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 nine-month period ended September 30, 2009 filed by Sociedad Química y Minera de Chile S.A. before the Superintendencia de Valores y Seguros de Chile on October 27, 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 ¨

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 ¨
No x

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82_________
 

 
On October 27, 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 nine-month period ended September 30, 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 NINE-MONTH PERIOD ENDED SEPTEMBER 30, 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
September 30, 2009 and 2008

 

 

Consolidated Financial Statements

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

As of September 30, 2009 and 2008
and for the nine month periods ended September 30, 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 Sheet
(A translation of the original in Spanish- see note 2 (a))

         
As of September 30,
 
   
Note
   
2009
   
2008
 
         
ThUS$
   
ThUS$
 
ASSETS
                 
                   
Current assets
                 
Cash
          22,071       22,360  
Time deposits
  33       270,742       77,763  
Marketable securities
  4       192,315       56,717  
Accounts receivable, net
  5       279,808       338,798  
Other accounts receivable, net
  5       68,102       73,307  
Accounts receivable from related companies
  6       77,698       58,989  
Inventories, net
  7       646,671       562,517  
Recoverable taxes
          64,168       43,802  
Prepaid expenses
          5,184       5,531  
Deferred income taxes
  15       33,969       16,265  
Other current assets
          51,530       34,357  
Total current assets
          1,712,258       1,290,406  
                       
Property, plant and equipment, net
  8       1,264,408       1,045,724  
                       
Other Assets
                     
Investments in related companies
  9       34,282       36,824  
Goodwill, net
  10       30,269       32,548  
Negative goodwill, net
  10       (1,074 )     (1,279 )
Long-term accounts receivable, net
  5       1,417       1,044  
Long-term accounts receivable from related companies
  6       -       2,000  
Intangible assets, net
          2,622       3,285  
Other long-term assets
  11       43,104       34,563  
Total Other Assets
          110,620       108,985  
Total assets
          3,087,286       2,445,115  

 
2

 

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.
Consolidated Balance Sheet
(A translation of the original in Spanish- see note 2 (a))

         
As of September 30,
 
   
Note
   
2009
   
2008
 
         
ThUS$
   
ThUS$
 
LIABILITIES AND SHAREHOLDERS' EQUITY
                 
                   
Current liabilities
                 
Short-term bank debt
  12       99,784       22,388  
Current portion of long-term debt
  12       100,917       1,114  
Obligations with the public (commercial papers)
  13       53,881       -  
Current portion of bonds payable
  13       14,957       12,717  
Dividends payable
          795       546  
Accounts payable
          156,597       138,820  
Other accounts payable
          364       364  
Notes and accounts payable to related companies
  6       765       553  
Accrued liabilities
  14       52,077       60,706  
Withholdings
          7,985       11,399  
Income taxes
          12,439       68,162  
Deferred income
  32       30,780       55,873  
Deferred income taxes
  15       -       -  
Other current liabilities
          2,646       7,797  
Total current liabilities
          533,987       380,439  
                       
Long-term liabilities
                     
Long-term bank debt
  12       275,000       180,000  
Long-term Obligations with the Public (Bonds)
  13       634,544       299,941  
Other accounts payable
          242       515  
Deferred income taxes
  15       60,559       55,005  
Long-term accrued liabilities
  16       49,500       31,706  
Total long-term liabilities
          1,019,845       567,167  
                       
Minority interest
  17       43,721       51,363  
                       
Shareholders' equity
                     
Paid-in capital
  18       477,386       477,386  
Other reserves
  18       160,563       163,095  
Retained earnings
  18       851,784       805,665  
Total shareholders' equity
          1,489,733       1,446,146  
Total liabilities and shareholders' equity
          3,087,286       2,445,115  

 
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 nine months ended
 
         
September 30,
 
   
Note
   
2009
   
2008
 
         
ThUS$
   
ThUS$
 
Operating results
                 
                   
Sales
          1,049,182       1,376,225  
Cost of sales
          (648,453 )     (830,804 )
Gross margin
          400,729       545,421  
Selling and administrative expenses
          (58,763 )     (64,037 )
Operating income
          341,966       481,384  
                       
Non-operating results
                     
Non-operating income
 
20
      19,044       32,245  
Non-operating expenses
 
20
      (49,637 )     (44,085 )
Non-operating loss
          (30,593 )     (11,840 )
Income before income taxes
          311,373       469,544  
Income tax expense
 
15
      (60,434 )     (80,988 )
Income before minority interest
          250,939       388,556  
Minority interest
 
17
      758       (7,485 )
Net income before negative goodwill
          251,697       381,071  
Net income
          251,697       381,071  

 
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 nine months ended
 
   
Note
   
2009
   
2008
 
         
ThUS$
   
ThUS$
 
Cash flows from operating activities
                 
Net income
          251,697       381,071  
Charges (credits) to income not representing cash flows
                     
Depreciation expense
 
8
      112,428       83,535  
Amortization of intangible assets
          493       528  
Write-offs and accruals
          38,033       19,090  
Gain on equity investments in related companies
          (2,562 )     (13,497 )
Loss on equity investments in related companies
          850       33  
Amortization of goodwill
 
10
      1,632       1,669  
(Profit) loss on sales of assets
          (196 )     (2,939 )
Los from sale of investments
          -       (1,387 )
Other credits to income not representing cash flows
          (3,538 )     (3,556 )
Other charges to income not representing cash flows
          114,184       172,690  
Foreign exchange difference, net
          8,528       7,585  
Net changes in operating assets and liabilities (Increase) decrease:
                     
Trade accounts receivable
          9,111       (185,802 )
Inventories
          (117,527 )     (199,902 )
Other assets
          (63,382 )     (11,994 )
Accounts payable
          (16,352 )     58,619  
Interest payable
          34,236       990  
Net income taxes payable
          (159,469 )     (40,705 )
Other accounts payable
          (24,367 )     -  
VAT and taxes payable
          3,126       (13,802 )
Minority interest
 
17
      (758 )     7,486  
Net cash provided from operating activities
          186,167       259,712  
                       
Cash flows from financing activities
                     
Proceeds from short term bank financing
          270,809       70,239  
Bonds payable
          372,347       -  
Payment of dividends
          (243,976 )     (115,990 )
Repayment of bank financing
          (160,000 )     (50,000 )
Payment of obligations with the public
          (2,788 )     (3,138 )
Payment of expenses for the issuance and placement of bonds payable
          (4,447 )     -  
Net cash used in financing activities
          231,945       (98,889 )
                       
Cash flows from investing activities
                     
Sales of property, plant and equipment
          1,729       25,382  
Sales of permanent investments
          -       1,688  
Other investing income
          2,121       -  
Additions to property, plant and equipment
          (257,074 )     (183,671 )
Capitalized interest
          (13,089 )     (7,405 )
Other disbursements
          (1,662 )     (565 )
Net cash used in investing activities
          (267,975 )     (164,571 )
                       
Effect of inflation on cash and cash equivalents
          14,615       547  
Net change in cash and cash equivalents
          164,752       (3,201 )
Beginning balance of cash and cash equivalents
          323,920       164,213  
Ending balance of cash and cash equivalents
          488,672       161,012  
                       

 
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 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  
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.
    100.00       100.00  
Proinsa Ltda.
    60.58       60.58  
SQM Potasio S.A.
    100.00       100.00  
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  
Agrorama Callegari Ltda.
    42.45       -  

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 for the nine month period as of September 30, 2009 and 2008.

