	
  
8

  
Reconciliation of Adjusted Earnings to profit/(loss):	
 	 	 	 	 	 	 	 	
 	For the three months
ended September 30,	 	For the nine months
ended September 30,	
($ in millions)	2016	 	2017	 	2016	 	2017	
 	(unaudited)	
Loss from continuing operations	(0.5)	 	(10.1)	 	(13.4)	 	(4.7)	
Amortization of acquisition related intangible assets (a)	6.5	 	5.7	 	17.9	 	16.8	
Restructuring costs (b) (*)	6.2	 	1.3	 	19.1	 	10.2	
Site relocation costs (c) (*)	0.7	 	-	 	6.5	 	-	
Other (d) (*)	4.2	 	4.0	 	5.0	 	4.8	
Net foreign exchange gain on financial instruments (e)	0.1	 	2.4	 	(0.6)	 	2.6	
Net foreign exchange impacts (f)	2.5	 	3.2	 	15.3	 	4.2	
Financial non-recurring (g)	-	 	17.7	 	-	 	17.7	
Depreciation non-recurring (h)	-	 	2.8	 	-	 	2.8	
Tax effect (i)	(5.1)	 	(7.4)	 	(16.6)	 	(13.0)	
Total of add-backs	15.1	 	29.7	 	46.6	 	46.1	
Adjusted Earnings (non-GAAP) (unaudited)	14.6	 	19.6	 	33.2	 	41.4	
Adjusted basic Earnings per share (in U.S. dollars) (**) (unaudited)	0.20	 	0.27	 	0.45	 	0.56	
Adjusted Earnings attributable to Owners of the parent (non-GAAP) (unaudited)	14.5	 	17.6	 	33.1	 	39.1	
Adjusted basic Earnings per share attributable to Owners of the parent (in U.S. dollars) (**) (unaudited)	0.20	 	0.24	 	0.45	 	0.53	

(*)	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)       	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.	
	(b)       	Restructuring costs for the three and nine months ended September 30, 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 and Brazil, which drove significant declines in volume .	
	(c)       	Site relocation costs incurred for three and nine months ended September 30, 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. We have not invested in this program for the three and nine months ended September 30, 2017 as it was substantially completed in 2016.	
	(d)       	Other non-recurring items for three and nine months ended September 30, 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.	
 
9

   

	(e)       	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 income statements. For comparability, these adjustments are added back to calculate Adjusted Earnings.	
	(f)        	Since 2015, our management analyzes the Company financial condition performance excluding net foreign exchange impacts, which eliminates the volatility of foreign exchange variances from our operational results.	
	(g)       	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 (See Note 13 to the interim consolidated financial statements) .	
	(h)       	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”).	
	(i)         	The tax effect represents the impact of the taxable adjustments based on tax nominal rate by country .	
(**) Adjusted Earnings per share is calculated based on the weighted average number of ordinary shares outstanding of 73,909,056 as of September 30, 2017. For the period ended September 30, 2016 the weighted average number of ordinary shares outstanding was 73,786,225.
10

   
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.       	Gross Leverage Ratio (applies to Atento S.A.) – measures the level of gross debt to EBITDA, as defined in the debt agreements. The contractual ratio indicates that the gross debt should not surpass 2.8 times the EBITDA for the last twelve months. As of September 30, 2017, the current ratio was 2.3 times.	
2.       	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 times the fixed charge of the same period. As of September 30, 2017, the current ratio was 4.0 times.	
3.       	Net Debt Brazilian Leverage Ratio (applies only to Brazil) – measures the level of net debt (gross debt, less cash and cash equivalents) to EBITDA – each as defined in debt agreements. The contractual ratio indicates that Brazil net debt should not surpass 2.0 times the Brazilian EBITDA. As of September 30, 2017, the current ratio was 0.4 times. This is the only ratio considered as a financial covenant.	
The Company regularly monitors all financial ratios under the debt agreements. As of September 30, 2017, we were in compliance with the terms of our covenants.

 	As of September 30,	
($ in millions, except Net Debt/Adj. EBITDA LTM)	2016	 	2017	
 	(unaudited)	
Cash and cash equivalents	177.9	 	162.8	
Debt:	 	 	 	
     Senior Secured Notes	297.4	 	393.8	
     Brazilian Debentures	211.8	 	22.5	
     Contingent Value Instrument (1)	24.0	 	-	
     Finance Lease Payables	3.8	 	9.8	
     Other Borrowings	76.9	 	79.6	
Total Debt	613.9	 	505.7	
Net Debt with third parties (2) (unaudited)	436.0	 	342.9	
   Adjusted EBITDA LTM (3) (non-GAAP) (unaudited)	227.5	 	224.4	
Net Debt/Adjusted EBITDA LTM (non-GAAP) (unaudited)	1.9x	 	1.5x	

(1)       	The CVI was terminated on November 8, 2016.	
(2)       	In considering our financial condition, our management analyzes Net debt with third parties, which is defined as total debt less cash and cash equivalents. Net debt with third parties is not a measure defined by IFRS and it 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 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 restructuring costs, site relocation costs, asset impairments and other items not related to our core results of operations.	
1 1

   
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS  
The information contained in this release, other than historical information, consists of forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. These risks and uncertainties are included in the "Risk Factors" in the Company’s Annual Form 20-F and Quarterly Information on Forms 6-K, and its other filings and submissions with the SEC, each of which are available free of charge on the Company’s investor relations website at  atento.com  and on the SEC’s website at  www.sec.gov .
The following discussion and analysis of our financial condition and the results of operations is based upon and should be read in conjunction with the consolidated financial statements of Atento.
Natural Disaster Disclosure
Puerto Rico
Since the storm made landfall on September 20, 20 17 , Hurricane Maria has wreaked havoc on the island, causing a level of widespread destruction and disorganization paralleled by few storms in American history. After the storm, most of the island had no access to electricity and clean water, being our subsidiary in Puerto Rico unable to provide their clients services due the critical situation of the country. Consistent with our emphasis on safety of our employees, the Company is in the process of evaluating all infrastructure conditions and will only reinitiate our services operations when the Company is entirely satisfied after a thorough safety review of our employees, and will re-start operations as soon basic services and new location are leased, equipped and is commissioned in Puerto Rico, and in other back up location in other countries in Latin America. The disaster impacted the services provided by 740 workstations of our Puerto Rico subsidiary, the Company registered an estimation of non - recurring expenses of $1.6 million and the provision for accelerated depreciation of fixed assets of $0.6 million.
Mexico
Due the Mexican earthquakes occurred on September 19, 2017 , which struck the state of Puebla and the greater Mexico City, 12% of our Mexico subsidiary operations were impacted and unable to provide clients services during the next ten days of the incident. The disaster impacted the services provided by 1,200 workstations of our Puebla and Yucatan operational sites, the Company registered an estimation of non - recurring expenses of $1.6 million and the provision for accelerated depreciation of fixed assets of $2.2 million.
The Company maintains both property and business interruption insurance policies to guarantee costs of repairing the damage and losses caused from such natural disaster event. The extent of losses, extraordinary costs and business interruptions losses are under assessment.
 Combined, we estimate an immaterial negative impact in the adjusted EPS (minus than $0.01) in Q3 caused by revenue losses of $0.7 million in Puerto Rico and $1.4 million in Mexico.
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and the results of operations is based upon and should be read in conjunction with the consolidated financial statements of Atento.
Factors which could cause or contribute to such difference, include, but are not limited to, those discussed elsewhere in this Report, particularly under “Cautionary Statement with respect to Forward-Looking Statements” and the section entitled “Risk Factors” in the Form 20-F for the year ended December 31, 2016.
Overview
Atento is the largest provider of customer-relationship management and business-process outsourcing (“CRM BPO”) services and solutions in Latin America (“LatAm”), and among the top five providers globally based on revenue. Atento’s tailored CRM BPO solutions are designed to enable our client’s ability to deliver a high-quality product by creating 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 for customer care, customizing each solution to the individual client’s needs.
12

   
In the third quarter of 2016 we announced a refreshed strategy to drive long-term profitable growth and create shareholder value. Recent market trends, including the macroeconomic pull-back in Brazil (the largest CRM BPO market in Latin America), and the accelerating adoption of omni-channel and digital capabilities, prompted us to reexamine the priorities that support our long-term strategy. The ultimate goal of this exercise, or Strategy Refresh, was to ensure we had the right focus and capabilities to capitalize on industry trends in Latin America and leverage our scale and financial strength to selectively broaden and diversify in key verticals, countries, and solutions.
We offer a comprehensive portfolio of customizable, and scalable, solutions including front and back-end services ranging from sales, applications-processing, customer care and credit-management. We leverage our deep industry knowledge and capabilities to provide industry-leading solutions to our clients. We provide our solutions to over 400 clients via over 151,000 highly engaged customer care specialists facilitated by our best-in-class technology infrastructure and multi-channel delivery platform. We believe we bring a differentiated combination of scale, capacity for processing client’s transactions, and industry expertise to our client’s customer care operations, which allow us to provide higher-quality and lower cost customer care services than our clients could deliver on their own.
We operate in 13 countries worldwide and organize our business into three geographic markets: (i) Brazil, (ii) Americas, excluding Brazil (“Americas”) and (iii) EMEA. For the nine months ended September 30, 2017, Brazil accounted for 49.9% of our revenue, Americas accounted for 38.6% of our revenue and EMEA accounted for 11.6% of our revenue (in each case, before holding company level revenue and consolidation adjustments). For the three months ended September 30, 2017, Brazil accounted for 49.6% of our revenue, Americas accounted for 39.6% of our revenue and EMEA accounted for 11.0% of our revenue (in each case, before holding company level revenue and consolidation adjustments).
Our number of workstations increased from 88,908 as of September 30, 2016 to 91,750 as of September 30, 2017. Generally, our competitors have higher EBITDA and depreciation expense than us because we lease rather than own all of our call center facilities (e.g., buildings and related equipment), except for IT infrastructure that is supported by Atento and depreciated.
As a part of our strategy to improve cost and increase efficiency we continued to migrate a portion of our call centers from Tier 1 to Tier 2 cities. These cities, which tend to be lower cost locations, allow us to optimize our lease expenses and reduce labor costs. By being a preferred employer we can then draw new and larger pools of talent and reduce turnover and absenteeism. We have completed many successful site transfers in Brazil, Colombia and Argentina. In Brazil, for example, the percentage of total workstations located in Tier 2 cities increased 1.6%, from 62.6% for the nine months ended September 30, 2016 to 64.2% for the nine months ended September 30, 2017, due to the new sites opened outside Sao Paulo and Rio de Janeiro. As demand for our services and solutions grows, and their complexity continues to increase, we have opportunities to evaluate and adjust our site footprint even further to create the most competitive combination of quality and cost effectiveness for our customers.
The following table shows the number of workstations and delivery centers in each of the jurisdictions in which we operated as of September 30, 2016 and 2017:

 
13

   
 	Number of Workstations	 	Number of Service Delivery Centers (1)	
	2016		2017	 	2016		2017	
 	 	
Brazil	45,963	 	48,052	 	31	 	33	
Americas	37,348	 	37,890	 	51	 	52	
Argentina (2)	3,674	 	4,288	 	11	 	13	
Central America (3)	2,624	 	2,342	 	5	 	4	
Chile	2,665	 	2,674	 	3	 	3	
Colombia	7,669	 	8,287	 	9	 	10	
Mexico (*)	10,153	 	10,059	 	16	 	15	
Peru	9,253	 	8,930	 	4	 	4	
United States (4) (*)	1,310	 	1,310	 	3	 	3	
EMEA	5,597	 	5,808	 	14	 	14	
Spain	5,597	 	5,808	 	14	 	14	
Total	88,908	 	91,750	 	96	 	99	

(*)    	Management is evaluating the final impact from the natural disasters, which will impact the numbers of workstations in Mexico and Puerto Rico.
 	
(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.	
 
For the three and nine months ended September 30, 2017, revenue generated from our 15 largest client groups represented 73.3% and 76.4% of our revenue, respectively, as compared to 80.4% and 80.9%, respectively, in the same period in the prior year. Excluding revenue generated from the Telefónica Group, for the three and nine months ended September 30, 2017 our next 15 largest client groups represented 36.2% and 37.9%, respectively, as compared to 39.0% and 38.5%, respectively, in the same period in the prior year.
Our vertical industry expertise in telecommunications, financial services and multi-sector companies allows us to adapt our services and solutions for our clients, further embedding us into their value chain while delivering effective business results and increasing the portion of our client’s services related to CRM BPO. For the nine months ended September 30, 2017, CRM BPO solutions and individual services comprised approximately 26.4% and 73.6% of our revenue, respectively. For the same period in 2016, CRM BPO solutions and individual services comprised approximately 24.7% and 75.3% of our revenue, respectively. For the three months ended September 30, 2017, CRM BPO solutions and individual services comprised approximately 27.0% and 73.0% of our revenue, respectively. For the three months ended September 30, 2016, CRM BPO solutions and individual services comprised approximately 24.7% and 75.3% of our revenue, respectively.
During the nine months ended September 30, 2017, telecommunications represented 47.3% of our revenue and financial services represented 32.4% of our revenue, compared to 49.0% and 34.9%, respectively, for the same period in 2016. Additionally, during the nine months ended September 30, 2016 and 2017 the sales by service were:

 
14

  
 	For the nine months ended September 30,	
	2016	 	2017	
Customer Service	49.8%	 	50.0%	
Sales	16.0%	 	17.5%	
Collection	9.9%	 	8.7%	
Back Office	10.6%	 	11.2%	
Technical Support	9.5%	 	8.7%	
Others	4.2%	 	3.9%	
Total	100.0%	 	100.0%	
 
During the three months ended September 30, 2017, telecommunications represented 46.8% of our revenue and financial services represented 31.1% of our revenue, compared to 48.5% and 35.5%, respectively, for the same period in 2016. Additionally, during the three months ended September 30, 2016 and 2017 the sales by service were:

 	For the three months ended September 30,	
	2016	 	2017	
Customer Service	50.2%	 	48.2%	
Sales	15.3%	 	17.2%	
Collection	9.4%	 	8.1%	
Back Office	11.2%	 	13.7%	
Technical Support	9.6%	 	8.4%	
Others	4.3%	 	4.4%	
Total	100.0%	 	100.0%	
 
Average headcount
The average headcount in the Atento Group in the nine months ended September 30, 2016 and 2017, is presented as follows:

 	September 30,	
 	2016	 	2017	
 	(unaudited)	
Brazil	75,918	 	78,201	
Central America	5,662	 	4,857	
Chile	4,669	 	5,356	
Colombia	8,291	 	9,745	
Spain	10,126	 	10,260	
Mexico	18,760	 	18,354	
Peru	15,645	 	15,828	
Puerto Rico	835	 	805	
United States	653	 	712	
Argentina and Uruguay	7,428	 	7,425	
Corporate	154	 	79	
Total	148,141	 	151,622	
 
15

   
Consolidated Income Statements for the Three and Nine Months Ended September 30, 2016 and 2017	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
($ in millions, except percentage changes)	For the three months ended September 30,	 	Change (%)	 	Change excluding FX (%)	 	For the nine months ended September 30,	 	Change (%)	 	Change excluding FX (%)	
	2016		2017	 		 		 	2016		2017	 		 		
 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	
Revenue	443.7	 	501.3	 	13.0	 	10.9	 	1,315.5	 	1,443.0	 	9.7	 	4.8	
Other operating income	1.9	 	4.8	 	N.M.	 	N.M.	 	3.4	 	13.9	 	N.M.	 	N.M.	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Supplies	(16.8)	 	(20.8)	 	23.8	 	20.9	 	(47.0)	 	(55.1)	 	17.2	 	12.7	
Employee benefit expenses	(323.6)	 	(369.1)	 	14.1	 	12.1	 	(980.4)	 	(1,070.0)	 	9.1	 	4.5	
Depreciation	(11.6)	 	(14.4)	 	24.1	 	21.0	 	(34.4)	 	(37.3)	 	8.4	 	1.9	
Amortization	(13.4)	 	(15.2)	 	13.4	 	10.1	 	(37.5)	 	(41.1)	 	9.6	 	3.8	
Changes in trade provisions	(0.1)	 	-	 	(100.0)	 	(100.0)	 	(0.4)	 	-	 	(100.0)	 	(100.0)	
Other operating expenses	(55.7)	 	(61.8)	 	11.0	 	8.6	 	(158.4)	 	(181.0)	 	14.3	 	8.0	
Total operating expenses	(421.2)	 	(481.3)	 	14.3	 	12.2	 	(1,258.1)	 	(1,384.5)	 	10.0	 	5.1	
Operating profit	24.4	 	24.8	 	1.6	 	-	 	60.8	 	72.4	 	19.1	 	14.9	
Finance income	2.3	 	2.4	 	4.3	 	4.3	 	4.4	 	6.0	 	36.4	 	22.4	
Finance costs	(22.0)	 	(34.5)	 	56.8	 	52.7	 	(59.8)	 	(68.0)	 	13.7	 	7.6	
Change in fair value of financial instruments	(0.1)	 	(2.4)	 	N.M.	 	N.M.	 	0.6	 	(2.6)	 	N.M.	 	N.M.	
Net foreign exchange gain/(loss)	(2.5)	 	(3.2)	 	28.0	 	33.3	 	(15.3)	 	(4.2)	 	(72.5)	 	(72.5)	
Net finance expense	(22.3)	 	(37.7)	 	69.1	 	65.4	 	(70.1)	 	(68.8)	 	(1.9)	 	(5.8)	
(Loss)/profit before tax	2.1	 	(12.9)	 	N.M.	 	N.M.	 	(9.3)	 	3.6	 	(138.7)	 	(136.0)	
Income tax benefit/(expense)	(2.6)	 	2.8	 	N.M.	 	N.M.	 	(4.1)	 	(8.3)	 	102.4	 	97.6	
Loss from continuing operations	(0.5)	 	(10.1)	 	N.M.	 	N.M.	 	(13.4)	 	(4.7)	 	(64.9)	 	(66.9)	
Discontinued operations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from discontinued operations	(3.2)	 	-	 	(100.0)	 	(100.0)	 	(3.2)	 	-	 	(100.0)	 	(100.0)	
Loss for the period	(3.7)	 	(10.1)	 	N.M.	 	N.M.	 	(16.6)	 	(4.7)	 	(71.7)	 	(73.3)	
(Loss)/profit attributable to:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Owners of the parent	(3.8)	 	(12.0)	 	N.M.	 	N.M.	 	(16.7)	 	(6.9)	 	(58.7)	 	(60.8)	
Non-controlling interest	0.1	 	1.9	 	N.M.	 	N.M.	 	0.1	 	2.2	 	N.M.	 	N.M.	
Other financial data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (1) (unaudited)	49.4	 	54.4	 	10.1	 	7.7	 	132.7	 	150.8	 	13.6	 	8.3	
Adjusted EBITDA (1) (unaudited)	60.5	 	59.7	 	(1.3)	 	(3.6)	 	163.3	 	165.8	 	1.5	 	(3.4)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(1)  For reconciliation with IFRS as issued by IASB, see section "Summary Historical Consolidated Financial Information - Reconciliation of EBITDA and Adjusted EBITDA to profit/(loss)".	
N.M. means not meaningful	
 
