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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



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Form 10-Q Equivalent - Informational



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(Mark One)

| ̈ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended June 30, 2005



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  to



Commission File Number: N/A



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AMERICAN ROCK SALT COMPANY LLC

(Exact Name of Registrant as Specified in its Charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|New York                                                       |  | 16-1516458                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (IRS Employer Identification Number)



|                                         |  |           
|---------------------------------------- |  | ----------
|3846 Retsof Road, Retsof, New York       |  | 14539     
|(Address of Principal Executive Offices) |  | (Zip Code)



Registrants
Telephone Number, Including Area Code: (585) 243-9510 ext. 1164



(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report): N/A



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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    YES ̈NO ̈N/A  x



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    YES ̈NO  x



This Form 10-Q Equivalent is only being filed for informational purposes pursuant to the indenture

governing American Rock Salt Company LLCs 91/2% Senior Secured Notes due 2014.



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##### Table of Contents

American Rock Salt Company LLC

INDEX



|           |  |                                                                                                       |  |           
|---------- |  | ----------------------------------------------------------------------------------------------------- |  | ----------
|           |  |                                                                                                       |  | PageNumber
|Part I.    |  | Financial Information                                                                                 |  |           
|           |  |                                                                                                      
|Item 1.    |  | Financial Statements                                                                                  |  |           
|           |  |                                                                                                      
|           |  | Balance SheetsJune 30, 2005 (Unaudited) and September 30, 2004                                        |  | 2         
|           |  |                                                                                                      
|           |  | Statements of OperationsThree and Nine Months Ended June 30, 2005 and 2004 (Unaudited)                |  | 3         
|           |  |                                                                                                      
|           |  | Statement of Changes in Members Equity (Deficit)Nine Months Ended June 30, 2005 and 2004 (Unaudited) |  | 3         
|           |  |                                                                                                      
|           |  | Statements of Cash FlowsNine Months Ended June 30, 2005 and 2004 (Unaudited)                          |  | 4         
|           |  |                                                                                                      
|           |  | Notes to Interim Financial Statements                                                                 |  | 5         
|           |  |                                                                                                      
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                 |  | 10        
|           |  |                                                                                                      
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                            |  | 17        
|           |  |                                                                                                      
|Item 4.    |  | Controls and Procedures                                                                               |  | 18        
|           |  |                                                                                                      
|Part II.   |  | Other Information                                                                                     |  |           
|           |  |                                                                                                      
|Item 1.    |  | Legal Proceedings                                                                                     |  | 18        
|           |  |                                                                                                      
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                           |  | 18        
|           |  |                                                                                                      
|Item 3.    |  | Defaults upon Senior Securities                                                                       |  | 18        
|           |  |                                                                                                      
|Item 4.    |  | Submission of Matters to a Vote of Security Holders                                                   |  | 18        
|           |  |                                                                                                      
|Item 5.    |  | Other Information                                                                                     |  | 18        
|           |  |                                                                                                      
|Item 6.    |  | Exhibits                                                                                              |  | 19        
|           | 
|Signatures |  |                                                                                                      
|           | 
|Exhibits   |  | 21                                                                                                   



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##### Table of Contents

PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



American Rock Salt Company LLC

Balance Sheets

(Dollars in Thousands)