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 year.  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 year-end constant pesos based on the change in the consumer price index during the year (2.8% and 6.9% in 2009 and 2008, respectively).  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 year-end.  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$  550.36 per US$1 at September 30, 2009 and Ch$ 551.31 per US$1 at September 30, 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 September 30, 2009 and 2008 generated net earnings (loss) of ThUS$ (8,528) and ThUS$ (7,585) 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 September 30, as follows:
 
   
2009
   
2008
 
   
US$
   
US$
 
Brazilian Real
    1.78       1.96  
New Peruvian Sol
    3.19       3.19  
Argentine Peso
    3.85       3.15  
Japanese Yen
    98.25       118.50  
Euro
    0.68       0.68  
Mexican Peso
    13.55       10.94  
Australian Dollar
    1.14       1.27  
Pound Sterling
    0.61       0.56  
Ecuadorian Sucre
    1.00       1.00  
South African Rand
    7.44       8.17  

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 variances 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% 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.

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.

Modification 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 these.

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.

 
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 3 - Changes in Accounting Principles

During the period ended September 30, 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.

 
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 4 - Marketable Securities

As of September 30 marketable securities are detailed as follows:

   
2009
   
2008
 
   
ThUS$
   
ThUS$
 
             
Mutual funds
    192,315       56,717  
Total
    192,315       56,717  

Mutual funds relate to investments made in 'Citifunds Institutional Liquid Reserve Limited' for ThUS$ 63,387 (ThUS$ 52,073 in 2008) in 'Merrill Lynch Institutional Liquidity Fund' for ThUS$ 64,422 (ThUS$ 4,644 in 2008), in JPM USDollar Money Market Fund ThUS$ 64,506 (ThUS$ 0 in 2008).

These funds are highly liquid and basically invest in fixed income instruments with less than 90 days duration.
 
Note 5 - Short-term and long-term Accounts Receivable

Short term and long-term accounts receivable and other accounts receivable as of September 30 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
    234,194       266,249       60,428       82,264       294,622       348,513  
Allowance for doubtful accounts
                                    (14,814 )     (9,715 )
Notes receivable
    40,386       26,131       22,025       37,308       62,411       63,439  
Allowance for doubtful accounts
                                    (6,241 )     (6,684 )
Accounts receivable, net
                                    335,978       395,553  
                                                 
Other accounts receivable
    12,580       13,665       824       4,001       13,404       17,666  
Allowance for doubtful accounts
                                    (1,472 )     (1,114 )
Other accounts receivable, net
                                    11,932       16,552  
                                                 
Long-term receivables
                                    1,417       1,044  

 
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 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
    74,815       182,686       120,815       106,137       25,522       8,914       32,103       38,429       26,553       2,632       279,808       338,798  
% of total
    26.74 %     53.92 %     43.18 %     31.33 %     9.12 %     2.63 %     11.47 %     11.34 %     9.49 %     0.78 %     100,00 %     100.00 %
Net short-term notes receivable
                                                                                               
Balance
    36,848       54,493       15,980       -       -       -       -       -       3,342       2,262       56,170       56,755  
% of total
    65.60 %     96.01 %     28.45 %     -       -       -       -       -       5.95 %     3.99 %     100,00 %     100.00 %
                                                                                                 
Net short-term other accounts receivable
                                                                                               
Balance
    10,601       15,434       850       343       12       161       383       526       86       88       11,932       16,552  
% of total
    88.85 %     93.25 %     7.12 %     2.07 %     0.10 %     0.97 %     3.21 %     3.18 %     0.72 %     0.53 %     100,00 %     100.00 %
                                                                                                 
Subtotal short-term accounts receivable, net
                                                                                               
Balance
    122,264       252,613       137,645       106,480       25,534       9,075       32,486       38,955       29,981       4,982       347,910       412,105  
% of total
    35.14 %     61.30 %     39.56 %     25.84 %     7.34 %     2.20 %     9.34 %     9.45 %     8.62 %     1.21 %     100,00 %     100.00 %
                                                                                                 
Long-term accounts receivable, net
                                                                                               
Balance
    1,417       1,044       -       -       -       -       -       -       -       -       1,417       1,044  
% of total
    100.00 %     100.00 %     -       -       -       -       -       -       -       -       100,00 %     100.00 %
                                                                                                 
Total short and long-term accounts receivable, net
                                                                                               
Balance
    123,681       253,657       137,645       106,480       25,534       9,075       32,486       38,955       29,981       4,982       349,327       413,149  
% of total
    35.41 %     61.39 %     39.40 %     25.77 %     7.31 %     2.20 %     9.30 %     9.43 %     8.58 %     1.21 %     100,00 %     100.00 %

 
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

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 September 30, 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
    5,810       13,908       -       -  
Nutrisi Holding N.V.
    1,771       1,790       -       -  
Ajay Europe S.A.R.L.
    2,480       2,769       -       -  
Ajay North America LLC
    2,208       4,505       -       -  
Abu Dhabi Fertilizer Industries WWL
    3,110       6,904       -       2.000  
NU3 B.V.
    1,009       2,677       -       -  
Sales de Magnesio Ltda.
    301       100       -       -  
SQM Agro India
    218       629       -       -  
Misr Specialty Fertilizers (MSF)
    122       891       -       -  
Soc.Inv.Pampa Calichera S.A.
    8       8       -       -  
Kowa Company Ltd.
    14,182       23,609       -       -  
SQM East Med Turkey
    767       1,199       -       -  
SQM Thailand CO. LTD.
    482       -       -       -  
Minera Saskatchewan (PCS)
    44,945       -       -       -  
Callegari Agricola S.A.
    285       -                  
Total
    77,698       58,989       -       2,000  

b)
Amounts included in balances with related parties as of  September 30, 2009 and 2008, continued:

   
Short-term
 
   
2009
   
2008
 
Accounts payable
 
ThUS$
   
ThUS$
 
             
SQM Thailand Co. Ltd.     -       90  
NU3 N.V
    765       463  
Total
    765       553  

There were no outstanding long-term accounts payable with related parties as of September 30, 2009 and 2008.

 
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 6 - Balances and Transactions with Related Parties (continued)

c)           During 2009 and 2008, principal transactions with related parties were as follows:

    Type of  
Amount of
Impact on income
Company
Relationship
transaction
 
Transaction
(charge) credit
       
2009
   
2008
   
2009
   
2008
 
       
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                             
NU3 N.V. (Belgium)
Indirect
Sales of products
    7,847       16,442       2,693       11,542  
Doktor Tarsa Tarim Sanayi AS
Indirect
Sales of products
    5,895       15,894       1,796       11,615  
Abu Dhabi Fertilizer  Ind. WWL
Indirect
Sales of products
    4,783       7,498       1,387       2,350  
 
Indirect
Income financial
    54       129       54       129  
Ajay Europe S.A.R.L.
Indirect
Sales of products
    6,065       15,871       2,772       4,211  
 
Indirect
Income financial
    7       7       7       7  
 
Indirect
Dividends
    -       118       -       -  
NU3 B.V.
Indirect
Sales of products
    7,629       11,750       1,144       7,721  
 
Indirect
Services
    79       83       -       83  
Ajay North America  LLC
Indirect
Sales of products
    8,021       24,523       3,747       7,083  
 
Indirect
Dividends
    453       1,054       -       -  
 
Indirect
Sales of property, plant and equipment
    20       -       20       -  
Kowa Company Ltd.
Shareholder
Sales of products
    42,772       82,423       17,455       37,612  
 