16

   
Consolidated Income Statements by Segment for the Three and Nine Months Ended September 30, 2016 and 2017	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
($ in millions, except percentage changes)	For the three months ended September 30,	 	Change (%)	 	Change Excluding  FX (%)	 	For the nine months ended September 30,	 	Change (%)	 	Change Excluding  FX (%)	
	2016		2017						2016		2017					
 	(unaudited)	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brazil	217.2	 	248.5	 	14.4	 	11.4	 	601.9	 	720.3	 	19.7	 	7.5	
Americas	179.8	 	198.4	 	10.3	 	10.4	 	546.1	 	557.5	 	2.1	 	3.3	
EMEA	47.1	 	55.1	 	17.0	 	10.9	 	168.7	 	166.9	 	(1.1)	 	(0.5)	
Other and eliminations (1)	(0.4)	 	(0.7)	 	75.0	 	75.0	 	(1.2)	 	(1.7)	 	41.7	 	30.8	
Total revenue	443.7	 	501.3	 	13.0	 	10.9	 	1,315.5	 	1,443.0	 	9.7	 	4.8	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brazil	(202.9)	 	(238.6)	 	17.6	 	14.6	 	(570.2)	 	(686.2)	 	20.3	 	7.8	
Americas	(168.3)	 	(197.3)	 	17.2	 	17.4	 	(506.6)	 	(540.1)	 	6.6	 	7.9	
EMEA	(48.7)	 	(57.7)	 	18.5	 	12.3	 	(176.5)	 	(166.7)	 	(5.6)	 	(5.0)	
Other and eliminations (1)	(1.3)	 	12.3	 	N.M.	 	N.M.	 	(4.8)	 	8.5	 	N.M.	 	N.M.	
Total operating expenses	(421.2)	 	(481.3)	 	14.3	 	12.2	 	(1,258.1)	 	(1,384.5)	 	10.0	 	5.1	
Operating profit/(loss) :	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brazil	15.1	 	11.4	 	(24.5)	 	(26.5)	 	32.5	 	43.5	 	33.8	 	25.0	
Americas	12.5	 	7.8	 	(37.6)	 	(38.1)	 	41.4	 	25.0	 	(39.6)	 	(39.2)	
EMEA	(1.5)	 	(2.4)	 	60.0	 	50.0	 	(7.1)	 	0.7	 	(109.9)	 	(109.9)	
Other and eliminations (1)	(1.7)	 	8.0	 	N.M.	 	N.M.	 	(6.0)	 	3.2	 	N.M.	 	N.M.	
Total operating profit	24.4	 	24.8	 	1.6	 	-	 	60.8	 	72.4	 	19.1	 	14.9	
Net finance expense :	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brazil	(12.1)	 	(8.4)	 	(30.6)	 	(32.3)	 	(31.4)	 	(25.7)	 	(18.2)	 	(25.9)	
Americas	(0.6)	 	(6.9)	 	N.M.	 	N.M.	 	(7.7)	 	(10.3)	 	33.8	 	39.2	
EMEA	(3.4)	 	(11.0)	 	N.M.	 	N.M.	 	(9.2)	 	(16.7)	 	81.5	 	81.5	
Other and eliminations (1)	(6.2)	 	(11.4)	 	83.9	 	81.0	 	(21.8)	 	(16.1)	 	(26.1)	 	(25.8)	
Total net finance expense	(22.3)	 	(37.7)	 	69.1	 	65.4	 	(70.1)	 	(68.8)	 	(1.9)	 	(5.8)	
Income tax benefit/(expense):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brazil	(0.7)	 	-	 	(100.0)	 	(100.0)	 	0.7	 	(3.9)	 	N.M.	 	N.M.	
Americas	(4.1)	 	(1.8)	 	(56.1)	 	(56.1)	 	(13.6)	 	(9.1)	 	(33.1)	 	(33.1)	
EMEA	0.4	 	4.2	 	N.M.	 	N.M.	 	3.2	 	3.6	 	12.5	 	16.1	
Other and eliminations (1)	1.8	 	0.4	 	(77.8)	 	(77.8)	 	5.6	 	1.1	 	(80.4)	 	(80.0)	
Total income tax benefit/(expense)	(2.6)	 	2.8	 	N.M.	 	N.M.	 	(4.1)	 	(8.3)	 	102.4	 	97.6	
Profit/(loss) from continuing operations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brazil	2.3	 	3.0	 	30.4	 	25.0	 	1.8	 	13.9	 	N.M.	 	N.M.	
Americas	7.8	 	(0.9)	 	(111.5)	 	(111.3)	 	20.1	 	5.5	 	(72.6)	 	(72.6)	
EMEA	(4.5)	 	(9.2)	 	104.4	 	91.7	 	(13.1)	 	(12.4)	 	(5.3)	 	(6.1)	
Other and eliminations (1)	(6.1)	 	(3.0)	 	(50.8)	 	(51.6)	 	(22.2)	 	(11.7)	 	(47.3)	 	(46.8)	
(Loss)/profit from continuing operations	(0.5)	 	(10.1)	 	N.M.	 	N.M.	 	(13.4)	 	(4.7)	 	(64.9)	 	(66.9)	
Loss from discontinued operations	(3.2)	 	-	 	(100.0)	 	(100.0)	 	(3.2)	 	-	 	(100.0)	 	(100.0)	
Profit/(loss) for the period:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brazil	2.3	 	3.0	 	30.4	 	25.0	 	1.8	 	13.9	 	N.M.	 	N.M.	
Americas	7.8	 	(0.9)	 	(111.5)	 	(111.3)	 	20.1	 	5.5	 	(72.6)	 	(72.6)	
EMEA	(7.7)	 	(9.2)	 	19.5	 	12.2	 	(16.3)	 	(12.4)	 	(23.9)	 	(25.3)	
Other and eliminations (1)	(6.1)	 	(3.0)	 	(50.8)	 	(51.6)	 	(22.2)	 	(11.7)	 	(47.3)	 	(46.8)	
(Loss)/profit for the period	(3.7)	 	(10.1)	 	N.M.	 	N.M.	 	(16.6)	 	(4.7)	 	(71.7)	 	(73.3)	
Profit/(loss) attributable to:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Owners of the parent	(3.8)	 	(12.0)	 	N.M.	 	N.M.	 	(16.7)	 	(6.9)	 	(58.7)	 	(60.8)	
Non-controlling interest	0.1	 	1.9	 	N.M.	 	N.M.	 	0.1	 	2.2	 	N.M.	 	N.M.	
Other financial data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (2) :	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brazil	29.2	 	26.9	 	(7.9)	 	(10.6)	 	70.6	 	86.4	 	22.4	 	12.1	
Americas	21.0	 	19.2	 	(8.6)	 	(9.4)	 	66.8	 	53.1	 	(20.5)	 	(20.2)	
EMEA	0.7	 	0.1	 	(85.7)	 	(85.7)	 	0.9	 	7.7	 	N.M.	 	N.M.	
Other and eliminations (1)	(1.5)	 	8.2	 	N.M.	 	N.M.	 	(5.6)	 	3.6	 	N.M.	 	N.M.	
Total EBITDA (unaudited)	49.4	 	54.4	 	10.1	 	7.7	 	132.7	 	150.8	 	13.6	 	8.3	
Adjusted EBITDA (2) :	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brazil	33.1	 	32.1	 	(3.2)	 	(6.0)	 	85.1	 	95.1	 	11.7	 	1.8	
Americas	24.2	 	23.7	 	(2.0)	 	(2.8)	 	71.9	 	62.9	 	(12.5)	 	(12.6)	
EMEA	4.7	 	3.5	 	(24.7)	 	(29.3)	 	11.0	 	11.6	 	5.8	 	4.8	
Other and eliminations (1)	(1.5)	 	0.4	 	(125.9)	 	(124.3)	 	(4.7)	 	(3.7)	 	(21.0)	 	(22.7)	
Total Adjusted EBITDA (unaudited)	60.5	 	59.7	 	(1.3)	 	(3.6)	 	163.3	 	165.8	 	1.5	 	(3.4)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(1)  Includes activities of the intermediate holding in Spain (Atento Spain Holdco, S.L.U.), Luxembourg holdings, as well as inter-group transactions between segments.	
(2)  For reconciliation with IFRS as issued by IASB, see section "Summary Historical Consolidated Financial Information - Reconciliation of EBITDA and Adjusted EBITDA to profit/(loss)".	
N.M. means not meaningful	
17

   
Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2017  
Revenue
Revenue increased by $57.6 million, or 13.0%, from $443.7 million for the three months ended September 30, 2016 to $501.3 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, revenue increased 10.9%. This result was influenced by the Morocco divestment registered in September 2016, which negatively impacted revenue in $7.8 million. Excluding this effect, revenue was 9.0% higher than same period from last year.
In third quarter of 2017, revenue was negatively impacted by the recent natural disasters occurred in Mexico and Puerto Rico. We estimate a loss of $2.1 million related to these events, concentrated in multisector clients ($1.7 million). If we exclude this impact, revenue would increase by 11.4% (considering no foreign exchange impact).
Multisector continued to deliver a sustainable growth, with a revenue increase of $46.5 million, or 17.6%, from $264.2 million for the three months ended September 30, 2016 to $310.7 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, revenue from multisector clients increased 15.3%, supported by gains in all regions (already excluding the impact from Morocco). Without the natural disasters impact, revenue would increase by 19.5%.
Revenue from Telefónica increased by $3.5 million, or 1.9%, from $187.1 million for the three months ended September 30, 2016 to $190.6 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, revenue from Telefónica slightly increased by 0.2%, mainly by volume reductions in Mexico, Spain and Brazil, compensated by positive results in Argentina, Chile and Colombia.
For the three months ended September 30, 2017, revenue from multisector clients was to 62.0% of total revenue compared 57.8% for the three months ended September 30, 2016, an increase of 4.2 percentage points.
The following chart sets forth a breakdown of revenue by geographical region for the three months ended September 30, 2016 and 2017 and as a percentage of revenue and the percentage change between those periods with and net of foreign exchange effects.

 	For the three months ended September 30,	
($ in millions, except percentage changes)	2016	 	(%)	 	2017	 	(%)	 	Change (%)	 	Change excluding FX (%)	
 	(unaudited)	 	 	 	(unaudited)	 	 	 	 	 	 	
Brazil	217.2	 	49.0	 	248.5	 	49.6	 	14.4	 	11.4	
Americas	179.8	 	40.5	 	198.4	 	39.6	 	10.3	 	10.4	
EMEA	47.1	 	10.6	 	55.1	 	11.0	 	17.0	 	10.9	
Other and eliminations (1)	(0.4)	 	(0.1)	 	(0.7)	 	(0.2)	 	75.0	 	75.0	
Total	443.7	 	100.0	 	501.3	 	100.0	 	13.0	 	10.9	
 
(1) Includes holding company level revenues and consolidation adjustments.
Brazil
Revenue in Brazil for the three months ended September 30, 2016 and 2017 totaled $217.2 million and $248.5 million, respectively, an increase of $31.3 million, or 14.4%. Excluding the impact of foreign exchange, revenue increased by 11.4%. Excluding the impact of foreign exchange, revenue from Telefónica decreased 1.8%, due to lower volumes while revenue from multisector clients increased by 18.3%, supported by new client wins.
Americas
Revenue in Americas for the three months ended September 30, 2016 and 2017 totaled $179.8 million and $198.4 million, respectively, an increase of $18.6 million, or 10.3%. Excluding the impact of foreign exchange, revenue increased 10.4%. Excluding the impact of foreign exchange, revenue from Telefónica increased 5.6%, driven by positive results in Argentina, Chile and Colombia, offset by lower volumes in Mexico. Revenue from multisector clients increased by 14.0%, supported by new client wins and volumes increase in Argentina, Colombia, Chile, and U.S. Nearshore business, partially offset by lower volumes in Mexico. Without the natural disasters impact, revenue would increase by 16.1%.
1 8

   
EMEA
Revenue in EMEA for the three months ended September 30, 2016 and 2017 was $47.1 million and $55.1 million, respectively, an increase of $8.0 million, or 17.0%. Excluding the impact of foreign exchange, revenue increased by 10.9%. This result was influenced by the Morocco divestment registered in September 2016, which negatively impacted revenue in $7.8 million. Without this impact, revenue was 4.2% lower than the same period from last year. Excluding the impacts of foreign exchange and Morocco divestment, revenue from Telefónica decreased by 7.3%, due to lower volumes in Spain, while revenue from multisector clients increased by 1.3% due to the positive performance from new clients won.
Other operating income
Other operating income increased by $2.9 million, from $1.9 million for the three months ended September 30, 2016 to $4.8 million, for the three months ended September 30, 2017.
Total operating expenses
Total operating expenses increased by $60.1 million, or 14.3%, from $421.2 million for the three months ended September 30, 2016 to $481.3 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, operating expenses increased by 12.2%, mainly in Brazil (higher volumes and expenses from recent acquisitions), Colombia and U.S. Nearshore (set up costs for new clients and higher volume) and Argentina (higher inflation). As a percentage of revenue, operating expenses represented 94.9% and 96.0% for the three months ended September 30, 2016 and 2017, respectively.
Supplies : Supplies expenses increased by $4.0 million, or 23.8%, from $16.8 million for the three months ended September 30, 2016 to $20.8 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, supplies expenses increased by 20.9%. As a percentage of revenue, supplies represented 3.8% and 4.1% for the three months ended September 30, 2016 and 2017, respectively.
Employee benefit expenses : Employee benefit expenses increased by $45.5 million, or 14.1%, from $323.6 million for the three months ended September 30, 2016 to $369.1 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, employee benefit expenses increased by 12.1%. As a percentage of revenue, employee benefit expenses represented 72.9% and 73.6% for the three months ended September 30, 2016 and 2017, respectively.
Depreciation and amortization : Depreciation and amortization expenses increased by $4.6 million, or 18.4%, from $25.0 million for the three months ended September 30, 2016 to $29.6 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, depreciation and amortization expense increased by 15.2%, impacted by the provision for fixed assets write-off in Mexico and Puerto Rico as a consequence of recent natural disasters. Excluding this effect, depreciation and amortization increased by 5.4%.
Changes in trade provisions : Changes in trade provisions changed by $0.1 million, from an expense of $0.1 million for the three months ended September 30, 2016 to zero for the three months ended September 30, 2017.
Other operating expenses : Other operating expenses increased by $6.1 million, or 11.0%, from $55.7 million for the three months ended September 30, 2016 to $61.8 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, other operating expenses increased by 8.6%. As a percentage of revenue, other operating expenses totaled 12.6% and 12.3% for the three months ended September 30, 2016 and 2017, respectively.
Brazil
Total operating expenses in Brazil increased by $35.7 million, or 17.6%, from $202.9 million for the three months ended September 30, 2016 to $238.6 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, operating expenses in Brazil increased by 14.6%, mainly due to the costs from recent acquisitions and the variable costs from the new clients wins. Operating expenses as a percentage of revenue increased 2.6 percentage points from 93.4% to 96.0%, for the three months ended September 30, 2016 and 2017, respectively.
19

   
Americas
Total operating expenses in Americas increased by $29.0 million, or 17.2%, from $168.3 million for the three months ended September 30, 2016 to $197.3 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, operating expenses increased by 17.4%. Operating expenses as a percentage of revenue increased 5.8 percentage points from 93.6% to 99.4%, for the three months ended September 30, 2016 and 2017, respectively. This increase was mainly driven by higher inflation in Argentina and the volume increase in Colombia, Chile and U.S. Nearshore business.
EMEA
Total operating expenses in EMEA increased by $9.0 million, or 18.5%, from $48.7 million for the three months ended September 30, 2016 to $57.7 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, operating expenses increased by 12.3%. This result was influenced by the Morocco divestment registered in September 2016, which positively impacted results in $7.6 million. Excluding this effect, total operating expenses was $1.6 million (2.7%) lower than same period from last year mainly driven by cost saving initiatives in fixed expenses implemented along 2016. Operating expenses as a percentage of revenue increased 1.3 percentage points from 103.4% to 104.7%, for the three months ended September 30, 2016 and 2017, respectively.
Operating profit
Operating profit increased by $0.4 million, from $24.4 million for the three months ended September 30, 2016 to $24.8 million for the three months ended September 30, 2017. Operating profit margin decreased from 5.5% for the three months ended September 30, 2016 to 4.9% for the three months ended September 30, 2017.
Brazil
Operating profit in Brazil decreased by $3.7 million, from $15.1 million for the three months ended September 30, 2016 to $11.4 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, operating profit decreased by 26.5%. Operating profit margin in Brazil decreased from 7.0% for three months ended September 30, 2016 to 4.6% for the three months ended September 30, 2017, mainly impacted by labor contingencies and higher implementation costs from new clients operations, partially compensated by the positive results from recent acquisitions.
Americas
Operating profit in Americas decreased by $4.7 million, from $12.5 million for the three months ended September 30, 2016 to $7.8 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, operating profit decreased by 38.1%. Operating profit margin decreased from 7.0% for the three months ended September 30, 2016 to 3.9% for the three months ended September 30, 2017. Decline in operating profit was driven by lower results concentrated in Mexico.
EMEA
Operating profit in EMEA changed by $0.9 million, from a loss of $1.5 million for the three months ended September 30, 2016 to a loss of $2.4 million for the three months ended September 30, 2017. Operating profit margin changed from negative margin of 3.2% to a negative margin of 4.4%, mainly impacted by the lower volumes from Telefónica as fixed costs have not decreased at the same speed.
Finance income
Finance income was $2.4 million for the three months ended September 30, 2017 compared to $2.3 million for the three months ended September 30, 2016. Excluding the impact of foreign exchange, finance income increased by 4.3% during the three months ended September 30, 2017.
20

   
Finance costs
Finance costs increased by $12.5 million, or 56.8%, from a cost of $22.0 million for the three months ended September 30, 2016 to $34.5 million for the three months ended September 30, 2017. Excluding the impact of foreign exchange, finance costs increased by 52.7% during the three months ended September 30, 2017. The increase in finance costs was mainly due to non-recurring expenses related to the refinance process during August 2017.
Change in fair value of financial instruments
Change in fair value of financial instruments changed by $2.3 million, from a loss of $0.1 million for the three months ended September 30, 2016 to a loss of $2.4 million for the three months ended September 30, 2017. This loss is mainly related to the mark-to-market of some derivatives that are not designated as hedge accounting.
Net foreign exchange gain/(loss)
Net foreign exchange loss changed by $0.7 million, from a loss of $2.5 million for the three months ended September 30, 2016 to a loss of $3.2 million for the three months ended September 30, 2017. This loss in the three months ended September 30, 2017 was mainly due to intercompany balances and therefore had no effect on cash.
Income tax benefit/(expense)
Income tax benefit/(expense) for the three months ended September 30, 2016 and 2017 totaled an expense of $2.6 million and a benefit of $2.8 million, respectively. The tax benefit incurred for the three months ended September 30, 2017 was based in a few tax opportunities developed during this quarter.
Loss for the period
Loss for the three months ended September 30, 2016 and 2017 was $3.7 million and $10.1 million, respectively, as a result of the items disclosed above.
EBITDA and Adjusted EBITDA
EBITDA increased by $5.0 million, or 10.1%, from $49.4 million for the three months ended September 30, 2016 to $54.4 million for the three months ended September 30, 2017. For the same period, Adjusted EBITDA decreased by $0.8 million, or 1.3%, from $60.5 million for the three months ended September 30, 2016 to $59.7 million for the three months ended September 30, 2017. The difference between EBITDA and Adjusted EBITDA is due to the exclusion of items that were not related to our core results of operations. Our Adjusted EBITDA is defined as EBITDA adjusted to exclude the restructuring costs, site relocation costs and other items, which are not related to our core results of operations. See “Summary Consolidated Historical Financial Information” for a reconciliation of EBITDA and Adjusted EBITDA to profit/(loss).
Excluding the impact of foreign exchange, EBITDA increased by 7.7% and Adjusted EBITDA decreased by 3.6%, mainly due to higher revenue and lower fixed costs.
Brazil
EBITDA in Brazil decreased by $2.3 million, or 7.9%, from $29.2 million for the three months ended September 30, 2016 to $26.9 million for the three months ended September 30, 2017. For the same period, Adjusted EBITDA decreased by $1.0 million, or 3.2%, from $33.1 million to $32.1 million. Excluding the impact of foreign exchange, EBITDA decreased by 10.6% and Adjusted EBITDA decreased by 6.0%, mainly driven by lower margins due to higher contingencies and new clients implementations costs.
Americas
EBITDA in Americas decreased by $1.8 million, or 8.6%, from $21.0 million for the three months ended September 30, 2016 to $19.2 million for the three months ended September 30, 2017. For the same period, Adjusted EBITDA decreased by $0.5 million, or 2.0%, from $24.2 million to $23.7 million. Excluding the impact of foreign exchange, EBITDA decreased during this period by $2.0 million, or 9.4%, and Adjusted EBITDA decreased $0.7 million, or 2.8% respectively.
21

   
The decrease in Adjusted EBITDA and EBITDA is mainly driven by declines in volume in Mexico.
EMEA
EBITDA in EMEA decreased by $0.6 million, from $0.7 million for the three months ended September 30, 2016 to $0.1 million for the three months ended September 30, 2017. For the same period, Adjusted EBITDA decreased by $1.2 million, from $4.7 million to $3.5 million. This decrease is mainly impacted by the lower volumes from Telefónica as fixed costs have not decreased at the same speed.
Excluding the impact of foreign exchange, EBITDA decreased during this period by $0.6 million, and Adjusted EBITDA decreased by $1.5 million.
22

   
Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2017  
Revenue
Revenue increased by $127.5 million, or 9.7%, from $1,315.5 million for the nine months ended September 30, 2016 to $1,443.0 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, revenue increased 4.8%.
In third quarter of 2017, revenue was negatively impacted by the recent natural disasters occurred in Mexico and Puerto Rico. We estimate a loss of $2.1 million related to these events, concentrated in multisector clients ($1.7 million).
Multisector continued to deliver a sustainable growth, with a revenue increase of $127.0 million, or 16.9%, from $750.7 million for the nine months ended September 30, 2016 to $877.7 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, revenue from multisector clients increased 11.0%, supported by gains in all regions.
Revenue from Telefónica slightly increased by $0.5 million, or 0.1%, from $564.8 million for the nine months ended September 30, 2016 to $565.3 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, revenue from Telefónica clients decreased 3.5%, mainly by the volume reduction in Mexico, Brazil, Spain and Peru.
For the nine months ended September 30, 2017, revenue from multisector clients was 60.8% of total revenue compared to 57.1% for the nine months ended September 30, 2016, an increase of 3.7 percentage points.
The following chart sets forth a breakdown of revenue by geographical region for the nine months ended September 30, 2016 and 2017 and as a percentage of revenue and the percentage change between those periods with and net of foreign exchange effects.