|                                                                                                                                             |  |               |         |                   |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | ----------------- | - | ------- | -
|                                                                                                                                             |  | June 30, 2005 |         | September 30,2004 |  
|                                                                                                                                             |  | (unaudited)   |         |                   |  
|Assets                                                                                                                                       |  |               |         |                   |   |         |  
|Current assets                                                                                                                               |  |               |         |                   |   |         |  
|Cash and equivalents                                                                                                                         |  | $             | 415     |                   | $ | 3,102   |  
|Restricted cash                                                                                                                              |  |               | 4,181   |                   |   | 1,328   |  
|Accounts receivable, net of reserve for doubtful accounts of approximately $57 and $54 at June 30, 2005 and September 30, 2004,
respectively |  |               | 814     |                   |   | 3,632   |  
|Inventory                                                                                                                                    |  |               | 20,575  |                   |   | 26,020  |  
|Prepaid expenses                                                                                                                             |  |               | 651     |                   |   | 718     |  
|                                                                                                                                             |  |               |         |                   |   |         |  
|Total current assets                                                                                                                         |  |               | 26,636  |                   |   | 34,800  |  
|Property and equipment, net                                                                                                                  |  |               | 76,000  |                   |   | 74,275  |  
|Other assets                                                                                                                                 |  |               |         |                   |   |         |  
|Salt deposits and mineral rights, net                                                                                                        |  |               | 2,613   |                   |   | 2,646   |  
|Mine acquisition costs, net                                                                                                                  |  |               | 390     |                   |   | 395     |  
|Financing costs, net of accumulated amortization                                                                                             |  |               | 6,740   |                   |   | 7,318   |  
|                                                                                                                                             |  |               |         |                   |   |         |  
|Total other assets                                                                                                                           |  |               | 9,743   |                   |   | 10,359  |  
|                                                                                                                                             |  |               |         |                   |   |         |  
|                                                                                                                                             |  | $             | 112,379 |                   | $ | 119,434 |  
|                                                                                                                                             |  |               |         |                   |   |         |  
|Liabilities and Members Equity                                                                                                              |  |               |         |                   |   |         |  
|Current liabilities                                                                                                                          |  |               |         |                   |   |         |  
|Revolving line of credit                                                                                                                     |  | $             |        |                   | $ | 12,750  |  
|Current portion of long-term debt                                                                                                            |  |               | 24      |                   |   | 24      |  
|Accounts payable                                                                                                                             |  |               | 4,397   |                   |   | 3,459   |  
|Accrued expenses                                                                                                                             |  |               | 4,396   |                   |   | 4,063   |  
|Mine construction retention                                                                                                                  |  |               |        |                   |   | 4,160   |  
|Related party payables                                                                                                                       |  |               | 136     |                   |   | 437     |  
|                                                                                                                                             |  |               |         |                   |   |         |  
|Total current liabilities                                                                                                                    |  |               | 8,953   |                   |   | 24,893  |  
|Long-term debt, net of current portion                                                                                                       |  |               | 100,132 |                   |   | 100,150 |  
|                                                                                                                                             |  |               |         |                   |   |         |  
|Total liabilities                                                                                                                            |  |               | 109,085 |                   |   | 125,043 |  
|                                                                                                                                             |  |               |         |                   |   |         |  
|Commitments and Contingencies (Note 6)                                                                                                       |  |               |         |                   |   |         |  
|                                                                                                                                             |  |              
|Members equity (deficit)                                                                                                                    |  |               |         |                   |   |         |  
|Class A Units 6,250 units issued and outstanding at June 30, 2005 and September 30, 2004                                                     |  |               | 1,084   |                   |   | (1,845  | )
|Class F Units 12,750 units issued and outstanding at June 30, 2005 and September 30, 2004                                                    |  |               | 2,210   |                   |   | (3,764  | )
|                                                                                                                                             |  |               |         |                   |   |         |  
|                                                                                                                                             |  |               | 3,294   |                   |   | (5,609  | )
|                                                                                                                                             |  |               |         |                   |   |         |  
|                                                                                                                                             |  | $             | 112,379 |                   | $ | 119,434 |  
|                                                                                                                                             |  |               |         |                   |   |         |  



The accompanying notes
are an integral part of these interim financial statements.



