Prepared and filed by St Ives Financial


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 the free translation of a material event sent by Sociedad Química y Minera de Chile S.A. to the Superintendencia de Valores y Seguros de Chile on August 08, 2006.

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

 

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

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


 


On August 08, 2006, 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 six-month period ended on June 30, 2006. 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, A SIX MONTH PERIOD ENDED JUNE 30, 2006 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

June 30, 2006 and 2005

 


Consolidated Financial Statements

SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

As of June 30, 2006 and 2005

and for the 6 month period ended June 30, 2006 and 2005

(A translation of the original in Spanish- see note 2 (a))

Contents

Consolidated Financial Statements

 


 

Ch$

-

Chilean pesos

ThCh $

-

Thousands of Chilean pesos

US$

-

United States dollars

ThUS$

-

Thousands of United States dollars

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.

 


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SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Consolidated Balance Sheets

(A translation of the original in Spanish- see note 2 (a))

 

 

 

 

 

As of June 30,

 

 

 

 

 


 

 

 

Note

 

2006

 

2005

 

 

 


 


 


 

 

 

 

 

ThUS$

 

ThUS$

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash

 

 

 

27,152

 

14,483

 

Time deposits

 

4

 

155,975

 

18,780

 

Marketable securities

 

5

 

58,933

 

35,287

 

Accounts receivable, net

 

6

 

170,437

 

134,416

 

Other accounts receivable, net

 

6

 

6,786

 

11,049

 

Accounts receivable from related companies

 

7

 

63,457

 

64,006

 

Inventories, net

 

8

 

374,298

 

322,214

 

Recoverable taxes

 

 

 

20,428

 

32,620

 

Prepaid expenses

 

 

 

5,292

 

5,105

 

Deferred income taxes

 

16

 

6,078

 

 

Other current assets

 

 

 

18,057

 

8,682

 

 

 

 

 


 


 

Total current assets

 

 

 

906,893

 

646,642

 

 

 

 

 


 


 

Property, plant and equipment, net

 

9

 

892,457

 

721,830

 

 

 

 

 


 


 

Other Assets

 

 

 

 

 

 

 

Investments in related companies

 

10

 

20,828

 

19,051

 

Goodwill, net

 

11

 

40,931

 

16,712

 

Negative goodwill, net

 

11

 

 

(169

)

Intangible assets, net

 

 

 

4,825

 

4,326

 

Long-term accounts receivable, net

 

6

 

297

 

332

 

Long-term accounts receivable from related companies

 

7

 

2,000

 

 

Other long-term assets

 

12

 

51,843

 

51,006

 

 

 

 

 


 


 

Total Other Assets

 

 

 

120,724

 

91,258

 

 

 

 

 


 


 

Total assets

 

 

 

1,920,074

 

1,459,730

 

 

 

 

 


 


 

The accompanying notes form an integral part of these consolidated financial statements.

3


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SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Consolidated Balance Sheets

(A translation of the original in Spanish- see note 2 (a))

 

 

 

 

 

As of June 30,

 

 

 

 

 


 

 

 

Note

 

2006

 

2005

 

 

 


 


 


 

 

 

 

 

ThUS$

 

ThUS$

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Short-term bank debt

 

13

 

51,600

 

1,250

 

Current portion of long-term debt

 

13

 

204,996

 

4,865

 

Current portion of bonds payable

 

14

 

5,398

 

 

Dividends payable

 

 

 

262

 

208

 

Accounts payable

 

 

 

83,855

 

64,168

 

Other accounts payable

 

 

 

1,019

 

1,677

 

Notes and accounts payable to related companies

 

7

 

2,331

 

1,709

 

Accrued liabilities

 

15

 

23,987

 

27,290

 

Withholdings

 

 

 

8,553

 

4,434

 

Income taxes

 

 

 

9,447

 

14,277

 

Deferred income taxes

 

16

 

 

2,743

 

Deferred income

 

 

 

11,346

 

1,206

 

Other current liabilities

 

 

 

1,999

 

591

 

 

 

 

 


 


 

Total current liabilities

 

 

 

404,793

 

124,418

 

 

 

 

 


 


 

Long-term liabilities

 

 

 

 

 

 

 

Long-term bank debt

 

13

 

100,000

 

300,000

 

Long-term Obligations with the Public (Bonds)

 

14

 

298,434

 

 

Other accounts payable

 

 

 

928

 

998

 

Deferred income taxes

 

16

 

43,958

 

36,605

 

Staff severance indemnities

 

17

 

16,932

 

12,122

 

 

 

 

 


 


 

Total long-term liabilities

 

 

 

460,252

 

349,725

 

 

 

 

 


 


 

Minority interest

 

18

 

34,908

 

31,891

 

 

 

 

 


 


 

Shareholders’ equity

 

 

 

 

 

 

 

Paid-in capital

 

19

 

477,386

 

477,386

 

Other reserves

 

19

 

155,377

 

149,577

 

Retained earnings

 

19

 

387,358

 

326,733

 

 

 

 

 


 


 

Total shareholders’ equity

 

 

 

1,020,121

 

953,696

 

 

 

 

 


 


 

Total liabilities and shareholders’ equity

 

 

 

1,920,074

 

1,459,730

 

 

 

 

 


 


 

The accompanying notes form an integral part of these consolidated financial statements.