Shareholder
Services
    92       -       -       -  
SQM Agro India PYT Ltda.
Indirect
Sales of products
    77       598       12       275  
Misr Specialty
Indirect
Sales of products
    -       733       -       539  
 
Indirect
Income financial
    -       7       -       7  
Nutrisi
Indirect
Income financial
    -       78       -       78  
SQM Eastmed Turkey
Indirect
Sales of products
    -       397       -       264  
SQM Thailand Co.Ltda.
Indirect
Sales of products
    1,175       -       341       -  
Sales de Magnesio Ltda.
Indirect
Sales of products
    734       615       223       280  
 
Indirect
Dividends
    385       491       -       -  
 
Indirect
Services
    270       -       -       -  
Minera Saskatchewan  (PCS)
Shareholder
Sales of products
    44,791       -       15,837       -  
 
Shareholder
Service
    154       -       -       -  

 
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 7 - Inventories

Net inventories are summarized as follows:

   
2009
   
2008
 
   
ThUS$
   
ThUS$
 
             
Finished products
    339,948       361,558  
Work in process
    280,153       162,695  
Supplies
    26,570       38,264  
Total
    646,671       562,517  

 
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

Property, plant and equipment are summarized as follows:

   
2009
   
2008
 
   
ThUS$
   
ThUS$
 
Land
           
Land
    81,707       80,625  
Mining Concessions
    30,086       30,086  
Total
    111,793       110,711  
                 
Buildings and infrastructure
               
Buildings
    176,419       151,437  
Installations
    388,447       315,135  
Construction-in-progress
    361,207       291,820  
Other
    233,849       210,665  
Total
    1,159,922       969,057  
                 
Machinery and Equipment
               
Machinery
    603,712       545,250  
Equipment
    155,335       138,278  
Project-in-progress
    88,752       41,279  
Other
    40,859       20,350  
Total
    888,658       745,157  
                 
Other fixed assets
               
Tools
    11,214       9,564  
Furniture and office equipment
    16,169       15,739  
Project-in-progress
    26,068       13,220  
Other
    13,133       9,831  
Total
    66,584       48,354  

 
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 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
    2,288,336       1,934,658  
                 
Less: Accumulated depreciation
               
Buildings and infrastructure
    (454,182 )     (381,430 )
Machinery and equipment
    (498,266 )     (434,074 )
Other fixed assets
    (31,526 )     (34,461 )
Technical appraisal
    (39,954 )     (38,969 )
Total accumulated depreciation
    (1,023,928 )     (888,934 )
Net property, plant and equipment
    1,264,408       1,045,724  
                 
   
2009
   
2008
 
Depreciation for the nine months ended September 30:
 
ThUS$
   
ThUS$
 
                 
Buildings and infrastructure
    (58,481 )     (43,028 )
Machinery and equipment
    (49,703 )     (37,427 )
Other fixed assets
    (3,550 )     (2,226 )
Technical revaluation
    (694 )     (854 )
Total depreciation
    (112,428 )     (83,535 )

 
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 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
    (576 )     (544 )
    Total assets in leasing
    1,412       1,444  

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

On July 14, 2009, subsidiary "Comercial Agrorama Callegari Limitada" was established, with a contribution from Soquimich Comercial S.A. of ThUS$ 1,021 (70% participation).

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.

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.

 
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 9 - Investments in and Receivables from Related Companies (continued)
 
Detail of investments in related companies

Tax
     
Country
 
Controlling
 
Number
   
Ownership
   
Equity of
   
Book value of
   
Net income
   
Equity
 
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
 
Doktor Tarsa Tarim Sanayi AS
 
Turkey
 
Euros
    -       50.00       50.00       18,562       20,059       9,281       10,030       1,671       10,282       835       5,141  
0-E
 
Nutrisi Holding N.V.
 
Belgium
 
Euros
    -       50.00       50.00       12,831       17,529       6,474       8,137       -2,402       7,157       -719       3,074  
0-E
 
Abu Dhabi Fertilizer
                                                                                               
   
Industries WWL
 
UAE
 
US$
    1,961       50.00       50.00       11,196       10,198       5,598       5,099       600       5,485       300       2,743  
0-E
 
Ajay North America
 
USA
 
US$
    -       49.00       49.00       13,405       11,787       5,245       4,909       1,833       1,971       898       966  
0-E
 
Ajay Europe S.A.R.L.
 
France
 
Euros
    36,700       50.00       50.00       10,308       9,671       3,574       4,302       627       826       313       413  
0-E
 
Misr Specialty
 
Egypt
 
US$
    -       47.00       47.00       4,550       4,982       2,160       2,366       -212       823       -101       391  
0-E
 
SQM Thailand Co. Ltd.
 
Thailand
 
US$
    -       40.00       40.00       3,333       3,596       1,333       1,438       131       1,077       52       431  
77557430-5
 
Sales de Magnesio Ltda.
 
Chile
 
Pesos
    -       50.00       50.00       605       729       302       364       326       510       163       255  
0-E
 
SQM Eastmed Turkey
 
Turkey
 
Euros
    -       50.00       50.00       460       111       230       56       -       -66       -       -33  
0-E
 
Agro India Limitada
 
India
 
US$
    -       49.00       49.00       130       208       64       102       -62       170       -30       83  
                                                                                                     
81767200-0
 
Asoc. Garantizadora
 
Chile
 
Pesos
    -       3.00       3.00       620       618       21       21       -       -5       -       -  
     Total
                                                        34,282       36,824                                  

 
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 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$12 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
     
September 30, 2009
   
September 30, 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.
    108       1,048       108       1,193  
96801610-5
Comercial Hydro S.A.
    127       608       164       881  
79947100-0
SQM Industrial S.A.
    835       16,969       835       18,082  
0-E
SQMC México S.A. de C.V.
    42       683       42       738  
0-E
Comercial Caiman Internacional S.A.
    17       68       17       91  
0-E
SQM Dubai- Fzco
    76       1,605       76       1,706  
0-E
Iodine  Minera B.V.
    427       9,288       427       9,857  
Total
      1,632       30,269       1,669       32,548  
                                   
b)           Negative Goodwill
 
September 30, 2009
   
September 30, 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.
    -       1,074       -       1,279  
Total
      -       1,074       -       1,279  
 
 
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 11 - Other Long-term Assets

Other long-term assets are summarized as follows:

   
2009
   
2008
 
   
ThUS$
   
ThUS$
 
             
Engine and equipment spare-parts, net                    (1)
    802       3,045  
Union negotiation bonus
    1,569       681  
Mine development costs
    27,233       23,871  
Income taxes recoverable
    262       324  
Healthcare institution guarantee in the National Healthcare Service Fonasa
    322       313  
Construction of Salar -Baquedano road
    960       1,080  
Deferred loan issuance costs                                    (2)
    1,330       208  
Cost of issuance and placement of bonds                (3)
    10,115       4,423  
Other
    511       618  
Total
    43,104       34,563  
 
(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$
 
             
Banco de Crédito e Inversiones
    30,000       -  
BBVA Chile
    30,794       -  
Banco Estado
    20,575       -  
Banco Santander Santiago
    -       20,211  
HSBC Bank Chile
    14,914       -  
Other
    3,501       2,177  
Total
    99,784       22,388  
Annual average interest rate
    3.69 %     3.84 %