2



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##### Table of Contents

American Rock Salt Company LLC

Statements of Operations

(Dollars in Thousands)

(Unaudited)



|                              |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  
|----------------------------- |  | -------------------------- | ------ | - | ------------------------- | - | ------ | ------------- |  | - | ------------- | - |  | - | ------ | -
|                              |  | For the three months ended |        |   | For the nine months ended |  
|                              |  | June 30, 2005              |        |   | June 30, 2004             |   |        | June 30, 2005 |  |   | June 30, 2004 |  
|Sales                         |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  
|Bulk                          |  | $                          | 2,644  |   |                           | $ | 2,916  |               |  | $ | 93,014        |   |  | $ | 88,741 |  
|Packaged                      |  |                            | (2     | ) |                           |   |       |               |  |   | 1,864         |   |  |   | 2,744  |  
|                              |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  
|Total sales                   |  |                            | 2,642  |   |                           |   | 2,916  |               |  |   | 94,878        |   |  |   | 91,485 |  
|                              |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  
|Cost of sales                 |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  
|Freight and handling          |  |                            | 1,476  |   |                           |   | 899    |               |  |   | 41,639        |   |  |   | 40,282 |  
|Products                      |  |                            | 738    |   |                           |   | 1,162  |               |  |   | 27,738        |   |  |   | 26,423 |  
|                              |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  
|                              |  |                            | 2,214  |   |                           |   | 2,061  |               |  |   | 69,377        |   |  |   | 66,705 |  
|                              |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  
|Gross income                  |  |                            | 428    |   |                           |   | 855    |               |  |   | 25,501        |   |  |   | 24,780 |  
|Operating expenses            |  |                            | 1,870  |   |                           |   | 1,389  |               |  |   | 6,139         |   |  |   | 4,787  |  
|                              |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  
|Income (loss) from operations |  |                            | (1,442 | ) |                           |   | (534   | )             |  |   | 19,362        |   |  |   | 19,993 |  
|                              |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  
|Other income (expense)        |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  
|Interest expense              |  |                            | (2,695 | ) |                           |   | (2,712 | )             |  |   | (8,606        | ) |  |   | (5,298 | )
|Other interest                |  |                            |       |   |                           |   |       |               |  |   |              |   |  |   | (2,679 | )
|Interest income               |  |                            | 65     |   |                           |   | 26     |               |  |   | 71            |   |  |   | 118    |  
|Other financing charges       |  |                            |       |   |                           |   | (4     | )             |  |   | (7            | ) |  |   | (308   | )
|Other, net                    |  |                            | 4      |   |                           |   |       |               |  |   | 6             |   |  |   | 9      |  
|                              |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  
|Total other expense, net      |  |                            | (2,626 | ) |                           |   | (2,689 | )             |  |   | (8,536        | ) |  |   | (8,158 | )
|                              |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  
|Net income (loss)             |  | $                          | (4,068 | ) |                           | $ | (3,223 | )             |  | $ | 10,826        |   |  | $ | 11,835 |  
|                              |  |                            |        |   |                           |   |        |               |  |   |               |   |  |   |        |  



The accompanying notes
are an integral part of these interim financial statements.



American Rock Salt Company LLC

Statement of Changes in Members Equity (Deficit)

For the Nine Months Ended June 30, 2005

(Dollars in Thousands)

(Unaudited)



|                                      |  |               |        |   |               |   |        |       |  |   |        |  
|------------------------------------- |  | ------------- | ------ | - | ------------- | - | ------ | ----- |  | - | ------ | -
|                                      |  | Class A Units |        |   | Class F Units |   |        | Total | 
|Members deficit - September 30, 2004 |  | $             | (1,845 | ) |               | $ | (3,764 | )     |  | $ | (5,609 | )
|Net income                            |  |               | 3,561  |   |               |   | 7,265  |       |  |   | 10,826 |  
|Distribution                          |  |               | (632   | ) |               |   | (1,291 | )     |  |   | (1,923 | )
|                                      |  |               |        |   |               |   |        |       |  |   |        |  
|Members equity - June 30, 2005       |  | $             | 1,084  |   |               | $ | 2,210  |       |  | $ | 3,294  |  
|                                      |  |               |        |   |               |   |        |       |  |   |        |  



The accompanying notes
are an integral part of these interim financial statements.



