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 financial statements and their related notes for the three-month period ended March 31, 2009 filed by Sociedad Química y Minera de Chile S.A. before the Superintendencia de Valores y Seguros de Chile on April 28, 2009.
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_________
On April 28, 2009, the Registrant filed with the Superintendencia de Valores y Seguros of Chile (the "SVS") a report that included information as to the Registrant's consolidated financial condition and results of operations for the three-month period ended March 31, 2009. Attached is a summary of such consolidated financial information included in the summary and in the report filed with the Superintendencia de Valores y Seguros of Chile. This financial information was prepared on the basis of accounting principles generally accepted in Chile and does not include a reconciliation of such information to accounting principles generally accepted in the United States of America.
THIS REPORT IS AN ENGLISH TRANSLATION OF, AND A CHILEAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES PRESENTATION OF, THE THREE-MONTH PERIOD ENDED MARCH 31, 2009 REPORT FILED WITH THE SUPERINTENDENCIA DE VALORES Y SEGUROS (SVS) IN CHILE, AND UNLESS OTHERWISE INDICATED, FIGURES ARE IN US DOLLARS. |
Consolidated Financial Statements
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Santiago, Chile
March 31, 2009 and 2008
Consolidated Financial Statements
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
As of March 31, 2009 and 2008
and for the years ended March 31, 2009 and 2008
(A translation of the original in Spanish- see note 2 (a))
Contents
Consolidated Financial Statements | ||||
Consolidated Balance Sheets | 2 | |||
Consolidated Statements of Income | 4 | |||
Consolidated Statements of Cash Flows | 5 | |||
Notes to the Consolidated Financial Statements | 6 |
Ch$ | - | Chilean pesos |
ThCh $ | - | Thousands of Chilean pesos |
US$ | - | United States dollars |
ThUS$ | - | Thousands of United States dollars |
ThEuro | - | Thousands of Euros |
UF | - | The UF is an inflation-indexed, Chilean peso-denominated monetary unit. The UF rate is set daily in advance, based on the change in the Consumer Price Index of the previous month. |
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Consolidated Balance Sheets
(A translation of the original in Spanish- see note 2 (a))
As of March 31, | ||||||||||||
Note | 2009 | 2008 | ||||||||||
ThUS$ | ThUS$ | |||||||||||
ASSETS | ||||||||||||
Current assets | ||||||||||||
Cash | 27,313 | 25,752 | ||||||||||
Time deposits | 33 | 441,699 | 77,239 | |||||||||
Marketable securities | 4 | 100,149 | 63,395 | |||||||||
Accounts receivable, net | 5 | 370,915 | 300,746 | |||||||||
Other accounts receivable, net | 5 | 19,519 | 8,434 | |||||||||
Accounts receivable from related companies | 6 | 36,377 | 47,467 | |||||||||
Inventories, net | 7 | 579,102 | 442,154 | |||||||||
Recoverable taxes | 36,701 | 38,598 | ||||||||||
Prepaid expenses | 9,515 | 9,291 | ||||||||||
Deferred income taxes | 15 | 48,370 | - | |||||||||
Other current assets | 15,583 | 45,488 | ||||||||||
Total current assets | 1,685,243 | 1,058,564 | ||||||||||
Property, plant and equipment, net | 8 | 1,155,264 | 1,006,525 | |||||||||
Other Assets | ||||||||||||
Investments in related companies | 9 | 35,141 | 25,929 | |||||||||
Goodwill, net | 10 | 31,356 | 33,822 | |||||||||
Negative goodwill, net | 10 | (1,222 | ) | (1,291 | ) | |||||||
Long-term accounts receivable, net | 5 | 1,048 | 1,245 | |||||||||
Long-term accounts receivable from related companies | 6 | 2,000 | 2,000 | |||||||||
Intangible assets, net | 2,949 | 3,642 | ||||||||||
Other long-term assets | 11 | 37,004 | 34,569 | |||||||||
Total Other Assets | 108,276 | 99,916 | ||||||||||
Total assets | 2,948,783 | 2,165,005 |
2
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Consolidated Balance Sheets
(A translation of the original in Spanish- see note 2 (a))
As of March 31, | ||||||||||||
Note | 2009 | 2008 | ||||||||||
ThUS$ | ThUS$ | |||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
Current liabilities | ||||||||||||
Short-term bank debt | 12 | 162,501 | 627 | |||||||||
Current portion of long-term debt | 12 | 101,421 | 1,687 | |||||||||
Obligations with the public (promissory notes) | 13 | 25,127 | - | |||||||||
Current portion of bonds payable | 13 | 14,465 | 14,107 | |||||||||
Dividends payable | 604 | 534 | ||||||||||
Accounts payable | 120,590 | 120,112 | ||||||||||
Other accounts payable | 332 | 398 | ||||||||||
Notes and accounts payable to related companies | 6 | - | 238 | |||||||||
Accrued liabilities | 14 | 34,614 | 32,671 | |||||||||
Withholdings | 26,408 | 17,956 | ||||||||||
Income taxes | 106,439 | 18,381 | ||||||||||
Deferred income | 24,261 | 58,458 | ||||||||||
Deferred income taxes | 15 | - | 9,512 | |||||||||
Other current liabilities | 2,320 | 5,870 | ||||||||||
Total current liabilities | 619,082 | 280,551 | ||||||||||
Long-term liabilities | ||||||||||||
Long-term bank debt | 12 | 160,000 | 180,000 | |||||||||
Long-term Obligations with the Public (Bonds) | 13 | 471,461 | 322,295 | |||||||||
Other accounts payable | 361 | 764 | ||||||||||
Deferred income taxes | 15 | 60,683 | 50,881 | |||||||||
Long-term accrued liabilities | 16 | 41,142 | 31,473 | |||||||||
Total long-term liabilities | 733,647 | 585,413 | ||||||||||
Minority interest | 17 | 46,276 | 51,031 | |||||||||
Shareholders' equity | ||||||||||||
Paid-in capital | 18 | 477,386 | 477,386 | |||||||||
Other reserves | 18 | 160,118 | 164,232 | |||||||||
Retained earnings | 18 | 912,274 | 606,392 | |||||||||
Total shareholders' equity | 1,549,778 | 1,248,010 | ||||||||||
Total liabilities and shareholders' equity | 2,948,783 | 2,165,005 |
3
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Consolidated Statements of Income
(A translation of the original in Spanish- see note 2 (a))
For the three months ended | ||||||||||||
March 31, | ||||||||||||
Note | 2009 | 2008 | ||||||||||
ThUS$ | ThUS$ | |||||||||||
Operating results | ||||||||||||
Sales | 320,897 | 326,335 | ||||||||||
Cost of sales | (180,429 | ) | (222,092 | ) | ||||||||
Gross margin | 140,468 | 104,243 | ||||||||||
Selling and administrative expenses | (20,962 | ) | (18,021 | ) | ||||||||
Operating income | 119,506 | 86,222 | ||||||||||
Non-operating results | ||||||||||||
Non-operating income | 20 | 6,017 | 7,769 | |||||||||
Non-operating expenses | 20 | (19,199 | ) | (11,379 | ) | |||||||
Non-operating loss | (13,182 | ) | (3,610 | ) | ||||||||
Income before income taxes | 106,324 | 82,612 | ||||||||||
Income tax expense | 15 | (21,038 | ) | (13,270 | ) | |||||||
Income before minority interest | 85,286 | 69,342 | ||||||||||
Minority interest | 17 | 987 | (4,558 | ) | ||||||||
Net income before negative goodwill | 86,273 | 64,784 | ||||||||||
Net income | 86,273 | 64,784 |
4
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Consolidated Statements of Cash Flows
(A translation of the original in Spanish- see note 2 (a))
For the three months ended March 31 | ||||||||
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Cash flows from operating activities | ||||||||
Net income for the year | 86,273 | 64,784 | ||||||
Charges (credits) to income not representing cash flows | ||||||||
Depreciation expense | 8 | 34,899 | 25,221 | |||||
Amortization of intangible assets | 164 | 172 | ||||||
Write-offs and accruals | 10,425 | 6,823 | ||||||
Gain on equity investments in related companies | (632 | ) | (2,107 | ) | ||||
Loss on equity investments in related companies | 725 | 50 | ||||||
Amortization of goodwill | 10 | 544 | 558 | |||||
(Profit) loss on sales of assets | - | (754 | ) | |||||
Other credits to income not representing cash flows | (13,566 | ) | (2,485 | ) | ||||
Other charges to income not representing cash flows | 23,958 | 36,994 | ||||||
Foreign exchange difference, net | 5,714 | 2,222 | ||||||
Net changes in operating assets and liabilities (Increase) decrease: | ||||||||
Trade accounts receivable | (49,213 | ) | (1,959 | ) | ||||
Inventories | (44,314 | ) | (57,954 | ) | ||||
Other assets | (1,089 | ) | (5,144 | ) | ||||
Accounts payable | (3,309 | ) | (4,773 | ) | ||||
Interest payable | 7,175 | 5,502 | ||||||
Net income taxes payable | 16,917 | (6,643 | ) | |||||
Other accounts payable | - | (7,294 | ) | |||||
VAT and taxes payable | (5,591 | ) | (1,865 | ) | ||||
Minority interest | 17 | (987 | ) | 4,558 | ||||
Net cash provided from operating activities | 68,093 | 55,906 | ||||||
Cash flows from financing activities | ||||||||
Proceeds from short term bank financing | 124,500 | - | ||||||
Bonds payable | 199,065 | - | ||||||
Payment of dividends | (74 | ) | (19 | ) | ||||
Repayment of bank financing | (65,000 | ) | (1,179 | ) | ||||
Payment of expenses for the issuance and placement of bonds payable | (3,349 | ) | - | |||||
Net cash used in financing activities | 255,142 | (1,198 | ) | |||||
Cash flows from investing activities | ||||||||
Sales of property, plant and equipment | - | 1,159 | ||||||
Sales of permanent investments | - | - | ||||||
Other investing income | 24 | 20,121 | 220 | |||||
Additions to property, plant and equipment | (70,657 | ) | (49,309 | ) | ||||
Capitalized interest | (2,932 | ) | (1,856 | ) | ||||
Other disbursements | (1,253 | ) | (740 | ) | ||||
Net cash used in investing activities | (54,721 | ) | (50,526 | ) | ||||
Effect of inflation on cash and cash equivalents | (3,152 | ) | (751 | ) | ||||
Net change in cash and cash equivalents | 265,362 | 3,431 | ||||||
Beginning balance of cash and cash equivalents | 303,799 | 164,212 | ||||||
Ending balance of cash and cash equivalents | 569,161 | 167,643 | ||||||
5
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 1 – Company Background
Sociedad Química y Minera de Chile S.A. (the “Company”) was registered with the Chilean Superintendency of Securities and Insurance (“SVS”) on March 18, 1983.
The subsidiary registered in the Superintendency of Securities and Insurance registry of securities is as follows:
Soquimich Comercial S.A., Registration No. 0436 dated January 11, 1993.
Note 2 – Summary of Significant Accounting Policies
a) Basis for the preparation of the consolidated financial statements
The accompanying consolidated financial statements have been prepared in U.S. dollars in accordance with accounting principles generally accepted in Chile (“Chilean GAAP”) and the regulations of the SVS. Certain accounting practices applied by the Company that conform with Chilean GAAP may not conform with generally accepted accounting principles in the United States (“US GAAP”). For the convenience of the reader, the consolidated financial statements and their accompanying notes have been translated from Spanish into English. |
The consolidated financial statements include the accounts of Sociedad Química y Minera de Chile S.A. (the “Parent Company”) and subsidiaries (companies in which the Parent Company holds a controlling participation, generally equal to direct or indirect ownership of more than 50%). The Parent Company and its subsidiaries are referred to as the “Company”.
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.