 
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 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)
    175,056       100,239  
ING Capital LLC (2)
    80,431       80,875  
Banco Estado (3)
    30,028       -  
Export Development Can  (4)
    50,362       -  
Caja de Ahorros y Monte de Piedad Madrid (5)
    40,040          
Total
    375,917       181,114  
                 
Less: Current portion
    (100,917 )     (1,114 )
                 
Long-term portion
    275,000       180,000  

(1) ThUS$ 75,000 loan, variable interest rate currently at 3.2825% per annum, quarterly payment. The principal is due on June 24, 2012.
      ThUS$ 100,000 loan, variable interest rate currently at 0.75% per annum, quarterly payment. The principal is due on February 25, 2010.
(2)U.S. dollar-denominated loan, variable interest rate currently at 1.55% per annum, semiannual payment. The principal is due on November 28, 2011.
(3) U.S. dollar-denominated loan, variable interest rate currently at 3.97% per annum, semiannual payment. The principal is due on March 23, 2011.
(4)U.S. dollar-denominated loan, variable interest rate currently at 2.6613% per annum, semiannual payment. The principal is due on December 22, 2010.
(5)U.S. dollar-denominated loan, variable interest rate currently at 2.5625% per annum, semiannual quarterly. The principal is due on September 11, 2012.

c)           The maturity of long-term debt is as follows:

   
2009
   
2008
 
   
ThUS$
   
ThUS$
 
Years to maturity
           
Current portion
    100,917       1,114  
1 to 2 years
    80,000       100,000  
2 to 3 years
    195,000       80,000  
Total
    375,917       181,114  

 
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 (Commercial Papers and Bonds Payable)
 
Additional Information

As of September 30, 2009 and 2008 ThUS$14,957 and ThUS$12,717 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$634,544 in 2009 and ThUS$299,941 in 2008 are presented in the long-term, and correspond to the principal installments of the Single Series bond and Series C, G, H, J and I bonds.
 
On January 25, 2006, the Company made a placement of Series C bonds for an amount of UF 3,000,000 (ThUS$102,630) at an annual rate of 4.00%.
 
As of September 30, 2009 and 2008 the following payments have been made with a charge to the line of Series C bonds:
 
   
2009
   
2008
 
             
   
UF
   
ThUS$
   
UF
   
ThUS$
 
                         
Capital payments
    75,000.00       2,787       75,000.00       3,261  
                                 
Interest payments
    53,470.80       1,987       56,441.40       2,454  
 
Single series bonds
 
On April 5, 2006, the Company made a placement of 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 September 30, 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
    6,125       6,125  

 
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 (Commercial Papers and Bonds Payable) (continued)

Series “G” and “H” Bonds

On January 13, 2009 the Company placed two series of bonds in the Chilean market.  Series H for UF 4,000,000 (ThUS$139,216) at an annual rate of 4.9% with a 21-year term, and biannual amortization of principal beginning in 2019 and Series G for ThCh$21,000,000 (ThUS$34,146) which was placed at a 5-year term with one single amortization upon maturity at an annual interest rate of 7%.

Series "J" and "I" Bonds
———————

On May 8, 2009 the Company placed two series of bonds in the domestic market.  Series J for ThCh$52,000,000 (ThUS$92,456) was placed at a 5-year term, with single amortization upon maturity and a 5.5% annual interest rate and Series I for UF 1,500,000 (ThUS$56,051) which was placed at a 5-year term, with single amortization upon maturity and a 3.00% annual interest rate.

2. Commercial papers (promissory notes)
—————————-

On March 24, 2009 the Company issued commercial papers in the Chilean market under Series 2-A, line 46, in the amount of ThCh$ 15,000,000 (ThUS$25,875), maturing on December 15, 2009.

On April 2, 2009 commercial papers were issued in the Chilean market under Series 1-B, line 47, in the amount of ThCh$ 15,000,000 (ThUS$25,770), maturing on March 17, 2009.

 
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 13 - Short and Long-term Obligations with the Public (Promissory Notes and Bonds Payable) (continued)

No. of
Registration of
the Instrument
 
Series
 
Nominal
Amount
 
Adjustment
Unit
 
Interest
Rate
 
Final Period
 
Payment of
Interest
 
Payment of
Amortization
 
09/30/09
ThUS$
 
09/30/08
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
 
6,980
 
7,094
 
In Chile
184
 
A
 
-
 
US$
 
6.125%
 
10/15/2009
 
Semi- annual
 
At maturity
 
5,623
 
5,623
 
Abroad
564
 
H
 
-
 
UF
 
4.9%
 
02/05/2010
 
Semi- annual
 
At maturity
 
1,733
 
-
 
In Chile
563
 
G
 
-
 
$
 
7.00%
 
02/05/2010
 
Semi- annual
 
At maturity
 
621
 
-
 
In Chile
563
 
 I
 
-
 
UF
 
3.00%
 
04/01/2010
 
Semi- annual
 
At maturity
 
-
 
-
 
In Chile
563
 
 J
 
-
 
$
 
5.50%
 
04/01/2010
 
Semi- annual
 
At maturity
 
-
 
-
 
In Chile
Total Current Portion
                 
14,957
 
12,717
   
                                         
Long-term bonds payable
                           
446
 
C
 
2,475,000
 
UF
 
4.00%
 
12/01/2026
 
Semi- annual
 
Semi-annual
 
93,694
 
99,941
 
In Chile
184
 
A
 
200,000,000
 
US$
 
6.125%
 
04/15/2016
 
Semi- annual
 
At maturity
 
200,000
 
200,000
 
Abroad
563
 
G
 
21,000,000,000
 
$
 
7.00%
 
01/05/2014
 
Semi- annual
 
At maturity
 
38,157
 
-
 
In Chile
564
 
H
 
4,000,000
 
UF
 
4.9%
 
01/05/2030
 
Semi- annual
 
Semi-annual
installments as
of 2019
 
151,425
 
-
 
In Chile
563
 
I
 
1,500,000
 
UF
 
3.0%
 
04/01/2014
 
Semi- annual
 
At maturity
 
56,784
 
-
 
In Chile
563
 
J
 
52,000,000,000
 
$
 
5.5%
 
04/01/2014
 
Semi- annual
 
At maturity
 
94,484
 
-
 
In Chile
Total Long-term
                 
634,544
 
299,941
   
 
 
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 13 - Short and Long-term Obligations with the Public (Promissory Notes and Bonds Payable) (continued)

                                 
Book Value
       
Registration No.
or Instrument 
I.D.
 
Series
   
Indexation 
Unit
   
Nominal
Value
ThCh$
   
Promissory
note or line of
credit
maturity
   
Interest
Rate
   
09/30/09
   
09/30/08
   
Placement
in Chile or 
Abroad
 
46
    2-A       -       15,000,000       12-15-2009       3.32 %     27,068       -       -  
47
    1-B       -       15,000,000       03-17-2010       3.60 %     26,813       -       -  
                                   
Total
      53,881       -          

Note 14 - Accrued Liabilities

As of September 30, 2009 and 2008, accrued liabilities are summarized as follows:

   
2009
   
2008
 
   
ThUS$
   
ThUS$
 
             
Provision for royalties Corfo
    4,546       5,155  
Provision for employee compensation and legal costs
    590       640  
Taxes and monthly income tax installment payments
    10,756       7,303  
Expenses incurred for Long-term loans (additional  tax)
    234       234  
Vacation accrual
    12,497       10,675  
Marketing expenses
    4,166       13,000  
External auditor fees
    765       338  
Benefits for employees
    14,236       20,062  
Other accruals
    4,287       3,299  
Total current liabilities
    52,077       60,706  
 
 
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

a)         At September 30, 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
    760,717       695,380  
   Accumulates tax basis retained earnings without tax credit
    125,149       3,954  
                 
Tax loss carry-forwards (1)
    (25,386 )     13,570  
Credit for shareholders
    155,700       142,258  

(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.