3



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##### Table of Contents

American Rock Salt Company LLC

Statements of Cash Flows

(Dollars in Thousands)

(Unaudited)

|                                                                                 |  |                           |         |   |               |   |         |  
|-------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ------------- | - | ------- | -
|                                                                                 |  | For the nine months ended |        
|                                                                                 |  | June 30, 2005             |         |   | June 30, 2004 |  
|Cash flows from operating activities                                             |  |                           |         |   |               |   |         |  
|Net income                                                                       |  | $                         | 10,826  |   |               | $ | 11,835  |  
|Adjustments to reconcile net income to net cash provided by operating activities |  |                           |         |   |               |   |         |  
|Depreciation                                                                     |  |                           | 4,698   |   |               |   | 4,581   |  
|Depletion                                                                        |  |                           | 34      |   |               |   | 44      |  
|Provision for bad debts                                                          |  |                           | 10      |   |               |   |        |  
|Amortization of mine acquisition and financing costs                             |  |                           | 582     |   |               |   | 632     |  
|Loss on sale or disposal of equipment                                            |  |                           |        |   |               |   | (7      | )
|Changes in                                                                       |  |                           |         |   |               |   |         |  
|Accounts receivable                                                              |  |                           | 2,808   |   |               |   | 5,363   |  
|Inventory                                                                        |  |                           | 5,444   |   |               |   | 5,166   |  
|Prepaid expenses and other assets                                                |  |                           | 69      |   |               |   | (345    | )
|Accounts payable                                                                 |  |                           | (1,073  | ) |               |   | (41     | )
|Accrued expenses                                                                 |  |                           | 1,382   |   |               |   | 1,384   |  
|Borrowings (Repayments) of related party payables                                |  |                           | (301    | ) |               |   | (2,754  | )
|                                                                                 |  |                           |         |   |               |   |         |  
|Net cash provided by operating activities                                        |  |                           | 24,479  |   |               |   | 25,858  |  
|                                                                                 |  |                           |         |   |               |   |         |  
|Cash flows from investing activities                                             |  |                           |         |   |               |   |         |  
|Proceeds on sale or disposal of equipment                                        |  |                           |        |   |               |   | 25      |  
|Purchase of property and equipment                                               |  |                           | (1,634  | ) |               |   | (1,602  | )
|Purchase of salt deposits and mineral rights                                     |  |                           |        |   |               |   | (673    | )
|Mine Development Expenditures                                                    |  |                           | (4,789  | ) |               |   |        |  
|Mine Construction - Retention                                                    |  |                           | (4,160  | ) |               |   |        |  
|Mine Construction - Accrued Expenses                                             |  |                           | (1,051  | ) |               |   |        |  
|                                                                                 |  |                           |         |   |               |   |         |  
|Net cash used in investing activities                                            |  |                           | (11,634 | ) |               |   | (2,250  | )
|                                                                                 |  |                           |         |   |               |   |         |  
|Cash flows from financing activities                                             |  |                           |         |   |               |   |         |  
|Repayments on long-term debt                                                     |  |                           | (18     | ) |               |   | (64,188 | )
|Payment of financing costs                                                       |  |                           |        |   |               |   | (7,482  | )
|Financed payables                                                                |  |                           | 2,012   |   |               |   |         |  
|Borrowings on revolving line of credit                                           |  |                           | 4,420   |   |               |   | 5,430   |  
|Repayments on revolving line of credit                                           |  |                           | (17,170 | ) |               |   | (17,810 | )
|Issuance of senior secured notes                                                 |  |                           |        |   |               |   | 100,000 |  
|Distribution to Members                                                          |  |                           | (1,923  | ) |               |   | (41,400 | )
|Increase in Restricted Cash                                                      |  |                           | (2,853  | ) |               |   | (664    | )
|                                                                                 |  |                           |         |   |               |   |         |  
|Net cash used in financing activities                                            |  |                           | (15,532 | ) |               |   | (26,114 | )
|                                                                                 |  |                           |         |   |               |   |         |  
|Net increase in cash and equivalents                                             |  |                           | (2,687  | ) |               |   | (2,506  | )
|Cash and equivalents - beginning of period                                       |  |                           | 3,102   |   |               |   | 9,097   |  
|                                                                                 |  |                           |         |   |               |   |         |  
|Cash and equivalents - end of period                                             |  | $                         | 415     |   |               | $ | 6,591   |  
|                                                                                 |  |                           |         |   |               |   |         |  
|                                                                                 |  |                          
|Supplemental Disclosure of Cash Flow Activities                                  |  |                           |         |   |               |   |         |  
|Cash paid for interest                                                           |  | $                         | 6,192   |   |               | $ | 4,408   |  
|                                                                                 |  |                           |         |   |               |   |         |  