 	For the nine months ended September 30,	
($ in millions, except percentage changes)	2016	 	(%)	 	2017	 	(%)	 	Change (%)	 	Change excluding FX (%)	
 	(unaudited)	 	 	 	(unaudited)	 	 	 	 	 	 	
Brazil	601.9	 	45.8	 	720.3	 	49.9	 	19.7	 	7.5	
Americas	546.1	 	41.5	 	557.5	 	38.6	 	2.1	 	3.3	
EMEA	168.7	 	12.8	 	166.9	 	11.6	 	(1.1)	 	(0.5)	
Other and eliminations (1)	(1.2)	 	(0.1)	 	(1.7)	 	(0.1)	 	41.7	 	30.8	
Total	1,315.5	 	100.0	 	1,443.0	 	100.0	 	9.7	 	4.8	
 
(1) Includes holding company level revenues and consolidation adjustments.
Brazil
Revenue in Brazil for the nine months ended September 30, 2016 and 2017 totaled $601.9 million and $720.3 million, respectively, an increase of $118.4 million, or 19.7%. Excluding the impact of foreign exchange, revenue increased by 7.5%. Excluding the impact of foreign exchange, revenue from Telefónica decreased by 3.2%, due to lower volumes while revenue from multisector clients increased by 13.0%, supported primarily by new client wins.
Americas
Revenue in Americas for the nine months ended September 30, 2016 and 2017 totaled $546.1 million and $557.5 million, respectively, an increase of $11.4 million, or 2.1%. Excluding the impact of foreign exchange, revenue increased 3.3%. Excluding the impact of foreign exchange, revenue from Telefónica decreased by 4.1%, driven by lower volumes in Mexico and Peru while revenue from multisector clients increased by 9.4%, supported by new client wins in Argentina, Colombia, Chile and U.S. Nearshore business.

23

   
EMEA
Revenue in EMEA for the nine months ended September 30, 2016 and 2017 was $168.7 million and $166.9 million, respectively, a decrease of $1.8 million, or 1.1%. Excluding the impact of foreign exchange, revenue decreased by 0.5%. Excluding the impacts of foreign exchange, revenue from Telefónica decreased by 2.8%, due to lower volumes in Spain, while revenue from multisector clients increased by 3.8%, supported by new service wins.
Other operating income
Other operating income increased from $3.4 million for the nine months ended September 30, 2016 to $13.9 million, for the nine months ended September 30, 2017, or by $10.5 million, mainly due to an extraordinary revenue related to a sale and leaseback operation of IT equipment’s in Brazil. This amount nets-off the amounts of the write-off from the assets, registered in other operating expenses, so the complete operation represents no impact to the EBITDA.
Total operating expenses
Total operating expenses increased by $126.4 million, or 10.0%, from $1,258.1 million for the nine months ended September 30, 2016 to $1,384.5 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, operating expenses increased by 5.1%, mainly in Brazil (set up costs incurred to implement operations for recently acquired new clients, costs from recent acquisitions and the write-off from IT equipment’s related to a sale and leaseback in Q2), Argentina (higher inflation), Colombia and U.S. Nearshore business (higher volumes). As a percentage of revenue, operating expenses represented 95.6% and 95.9% for the nine months ended September 30, 2016 and 2017, respectively.
Supplies : Supplies expenses increased by $8.1 million, or 17.2%, from $47.0 million for the nine months ended September 30, 2016 to $55.1 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, supplies expenses increased by 12.7%, mainly due to higher set up costs to implement operations from recent acquired clients in Brazil. As a percentage of revenue, supplies represented 3.6% and 3.8% for the nine months ended September 30, 2016 and 2017, respectively.
Employee benefit expenses : Employee benefit expenses increased by $89.6 million, or 9.1%, from $980.4 million for the nine months ended September 30, 2016 to $1,070.0 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, employee benefit expenses increased by 4.5%, mainly in Brazil (higher labor contingencies, set up costs for new clients and higher labor expenses as per new collective agreement recently signed) and Americas (higher inflation in Argentina). As a percentage of revenue, employee benefit expenses represented 74.5% and 74.2% for the nine months ended September 30, 2016 and 2017, respectively.
Depreciation and amortization : Depreciation and amortization expenses increased by $6.5 million, or 9.0%, from $71.9 million for the nine months ended September 30, 2016 to $78.4 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, depreciation and amortization expense increased by 2.9%, impacted by the provision for fixed assets write-off in Mexico and Puerto Rico as a consequence of recent natural disasters in Q3. Excluding this effect, depreciation and amortization was slightly lower than last year (-0.7%).
Changes in trade provisions : Changes in trade provisions changed by $0.4 million, from an expense of $0.4 million for the nine months ended September 30, 2016 to zero for the nine months ended September 30, 2017.
Other operating expenses : Other operating expenses increased by $22.6 million, or 14.3%, from $158.4 million for the nine months ended September 30, 2016 to $181.0 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, other operating expenses increased by 8.0%, mainly in Brazil (set up costs for new clients and costs from recent acquisitions) and Americas (higher inflation in Argentina). As a percentage of revenue, other operating expenses were 12.0% and 12.5% for the nine months ended September 30, 2016 and 2017, respectively.
Brazil
Total operating expenses in Brazil increased by $116.0 million, or 20.3%, from $570.2 million for the nine months ended September 30, 2016 to $686.2 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, operating expenses in Brazil increased by 7.8%, impacted by set up costs for new clients, costs from recent acquisitions, higher labor contingencies and the write-off from IT equipment’s related to the lease-back operation in Q2. Operating expenses as a percentage of revenue increased from 94.7% to 95.3%, for the nine months ended September 30, 2016 and 2017, respectively.
24

   
Americas
Total operating expenses in Americas increased by $33.5 million, or 6.6%, from $506.6 million for the nine months ended September 30, 2016 to $540.1 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, operating expenses in Americas increased by 7.9%. Operating expenses as a percentage of revenue increased from 92.8% to 96.9%, for the nine months ended September 30, 2016 and 2017, respectively. This increase was mainly caused by the impact of higher inflation in Argentina, increase in variable costs due to volume increase in Colombia, Chile and U.S. Nearshore business and provisions made in September related to the costs expected to recover part of operations in Mexico and Puerto Rico affected by the recent natural disasters.
EMEA
Total operating expenses in EMEA decreased by $9.8 million, or 5.6%, from $176.5 million for the nine months ended September 30, 2016 to $166.7 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, operating expenses in EMEA decreased by 5.0%. Operating expenses as a percentage of revenue decreased from 104.6% to 99.9%, for the nine months ended September 30, 2016 and 2017, respectively, mainly as an impact of the cot initiatives in fixed costs recently implemented.
Operating profit
Operating profit increased by $11.6 million, from $60.8 million for the nine months ended September 30, 2016 to $72.4 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, operating profit increased 14.9%. Operating profit margin increased from 4.6% for the nine months ended September 30, 2016 to 5.0% for the nine months ended September 30, 2017.
Brazil
Operating profit in Brazil increased by $11.0 million, from $32.5 million for the nine months ended September 30, 2016 to $43.5 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, operating profit increased by 25.0%. Operating profit margin in Brazil increased from 5.4% for nine months ended September 30, 2016 to 6.0% for the nine months ended September 30, 2017.
Americas
Operating profit in Americas decreased by $16.4 million, from $41.4 million for the nine months ended September 30, 2016 to $25.0 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, operating profit decreased by 39.2%. Operating profit margin in Americas decreased from 7.6% for the nine months ended September 30, 2016 to 4.5% for the nine months ended September 30, 2017. The decrease was mainly driven by lower results in Mexico.
EMEA
Operating profit in EMEA changed by $7.8 million, from a loss of $7.1 million for the nine months ended September 30, 2016 to a profit of $0.7 million for the nine months ended September 30, 2017. Operating profit margin improved from negative margin of 4.2% to a positive margin of 0.4%. This increase is mainly related to lower fixed costs as a result of the implementation of cost saving initiatives.
Finance income
Finance income was $6.0 million for the nine months ended September 30, 2017 compared to $4.4 million for the nine months ended September 30, 2016. Excluding the impact of foreign exchange, finance income increased by 22.4% during the nine months ended September 30, 2017.
 
25

   
Finance costs
Finance costs increased by $8.2 million, or 13.7%, from $59.8 million for the nine months ended September 30, 2016 to $68.0 million for the nine months ended September 30, 2017. Excluding the impact of foreign exchange, finance costs increased by 7.6% during the nine months ended September 30, 2017. The increase in finance costs was mainly due to one-off expenses related to the refinance process during August 2017.
Change in fair value of financial instruments
Changes in fair value of financial instruments changed by $3.2 million, from a gain of $0.6 million for the nine months ended September 30, 2016 to a loss of $2.6 million for the nine months ended September 30, 2017. This loss is mainly related to the mark-to-market of some derivatives that are not designated as hedge accounting.
Net foreign exchange gain/(loss)
Net foreign exchange loss changed by $11.1 million, from a loss of $15.3 million for the nine months ended September 30, 2016 to a loss of $4.2 million for the nine months ended September 30, 2017. This loss was mainly due to intercompany balances and therefore had no effect on cash.
Income tax expense
Income tax expense for the nine months ended September 30, 2016 and 2017 totaled $4.1 million and $8.3 million, respectively. Higher tax expenses were mainly attributed to: (i) the recognition of non-deductible expenses mainly in Mexico, Peru and Colombia, (ii) the contribution of losses in the holdings companies, even with the opportunities developed during the third quarter.
Loss for the period
Loss for the nine months ended September 30, 2016 and 2017 was $16.6 million and $4.7 million, respectively, as a result of the items disclosed above.
EBITDA and Adjusted EBITDA
EBITDA increased by $18.1 million, or 13.6%, from $132.7 million for the nine months ended September 30, 2016 to $150.8 million for the nine months ended September 30, 2017. For the same period, Adjusted EBITDA increased by $2.5 million, or 1.5% from $163.3 million for the nine months ended September 30, 2016 to $165.8 million for the nine months ended September 30, 2017. The difference between EBITDA and Adjusted EBITDA is due to the exclusion of items that were not related to our core results of operations. Our Adjusted EBITDA is defined as EBITDA adjusted to exclude the restructuring costs, site relocation costs and other items which are not related to our core results of operations. See “Summary Consolidated Historical Financial Information” for a reconciliation of EBITDA and Adjusted EBITDA to profit/(loss).
Excluding the impact of foreign exchange, EBITDA increased by 8.3% and Adjusted EBITDA decreased by 3.4%, mainly driven by lower revenue in Americas.
Brazil
EBITDA in Brazil increased by $15.8 million, or 22.4%, from $70.6 million for the nine months ended September 30, 2016 to $86.4 million for the nine months ended September 30, 2017. For the same period, Adjusted EBITDA increased by $10.0 million, or 11.7%, from $85.1 million to $95.1 million. Excluding the impact of foreign exchange, EBITDA increased by 12.1% and Adjusted EBITDA increased by 1.8%.
Americas
EBITDA in Americas decreased by $13.7 million, or 20.5%, from $66.8 million for the nine months ended September 30, 2016 to $53.1 million for the nine months ended September 30, 2017. For the same period, Adjusted EBITDA decreased by $9.0 million, or 12.5%, from $71.9 million to $62.9 million. Excluding the impact of foreign exchange, EBITDA decreased during this period by $13.4 million, or 20.2%, and Adjusted EBITDA decreased $9.1 million, or 12.6% respectively.
26

   
The decrease in Adjusted EBITDA and EBITDA is mainly driven by declines in volume from Mexico.
EMEA
EBITDA in EMEA improved by $6.8 million, from a gain of $0.9 million for the nine months ended September 30, 2016 to a gain of $7.7 million for the nine months ended September 30, 2017. For the same period, Adjusted EBITDA increased by $0.6 million, from $11.0 million to $11.6 million.
Excluding the impact of foreign exchange, EBITDA increased during this period by $6.8 million, and Adjusted EBITDA increased by $0.5 million, respectively. The EBITDA of September 30, 2016 was also impacted by non-recurring expenses related to investments to adjust cost structure in the Region.
Liquidity and Capital Resources
As of September 30, 2017, our outstanding debt was $505.7 million, which includes $393.8 million of our 6.125% Senior Secured Notes due 2022, $22.5 million equivalent amount of Brazilian Debentures, $56.3 million of financing provided by BNDES, $9.8 million of finance lease payables and $23.3 million of other bank borrowings.
During the three months ended September 30, 2017, our cash flow provided by operating activities was $69.7 million, which includes interest paid of $37.2 million. Our cash flow from operating activities, before giving effect to the payment of interest, was $106.9 million.
During the nine months ended September 30, 2017, our cash flow provided by operating activities was $71.2 million, which includes interest paid of $69.1 million. Our cash flow from operating activities, before giving effect to the payment of interest, was $140.3 million.
27

   
Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2016 and 2017	
($ MILLIONS, UNLESS OTHERWISE INDICATED)	
 	 	 	 	 	 	 	 	 	
 	 	For the three months ended
September 30,	 	For the nine months ended
September 30,	
 	 	2016		2017	 	2016		2017	
 	 	(unaudited)	
Operating activities	 	 	 	 	 	 	 	 	
(Loss)/profit before tax	 	2.1	 	(12.9)	 	(9.2)	 	3.6	
Adjustments to profit/(loss) before tax to net cash flows:	 	 	 	 	 	 	 	 	
Amortization and depreciation	 	25.0	 	29.6	 	71.9	 	78.4	
Impairment losses	 	0.1	 	-	 	0.4	 	-	
Change in provisions	 	9.4	 	5.8	 	11.9	 	10.2	
Grants released to income	 	(0.1)	 	(0.1)	 	(0.4)	 	(0.3)	
Losses on disposal of fixed assets	 	0.2	 	(0.3)	 	0.8	 	0.8	
Finance income	 	(2.3)	 	(2.4)	 	(4.4)	 	(6.0)	
Finance costs	 	22.0	 	34.5	 	59.8	 	68.0	
Net foreign exchange differences	 	2.5	 	3.2	 	15.2	 	4.2	
Change in fair value of financial instruments	 	0.1	 	2.4	 	(0.6)	 	2.6	
Changes in other (gains)/losses and own work capitalized	 	(3.2)	 	(6.7)	 	(2.8)	 	(1.4)	
 	 	53.6	 	66.0	 	151.9	 	156.5	
Changes in working capital:	 	 	 	 	 	 	 	 	
Changes in trade and other receivables	 	16.8	 	16.1	 	0.3	 	(40.2)	
Changes in trade and other payables	 	(11.1)	 	6.9	 	23.3	 	24.8	
Other assets/(payables)	 	12.0	 	(7.4)	 	(22.3)	 	(25.1)	
 	 	17.7	 	15.6	 	1.3	 	(40.5)	
 	 	 	 	 	 	 	 	 	
Interest paid	 	(15.5)	 	(37.2)	 	(50.8)	 	(69.1)	
Interest received	 	1.5	 	46.3	 	0.8	 	49.7	
Income tax paid	 	(5.1)	 	(4.8)	 	(19.3)	 	(14.9)	
Other payments	 	(6.1)	 	(3.3)	 	(16.4)	 	(14.1)	
 	 	(25.2)	 	1.0	 	(85.8)	 	(48.4)	
Net cash flow from operating activities	 	48.3	 	69.7	 	58.2	 	71.2	
Investing activities	 	 	 	 	 	 	 	 	
Payments for acquisition of intangible assets	 	(5.0)	 	(3.6)	 	(24.4)	 	(23.6)	
Payments for acquisition of property, plant and equipment	 	(10.7)	 	(9.6)	 	(32.0)	 	(26.4)	
Acquisition of subsidiaries, net of cash acquired	 	(8.6)	 	-	 	(8.6)	 	(14.5)	
Proceeds from sale of PP&E and intangible assets	 	0.2	 	0.1	 	1.1	 	0.2	
Proceeds from sale of subsidiaries	 	2.0	 	-	 	2.0	 	-	
Net cash flow used in investing activities	 	(22.2)	 	(13.1)	 	(61.9)	 	(64.4)	
Financing activities	 	 	 	 	 	 	 	 	
Proceeds from borrowing from third parties	 	-	 	401.3	 	-	 	467.3	
Repayment of borrowing from third parties	 	(5.6)	 	(446.4)	 	(12.7)	 	(515.4)	
Net cash flow used in financing activities	 	(5.6)	 	(45.1)	 	(12.7)	 	(48.1)	
Net increase/(decrease) in cash and cash equivalents	 	20.5	 	11.6	 	(16.4)	 	(41.3)	
Foreign exchange differences	 	(2.1)	 	5.0	 	10.3	 	10.1	
Cash and cash equivalents at beginning of period	 	159.5	 	146.3	 	184.0	 	194.0	
Cash and cash equivalents at end of period	 	177.9	 	162.8	 	177.9	 	162.8	

 
28

   
Cash Flow
As of September 30, 2017, we had cash and cash equivalents of $162.8 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.

 	For the three months ended
September 30,	 	For the nine months ended
September 30,	
($ in millions)	2016		2017		2016		2017	
 	(unaudited)	
Cash from operating activities	48.3	 	69.7	 	58.2	 	71.2	
Cash used in investing activities	(22.2)	 	(13.1)	 	(61.9)	 	(64.4)	
Cash used in financing activities	(5.6)	 	(45.1)	 	(12.7)	 	(48.1)	
Net increase/(decrease) in cash and cash equivalents	20.5	 	11.6	 	(16.4)	 	(41.3)	
Effect of changes in exchanges rates	(2.1)	 	5.0	 	10.3	 	10.1	
 
Cash from Operating Activities
Three and Nine Months Ended September 30, 2016 Compared to Three and Nine Months Ended September 30, 2017
Cash provided by operating activities was $ 69.7 million for the three months ended September 30, 2017 compared to $ 48.3 million for the three months ended September 30, 2016. For the nine months ended September 30, 2017 cash provided by operating activities was $ 71.2 million compared to cash provided by operating activities of $ 58.2 million for the same period in the prior year. The increase from cash provided by operating activities is mainly due to the positive cash impact related to the unwind of hedging structures, realizing a mark-to-market gain of approximately $46.1 million.
Cash used in Investing Activities
Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2017
Cash used in investing activities was $ 13.1 million for the three months ended September 30, 2017 compared to cash used in investment activities of $ 22.2 million for the three months ended September 30, 2016. The variance is mainly driven by the acquisition of RBrasil in September 2016.
Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2017
Cash used in investing activities was $ 64.4 million for the nine months ended September 30, 2017 compared to cash used in investment activities of $ 61.9 million for the nine months ended September 30, 2016. The variance is mainly driven by the acquisition of Interfile in June 2017.
Cash used in Financing Activities
Three and Nine Months Ended September 30, 2016 Compared to Three and Nine Months Ended September 30, 2017
Cash used in financing activities was $ 45.1 million for the three months ended September 30, 2017 compared to the cash used in financing activities of $ 5.6 million for the three months ended September 30, 2016. For the nine months ended September 30, 2017 cash used in financing activities was $ 48.1 million compared to cash used in financing activities of $ 12.7 million for the same period in the prior year. Main variance is driven by non-recurring 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 (See Note 13 to the interim consolidated financial statements).

29

   
Finance leases
The Company holds the following assets under finance leases:

 	As of September 30,	
 	2016	 	2017	
($ in millions)	Net carrying amount of asset		Net carrying amount of asset	
Finance leases	(unaudited)	
      Plant and machinery	2.0	 	2.1	
      Furniture, tools and other tangible assets	2.3	 	7.8	
Total	4.3	 	9.9	
 
The present value of future finance lease payments is as follow:

 	As of September 30,	
 	2016	 	2017	
($ in millions)	Net carrying amount of asset		Net carrying amount of asset	
 	(unaudited)	
      Up to 1 year	2.0	 	4.0	
      Between 1 and 5 years	1.8	 	5.8	
Total	3.8	 	9.8	
 
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 comprised of furniture, computer equipment and technology equipment; and acquisition and upgrades of our software or specific customer’s 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 three and nine months ended September 30, 2016 and 2017.