 
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)

The deferred taxes as of September 30, 2009 and 2008 represented a net liability of ThUS$26,590 and ThUS$38,740 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
    3,674       1,716       -       -  
Vacation accrual
    2,046       -       -       -  
Unrealized gain on sale of products
    71,265       -       -       -  
Provision for obsolescence
    -       3,153       -       -  
Production expenses
    -       -       37,095       -  
Accelerated depreciation
    -       -       -       74,428  
Exploration expenses
    -       -       -       5,372  
Capitalized interest
    -       -       -       10,656  
Staff severance indemnities
    -       -       -       2,467  
Fair value recognition
    -       2,879       -       -  
Leased assets
    -       26       -       -  
Capitalized expenses
    -       -       -       2,087  
Tax loss carry-forwards
    2,506       7,806       -       -  
Deferred revenue
    -       -       -       -  
Accrued interest
    241       -       -       -  
Benefits for employees
    -       4,689       -       -  
Deferred Tax Royalty
    1,120       615       3,532       4,159  
Accrued Gain from Exchange Insurance
    -       -       4,738       -  
Other
    3,651       11,425       8       809  
Total gross deferred taxes
    84,503       32,309       45,373       99,978  
Total complementary accounts
    -       -       -       (12,203 )
Valuation allowance
    (5,161 )     (5,093 )     -       -  
Total deferred taxes
    79,342       27,216       45,373       87,775  
 
 
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 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
    1,513       1,002       -       -  
Vacation accrual
    1,730       -       -       -  
Unrealized gain on sale of products
    62,045       -       -       -  
Provision for obsolescence
    -       3,549       -       -  
Production expenses
    -       -       26,303       -  
Accelerated depreciation
    -       -       -       66,562  
Exploration expenses
    -       -       -       5,224  
Capitalized interest
    -       -       -       9,069  
Staff severance indemnities
    -       -       -       2,085  
Fair value recognition
    -       2,189       -       -  
Leased assets
    -       -       -       -  
Capitalized expenses
    -       -       -       852  
Tax loss carry-forwards
    -       4,161       -       -  
Accrued gain from exchange insurance
    -       -       2,393       -  
Deferred revenue
    -       -       -       -  
Accrued interest
    922       -       -       -  
Benefits for employees
    16       884       -       -  
Other
    4,629       6,940       1,785       402  
Total gross deferred taxes
    70,855       18,725       30,481       84,194  
Total complementary accounts
    -       -       -       (14,097 )
Valuation allowance
    (24,109 )     (3,633 )     -       -  
Total deferred taxes
    46,746       15,092       30,481       70,097  
 
 
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 15 - Income and Deferred Taxes (continued)

c)
Income tax expense is summarized as follows:

   
2009
   
2008
 
   
ThUS$
   
ThUS$
 
             
Current tax expense (income tax accrual)
    (63,647 )     (104,544 )
Tax expense adjustment (prior year)
    (4,413 )     576  
Effect of deferred tax assets and liabilities
    (21,274 )     35,777  
                 
Tax benefit for tax losses
    14,967       (21,424 )
                 
Effect of amortization of complementary accounts
    (1,312 )     (1,529 )
                 
Effect on deferred tax assets and liabilities due to changes in valuation allowance
    15,245       10,181  
Other tax charges and credits
    -       (25 )
                 
Total income tax expense
    (60,434 )     (80,988 )

 
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 16 – Long-term accrued liabilities

Long-term accrued liabilities are summarized as follows:

   
2009
   
2008
 
   
ThUS$
   
ThUS$
 
             
Staff severance indemnities (2)
    28,163       20,714  
Benefits for employees (1)
    17,900       9,000  
Site closing provision
    3,437       1,992  
Balance as of  September 30
    49,500       31,706  

(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
    3,770       4,340  
Payments
    (1,234 )     (1,870 )
Exchange difference
    3,302       (2,435 )
Other difference
    196       -  
Balance As of September 30
    28,163       20,714  

 
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 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.
    39,075       46,641       621       (6,510 )
Ajay SQM Chile S.A.
    4,248       4,108       (309 )     (482 )
SQM Nitratos México S.A. de C.V.
    2       9       8       5  
Fertilizantes Naturales S.A.
    (59 )     627       482       (504 )
SQM Indonesia S.A.
    1       (30 )     (35 )     9  
Agrorama Callegari Ltda.
    442       -       (6 )     -  
SQM Potasio S.A.
    12       8       (3 )     (3 )
Total
    43,721       51,363       758       (7,485 )

 
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

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 2007 net income to retained earnings
    -       -       -       -       -       180,021       (180,021 )     -  
Declared dividends 2008
    -       -       -       -       -       (117,014 )     -       (117,014 )
Accumulated deficit from subsidiaries in development stage
    -       -       -       -       -       -       -       -  
Other comprehensive income
    -       -       (347 )     -       -       -       -       (347 )
Net income for the year
    -       -       -       -       -       -       381,071       381,071  
Balance As of September 30, 2008
    263,196,524       477,386       163,095       -       -       424,594       381,071       1,446,146  
Balance January 1,2009
    263,196,524       477,386       159,721       -       (100,000 )     424,594       501,407       1,463,108  
Transfer 2007 net income to retained earnings
    -       -       -       -       -       501,407       (501,407 )     -  
Declared dividends 2009
    -       -       -       -       100,000       (325,914 )     -       (225,915 )
Interim dividends
    -       -       -       -               -       -          
Other comprehensive income
    -       -       842       -       -       -       -       842  
Net income for the year
    -       -       -       -       -       -       251,697       251,697  
Balance as of  September 30, 2009
    263,196,524       477,386       160,563       -       -       600,087       251,697       1,489,732  

 
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 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) Final Dividend

The Company’s Ordinary Shareholders’ Meeting held on April 29, 2009 agreed to pay and distribute, in accordance with the respective dividends policy, an annual dividend in the amount of ThUS$325,915 equivalent to 65% of distributable net income obtained during the 2008 commercial year.  The amount of ThUS$100,000 (US$0.37994 per share) was discounted from that final dividend since it had already been paid as an interim dividend.  The balance, in the amount of ThUS$225,915 (US$0.85835 per share), was paid and distributed to the shareholders of SQM registered in the respective shareholders’ registry on the fifth business day prior to the date on which it was paid.

 
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 18 - Shareholders’ Equity (continued)

e) Other information

The detail of other reserves is as follows:

     
For the nine months
ended
September 30,
2009
   
As of
September 30,
2009
 
Detail
   
ThUS$
   
ThUS$
 
               
Technical appraisal
      -       151,345  
Changes to other comprehensive income from equity method investments:
                 
Soquimich Comercial S.A.
(1)
    693       13,980  
Comercial Hydro S.A.
(1)
    -       (725 )
SQMC Internacional Ltda.
(1)
    -       (35 )
Proinsa Ltda.
(1)
    -       (26 )
Isapre Norte Grande Ltda.
(1)
    37       7  
Inversiones Augusta S.A.
(1)
    -       (761 )
SQM Ecuador S.A.
(2)
    -       (270 )
Almacenes y Depósitos Ltda.
(1)
    43       130  
Asociación Garantizadora de Pensiones
(1)
    3       (20 )
Sales de Magnesio Ltda.
(1)
    51       61  
Sociedad de Servicios de Salud S.A.
(1)
    15       29  
SQM North America Corp.
(3)
    -       (4,186 )
SQM Dubai Fzco.
(1)
    -       (12 )
Ajay Europe SARL
(1)
    -       343  
Other Companies
(1)
    -       717  
Total other comprehensive income
    842       160,563  

(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.