The accompanying notes
are an integral part of these interim financial statements.



4



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##### Table of Contents

AMERICAN ROCK SALT COMPANY LLC

NOTES TO FINANCIAL STATEMENTS



1. The Company



American Rock Salt Company LLC (the Company) primarily sells bulk rock salt for use in deicing roads. The
Company bids on supply contracts for salt produced at the Hampton Corners Mine to be provided to state Departments of Transportation and local municipalities as well as industrial consumers throughout the Northeastern United States. The Company was
formed on January 30, 1997. Construction of the Hampton Corners Mine began in November 1998 and it was substantially completed in December 2001. The Company steadily increased sales as production and distribution capacity came online during a
ramp-up phase in fiscal 2001 and 2002. The Company attained full operating capacity during fiscal 2003.



2. Basis of Presentation



The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These interim unaudited financial statements should be read in conjunction with the audited financial statements
for the fiscal year ended September 30, 2004 included in the Companys Form 10-K Equivalent. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation, have been
included. Operating results for the three and nine month periods ended June 30, 2005 are not indicative of the results that may be expected for a full year due, in part, to seasonal fluctuations, which are normal for the Companys business.
Further, the Company has made a number of estimates and assumptions relating to the assets and liabilities, the disclosure of contingent assets and liabilities and the reporting of revenues and expenses to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could differ from those estimates.



The balance sheet at September 30, 2004 has been derived from the audited financial statements at that date, but does not include all the information and
footnotes required by accounting principles generally accepted in the United States for complete financial statements.



No provision is made for income taxes in the accompanying financial statements as the Company is a limited liability company that elected partnership
status. The taxable income or loss and any available credits of the Company are includable on the individual income tax returns of the members.



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##### Table of Contents

3. Long-Term Debt





|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |              |         |   |                   |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ----------------- | - | ------- | -
|Long-term debt consisted of the following at:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | (Thousands)  |        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | June 30,2005 |         |   | September 30,2004 |  
|Senior Secured Notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |              |         |   |                   |   |         |  
|Senior Secured Notes at June 30, 2005 of $100,000,000, currently requiring semiannual interest payments through the final maturity date of
March 15, 2014 at an annual rate of 9.50%. Prior to March 15, 2007, 35% of the aggregate principal amount of the notes at the established price plus accrued and unpaid interest may be redeemed at 109.5%. Some or all of the notes may be redeemed at
any time prior to March 15, 2009 at a make-whole redemption price. After March 15, 2009, the notes are redeemable at a redemption price of 104.75%, to be adjusted annually to 100% by March 15, 2012 |  |              | 100,000 |   |                   |   | 100,000 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |             
|Promissory note payable to the Empire State Development Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |              |         |   |                   |   |         |  
|Due April 1, 2011, interest at 4.0% per annum payable in 120 equal installments of principal and interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |              | 156     |   |                   |   | 174     |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |              |         |   |                   |   |         |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |              | 100,156 |   |                   |   | 100,174 |  
|Less: Current maturities of long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |              | (24     | ) |                   |   | (24     | )
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |              |         |   |                   |   |         |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | $            | 100,132 |   |                   | $ | 100,150 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |              |         |   |                   |   |         |  