 	For the three months ended
September 30,	 	For the nine months ended
September 30,	
 	2016		2017		2016		2017	
($ in millions)	(unaudited)	
Brazil	5.7	 	8.1	 	14.4	 	20.1	
Americas	3.2	 	6.9	 	9.3	 	13.6	
EMEA	0.4	 	1.4	 	0.7	 	2.1	
Other and eliminations	0.1	 	-	 	-	 	(0.1)	
Total capital expenditure	9.4	 	16.4	 	24.4	 	35.7	
 
30

   

ATENTO S.A. AND SUBSIDIARIES

 

 
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2017

    

31

 
   
ATENTO S.A. AND SUBSIDIARIES	
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION	
As of December 31, 2016 and September 30, 2017	
(In thousands of U.S. dollars, unless otherwise indicated)	
ASSETS	 	Notes	 	 	 	 	
	 		 	December 31,	 	September 30,	
	 		 	2016	 	2017	
 	 	 	 	(audited)	 	(unaudited)	
NON-CURRENT ASSETS	 	 	 	802,944	 	784,793	
 	 	 	 	 	 	 	
Intangible assets	 	8	 	226,553	 	241,412	
Goodwill	 	9	 	146,015	 	156,000	
Property, plant and equipment	 	10	 	165,270	 	157,506	
Non-current financial assets	 	 	 	138,950	 	83,539	
Trade and other receivables	 	12	 	20,911	 	22,597	
Other non-current financial assets	 	12	 	40,565	 	59,540	
Derivative financial instruments	 	13	 	77,474	 	1,402	
Other taxes receivable	 	 	 	7,815	 	7,672	
Deferred tax assets	 	 	 	118,341	 	138,664	
 	 	 	 	 	 	 	
CURRENT ASSETS	 	 	 	574,674	 	633,027	
 	 	 	 	 	 	 	
Trade and other receivables	 	 	 	373,047	 	454,316	
Trade and other receivables	 	12	 	350,902	 	433,224	
Current income tax receivable	 	 	 	22,145	 	21,092	
Other taxes receivable	 	 	 	6,452	 	14,683	
Other current financial assets	 	12	 	1,140	 	1,188	
Cash and cash equivalents	 	12	 	194,035	 	162,840	
 	 	 	 	 	 	 	
TOTAL ASSETS	 	 	 	1,377,618	 	1,417,820	
 	
The accompanying notes are an integral part of the interim consolidated financial statements.	
 
32

   
ATENTO S.A. AND SUBSIDIARIES	
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION	
As of December 31, 2016 and September 30, 2017	
(In thousands of U.S. dollars, unless otherwise indicated)	
 	 	 	 	 	 	 	
EQUITY AND LIABILITIES	 	Notes	 	December 31,	 	September 30,	
	 		 	2016	 	2017	
 	 	 	 	(audited)	 	(unaudited)	
TOTAL EQUITY	 	 	 	430,203	 	412,289	
EQUITY ATTRIBUTABLE TO:	 	 	 	 	 	 	
NON-CONTROLLING INTEREST	 	 	 	(718)	 	11,691	
OWNERS OF THE PARENT COMPANY	 	 	 	430,921	 	400,598	
 	 	 	 	 	 	 	
Share capital	 	11	 	48	 	48	
Reserve for acquisition of non-controlling interest	 	11	 	(1,057)	 	(23,531)	
Share premium	 	 	 	639,435	 	639,435	
Retained losses	 	 	 	(53,598)	 	(60,504)	
Translation differences	 	 	 	(193,529)	 	(166,509)	
Hedge accounting effects	 	 	 	35,521	 	5,378	
Stock-based compensation	 	 	 	4,101	 	6,281	
NON-CURRENT LIABILITIES	 	 	 	598,808	 	605,803	
 	 	 	 	 	 	 	
Deferred tax liabilities	 	 	 	45,597	 	44,307	
Debt with third parties	 	13	 	480,359	 	449,077	
Derivative financial instruments	 	13	 	184	 	6,828	
Provisions and contingencies	 	14	 	69,895	 	73,379	
Non-trade payables	 	 	 	618	 	6,515	
Option for the acquisition of non-controlling interest	 	 	 	1,057	 	24,572	
Other taxes payable	 	 	 	1,098	 	1,125	
 	 	 	 	 	 	 	
CURRENT LIABILITIES	 	 	 	348,607	 	399,728	
 	 	 	 	 	 	 	
Debt with third parties	 	13	 	54,576	 	56,670	
Derivative financial instruments	 	13	 	-	 	680	
Trade and other payables	 	 	 	279,313	 	322,063	
Trade payables	 	 	 	75,268	 	86,106	
Income tax payables	 	 	 	4,030	 	7,856	
Other taxes payables	 	 	 	68,800	 	87,167	
Other non-trade payables	 	 	 	131,215	 	140,934	
Provisions and contingencies	 	14	 	14,718	 	20,315	
TOTAL EQUITY AND LIABILITIES	 	 	 	1,377,618	 	1,417,820	
 	
The accompanying notes are an integral part of the interim consolidated financial statements.	
 
33

   
ATENTO S.A. AND SUBSIDIARIES	
INTERIM CONSOLIDATED INCOME STATEMENTS	
For the nine months ended September 30, 2016 and 2017	
(In thousands of U.S. dollars, unless otherwise indicated)	
 	 	 	 	 	 	 	 	 	 	
 	 	 	For the three months
ended September 30,	 	For the nine months
ended September 30,	
 	Notes	 	2016		2017	 	2016	  	2017	
	 	 	(unaudited)	 	(unaudited)	
Revenue	 	 	443,722	 	501,284	 	1,315,493	 	1,442,994	
Other operating income	 	 	1,869	 	4,808	 	3,361	 	13,861	
Other gains and own work capitalized	 	 	10	 	27	 	28	 	66	
Operating expenses:	 	 	 	 	 	 	 	 	 	
Supplies	 	 	(16,784)	 	(20,767)	 	(46,988)	 	(55,070)	
Employee benefit expenses	 	 	(323,647)	 	(369,141)	 	(980,418)	 	(1,069,985)	
Depreciation	 	 	(11,574)	 	(14,413)	 	(34,435)	 	(37,290)	
Amortization	 	 	(13,395)	 	(15,156)	 	(37,510)	 	(41,082)	
Changes in trade provisions	 	 	(140)	 	13	 	(446)	 	(13)	
Other operating expenses	 	 	(55,641)	 	(61,802)	 	(158,285)	 	(181,096)	
OPERATING PROFIT	 	 	24,420	 	24,853	 	60,800	 	72,385	
 	 	 	 	 	 	 	 	 	 	
Finance income	 	 	2,272	 	2,411	 	4,428	 	6,027	
Finance costs	 	 	(21,963)	 	(34,544)	 	(59,764)	 	(68,005)	
Change in fair value of financial instruments	 	 	(102)	 	(2,374)	 	561	 	(2,642)	
Net foreign exchange loss	 	 	(2,480)	 	(3,197)	 	(15,231)	 	(4,155)	
NET FINANCE EXPENSE	 	 	(22,273)	 	(37,704)	 	(70,006)	 	(68,775)	
(LOSS)/PROFIT BEFORE TAX	 	 	2,147	 	(12,851)	 	(9,206)	 	3,610	
Income tax expense	15	 	(2,635)	 	2,832	 	(4,149)	 	(8,259)	
LOSS FROM CONTINUING OPERATIONS	 	 	(488)	 	(10,019)	 	(13,355)	 	(4,649)	
LOSS FROM DISCONTINUED OPERATIONS	 	 	(3,206)	 	-	 	(3,206)	 	-	
LOSS FOR THE PERIOD	 	 	(3,694)	 	(10,019)	 	(16,561)	 	(4,649)	
(LOSS)/PROFIT ATTRIBUTABLE TO:	 	 	 	 	 	 	 	 	 	
OWNERS OF THE PARENT	 	 	(3,782)	 	(12,013)	 	(16,649)	 	(6,906)	
NON-CONTROLLING INTEREST	 	 	88	 	1,994	 	88	 	2,257	
LOSS FOR THE PERIOD	 	 	(3,694)	 	(10,019)	 	(16,561)	 	(4,649)	
LOSS PER SHARE:	 	 	 	 	 	 	 	 	 	
Basic loss per share from continuing operations (in U.S. dollars)	16	 	(0.01)	 	(0.16)	 	(0.18)	 	(0.09)	
Basic loss per share from discontinued operations (in U.S. dollars)	16	 	(0.04)	 	-	 	(0.04)	 	-	
Diluted loss per share from continuing operations (in U.S. dollars)	16	 	(0.01)	 	(0.16)	 	(0.18)	 	(0.09)	
Diluted loss per share from discontinued operations (in U.S. dollars)	16	 	(0.04)	 	-	 	(0.04)	 	-	
 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the interim consolidated financial statements.	
34

   
  ATENTO S.A. AND SUBSIDIARIES	
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) 	
For the nine months ended September 30, 2016 and 2017	
(In thousands of U.S. dollars, unless otherwise indicated)	
 	 	 	 	 	 	 	 	
 	For the three months ended September 30,	 	For the nine months ended September 30,	
 	2016		2017	 	2016		2017	
 	(unaudited)	 	(unaudited)	
Loss from continuing operations	(488)	 	(10,019)	 	(13,355)	 	(4,649)	
(Loss)/profit from discontinued operations	(3,206)	 	-	 	(3,206)	 	-	
Loss for the period	(3,694)	 	(10,019)	 	(16,561)	 	(4,649)	
Other comprehensive income/(loss)	 	 	 	 	 	 	 	
Other comprehensive income/(loss) to be reclassified to profit and loss in subsequent periods	 	 	 	 	 	 	 	
Cash flow/net investment hedge	2,265	 	(7,736)	 	3,423	 	(30,546)	
Tax effect on hedge	584	 	(251)	 	2,505	 	403	
Translation differences	(19,199)	 	18,614	 	17,664	 	28,150	
Other comprehensive income/(loss)	(16,350)	 	10,627	 	23,592	 	(1,993)	
Total comprehensive income/(loss)	(20,044)	 	608	 	7,031	 	(6,642)	
Total comprehensive income/(loss) attributable to:	 	 	 	 	 	 	 	
Owners of the parent	(20,132)	 	(2,513)	 	6,943	 	(10,029)	
Non-controlling interest	88	 	3,121	 	88	 	3,387	
Total comprehensive income/(loss)	(20,044)	 	608	 	7,031	 	(6,642)	
 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the interim consolidated financial statements.	 	 	 	 	 	 	 	
 
35

   
ATENTO S.A. AND SUBSIDIARIES	
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	
For the nine months ended September 30, 2016 and 2017	
(In thousands of U.S. dollars, unless otherwise indicated)	
 
 	Share capital	 	Share premium	 	Reserve for acquisition of non-controlling interest	 	Retained losses	 	Translation differences	 	Hedge accounting effects	 	Stock-based compensation	 	Total owners of the parent company	 	Non-controlling interest	 	Total equity	
Balance at January 1, 2016	48	 	639,435	 	-	 	(53,663)	 	(209,224)	 	18,629	 	2,566	 	397,791	 	-	 	397,791	
Comprehensive income/(loss) for the period	-	 	-	 	-	 	(16,649)	 	17,664	 	5,928	 	-	 	6,943	 	-	 	6,943	
Loss for the period	-	 	-	 	-	 	(16,649)	 	-	 	-	 	-	 	(16,649)	 	-	 	(16,649)	
Other comprehensive income/(loss), net of taxes	-	 	-	 	-	 	-	 	17,664	 	5,928	 	-	 	23,592	 	-	 	23,592	
Reserve for acquisition of non-controlling interest	-	 	-	 	(1,693)	 	-	 	-	 	-	 	-	 	(1,693)	 	-	 	(1,693)	
Stock-based compensation	-	 	-	 	-	 	-	 	-	 	-	 	1,384	 	1,384	 	-	 	1,384	
Non-controlling interest	-	 	-	 	-	 	-	 	-	 	-	 	-	 	-	 	(529)	 	(529)	
Balance at September 30, 2016 (*)	48	 	639,435	 	(1,693)	 	(70,312)	 	(191,560)	 	24,557	 	3,950	 	404,425	 	(529)	 	403,896	
 
 	Share capital	 	Share premium	 	Reserve for acquisition of non-controlling interest	 	Retained losses	 	Translation differences	 	Hedge accounting effects	 	Stock-based compensation	 	Total owners of the parent company	 	Non-controlling interest	 	Total equity	
Balance at January 1, 2017	48	 	639,435	 	(1,057)	 	(53,598)	 	(193,529)	 	35,521	 	4,101	 	430,921	 	(718)	 	430,203	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income/(loss) for the period	-	 	-	 	-	 	(6,906)	 	27,020	 	(30,143)	 	-	 	(10,029)	 	3,387	 	(6,642)	
Profit/(loss) for the period	-	 	-	 	-	 	(6,906)	 	-	 	-	 	-	 	(6,906)	 	2,257	 	(4,649)	
Other comprehensive income/(loss), net of taxes	-	 	-	 	-	 	-	 	27,020	 	(30,143)	 	-	 	(3,123)	 	1,130	 	(1,993)	
Reserve for acquisition of non-controlling interest	-	 	-	 	(22,474)	 	 	 	 	 	 	 	 	 	(22,474)	 	-	 	(22,474)	
Stock-based compensation	-	 	-	 	-	 	-	 	-	 	-	 	2,180	 	2,180	 	-	 	2,180	
Non-controlling interest	-	 	-	 	-	 	-	 	-	 	-	 	-	 	-	 	9,022	 	9,022	
Balance at September 30, 2017 (*)	48	 	639,435	 	(23,531)	 	(60,504)	 	(166,509)	 	5,378	 	6,281	 	400,598	 	11,691	 	412,289	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(*) unaudited	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the interim consolidated financial statements.	 	 	 	 	
 
36

   
ATENTO S.A. AND SUBSIDIARIES	
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS	
For the nine months ended September 30, 2016 and 2017	
(In thousands of U.S. dollars, unless otherwise indicated)	
 	 	 	 	 	
 	 	For the nine months ended September 30,	
 	 	2016		2017	
 	 	(unaudited)	
Operating activities	 	 	 	 	
(Loss)/profit before tax	 	(9,206)	 	3,610	
Adjustments to profit/(loss) before tax to net cash flows:	 	 	 	 	
Amortization and depreciation	 	71,945	 	78,372	
Impairment losses	 	446	 	13	
Change in provisions	 	11,916	 	10,216	
Grants released to income	 	(352)	 	(318)	
Losses on disposal of fixed assets	 	777	 	826	
Finance income	 	(4,428)	 	(6,027)	
Finance costs	 	59,764	 	68,005	
Net foreign exchange differences	 	15,231	 	4,155	
Change in fair value of financial instruments	 	(561)	 	2,642	
Changes in other (gains)/losses and own work capitalized	 	(2,876)	 	(1,390)	
 	 	151,862	 	156,494	
Changes in working capital:	 	 	 	 	
Changes in trade and other receivables	 	259	 	(40,201)	
Changes in trade and other payables	 	23,332	 	24,789	
Other payables	 	(22,322)	 	(25,097)	
 	 	1,269	 	(40,509)	
 	 	 	 	 	
Interest paid	 	(50,848)	 	(69,131)	
Interest received	 	777	 	49,725	
Income tax paid	 	(19,323)	 	(14,916)	
Other payments	 	(16,382)	 	(14,056)	
 	 	(85,776)	 	(48,378)	
Net cash flow from operating activities	 	58,149	 	71,217	
Investing activities	 	 	 	 	
Payments for acquisition of intangible assets	 	(24,392)	 	(23,635)	
Payments for acquisition of property, plant and equipment	 	(31,957)	 	(26,440)	
Acquisition of subsidiaries, net of cash acquired	 	(8,638)	 	(14,512)	
Proceeds from sale of PP&E and intangible assets	 	1,061	 	159	
Proceeds from sale of subsidiaries	 	2,029	 	-	
Net cash flow used in investing activities	 	(61,897)	 	(64,428)	
Financing activities	 	 	 	 	
Proceeds from borrowing from third parties	 	-	 	467,329	
Repayment of borrowing from third parties	 	(12,693)	 	(515,394)	
Net cash flow used in financing activities	 	(12,693)	 	(48,065)	
Net decrease in cash and cash equivalents	 	(16,441)	 	(41,276)	
Foreign exchange differences	 	10,289	 	10,081	
Cash and cash equivalents at beginning of period	 	184,020	 	194,035	
Cash and cash equivalents at end of period	 	177,868	 	162,840	
 	 	 	 	 	
The accompanying notes are an integral part of the interim consolidated financial statements.	
 
3 7

    
SELECTED EXPLANATORY NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

1. COMPANY ACTIVITY AND CORPORATE INFORMATION
(a) Description of business
Atento S.A. (hereinafter the “Company”), and its subsidiaries (hereinafter “Atento Group”) is a group of companies that offers customer relationship management services to its 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 Atento Group was acquired in 2012 by Bain Capital Partners, LLC (hereinafter “Bain Capital”). Bain Capital is a private investment fund that invests in companies with a high growth potential. Notable among its investments in the Customer Relationship Management (hereinafter “CRM”) sector is its holding in Bellsystem 24, a leader in customer service in Japan, and Genpact, the largest business management services company in the world.
In December 2012, Bain Capital entered into a final agreement with Telefónica, S.A. for the transfer of nearly 100% of the CRM business carried out by Atento Group (hereinafter the “Acquisition”), the parent company of which was Atento Inversiones y Teleservicios, S.A. (hereinafter “AIT”). The Venezuela based subsidiaries of the group headed by AIT, and AIT , except for some specific assets and liabilities, were not included in the Acquisition. Control was transferred for the purposes of creating the consolidated Atento Group on December 1, 2012.
The majority direct shareholder of the Company, ATALAYA Luxco PIKCo, S.C.A. (Luxembourg), is a holding company incorporated under the laws of the Grand-Duchy of Luxembourg.
The Company’s corporate purpose is to hold investments in companies in Luxembourg and abroad, purchase and sell, subscribe or any other format, and transfer through sale, swap or otherwise of securities of any kind, and administration, management, control and development of the investment portfolio.
The Company may also 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 trade on NYSE under the symbol “ATTO”.
The unaudited interim consolidated financial statements were approved by the Board of Directors on October 31, 2017.
(b) Seasonality
Our performance is subject to seasonal fluctuations, which is primarily due to (i) the initial costs to train and hire new employees at new service delivery centers to provide additional services to our clients, and (ii) statutorily mandated minimum wage and salary increases of operators, supervisors and coordinators in many of the countries in which we operate, whereas revenue increases related to inflationary adjustments and contracts negotiations generally take effect after the half year. These seasonal effects also cause differences in revenue and expenses 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 financial results.
3 8

   
2. BASIS OF PRESENTATION OF THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The interim consolidated financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”).
The interim financial statements should be read in conjunction with the consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) for the year ended December 31, 2016. The interim consolidated financial statements have been prepared on a historical costs basis, with the exception of derivative financial instruments and the option for the acquisition of non-controlling interest, which have been measured at fair value. The interim consolidated financial statement are for the Atento Group.
The figures in these interim consolidated financial statements are expressed in thousands of U.S. dollars, unless indicated otherwise. U.S. dollar is the Atento Group’s presentation currency.
 
3. COMPARATIVE INFORMATION
The main changes are:
On September 2, 2016, the Company through its direct subsidiary Atento Brasil acquired 81.49%, the controlling interest of RBrasil Soluções S.A. (RBrasil) and on September 30, 2016 the Company through its direct subsidiary Atento Teleservicios España sold 100% of Atento Morocco. In accordance with IFRS 5 the results of the operations in Morocco are presented in interim consolidated income statements as discontinued operations for the nine months ended September 30, 2016.
On June 9, 2017, the Company, through its subsidiary Atento Brasil, acquired control of Interfile Serviços de BPO Ltda. and 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. See more details of this acquisition in Note 6.
 
4. ACCOUNTING POLICIES
There were no significant changes in accounting policies and calculation methods used for the interim consolidated financial statements as of September 30, 2017 in relation to those presented in the annual financial statements for the year ended December 31, 2016.
a)     Critical accounting estimates and assumptions
The preparation of the interim consolidated financial statements under IAS 34 requires the use of certain assumptions and estimates that affect the recognized amount of assets, liabilities, income and expenses, as well as the related disclosures.
Some of the accounting policies applied in preparing the accompanying interim 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 interim consolidated income statements.
39

   
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 in the coming financial period is as follow:
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 disclosed in the consolidated annual financial statements for the year ended December 31, 2016. 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 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 Atento Group as a result of changes in tax legislation or unforeseen transactions that could affect the tax balances.
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.
4 0

   
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 interim 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 Atento Group uses derivative financial instruments to mitigate risks, primarily derived from possible fluctuations in interest 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.
b)     New standards and interpretations not yet adopted
The reporting standards below were published and are mandatory for future annual reporting periods:

Title of standard
 	IFRS 9  Financial Instruments
 	
Nature of change
 	IFRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.	
Impact
 	The Group is undertaking a detailed assessment of the classification and measurement of financial assets and financial liabilities .
 