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:

 
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 18 - Shareholders’ Equity (continued)

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 the close of the period.  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 September 30, 2009 the Company’s derivative instruments are as follows:
                                   
2009
 
Notional or
     
Description of the
           
Income
   
Income
 
Type of
Derivative
 
covered
amount
 
Expiration
 
contract
type
 
Position
purchase/sale
 
(Liability)Asset
amount
   
(realized)
recorded
   
(not realized)
recorded
 
   
ThUS$
             
ThUS$
   
ThUS$
   
ThUS$
 
                                   
Swap
    89.802  
4th Quarter of 2026
 
Exchange rate
 
P
    13,430       9,109       4,321  
Swap
    33,673  
1 st Quarter of 2014
 
Exchange rate
 
P
    4,833       4,676       158  
Swap
    42,822  
1 st Quarter of 2013
 
Exchange rate
 
P
    5,633       4,430       1,203  
Swap
    43,116  
1 st Quarter of 2013
 
Exchange rate
 
P
    5,448       4,143       1,305  
Swap
    46,220  
1 st Quarter of 2014
 
Exchange rate
 
P
    905       1,022       (1,927 )
Swap
    46,220  
1 st Quarter of 2014
 
Exchange rate
 
P
    896       1,022       (1,918 )
Swap
    56,041  
1 st Quarter of 2014
 
Exchange rate
 
P
    967       744       223  
US dollar Forward
    3,000  
4th Quarter of 2009
 
Exchange rate
 
S
    39       39       -  
US dollar Forward
    6,000  
4th Quarter of 2009
 
Exchange rate
 
S
    3       3       -  
US dollar Forward
    7,000  
4th Quarter of 2009
 
Exchange rate
 
S
    43       (43 )     -  
US dollar Forward
    4,000  
4th Quarter of 2009
 
Exchange rate
 
S
    45       45       -  
US dollar Forward
    25,349  
4th Quarter of 2009
 
Exchange rate
 
S
    1,906       1,906       -  
US dollar Forward
    6,944  
1 st Quarter of 2010
 
Exchange rate
 
S
    142       142       -  
US dollar Forward
    2,870  
1 st Quarter of 2010
 
Exchange rate
 
S
    37       37       -  
US dollar Forward
    16,918  
1 st Quarter of 2010
 
Exchange rate
 
S
    343       343       -  
European Option
    7,270  
4th Quarter of 2009
 
Exchange rate
 
P
    61       (61 )     -  
European Option
    7,400  
4th Quarter of 2009
 
Exchange rate
 
P
    -       -       -  

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 19 – Derivative Instruments (continued)
 
2009
 
Notional or
     
Description of
           
Income
   
Income
 
Type of
Derivative
 
covered
amount
 
Expiration
 
the contract
type
 
Position
purchase/sale
 
(Liability)Asset
amount
   
(realized)
recorded
   
(not realized)
recorded
 
   
ThUS$
             
ThUS$
   
ThUS$
   
ThUS$
 
                                   
European Option
    4,415  
4th Quarter of 2009
 
Exchange rate
 
P
    -       -       -  
European Option
    6,671  
4th Quarter of 2009
 
Exchange rate
 
P
    -       -       -  
European Option
    7,309  
4th Quarter of 2009
 
Exchange rate
 
P
    12       (12 )     -  
European Option
    6,629  
4th Quarter of 2009
 
Exchange rate
 
P
    -       -       -  
European Option
    6,536  
4th Quarter of 2009
 
Exchange rate
 
P
    11       (11 )     -  
European Option
    3,384  
4th Quarter of 2009
 
Exchange rate
 
P
    273       (273 )     -  
European Option
    3,769  
4th Quarter of 2009
 
Exchange rate
 
P
    48       (48 )     -  
European Option
    2,877  
4th Quarter of 2009
 
Exchange rate
 
P
    11       (11 )     -  
US dollar Forward
    6,879  
2nd Quarter of 2010
 
Exchange rate
 
P
    312       (312 )     -  
European Option
    57,477  
1st Quarter of 2010
 
Exchange rate
 
P
    -       -       -  
European Option
    59,352  
1st Quarter of 2010
 
Exchange rate
 
P
    1,107       (1,107 )     -  
European Option
    61,446  
1st Quarter of 2010
 
Exchange rate
 
P
    -       -       -  
US dollar Forward
    10,011  
4th Quarter of 2009
 
Exchange rate
 
P
    93       93       -  
US dollar Forward
    10,091  
4th Quarter of 2009
 
Exchange rate
 
P
    98       98       -  
US dollar Forward
    10,024  
4th Quarter of 2009
 
Exchange rate
 
P
    107       107       -  
US dollar Forward
    10,035  
4th Quarter of 2009
 
Exchange rate
 
P
    17       17       -  
US dollar Forward
    5,025  
4th Quarter of 2009
 
Exchange rate
 
P
    71       71       -  
US dollar Forward
    5,018  
4th Quarter of 2009
 
Exchange rate
 
P
    9       9       -  
US dollar Forward
    10,032  
4th Quarter of 2009
 
Exchange rate
 
P
    113       113       -  
US dollar Forward
    10,112  
4th Quarter of 2009
 
Exchange rate
 
P
    123       123       -  
US dollar Forward
    5,019  
4th Quarter of 2009
 
Exchange rate
 
P
    -       -       -  
US dollar Forward
    5,019  
4th Quarter of 2009
 
Exchange rate
 
P
    -       -       -  
US dollar Forward
    10,039  
4th Quarter of 2009
 
Exchange rate
 
P
    1       1       -  
US dollar Forward
    10,111  
4th Quarter of 2009
 
Exchange rate
 
P
    15       (15 )     -  
US dollar Forward
    10,058  
4th Quarter of 2009
 
Exchange rate
 
P
    76       (76 )     -  
US dollar Forward
    15,137  
4th Quarter of 2009
 
Exchange rate
 
P
    22       22       -  
US dollar Forward
    8,550  
4th Quarter of 2009
 
Exchange rate
 
P
    7       7       -  
US dollar Forward
    10,056  
4th Quarter of 2009
 
Exchange rate
 
P
    33       33       -  
US dollar Forward
    10,064  
4th Quarter of 2009
 
Exchange rate
 
P
    131       131       -  
US dollar Forward
    10,054  
4th Quarter of 2009
 
Exchange rate
 
P
    19       19       -  
US dollar Forward
    5,040  
4th Quarter of 2009
 
Exchange rate
 
P
    77       77       -  
US dollar Forward
    10,085  
4th Quarter of 2009
 
Exchange rate
 
P
    159       159       -  
US dollar Forward
    10,044  
4th Quarter of 2009
 
Exchange rate
 
P
    39       39       -  
US dollar Forward
    20,087  
4th Quarter of 2009
 
Exchange rate
 
P
    78       78       -  
US dollar Forward
    5,100  
4th Quarter of 2009
 
Exchange rate
 
P
    41       -       (41 )
US dollar Forward
    17,400  
4th Quarter of 2009
 
Exchange rate
 
P
    104       104       -  
US dollar Forward
    11,300  
4th Quarter of 2009
 
Exchange rate
 
P
    17       (17 )     -  
US dollar Forward
    10,400  
2nd Quarter of 2010
 
Exchange rate
 
P
    30       30       -  
US dollar Forward
    500  
3rd Quarter of 2009
 
Exchange rate
 
P
    -1       -1       -  

 
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 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$
 