In accordance with SVS Circular No. 1,697 and Technical Bulletins Nos. 64 and 72 of the Chilean Association of Accountants, the consolidated financial statements include the following subsidiaries:
6
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 – Summary of Significant Accounting Policies (continued)
Basis for the preparation of the consolidated financial statements (continued)
Direct or indirect ownership | ||||||||
2009 | 2008 | |||||||
% | % | |||||||
Foreign subsidiaries: | ||||||||
Nitrate Corp. of Chile Limited (United Kingdom) | 100.00 | 100.00 | ||||||
Soquimich SRL – Argentina | 100.00 | 100.00 | ||||||
Nitratos Naturais do Chile Ltda. (Brazil) | 100.00 | 100.00 | ||||||
SQM Europe NV (Belgium) | 100.00 | 100.00 | ||||||
SQM North America Corp. (USA) | 100.00 | 100.00 | ||||||
North American Trading Company (USA) | 100.00 | 100.00 | ||||||
SQM Peru S.A. | 100.00 | 100.00 | ||||||
SQM Corporation N.V. (Dutch Antilles) | 100.00 | 100.00 | ||||||
S.Q.I. Corporation N.V. (Dutch Antilles) | 100.00 | 100.00 | ||||||
Soquimich European Holding B.V. (Holland) | 100.00 | 100.00 | ||||||
SQMC Holding Corporation L.L.P. (USA) | 100.00 | 100.00 | ||||||
SQM Ecuador S.A. | 100.00 | 100.00 | ||||||
SQM Investment Corporation N.V. (Dutch Antilles) | 100.00 | 100.00 | ||||||
SQM Brasil Ltda. | 100.00 | 100.00 | ||||||
Royal Seed Trading Corporation A.V.V. (Aruba) | 100.00 | 100.00 | ||||||
SQM Japon Co. Ltd. | 100.00 | 100.00 | ||||||
SQM Oceanía PTY Limited (Australia) | 100.00 | 100.00 | ||||||
SQM France S.A. | 100.00 | 100.00 | ||||||
RS Agro-Chemical Trading A.V.V. (Aruba) | 100.00 | 100.00 | ||||||
SQM Comercial de México S.A. de C.V. | 100.00 | 100.00 | ||||||
SQM Indonesia | 80.00 | 80.00 | ||||||
SQM Virginia L.L.C. (USA) | 100.00 | 100.00 | ||||||
Agricolima S.A. de C.V. (Mexico) | 0.00 | 100.00 | ||||||
SQM Venezuela S.A. | 100.00 | 100.00 | ||||||
SQM Italia SRL (Italy) | 100.00 | 100.00 | ||||||
Comercial Caiman Internacional S.A. (Cayman Islands) | 100.00 | 100.00 | ||||||
SQM Africa PTY (South Africa) | 100.00 | 100.00 | ||||||
Administración y Servicios Santiago S.A. de C.V. (Mexico) | 100.00 | 100.00 | ||||||
SQM Lithium Specialties L.L.P. (USA) | 100.00 | 100.00 | ||||||
SQM Nitratos México S.A. de C.V. (México) | 51.00 | 51.00 | ||||||
Fertilizantes Naturales S.A. | 66.67 | 66.67 | ||||||
Iodine Minera B.V. | 100.00 | 100.00 | ||||||
SQM Dubai – FZCO. | 100.00 | 100.00 |
7
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 – Summary of Significant Accounting Policies (continued)
Basis for the preparation of the consolidated financial statements (continued)
Direct or indirect ownership | ||||||||
2009 | 2008 | |||||||
% | % | |||||||
Domestic subsidiaries: | ||||||||
Servicios Integrales de Tránsitos y Transferencias S.A. | 100.00 | 100.00 | ||||||
Soquimich Comercial S.A. | 60.64 | 60.64 | ||||||
Isapre Norte Grande Ltda. | 100.00 | 100.00 | ||||||
Almacenes y Depósitos Ltda. | 100.00 | 100.00 | ||||||
Ajay SQM Chile S.A. | 51.00 | 51.00 | ||||||
SQM Nitratos S.A. | 99.99 | 99.99 | ||||||
Proinsa Ltda. | 60.58 | 60.58 | ||||||
SQM Potasio S.A. | 99.99 | 99.99 | ||||||
SQMC International Limitada. | 60.64 | 60.64 | ||||||
SQM Salar S.A. | 100.00 | 100.00 | ||||||
SQM Industrial S.A. | 100.00 | 100.00 | ||||||
Minera Nueva Victoria S.A. | 100.00 | 100.00 | ||||||
Exploraciones Mineras S.A. | 100.00 | 100.00 | ||||||
Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A. | 100.00 | 100.00 | ||||||
Comercial Hydro S.A. | 60.64 | 60,64 |
All significant inter-company balances, transactions and unrealized gains and losses arising from transactions between these companies have been eliminated in consolidation.
8
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 - Summary of Significant Accounting Policies (continued)
b) | Period |
These consolidated financial statements have been prepared as of March 31, 2009 and 2008 and for the years then ended. |
c) | Reporting currency and monetary correction |
The financial statements of the Company are prepared in U.S. dollars. As a significant portion of the Company’s operations are transacted in U.S. dollars, the U.S. dollar is considered the currency of the primary economic environment in which the Company operates. |
The Parent Company and those subsidiaries which maintain their accounting records in U.S. dollars are not required, or permitted, to restate the historical dollar amounts for the effects of inflation. |
The financial statements of domestic subsidiaries, which maintain their accounting records in Chilean pesos have been restated to reflect the effects of variations in the purchasing power of Chilean pesos during the period. For this purpose, and in accordance with Chilean regulations, non-monetary assets and liabilities, equity and income statement accounts have been restated in terms of period-end constant pesos based on the change in the consumer price index during the period (negative 2.3% in 2009 and 0.8% in 2008). The resulting net charge or credit to income arises as a result of the gain or loss in purchasing power from the holding of non-U.S. dollar denominated monetary assets and liabilities exposed to the effects of inflation. |
Prior period financial statements presented for comparative purposes have not been restated to reflect the change in the purchasing power of the Chilean pesos during the most recent period. In accordance with Chilean GAAP, amounts expressed in U.S. dollars, including amounts included in the consolidated financial statements as determined in prior years from the translation of financial statements of those Chilean subsidiaries which maintain their accounting records in Chilean pesos, are not adjusted for price-level changes.
9
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 - Summary of Significant Accounting Policies (continued)
d) | Foreign currency |
i) | Foreign currency transactions |
Monetary assets and liabilities denominated in Chilean pesos and other currencies have been translated to U.S. dollars at the observed exchange rates determined by the Central Bank of Chile in effect at each year-end of Ch$ 583.26 per US$1 at March 31, 2009 and Ch$ 437.71 per US$1 at March 31, 2008. |
ii) | Translation of non-U.S. dollar financial statements |
In accordance with Chilean GAAP, the financial statements of foreign and domestic subsidiaries that do not maintain their accounting records in U.S. dollars are translated from the respective local currencies to U.S. dollars in accordance with Technical Bulletin No. 64 and No. 72 of the Chilean Association of Accountants (“BT 64-BT 72”) as follows: |
a) | For those subsidiaries and affiliates located in Chile which keep their accounting records in price-level adjusted Chilean pesos: |
- | Balance sheet accounts are translated to U.S. dollars at the year-end exchange rate without eliminating the effects of price-level restatement. |
- | Income statement accounts are translated to U.S. dollars at the average exchange rate each month. The monetary correction account on the income statement, which is generated by the inclusion of price-level restatement on the non-monetary assets and liabilities and shareholders’ equity, is translated to U.S. dollars at the average exchange rate for each month. |
- | Translation gains and losses, as well as the price-level restatement to the balance sheet mentioned above, are included as an adjustment in shareholders’ equity, in conformity with Circular No. 1,697 of the SVS. |
10
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 - Summary of Significant Accounting Policies (continued)
b) | The financial statements of those foreign subsidiaries that keep their accounting records in currencies other than the U.S. dollar have been translated at historical exchange rates as follows: |
- | Monetary assets and liabilities are translated at year-end exchange rates between the US dollar and the local currency. |
- | All non-monetary assets and liabilities and shareholders’ equity are translated at historical exchange rates between the US dollar and the local currency. |
- | Income and expense accounts are translated at average exchange rates between the US dollar and the local currency. |
- | Any exchange differences are included in the results of operations for the period. |
d) | Foreign currency (continued) |
Foreign exchange differences for the period ended March 31, 2009 and 2008 generated net earnings (loss) of ThUS$ (5,714) and ThUS$ (2,222) respectively, which have been charged to the consolidated statements of income in each respective period. |
The monetary assets and liabilities of foreign subsidiaries were translated into US dollars at the exchange rates per US dollar prevailing at March 31, as follows:
2009 | 2008 | |||||||
US$ | US$ | |||||||
Brazilian Real | 2.31 | 1.73 | ||||||
New Peruvian Sol | 3.16 | 3.19 | ||||||
Argentine Peso | 3.66 | 3.17 | ||||||
Japanese Yen | 98.23 | 100.19 | ||||||
Euro | 0.73 | 0.65 | ||||||
Mexican Peso | 14.38 | 10.70 | ||||||
Australian Dollar | 1.43 | 1.10 | ||||||
Pound Sterling | 0.67 | 0.50 | ||||||
Ecuadorian Sucre | 1.00 | 1.00 | ||||||
South African Rand | 9.37 | 8.14 |
The Company uses the “observed exchange rate”, which is the rate determined daily by the Chilean Central Bank based on the average exchange rates at which bankers conduct authorized transactions.