Financial assets
 
We expect the loans and receivables as per IAS 39 that are held to collect contractual cash flows that solely represent payments and interest would appear to satisfy the conditions for classification as at amortized cost for IFRS 9 and hence there will be no change to the accounting for these assets.
 
We also expect no changes for derivatives, that as per IAS 39 are classified at fair value through profit or loss (unless they are designated as hedges) and would appear to be classified as FVPL as per IFRS 9.
 
Accordingly, the Atento Group does not expect the new guidance to have a significant impact on the classification and measurement of its financial assets.
 
Financial liabilities
 
There will be no impact on the Atento Group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Atento Group does not have such liabilities other than derivatives, that as per IAS 39 are classified at fair value through profit or loss (unless they are designated as hedges) and would appear to be classified as FVPL (fair value through profit or loss) as per IFRS 9. The derecognition rules have been transferred from IAS 39  Financial Instruments: Recognition and Measurement  and have not been changed.
 
The new hedge accounting rules will align the accounting for hedging instruments more closely with the Atento Group’s risk management practices. As a general rule, more hedge relationships might be eligible for hedge accounting, as the standard introduces a more principles-based approach. While the Atento Group is undertaking a detailed assessment, it would appear that the Atento Group’s current hedge relationships would qualify as continuing hedges upon the adoption of IFRS 9. Accordingly, the Atento Group does not expect a significant impact on the accounting for its hedging relationships.
 
The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under IAS 39. It applies to financial assets classified at amortized cost, debt instruments measured at FVOCI (fair value through other comprehensive income), contract assets under IFRS 15  Revenue from Contracts with  Customers, lease receivables, loan commitments and certain financial guarantee contracts. The Atento Group is undertaking a detailed assessment of how its impairment provisions would be affected by the new model and it may result in an earlier recognition of credit losses, in relation to trade receivables.
 
The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the Atento Group’s disclosures about its financial instruments particularly in the year of the adoption of the new standard.	
Mandatory application date/ Date of adoption by the Atento Group
 	Must be applied for financial years commencing on or after 1 January 2018.
 
Based on the transitional provisions in the completed IFRS 9, early adoption in phases was only permitted for annual reporting periods beginning before 1 February 2015. After that date, the new rules must be adopted in their entirety.
 
The Atento Group does not intend to adopt IFRS 9 before its mandatory date.	
 
4 1

   
 
Title of standard
 	IFRS 15  Revenue from Contracts with Customers
 	
Nature of change
 	The IASB has issued a new standard for the recognition of revenue. This will replace IAS 18 which covers contracts for goods and services and IAS 11 which covers construction contracts.
 
The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer.
 
The standard permits either a full retrospective or a modified retrospective approach for the adoption.	
Impact
 	Management is currently assessing the effects of applying the new standard on the Atento Group’s financial statements and has identified the following services that are likely to be affected:
 	
	  ü   	Accounting for certain costs incurred in fulfilling a contract – certain costs which are currently expensed may need to be recognised as an asset under IFRS 15.
  	
	  ü   	Variable consideration – IFRS 15 establishes that the Atento Group includes in the transaction price of services the amount of variable consideration estimated only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Some contracts with customer may be impacted for this requirement due to the existence of clauses containing service level requirements, trade discounts, penalties or volume rebates. This could result in different amounts being recognized and/or delay the recognition of a portion of the revenue.
 	
	  ü  	Presentation disclosure - IFRS 15 provides presentation and disclosure requirements, which are more detailed than under current IFRS. The presentation requirements represent a significant change from current practice and significantly increases the volume of disclosures required in Atento Group’s financial statements. Many of the disclosure requirements in IFRS 15 are completely new. The Atento Group is reassessing its systems, internal controls, policies and procedures necessary to collect and disclose the required information. 	
	 
Due to our comprehensive portfolio of contracts, high volume of transactions and necessary information, at this stage, the Atento Group is not able to quantify the impact of the IFRS 15 on the Atento Group’s financial statements. We are making a detailed assessment of the impact and will conclude it during 2017.	
Mandatory application date/ Date of adoption by the Atento Group	Mandatory for financial years commencing on or after 1 January 2018.
 
Expected date of adoption by the Atento Group: 1 January 2018.	

4 2

   
Title of standard
 	IFRS 16  Leases
 	
Nature of change
 	IFRS 16 was issued in January 2016. It will result in almost all leases being recognised 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 recognised. The only exceptions are short-term and low-value leases.
 
The accounting for lessors will not significantly change.	
Impact
 	The standard will affect primarily the accounting for the Atento Group’s operating leases. As at the reporting date, the Atento Group has operating lease commitments of 217,315 thousand U.S. dollars. However, the Atento Group has not yet determined to what extent these commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Atento Group’s profit and classification of cash flows.
 
Some of the commitments may be covered by the exception for short-term and low-value leases and some commitments may relate to arrangements that will not qualify as leases under IFRS 16.	
Mandatory application date/ Date of adoption by Atento Group	Mandatory for financial years commencing on or after 1 January 2019. At this stage, the Atento Group does not intend to adopt the standard before its effective date.

Title of standard
 	Disclosure Initiative – Amendments to IAS 7	
Nature of change /impact
 	Going forward, entities will be required to explain changes in their liabilities arising from financing activities. This includes changes arising from cash flows (eg: drawdowns and repayments of borrowings) and non-cash changes such as acquisitions, disposals, accretion of interest and unrealised exchange differences.
 
Changes in financial assets must be included in this disclosure if the cash flows were, or will be, included in cash flows from financing activities. This could be the case, for example, for assets that hedge liabilities arising from financing liabilities.
 
Entities may include changes in other items as part of this disclosure, for example by providing a ‘net debt’ reconciliation. However, in this case the changes in the other items must be disclosed separately from the changes in liabilities arising from financing activities.
 
The information may be disclosed in tabular format as a reconciliation from opening and closing balances, but a specific format is not mandated.	
Mandatory application date/ Date of adoption by Atento Group	For the annual consolidated financial statements of 2017.	
 
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.
 
5. MANAGEMENT OF FINANCIAL RISK
5.1 Financial risk factors
The Atento Group's activities are exposed to various types of financial risks: market risk (including currency risk, interest rate risk and country 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.
4 3

   
These unaudited interim consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements and therefore they should be read in conjunction with the Atento Group’s annual financial statements as of and for the year ended December 31, 2016. During the nine months ended September 30, 2017 there have not been changes in any risk management policies.
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.
Interest Rate Risk
Interest rate 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 fluctuation in interest rates. As of September 30, 2017, 16.0% of Atento Group’s finance costs are exposed to fluctuations in interest rates (excluding the effect of financial derivative instruments), compared to 40.6% as of December 31, 2016.
Based on our total indebtedness of 505,747 thousand U.S. dollars as of September 30, 2017, a 1% change in interest rates would impact our net interest expense by 1,311 thousand U.S. dollars.
As of December 31, 2016, the estimated fair value of the interest rate hedging instruments related to the Brazilian Debentures totaled 1,330 thousand U.S. dollars, which was recorded as a financial asset. Based on our total indebtedness of 534,935 thousand U.S. dollars as of December 31, 2016 and not taking into account the impact of our interest rate hedging instruments referred to above, a 1% change in interest rates would impact our net interest expense by 2,353 thousand U.S. dollars.
Foreign Currency Risk
Our exchange rate risk arises from our 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.
As of September 30, 2017, the estimated fair value of the cross-currency swaps designated as hedging instruments totaled a liability of 3,825 thousand U.S. dollars (asset of 75,960 thousand U.S. dollars, as of December 31, 2016).
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 operate. The master agreement establishes: (i) the maximum amounts to be invested per counterparty, based on their ratings (long- and short-term debt rating); (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 it financial assets. The Atento Group holds no guarantees as collection insurance. The Atento Group carries out significant transactions with the Telefónica Group, which amounted to 125,944 thousand U.S. dollars (125,333 thousand U.S. dollars as of December 31, 2016).
 
4 4

   
Liquidity Risk
The Atento Group seeks to match its debt maturity schedule to its capacity to generate cash flow 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).
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 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 forecast future cash flows and with quantitative restrictions imposed under financing contracts.
Among the restrictions imposed under financing arrangements, the debenture contract lays out certain general obligations and disclosures in respect of the lending institutions, specifically, Atento Brasil S.A. must comply with the quarterly net financial debt/EBITDA ratio set out in the contract terms.
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 contract also sets out additional restrictions, including limitations on dividends, payments and distributions to shareholders and capacity to incur additional debt.
The Super Senior Revolving Credit Facility carries no financial covenant obligations regarding debt levels. However, the Notes do impose limitations on the distributions on dividends, payments or distributions to the shareholders, the incurring of additional debt, and on investments and disposal of assets.
As of the date of these interim 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.
 
5.2 Fair value estimation

a)    	Level 1: The fair value of financial instruments traded on active markets is based on the quoted market price at the reporting date.	
b)    	Level 2: The fair value of financial instruments not traded in active market (i.e. OTC derivatives) is determined using valuation techniques. Valuation techniques maximize the use of available observable market data, and place as little reliance as possible on specific company estimates. If all of the significant inputs required to calculate the fair value of financial instrument are observable, the instrument is classified in Level 2. The Atento Group’s Level 2 financial instruments comprise interest rate swaps used to hedge floating rate loans and cross currency swaps.	
c)     	Level 3: If one or more significant inputs are not based on observable market data, the instrument is classified in Level 3.	
The Atento Group’s assets and liabilities measured at fair value as of December 31, 2016 and September 30, 2017 are classified as Level 2. No transfers were carried out between the different levels during the period.
 
4 5

   
6. BUSINESS COMBINATIONS
On June 9, 2017, the Company through its indirect subsidiary Atento Brasil S.A. acquired 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.
The total amount paid for this acquisition was approximately 14,512 thousand U.S. dollars, net of cash acquired.
Valuations were carried out to measure the preliminary fair value of assets acquired and liabilities assumed for the allocation of the acquisition price, in accordance with the requirements of IFRS 3 in this interim consolidated financial statements. The preliminary goodwill recognized in the transaction represents expected future synergies of the business combinations and will be deductible for income tax when the acquired entities are merged into the Atento Brasil S.A. These benefits are not recognized separately from goodwill because they do not meet the criteria for recognition of identifiable intangible assets.
Details of the preliminary purchase consideration, the net assets acquired and goodwill are as follows:

 	Thousands of U.S. dollars	
Assets	 	
Cash and cash equivalents	1,556	
Accounts receivable	5,406	
Deferred taxes assets	2,341	
Other credits	1,209	
Property, plant and equipment	2,456	
Intangibles (b)	16,303	
 	 	
Liabilities	 	
Other obligations	(5,795)	
Provisions for legal proceedings and contingent liabilities                                                             	(5,433)	
Net identifiable assets acquired	18,043	
 	 	
Non-controlling interest (49,99998% of net asset)	(9,022)	
Goodwill on acquisition	7,047	
Total of the consideration	16,068	
 	 	
Analysis of the cash flow of the acquisition	 	
Consideration paid	16,068	
Net cash acquired	(1,556)	
Consideration net of cash acquired (a)	14,512	

(a)    	Presented as investing activities in the statement of cash flows.	
(b)    	Intangible assets acquired which meet the criteria for recognition comprise customer relationships, a non-compete agreement and a software database identified as part of the purchase price allocation.	
The fair value amount for accounts receivables is 5,406 thousand U.S. dollars. The gross contractual amount for trade receivables due 5,585 thousand U.S. dollars, of which 179 thousand U.S. dollars is expected to be uncollectible.
Transaction costs totaling 116 thousand U.S. dollars are presented as operating activities in the statement of cash flow.
The acquired business contributed revenues of 13,564 thousand U.S. dollars and net profit of 1,620 thousand U.S. dollars to the Atento Group for the period from June 9, 2017 to September 30, 2017. If the acquisition had occurred on January 1, 2017, the Company consolidated revenue and consolidated loss for the nine months ended September 30, 2017 would have been 1,459,080 thousand of U.S. dollars and 7,767 thousand of U.S. dollars, respectively.
 
4 6

   
Put/Call options
As per the Shareholders' Agreement, the Company has a purchase option, where non-controlling shareholders grant to the 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, shall be obliged to sell their shares to the Atento Brasil S.A. ("call option"). The call option may be exercised by Atento Brasil S.A. between January 1, 2020 and April 15, 2020. The Shareholders' Agreement also provides for put options, where the non-controlling shareholders have the right, to sell partial or all of their shares to the Atento Brasil S.A. ("put options"). Many put options were understood by the 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.
Considering the valuation of the acquired entity and the management best estimates, the put option that will likely to be exercised by the non-controlling shareholders is between January 1, 2020 and April 15, 2020 – which is 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 will 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.
IFRS 3 does not provide specific guidance on how such contracts should be accounted for in a business combination. To determine the appropriate accounting treatment, IAS 39 - financial instruments: recognition and measurement, IAS 32 - financial instruments: presentation and IFRS 10 – consolidated financial statements were considered.
On the basis of the above, the Company recognized a financial liability related to the potential acquisition of non-controlling interest for the amount of 22,474 thousand U.S. dollars. The financial liability was recognized against specific reserve in shareholders' equity, considering that these are transactions between shareholders.
 
7. SEGMENT INFORMATION
The following tables present financial information for the Atento Group’s operating segments for the nine months ended September 30, 2016 and 2017 (in thousand U.S. dollars):

For the nine months ended September 30, 2016	 	 	 	 	 	 	 	 	 	
 	Thousands of U.S. dollars	
 	EMEA	 	Americas	 	Brazil	 	Other and eliminations	 	Total Group	
 	(unaudited)	
Sales to other companies	53,539	 	297,072	 	395,071	 	-	 	745,682	
Sales to Telefónica Group	115,114	 	247,820	 	206,877	 	-	 	569,811	
Sales to other group companies	4	 	1,254	 	-	 	(1,258)	 	-	
Other operating income and expense	(167,743)	 	(479,363)	 	(531,325)	 	(4,317)	 	(1,182,748)	
EBITDA	914	 	66,783	 	70,623	 	(5,575)	 	132,745	
Depreciation and amortization	(7,997)	 	(25,432)	 	(38,099)	 	(417)	 	(71,945)	
Operating profit/(loss)	(7,083)	 	41,351	 	32,524	 	(5,992)	 	60,800	
Financial results	(9,237)	 	(7,657)	 	(31,413)	 	(21,699)	 	(70,006)	
Income tax	3,207	 	(13,570)	 	739	 	5,475	 	(4,149)	
Profit/(loss) from continuing operations	(13,113)	 	20,124	 	1,850	 	(22,216)	 	(13,355)	
Profit/(loss) from discontinued operations	(3,206)	 	-	 	-	 	-	 	(3,206)	
Profit/(loss) for the period	(16,319)	 	20,124	 	1,850	 	(22,216)	 	(16,561)	
EBITDA	914	 	66,783	 	70,623	 	(5,575)	 	132,745	
Restructuring costs	6,302	 	4,930	 	7,865	 	-	 	19,097	
Site relocation costs	18	 	168	 	6,358	 	-	 	6,544	
Other	3,822	 	6	 	234	 	907	 	4,969	
Adjusted EBITDA (unaudited)	11,056	 	71,887	 	85,080	 	(4,668)	 	163,355	
Capital expenditure	749	 	9,281	 	14,373	 	-	 	24,403	
Intangible, Goodwill and PP&E (as of December 31, 2016)	48,342	 	189,036	 	298,920	 	1,540	 	537,838	
Allocated assets (as of December 31, 2016)	396,298	 	558,657	 	677,794	 	(255,131)	 	1,377,618	
Allocated liabilities (as of December 31, 2016)	272,082	 	259,352	 	490,172	 	(74,191)	 	947,415	
4 7

   
 
For the nine months ended September 30, 2017	 	 	 	 	 	 	 	 	 	
 	Thousands of U.S. dollars	
 	EMEA	 	Americas	 	Brazil	 	Other and eliminations	 	Total Group	
 	(unaudited)	
Sales to other companies	57,373	 	323,535	 	497,310	 	1	 	878,219	
Sales to Telefónica Group	109,560	 	232,227	 	222,988	 	-	 	564,775	
Sales to other group companies	1	 	1,707	 	-	 	(1,708)	 	-	
Other operating income and expense	(159,269)	 	(504,342)	 	(633,938)	 	5,312	 	(1,292,237)	
EBITDA	7,665	 	53,127	 	86,360	 	3,605	 	150,757	
Depreciation and amortization	(6,935)	 	(28,173)	 	(42,869)	 	(395)	 	(78,372)	
Operating profit/(loss)	730	 	24,954	 	43,491	 	3,210	 	72,385	
Financial results	(16,748)	 	(10,332)	 	(25,722)	 	(15,973)	 	(68,775)	
Income tax	3,623	 	(9,147)	 	(3,880)	 	1,145	 	(8,259)	
Profit/(loss) for the period	(12,395)	 	5,475	 	13,889	 	(11,618)	 	(4,649)	
EBITDA	7,665	 	53,127	 	86,360	 	3,605	 	150,757	
Restructuring costs	1,665	 	4,523	 	3,591	 	464	 	10,243	
Other	21	 	4,196	 	172	 	459	 	4,848	
Shared services expenses	2,237	 	1,023	 	4,952	 	(8,212)	 	-	
Adjusted EBITDA (unaudited)	11,588	 	62,869	 	95,075	 	(3,684)	 	165,848	
Capital expenditure	2,055	 	13,556	 	20,113	 	(1)	 	35,723	
Intangible, Goodwill and PP&E (as of September 30, 2017)	48,875	 	183,086	 	321,653	 	1,304	 	554,918	
Allocated assets (as of September 30, 2017)	432,267	 	619,736	 	756,098	 	(390,281)	 	1,417,820	
Allocated liabilities (as of September 30, 2017)	333,765	 	304,993	 	568,828	 	(202,055)	 	1,005,531	
 
"Other and eliminations" includes activities of the intermediate holding in Spain (Atento Spain Holdco, S.L.U.), Luxembourg holdings, as well as inter-group transactions between segments.
 
8. INTANGIBLE ASSETS
The main changes in intangible assets between the period ended September 30, 2017 and the year ended December 31, 2016 are related to the additions from (i) purchase price allocation of Interfile in the amount of 15,342 thousand U.S. dollars, net of amortization from the period and (ii) extension partnership with Itaú through Atento Brasil S.A. and RBrasil in the approximate amount of 18,623 thousand U.S. dollars, net of amortization from the period.
 
4 8

   
9. GOODWILL
The main change in goodwill between the period ended September 30, 2017 and the year ended December 31, 2016 is related to the acquisition of Interfile in the amount of 7,047 thousand U.S. dollars.
 
10. PROPERTY, PLANT AND EQUIPMENT (PP&E)
The main changes in PP&E between the period ended September 30, 2017 and the year ended December 31, 2016 are related to the net disposals of furniture, tools and other tangible assets in the amount of 8,506 thousand U.S. dollars, mainly in Brazil.
 
11. EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital 
As of September 30, 2017, share capital stood at 48 thousand U.S. dollars (€33,304), divided into 73,909,056 shares. PikCo owns 84.96% of ordinary shares of Atento S.A.
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.
Reserve for acquisition of non-controlling interest
Refers to the options attributable to the p arent company in the acquisition of RBrasil and Interfile in amount of 23,531 thousand U.S. dollars.
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, 2016 and September 30, 2017, no legal reserve had been established, mainly due to the losses incurred by Atento S.A.
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) by the full consolidation method.
Stock - ­based compensation
a) Description of share - ­based payment arrangements
In 2014, Atento granted the following two share-based payment arrangements to directors, officers and other employees, for the Company and its subsidiaries. The share-based payments are Time Restricted Stock Units (“TRSUs”) and Performance Restricted Stock Units (“PRSU”). In 2016, Atento granted two news share-based payment arrangements (both of them are Time Restricted Stock Units –“TRSUs”) to directors, officers and other employees, for the Company and its subsidiaries. The reference for these share-based payment arrangements is made to the annual financial statements for December 31, 2016, for a description of the arrangement and their vesting conditions.
49

   
On July 3, 2017, 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:
Time Restricted Stock Units (“RSUs”) (equity settled)
·          Grant date: July 3, 2017
·          Amount: 886,187 RSUs
·          Vesting period: 100% of the RSUs vests on January 2, 2020
·          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.
c) Outstanding RSUs
As of September 30, 2017, there are 664,172 Performance RSUs outstanding related to the 2014 Grant , however the assessment for the performance conditions is that the vesting thresholds will not be attained, therefore the provision has been reverted.
As of September 30, 2017, there are 1,170,326 Time RSUs outstanding to the 2016 Grant and 886,187 Time RSUs outstanding to the 2017 Grant . Holders of RSUs will receive the equivalent in shares of Atento S.A. without cash settlement of stock values when the RSUs.