4


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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 years ended
June 30,

 

 

 

 

 


 

 

 

Note

 

2006

 

2005

 

 

 


 


 


 

 

 

 

 

ThUS$

 

ThUS$

 

Operating results

 

 

 

 

 

 

 

Sales

 

 

 

504,724

 

442,133

 

Cost of sales

 

 

 

(358,627

)

(322,098

)

 

 

 

 


 


 

Gross margin

 

 

 

146,097

 

120,035

 

Selling and administrative expenses

 

 

 

(33,116

)

(31,019

)

 

 

 

 


 


 

Operating income

 

 

 

112,981

 

89,016

 

 

 

 

 


 


 

Non-operating results

 

 

 

 

 

 

 

Non-operating income

 

21

 

9,965

 

8,488

 

Non-operating expenses

 

21

 

(27,301

)

(25,378

)

 

 

 

 


 


 

Non-operating loss

 

 

 

(17,336

)

(16,890

)

 

 

 

 


 


 

Income before income taxes

 

 

 

95,645

 

72,126

 

Income tax expense

 

16

 

(19,582

)

(16,628

)

 

 

 

 


 


 

Income before minority interest

 

 

 

76,063

 

55,498

 

Minority interest

 

18

 

(869

)

(1,104

)

 

 

 

 


 


 

Net income before negative goodwill

 

 

 

75,194

 

54,394

 

Amortization of negative goodwill

 

11

 

68

 

102

 

 

 

 

 


 


 

Net income for the year

 

 

 

75,262

 

54,496

 

 

 

 

 


 


 

The accompanying notes form an integral part of these consolidated financial statements.

5


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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 years ended June 30

 

 

 

 

 


 

 

 

 

 

2006

 

2005

 

 

 

 

 


 


 

 

 

 

 

ThUS$

 

ThUS$

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net income for the year

 

 

 

75,262

 

54,496

 

Charges (credits) to income not representing cash flows

 

 

 

 

 

 

 

Depreciation expense

 

 

 

44,037

 

33,002

 

Amortization of intangible assets

 

 

 

732

 

244

 

Write-offs and accruals

 

 

 

8,051

 

13,003

 

Gain on equity investments in related companies

 

 

 

(1,144

)

(1,764

)

Loss on equity investments in related companies

 

 

 

131

 

35

 

Amortization of goodwill

 

 

 

1,369

 

673

 

Amortization of negative goodwill

 

 

 

(68

)

(102

)

(Profit) loss on sales of assets

 

 

 

(767

)

 

Other credits to income not representing cash flows

 

 

 

(15,489

)

(5,148

)

Other charges to income not representing cash flows

 

 

 

52,287

 

45,977

 

Foreign exchange difference, net

 

 

 

3,096

 

3,136

 

Net changes in operating assets and liabilities:

 

 

 

 

 

 

 

(Increase) decrease in trade accounts receivable

 

 

 

11,370

 

(14,359

)

Increase in inventories

 

 

 

(43,626

)

(53,269

)

Decrease in other assets

 

 

 

1,198

 

(7,925

)

(Decrease) increase in accounts payable

 

 

 

(1,794

)

(2,779

)

Increase (decrease) in interest payable

 

 

 

3,889

 

330

 

Decrease in net income taxes payable

 

 

 

(29,105

)

(15,213

)

(Decrease) increase in other accounts payable

 

 

 

(7,312

)

(8,865

)

Decrease in VAT and taxes payable

 

 

 

1,303

 

(5,590

)

Minority interest

 

 

 

869

 

(1,070

)

 

 

 

 


 


 

Net cash provided from operating activities

 

 

 

104,289

 

34,812

 

 

 

 

 


 


 

Cash flows from financing activities

 

 

 

 

 

 

 

Proceeds from short term bank financing

 

 

 

136,281

 

100,000

 

Bonds payable

 

 

 

299,833

 

 

Payment of dividends

 

 

 

(74,481

)

(51,540

)

Repayment of bank financing

 

 

 

(171,281

)

(6,000

)

Payment of expenses for the issuance and placement of bonds payable

 

 

 

(6,629

)

 

 

 

 

 


 


 

Net cash used in financing activities

 

 

 

183,723

 

42,460

 

 

 

 

 


 


 

Cash flows from investing activities

 

 

 

 

 

 

 

Sales of property, plant and equipment

 

