UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Includes SQM’s earnings release for the six months ended June 30, 2008.
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
(Exact name of registrant as specified in its charter)
CHEMICAL AND MINING COMPANY OF CHILE INC.
(Translation of registrant's name into English)
El Trovador 4285, Santiago, Chile (562) 425-2000
(Address and phone number of principal executive offices)
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 whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o | No x |
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82_________
This document contains a free translation of information that was filed by Sociedad Química y Minera de Chile S.A. (SQM) before the Chilean Superintendency of Securities of Insurance (SVS) on September 30, 2008, in relation to the adoption of International Financial Reporting Standards (IFRS) by Chilean companies.
Beginning on January 1, 2009, certain Chilean companies must adopt IFRS for their presentation of financial information. SQM will present its first quarter 2009 financial statements under IFRS, including comparative figures for the same period of 2008. During the transition period, companies will have an extended deadline to report their financial results.
As a part of this process, the SVS has required certain companies to present a preliminary estimate of the effects of IFRS adoption on their financial statements. In addition, these companies must provide information about their functional currency and the primary accounting policies they will apply under IFRS. A free translation of the effects of IFRS adoption on SQM’s financial statements is provided below.Santiago, September 30, 2008
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Santiago, September 30, 2008
Mr. Superintendent of Securities and Insurance
Dear Mr. Superintendent:
In accordance with Circular Letters No. 457, dated June 20, 3008, and No. 471, dated September 15, 2008, please find enclosed information from Sociedad Química y Minera de Chile S.A. and its subsidiaries regarding the functional currency, primary accounting policies to apply under IFRS, and the preliminary estimate of the effects that the adoption of IFRS will have on the Company’s financial statements.
The Company is currently in the process of analyzing the effects of IFRS adoption, in order to comply with the requirements of the Chilean Superintendency of Securities and Insurance beginning on January 1, 2009. This process includes the development and modification of computer systems, account plans, technical training, evaluation of fair value, and calculation of actuarial values, among others.
Please note that to date, the effects that the application of fair value may have on certain portions of property, plant and equipment and the effects of the application of the actuarial value of staff severance indemnities in accordance with IFRS 1 are currently being evaluated. Therefore, we reiterate that the information reported to date is preliminary and is currently being analyzed by our external auditors.
We remain at your disposal to clarify any additional matters that you may deem relevant in relation to the above.
Very truly yours,
Patricio Contesse G.
Chief Executive Officer
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Preliminary Unaudited Balance Sheet Reconciliation for SQM S.A. and Subsidiaries as of January 1, 2008
ASSETS | Balances under Chilean GAAP ThUS$ | Balances under Chilean GAAP Expressed in Functional Currency ThUS$ | Effect of Conversion to IFRS ThUS$ | Balances under IFRS January 1, 2008 ThUS$ |
TOTAL CURRENT ASSETS | 903,954 | 903,954 | 903,954 | |
| Cash and cash equivalents | 164,212 | 164,212 | 164,212 | |
| Trade accounts receivable | 164,470 | 164,470 | 164,470 | |
| Notes receivable (net) | 59,974 | 59,974 | 59,974 | |
| Miscellaneous receivables | 6,249 | 6,249 | 6,249 | |
| Notes and accounts receivable from related companies | 61,042 | 61,042 | 61,042 | |
| Inventories (net) | 387,768 | 387,768 | 387,768 | |
| Recoverable taxes | 31,322 | 31,322 | 31,322 | |
| Prepaid expenses | 4,197 | 4,197 | 4,197 | |
| Other current assets | 24,720 | 24,720 | 24,720 | |
TOTAL PROPERTY, PLANT AND EQUIPMENT | 983,449 | 983,449 | 983,449 | |
| Land | 112,813 | 112,813 | (*) | 112,813 |
| Buildings and infrastructure | 841,827 | 841,827 | (*) | 841,827 |
| Machinery and equipment | 731,153 | 731,153 | (*) | 731,153 |
| Other property, plant and equipment | 50,029 | 50,029 | (*) | 50,029 |
| Negative goodwill from technical appraisal of property, plant and equipment | 61,379 | 61,379 | (*) | 61,379 |
| Depreciation (less) | (813,752) | (813,752) | (813,752) | |
TOTAL OTHER ASSETS | 98,916 | 98,916 | 5,995 | 104,911 |
| Investments in related companies | 23,935 | 23,935 | 23,935 | |
| Goodwill from investments | 34,236 | 34,236 | 4,704 | 38,940 |
| Negative goodwill from investments (less) | (1,291) | (1,291) | 1,291 | - |
| Long-term receivables | 604 | 604 | 604 | |
| Long-term notes and accounts receivable from related companies | 2,000 | 2,000 | 2,000 | |
| Intangible assets (net of amortization) | 3,814 | 3,814 | 3,814 | |
| Other assets | 35,618 | 35,618 | 35,618 | |
TOTAL ASSETS | 1,986,319 | 1,986,319 | 5,995 | 1,992,314 |
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APPENDIX, continued
LIABILITIES AND SHAREHOLDERS’ EQUITY | Balances under Chilean GAAP ThUS$ | Balances under Chilean GAAP Expressed in Functional Currency ThUS$ | Effect of Conversion to IFRS ThUS$ | Balances under IFRS January 1, 2008 ThUS$ |
TOTAL CURRENT LIABILITIES | 192,422 | 192,422 | 54,006 | 246,428 |
| Obligations with banks and financial institutions | 2,607 | 2,607 | 2,607 | |