11
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 - Summary of Significant Accounting Policies (continued)
e) | Cash and cash equivalents |
Included in cash and cash equivalents are cash and bank balances included in cash, time deposits, financial instruments classified as marketable securities and other short-term investments maturing within 90 days, in compliance with Technical Bulletin No. 50 issued by the Chilean Association of Accountants. |
The Company defines cash flows from operating activities as all inflows and outflows of cash that are directly related to its operations and, in general, all cash flows not defined as being from investing or financing activities. |
f) | Time Deposits |
Time deposits are recorded at cost plus accrued interest. |
g) | Marketable securities |
Marketable securities are recorded at the lower of cost plus accrued interest or market value. |
h) | Allowance for doubtful accounts |
The Company records an allowance for doubtful accounts based on estimated probable losses. |
i) | Inventories and materials |
Inventories of finished products and products in process are stated at average production cost, which is presented net of provisions. Provisions have been made based on a technical study which covers the different variables which affect our products (density, moist, among others). |
Materials and supplies received are stated at average acquisition and inventories in transit are stated at cost incurred at the end of the period. |
The cost of inventories does not exceed its net realizable value. |
j) | Income taxes and deferred income taxes |
In conformity with current Chilean tax regulations, the Company recognizes the provision for corporate income tax expense and the income tax for the mining activity on an accrual basis. |
12
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 - Summary of Significant Accounting Policies (continued)
j) | Income and deferred taxes (continued) |
Prior to 2000, income taxes were charged to results in the same period in which the income and expenses were recorded and were calculated in accordance with the enacted tax laws in Chile and the other jurisdictions in which the Company operated. |
Under Chilean law, the Parent Company and its subsidiaries are required to file separate tax declarations. |
Beginning January 1, 2000, the Company records deferred income taxes in accordance with Technical Bulletin Nos. 60, 69, 71 and 73 of the Chilean Association of Accountants, and with Circular No. 1466 issued on January 27, 2000 by the SVS, recognizing the deferred tax effects of temporary differences between the financial and tax values of assets and liabilities, using the liability method. The effect of the temporary differences at March 31, 1999 were recorded in complementary asset and liability accounts, which are recognized in the statement of operations over the estimated period in which they reverse. |
k) | Property, plant and equipment |
Property, plant, equipment and property rights are recorded at acquisition cost, considering in general an average residual value of 5%, except for certain assets that were restated in accordance with a technical appraisal in 1989. Depreciation for the period is calculated according to the straight-line method based on the remaining technical useful lives of assets, estimated by management. |
Property, plant and equipment acquired through financial lease agreements are accounted for at the present value of the minimum lease payments plus the purchase option based on the interest rate included in each contract. The Company does not legally own these assets and therefore cannot freely dispose of them. |
In conformity with Technical Bulletin No. 31 and 33 of the Chilean Association of Accountants, the Company capitalizes interest cost associated with the financing of new assets during the construction period of such assets. |
Maintenance costs of plant and equipment are charged to expenses as incurred. |
The Company obtains property rights and mining concessions from the Chilean state. Other than minor filing fees, the property rights are usually obtained without initial cost, and once obtained, are retained by the Company as long as the annual fees are paid. Such fees, which are paid annually in September, are recorded as prepaid assets to be amortized over the following twelve months. Values attributable to these original mining concessions are recorded in property, plant and equipment. |
13
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 - Summary of Significant Accounting Policies (continued)
l) | Investments in related companies |
Investments in related companies over which the Company has significant influence, are included in other assets and are recorded using the equity method of accounting, in accordance with SVS Circulars Nos. 368 and 1,697 and Technical Bulletins Nos. 64 and 72 issued by the Chilean Association of Accountants. Accordingly, the Company’s proportional share in the net income or loss of each investee is recognized in the non-operating income and expense classification in the consolidated statements of income on an accrual basis, after eliminating any unrealized profits from transactions with the related companies. |
The translation adjustment to U.S. dollars of investments in domestic subsidiaries that maintain their accounting records and are controlled in Chilean pesos is recognized in other reserves within shareholders’ equity. Direct and indirect investments in foreign subsidiaries or affiliates are controlled in U.S. dollars. |
Investments in which the Company has less than 20% ownership and the capacity to exert significant influence or control over the investment, because SQM forms part of its Board of Directors, have been valued using the equity method. |
m) | Goodwill and negative goodwill |
Goodwill is calculated as the excess of the purchase price of companies acquired over their net book value, whereas negative goodwill occurs when the net book value exceeds the purchase price of companies acquired. Goodwill and negative goodwill resulting from equity method investments are maintained in the same currency in which the investment was made and are amortized based on the estimated period of investment return, generally 20 years for goodwill and negative goodwill. |
Beginning on January 1, 2004, goodwill and negative goodwill represents the difference between the acquisition cost of the investment in a related company and the fair value of this investment at the acquisition date, which is amortized with a charge or credit to income in the expected period of return of the investment, which does not exceed 20 years. |
Modifications of fair value, goodwill or negative goodwill are performed within a year from the date of acquisition. |
n) | Intangible assets |
Intangible assets are stated at cost plus acquisition expenses and are amortized over a period of up to a maximum of 40 years, in accordance with Technical Bulletin No. 55 of the Chilean Association of Accountants. |
14
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 - Summary of Significant Accounting Policies (continued)
o) | Mining development cost |
Mining development costs are recorded in other long-term assets and are amortized utilizing the unit of production basis. |
Prospecting expenses for mining claims where the product is low grade and not economically exploitable, are charged directly to income. |
p) | Accrued employee severance |
The Company calculates the liability for staff severance indemnities based on the present value of the accrued benefits for the actual years of service worked assuming average employee tenure of 24 years and a real annual discount rate of 8%. |
q) | Vacations |
The cost of employee vacations is recognized in the financial statements on an accrual basis. |
r) | Saleback operations |
These operations are registered in Other Current Assets at the amount of the purchase. Starting at the purchase date, the respective interest is recorded in accordance with SVS Circular 768. |
s) | Derivative Contracts |
The Company maintains derivative contracts to hedge against movements in foreign currencies, which are recorded in conformity with Technical Bulletin No. 57 of the Chilean Association of Accountants. Such contracts are recorded at fair value with net losses recognized on the accrual basis and gains recognized when realized. |
t) | Reclassifications |
For comparison purposes, certain reclassifications have been made to the 2008 financial statements. |
u) | Revenue recognition |
Income from the operation of the line of business of the Company and its Subsidiaries, is recorded as of the date of physical delivery of the products in accordance with the sales conditions stated in Technical Bulletin No. 70 issued by the Chilean Association of Accountants. |
15
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 - Summary of Significant Accounting Policies (continued)
Income from sales by installments is determined discounting the cash nominal value, using the interest rate implicit for this type of sale. In this manner, interest not accrued at financial statement closing date is presented as a decrease in the value of the respective documents and as it accrues during the course of time, it is recognized as interest income.
v) | Computer software |
Computational systems developed internally using the Company’s personnel and materials are charged to income during the year in which the expenses are incurred. In accordance with Circular No. 1.819 dated November 14, 2007 of the SVS, computer systems acquired by the Company are recorded at cost |
w) | Research and development expenses |
Research and development cost are charged to the income statement in the period in which they are incurred. Property, plant and equipment that are acquired for use in research and development activities and determined to provide additional benefits to the Company are recorded in property, plant and equipment. |
x) | Obligations with the public (Bonds payable) |
Bonds are stated at the principal amount plus interest accrued. The difference between the carrying value and the placement value is capitalized and amortized in the period of expiration of the bonds.
y) | Negotiable Instruments – Promissory Notes |
Negotiable Instruments with a charge to line No. 46 of the Securities Registry of the Superintendence of Securities and Insurance are valued in Chilean pesos plus accrued interest.
z) | Provisions for mine closure costs |
The Company has made a provision to cover those costs associated with mine closure and mining facilities and mitigation of environmental damage, which has been recorded at its present value. The amount determined is presented under accrued expenses in long-term liabilities.
16
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 2 - Summary of Significant Accounting Policies (continued)
aa) | Deferred income |
Deferred income relate to the recognition of documented sales, the delivery of which occurs subsequent to the closing date of the financial statements.
ab) | Employee benefits |
Benefits agreed other than staff severance indemnities which the Company and its subsidiaries will have to pay to its employees by virtue of agreements entered recognized on an accrual basis.
Note 3 - Changes in Accounting Principles
During the period ended March 31, 2009, there were no other changes in the application of generally accepted accounting principles in Chile compared to the prior year, which could significantly affect the interpretation of these consolidated financial statements.
Note 4 - Marketable Securities
As of March 31 marketable securities are detailed as follows:
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Mutual funds | 100,149 | 63,395 | ||||||
Total | 100,149 | 63,395 |
Mutual funds relate to investments made in 'Citifunds Institutional Liquid Reserve Limited' for ThUS$ 56,367 (ThUS$ 62,098 in 2008) in 'Merrill Lynch Institutional Liquidity Fund' for ThUS$ 42,975, (ThUS$ 1,297 in 2008), in JPM USDollar Money Market Fund ThUS$ 704 (ThUS$ 0 in 2008) and in Citibank ThUS$ 103 (ThUS$ 0 in 2008).
The above are high-liquidity funds dedicated to invest basically in fixed income instruments in the U.S. market.
17
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 5 - Short-term and long-term Accounts Receivable
a) | Short term and long-term accounts receivable and other accounts receivable As of March 31 are detailed as follows: |
Between 90 days | Total | |||||||||||||||||||||||
Up to 90 days | and 1 year | Short-term (net) | ||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||
Short-term | ||||||||||||||||||||||||
Trade accounts receivable | 271,849 | 153,951 | 72,090 | 100,553 | 343,939 | 254,504 | ||||||||||||||||||
Allowance for doubtful accounts | (14,154 | ) | (6,809 | ) | ||||||||||||||||||||
Notes receivable | 36,539 | 12,927 | 7,702 | 45,238 | 44,241 | 58,165 | ||||||||||||||||||
Allowance for doubtful accounts | (3,111 | ) | (5,114 | ) | ||||||||||||||||||||
Accounts receivable, net | 370,915 | 300,746 | ||||||||||||||||||||||
Other accounts receivable | 20,572 | 6,931 | 385 | 3,226 | 20,957 | 10,157 | ||||||||||||||||||
Allowance for doubtful accounts | (1,438 | ) | (1,723 | ) | ||||||||||||||||||||
Other accounts receivable, net | 19,519 | 8,434 | ||||||||||||||||||||||
Long-term receivables | 1,048 | 1,245 |
18
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 5 - Short-term and Long-term Accounts Receivable (continued)
Consolidated Short-term and Long-term Receivables – by Geographic Location
Asia and | USA, Mexico | Latin America | ||||||||||||||||||||||||||||||||||||||||||||||
Chile | Europe | Oceania | and Canada | and the Caribbean | Total | |||||||||||||||||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||||||||||||||
Net short-term trade accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance | 44,167 | 93,767 | 98,946 | 85,877 | 35,982 | 6,848 | 35,895 | 25,767 | 114,795 | 35,436 | 329,785 | 247,695 | ||||||||||||||||||||||||||||||||||||
% of total | 13,39 | % | 37.86 | % | 30,00 | % | 34.67 | % | 10,91 | % | 2.76 | % | 10,89 | % | 10.40 | % | 34,81 | % | 14.31 | % | 100,00 | % | 100.00 | % | ||||||||||||||||||||||||
Net short-term notes receivable | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance | 39,223 | 50,225 | - | - | - | - | - | - | 1,907 | 2,826 | 41,130 | 53,051 | ||||||||||||||||||||||||||||||||||||
% of total | 95,36 | % | 94.67 | % | - | - | - | - | - | - | 4,64 | % | 5.33 | % | 100,00 | % | 100.00 | % | ||||||||||||||||||||||||||||||
Net short-term other accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance | 18,637 | 6,375 | 471 | 1,487 | 7 | 10 | 122 | 101 | 282 | 461 | 19,519 | 8,434 | ||||||||||||||||||||||||||||||||||||
% of total | 95,48 | % | 75.59 | % | 2,41 | % | 17.62 | % | 0,04 | % | 0.12 | % | 0,63 | % | 1.20 | % | 1,44 | % | 5.47 | % | 100,00 | % | 100.00 | % | ||||||||||||||||||||||||
Subtotal short-term accounts receivable, net | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance | 102,027 | 150,367 | 99,417 | 87,364 | 35,989 | 6,858 | 36,017 | 25,868 | 116,984 | 38,723 | 390,434 | 309,180 | ||||||||||||||||||||||||||||||||||||
% of total | 26,13 | % | 48.63 | % | 25,46 | % | 28,26 | % | 9,22 | % | 2.22 | % | 9,23 | % | 8.37 | % | 29,96 | % | 12.52 | % | 100,00 | % | 100.00 | % | ||||||||||||||||||||||||
Long-term accounts receivable, net | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance | 1,008 | 1,245 | 40 | - | - | - | - | - | - | - | 1,048 | 1,245 | ||||||||||||||||||||||||||||||||||||
% of total | 96,18 | % | 100.00 | % | 3,82 | % | - | - | - | - | - | - | - | 100,00 | % | 100,00 | % | |||||||||||||||||||||||||||||||
Total short and long-term accounts receivable, net | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance | 103,035 | 151,612 | 99,457 | 87,364 | 35,989 | 6,858 | 36,017 | 25,868 | 116,984 | 38,723 | 391,482 | 310,425 | ||||||||||||||||||||||||||||||||||||
% of total | 26,32 | % | 48.84 | % | 25,41 | % | 28.14 | % | 9,19 | % | 2,21 | % | 9,20 | % | 8.34 | % | 29,88 | % | 12.47 | % | 100,00 | % | 100.00 | % |
19
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 6 - Balances and Transactions with Related Parties
Balances with related companies are generated by commercial transactions which accrue no interest under normal conditions in force for this type of operations in respect to term and market price.
Expiration conditions for each case vary depending on the transaction which generated it.