 

 

10

 

 

Other investing income

 

25

 

25,182

 

740

 

Additions to property, plant and equipment

 

 

 

(104,722

)

(74,345

)

Capitalized interest

 

 

 

 

(1,928

)

Purchase of permanent investments

 

 

 

(115,124

)

(1,002

)

Other disbursements

 

 

 

 

(666

)

 

 

 

 


 


 

Net cash used in investing activities

 

 

 

(194,654

)

(77,201

)

 

 

 

 


 


 

Effect of inflation on cash and cash equivalents

 

 

 

998

 

983

 

 

 

 

 


 


 

Net change in cash and cash equivalents

 

 

 

94,356

 

1,054

 

Beginning balance of cash and cash equivalents

 

 

 

147,956

 

66,753

 

 

 

 

 


 


 

Ending balance of cash and cash equivalents

 

 

 

242,312

 

67,807

 

 

 

 

 


 


 

The accompanying notes from an integral part of these consolidated financial statements.

6


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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.

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.

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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)

a)

Basis for the preparation of the consolidated financial statements (continued)

In accordance with SVS Circular No. 1,697 and Technical Bulletins Nos. 64 and 72 of the Chilean Association of Accountants, the consolidated financial statements include the following subsidiaries:

 

 

 

Direct or indirect ownership

 

 

 


 

 

 

2006

 

2005

 

 

 


 


 

 

 

%

 

%

 

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 NV (Dutch Antilles)

 

100.00

 

100.00

 

S.Q.I. Corporation NV (Dutch Antilles)

 

100.00

 

100.00

 

Soquimich European Holding BV (Holland)

 

100.00

 

100.00

 

PTM - SQM Ibérica S.A. (Spain)

 

100.00

 

100.00

 

SQMC Holding Corporation LLP (USA)

 

100.00

 

100.00

 

SQM Ecuador S.A.

 

100.00

 

100.00

 

Cape Fear Bulk LLC (USA)

 

51.00

 

51.00

 

SQM Investment Corporation NV (Dutch Antilles)

 

100.00

 

100.00

 

SQM Brasil Ltda.

 

100.00

 

100.00

 

Royal Seed Trading Corporation AVV (Aruba)

 

100.00

 

100.00

 

SQM Japan Co. Ltda.

 

100.00

 

100.00

 

SQM Oceania PTY Limited (Australia)

 

100.00

 

100.00

 

SQM France S.A.

 

100.00

 

100.00

 

RS Agro-Chemical Trading AVV (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 LLC (USA)

 

100.00

 

100.00

 

Agricolima S.A. de C.V. (Mexico)

 

100.00

 

100.00

 

SQM Venezuela S.A.

 

100.00

 

100.00

 

SQM Italia SRL (Italy)

 

100.00

 

95.00

 

Comercial Caiman Internacional S.A. (Cayman Islands)

 

100.00

 

100.00

 

Mineag SQM Africa Limited (South Africa)

 

100.00

 

100.00

 

Fertilizantes Olmeca y SQM S.A. de C.V. (Mexico)

 

100.00

 

100.00

 

Administración y Servicios Santiago S.A. de C.V. (Mexico)

 

100.00

 

100.00

 

SQM Lithium Specialties LLC (USA)

 

100.00

 

100.00

 

SQM Nitratos México S.A. de C.V.

 

51.00

 

51.00

 

Fertilizantes Naturales S.A.

 

66.67

 

 

SQM Dubai - FZCO

 

100.00

 

 

Iodine Minera B.V.

 

100.00

 

 

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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)

a)

Basis for the preparation of the consolidated financial statements (continued)

 

 

Direct or indirect ownership

 

 

 


 

 

 

2006

 

2005

 

 

 


 


 

 

 

%

 

%

 

Domestic subsidiaries:

         

Servicios Integrales de Tránsitos y Transferencias S.A.

 

100.00

 

100.00

 

Soquimich Comercial S.A.

 

60.64

 

60.64

 

Isapre Norte Grande Ltda.

 

100.00

 

100.00

 

Almacenes y Depósitos Ltda.

 

100.00

 

100.00

 

Ajay SQM Chile S.A.

 

51.00

 

51.00

 

SQM Nitratos S.A.

 

99.99

 

99.99

 

Proinsa Ltda.

 

60.58

 

60.58

 

SQM Potasio S.A.

 

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

 

Comercial Hydro S.A.

 

60.64

 

60.64

 

Minera Nueva Victoria S.A.

 

100.00

 

 

Exploraciones Mineras S.A.

 

100.00

 

 

Sociedad Prestadora de Servicios de Salud Cruz del Norte S.A.

 

100.00

 

 

All significant inter-company balances, transactions and unrealized gains and losses arising from transactions between these companies have been eliminated in consolidation.