             
Recovery of doubtful accounts
    45       475  
Insurance recoveries
    208       474  
Reversal of obligations with third parties
    620       2,068  
Gain from sale of assets SQM Lithium
    -       2,342  
Gain on sale of investments in related companies
    -       1,387  
Sale of mining concessions
    2,121       721  
Provision of services
    78       121  
Rental of property, plant and equipment
    769       851  
Fines collected from third parties
    73       46  
Discounts obtained
    798       484  
Compensation received
    60       213  
Sale of property, plant and equipment
    486       1,146  
Other income
    955       1,749  
 Total
    6,213       12,077  

           b)Non-operating expenses

   
2009
   
2008
 
   
ThUS$
   
ThUS$
 
             
Investment plan expenses and adjustment of property, plant and equipment realization value
    7,982       14,678  
Interest expense
    -       -  
Equity participation in net losses of unconsolidated subsidiaries
    -       -  
Amortization of goodwill
    -       -  
Net foreign exchange losses
    -       -  
Work disruption expenses
    283       776  
Non-recoverable taxes
    -       -  
Indemnity to suppliers
    1,745       177  
Accrual for loss in auction
    -       -  
Provision for legal expenses and  third party compensation
    451       435  
Training and donation expenses
    841       1,845  
Amortization of information
    -       -  
Insurance claim
    -       -  
Consulting services
    -       -  
Other expenses
    4,008       2,508  
Total
    15,310       20,419  

 
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 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
    (8 )     28  
Other assets and liabilities
    (12 )     13  
Shareholders’ equity
    196       (490 )
Net price-level restatement
    176       (449 )

 
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 22 – Assets and Liabilities Denominated in Foreign Currency

   
2009
   
2008
 
   
ThUS$
   
ThUS$
 
Assets
           
    Chilean pesos
    385,858       151,372  
    US dollars
    2,512,631       2,111,783  
    Euros
    66,877       86,568  
    Japanese Yen
    1,225       1,232  
    Brazilian Real
    333       371  
    Mexican pesos
    3,235       1,088  
    UF
    63,484       31,460  
    South African Rand
    23,901       23,303  
    Dirhams
    14,786       21,492  
    Other currencies
    14,956       16,446  
                 
Current liabilities
               
    Chilean pesos
    152,269       161,693  
    US dollars
    310,878       180,762  
    Euros
    55,309       13,818  
    Japanese Yen
    26       23  
    Brazilian Real
    1,819       1,682  
    Mexican pesos
    582       3,347  
    UF
    9,507       13,372  
    South African Rand
    2,344       3,243  
    Dirhams
    1,190       1,120  
    Other currencies
    63       1,379  
                 
Long-term liabilities
               
    Chilean pesos
    159,246       20,016  
    US dollars
    557,763       445,987  
    Japanese Yen
    278       206  
    UF
    302,145       100,456  
    Mexican pesos
    403       491  
    Other currencies
    10       11  

 
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 23 – Expenses Incurred in the Issuance Shares and Debt Titles

Bond issuance and placement expenses are presented in Other Long-term Assets.  The portion to be amortized within a year is shown in Other Current Assets, amortized using the straight-line method, over the term of the documents.  That amortization is presented as a financial expense.

As of September 30, 2009 and 2008 the detail is as follows:

   
Other Assets
   
Amortization
 
   
Short term
2009
   
Long term
2009
   
2009
   
2008
 
   
ThUS$
   
ThUS$
   
ThUS$
   
ThUS$
 
                         
Single-series Placement Expenses
    293       1,610       220       220  
Series C Placement Expenses
    281       2,240       221       234  
Series G Placement Expenses
    136       443       102          
Series H Placement Expenses
    133       2,671       104          
Series J Placement Expenses
    552       1,933       276          
Series I Placement Expenses
    348       1,218       174          
                                 
Total
    1,743       10,115       1,097       454  

Note 24 - Cash Flow Statement

Amounts included in other investing income are summarized as follows:

   
2009
   
2008
 
   
ThUS$
   
ThUS$
 
             
Sale of mining concessions
    2,121       -  
   Total
    2,121       -  

 
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 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

 
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 25 – Commitments and Contingencies (continued)

6.
Plaintiff
: Agraria Santa Aldina Limitada
 
Defendant
: SQM Perú S.A.
 
Date of lawsuit
: June 2009
 
Court
: Civil Court of Pisco - Peru
 
Cause
: Damage indemnity lawsuit for alleged non-compliance with the terms of the product distribution agreement
 
Instance
: Response
 
Nominal amount
: ThUS$6,000

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.

 
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 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$ 14,077 in 2009 (ThUS$ 12,349 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 September 30, 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
    175,056       100,239  
ING Capital LLC
Royal Seed Trading Corp.  A.V.V.
 
Subsidiary
    80,431       80,875  
Export Development Canada.
SQM Investment Corpotation N.V.
 
Subsidiary
    50,362       -  

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 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:
       
Company Name
 
ThUS$
 
       
Llanos y Wammes Soc. Com. Ltda.
    1,943  
Fertglobal Chile Ltda. y Bramelli
    3,197  
Tattersall S.A.
    1,082  
 
Note 28 - Sanctions

During 2009 and 2008, the SVS did not apply sanctions to the Company, its directors or managers.

Note 29 – Subsequent Events
 
Management is not aware of other significant events, occurred between September 30, 2009 and the date of issuance of these Consolidated Financial Statements (October 27, 2009), which could significantly affect them.

Note 30 – Environmental Projects

The Company is continuously 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 September 30, 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$ 6,830 and are detailed as follows:

 
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))

Note 30 – Environmental Projects (continued)

         
Future
 
   
2009
   
Disbursements
 
   
ThUS$
   
ThUS$
 
Projects
           
Enablement of money exchange and bathrooms
    993       780  
Environmental evaluation
    441       288  
Handling of household and industrial waste
    963       189  
Hazardous substance management
    443       553  
Salar (Salt deposit) environmental follow-up plan
    361       143  
Environmental studies
    1,710       260  
Improvements in M. Elena – Streets camp
    373       333  
Sanitary regulations PV Traffic Facilities
    -       98  
Environmental remediation
    777       422  
Environmental Management
    * 769       **509  
Total
    6,830       3,575  

(*) Corresponds to the 2008 Budget
(**)Corresponds to the 2009 Budget

 
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))

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 this type 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 allows reduction of the particulate material emissions required by environmental regulations.  The project is in operation as of January 2009.  The old María Elena crushing plant was finally put out of service as of July 5, 2008, with the consequent improvement in air quality.  The effectiveness of this project in respect to the improvement in air quality will be able to be evaluated upon completion of three years of operation, which is what the standard for MP10 requires.

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.

 
55

 

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
 
1.-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 their investment plan and refinance certain liabilities.