On April 21, 2008, Inversiones SQ S.A. and SQH S.A., have acquired from Yara Netherland B.V. 49% of the shares of the privately-held company, Inversiones SQYA S.A. Beginning on the date referred to above, SQYA S.A. Yara is no longer a related company of Sociedad Química y Minera de Chile S.A.
a) | Amounts included in balances with related parties as of March 31, 2009 and 2008 are as follows: |
Short-term | Long-term | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Accounts receivable | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ||||||||||||
Doktor Tarsa Tarim Sanayi AS | 9,278 | 8,018 | - | - | ||||||||||||
Nutrisi Holding N.V. | 1,654 | 1,885 | - | - | ||||||||||||
Ajay Europe S.A.R.L. | 1,732 | 6,726 | - | - | ||||||||||||
Ajay North America LLC | 2,759 | 3,865 | - | - | ||||||||||||
Abu Dhabi Fertilizer Industries WWL | 4,416 | 5,162 | 2,000 | 2.000 | ||||||||||||
NU3 B.V. | 1,924 | 1,908 | - | - | ||||||||||||
NU3 N.V. | 1,569 | 3,235 | - | - | ||||||||||||
Sales de Magnesio Ltda. | 388 | 57 | - | - | ||||||||||||
SQM Agro India | 495 | 486 | - | - | ||||||||||||
Misr Specialty Fertilizers (MSF) | 121 | 715 | - | - | ||||||||||||
Soc.Inv.Pampa Calichera S.A. | 8 | 8 | - | - | ||||||||||||
Inversiones PCS Chile S.A. | - | 17 | - | - | ||||||||||||
Kowa Company Ltd. | 10,773 | 15,069 | - | - | ||||||||||||
SQM East Med Turkey | 926 | 316 | - | |||||||||||||
SQM Thailand CO. LTD. | 334 | - | - | |||||||||||||
Total | 36,377 | 47,467 | 2,000 | 2,000 |
b) | Amounts included in balances with related parties as of March 31, 2009 and 2008, continued: |
Short-term | ||||||||
2009 | 2008 | |||||||
Accounts payable | ThUS$ | ThUS$ | ||||||
SQM Thailand Co. Ltd. | - | 238 | ||||||
Total | - | 238 |
There were no outstanding long-term accounts payable with related parties as of March 31, 2009 and 2008
20
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 6 - Balances and Transactions with Related Parties (continued)
c) | During 2009 and 2008, principal transactions with related parties were as follows: |
Amount of | Impact on income | |||||||||||||||||||
Company | Relationship | Type of transaction | Transaction | (charge) credit | ||||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||
NU3 N.V. (Belgium) | Indirect | Sales of products | 2,134 | 6,235 | 640 | 2,485 | ||||||||||||||
Doktor Tarsa Tarim Sanayi AS | Indirect | Sales of products | - | 3,739 | - | 1,992 | ||||||||||||||
Abu Dhabi Fertilizer Ind. WWL | Indirect | Sales of products | 1,046 | 1,874 | 324 | 714 | ||||||||||||||
Indirect | Financial Income | - | 26 | - | 26 | |||||||||||||||
Ajay Europe S.A.R.L. | Indirect | Sales of products | 1,503 | 5,830 | 451 | 1,915 | ||||||||||||||
Indirect | Financial Income | - | 2 | - | 2 | |||||||||||||||
NU3 B.V. | Indirect | Sales of products | 2,236 | 2,889 | 447 | 1,971 | ||||||||||||||
Indirect | Services | 26 | 26 | 26 | 26 | |||||||||||||||
Ajay North America LLC | Indirect | Sales of products | 3,814 | 7,377 | 1,335 | 2,309 | ||||||||||||||
Indirect | Dividends | 110 | - | - | - | |||||||||||||||
Kowa Company Ltd. | Shareholder | Sales of products | 11,488 | 23,748 | 4,595 | 11,355 |
Note 7 - Inventories
Net inventories are summarized as follows:
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Finished products | 328,021 | 262,675 | ||||||
Work in process | 216,833 | 151,624 | ||||||
Supplies | 34,248 | 27,855 | ||||||
Total | 579,102 | 442,154 |
21
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 8 - Property, Plant and Equipment
Property, plant and equipment are summarized as follows:
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Land | ||||||||
Land | 80,529 | 81,749 | ||||||
Mining Concessions | 30,086 | 30,086 | ||||||
Total | 110,615 | 111,835 | ||||||
Buildings and infrastructure | ||||||||
Buildings | 176,367 | 163,714 | ||||||
Installations | 389,762 | 311,356 | ||||||
Construction-in-progress | 239,550 | 207,932 | ||||||
Other | 230,594 | 207,997 | ||||||
Total | 1,036,273 | 890,999 | ||||||
Machinery and Equipment | ||||||||
Machinery | 603,963 | 558,030 | ||||||
Equipment | 149,920 | 132,086 | ||||||
Project-in-progress | 43,710 | 27,192 | ||||||
Other | 40,950 | 19,735 | ||||||
Total | 838,543 | 737,043 | ||||||
Other fixed assets | ||||||||
Tools | 11,027 | 9,459 | ||||||
Furniture and office equipment | 16,154 | 15,761 | ||||||
Project-in-progress | 25,091 | 11,882 | ||||||
Other | 12,724 | 8,435 | ||||||
Total | 64,996 | 45,537 |
22
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 8 - Property, Plant and Equipment (continued)
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Amounts relating to technical revaluation of fixed assets | ||||||||
Land | 7,839 | 7,839 | ||||||
Buildings and infrastructure | 41,439 | 41,439 | ||||||
Machinery and equipment | 12,048 | 12,048 | ||||||
Other assets | 53 | 53 | ||||||
61,379 | 61,379 | |||||||
Total property, plant and equipment | 2,111,806 | 1,846,793 | ||||||
Less: Accumulated depreciation | ||||||||
Buildings and infrastructure | (418,373 | ) | (351,696 | ) | ||||
Machinery and equipment | (469,093 | ) | (417,906 | ) | ||||
Other fixed assets | (29,589 | ) | (32,267 | ) | ||||
Technical appraisal | (39,487 | ) | (38,399 | ) | ||||
Total accumulated depreciation | (956,542 | ) | (840,268 | ) | ||||
Net property, plant and equipment | 1,155,264 | 1,006,525 | ||||||
2009 | 2008 | |||||||
Depreciation for the period ended March 31: | ThUS$ | ThUS$ | ||||||
Buildings and infrastructure | (19,256 | ) | (11,638 | ) | ||||
Machinery and equipment | (14,096 | ) | (12,587 | ) | ||||
Other fixed assets | (1,320 | ) | (711 | ) | ||||
Technical revaluation | (227 | ) | (285 | ) | ||||
Total depreciation | (34,899 | ) | (25,221 | ) |
23
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 8 - Property, Plant and Equipment (continued)
The Company has capitalized assets obtained through leasing, which are included in other fixed assets and are as follows:
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Administrative office buildings | 1,988 | 1,988 | ||||||
Accumulated depreciation | (560 | ) | (528 | ) | ||||
Total assets in leasing | 1,428 | 1,460 |
The administrative office buildings were acquired for 230 installments of UF 663.75 each and an annual, contractually established interest rate of 8.5%.
Note 9 - Investments in and Receivables from Related Parties
a) | Information on foreign investments |
Foreign subsidiaries do not have net income destined for remittance, since it is the Company’s policy to reinvest. This policy has been continuously applied.. |
The parent company has not entered into liabilities as hedge instruments for investments abroad. |
b) | Transactions executed in 2009 |
* During the period ended March 31, 2009, there are no investments in related companies.
c) | Transactions executed in 2008 |
* On April 24, 2008, the subsidiary Agricolima S.A. was sold to Mr. Carlos Federico Valenzuela Cadena, Mr. Diego Valenzuela Cadena and Mr. Jesús Angel Morelos Montfort, creating a gain on sale of investment of ThUS$ 1,387.
24
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 9 - - Investments in and Receivables from Related Companies (continued)
d)Investments with less than 20% participation
Investments in which the Company has less than 20% participation and the capacity to exert significant influence or control over the investment, because SQM forms part of its Board of Directors, have been valued using the equity method.
25
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 9 - Investments in and Receivables from Related Companies (continued)
d) | Detail of investments in related companies |
Tax Registration | Country of | Controlling | Number of | Ownership interest | Equity of companies | Book value of investment | Net income (loss) | Equity participation in net income (loss) | |||||||||||||||||||||||||||||||||||
Number | Company | origin | currency | shares | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||||||||||||
% | % | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ||||||||||||||||||||||||||||||||||
0-E | Nutrisi Holding N.V. | Belgium | Euros | - | 50.00 | 50.00 | 13,181 | 11,281 | 6,409 | 5,460 | -974 | 1,082 | 6,409 | 5,460 | |||||||||||||||||||||||||||||
0-E | Ajay North America LLC | USA | US$ | - | 49.00 | 49.00 | 12,126 | 12,448 | 4,619 | 5,075 | -145 | 782 | 5,942 | 6,099 | |||||||||||||||||||||||||||||
0-E | Doktor Tarsa Tarim Sanayi AS | Turkey | Euros | - | 50.00 | 50.00 | 21,877 | 10,080 | 10,938 | 5,040 | 181 | 1,738 | 10,938 | 5,040 | |||||||||||||||||||||||||||||
0-E | Ajay Europe S.A.R.L. | France | Euros | 36,700 | 50.00 | 50.00 | 9,810 | 9,318 | 3,322 | 3,821 | - | - | 4,905 | 4,659 | |||||||||||||||||||||||||||||
0-E | Abu Dhabi Fertilizer Industries WWL | UAE | US$ | 1,961 | 50.00 | 50.00 | 11,196 | 4,931 | 5,598 | 2,465 | 600 | 219 | 5,598 | 2,465 | |||||||||||||||||||||||||||||
0-E | Misr Specialty Fertilizers | Egypt | US$ | - | 47.00 | 47.00 | 4,394 | 4,056 | 2,087 | 1,926 | -205 | -105 | 2,087 | 1,926 | |||||||||||||||||||||||||||||
0-E | SQM Thailand Co. Ltd. | Thailand | US$ | - | 40.00 | 40.00 | 3,388 | 2,534 | 1,355 | 1,014 | -99 | 85 | 1,355 | 1,014 | |||||||||||||||||||||||||||||
77557430-5 | Sales de Magnesio Ltda. | Chile | Pesos | - | 50.00 | 50.00 | 1,033 | 1,938 | 516 | 969 | - | 461 | 516 | 969 | |||||||||||||||||||||||||||||
0-E | SQM Eastmed Turkey | Turkey | Euros | - | 50.00 | 50.00 | 427 | 238 | 214 | 119 | - | - | 214 | 119 | |||||||||||||||||||||||||||||
81767200-0 | Asoc. Garantizadora Pensiones | Chile | Pesos | - | 3.00 | 3.00 | 585 | 826 | 19 | 27 | - | - | 19 | 27 | |||||||||||||||||||||||||||||
0-E | Agro India Limitada | India | US$ | - | 49.00 | 49.00 | 130 | 27 | 64 | 13 | -62 | - | 64 | 13 | |||||||||||||||||||||||||||||
Total | 35,141 | 25,929 |
26
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 10 - Goodwill and Negative Goodwill
As established in Technical Bulletin No. 72, issued by the Chilean Association of Accountants, ThUS$57 en el 2009 (MUS$636 en 2008) has been adjusted to the negative goodwill account related to lawsuits with third parties paid, which as of the date of determination of negative goodwill did not meet the requirements to be treated as identifiable liabilities that could be recognized.
These relate to lawsuits with factoring companies which as of the acquisition date were identified with results favorable to our company.
Goodwill and negative goodwill and the related amortization is summarized as follows:
a) | Goodwill |
March 31, 2009 | March 31, 2008 | ||||||||||||||||
Tax Registration | Amount amortized | Goodwill | Amount amortized | Goodwill | |||||||||||||
Number | Company | during the period | Balance | during the period | balance | ||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ||||||||||||||
96864750-4 | SQM Potassium S.A. | 36 | 1,120 | 36 | 1,265 | ||||||||||||
96801610-5 | Comercial Hydro S.A. | 43 | 692 | 57 | 1,161 | ||||||||||||
79947100-0 | SQM Industrial S.A. | 278 | 17,526 | 278 | 18,638 | ||||||||||||
0-E | SQMC México S.A. de C.V. | 14 | 710 | 14 | 766 | ||||||||||||
0-E | Comercial Caiman Internacional S.A. | 6 | 80 | 6 | 103 | ||||||||||||
0-E | SQM Dubai- Fzco | 25 | 1,655 | 25 | 1,757 | ||||||||||||
0-E | Iodine Minera B.V. | 142 | 9,573 | 142 | 10,132 | ||||||||||||
Total | 544 | 31,356 | 558 | 33,822 |
b) | Negative Goodwill |
March 31, 2009 | March 31, 2008 | ||||||||||||||||
Negative | Negative | ||||||||||||||||
Tax Registration | Amount amortized | goodwill | Amount amortized | goodwill | |||||||||||||
Number | Company | during the period | Balance | during the period | balance | ||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ||||||||||||||
78602530-3 | Minera Nueva Victoria S.A. | - | 1,222 | - | 1,291 | ||||||||||||
Total | - | 1,222 | - | 1,291 |
27
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 11 - Other Long-term Assets
Other long-term assets are summarized as follows:
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Engine and equipment spare-parts, net (1) | 2,837 | 2,468 | ||||||
End of agreement bonus | 517 | 1,184 | ||||||
Mine development costs | 24,069 | 23,438 | ||||||
Income taxes recoverable | 209 | 365 | ||||||
Healthcare institution guarantee in the National Healthcare Service Fonasa | 296 | 394 | ||||||
Construction of Salar-Baquedano road | 1,020 | 1,140 | ||||||
Deferred loan issuance costs (2) | 274 | 298 | ||||||
Cost of issuance and placement of bonds (3) | 7,166 | 4,717 | ||||||
Other | 616 | 565 | ||||||
Total | 37,004 | 34,569 |
(1) According to analyses conducted, at each year-end, this item includes non-current warehouse spare-parts and materials. In addition, an allowance for obsolescence has been made and included in this item.