| Obligations with the public | 8,868 | 8,868 | 8,868 | |
| Dividends payable | 531 | 531 | 54,006 | 54,537 |
| Accounts payable | 99,030 | 99,030 | 99,030 | |
| Miscellaneous payables | 1,820 | 1,820 | 1,820 | |
| Notes and accounts payable to related companies | 6,880 | 6,880 | 6,880 | |
| Provisions and withholdings | 45,245 | 45,245 | 45,245 | |
| Income taxes | 9,514 | 9,514 | 9,514 | |
| Prepaid income | 10,858 | 10,858 | 10,858 | |
| Deferred taxes | 6,214 | 6,214 | 6,214 | |
| Other current liabilities | 855 | 855 | 855 | |
TOTAL LONG-TERM LIABILITIES | 565,462 | 565,462 | 15,633 | 581,095 |
| Long-term obligations with banks and financial institutions | 180,000 | 180,000 | 180,000 | |
| Long-term obligations with the public | 306,651 | 306,651 | 306,651 | |
| Long-term miscellaneous receivables | 731 | 731 | 731 | |
| Long-term provisions | 22,671 | 22,671 | (*) | 22,671 |
| Long-term deferred taxes | 55,409 | 55,409 | 15,633 | 71,042 |
MINORITY INTEREST | 45,999 | 45,999 | - | 45,999 |
TOTAL SHAREHOLDERS’ EQUITY | 1,182,436 | 1,182,436 | (63,644) | 1,118,792 |
| Paid-in capital | 477,386 | 477,386 | 477,386 | |
| Capital revaluation reserve | - | - | - | |
| Premium on sale of Company stock | - | - | - | |
| Other reserves | 163,442 | 163,442 | - | 163,442 |
| Retained earnings (sum of items 5.24.51.00 to 5.24.56.00) | 541,608 | 541,608 | (63,644) | 477,964 |
| Future dividend reserve | - | - | - | |
| Retained earnings | 541,608 | 541,608 | (63,644) | 477,964 |
| Accumulated losses (less) | ||||
| Net income (loss) | ||||
| Interim dividends (less) | - | - | - | |
| Accumulated deficit from development period | - | - | - | |
TOTAL LIABILITIES | 1,986,319 | 1,986,319 | 5,995 | 1,992,314 |
(*) To date, the effects that the application of fair value may have on certain portions of property, plant and equipment and the effects of the application of the actuarial value of staff severance indemnities in accordance with IFRS 1 are currently being evaluated.
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Reconciliation between shareholders’ equity under Chilean GAAP and preliminary estimate of shareholders’ equity under IFRS.
| ThUS$ | ||||
| Shareholders’ equity as of January 1, 2008 | 1,182,436 | |||
| Reversal of amortization of goodwill from acquisitions after March 2004 (a) | 4,704 | |||
| Negative goodwill from investments (b) | 1,291 | |||
| Reversal of complementary accounts for deferred taxes (c) | (15,633 | ) | ||
| Recognition of obligation to distribute minimum 30% dividend (d) | (54,006 | ) | ||
| Fair value of property, plant and equipment (e) | (* | ) | ||
| Recognition of actuarial value of provision for staff severance indemnities (f) | (* | ) | ||
| Adjusted shareholders’ equity as of January 1, 2008 | 1,118,792 | |||
(*) To date, the effects that the application of fair value may have on certain portions of property, plant and equipment and the effects of the application of the actuarial value of staff severance indemnities in accordance with IFRS 1 are currently being evaluated.
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Summary explanation of IFRS conversión adjustments
(a) | Reversal of goodwill amortization |
In accordance with IFRS 1 for the first financial statements, goodwill from investments acquired on March 31, 2004 or thereafter under the business combination methodology is not amortized.
Accordingly, we have reversed the effects of amortization of the goodwill generated by the purchases of PCS Yumbes, Iodine Minera and SQM Dubai.
(b) | Reversal of negative goodwill |
In accordance with IFRS 3, any negative goodwill generated as a result of the acquisition of another company under the business combination methodology must be reversed. The negative goodwill was generated by the purchase of Minera Nueva Victoria.
(c) | Reversal of complementary accounts |
The reversal of complementary accounts corresponds to the balance of complementary accounts recognized in 2000, as a result of the recognition of deferred taxes in Chile. This treatment is not allowed under IFRS, which is why the balance of these complementary accounts is adjusted.
(d) | Minimum dividend |
As required by the Corporations Law, corporations in Chile must distribute a cash dividend equal to or greater than 30% of net income, unless shareholders have unanimously voted otherwise or the corporation has unabsorbed losses from previous years.
Given that the payment of the dividend of 30% of each year’s net income is a legal requirement in Chile, a provision to recognize the related decrease in net equity has been constituted.
(e) | Fair value of property, plant and equipment |
Sociedad Química y Minera de Chile S.A. is currently in the process of determining the fair values of certain groups of assets, in accordance with IFRS 1. Therefore, we cannot determine the preliminary impact of these adjustments.
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(f) | Actuarial value of provision for staff severance indemnities |
In accordance with IFRS, indemnities agreed with the employees of the Company must be recognized using an actuarial calculation, which considers: mortality rate assumptions, employee turnover rates, interest rates, retirement dates, effects of increases in employee salaries, and effects of variation in inflation rates.
The calculation model is being developed by an external actuary. As of the date of this report, we do not have the results necessary to quantify the impact.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Conf: /s/ Ricardo Ramos R.
Ricardo Ramos R.
Chief Financial Officer
Date: September 30, 2008
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