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SOCIEDAD QUIMICA Y MINERA DE CHILE S.A.

Notes to the Consolidated Financial Statements

(A translation of the original in Spanish- see note 2 (a))

Note 2 - Summary of Significant Accounting Policies (continued)

b)

Period

These consolidated financial statements have been prepared as of June 30, 2006 and 2005 and for the years then ended.

c)

Reporting currency and monetary correction

The financial statements of the Company are prepared in U.S. dollars. As a significant portion of the Company’s operations are transacted in U.S. dollars, the U.S. dollar is considered the currency of the primary economic environment in which the Company operates.

The Parent Company and those subsidiaries which maintain their accounting records in U.S. dollars are not required, or permitted, to restate the historical dollar amounts for the effects of inflation.

The financial statements of domestic subsidiaries, which maintain their accounting records in Chilean pesos have been restated to reflect the effects of variations in the purchasing power of Chilean pesos during the 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 (1.1% and 1.0% in 2006 and 2005, 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.

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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$539.44 per US$1 at June 30, 2006 and Ch$579.00 per US$1 at June 30, 2005.

 

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 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.

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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 June 30, 2006 and 2005 generated net earnings (loss) of ThUS$ (3,096) and ThUS$ (3,136), 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 June 30, as follows:

 

 

 

2006

 

2005

 

 

 


 


 

Brazilian Real

 

2.16

 

2.35

 

New Peruvian Sol

 

3.26

 

3.25

 

Argentine Peso

 

3.08

 

2.89

 

Japanese Yen

 

115.24

 

110.62

 

Euro

 

0.79

 

0.83

 

Mexican Peso

 

11.40

 

10.76

 

Indonesian Rupee

 

9,290.00

 

9,290.00

 

Australian Dollar

 

1.35

 

1.32

 

Pound Sterling

 

0.54

 

0.52

 

South African Rand

 

7.14

 

6.72

 

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.

12


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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

The Company considers all highly liquid investments with a remaining maturity of less than 90 days as of the closing date of the financial statements to be cash equivalents.

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 work in process are valued at average production cost. Raw materials and products acquired from third parties are stated at average cost and materials-in-transit are valued at cost. All such values do not exceed net realizable values.

Inventories of non-critical spare parts and supplies are classified as other current assets, except for those items which the Company estimates to have a turnover period of one year or more, which are classified as other long-term assets.

j)

Income taxes and deferred income taxes

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.

13


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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)

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 expense has been calculated using the straight-line method based on the estimated useful lives of the assets and is charged directly to expenses.

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 June, 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.

14


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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.

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.

o)

Mining development cost

Expenses associated with mineral reserves under exploitation are included within Inventories and are amortized according to estimated reserves of minerals and expenses associated with future reserves are presented within Other long-term assets.

15


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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)

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)

Sellback 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)

Dividends

Dividends are generally declared in U.S. dollars but are paid in Chilean pesos.

t)

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.

u)

Reclassifications

For comparison purposes, certain reclassifications have been made to the 2005 financial statements.

v)

Revenue recognition

Revenue is recognized on the date goods are physically delivered or when they are considered delivered according to the terms of the contract.

16


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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))

w)

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. 981 dated December 28, 1990 of the SVS, computer systems acquired by the Company are recorded at cost.

x)

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.

z)

Obligations with the public (bonds payable)

Bonds are stated at the amount of principal owed plus interest accrued. The difference between the carrying value and the placement value is capitalized and amortized over the term in which bonds expire.

17


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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

a) Changes in Accounting Principles

Up to December 31, 2005, the financial statements of the subsidiary Fertilizantes Naturales S.A. were considered in consolidation given that the Company maintained the control of this subsidiary (due to its right to manage this subsidiary’s financial and operating policies). Beginning on January 1, 2006, the Company no longer controls this subsidiary and therefore the aforementioned subsidiary has been excluded from consolidation in accordance with letters a) to d) of No.6 in Attachment 1 to Technical Bulletin No. 72 issued by the Chilean Association of Accountants.

There were no other changes in the accounting principles used by the Company during 2006 and 2005.

b) Reformulation of 2005 Financial Statements

For comparison purposes, the financial statements as of June 30, 2005 have been reformulated excluding and incorporate the following assets and liabilities of Fertilizantes Naturales S.A respectively. Consequently, assets and liabilities excluded and included are detailed as follows:

 

 

 

Fertilizantes
Naturales S.A.