(2) Relates to the portion to be accrued of negotiation costs of long-term loans.
(3) Refer to the explanation of these expenses in Note 23.
Note 12 - Bank Debt
a) | Short-term bank debt is detailed as follows: |
2009 | 2008 | |||||||
Bank or financial institution | ThUS$ | ThUS$ | ||||||
JP Morgan Chase Bank | 20,648 | - | ||||||
Banco de Crédito e Inversiones | 20,475 | - | ||||||
Scotiabank Sud Americano | 10,050 | - | ||||||
BBVA Chile | 30,109 | - | ||||||
Banco Estado | 40,192 | - | ||||||
Banco Santander Santiago | 10,194 | - | ||||||
HSBC Bank Chile | 30,150 | - | ||||||
Other | 683 | 627 | ||||||
Total | 162,501 | 627 | ||||||
Annual average interest rate | 5.36987 | % |
28
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 12 - Bank Debt (continued)
b) | Long-term bank debt is detailed as follows: |
2009 | 2008 | |||||||
Bank or financial institution | ThUS$ | ThUS$ | ||||||
BBVA Banco Bilbao Vizcaya Argentaria (1) | 100,131 | 100,640 | ||||||
ING Capital LLC (2) | 80,800 | 81,047 | ||||||
Banco Estado (3) | 30,042 | - | ||||||
Export Development Canada (4) | 50,448 | - | ||||||
Total | 261,421 | 181,687 | ||||||
Less: Current portion | (101,421 | ) | (1,687 | ) | ||||
Long-term portion | 160,000 | 180,000 |
(1) | U.S. dollar-denominated loan without guarantee, interest rate of Libor + 0.375% per annum, quarterly payment. The principal is due on February 25, 2010. |
(2) | U.S. dollar-denominated loan without guarantee, interest rate of Libor + 0.300% per annum, semi-annually payment. The principal is due on November 28, 2011. |
(3) | U.S. dollar-denominated loan without guarantee, interest rate of Libor + 3.300% per annum, semi-annually payment. The principal is due on March 23, 2011. |
(4) | U.S. dollar-denominated loan without guarantee, interest rate of Libor + 1.500% per annum, semi-annually payment. The principal is due on December 24, 2010. |
c) | The maturity of long-term debt is as follows: |
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Years to maturity | ||||||||
Current portion | 101,421 | 1,687 | ||||||
1 to 2 years | 80,000 | 100,000 | ||||||
3 to 5 years | 80,000 | 80,000 | ||||||
Total | 261,421 | 181,687 |
29
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 13 - Short and Long-term Obligations with the Public (Promissory Notes and Bonds Payable)
Additional Information
On January 25, 2006, the Company issued in the Chilean market Series C bonds for an amount of UF 3,000,000 at an annual rate of 4.00%. This placement achieved collection equivalent to 100% of par value.
As of March 31, 2009 and 2008 the following payments have been made with a charge to the line of Series C bonds:
2009 | 2008 | |||||||
UF | UF | |||||||
Capital payments | - | 150.000,00 | ||||||
Interest payments | - | 111.397,51 |
Single series bonds
On April 5, 2006, the Company issued single-series bonds for an amount of ThUS$200,000 at an annual rate of 6.125%, under the regulations contained in "Rule 144 and regulation S of the U.S. Securities Act of 1933".
As of March 31, 2009 and 2008 the following payments have been made with a charge to the single Series line of bonds:
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Interest payments | - | 12.250 |
30
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 13 - Short and Long-term Obligations with the Public (Promissory Notes and Bonds Payable) (continued)
Series G and H Bonds
On January 13, 2009 the Company issued two series of bonds in the Chilean market. Series H for UF 4,000,000 at an annual rate of 4.9% with a 21-year term and 10-year grace period, and Series G for ThCh$21,000,000 at an annual interest rate of 7% with a 5-year term with one single amortization upon maturity.
As of March 31, 2009 and 2008 ThUS$14,465 and ThUS$14,107 are presented in the short-term, respectively, corresponding to the short-term portion of principal plus interest accrued as of that date. The amounts of ThUS$471,461 in 2009 and ThUS$322,295 in 2008 are presented in the long-term, and correspond to the principal installments of the Series C Bonds, Single Series bonds, Series G bonds and Series H bonds.
No. of Registration of the Instrument | Series | Nominal Amount | Adjustment Unit | Interest Rate | Final Period | Payment of Interest | Payment of Amortization | 03/31/09 ThUS$ | 03/31/08 ThUS$ | Placement in Chile or abroad | ||||||||||
Current portion of long-term bonds payable | ||||||||||||||||||||
446 | C | 150,000 | UF | 4.00 | % | 12/01/2009 | Semi-annual | Semi-annual | 6,659 | 8,484 | In Chile | |||||||||
184 | Single | - | US$ | 6.125 | % | 10/15/2009 | Semi-annual | At maturity | 5,589 | 5,623 | Abroad | |||||||||
0 | H | - | UF | 4.9 | % | 07/05/2009 | Semi-annual | At maturity | 1,635 | - | In Chile | |||||||||
0 | G | - | CH$ | 7.00 | % | 07/05/2009 | Semi- annual | At maturity | 582 | - | In Chile | |||||||||
Total Current Portion | 14,465 | 14,107 | ||||||||||||||||||
Long-term bonds payable | ||||||||||||||||||||
446 | C | 2,550,000 | UF | 4.00 | % | 12/01/2026 | Semi-annual | Semi-annual | 91,662 | 122,295 | In Chile | |||||||||
184 | Single | 200,000,000 | US$ | 6.125 | % | 04/15/2016 | Semi-annual | At maturity | 200,000 | 200,000 | Abroad | |||||||||
0 | G | 21,000,000,000 | CH$ | 7.00 | % | 01/05/2014 | Semi- annual | At maturity | 36,015 | - | In Chile | |||||||||
0 | H | 4,000,000 | UF | 4.9 | % | 01/05/2030 | Semi- annual | Semi-annual from 2019 | 143,784 | - | In Chile | |||||||||
Total Long-term | 471,461 | 322,295 |
31
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 13 - Short and Long-term Obligations with the Public (Promissory Notes and Bonds Payable) (continued)
Negotiable instruments (Commercial papers)
On March 24, 2009 SQM issued short-term Commercial papers, Series 2-A, in the local market for ThCh $ 15,000,000. This issuance was part of a 10-year program with a maximum amount to be issued of UF 1,500,000.
BOOK VALUE | ||||||||||||||||||||||||||||||||
REGISTRATION No. OR INSTRUMENT I.D. | SERIES | INDEXATION UNIT | NOMINAL VALUE ThCh$ | PROMISSORY NOTE OR LINE OF CREDIT MATURITY | INTEREST RATE | 03-31-2009 | 03-31-2008 | PLACEMENT IN CHILE OR ABROAD | ||||||||||||||||||||||||
- | 2-A | - | 15,000,000 | 12-15-2009 | 3.3262 | % | 25.127 | - | - | |||||||||||||||||||||||
TOTAL | 25.127 | - |
Note 14 - Accrued Liabilities
As of March 31, 2009 and 2008, accrued liabilities are summarized as follows:
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Provision for royalties Corfo | 4,149 | 3,115 | ||||||
Provision for employee compensation and legal costs | 639 | 349 | ||||||
Taxes and monthly income tax installment payments | 8,075 | 5,281 | ||||||
Expenses incurred for Long-term loans (additional tax) | - | - | ||||||
Vacation accrual | 10,958 | 10,992 | ||||||
Marketing expenses | 1,389 | 3,600 | ||||||
External auditor fees | 601 | 218 | ||||||
Benefits for employees | 6,200 | 5,759 | ||||||
Other accruals | 2,603 | 3,357 | ||||||
Total current liabilities | 34,614 | 32,671 |
32
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 15 - Income and Deferred Taxes
a) | At March 31, 2009 and 2008 the Company has the following consolidated balances for retained tax earnings, income not subject to taxes, tax loss carry-forwards and credit for shareholders: |
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Accumulated tax basis retained earnings with tax credit | 813,716 | 417,126 | ||||||
Accumulated tax basis retained earnings without tax credit | 132,773 | 56,341 | ||||||
Tax loss carry-forwards (1) | 16,949 | 137,197 | ||||||
Credit for shareholders | 166,554 | 85,222 |
(1) | Income tax losses in Chile can be carried forward indefinitely. |
The Company has recognized deferred income taxes for tax losses and the related valuation allowance, where applicable, in accordance with Technical Bulletin No. 60 issued by the Chilean Association of Accountants.
33
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 15 - Income and Deferred Taxes (continued)
The deferred taxes as of March 31, 2009 and 2008 represented a net liability of ThUS$38,740 and ThUS$56,077 respectively, and consisted of:
2009 | Deferred tax asset | Deferred tax liability | ||||||||||||||
Short-term | Long-term | Short-term | Long-term | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Temporary differences | ||||||||||||||||
Allowance for doubtful accounts | 2,149 | 1,699 | - | - | ||||||||||||
Vacation accrual | 1,773 | - | - | - | ||||||||||||
Unrealized gain on sale of products | 86,025 | - | - | - | ||||||||||||
Provision for obsolescence | - | 3,940 | - | - | ||||||||||||
Production expenses | - | - | 30,159 | - | ||||||||||||
Accelerated depreciation | - | - | - | 74,154 | ||||||||||||
Exploration expenses | - | - | - | 4,679 | ||||||||||||
Capitalized interest | - | - | - | 9,518 | ||||||||||||
Staff severance indemnities | - | - | - | 2,250 | ||||||||||||
Fair value recognition | - | 3,087 | - | - | ||||||||||||
Leased assets | - | - | - | - | ||||||||||||
Capitalized expenses | - | - | - | 1,360 | ||||||||||||
Tax loss carry-forwards | 2,931 | 5,512 | - | - | ||||||||||||
Accrued gain from exchange insurance | - | - | 1,144 | - | ||||||||||||
Deferred revenue | - | - | - | - | ||||||||||||
Accrued interest | 335 | - | - | - | ||||||||||||
Benefits for employees | 11 | 3,924 | - | - | ||||||||||||
Deferred Tax Royalty | 710 | 494 | 2,422 | 4,305 | ||||||||||||
Accrued Gain from Exchange Insurance | 442 | - | - | - | ||||||||||||
Other | 5,379 | 9,120 | - | 511 | ||||||||||||
Total gross deferred taxes | 99,755 | 27,776 | 33,725 | 96,777 | ||||||||||||
Total complementary accounts | - | - | - | (13,054 | ) | |||||||||||
Valuation allowance | (17,660 | ) | (4,736 | ) | - | - | ||||||||||
Total deferred taxes | 82,095 | 23,040 | 33,725 | 83,723 |
34
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 15 - Income and Deferred Taxes (continued)
2008 | Deferred tax asset | Deferred tax liability | ||||||||||||||
Short-term | Long-term | Short-term | Long-term | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Temporary differences | ||||||||||||||||
Allowance for doubtful accounts | 658 | 1,433 | - | - | ||||||||||||
Vacation accrual | 1,786 | - | - | - | ||||||||||||
Unrealized gain on sale of products | 21,386 | - | - | - | ||||||||||||
Provision for obsolescence | - | 3,830 | - | - | ||||||||||||
Production expenses | - | - | 23,140 | - | ||||||||||||
Accelerated depreciation | - | - | - | 63,103 | ||||||||||||
Exploration expenses | - | - | - | 4,696 | ||||||||||||
Capitalized interest | - | - | - | 8,510 | ||||||||||||
Staff severance indemnities | - | - | - | 1,867 | ||||||||||||
Fair value recognition | - | 2,160 | - | - | ||||||||||||
Leased assets | - | 27 | - | - | ||||||||||||
Capitalized expenses | - | - | - | 904 | ||||||||||||
Tax loss carry-forwards | - | 28,522 | - | - | ||||||||||||
Accrued gain from exchange insurance | - | - | 4,880 | - | ||||||||||||
Deferred revenue | 290 | - | - | - | ||||||||||||
Accrued interest | 375 | - | - | - | ||||||||||||
Benefits for employees | - | - | - | - | ||||||||||||
Other | 1,479 | 6,157 | 1 | 631 | ||||||||||||
Total gross deferred taxes | 25,974 | 42,129 | 28,021 | 79,711 | ||||||||||||
Total complementary accounts | - | - | - | (15,119 | ) | |||||||||||
Valuation allowance | (7,465 | ) | (28,418 | ) | - | - | ||||||||||
Total deferred taxes | 18,509 | 13,711 | 28,021 | 64,592 |
35
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 15 - Income and Deferred Taxes (continued)
c) Income tax expense is summarized as follows:
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Current tax expense (income tax accrual) | 62 | - | ||||||
Tax expense adjustment ( prior year) | - | - | ||||||
Provision for current income tax | (31,577 | ) | (14,198 | ) | ||||
Effect of deferred tax assets and liabilities | 5,442 | (3,526 | ) | |||||
Tax benefit for tax losses | 2,350 | 2,631 | ||||||
Effect of amortization of complementary accounts | (461 | ) | (510 | ) | ||||
Effect on deferred tax assets and liabilities due to changes in valuation allowance | 3,146 | 2,333 | ||||||
Other tax charges and credits | - | - | ||||||
Total income tax expense | (21,038 | ) | (13,270 | ) |
36
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 16 – Long-term accrued liabilities
Long-term accrued liabilities are summarized as follows:
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Staff severance indemnities (2) | 24,961 | 24,481 | ||||||
Benefits for employees (1) | 13,000 | 5,000 | ||||||
Site closing provision | 3,181 | 1,992 | ||||||
Balance as of March 31 | 41,142 | 31,473 |
(1) These provisions correspond to retention bonuses for the Company’s executives. The value of these bonuses is linked to the price of the Company’s stock and is to be paid in cash between 2010 and 2011.