The 2016 Grant	Time RSU	
Outstanding December 31, 2016	1,367,896	
Forfeited (*)	(197,570)	
Outstanding September 30, 2017	1,170,326	
(*) RSUs forfeited during the period due to employees failing to satisfy the service conditions.	
 	 	
The 2017 Grant	Time RSU	
Outstanding September 30, 2017	886,187	
 
d) Impacts in Profit or Loss
In the nine months ended September 30, ended September 30, 2017, 3,287 thousand U.S. dollars related to stock-based compensation were recorded as Employee benefit expenses.
 
12. FINANCIAL ASSETS
As of December 31, 2016 and September 30, 2017, all the financial assets of the Company are classified as loans and receivables, except for the derivative financial instruments that are categorized as fair value through profit or loss.
As of September 30, 2017, 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 193,785 thousand U.S. dollars, receiving cash net of discount, the related trade receivables was realized and interest expenses was recognized in the income statement.
Details of other financial assets as of December 31, 2016 and September 30, 2017 are as follow:
5 0

   
 	Thousands of U.S. dollars	
 	12/31/2016	 	9/30/2017	
 	(audited)	 	(unaudited)	
Non-current guarantees and deposits	40,565	 	59,540	
Total non-current	40,565	 	59,540	
 	 	 	 	
Current guarantees and deposits	1,140	 	1,188	
Total current	1,140	 	1,188	
 	 	 	 	
Total	41,705	 	60,728	
 
The breakdown of “Trade and other receivables” as of December 31, 2016 and September 30, 2017 is as follow:

 	Thousands of U.S. dollars	
 	12/31/2016	 	9/30/2017	
 	(audited)	 	(unaudited)	
Non-current trade receivables	7,824	 	7,290	
Other non-financial assets (*)	13,087	 	15,307	
Total non-current	20,911	 	22,597	
Current trade receivables	321,608	 	397,110	
Other receivables	15,302	 	15,697	
Prepayments	4,693	 	7,621	
Personnel	9,299	 	12,796	
Total current	350,902	 	433,224	
Total	371,813	 	455,821	
 
(*) “Other non-financial assets” as of September 30, 2017 primarily comprise the litigation underway with the Brazilian social security authority ( Instituto Nacional do Seguro Social ), recorded in Atento Brasil.
For the purpose of the interim consolidated statements of cash flows, cash and cash equivalents are comprised of the following:

 	Thousands of U.S. dollars	
 	12/31/2016	 	9/30/2017	
	(audited)	 	(unaudited)	
Deposits held at call	124,777	 	104,345	
Short-term financial investments	69,258	 	58,495	
Total	194,035	 	162,840	
 
"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.
 
5 1

   
13. FINANCIAL LIABILITIES
As of December 31, 2016 and September 30, 2017 , all the financial liabilities of the Company are classified as other financial liabilities at amortized cost, except for the derivative financial instruments and options for acquisitions of NCI that are classified as financial liability at fair value through profit or loss.
Debt with third parties as of December 31, 2016 and September 30, 2017 is as follow:

 	Thousands of U.S. dollars	
	12/31/2016	 	9/30/2017	
	(audited)	 	(unaudited)	
Senior Secured Notes	294,068	 	390,393	
Brazilian bonds – Debentures	136,231	 	19,520	
Bank borrowing	48,629	 	33,318	
Finance lease payables	1,431	 	5,846	
Total non-current	480,359	 	449,077	
Senior Secured Notes	9,282	 	3,403	
Brazilian bonds – Debentures	20,365	 	3,015	
Bank borrowing	22,724	 	46,281	
Finance lease payables	2,205	 	3,971	
Total current	54,576	 	56,670	
TOTAL DEBT WITH THIRD PARTIES	534,935	 	505,747	
 
Senior Secured Notes
On January 29, 2013, Atento Luxco 1 S.A. issued 300,000 thousand U.S. dollars aggregate principal amount of Senior Secured Notes that would mature on January 29, 2020. The 2020 Senior Secured Notes were senior secured obligations of Atento Luxco 1 and were guaranteed on a senior secured first-priority basis by Atento Luxco 1 and certain of its subsidiaries excluding Argentina and Brazil subsidiaries. The Senior Secured Notes were also guaranteed on an unsecured basis by Atento S.A. and Midco.
The indenture governing the 2020 Senior Secured Notes contained covenants that, among other things, restricted the ability of Atento Luxco 1 and certain of its subsidiaries to: incur or guarantee additional indebtedness; pay dividends or make distributions or redeem or repurchase capital stock; issue, redeem or repurchase certain debt; issue certain preferred stock or similar equity securities; make loans and investments; sell assets; incur liens; enter into transaction with affiliates; enter into agreements restricting certain subsidiaries’ ability to pay dividends; and consolidate, merge or sell all or substantially all of our assets. These covenants were subject to a number of important exceptions and qualifications. In addition, in certain circumstances, if Atento Luxco 1 had sold assets or experiences certain changes of control, it must offer to purchase the 2020 Senior Secured Notes.
On August 19, 2017, in connection with the offering described below, Atento Luxco 1 redeemed all of the outstanding amount of the 2020 Senior Secured Notes. The notes were called at a premium over face value of 103.688% per note, resulting in a total call cost of 11,064 thousand U.S. dollars recorded in finance costs during August 2017, along with the remaining balance of the 2020 Senior Secured Notes issuance amortized cost of 4,920 thousand U.S. dollars.
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 on August 2022 and will be callable as of August 2019. The 2022 Senior Secured Notes will be guaranteed on a senior secured basis by certain of Atento’s wholly-owned subsidiaries. The costs of 9,841 thousand U.S. dollars related to this new issuance are recorded using the amortized cost method.
The terms of the Indenture, 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 September 30, 2017, we were in compliance with these covenants. The outstanding amount on September 30, 2017 is 393,796 thousand U.S. dollars.
5 2

   
Debentures
On April 27, 2017, Atento Brasil S.A. repaid in advance of the  maturity date, 84,700 thousand Brazilian Reais (equivalent to 27,007 thousand U.S. dollars) of the 1 st Brazilian Debentures due 2019. On August 21, 2017, Atento Brasil S.A. repaid in advance of the  maturity date all the outstanding amount. The amount repaid was 428,350 thousand Brazilian Reais (equivalent to 135,211 thousand U.S. dollars) plus interest accrued of 10,944 thousand Brazilian Reais (equivalent to 3,455 thousand U.S. dollars) and 2,142 thousand Brazilian Reais (equivalent to 676 thousand U.S. dollars) of penalty fee due to early repayment. In addition to the penalty fee, the remaining balance of the first Debentures issuance of 3,050 thousand Brazilian Reais (equivalent to 963 thousand U.S. dollars) were recorded in finance costs during August 2017. As of September 30, 2017 there was no outstanding amount related to the Debentures due 2019.
On May 2, 2017, Atento Brasil S.A. entered into an indenture (“Second Brazilian Debenture”) for the issuance of 70,000 thousand Brazilian Reais (equivalent to approximately 22,096 thousand U.S. dollars) of Brazilian Debentures due April 25, 2023. The Second Brazilian Debenture bear interest at a rate per annum equal to the average daily rate of the one day “over extragroup” – DI – Interfinancial Deposits (as such rate is disclosed by CETIP S.A – Mercados Organizados (“CETIP”) in the daily release available on its web page (http://cetip.com.br), plus a spread of 3.75%. The amortization schedule is: April 25, 2018: 9.1%; October 25, 2018: 9.1%; April 25, 2019: 9.1%; October 25, 2019: 9.1%; April 25, 2020: 9.1%; October 25, 2020: 9.1%; April 25, 2021: 9.1%; October 25, 2021: 9.1%; April 25, 2022: 9.1%; October 25, 2022: 9.1%; April 25, 2023: 9,0%. The outstanding amount on September 30, 2017 is 22,535 thousand U.S. dollars.
Under the term of the indenture, the Brazilian subsidiary must comply with the quarterly net financial debt / EBITDA ratio set out in the contract terms. As of September 30, 2017, Atento Brasil S.A. was in compliance with this covenant.
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 94,697 thousand U.S. dollars as of September 30, 2017 .
The total amount of the BNDES Credit Facility is divided into five tranches subject to the following interest rates:

Tranche	 	Interest Rate	
	 		
Tranche A	 	Long-Term Interest Rate ( Taxa de Juros de Longo Prazo -TJLP ) plus 2.5% per annum	
Tranche B	 	SELIC Rate plus 2.5% per annum	
Tranche C	 	4.0% per year	
Tranche D	 	6.0% per year	
Tranche E	 	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.	
•              	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.	
5 3

   

BNDES releases amounts under the credit facility once the debtor met 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:
 
(Thousands of U.S. dollars)	 	 	 	 	 	 	 	 	 	 	 	 	
Date	 	Tranche A	 	Tranche B	 	Tranche C	 	Tranche D	 	Tranche E	 	Total	
March 27, 2014	 	7,999	 	3,949	 	5,529	 	395	 	-	 	17,872	
April 16, 2014	 	3,325	 	1,663	 	2,327	 	166	 	-	 	7,481	
July 16, 2014	 	-	 	-	 	-	 	-	 	189	 	189	
August 13, 2014	 	19,758	 	2,158	 	3,173	 	342	 	-	 	25,431	
Subtotal 2014	 	31,082	 	7,770	 	11,029	 	903	 	189	 	50,973	
March 26, 2015	 	5,796	 	1,449	 	2,057	 	168	 	-	 	9,470	
April 17, 2015	 	11,591	 	2,898	 	4,113	 	337	 	-	 	18,939	
December 21, 2015	 	9,115	 	2,272	 	-	 	-	 	221	 	11,608	
Subtotal 2015	 	26,502	 	6,619	 	6,170	 	505	 	221	 	40,017	
October 27, 2016	 	-	 	 	 	 	 	 	 	241	 	241	
Subtotal 2016	 	-	 	-	 	-	 	-	 	241	 	241	
Total	 	57,584	 	14,389	 	17,199	 	1,408	 	651	 	91,231	
 
The facility should be repaid in 48 monthly installments. The first payment was made on March 15, 2016 and the last payment will be due on February 15, 2020.
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 September 30, 2017, 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 6,944 thousand U.S. dollars as of September 30, 2017. 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 installments. The first payment will be 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. As of September 30, 2017, no amounts were released under this facility.
On January 28, 2013, Atento Luxco 1 entered into a Super Senior Revolving Credit Facility (the “Revolving Credit Facility”), which provides borrowings capacity of up to 50,000 thousand Euro (equivalent to 59,032 thousand U.S. dollars as of September 30, 2017).
The Revolving Credit Facility allows borrowings in Euros, Mexican Pesos and U.S. dollars and includes borrowings capacity for letters of credit and ancillary facilities (including an overdraft, guarantee, stand-by letter of credit, short-term loan facility).
This facility matures on July 2019. In connection with the Refinancing process, this Revolving Credit Facility was ended on August 10, 2017.
5 4

   
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 25,252 thousand U.S. dollars as of September 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 – Interfinancial Deposits (as such 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 matured on July 25, 2017 and was extended until March 01, 2018. As of September 30, 2017, there was no outstanding balance under the 2017 Santander Bank Credit Certificate.
On May 26, 2017, Atento Brasil S.A. entered into an agreement with Banco ABC Brasil for an amount of 12,232 thousand U.S. dollars maturing on November 26, 2017 with an annual interest rate of 3.52%. In connection with the loan, Atento Brasil S.A. entered into a SWAP agreement through which it receives fixed interest rates in U.S. dollars, 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 – Interfinancial Deposits (as such rate is disclosed by CETIP in the daily release available on its web page), plus a spread of 3.75% over 40 thousand Brazilian Reais. The outstanding amount as of September 30, 2017 was 12,508 thousand U.S. dollars.
On June 7, 2017, Atento Brasil S.A. entered into a bank credit certificate ( cédula de crédito bancário ) with Banco Bradesco S.A. in an aggregate principal amount of up to 25,000 thousand Brazilian Reais (the “2017 Bradesco Bank Credit Certificate”), equivalent to approximately 7,891 thousand U.S. dollars as of September 30, 2017. The interest rate of the 2017 Bradesco Bank Credit Certificate equals to the average daily rate of the one day “over extra-group” – DI – Interfinancial Deposits (as such rate is disclosed by CETIP in the daily release available on its web page), plus a spread of 3.29% per annum. The 2017 Bradesco Bank Credit Certificate will be due on October 5, 2017. As of September 30, 2017, no amounts were released under the 2017 Bradesco Bank Credit Certificate.
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 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. As of September 30, 2017, we were in compliance with this covenant.
5 5

   
As of September 30, 2017, no amounts were released under the Super Senior Revolving Credit Facility.
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 a bi-lateral, multi-currency revolving credit facilities. Up to 30,000 thousand of U.S. dollars of commitments are available for the drawing of cash loans in Euro, Mexican Pesos (MXN) and Colombian Pesos (COP). The original borrowers under this facility are Atento Colombia S.A, 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. This facility matures one year after the date of the Agreement. As of September 30, 2017, no amounts were released under this facility.
Finance lease
On April 25, 2017, Atento Brasil S.A. entered in a sale leaseback with HP Financial Services Arrendamento Mercantil S.A. in an amount of 23,615 thousand Brazilian Reais, equivalent to approximately 7,454 thousand U.S. dollars as of September 30, 2017, which will be repaid in 36 monthly installments.
On August 25, 2017, Atento Brasil S.A. entered in a new sale leaseback with HP Financial Services Arrendamento Mercantil S.A. in an amount of 4,220 thousand Brazilian Reais, equivalent to approximately 1,332 thousand U.S. dollars as of September 30, 2017, which will be repaid in 60 monthly installments.
Derivatives
Details of derivative financial instruments as of December 31, 2016 and September 30, 2017 are as follows:

 	Thousands of U.S. dollars	
 	12/31/2016	 	9/30/2017	
 	Assets	 	Liabilities	 	Assets	 	Liabilities	
Interest rate swaps	1,330	 	-	 	-	 	(1,601)	
Cross currency swaps - net investment hedges	76,144	 	(184)	 	1,402	 	(3,330)	
Cross currency swaps - that do not qualify for hedge accounting	-	 	-	 	-	 	(2,577)	
Total	77,474	 	(184)	 	1,402	 	(7,508)	
 	 	 	 	 	 	 	 	
Non-current portion	77,474	 	(184)	 	1,402	 	(6,828)	
Current portion	-	 	-	 	-	 	(680)	
 
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 expense. Thereafter, any changes in fair value will be directly recognized in income statement.
On May 26, 2017, Atento Brasil S.A. entered into a cross currency swap to hedge a USD loan of 12,232 thousand U.S. dollars at a fixed rate of 3.25% exchanged to a 40,000 thousand Brazilian Reais with interest rate of the average daily rate of the one day “over extra-group” – DI – Interfinancial Deposits - plus a spread of 3.45% per annum.
On April 1, 2015, the Company started a hedge accounting program for net investment hedge related to exchange risk between the U.S. dollar and foreign operations in Euro, 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 of 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, Mexican Peso (MXN), Brazilian Reais (BRL) and Peruvian Nuevo Sol (PEN). Except for the Cross Currency Swap between U.S. dollars and Brazilian Reais, all other Cross Currency Swaps were designated for hedge accounting as net investment hedge.
5 6

   
As of September 30, 2017, details of interest rate swap, cross currency swaps that do not qualify for hedge accounting and net investment hedges were as follows:

Interest Rate Swap	
Bank	 	Maturity	 	Notional
currency	 	Index	 	Notional in
contract
currency
(thousands)	 	Fair value assets	 	Fair value liability	 	Other
comprehensive
income, net of
taxes	 	Change in
OCI, net of taxes	 	Income statement - Finance cost	 	Income statement - Change in fair value	
 	 	 	 	 	 	 	 	 	 	(unaudited)	
 	 	 	 	 	 	 	 	 	 	D/(C)	 	D/(C)	 	D/(C)	 	D/(C)	 	D/(C)	 	D/(C)	
Itau	 	Dec-18	 	BRL	 	BRL CDI	 	245,000	 	-	 	(1,601)	 	-	 	(781)	 	(1,443)	 	-	
 	 	 	 	 	 	 	 	 	 	-	 	(1,601)	 	-	 	(781)	 	(1,443)	 	-	
 
Cross Currency Swaps - that do not qualify for hedge accounting	
Bank	 	Maturity	 	Purchase currency	 	Selling currency	 	Notional (thousands)	 	Fair value assets	 	Fair value liability	 	Other comprehensive income	 	Change in OCI, net of taxes	 	Income statement - Finance cost	 	Income statement - Change in fair value	
 	 	 	 	 	 	 	 	 	 	(unaudited)	
 	 	 	 	 	 	 	 	 	 	D/(C)	 	D/(C)	 	D/(C)	 	D/(C)	 	D/(C)	 	D/(C)	
ABC Brasil S.A.	 	Nov-17	 	USD	 	BRL	 	12,232	 	-	 	(680)	 	-	 	-	 	(679)	 	-	
Goldman Sachs	 	Aug-17	 	BRL	 	USD	 	754,440	 	-	 	(1,897)	 	-	 	-	 	-	 	1,897	
Goldman Sachs	 	Aug-22	 	BRL	 	USD	 	127,000	 	-	 	-	 	-	 	-	 	-	 	227	
 	 	 	 	 	 	 	 	 	 	-	 	(2,577)	 	-	 	-	 	(679)	 	2,124	
 
Net Investment Hedges	
Bank	 	Maturity	 	Purchase currency	 	Selling currency	 	Notional (thousands)	 	Fair value assets	 	Fair value liability	 	Other comprehensive income	 	Change in
OCI, net of taxes	 	Income statement - Finance cost	 	Income statement - Change in fair value	
 	 	 	 	 	 	 	 	 	 	(unaudited)	
 	 	 	 	 	 	 	 	 	 	D/(C)	 	D/(C)	 	D/(C)	 	D/(C)	 	D/(C)	 	D/(C)	
Nomura International	 	Aug-22	 	EUR	 	USD	 	34,109	 	14	 	(208)	 	194	 	(194)	 	-	 	-	
Goldman Sachs	 	Aug-22	 	MXN	 	USD	 	1,065,060	 	1,210	 	(321)	 	(889)	 	889	 	-	 	-	
Goldman Sachs	 	Aug-22	 	PEN	 	USD	 	194,460	 	-	 	(2,801)	 	2,801	 	(2,801)	 	-	 	-	
Santander	 	Jan-20	 	USD	 	EUR	 	20,000	 	-	 	-	 	1,742	 	(2,522)	 	-	 	88	
Santander	 	Jan-20	 	USD	 	MXN	 	11,111	 	-	 	-	 	(2,113)	 	(2,411)	 	-	 	21	
Goldman Sachs	 	Jan-20	 	USD	 	EUR	 	48,000	 	-	 	-	 	3,587	 	(5,452)	 	-	 	217	
Goldman Sachs	 	Jan-20	 	USD	 	MXN	 	40,000	 	-	 	-	 	(7,601)	 	(8,671)	 	-	 	(47)	
Nomura International	 	Jan-20	 	USD	 	MXN	 	23,889	 	-	 	-	 	(4,357)	 	(5,358)	 	-	 	105	
Nomura International	 	Jan-20	 	USD	 	EUR	 	22,000	 	-	 	-	 	1,620	 	(2,476)	 	-	 	99	
Goldman Sachs	 	Jan-18	 	USD	 	PEN	 	13,800	 	90	 	-	 	13	 	(53)	 	-	 	6	
BBVA	 	Jan-18	 	USD	 	PEN	 	55,200	 	-	 	-	 	71	 	(229)	 	-	 	23	
Goldman Sachs	 	Jan-18	 	USD	 	COP	 	7,200	 	88	 	-	 	(87)	 	(19)	 	-	 	(1)	
BBVA	 	Jan-18	 	USD	 	COP	 	28,800	 	-	 	-	 	(359)	 	(65)	 	-	 	7	
 	 	 	 	 	 	 	 	 	 	1,402	 	(3,330)	 	(5,378)	 	(29,362)	 	-	 	518	
Total	 	 	 	 	 	 	 	 	 	1,402	 	(7,508)	 	(5,378)	 	(30,143)	 	(2,122)	 	2,642	
 