 

   
 

 

 

ThUS$

 

Current Asset

 

11,203

 

Property, Plant and Equipment

 

64

 

Other Assets

 

71

 

Current Liability

 

10,868

 

Results

 

67

 

18


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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 - Time Deposits

 

Institution which
receives the
deposit

 

Type of deposit

 

Origin
currency

 

Interest
rate

 

Placement date

 

Expiration date

 

Principal owed
ThUS$

 

Interest accrued
to-date
ThUS$

 

Current year
balance ThUS$

 

Prior year balance
ThUS$

 


 


 


 


 


 


 


 


 


 


 

Banco Crédito e Inversiones

 

Fixed term

 

USD

 

5.02

%

04 – 05 – 2006

 

07 – 05 – 2006

 

40,000

 

480

 

40,480

 

0

 

Banco Santander – Santiago

 

Fixed term

 

USD

 

0.38

%

06 – 07 – 2005

 

07 – 11 – 2005

 

0

 

0

 

0

 

12,304

 

Banco Santander – Santiago

 

Fixed term

 

USD

 

5.40

%

04 – 05 – 2006

 

09 – 07 – 2006

 

22,000

 

284

 

22,284

 

0

 

Banco Santander – Santiago

 

Fixed term

 

USD

 

5.40

%

04 – 05 – 2006

 

09 – 08 – 2006

 

22,000

 

284

 

22,284

 

0

 

Banco Santander – Santiago

 

Fixed term

 

USD

 

5.40

%

04 – 05 – 2006

 

09 – 11 – 2006

 

22,000

 

284

 

22,284

 

0

 

Banco Santander – Santiago

 

Fixed term

 

USD

 

5.40

%

04 – 05 – 2006

 

09 – 12 – 2006

 

22,000

 

284

 

22,284

 

0

 

Banco Santander – Santiago

 

Fixed term

 

USD

 

5.40

%

04 – 05 – 2006

 

09 – 13 – 2006

 

22,000

 

284

 

22,284

 

0

 

Citibank N.A.

 

Overnight

 

USD

 

3.10

%

06 – 30 – 2005

 

07 – 01 – 2005

 

0

 

0

 

0

 

235

 

Citibank N.A.

 

Overnight

 

USD

 

3.10

%

06 – 30 – 2005

 

07 – 01 – 2005

 

0

 

0

 

0

 

1,620

 

Citibank N.A.

 

Overnight

 

USD

 

3.56

%

06 – 30 – 2006

 

07 – 03 – 2006

 

577

 

0

 

577

 

0

 

Citibank N.A.

 

Overnight

 

USD

 

3.10

%

06 – 30 – 2005

 

07 – 01 – 2005

 

0

 

0

 

0

 

1,632

 

Citibank N.A.

 

Overnight

 

USD

 

3.56

%

06 – 30 – 2006

 

07 – 03 – 2006

 

2,078

 

0

 

2,078

 

0

 

Citibank N.A.

 

Overnight

 

USD

 

3.10

%

06 – 30 – 2005

 

07 – 01 – 2005

 

0

 

0

 

0

 

1,537

 

Citibank N.A.

 

Overnight

 

USD

 

3.56

%

06 – 30 – 2006

 

07 – 03 – 2006

 

1,127

 

0

 

1,127

 

0

 

Bank Boston N.A.

 

Fixed term

 

USD

 

16.32

%

12 – 08 – 2004

 

12 – 05 – 2005

 

0

 

0

 

0

 

91

 

Banco Unibanco S.A.

 

Demand deposit

 

Brazilian real

 

1.17

%

01 – 08 – 2003

 

12 – 23 – 2005

 

0

 

0

 

0

 

15

 

Banco Unibanco S.A.

 

Demand deposit

 

Brazilian real

 

1.17

%

07 – 06 – 2004

 

06 – 21 – 2006

 

0

 

0

 

0

 

1

 

Nedbank

 

Fixed term

 

ZAR

 

4.95

%

02 – 28 – 2006

 

04 – 01 – 2006

 

4

 

0

 

4

 

0

 

Citibank N.A.

 

Overnight

 

USD

 

3.56

%

06 – 30 – 2006

 

07 – 03 – 2006

 

241

 

0

 

241

 

0

 

Citibank N.A.

 

Overnight

 

USD

 

3.10

%

06 – 30 – 2005

 

07 – 01 – 2005

 

0

 

0

 

0

 

1,298

 

BBVA Banco Bilbao Vizcaya Argentaria

 

Fixed term

 

Euro

 

1.37

%

03 – 31 – 2004

 

11 – 02 – 2006

 

48

 

0

 

48

 

0

 

BBVA Banco Bilbao Vizcaya Argentaria

 

Fixed term

 

Euro

 

1.37

%

03 – 31 – 2004

 

11 – 02 – 2006

 

0

 

0

 

0

 

47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

155,975

 

18,780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


 

 

19


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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 - Marketable Securities

As of June 30 marketable securities are detailed as follows:

 

 

 

2006

 

2005

 

 

 


 


 

 

 

ThUS$

 

ThUS$

 

 

 

 

 

 

 

Mutual funds

 

58,933

 

35,287

 

 

 


 


 

Total

 

58,933

 

35,287

 

 

 


 


 

Mutual funds consist of investments with Citibank in highly liquid funds invested in fixed-rate debt in the United States.