(2) Staff severance indemnities are summarized as follows:
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Opening balance | 22,129 | 20,679 | ||||||
Increases in obligation | 1,535 | 1,288 | ||||||
Payments | (531 | ) | (401 | ) | ||||
Exchange difference | 1,757 | 2,915 | ||||||
Other difference | 71 | - | ||||||
Balance As of March 31 | 24,961 | 24,481 |
37
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 17 - Minority Interest
Minority interest is summarized as follows:
Equity | Net Income/(Loss) | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Soquimich Comercial S.A. | 41,902 | 47,127 | 788 | (4,388 | ) | |||||||||||
Ajay SQM Chile S.A. | 4,201 | 3,733 | (42 | ) | (107 | ) | ||||||||||
Cape Fear Bulk L.L.C. | - | - | - | - | ||||||||||||
SQM Nitratos México S.A. de C.V. | 9 | 14 | 1 | (60 | ) | |||||||||||
Fertilizantes Naturales S.A. | 182 | 181 | 241 | - | ||||||||||||
SQM Indonesia S.A. | (29 | ) | (30 | ) | - | (2 | ) | |||||||||
SQM Potasio S.A. | 11 | 6 | (1 | ) | ||||||||||||
Total | 46,276 | 51,031 | 987 | (4,558 | ) |
38
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 18 - Shareholders’ Equity
a) | Changes to shareholders’ equity consisted of: |
Accumulated deficit | ||||||||||||||||||||||||||||||||
of subsidiaries in | ||||||||||||||||||||||||||||||||
Paid-in | Other | development | Interim | Retained | Net | |||||||||||||||||||||||||||
Number | capital | reserves | stage | Dividends | earnings | income | Total | |||||||||||||||||||||||||
of shares | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||
Balance as of January 1, 2008 | 263,196,524 | 477,386 | 163,442 | - | - | 361,587 | 180,021 | 1,182,436 | ||||||||||||||||||||||||
Transfer 2006 net income to retained earnings | - | - | - | - | - | 180,021 | (180,021 | ) | - | |||||||||||||||||||||||
Declared dividends 2008 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Accumulated deficit from subsidiaries in development stage | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Other comprehensive income | - | - | 790 | - | - | - | - | 790 | ||||||||||||||||||||||||
Net income for the year | - | - | - | - | - | - | 64,784 | 64,784 | ||||||||||||||||||||||||
Balance As of March 31, 2008 | 263,196,524 | 477,386 | 164,232 | - | - | 541,608 | 64,784 | 1,248,010 | ||||||||||||||||||||||||
Balance January 1,2009 | 263,196,524 | 477,386 | 159,721 | - | 424,594 | 501,407 | 1,563,108 | |||||||||||||||||||||||||
Transfer 2007 net income to retained earnings | - | - | - | - | - | 501,507 | (501,407 | ) | - | |||||||||||||||||||||||
Declared dividends 2009 | - | - | - | - | - | - | - | |||||||||||||||||||||||||
Interim dividends | - | - | - | - | (100,000 | ) | - | - | (100,000 | ) | ||||||||||||||||||||||
Other comprehensive income | - | - | 397 | - | - | - | - | 397 | ||||||||||||||||||||||||
Net income for the year | - | - | - | - | - | - | 86,273 | 86,273 | ||||||||||||||||||||||||
Balance as of March 31, 2009 | 263,196,524 | 477,386 | 160,118 | - | (100,000 | ) | 926,001 | 86,273 | 1,549,778 |
39
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 18 - Shareholders’ Equity (continued)
b) In consideration of the current distribution of shares, the Company has a controlling interest Group composed of Pampa Calichera S.A. and the Kowa Group by virtue of the Joint Action Agreement subscribed on December 21, 2006.
c) Interim Dividends
At Board of Directors Meeting held on October 28, 2008 the directors agreed to distribute an interim dividend of US$0.37994 per share as of November 21, 2008 for a total amount of ThUS$ 100,000 and lower than 30% of distributable net income for commercial year 2008, accrued as of September 30, 2008. The above was charged to net income for that commercial year, payable to the shareholders of Sociedad Química y Minera de Chile S.A. registered in the respective registry on the 5th business day prior to November 21, 2008, in its equivalent in Chilean pesos based on the value of the observed dollar or US dollar published in the Official Gazette on Friday, November 14, 2008.
d) Other information
The detail of other reserves is as follows:
As of March 31, 2009 | As of March 31, 2009 | |||||||||||
Detail | ThUS$ | ThUS$ | ||||||||||
Technical appraisal | - | 151,345 | ||||||||||
Changes to other comprehensive income from equity method investments: | - | - | ||||||||||
Soquimich Comercial S.A. | (1) | - | 13,287 | |||||||||
Comercial Hydro S.A. | (1) | 275 | (450 | ) | ||||||||
SQMC Internacional Ltda. | (1) | 12 | (23 | ) | ||||||||
Proinsa Ltda. | (1) | 9 | (17 | ) | ||||||||
Isapre Norte Grande Ltda. | (1) | 23 | (22 | ) | ||||||||
Inversiones Augusta S.A. | (1) | - | (761 | ) | ||||||||
SQM Ecuador S.A. | (2) | - | (270 | ) | ||||||||
Almacenes y Depósitos Ltda. | (1) | 22 | 110 | |||||||||
Asociación Garantizadora de Pensiones | (1) | 2 | (21 | ) | ||||||||
Sales de Magnesio Ltda. | (1) | 43 | 53 | |||||||||
Sociedad de Servicios de Salud S.A. | (1) | - | 14 | |||||||||
SQM North America Corp. | (3) | 11 | (4,175 | ) | ||||||||
SQM Dubai Fzco. | (1) | - | (12 | ) | ||||||||
Ajay Europe SARL | (1) | - | 343 | |||||||||
Other Companies | (1) | - | 717 | |||||||||
Total other comprehensive income | 397 | 160,118 |
40
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 18 - Shareholders’ Equity (continued)
(1) | Corresponds to translation adjustments and monetary correction. |
(2) | Corresponds to the translation adjustment produced by the application of a new law implemented by the Ecuadorian Government. |
(3) | Corresponds to a change in the valuation of the Companys under-funded pension plan. |
e) | Capital consists of 263,196,524 fully authorized, subscribed and paid shares with no par value, divided into 142,819,552 Series A shares and 120,376,972 Series B shares. |
The preferential voting rights of each series are as follows:
Series A: | If the election of the president of the Company results in a tied vote, the Company's directors may vote once again, without the vote of the director elected by the Series B shareholders. |
Series B: 1) | A general or extraordinary shareholders' meeting may be called at the request of shareholders representing 5% of the Company's Series B shares. |
2) | An extraordinary meeting of the Board of Directors may be called with or without the agreement of the Company's president, at the request of a director elected by Series B shareholders. |
Note 19 – Derivative Instruments
Derivative instruments are recorded at their fair value at year-end. Changes in fair value are recognized in income with the liability recorded in other current liabilities. Losses from options relate to fees paid by the Company to enter into such contracts. As of March 31, 2009 the Company’s derivative instruments are as follows:
2009 | Notional or Notional or | Description of the | ||||||||||||||||||||
Type of | covered | Expiration | contract | Position | (Liability)Asset | Income | Income | |||||||||||||||
derivative | amount | type | purchase/sale | amount | (loss) recorded | (not) recorded | ||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||
US dollar Forward | 198,916 | 2nd Quarter of 2009 | Exchange rate | P | 195,960 | (3,485 | ) | - | ||||||||||||||
US dollar Forward | 12,963 | 2nd Quarter of 2009 | Exchange rate | S | 12,316 | 684 | - | |||||||||||||||
Swap | 119,548 | 4th Quarter of 2026 | Interest rate | P | 114,463 | 4,156 | 929 | |||||||||||||||
Swap | 41,427 | 1 st Quarter of 2014 | Interest rate | P | 38,993 | 2,505 | (71 | ) | ||||||||||||||
Swap | 89,727 | 1 st Quarter of 2013 | Interest rate | P | 85,938 | 3,763 | 26 | |||||||||||||||
OE | 4,850 | 2nd Quarter of 2009 | Exchange rate | S | 4,277 | (573 | ) | - | ||||||||||||||
OE | 3,233 | 2nd Quarter of 2009 | Exchange rate | S | 2,850 | (383 | ) | - | ||||||||||||||
OE | 3,233 | 3rd Quarter of 2009 | Exchange rate | S | 2,850 | (383 | ) | - | ||||||||||||||
OE | 1,617 | 3rd Quarter of 2009 | Exchange rate | S | 1,426 | (191 | ) | - | ||||||||||||||
US dollar Forward | 24,585 | 2nd Quarter of 2009 | Exchange rate | P | 23,307 | (1,278 | ) | - | ||||||||||||||
OE | 31,785 | 2nd Quarter of 2009 | Exchange rate | P | 31,796 | 11 | - | |||||||||||||||
US dollar Forward | 8,369 | 2nd Quarter of 2009 | Exchange rate | P | 7,789 | (580 | ) | - | ||||||||||||||
US dollar Forward | 56,025 | 1 st Quarter of 2009 | Exchange rate | P | 57,009 | - | 984 | |||||||||||||||
US dollar Forward | 35,000 | 2nd Quarter of 2009 | Exchange rate | P | 33,139 | (1,861 | ) | - | ||||||||||||||
US dollar Forward | 7,000 | 2nd Quarter of 2009 | Exchange rate | P | 6,810 | (190 | ) | - | ||||||||||||||
US dollar Forward | 1,647 | 3rd Quarter of 2009 | Exchange rate | P | 1,886 | 239 | - | |||||||||||||||
US dollar Forward | 5,481 | 1 st Quarter of 2009 | Exchange rate | S | 6,257 | (776 | ) | - | ||||||||||||||
US dollar Forward | 92 | 1 st Quarter of 2009 | Exchange rate | S | 102 | (10 | ) | - |
41
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 20 - Non-Operating Income and Expenses
Amounts included in non-operating income and expenses are summarized as follows:
a) | Non-operating income |
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Interest income | 3,957 | 2,983 | ||||||
Cross Currency swap | - | - | ||||||
Recovery of doubtful accounts | 68 | 226 | ||||||
Insurance recoveries | 102 | 227 | ||||||
Reversal of obligations with third parties | 354 | 598 | ||||||
Sale of property, plant and equipment | 85 | 789 | ||||||
Gain on sale of investments in related companies | 632 | 2,107 | ||||||
Sale of mining concessions | - | 220 | ||||||
Rental of property, plant and equipment | 246 | 260 | ||||||
Discounts obtained | 363 | 123 | ||||||
Other income | 210 | 236 | ||||||
Total | 6,017 | 7,769 |
b) | Non-operating expenses |
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Investment plan expenses and adjustment of property, plant and equipment realization value | 3,370 | 1,448 | ||||||
Interest expense | 7,941 | 5,495 | ||||||
Equity participation in net losses of unconsolidated subsidiaries | 725 | 50 | ||||||
Amortization of goodwill | 544 | 558 | ||||||
Net foreign exchange losses | 5,714 | 2,222 | ||||||
Work disruption expenses | 68 | 149 | ||||||
Non-recoverable taxes | 155 | 86 | ||||||
Accrual for loss in auction | - | 300 | ||||||
Provision for legal expenses and third party compensation | 178 | 183 | ||||||
Training and donation expenses | 228 | 295 | ||||||
Amortization of information | 101 | 101 | ||||||
Prior year proportional equity value result | - | 65 | ||||||
Commissions | 10 | 100 | ||||||
Other expenses | 165 | 327 | ||||||
Total | 19,199 | 11,379 |
42
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 21 – Price-level Restatement
Amounts charged or credited to income relating to price-level restatement are summarized as follows:
(Charge) credit to income from operations | ||||||||
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Property, plant and equipment | (5 | ) | ||||||
Other assets and liabilities | 1 | 228 | ||||||
Shareholders’ equity | 7 | (85 | ) | |||||
Net price-level restatement | 8 | 138 |
43
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 22 – Assets and Liabilities Denominated in Foreign Currency
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Assets | ||||||||
Chilean pesos | 377,797 | 231,228 | ||||||
US dollars | 2,420,790 | 1,764,500 | ||||||
Euros | 78,233 | 58,173 | ||||||
Japanese Yen | 1,111 | 956 | ||||||
Brazilian Real | 226 | 377 | ||||||
Mexican pesos | 2,696 | 2,820 | ||||||
UF | 26,946 | 63,924 | ||||||
South African Rand | 7,729 | 17,546 | ||||||
Dirhams | 17,705 | 15,612 | ||||||
Other currencies | 15,550 | 9,869 | ||||||
Current liabilities | ||||||||
Chilean pesos | 119,170 | 102,958 | ||||||
US dollars | 463,599 | 141,768 | ||||||
Euros | 20,953 | 15,256 | ||||||
Japanese Yen | 24 | 23 | ||||||
Brazilian Real | 1,377 | 1,691 | ||||||
Mexican pesos | 672 | 3,673 | ||||||
UF | 11,413 | 12,217 | ||||||
South African Rand | 641 | 1,394 | ||||||
Dirhams | 582 | 800 | ||||||
Other currencies | 651 | 771 | ||||||
Long-term liabilities | ||||||||
Chilean pesos | 21,536 | 23,674 | ||||||
US dollars | 439,637 | 438,457 | ||||||
Japanese Yen | 273 | 213 | ||||||
UF | 271,822 | 123,059 | ||||||
Mexican pesos | 370 | - | ||||||
Other currencies | 9 | 10 |
44
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 23 – Expenses Incurred in the Issuance of Shares and Debt Titles
Expenses incurred in the issuance and placement of bonds are presented under Other long-term assets, the portion to be amortized within one year is presented within Other current assets, which are amortized using the straight-line method, in accordance with the period for issuance of documents. This amortization is presented as interest expense.