Gains and losses on net investment hedges accumulated in equity will be taken to the income statements when the foreign operation is partially disposed of or sold.
5 7

   
 
14. PROVISIONS AND CONTINGENCIES
Atento has contingent liabilities arising from lawsuits in the normal course of its business. Contingent liabilities with a probable likelihood of loss are fully recorded as liabilities and the breakdown is as follows:

 	Thousands of U.S. dollars	
 	12/31/2016	 	9/30/2017	
 	(audited)	 	(unaudited)	
Non-current	 	 	 	
Provisions for liabilities	30,394	 	29,616	
Provisions for taxes	21,447	 	24,200	
Provisions for dismantling	15,338	 	17,513	
Other provisions	2,716	 	2,050	
Total non-current	69,895	 	73,379	
 	 	 	 	
Current	 	 	 	
Provisions for liabilities	8,160	 	5,074	
Provisions for taxes	1,006	 	5,494	
Provisions for dismantling	213	 	-	
Other provisions	5,339	 	9,747	
Total current	14,718	 	20,315	
 
“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 33,678 thousand U.S. dollars and 41,239 thousand U.S. dollars as of December 31, 2016 and September 30, 2017, respectively.
“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 4,619 thousand U.S. dollars and 4,606 thousand U.S. dollars as of December 31, 2016 and September 30, 2017, 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.
Given the nature of the risks covered by these provisions, it is not possible to determine a reliable schedule of potential payments, if any.
As of September 30, 2017, lawsuits still before the courts as follow:
Brazil
At September 30, 2017, Atento Brasil was involved in approximately 14,224 labor-related disputes (12,364 labor disputes as of December 31, 2016), 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 probable was 23,427 thousand U.S. dollars (20,714 thousand U.S. dollars on December 31, 2016) and the main claims classified as possible was 165,293 thousand U.S. dollars (51,354 thousand U.S. dollars on December 31, 2016).
In addition, at September 30, 2017, there are labor-related disputes belonging to the company Atento Brasil 1 (formely Casa Bahia Contact Center Ltda – “CBCC”) totaling 911 thousand U.S. dollars. According to the Company’s external attorneys, materialization of the risk event is probable.
5 8

   
Moreover, as of September 30, 2017, Atento Brasil was party to 13 civil public actions filed by the Labor Prosecutor’s Office due to alleged irregularities mainly concerning daily and general working routine, lack of overtime control and improper health and safety conditions in the workplace. The total amount involved in these claims was approximately 89,123 thousand Brazilian Reais (28,132 thousand U.S. dollars), of which 2,786 thousand Brazilian Reais relate to claims that have been classified as probable by our internal and external lawyers, for which amount Atento Brasil has recorded a provision, as indicated in the paragraph above. We expect that our ultimate liability for these claims, if any, will be substantially less than the full amount claimed. These claims are generally brought with respect to specific jurisdictions in Brazil, and it is possible that in the future similar claims could be brought against us in additional jurisdictions. We cannot assure that these current claims or future claims brought against us will not result in liability to the Company, and that such liability would not have a material adverse effect on our business, financial condition and results of operations.
As of September 30, 2017, Atento Brasil S.A. has 12 civil lawsuits ongoing for various reasons (14 on December 31, 2016) which, according to the Company’s external attorneys, materialization of the risk event is possible. The total amount of the claims is approximately 6,309 thousand U.S. dollars (4,948 thousand U.S. dollars on December 31, 2016).
In addition, at September 30, 2017, Atento Brasil S.A. has 41 disputes ongoing with the tax authorities and social security authorities, for various reasons relating to infraction proceedings filed (46 on December 31, 2016). The total amount of these claims is approximately 61,224 thousand U.S. dollars (30,885 thousand U.S. dollars on December 31, 2016). According to the Company’s external attorneys, risk of material loss is possible.
In addition, as of September 30, 2017, there are tax authorities disputes belonging to the company CBCC totaling 3,016 thousand U.S. dollars. According to the Company’s external attorneys, materialization of the risk event is probable.
Furthermore, it is important to highlight out that the Superior Labor Court of Appeals (Tribunal Superior do Trabalho) during the month of August 2015 decided to amend the indexation rate related to labor contingencies. The decision alter the Reference Rate Index (Taxa Referencial - TR) usually used to adjust the amount of the contingencies to the Special Broad Consumer Price Index (Índice de Preços ao Consumidor Amplo Especial – IPCA-E). There are several questions about this matter, especially the period to which change should be applied as well as if the new index is appropriate. In addition, during October 2015, the Supreme Court (STF) issued a “writ of Mandamus” to the Federation of Brazilian Banks (FEBRABAN) suspending the application of the new index (IPCA-E). On September 30, 2017, a new decision of the Superior Labor Court of Appeals on the application of the index IPCA-E was amended, changing the initial date of the application of the index from June 30, 2009 to March 25, 2015. However, the application of the new index remains suspended due to decision of the STF in October 2015. Thus, the Company considered the this quarter the new modulation for projection of IPCA-E in the labor contingencies, being that, the Company’s external lawyers’ opinion still considering the likelihood of loss in an eventual dispute as possible. The amount involved in the period from March 25, 2015 through September 30, 2017 is approximately 495 thousand U.S. dollars and in the period from August 31, 2015 through September 30, 2017 is approximately 339 thousand U.S. dollars. We will monitor this matter during 2017.
On September 30, 2017, the subsidiary RBrasil Soluções S.A. holds contingent liabilities of labor nature and social charges classified as possible in the amount of 13,328 thousand Brazilian Reais (equivalent to 4,207 thousand U.S. dollars), respectively, and contingent liabilities of tax nature classified as possible in the amount of 16,754 thousand Brazilian Reais (equivalent to 5,288 thousand U.S. dollars), respectively.
On September 30, 2017, the subsidiary Interfile holds contingent liabilities of labor nature and social charges classified as probable in the amount of 12,829 thousand Brazilian Reais (equivalent to 4,050 thousand U.S. dollars) and approximately 2,633 thousand Brazilian Reais (equivalent to 831 thousand U.S. dollars) classified as possible.
Additionally, there are other contingencies which are classified as possible by the Company amounting to 6,107 thousand U.S. dollars.
Peru
At September 30, 2017, Teleatento del Perú, S.A.C. has lawsuits underway with the Peruvian tax authorities amounting to 5,520 thousand U.S. dollars (10,045 thousand U.S. dollars on December 31, 2016). According to the Company’s external attorneys, risk of material loss is possible.
59

   
Spain
At September 30, 2017, 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, totaling 3,624 thousand U.S. dollars. According to the Company’s external lawyers, materialization of the risk event is possible.
Mexico
At September 30, 2017, 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 7,193 thousand U.S. dollars (Atento Servicios, S.A. de C.V. 4,495 thousand U.S. dollars and Atento Atencion y Servicios, S.A. de C.V. 2,698 thousand U.S. dollars), according to the external labor law firm for possible risk labor disputes.
Argentina
In Argentina, as a consequence of an unfavourable sentence on the case “ATUSA S.A.” issued by Argentinian Internal Revenue Services (“Administración Federal de Ingresos Públicos”), notified on February 2017, the risk qualified so far as “remote” becomes now “possible” being this contingency estimated amount of approximately 2,525 thousand U.S. dollars at September 30, 2017 (3,147 thousand U.S. dollars on December 31, 2016). A formal appeal has been filed at the National Supreme Court of Justice.
Given the nature of the risks covered by these provisions, it is not possible to determine a reliable schedule of potential payments, if any.
 
15. INCOME TAX
The breakdown of the Atento Groups’s income tax expense is as follow:

 	 	Thousands of U.S. dollars	
 	 	For the nine months ended September 30,	
Income taxes	 	2016		2017	
	 	(unaudited)	
Current tax expense	 	(17,128)	 	(20,292)	
Deferred tax	 	12,979	 	12,033	
Total income tax expense	 	(4,149)	 	(8,259)	
 
For the nine months ended September 30, 2017, Atento Group’s consolidate financial statements presented profit before tax in the amount of 3,610 thousand U.S. dollars and a tax expense of 8,259 thousand U.S. dollars compared to a loss before tax of 9,206 thousand U.S. dollars and a tax expense of 4,149 thousand U.S. dollars for the nine months ended September 30, 2016. The effective tax rate for Atento Group’s, under a positive pre-tax basis, for the nine months ended September 30, 2017 was distorted by the losses incurred by the holding companies. Excluding the holding companies, the aggregated effective tax rate for the nine months ended September 30, 2017 is 35.62% (versus 45.07% for the nine months ended September 30, 2016, under a negative pre-tax basis).
 
16. LOSS PER SHARE
Basic earnings per share is calculated by dividing the profits attributable to equity owners of the Company by the weighted average number of ordinary shares outstanding during the periods as demonstrated below:
6 0

   
 
 	For the three months ended September 30,	 	For the nine months ended September 30,	
 	2016		2017	 	2016		2017	
 	(unaudited)	 	(unaudited)	
Result attributable to equity holders of the Company	 	 	 	 	 	 	 	
Atento’s loss attributable to equity holders of the parent from continuing operations (in thousands U.S. dollars) (1)	(488)	 	(12,013)	 	(13,355)	 	(6,906)	
Atento’s loss attributable to equity holders of the parent from discontinued operations (in thousands U.S. dollars) (1)	(3,206)	 	-	 	(3,206)	 	-	
Weigthed average number of ordinary shares	73,786,225	 	73,909,056	 	73,786,225	 	73,909,056	
Basic and diluted loss per share from continuing operations	(0.01)	 	(0.16)	 	(0.18)	 	(0.09)	
Basic and diluted loss per share from discontinued operations	(0.04)	 	-	 	(0.04)	 	-	
 
(1) As of September 30, 2016 and 2017, potential ordinary shares of 1,112,405 and 870,589, respectively, relating to the stock option plan were excluded from the calculation of diluted loss per share, as the loss in the periods are anti-dilutive .
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 earnings per share attributable to common stockholders is the same.
 
17. RELATED PARTIES
Directors
The directors of the Company as of the date on which the interim consolidated financial statements were prepared are Melissa Bethell, Vishal Jugdeb, Francisco Tosta Valim, Thomas Iannotti, David Garner, Stuart Gent, Devin O’Reilly, and Alejandro Reynal.
At September 30, 2017, some members of Board of Directors have the right to the stock-based compensation as described in Note 11.
Key management personnel
Key management personnel include those persons empowered and responsible for planning, directing and controlling the Atento Group’s activities, either directly or indirectly.
The following table shows the total remuneration paid to the Atento Group’s key management personnel in the nine months ended September 30, 2016 and 2017:

 	For the nine months ended September 30,	
	2016		2017	
 	(unaudited)	
Total remuneration paid to key management personnel	3,516	 	4,243	

 
6 1

   
18. OTHER INFORMATION
a.             Guarantees and commitments
At September 30, 2017, the Atento Group has guarantees and commitments to third parties amounting to 349,203 thousand U.S. dollars (320,300 thousand U.S. dollars at December 31, 2016).
The Company’s directors do not believe that any contingencies will arise from these guarantees other than those already recognized.
The total amount of operating lease expenses recognized in the interim consolidated income statements for the nine months ended September 30, 2017 was 52,998 thousand U.S. dollars (46,679 thousand U.S. dollars at September 30, 2016).
There are no contingent payments on operating leases recognized in the interim consolidated income statements for the nine months ended September 30, 2016 and 2017.
The operating leases where the Company acts as lessee are mainly on premises intended for use as call centers. These leases have various termination dates, with the latest terminating in 2028. As of September 30, 2017, the payment commitment for the early cancellation of these leases is 131,007 thousand U.S. dollars (122,480 thousand U.S. dollars at December 31, 2016).
 
19. EVENTS AFTER THE REPORTING PERIOD
On September 25, 2017, we announced a new dividend policy pursuant to which our board of directors approved a dividend policy for the Company with a goal of paying annual cash dividends. On October 31, 2017, our board of directors authorized us to declare a cash dividend with respect to our ordinary shares of $0.34 per share which will be paid on November 28 , 2017 to shareholders of record as of the close of business on November 10 , 2017. Future cash dividends, if any, will be at the discretion of our board of directors and can be changed or discontinued at any time. The declaration and payment of any future dividends (including the amount of the cash dividend, the record date and date of payment) 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.
6 2

   
PART II - OTHER INFORMATION
 
LEGAL PROCEEDINGS
See Note 14 to the unaudited interim consolidated financial statements.
RISK FACTORS
There were no material changes to the risk factors described in section “Risk Factors” in our Annual Form 20-F, for the year ended December 31, 2016, and in our Form 6-K for three months ended March 31, 2017.
6 3

    
 
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.

		
 	ATENTO S.A.  	
Date: October 31, 2017.  	 	
 	By: /s/ Alejandro Reynal  	
 	Name: Alejandro Reynal  	
 	Title: Chief Executive Officer  	
 	
 	By: /s/ Mauricio Montilha  	
 	Name: Mauricio Montilha  	
 	Title: Chief Financial Officer  	

 
64

	PRESS RELEASE	

Atento Reports Fiscal 3Q17 Results Highlighted by Strong Topline and EPS Growth
 
·    Strong Multisector growth and continued improvement in revenue mix:
§ Consolidated revenues up 9.0%, multisector up 15.3%
§ Multisector broad-based gains in all regions, with mix up 420bps to 62.0% 
§ Revenue mix from higher value-added solutions up 230bps to 27.0%
§ Telefonica revenues stable YoY
·    Adjusted EBITDA margin of 11.9% in Q3 and YTD at 11.5%, in line with FY 2017 guidance
·    Solid growth in recurring EPS, up 20% in Q3 and 12.8% YTD, to $0.24 and $0.53 respectively
·    Sound Free Cash Flow generation and enhanced capital structure:
§   Free cash flow before interest and acquisitions totalled $48 million, an 80% cash conversion
§   Debt refinance estimated to reduce interest expense by $10-15mm p.a. as of 2018
§   Net leverage down to 1.5x from 1.9x in Q3 2016 and 1.8x in Q2 2017
·    Declares first cash dividend of $25.0 million ($0.34/share), under the approved policy  
·    Reaffirmed full-year 2017 targets
 
NEW YORK, October 31, 2017 – Atento S.A. (NYSE: ATTO), the largest provider of customer-relationship management and business-process outsourcing services in Latin America, and among the top five providers globally, today announced its third-quarter 2017 operating results. All comparisons in this announcement are year-over-year and in constant-currency (CCY), unless noted otherwise. 
 
Summary
 
($ in millions except EPS)	Q3 2017	Q3 2016	CCY Growth	YTD 2017	YTD 2016	CCY Growth	
Income Statement	 	 	 	 	 	 	
Revenue (1)	501.3	443.7	+9.0%	1,443.0	1,315.5	+4.8%	
Adjusted EBITDA (3)	 59.7	60.5	-3.6%	165.8	163.3	-3.4%	
Adjusted EBITDA Margin (3)	11.9%	13.6%	-1.7pp	11.5%	12.4%	-0.9pp	
Recurring Net Income (2)	17.6	14.5	+19.7%	39.1	33.1	+13.7%	
Recurring Earnings Per Share (2)	$0.24	$0.20	+20.0%	$0.53	$0.45	+12.8%	
Reported EBITDA (2)	54.4	49.4	+7.7%	150.8	132.7	+8.3%	
Reported Net Income/(Loss) (2)	(12.0)	(0.5)	n.m.	(6.9)	(13.4)	n.m.	
Reported Earnings Per Share (2)	($0.16)	($0.05)	n.m.	($0.09)	($0.22)	n.m.	
Cashflow, Debt and Leverage	 	 	 	 	 	 	
FCF before Interest and Acquisitions (3)	47.6	46.7	 	53.3	52.9	 	
Net Debt	342.9	436.0	 	 	 	 	
Leverage (x)	1.5x	1.9x	 	1.5x	1.9x	 	

 
(1)       Revenue excludes Morocco which was divested in September 2016. Please refer to the MD&A section of the Q3 2017 6K for more details.
(2)       Reported Net Income and Earnings Per Share and Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Earnings Per Share refer only to continuing operations. Reported and Adjusted Earnings Per Share, for the period ended September 30, 2017, were calculated considering the weighted average number of ordinary shares of 73,909,056. For the period ended September 30, 2016, the number of ordinary shares was 73,786,225. Recurring Earnings and EPS attributable to Owners of the parent
(3)       EBITDA is defined as profit/(loss) for the period from continuing operations before net finance costs, 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.
(4)      We define Free Cash flow before interest and acquisitions as operating cashflow minus Capex payments and income tax expenses.

	1	

	PRESS RELEASE	
 
Alejandro Reynal, Atento´s Chief Executive Officer, commented, “We delivered solid third quarter results, driven by strong growth in revenues and significant improvement in revenue mix from higher value-added solutions. Our confidence in the outlook of our business and the strength of our cash flow and balance sheet led Atento´s Board to adopt a new dividend policy and declare the Company’s first dividend payment, a new and important milestone in our trajectory as a listed company.”
 
Mauricio Montilha, Atento´s Chief Financial Officer, said, "Our proactive cost and efficiency initiatives allowed us to deliver stable margins along with strong top line results. Our focus on disciplined capital allocation, improving returns and strict working capital management drove an 80% adjusted EBITDA to cash conversion in the quarter. Our strong cash flow profile and low leverage of 1.5x reflect our enhanced financial flexibility.”
 
Mr. Reynal concluded, “Our ongoing focus on driving the optimal balance of growth, profitability and liquidity provides us with the confidence to reaffirm our full-year outlook for revenue growth between 5% and 8% and adjusted EBITDA margin between 11% and 12%. I am confident in our ability to deliver above-market growth, further increase our leadership position in Latin America, and continue to be the reference partner for the CRM BPO needs of our clients.”

Third Quarter Consolidated Operating Results
 
All comparisons in this announcement, unless otherwise noted, are year-over-year and in constant-currency (CCY). 
 
We continue to present positive revenue trend, with consolidated revenue in constant currency up 9.0%, driven by the relevant growth in Brazil and Americas. Revenues from multisector grew a strong 15.3%, supported by new service/client wins in all regions and by the recent acquisitions. As a percentage of revenues, multisector increased 420 basis points year-over-year to a record 62.0% in Q3 2017. Revenues from Telefonica showed stability in the quarter as lower volumes in Mexico, Spain and Brazil were offset by higher volumes in Argentina, Chile and Colombia. The revenue mix from higher value-added solutions increased 230 basis points to a historical high of 27.0% in the quarter. On a reported basis, total revenue increased 11.1%.
 
Recurring net income and EPS attributable to owners of the parent in the quarter totaled $17.6 million and $0.24, respectively, with EPS up 20.0% helped by the decline in interest expense due to the debt refinancing. In Q3 2017, Adjusted EBITDA reached $59.7 million, implying an 11.9% margin. Year-to-date, Adjusted EBITDA totaled $165.8 million with margins at 11.5%, in line with the FY 2017 guidance. Adjusted EBITDA margin in the quarter was impacted by the ramp up of new clients.
 
Operating cash flow totaled $65.5 million in the quarter, and free cash flow before interest and acquisitions totaled $47.6 million, with Adjusted EBITDA to cash conversion of 79.7% in the quarter.
 
At the end of the third quarter, the Company had a cash position of $163.0 million with a net debt of $342.9 million. Net Debt to adjusted EBITDA presented reduction to 1.5x from 1.9x in Q3 2016 and 1.8x in Q2 2017.
 
Adjusted earnings, adjusted EBITDA and adjusted earnings per share are non-GAAP financial measures and are reconciled to their most directly comparable GAAP measures in the accompanying financial tables.