As of June 30, 2005,
the Company had no outstanding borrowings under its working capital line of credit. On March 17, 2004, the Company repaid all of its existing indebtedness other than a $0.2 million subordinated note with the proceeds of its new financing which
comprised: $100.0 million principal amount 9.5% senior secured notes with a maturity date of March 15, 2014, and a new bank facility in the aggregate principal amount of $62.1 million, consisting of: (a) a $32.1 million term loan facility, and (b) a
$30.0 million working capital facility. Both the term loan and the working capital facility currently bear interest at an annual rate equal to the LIBOR rate plus up to 3.5% based on a pricing grid leverage ratio or a base rate (the higher of the
Federal Funds Rate plus 0.50% or the prime rate plus the applicable margin for base rate loans), at the Companys option. The term loan facility has a maturity of eight years commencing March 17, 2004. The working capital facility has an
initial term of five years commencing March 17, 2004.



The
term loan facility was used to support the litigation with the contractor of the mine facility. More specifically, the lenders under the new credit agreement facilitated the issuance, at closing, of a $32.1 million letter of credit, which could be
drawn against for purposes of the litigation. Upon conclusion of the litigation, the letter of credit facility would convert to a term loan. Sinking fund payments totaling $0.7 million were made from April 1, 2005 through June 30, 2005 as required
under our credit facility for the un-drawn $32.1 million term loan. These payments are shown on the balance sheet as restricted cash. On June 30, 2005, the Company reached a settlement regarding the litigation and on July 5, 2005 the letter of
credit facility converted to a fully drawn term loan, offset by restricted cash payments of $4.1 million. As of June 30, 2005, the end of the period covered by this Quarterly Report on Form 10-Q Equivalent, no monies were drawn against the $32.1
million letter of credit. At that date, the letter of credit facility bore an interest rate of 2.75%, and if the term loan facility were outstanding, it would have borne an interest rate of 6.25%. At July 5, 2005, the fully-drawn term loan facility
bore an interest rate of 6.25%.



The working capital facility
permits the Company to borrow up to $30.0 million in revolving loans with a $7.0 million sub-limit available for the issuance of letters of credit. Availability of the working capital facility is subject to a borrowing base formula. As of June 30,
2005, the Company had $0.0 million drawn and $3.3 million of standby letters of credit outstanding under the working capital facility, with approximately $8.1 million of remaining availability thereunder. The aggregate outstanding amount of
revolving loans and letters of credit under the financing arrangement cannot exceed $30.0 million and bears interest at a rate of 6.25%.



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##### Table of Contents

4. Inventory



Inventory consists of the following at:



|                     |  |              |        |   |                   |   |        |  
|-------------------- |  | ------------ | ------ | - | ----------------- | - | ------ | -
|                     |  | June 30,2005 |        |   | September 30,2005 |  
|Supplies             |  | $            | 944    |   |                   | $ | 778    |  
|Finished Goods, Salt |  |              | 19,668 |   |                   |   | 25,279 |  
|                     |  |              |        |   |                   |   |        |  
|                     |  |              | 20,612 |   |                   |   | 26,057 |  
|Less:                |  |              |        |   |                   |   |        |  
|Reserve              |  |              | (37    | ) |                   |   | (37    | )
|                     |  |              |        |   |                   |   |        |  
|                     |  | $            | 20,575 |   |                   | $ | 26,020 |  
|                     |  |              |        |   |                   |   |        |  



5. Related Party Transactions



Legal Services



Certain legal costs were incurred from an organization affiliated with
several of our members of approximately $0.2 million and $0.2 million during the three months ended, and $0.8 million and $1.0 million for the nine months ended June 30, 2005 and 2004, respectively. All such fees were included in operating expenses.



Goods and Services



Certain members, or their affiliates, received management and service fees
of approximately $0.1 million and $0.1 million during the three months ended, and $0.2 million and $0.2 million for the nine months ended June 30, 2005 and 2004, respectively. These amounts are included in operating expenses.