The expenses for issuing, placing and discounting Series “C” and single series bonds amounted to ThUS$6,665. Disbursements paid for risk rating reports, legal and financial advisories, taxes, printing and placement commissions are included as issuance expenses. Amortization for the 2009 period amounted to ThUS$ 147, (ThUS$ 152 in 2008).
The expenses for issuing, placing and discounting Series "G" and "H" bonds amounted to ThUS$3,349. Disbursements paid for risk rating reports, legal and financial advisories, taxes, printing and placement commissions are included as issuance expenses. Amortization for the 2009 period amounted to ThUS$ 64, (ThUS$ 0 in 2008).
Note 24 - Cash Flow Statement
Amounts included in other investing income are summarized as follows:
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Sale of mining concessions | - | 220 | ||||||
Total | - | 220 |
45
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 25 – Commitments and Contingencies
I. Contingencies:
(a) | Material lawsuits or other legal actions of which the Company is party to: |
1. | Plaintiff | : Compañía Salitre y Yodo Soledad S.A. |
Defendant | : Sociedad Química y Minera de Chile S.A. | |
Date of lawsuit | : December 1994 | |
Court | : Civil Court of Pozo Almonte | |
Cause | : Partial annulment of mining property, Cesard 1 to 29 | |
Instance | : Evidence provided | |
Nominal amount | : ThUS$ 211 | |
2. | Plaintiff | : Compañía Productora de Yodo y Sales S.A. |
Defendant | : SQM S.A. | |
Date of lawsuit | : November 1999 | |
Court | : Civil Court of Pozo Almonte | |
Cause | : Partial annulment of mining property, Paz II 1 to 25 | |
Instance | : Evidence provided | |
Nominal amount | : ThUS$ 162 | |
3. | Plaintiff | : Compañía Productora de Yodo y Sales S.A. |
Defendant | : SQM S.A. | |
Date of lawsuit | : November 1999 | |
Court | : Civil Court of Pozo Almonte | |
Cause | : Partial annulment of mining property, Paz III 1 to 25 | |
Instance | : Evidence provided | |
Nominal amount | : ThUS$ 204 | |
4. | Plaintiff | : Angélica Allende and her sons Iván Molina and Cristóbal Molina |
Defendant | : Ingeniería, Construcción y Servicios SMR Limitada and, | |
subsidiarily, SQM Nitratos S.A. and its insurance companies | ||
Date of lawsuit | : May 2008 | |
Court | : Labor Court of Antofagasta | |
Cause | : Work accident | |
Instance | : Suit being answered | |
Nominal amount | : ThUS$ 670 | |
5. | Plaintiff | : Nancy Erika Urra Muñoz |
Defendant | : Fresia Flores Zamorano, Duratec-Vinilit S.A. and SQM S.A. | |
and its insurance companies. | ||
Date of lawsuit | : December 2008 | |
Court | : 1st Civil Court of Santiago | |
Cause | : Work accident | |
Instance | : Response. | |
Nominal amount | : ThUS$ 550 |
46
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 25 – Commitments and Contingencies (continued)
II. SQM S.A. and its subsidiaries have been participating and probably will continue to participate habitually as plaintiffs or defendants in certain judicial proceedings that have been and will be filed and are subject to the decisions of the Ordinary Courts of Justice. Those proceedings, which are regulated by the applicable legal provision, mainly seek to exercise or oppose certain actions or exceptions related to certain mining concessions constituted or in the process of being constituted and do not and will not essentially affect the development of SQM S.A. and its subsidiaries.
III. Soquimich Comercial S.A. has been participating and probably will continue to participate habitually as a plaintiff in certain judicial proceedings through which it seeks mainly to collect and receive the amounts owed to it in the total approximate amount of ThUS $ 900.
IV. SQM S.A. and its subsidiaries have tried and currently continue to try to obtain payment of certain amounts still owed to them for their regular activities. Those amounts will continue to be judicially and non-judicially demanded by the plaintiffs and the actions exercised in relation to them are currently in full force.
V. SQM S.A. and its subsidiaries have not been legally notified of other complaints other than those mentioned in paragraph I above and which pursue the voidance of certain mining properties purchased by SQM S.A. and its subsidiaries and whose proportional purchase price, in respect to the part affected by the respective overlap, exceeds the nominal and approximate amount of ThUS$150 or which seek to obtain payment of certain amounts allegedly owed from exercising their own activities and which exceed the nominal individual amount of approximately ThUS$150.
47
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 25 – Commitments and Contingencies (continued)
b) Restrictions:
The bank loans of SQM S.A. and its subsidiaries contain restrictions similar to those of loans of the same nature that have been in force from time to time and which, among others, are related to maximum debt and minimum shareholders’ equity. Except for the above, SQM S.A. is not exposed to other restrictions in its management or to financial indicator limits by contracts or covenants with creditors.
c) Commitments:
Subsidiary SQM Salar S.A. has signed a rental contract with CORFO which establishes that such subsidiary, will pay to CORFO, for the exploitation of certain mining properties owned by CORFO and for the products resulting from such exploitation, the annual rent stated in the aforementioned contract, the amount of which is calculated on the basis of the sales of each type of product. The contract is in force until 2030 and rent began being paid in 1996 reflecting in income a value of ThUS$ 383 in 2009 (ThUS$ 3,115 in 2008).
II. Indirect Guarantees
The guarantees that do not have a pending payment balance reflect, indirectly that the respective guarantees are in force and approved by the Company’s Board of Directors and that they have not been used by the corresponding subsidiary.
Note 26 – Third Party Guarantees
As of March 31, 2009 and 2008 the Company has the following indirect guarantees outstanding:
Debtor | Balances outstanding | |||||||||
Beneficiary | Name | Relationship | 2009 | 2008 | ||||||
ThUS$ | ThUS$ | |||||||||
BBVA Banco Bilbao Vizcaya Argentaria | Royal Seed Trading Corp. A.V.V. | Subsidiary | 100,131 | 100,640 | ||||||
ING Capital LLC | Royal Seed Trading Corp. A.V.V. | Subsidiary | 80,800 | 81,047 | ||||||
Export Development Canada. | SQM Investment Corpotation N.V. | Subsidiary | 50,448 | - |
48
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 27 – Sureties Obtained from Third Parties
The main solidary pledges provided to guarantee to Soquimich Comercial S.A. fulfillment of the obligations in the commercial mandate agreements for distribution and sale of fertilizers are as follows:
2009 | ||||
Company Name | ThUS$ | |||
Llanos y Wammes Soc. Com. Ltda. | 2,285 | |||
Fertglobal Chile Ltda. y Bramelli | 1,142 | |||
Tattersall S.A. | 1,314 |
Note 28 - Sanctions
During the three months ended March 31, 2009 and 2008, the SVS did not apply sanctions to the Company, its directors or managers.
Note 29 – Subsequent Events
On April 6, 2009, the Superintendency of Securities and Insurance was informed that at the meeting of the Board of Directors of Sociedad Química y Minera de Chile (SQM) held on April 6, 2009 the Directors unanimously agreed to recommend to the next Ordinary General Shareholders’ Meeting payment of a final dividend of US$1.23829 per share to be charged against distributable net income obtained during the 2008 commercial year. Notwithstanding, the amount of US$0.37994 already paid in the interim dividend must be deducted from that final dividend, leaving a balance of US$0.85835 per share to be paid and distributed in favor of the shareholders of SQM registered in the respective registry during the fifth business day prior to the date on which the dividend will be paid.
That proposal, once approved by the next Ordinary General Shareholders’ Meeting which will be held on April 29, 2009, will allow the Company to effectively pay and distribute, in accordance with the respective dividends policy, an annual dividend equivalent to 65% of distributable net income obtained during the 2008 commercial year.
Management is not aware of other significant events occurred between March 31, 2009 and the date of issuance of these Consolidated Financial Statements (April 28, 2009), which could significantly affect them.
49
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 30 – Environmental Projects
The Company is concerned with protecting the environment both in its production processes and with respect to products manufactured. This commitment is supported by its principles indicated in its Sustainable Development Policy.
SQM is currently operating under an Environmental Management System (EMS) bases in the ISO 14000 standard, which has allowed strengthening its environmental performance through the effective application of the Company’s Sustainable Development Policy.
Disbursements made by the Company and its subsidiaries As of March 31, 2009 related to investments in production processes, verification and control of compliance with ordinances and laws relative to industrial processes and facilities amount to ThUS$ 1,744 and are detailed as follows:
Future | ||||||||
2009 | Disbursements | |||||||
ThUS$ | ThUS$ | |||||||
Projects | ||||||||
Enablement of money exchange and bathrooms | 535 | 1,183 | ||||||
Environmental evaluation | 57 | 492 | ||||||
Handling of household and industrial waste | 182 | 341 | ||||||
Hazardous substance management | 223 | 1,416 | ||||||
Salar (Salt deposit) environmental follow-up plan | 44 | 169 | ||||||
Environmental studies | 169 | 371 | ||||||
Improvements in M. Elena – Streets camp | - | 740 | ||||||
Sanitary regulations PV Traffic Facilities | - | 98 | ||||||
Environmental remediation | 277 | 904 | ||||||
Environmental Management | * 257 | **1,238 | ||||||
Total | 1,744 | 6,952 |
(*) Corresponds to the 2008 Budget
(**)Corresponds to the 2009 Budget
50
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 30 – Environmental Projects (continued)
Operations which use caliche as raw material are developed desert geographical areas with climatic conditions favorable for drying solids and evaporating liquids using solar energy. Operations for the open-pit extraction of minerals, due to their low waste to mineral ratio, generate remaining deposits which slightly alter the environment. During the extraction process and subsequent crushing of ore, particle emissions occur, which is normal for these types of operations.