 

 
	2	

	PRESS RELEASE	
 
Segment Reporting
 
($ in millions)	Q3 2017	Q3 2016	CCY growth	YTD 2017	YTD 2016	CCY growth	
Brazil Region	 	 	 	 	 	 	
Revenue	248.5	217.2	+11.4%	720.3	601.9	+7.5%	
Operating Income	11.4	15.1	-26.5%	43.5	32.5	+25.0%	
Adjusted EBITDA	32.1	33.1	-6.0%	95.1	85.1	+1.8%	
Margin	12.9%	15.2%	 	13.2%	14.1%	 	
Americas Region	 	 	 	 	 	 	
Revenue	198.4	179.8	+10.4%	557.5	546.1	+3.3%	
Operating Income	7.8	12.5	-38.1%	25.0	41.4	-39.2%	
Adjusted EBITDA	23.7	24.2	-2.8%	62.9	71.9	-12.6%	
Margin	11.9%	13.5%	 	11.3%	13.2%	 	
EMEA Region	 	 	 	 	 	 	
Revenue	55.1	47.1	-4.2%	166.9	168.7	-0.5%	
Operating Income/(Loss)	(2.4)	(1.5)	+50.0%	0.7	(7.1)	-109.9%	
Adjusted EBITDA	3.5	4.7	-29.3%	11.6	11.0	+4.8%	
Margin	6.4%	10.0%	 	7.0%	6.5%	 	

Brazil Region
 
Revenues in Brazil continued to present significant growth, up 11.4% in Q3 2017, primarily driven by an increase of 18.3% in revenues from multisector supported by new contract wins in new services, as well as the run rate from the acquisitions. Revenues from Telefonica decreased 1.8% in the quarter, driven by volume reductions. As a percentage of revenues, multisector increased 410 basis points to a record of 69.9% in Q3 2017, while revenue mix from higher value-added solutions reached 37.5%, up 80 basis points year-over-year. On a reported basis, revenues increased 14.4% in Q3 2017.
 
Operating Income was $11.4 million, while Adjusted EBITDA totaled $32.1 million, with margins at 12.9%, down 230 basis points. Decrease in margins was mainly reflected by new clients’ implementation costs and higher labor contingencies.
 
Americas Region
 
Revenues in Americas returned to present growth in the quarter, up 10.4% primarily driven by positive results in Argentina, Chile and Colombia. Revenues from multisector grew by 14.0%, while revenues from Telefonica increased 5.6% in Q3 2017.
 
The region also presented improvement in the mix of revenues in the quarter. As a percentage of revenues, multisector reached 58.8% in Q3 2017, up 220 basis points, while mix of revenue from higher value-added solutions continued the growth trend, up 570 basis points to historical high of 18.0%. On a reported basis, revenues increased 10.3% in Q3 2017.
 
Operating income was $7.8 million, and Adjusted EBITDA was $23.8 million, implying adjusted EBITDA margin of 11.9%. Decrease in margins was driven by ramp up costs from new contracts in Colombia, Chile and U.S Nearshore, as well as due to volume adjustments from some clients in Mexico.

	3	

	PRESS RELEASE	
 
EMEA Region
 
Revenue in EMEA decreased 4.2% in Q3 2017, driven by 1.3% growth in multisector reflecting new client wins, which was offset by a 7.3% decrease in revenues from Telefonica, on the back of lower volumes in Spain. The mix of revenue from higher value-added solutions remained stable at 11.0%.  
 
Operating loss was $2.4 million in Q3 2017, and Adjusted EBITDA totaled $3.5 million, with margin of 6.4%. The decrease in margin was mainly driven by the lower volumes from Telefonica.
 
Strong Balance Sheet and Debt Refinancing Enhances Financial Flexibility
 
As of September 30, 2017, the Company had Cash and Cash equivalents of $163.0 million and undrawn revolving credit facilities of $105 million, implying total liquidity of $268.0 million. Total net debt with third parties was $342.9 million and last twelve month (LTM) adjusted EBITDA to net debt with third parties was 1.5x compared to 1.9x at September 30, 2016 and 1.8x at June 30, 2017.
 
As announced on September 18, 2017, the Company concluded the refinancing of its debt structure in the quarter. The process included the previously announced issuance of new $400 million Senior Secured Notes (“SSN”), the redemption in full of the Company’s outstanding Senior Secured Notes due 2020 ($300 million), the redemption in full of the Brazilian Debenture due 2019 ($129 million), as well as the arrangement of new $105 million in Revolving Credit Facilities. As part of its refinancing process, the Company incurred a one-time net gain in cash of approximately $24.4 million, stemming from a $46.0 million gain from unwind hedging instruments related to the old bond, partially offset by $21.6 million expenses related to the refinancing.  
 
Reflecting the debt refinance, we expect to reduce interest expense by $10-15mm p.a. as of 2018, with the full impact kicking in by Q4 2017.

  

 

	4	

	PRESS RELEASE	
 
Reaffirmed Fiscal 2017 Guidance
 
We continue on track with our strategy to allow us to deliver a return to both top and bottom line growth in Fiscal 2017, generate free cash flow, continue to outperform the market, further increase our leadership position in Latin America, and remain the reference partner for the CRM BPO needs of our clients. Year-to-date, revenues are in line with the provided guidance.
 
We reaffirm our outlook for Fiscal 2017:
 
Guidance	
Consolidated Revenue Growth (CCY)	5% to 8%	
Adjusted EBITDA Margin Range (CCY)	11% to 12%	
Net Interest Expense Range	$55MM to $60MM	
Cash Capex (% of Revenue)	~3-4%	
Effective Tax Rate	~39%	
Diluted Share Count	~73.9MM shares	
Cash Conversion as % of Adj. EBITDA	~40%	
 
This guidance assumes no change in the current operating environment, capital structure or exchange rates movements on the translation of our financial statements into U.S. dollars except where noted. 
 
Dividends
 
In October 31, 2017, the board of Directors approved the payment of interim cash dividends, in the total amount of $25 million, which represents a $0.34 per common share of the company and a Dividend Yield of 2.8% (closing price as of October 30, 2017). The record date was set at November 10, 2017, and payment date is expected to be November 28, 2017.

 

	5	

	PRESS RELEASE	
 
Conference Call
 
The Company will host a conference call and webcast on Wednesday, November 1, 2017 at 10:00 am ET to discuss its financial results. The conference call can be accessed by dialing: +1 (877) 407-3982 toll free domestic, UK: (+44) 0 800 756 3429 toll free, Brazil: (+55) 0 800 891 6221 toll free, or Spain: (+34) 900 834 236 toll free. All other international callers can access the conference call by dialing: +1 (201) 493-6780 toll free. No passcode is required. Individuals who dial in will be asked to identify themselves and their affiliations. The live webcast of the conference call will be available on Atento’s Investor Relations website at investors.atento.com. A web-based archive of the conference call will also be available at the above website.
 
About Atento 
 
Atento is the largest provider of customer relationship management and business process outsourcing (CRM BPO) solutions in Latin America, and among the top five providers globally, based on revenues. Atento is also a leading provider of nearshoring CRM/BPO services to companies that carry out their activities in the United States. Since 1999, the company has developed its business model in 13 countries where it employs 150,000 people. Atento has over 400 clients to whom it offers a wide range of CRM/BPO services through multiple channels. Atento's clients are mostly leading multinational corporations in sectors such as telecommunications, banking and financial services, health, retail and public administrations, among others. Atento´s shares trade under the symbol ATTO on the New York Stock Exchange (NYSE). In 2016, Atento was named one of the World´s 25 Best Multinational Workplaces by Great Place to Work® for a fourth consecutive year. For more information visit www.atento.com
 
Investor Relations 
Shay Chor
+ 55 11 3293-5926
 shay.chor@atento.com
 
Felipe Joaquim Martins de Souza
+ 55 11 3779-8053
 felipe.souza@atento.com
 
Media Relations 
Maite Cordero
+ 34 91 740 74 47
 media@atento.com

	6	

	PRESS RELEASE	
 
Forward-Looking Statements
 
This press release contains forward-looking statements. Forward-looking statements can be identified by the use of words such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "continue" or similar terminology. These statements reflect only Atento's current expectations and are not guarantees of future performance or results. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties include, but are not limited to, competition in Atento’s highly competitive industries; increases in the cost of voice and data services or significant interruptions in these services; Atento’s ability to keep pace with its clients’ needs for rapid technological change and systems availability; the continued deployment and adoption of emerging technologies; the loss, financial difficulties or bankruptcy of any key clients; the effects of global economic trends on the businesses of Atento’s clients; the non-exclusive nature of Atento’s client contracts and the absence of revenue commitments; security and privacy breaches of the systems Atento uses to protect personal data; the cost of pending and future litigation; the cost of defending Atento against intellectual property infringement claims; extensive regulation affecting many of Atento’s businesses; Atento’s ability to protect its proprietary information or technology; service interruptions to Atento’s data and operation centers; Atento’s ability to retain key personnel and attract a sufficient number of qualified employees; increases in labor costs and turnover rates; the political, economic and other conditions in the countries where Atento operates; changes in foreign exchange rates; Atento’s ability to complete future acquisitions and integrate or achieve the objectives of its recent and future acquisitions; future impairments of our substantial goodwill, intangible assets, or other long-lived assets; and Atento’s ability to recover consumer receivables on behalf of its clients. In addition, Atento is subject to risks related to its level of indebtedness. Such risks include Atento’s ability to generate sufficient cash to service its indebtedness and fund its other liquidity needs; Atento’s ability to comply with covenants contained in its debt instruments; the ability to obtain additional financing; the incurrence of significant additional indebtedness by Atento and its subsidiaries; and the ability of Atento’s lenders to fulfill their lending commitments. Atento is also subject to other risk factors described in documents filed by the company with the United States Securities and Exchange Commission. 
 
These forward-looking statements speak only as of the date on which the statements were made. Atento undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
 
SELECTED FINANCIAL DATA
 
The following selected financial information should be read in conjunction with the interim consolidated financial statements and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” presented elsewhere in the Form 6-K.

 

	7	

	PRESS RELEASE	
 
Consolidated Income Statements for the Three and Nine Months Ended September 30, 2016 and 2017	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
($ in millions, except percentage changes)	For the three months ended
September 30,	 	Change (%)	 	Change excluding
FX (%)	 	For the nine months ended
September 30,	 	Change (%)	 	Change excluding
FX (%)	
	2016	 	2017	 		 		 	2016	 	2017	 		 		
 	(unaudited)	 	 	 	 	 	(unaudited)	 	 	 	 	
Revenue	443.7	 	501.3	 	13.0	 	10.9	 	1,315.5	 	1,443.0	 	9.7	 	4.8	
Other operating income	1.9	 	4.8	 	N.M.	 	N.M.	 	3.4	 	13.9	 	N.M.	 	N.M.	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Supplies	(16.8)	 	(20.8)	 	23.8	 	20.9	 	(47.0)	 	(55.1)	 	17.2	 	12.7	
Employee benefit expenses	(323.6)	 	(369.1)	 	14.1	 	12.1	 	(980.4)	 	(1,070.0)	 	9.1	 	4.5	
Depreciation	(11.6)	 	(14.4)	 	24.1	 	21.0	 	(34.4)	 	(37.3)	 	8.4	 	1.9	
Amortization	(13.4)	 	(15.2)	 	13.4	 	10.1	 	(37.5)	 	(41.1)	 	9.6	 	3.8	
Changes in trade provisions	(0.1)	 	-	 	(100.0)	 	(100.0)	 	(0.4)	 	-	 	(100.0)	 	(100.0)	
Other operating expenses	(55.7)	 	(61.8)	 	11.0	 	8.6	 	(158.4)	 	(181.0)	 	14.3	 	8.0	
Total operating expenses	(421.2)	 	(481.3)	 	14.3	 	12.2	 	(1,258.1)	 	(1,384.5)	 	10.0	 	5.1	
Operating profit	24.4	 	24.8	 	1.6	 	-	 	60.8	 	72.4	 	19.1	 	14.9	
Finance income	2.3	 	2.4	 	4.3	 	4.3	 	4.4	 	6.0	 	36.4	 	22.4	
Finance costs	(22.0)	 	(34.5)	 	56.8	 	52.7	 	(59.8)	 	(68.0)	 	13.7	 	7.6	
Change in fair value of financial instruments	(0.1)	 	(2.4)	 	N.M.	 	N.M.	 	0.6	 	(2.6)	 	N.M.	 	N.M.	
Net foreign exchange gain/(loss)	(2.5)	 	(3.2)	 	28.0	 	33.3	 	(15.3)	 	(4.2)	 	(72.5)	 	(72.5)	
Net finance expense	(22.3)	 	(37.7)	 	69.1	 	65.4	 	(70.1)	 	(68.8)	 	(1.9)	 	(5.8)	
(Loss)/profit before tax	2.1	 	(12.9)	 	N.M.	 	N.M.	 	(9.3)	 	3.6	 	(138.7)	 	(136.0)	
Income tax benefit/(expense)	(2.6)	 	2.8	 	N.M.	 	N.M.	 	(4.1)	 	(8.3)	 	102.4	 	97.6	
Loss from continuing operations	(0.5)	 	(10.1)	 	N.M.	 	N.M.	 	(13.4)	 	(4.7)	 	(64.9)	 	(66.9)	
Discontinued operations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from discontinued operations	(3.2)	 	-	 	(100.0)	 	(100.0)	 	(3.2)	 	-	 	(100.0)	 	(100.0)	
Loss for the period	(3.7)	 	(10.1)	 	N.M.	 	N.M.	 	(16.6)	 	(4.7)	 	(71.7)	 	(73.3)	
(Loss)/profit attributable to:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Owners of the parent	(3.8)	 	(12.0)	 	N.M.	 	N.M.	 	(16.7)	 	(6.9)	 	(58.7)	 	(60.8)	
Non-controlling interest	0.1	 	1.9	 	N.M.	 	N.M.	 	0.1	 	2.2	 	N.M.	 	N.M.	
Other financial data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (1) (unaudited)	49.4	 	54.4	 	10.1	 	7.7	 	132.7	 	150.8	 	13.6	 	8.3	
Adjusted EBITDA (1) (unaudited)	60.5	 	59.7	 	(1.3)	 	(3.6)	 	163.3	 	165.8	 	1.5	 	(3.4)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(1)  For reconciliation with IFRS as issued by IASB, see section "Summary Historical Consolidated Financial Information - Reconciliation of EBITDA and Adjusted EBITDA to profit/(loss)".	
N.M. means not meaningful	

 
 
	8	

	PRESS RELEASE	
 
Reconciliation of EBITDA and Adjusted EBITDA to profit/(loss):	
 	 	 	 	 	 	 	 	 	
 	 	For the three months ended September 30,	 	For the nine months ended September 30,	
($ in millions)	 	2016	 	2017	 	2016	 	2017	
 	 	(unaudited)	
 	 	 	 	 	 	 	 	 	
Loss from continuing operations	 	(0.5)	 	(10.1)	 	(13.4)	 	(4.7)	
Net finance expense	 	22.3	 	37.7	 	70.1	 	68.8	
Income tax expense	 	2.6	 	(2.8)	 	4.1	 	8.3	
Depreciation and amortization	 	25.0	 	29.6	 	71.9	 	78.4	
EBITDA (non-GAAP) (unaudited)	 	49.4	 	54.4	 	132.7	 	150.8	
Restructuring costs (a)	 	6.2	 	1.3	 	19.1	 	10.2	
Site relocation costs (b)	 	0.7	 	-	 	6.5	 	-	
Other (c)	 	4.2	 	4.0	 	5.0	 	4.8	
Total non-recurring items (*)	 	11.1	 	5.3	 	30.6	 	15.0	
Adjusted EBITDA (non-GAAP) (unaudited)	 	60.5	 	59.7	 	163.3	 	165.8	
 
(*)        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)         Restructuring costs for the three and nine months ended September 30, 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 and Brazil, which drove significant declines in volume.
b)         Site relocation costs incurred for three and nine months ended September 30, 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. We have not invested in this program for the three and nine months ended September 30, 2017 as it was substantially completed in 2016.
c)         Other non-recurring items for three and nine months ended September 30, 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.

	9	

	PRESS RELEASE	
 
Reconciliation of Adjusted Earnings to profit/(loss):	
 	 	 	 	 	 	 	 	
 	For the three months ended September 30,	 	For the nine months ended September 30,	
($ in millions)	2016	 	2017	 	2016	 	2017	
 	(unaudited)	
Loss from continuing operations	(0.5)	 	(10.1)	 	(13.4)	 	(4.7)	
Amortization of acquisition related intangible assets (a)	6.5	 	5.7	 	17.9	 	16.8	
Restructuring costs (b) (*)	6.2	 	1.3	 	19.1	 	10.2	
Site relocation costs (c) (*)	0.7	 	-	 	6.5	 	-	
Other (d) (*)	4.2	 	4.0	 	5.0	 	4.8	
Net foreign exchange gain on financial instruments (e)	0.1	 	2.4	 	(0.6)	 	2.6	
Net foreign exchange impacts (f)	2.5	 	3.2	 	15.3	 	4.2	
Financial non-recurring (g)	-	 	17.7	 	-	 	17.7	
Depreciation non-recurring (h)	-	 	2.8	 	-	 	2.8	
Tax effect (i)	(5.1)	 	(7.4)	 	(16.6)	 	(13.0)	
Total of add-backs	15.1	 	29.7	 	46.6	 	46.1	
Adjusted Earnings (non-GAAP) (unaudited)	14.6	 	19.6	 	33.2	 	41.4	
Adjusted basic Earnings per share (in U.S. dollars) (**) (unaudited)	0.20	 	0.27	 	0.45	 	0.56	
Adjusted Earnings attributable to Owners of the parent (non-GAAP) (unaudited)	14.5	 	17.6	 	33.1	 	39.1	
Adjusted basic Earnings per share attributable to Owners of the parent (in U.S. dollars) (**) (unaudited)	0.20	 	0.24	 	0.45	 	0.53	
 
(*) 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)         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.
b)         Restructuring costs for the three and nine months ended September 30, 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 and Brazil, which drove significant declines in volume .
c)         Site relocation costs incurred for three and nine months ended September 30, 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. We have not invested in this program for the three and nine months ended September 30, 2017 as it was substantially completed in 2016.
d)         Other non-recurring items for three and nine months ended September 30, 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.

	10	

	PRESS RELEASE	
 
e)         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 income statements. For comparability, these adjustments are added back to calculate Adjusted Earnings.
f)          Since 2015, our management analyzes the Company financial condition performance excluding net foreign exchange impacts, which eliminates the volatility of foreign exchange variances from our operational results.
g)         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 (See Note 13 to the interim consolidated financial statements) .
h)         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”).
i)          The tax effect represents the impact of the taxable adjustments based on tax nominal rate by country .
(**) Adjusted Earnings per share is calculated based on the weighted average number of ordinary shares outstanding of 73,909,056 as of September 30, 2017. For the period ended September 30, 2016 the weighted average number of ordinary shares outstanding was 73,786,225.
Financing Arrangements

 	As of September 30,	
($ in millions, except Net Debt/Adj. EBITDA LTM)	2016	 	2017	
 	(unaudited)	
Cash and cash equivalents	177.9	 	162.8	
Debt:	 	 	 	
     Senior Secured Notes	297.4	 	393.8	
     Brazilian Debentures	211.8	 	22.5	
     Contingent Value Instrument (a)	24.0	 	-	
     Finance Lease Payables	3.8	 	9.8	
     Other Borrowings	76.9	 	79.6	
Total Debt	613.9	 	505.7	
Net Debt with third parties (b) (unaudited)	436.0	 	342.9	
   Adjusted EBITDA LTM (c) (non-GAAP) (unaudited)	227.5	 	224.4	
Net Debt/Adjusted EBITDA LTM (non-GAAP) (unaudited)	1.9x	 	1.5x	
 
a)           The CVI was terminated on November 8, 2016.
b)           In considering our financial condition, our management analyzes Net debt with third parties, which is defined as total debt less cash and cash equivalents. Net debt with third parties is not a measure defined by IFRS and it 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 is not necessarily comparable to similarly titled measures used by other companies.
c)           Adjusted EBITDA LTM (Last Twelve Months) is defined as EBITDA adjusted to exclude restructuring costs, site relocation costs, asset impairments and other items not related to our core results of operations.

	11	

	PRESS RELEASE	
 
Free Cash Flow:

 	Q3	YTD	
Free Cash Flow (FCF) US$ MM 	2017	2016	2017	2016	
Operating Cash Flow (1)	65.5	68.9	105.5	125.1	
Cash Capex (2)	(13.1)	(16.1)	(37.3)	(55.8)	
Income Tax Paid	(4.8)	(6.1)	(14.9)	(16.4)	
Free Cash Flow before Interest and Acquisitions	47.6	46.7	53.3	52.9	
Adj. EBITDA to Cash Conversion (%)	79.7%	77.2%	32.1%	32.4%	
Acquisitions	-	(8.6)	(27.1)	(8.6)	
Net Interest Paid (3)	9.1	(14.0)	(19.4)	(50.1)	
Free Cash Flow (FCF)	56.7	24.1	6.8	(5.8)	

 
(1)       We define Operating Cash flow as Net Cash flow from/(used in) operating activities (as per 6K) adding back net interest and income tax expenses.
(2)       Does not consider acquisitions
(3)       Net interest paid includes $46.0 million gain from unwind hedging instruments related to the old bond, partially offset by $21.6 million expenses related to the refinancing.

	12