Additionally, certain members, or their affiliates, received payments for
goods and services of approximately $0.4 million and $0.2 million during the three months ended, and $1.1 million and $1.3 million for the nine months ended June 30, 2005 and 2004 respectively. For the three months ended June 30, 2005, approximately
$0.2 million of the total $0.4 million is included in cost of sales  products, with the remaining balance in operating expenses. For the three months ended June 30, 2004, approximately $0.1 million of the total $0.2 million is included in cost
of sales  products, with the remaining balance in operating expenses. For the nine months ended June 30, 2005, approximately $0.8 million of the total $1.1 million is included in cost of sales  products, with the remaining balance in
operating expenses. For the nine months ended June 30, 2004, approximately $0.4 million of the total $1.3 million is included in cost of sales  products, with the remaining balance in operating expenses.



Financing Costs



Certain costs were incurred from a member which was, until the refinancing,
also a lender, for administrative fees of $0 and $0.1 million, principal payments of $0 and $15.3 million, and interest payments of approximately $0 and $0.8 million, and prepayment penalties of $0 and $1.9 million for the three and nine months
ended June 30, 2004. No such amounts were incurred during the three and nine months ended June 30, 2005. This lender was paid in full upon completion of the new financing agreement on March 17, 2004. All amounts, excluding interest and prepayment
penalties, are included in operating expenses.



Certain costs
were incurred from an affiliate of a member for financial advisory fees of approximately $0.1 million and $0.1 million for the three months ended, and $0.2 million and $1.8 million for the nine months ended June 30, 2005 and 2004, respectively.
Amounts for the three and nine months ended June 30, 2005 are included in operating expenses while the amounts for the three and nine months ended June 30, 2004 are recorded as an asset on the balance sheet in other assets  financing costs,
and will be amortized over the life of the related debt.



Non-operating Mineral Interests (NOMIs)



Certain members receive payments in respect of NOMIs related to the acquisition of mineral rights equal to 2.5% of the gross income from the mine as reported for purposes of computing percentage depletion for federal income tax purposes.
NOMI expense was approximately $0.05 million and $0.05 million during the three months ended, and $2.2 million and $2.1 million for the nine months ended June 30, 2005 and 2004, respectively. These amounts are included in cost of sales 
products.



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##### Table of Contents

6. Commitments and Contingencies



Engineering and Procurement Contract/Litigation



The Company has been involved in litigation with Frontier-Kemper Constructors, Inc., Flatiron Constructors, Inc. (formerly known as Flatiron
Constructors, LLC, and also known as Flatiron Structures LLC), Jointly and Severally with Frontier-Kemper Constructors, Inc. and d/b/a Frontier-Kemper/Flatiron Joint Venture (together, the EPC Contractor or FKF), whom the
Company engaged to design and construct its mine facility, and Travelers Casualty and Surety Company of America and Liberty Mutual Insurance Company. On June 30, 2005, the above parties reached a settlement agreement with respect to the litigation,
pursuant to which the parties agreed to dismiss all claims and counterclaims, subject to limited exceptions, with no findings or admissions of liability by any party. All of the settled claims were dismissed with prejudice. The settlement also freed
the Company from any further obligation under a $32.1 million bond the Company had posted as security to discharge a mechanics lien the EPC Contractor had filed against the Hampton Corners Salt Mine arising out of the litigation. The
settlement does not include the settling parties claims against Willis Corroon Corporation of Missouri, Willis Limited, Willis Faber and Dumas and Lloyds U/W at London, Sponsoring Syndicates, third-party defendants in the above-described
action, which claims are still pending. Other terms of the settlement are confidential by agreement of the parties.



7. Accounting Pronouncements



In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Accounting Standards (SFAS) No. 151, Inventory Costs  an amendment
of ARB No. 43, Chapter 4 to clarify the accounting for idle facility expense, freight, handling costs, and wasted material (spoilage). This Statement requires that those items be recognized as current-period charges regardless of whether they meet
the criterion of so abnormal as defined in ARB No. 43. In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS No.
151 is effective for the Company beginning January 1, 2006. The Company is currently evaluating the impact of SFAS No. 151 on its financial statements.