On August 10, 1993, the Ministry of Health published a resolution under the Sanitary Code that established that the levels of breathable particles present at Maria Elena Plant exceeded the level allowed for air quality and, consequently, affected the nearby city of Maria Elena. These particles mainly come from dust that results from caliche processing, particularly during the crushing processes prior to leaching. Within the framework of a decontamination plan for this city and in accordance with its Sustainable Development Policy, the Company has implemented a series of measures that have shown notable improvement in air quality at María Elena. In October 2005, the company obtained approval from environmental authorities for a project entitled “Technological Change at María Elena”. The operation of this project will facilitate the reduction of particle emissions, as required by the new environmental standard. The operation of this project will allow reducing particle emission, as required by the new environmental standard, which is estimate to occur during the second half of 2008. The new María Elena crushing plant was finally put out of service as of July 5, 2008, with the consequent improvement in air quality, which will be able to be evaluated after three years of operation as required by the regulation for MP10.
In addition, for all its operations, the Company carries out environmental follow-up and monitoring plans based on specialized scientific studies, and it also provides an annual training program in environmental matters to both its direct employees and for contractors’ employees. Within this context, SQM entered into a contract with the National Forestry Corporation (CONAF) aimed at researching the activities of flamingo groups that live in the Salar de Atacama lagoons. Such research includes a population count of the birds, as well as breeding research. Environmental monitoring activities carried out by the Company at the Salar de Atacama and other systems in which it operates are supported by a number of studies that have integrated diverse scientific efforts from prestigious research centers, including Dictuc from Pontificia Universidad Católica and the School of Agricultural Science of Universidad de Chile.
Furthermore, the Company is performing significant activities for the recording of Pre-Columbian and historical heritage, as well as the protection of heritage sites, in accordance with current Chilean laws. These activities have been especially performed in the areas surrounding María Elena and the Nueva Victoria plant. This effort is being accompanied by cultural initiatives within the community and the organization of exhibits in local and regional museums.
As emphasized in its Sustainable Development Policy, the Company strives for maintaining positive relationships with the surrounding community, as well as to participate in community development by supporting joint projects and activities which help to improve the quality of life for residents. For this purpose, the Company has focused its efforts on activities involving the rescue of historical heritage, education and culture, and development, and in order to do so, its acts both individually and in conjunction with both private and public entities.
51
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 31 – Significant Events
On January 13, 2009 the Superintendency of Securities and Insurance was informed that Sociedad Química y Minera de Chile S.A. has successfully placed two series of bonds in the domestic market. The first for ThUF 4,000 was placed with a term of 21 years, with amortization of principal starting in 2019 and at an annual interest rate of UF plus 5.05%. The second, for ThCh$ 21,000, was placed with a term of 5 years, with a single amortization upon expiry of that term and an annual interest rate of 7.5% in nominal pesos.
The resources obtained of close to ThUS$ 173,000, will be used by SQM to finance its investment plan and refinance certain liabilities.
Note 32 – Unearned Income
During the periods ended March 31, 2009 and 2008, the Company maintains unearned income
related to the recognition of sales invoices the delivery of which will occur subsequent to the close of the financial statements. The detail is as follows:
2009 | 2008 | |||||||
ThUS$ | ThUS$ | |||||||
Unearned income | 24,261 | 58,458 |
52
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Note 33 – Time Deposits
Bank of the Investment | Kind of Deposit | Currency of Origin | Interest Rate | Investment Date | Expiration Date | Capital in ThUS$ | Accrued Interest in ThUS$ | Balance Present Year in ThUS$ | Balance Previous Year in ThUS$ | |||||||||||||||||||||
Banco de Chile | Fixed Term | US dollar | 2.35 | % | 01-05-2009 | 04-06-2009 | 10,000 | 56 | 10,056 | - | ||||||||||||||||||||
Scotiabank Sud Americano | Fixed Term | US dollar | 2.00 | % | 01-09-2009 | 04-09-2009 | 8,000 | 36 | 8,036 | - | ||||||||||||||||||||
Banco Estado | Fixed Term | US dollar | 0.75 | % | 03-23-2009 | 04-23-2009 | 20,000 | 3 | 20,003 | - | ||||||||||||||||||||
BBVA Chile | Fixed Term | US dollar | 1.35 | % | 03-02-2009 | 04-27-2009 | 20,000 | 22 | 20,022 | - | ||||||||||||||||||||
BBVA Chile | Fixed Term | US dollar | 1.10 | % | 03-16-2009 | 04-27-2009 | 4,500 | 2 | 4,502 | - | ||||||||||||||||||||
BBVA Chile | Fixed Term | US dollar | 1.35 | % | 03-02-2009 | 04-28-2009 | 10,000 | 11 | 10,011 | 99 | ||||||||||||||||||||
Banco Santander- Santiago | Fixed Term | US dollar | 2.20 | % | 01-09-2009 | 04-29-2009 | 12,500 | 62 | 12,562 | 52,764 | ||||||||||||||||||||
BBVA Chile | Fixed Term | US dollar | 1.35 | % | 03-02-2009 | 04-29-2009 | 6,000 | 7 | 6,007 | - | ||||||||||||||||||||
Banco Santander- Santiago | Fixed Term | Chilean Pesos | 0.32 | % | 03-11-2009 | 04-13-2009 | 10,119 | 22 | 10,141 | - | ||||||||||||||||||||
Corpbanca | Fixed Term | Chilean Pesos | 0.31 | % | 03-11-2009 | 04-13-2009 | 17,247 | 36 | 17,283 | - | ||||||||||||||||||||
Corpbanca | Fixed Term | Chilean Pesos | 0,35 | % | 03-04-2009 | 04-17-2009 | 7,718 | 24 | 7,742 | - | ||||||||||||||||||||
BBVA Chile | Fixed Term | Chilean Pesos | 0.22 | % | 03-24-2009 | 04-23-2009 | 4,298 | 2 | 4,300 | - |
53
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Banco Crédito e Inversiones | Fixed Term | Chilean Pesos | 0.22 | % | 03-24-2009 | 04-23-2009 | 16,121 | 8 | 16,129 | - | |||||||||||||||||||||
Banco Crédito e Inversiones | Fixed Term | Chilean Pesos | 0.22 | % | 03-24-2009 | 05-08-2009 | 14,578 | 7 | 14,585 | - | |||||||||||||||||||||
Banco de Chile | Fixed Term | Chilean Pesos | 0.22 | % | 03-24-2009 | 05-08-2009 | 11,148 | 6 | 11,154 | 20,449 | |||||||||||||||||||||
Banco de Chile | Fixed Term | Chilean Pesos | 0.37 | % | 02-17-2009 | 04-20-2009 | 5,089 | 26 | 5,115 | - | |||||||||||||||||||||
Banco de Chile | Fixed Term | Chilean Pesos | 0.37 | % | 02-26-2009 | 04-29-2009 | 10,201 | 42 | 10,243 | - | |||||||||||||||||||||
Banco Santander – Santiago | Fixed Term | Chilean Pesos | 0.21 | % | 03-16-2009 | 05-04-2009 | 38,607 | 41 | 38,648 | ||||||||||||||||||||||
Banco Santander – Santiago | Fixed Term | Chilean Pesos | 0.37 | % | 02-27-2009 | 05-05-2009 | 20,556 | 81 | 20,637 | - | |||||||||||||||||||||
Banco de Chile | Fixed Ternm | Chilean Pesos | 0.36 | % | 02-20-2009 | 05-05-2009 | 21,197 | 99 | 21,296 | - | |||||||||||||||||||||
Corpbanca | Fixed Term | Chilean Pesos | 0.35 | % | 03-04-2009 | 05-05-2009 | 4,171 | 13 | 4,184 | - | |||||||||||||||||||||
Banco de Chile | Fixed Term | Chilean Pesos | 0.36 | % | 02-20-2009 | 05-07-2009 | 21,197 | 99 | 21,296 | - | |||||||||||||||||||||
Banco de Chile | Fixed Term | Chilean Pesos | 0,35 | % | 02-24-2009 | 05-07-2009 | 10,352 | 42 | 10,394 | - | |||||||||||||||||||||
Banco Santander – Santiago | Fixed Term | Chilean Pesos | 0.23 | % | 03-26-2009 | 05-08-2009 | 16,749 | 6 | 16,755 | - | |||||||||||||||||||||
Corpbanca | Fixed Term | Chilean Pesos | 0.25 | % | 03-24-2009 | 05-08-2009 | 3,468 | 2 | 3,470 | - | |||||||||||||||||||||
Banco de Chile | Fixed Term | Chilean Pesos | 0.23 | % | 03-31-2009 | 05-08-2009 | 19,966 | - | 19,966 | - | |||||||||||||||||||||
Banco Santander – Santiago | Fixed Term | Chilean Pesos | 0.25 | % | 03-30-2009 | 05-08-2009 | 21,105 | 2 | 21,107 | - | |||||||||||||||||||||
Corpbanca | Fixed Term | Chilean Pesos | 0.25 | % | 03-30-2009 | 05-08-2009 | 9,326 | 1 | 9,327 | - |
54
SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Notes to the Consolidated Financial Statements
(A translation of the original in Spanish- see note 2 (a))
Banco Scurity | Fixed Term | US dollar | 1.50 | % | 03-02-2009 | 04-29-2009 | 10,000 | 12 | 10,012 | - | |||||||||||||||||||||
BBVA Chile | Fixed Term | US dollar | 1,35 | % | 03-02-2009 | 04-29-2009 | 5,000 | 5 | 5,005 | - | |||||||||||||||||||||
Citifunds Institucional Liquid Reserve Ltd. | Overnight | US dollar | 1.53 | % | 03-31-2009 | 04-01-2009 | 552 | - | 552 | - | |||||||||||||||||||||
Banco Crédito e Inversiones | Fiixed Term | US dollar | 4.20 | % | 11-10-2008 | 04-09-2009 | 10,000 | 165 | 10,165 | - | |||||||||||||||||||||
Banco de Crédito | Fiixed Term | US dollar | 4.33 | % | 11-10-2008 | 05-11-2009 | 10,000 | 170 | 10,170 | - | |||||||||||||||||||||
Corpbanca | Fixed Term | US dollar | 2.55 | % | 01-20-2009 | 04-20-2009 | 9,000 | 45 | 9,045 | - | |||||||||||||||||||||
Banco Scurity | Fixed Term | US dollar | 1,50 | % | 03-03-2009 | 04-28-2009 | 2,000 | 2 | 2,002 | - | |||||||||||||||||||||
Banco Crédito e Inversiones | Fixed Term | US dollar | 1.75 | % | 02-25-2009 | 04-29-2009 | 14,500 | 24 | 14,524 | - | |||||||||||||||||||||
Banco Santander - Santiago | Fixed Term | US dollar | 1.50 | % | 02-27-2009 | 04-29-2009 | 5,008 | 7 | 5,015 | - | |||||||||||||||||||||
Citifunds Institucional Liquid Reserve Ltd. | Overnight | US dollar | 0.44 | % | 03-31-2009 | 04-012-2009 | 159 | - | 159 | - | |||||||||||||||||||||
BBVA Banco Bilbao Vizcaya Argentaria | Renewable term | Euro | 0.00 | % | 03-22-2004 | 04-30-2009 | 79 | - | 79 | - | |||||||||||||||||||||
Citibank N.A. | - | - | - | - | - | - | - | - | 3,662 | ||||||||||||||||||||||
Bancomer | - | - | - | - | - | - | - | - | 265 | ||||||||||||||||||||||
440,511 | 1,188 | 441,699 | 77,239 |
55
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: June 16, 2009