Note 6 - Short-term and long-term Accounts Receivable

 

a)

Short term and long-term accounts receivable and other accounts receivable as of June 30 are detailed as follows:

 

 

 

Up to 90 days

 

Between 90 days
and 1 year

 

Total
Short-term (net)

 

   
 
 
 

 

 

2006

 

2005

 

2006

 

2005

 

2006

 

2005

 

 

 


 


 


 


 


 


 

 

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

Short-term

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts receivable

 

126,593

 

98,898

 

24,284

 

18,260

 

150,877

 

117,158

 

Allowance for doubtful accounts

 

 

 

 

 

 

 

 

 

(8,083

)

(9,080

)

Notes receivable

 

25,280

 

23,633

 

6,246

 

5,671

 

31,526

 

29,304

 

Allowance for doubtful accounts

 

 

 

 

 

 

 

 

 

(3,883

)

(2,966

)

 

 

 

 

 

 

 

 

 

 


 


 

Accounts receivable, net

 

 

 

 

 

 

 

 

 

170,437

 

134,416

 

 

 

 

 

 

 

 

 

 

 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other accounts receivable

 

5,848

 

10,910

 

1,618

 

867

 

7,466

 

11,777

 

Allowance for doubtful accounts

 

 

 

 

 

 

 

 

 

(680

)

(728

)

 

 

 

 

 

 

 

 

 

 


 


 

Other accounts receivable, net

 

 

 

 

 

 

 

 

 

6,786

 

11,049

 

 

 

 

 

 

 

 

 

 

 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term receivables

 

 

 

 

 

 

 

 

 

297

 

332

 

 

 

 

 

 

 

 

 

 

 


 


 

 

20


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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 - Short-term and Long-term Accounts Receivable (continued)

Consolidated Short-term and Long-term Receivables – by Geographic Location

 

 

 

Chile

 

Europe, Africa and
the Middle East

 

Asia and
Oceania

 

USA, Mexico
and Canada

 

Latin America
and the Caribbean

 

Total

 

   
 
 
 
 
 
 

 

 

2006

 

2005

 

2006

 

2005

 

2006

 

2005

 

2006

 

2005

 

2006

 

2005

 

2006

 

2005

 

 

 


 











 


 

 

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

Net short-term trade accounts receivable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

28,770

 

24,467

 

42,199

 

30,064

 

8,852

 

5,410

 

31,790

 

29,337

 

31,183

 

18,800

 

142,794

 

108,078

 

% of total

 

20.15

%

22.64

%

29.55

%

27.82

%

6.20

%

5.01

%

22.26

%

27.14

%

21.84

%

17.39

%

100.00

%

100.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net short-term notes receivable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

17,162

 

17,176

 

5,761

 

3,913

 

293

 

609

 

956

 

883

 

3,471

 

3,757

 

27,643

 

26,338

 

% of total

 

62.08

%

65.21

%

20.84

%

14.86

%

1.06

%

2.31

%

3.46

%

3.36

%

12.56

%

14.26

%

100.00

%

100.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net short-term other accounts receivable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

2,834

 

3,423

 

1,328

 

3,658

 

79

 

98

 

2,289

 

3,720

 

256

 

150

 

6,786

 

11,049

 

% of total

 

41.76

%

30.98

%

19.57

%

33.10

%

1.16

%

0.89

%

33.74

%

33.67

%

3.77

%

1.36

%

100.00

%

100.00

%

 

 


 


 


 


 


 


 


 


 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal short-term accounts receivable, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

48,766

 

45,066

 

49,288

 

37,635

 

9,224

 

6,117

 

35,035

 

33,940

 

34,910

 

22,707

 

177,223

 

145,465

 

% of total

 

27.52

%

30.98

%

27.81

%

25.87

%

5.20

%

4.21

%

19.77

%

23.33

%

19.70

%

15.61

%

100.00

%

100.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term accounts receivable, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

282

 

245

 

 

72

 

 

 

 

 

15

 

15

 

297

 

332

 

% of total

 

94.95

%

73.79

%

 

21.69

%

 

 

 

 

5.05

%

4.52

%

100.00

%

100.00

%

 

 


 


 


 


 


 


 


 


 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total short and long-term accounts receivable, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

49,048

 

45,311

 

49,288

 

37,707

 

9,224

 

6,117

 

35,035

 

33,940

 

34,925

 

22,722

 

177,520

 

145,797

 

% of total

 

27.63

%

31.08

%

27.76

%

25.86

%

5.20

%

4.20

%

19.74

%

23.28

%

19.67

%

15.58

%

100.00

%

100.00

%

 

 


 


 


 


 


 


 


 


 


 


 


 


 

 

21


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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 - Balances and Transactions with Related Parties

Accounts receivable from and payable to related companies are stated in US dollars and accrue no interest.