2.- On April 6, 2009, the Superintendency of Securities and Insurance was informed that the Board of Directors of Sociedad Química y Minera de Chile (SQM), at the meeting held on April 6 of this year unanimously agreed to recommend payment of a final dividend of US$1.23829 per share at the next Ordinary Shareholders’ Meeting out of distributable net income obtained during the 2008 commercial year.  The amount of US$0.37994 which was already paid as an interim dividend must be discounted and the balance in the amount of US$0.85835 per share, will be paid and distributed to the shareholders of SQM that are registered in the respective registry on the fifth business day prior to the date on which it will be paid.

That proposal, once approved by the next Ordinary Shareholder’s Meeting of the Company which will be held on April 29, 2009, will allow it 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.

3.- On April 30, 2009, the Superintendency of Securities and Insurance was informed that the Board of Directors of Sociedad Química y Minera de Chile  (SQM), at a meeting held on April 28 of this year agreed to authorize the signing of a supply agreement in virtue of which SQM Salar S.A., subsidiary of Sociedad Química y Minera de Chile (SQM), will sell to PCS Sales (USA) Inc., subsidiary of Potash Corporation of Saskatchewan Inc., majority shareholder of SQM, an approximate amount of between 150 thousand and 250 thousand annual tons of potassium chloride to be commercialized by PCS in Japan, India and the People’s Republic of China, for the period from May 1, 2009 to May 1, 2012 and under similar terms and conditions to those prevailing in the market at the relevant moment.

4.- On May 8, 2009, the Superintendency of Securities and Insurance was informed that on May 8, 2009, Sociedad Química y Minera de Chile S.A.(SQM) has successfully placed two series of bonds in the Chilean market.  Series I was placed in the amount of UF 1,500,000 for a 5-year term, with single amortization at maturity and a 3.67% annual interest rate.  Series J was placed in the amount of Th$52,000,000 for a 5-year term, also with single amortization at maturity and a 6.14% annual interest rate in nominal pesos.

The funds obtained with this issuance, of close to ThUS$148,000, will be used by SQM to refinance the company’s short and long-term liabilities and its investment plan.
 
5.- On July 15, 2009, the Board of Directors of Soquimich Comercial S.A. (SQMC) met in an extraordinary meeting held on July 14, 2009 and agreed to concur in the formation of a subsidiary in which SQMC will have a 70% participation and closely held corporation Callegari Agrícola S.A. will have a 30% participation.
 
This new company, which will be called "Comercial Agrorama Callegari Limitada", and which will have the synthetic name of "Agrorama Callegari Ltda." will have capital of Ch$800 million and its main line of business will be commercialization and distribution of fertilizers, pesticides and agricultural products or supplies.  The duration of this new subsidiary of SQMC will be 5 years as of July 14, 2009, with tacit and automatic renewal for 5-year periods

 
56

 

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 32 – Unearned Income

During the periods ended September 30, 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
    30,780       55,873  

 
57

 

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 Crédito e Inversiones
 
Fixed Term
 
Chilean Pesos
 
0.06%
 
08-12-2009
 
11-10-2009
 
9,915
 
10
 
9,925
 
-
Banco Crédito e Inversiones
 
Fixed Term
 
Chilean Pesos
 
0.06%
 
09-01-2009
 
11-02-2009
 
10,114
 
6
 
10,120
 
-
Banco Crédito e Inversiones
 
Fixed Term
 
Chilean Pesos
 
0.06%
 
09-03-2009
 
11-04-2009
 
10,121
 
5
 
10,126
 
-
Banco Crédito e Inversiones
 
Fixed Term
 
Chilean Pesos
 
0.06%
 
09-04-2009
 
11-05-2009
 
15,094
 
7
 
15,101
 
-
Banco Crédito e Inversiones
 
Fixed Term
 
Chilean Pesos
 
0.06%
 
09-04-2009
 
11-06-2009
 
8,533
 
5
 
8,538
 
-
Banco Crédito e Inversiones
 
Fixed Term
 
Chilean Pesos
 
0.06%
 
09-17-2009
 
10-13-2009
 
9,912
 
2
 
9,914
 
-
Banco Crédito e Inversiones
 
Fixed Term
 
Chilean Pesos
 
0.06%
 
09-17-2009
 
10-22-2009
 
9,912
 
2
 
9,914
 
-
Banco Crédito e Inversiones
 
Fixed Term
 
Chilean Pesos
 
0.09%
 
09-30-2009
 
12-29-2009
 
20,009
 
-
 
20,009
 
-
Banco Crédito e Inversiones
 
Fixed Term
 
Chilean Pesos
 
0.09%
 
09-30-2009
 
12-29-2009
 
10,004
 
-
 
10,004
 
28,267
Banco de Chile
 
Fixed Term
 
Chilean Pesos
 
0.06%
 
08-10-2009
 
10-09-2009
 
9,981
 
10
 
9,991
 
19,246
Banco de Chile
 
Fixed Term
 
Chilean Pesos
 
0.06%
 
09-08-2009
 
11-09-2009
 
10,011
 
4
 
10,015
 
10,010
Banco de Chile
 
Fixed Term
 
Chilean Pesos
 
0.06%
 
09-10-2009
 
11-11-2009
 
10,023
 
4
 
10,027
 
-
Banco de Chile
 
Fixed Term
 
Chilean Pesos
 
0.07%
 
09-15-2009
 
10-30-2009
 
20,055
 
7
 
20,062
 
-
Banco Santander –  Santiago
 
Fixed Term
 
Chilean Pesos
 
0.05%
 
08-25-2009
 
10-26-2009
 
9,979
 
6
 
9,985
 
-
Banco Santander –  Santiago
 
Fixed Term
 
Chilean Pesos
 
0.05%
 
09-08-2009
 
10-19-2009
 
10,011
 
4
 
10,015
 
-
Banco Santander –  Santiago
 
Fixed Term
 
Chilean Pesos
 
0.05%
 
09-08-2009
 
10-20-2009
 
5,005
 
2
 
5,007
 
-
Banco Santander –  Santiago
 
Fixed Term
 
UF
 
2.85%
 
08-24-2009
 
11-23-2009
 
29,914
 
88
 
30,002
 
-
BBVA Banco Bilbao Vizcaya Argentaria
 
Fixed Term
 
Chilean Pesos
 
0.04%
 
09-17-2009
 
10-02-2009
 
9,916
 
2
 
9,918
 
-
Corpbanca
 
Fixed Term
 
Chilean Pesos
 
0.07%
 
08-21-2009
 
10-20-2009
 
4,947
 
5
 
4,952
 
-

 
58

 

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 (continued)

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$
Corpbanca
 
Fixed Term
 
Chilean Pesos
 
0.08%
 
08-21-2009
 
11-19-2009
 
4,952
 
5
 
4,957
 
-
Corpbanca
 
Fixed Term
 
Chilean Pesos
 
0.08%
 
08-24-2009
 
11-23-2009
 
30,060
 
30
 
30,090
 
-
Corpbanca
 
Fixed Term
 
Chilean Pesos
 
0.08%
 
08-25-2009
 
11-24-2009
 
9,902
 
10
 
9,912
 
-
Citibank N.A.
 
Overnight
 
US dollar
 
0.08%
 
09-30-2009
 
10-01-2009
 
2,158
 
-
 
2,158
 
1,012
Banco Itau
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
8,206
Deutsche Bank Chile S.A.
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
5,006
HSBC Bank Chile
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
5,006
Fortis Bank
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
630
Bancomer
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
294
BBVA Banco Bilbao Vizcaya Argentaria
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
86
                       
270,528
 
214
 
270,742
 
77,763

 
59

 

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: December 8, 2009

 
60