Transactions are made under terms and conditions which are similar to those offered to unrelated third parties.

a)

Amounts included in balances with related parties as of June 30, 2006 and 2005 are as follows:

 

 

 

Short-term

 

Long-term

 

   
 
 

Accounts receivable 

 

2006

 

2005

 

2006

 

2005

 


 


 


 


 


 

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

Ajay Europe S.A.R.L.

 

4,319

 

2,663

 

 

 

Nutrisi Holding N.V.

 

1,545

 

1,470

 

 

 

Generale de Nutrition Vegetale S.A.

 

132

 

132

 

 

 

Abu Dhabi Fertilizer Ind. WLL

 

2,600

 

5,039

 

2,000

 

 

Doktor Tarsa –SQM Turkey

 

11,316

 

9,712

 

 

 

Yara North America

 

9,794

 

9,674

 

 

 

Yara Iberian S.A.

 

2,422

 

2,728

 

 

 

Sales de Magnesio S.A.

 

36

 

42

 

 

 

Soc. Inv. Pampa Calichera S.A.

 

8

 

 

 

 

Ajay North America LLC

 

3,158

 

2,670

 

 

 

Yara International Asia Trade Pte Ltd

 

1,482

 

 

 

 

Yara France S.A.

 

35

 

50

 

 

 

Yara Poland SP

 

533

 

445

 

 

 

Yara Benelux B.V

 

714

 

590

 

 

 

Yara Hellas S.A.

 

694

 

928

 

 

 

Yara UK Ltd.

 

322

 

443

 

 

 

Yara GMBH & CO KG

 

568

 

493

 

 

 

Yara AB

 

70

 

96

 

 

 

Yara Colombia Ltda.

 

724

 

707

 

 

 

Yara International ASA

 

6,015

 

308

 

 

 

Yara Norge

 

13

 

7

 

 

 

Yara CZECH Republic

 

16

 

12

 

 

 

Yara International Australia PTY

 

668

 

730

 

 

 

Yara France BU Africa

 

542

 

775

 

 

 

NU3 B.V.

 

1,400

 

902

 

 

 

Yara Argentina S.A.

 

6,114

 

6,817

 

 

 

Yara Fertilizers (Filipinas)

 

 

11

 

 

 

Yara International Asia Trade (Vietnam)

 

21

 

58

 

 

 

Yara International Asia Trade (Singapur)

 

 

1,680

 

 

 

Yara Fertilizers (New Zealand)

 

121

 

79

 

 

 

PCS Sales Inc.

 

16

 

25

 

 

 

Yara France BU Latin America

 

 

2,760

 

 

 

Yara International Wholesale Spec. South Africa

 

 

3,173

 

 

 

Yara Italia SPA

 

58

 

75

 

 

 

Yara East Africa Limited

 

140

 

626

 

 

 

Adubo Trevo

 

252

 

530

 

 

 

SQM East Med Turkey

 

13

 

 

 

 

Fertilizantes Naturales S.A.

 

 

233

 

 

 

Impronta SRL

 

7,596

 

7,323

 

 

 

 

 


 


 


 


 

Total

 

63,457

 

64,006

 

2,000

 

 

 

 


 


 


 


 

22


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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 - Balances and Transactions with Related Parties (continued)

a)

Amounts included in balances with related parties as of June 30, 2006 and 2005, continued:

 

 

 

Short-term

 

 

 


 

Accounts payable 

 

2006

 

2005

 


 


 


 

 

ThUS$

 

ThUS$

 

NU3 N.V.

 

647

 

944

 

Yara Fertilizantes Ltda.

 

153

 

765

 

Yara France BU Latin America

 

356

 

 

Charlee SQM Thailand co.

 

175

 

 

Inversiones PCS Chile Ltda.

 

1,000

 

 

 

 


 


 

Total

 

2,331

 

1,709

 

 

 


 


 

There were no outstanding long-term accounts payable with related parties as of June 30, 2006 and 2005

23


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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 - Balances and Transactions with Related Parties (continued)

b)

During 2006 and 2005, principal transactions with related parties were as follows:

 

Company

 

Relationship

 

Type of transaction

 

Amount of
Transaction

 

Impact on income
(charge) credit

 


 


 


 


 


 

 

 

 

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 


 


 


 


 

 

 

 

 

 

 

ThUS$

 

ThUS$

 

ThUS$

 

ThUS$

 

NU3 N.V.

 

Indirect

 

Sales of products

 

3,971

 

3,009

 

1,565

 

1,023

 

Doktor Tarsa

 

Indirect

 

Sales of products

 

7,962

 

7,885

 

2,677

 

2,310

 

Abu Dhabi Fertilizer WLL

 

Indirect

 

Sales of products

 

1,403

 

1,153

 

425

 

380

 

Ajay Europe S.A.R.L.

 

Indirect

 

Sales of products

 

6,869

 

3,975

 

3,085

 

2,117

 

NU3 B.V.

 

Indirect

 

Sales of products

 

3,838

 

3,433

 

1,491

 

372

 

Impronta SRL

 

Indirect

 

Sales of products

 

2,982

 

2,567

 

1,133

 

998

 

Ajay North America LLC

 

Indirect

 

Sales of products

 

8,706

 

6,549

 

4,280

 

3,544

 

Adubo Trevo S.A.

 

Shareholder

 

Sales of products

 

1,573

 

2,006

 

685

 

864

 

Yara Business Support

 

Shareholder

 

Services

 

2,250

 

2,050

 

(2,250

)

(2,050

)

Yara Hellas S.A.

 

Shareholder

 

Sales of products

 

1,323

 

1,069

 

454

 

360

 

Yara Argentina S.A.

 

Shareholder

 

Sales of products

 

10,423

 

7,797

 

3,660

 

2,413

 

Yara UK Ltd.

 

Shareholder

 

Sales of products

 

802

 

907

 

256

 

114

 

Yara Int. Asia Trade PTE Ltd.

 

Shareholder

 

Sales of products

 

3,491

 

4,747

 

1,205

 

1,267

 

Yara Benelux B.V.

 

Shareholder

 

Sales of products

 

5,241

 

4,759

 

1,225

 

1,101

 

Yara Int. Australia Ltd.

 

Shareholder

 

Sales of products

 

967

 

1,397

 

320

 

237

 

Yara Iberian S.A.

 

Shareholder

 

Sales of products

 

4,478

 

4,699

 

1,851

 

1,793

 

Yara Colombia Ltda.

 

Shareholder

 

Sales of products

 

1,784

 

2,974

 

579

 

1,547

 

Yara Plant Nutri Poland

 

Shareholder

 

Sales of products

 

1,089

 

1,022

 

420

 

136

 

Yara GMBH & Co Kg

 

Shareholder

 

Sales of products

 

1,168

 

1,075

 

447

 

180

 

Yara France

 

Shareholder

 

Sales of products

 

4,388

 

5,344

 

1,451

 

1,562

 

Yara France BU Africa

 

Shareholder

 

Sales of products

 

1,177

 

7,033

 

255

 

2,485

 

Yara North America

 

Shareholder

 

Sales of products

 

26,300

 

25,436

 

6,481

 

8,685

 

Yara Fertilizers Brasil

 

Shareholder

 

Sales of products

 

4,184

 

 

1,732

 

 

Yara International Wholesale

 

Shareholder

 

Sales of products

 

 

9,767

 

 

2,259

 

Yara Internacional ASA

 

Shareholder

 

Sales of products

 

12,213

 

1,834

 

3,542

 

358

 

24


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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 - Inventories

Net inventories are summarized as follows:

 

 

 

2006

 

2005

 

 

 


 


 

 

 

ThUS$

 

ThUS$

 

Finished products

 

234,946

 

206,427

 

Work in process

 

120,745

 

99,650

 

Supplies

 

18,607

 

16,137

 

 

 


 


 

Total

 

374,298

 

322,214

 

 

 


 


 

Note 9 - Property, Plant and Equipment

Property, plant and equipment are summarized as follows:

 

 

 

2006

 

2005

 

 

 


 


 

 

 

ThUS$

 

ThUS$

 

Land

 

 

 

 

 

Land

 

67,750

 

20,003

 

Mining Concessions

 

30,787

 

44,183

 

 

 


 


 

 

 

98,537

 

64,186

 

 

 


 


 

Buildings and infrastructure

 

 

 

 

 

Buildings

 

167,907

 

163,583

 

Installations

 

207,803

 

178,011

 

Construction-in-progress

 

211,429

 

84,098

 

Other

 

176,951

 

172,533

 

 

 


 


 

 

 

764,090

 

598,225

 

 

 


 


 

Machinery and Equipment

 

 

 

 

 

Machinery

 

455,525

 

416,960

 

Equipment

 

123,565

 

99,479

 

Project-in-progress

 

10,113

 

29,805

 

Other

 

18,101

 

18,626

 

 

 


 


 

 

 

607,304

 

564,870

 

 

 


 


 

Other fixed assets

 

 

 

 

 

Tools

 

8,840

 

8,640

 

Furniture and office equipment

 

14,600

 

14,392

 

Project-in-progress

 

16,704

 

14,276

 

Other

 

12,782

 

7,878

 

 

 


 


 

 

 

52,926

 

45,186

 

 

 


 


 

25


Back to Contents

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 - Property, Plant and Equipment (continued)

 

 

 

 

2006

 

2005

 

 

 


 


 

 

 

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

 

12,091

 

12,091

 

Other assets