In December 2004, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 153, Exchange of Non-monetary Assets (FAS 153). This statement is based on the
principle that exchanges of non-monetary assets should be measured based on the fair value of the assets exchanged. FAS 153 is effective for non monetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not
expect that the adoption of this statement will have a material impact on its financial statements.



The Securities and Exchange Commission (SEC) recently issued guidance on the ways in which its full-cost rules interact with the accounting requirements that the FASB established for asset retirement
obligations  specifically, how FASB Statement No. 143, Accounting for Asset Retirement Obligations (FAS 143), interacts with the full-cost requirements in Rule 4-10 of Regulation S-X (Rule 4-10). The SECs new guidance appears in
Staff Accounting Bulletin No. 106 (SAB 106) issued in October 2004. The Company adopted SAB 106 on January 1, 2005. The adoption did not have an impact on the Companys financial statements.



In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset
Retirement Obligations - an interpretation of FASB Statement No. 143 (FIN 47), which clarifies the term conditional asset retirement obligation used in SFAS No. 143, Accounting for Asset Retirement Obligations, and
specifically when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The Company is required to adopt FIN 47 no later than September 30, 2005. The Company does not expect the adoption
of FIN 47 to have a material impact on its financial statements.



In May 2005,
the FASB issued SFAS No. 154, Accounting Changes and Error Corrections (FAS 154), which replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements - An
Amendment of APB Opinion No. 28. FAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application, or the latest practicable date, as the required method for
reporting a change in accounting principle and the reporting of a correction of an error. FAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not expect that
the adoption of this statement will have a material impact on its financial statements.



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##### Table of Contents

8. Subsequent Events



As described above in Note 6, Commitments and Contingencies, the Company reached a settlement regarding the litigation involving the EPC Contractor. On June
30, 2005, a total of $10.0 million was paid to the EPC Contractor, including $4.2 million of mine construction retention previously withheld and owed to the EPC Contractor and the last invoice dated December 2001 totaling $1.0 million, both of which
had been previously recorded as accrued liabilities on the Companys balance sheet. The remaining $4.8 million of the settlement payment was for additional mine construction expenditures and was also recorded on June 30, 2005 as capitalized
mine development costs. On July 5, 2005, the Companys letter of credit facility, which had been used to support the litigation, immediately converted to a fully drawn $32.1 million term loan. Upon conversion of the letter of credit facility to
a term loan, the $4.2 million in restricted cash shown on the Companys balance sheet as of June 30, 2005 ceased to be restricted and was applied against the term loan. On July 5, 2005 the net term loan balance was $27.9 million. Under the
terms of the Companys credit facility and the indenture governing its senior secured notes, the Company was permitted to use the proceeds of the term loan remaining after any payments under the settlement of the litigation to make a
distribution to the Companys members. On July 5, 2005, the Company paid a distribution to its members in the aggregate amount of $22.1 million, which was declared by the Board of Managers on that date.



CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS



From time to time, the Company or persons acting on behalf of the Company
may make oral and written statements that may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 (the PSLRA) or by the SEC in its rules, regulations, and releases. The
Company desires to take advantage of the safe harbor provisions in the PSLRA for forward-looking statements made from time to time, including, but not limited to, the forward-looking information contained in the Managements
Discussion and Analysis of Financial Condition and Results of Operations section of this Form 10-Q Equivalent and other statements made in this Form 10-Q Equivalent and in filings with the SEC.



The Company cautions readers that any such forward-looking statements made
by or on behalf of the Company are based on managements current expectations and beliefs but are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements.
Among the factors that could impact the Company includes:



| |  |  | return expectations and related allocation of resources;
| | - |  | --------------------------------------------------------



| |  |  | changing economic or competitive conditions; and
| | - |  | ------------------------------------------------



| |  |  | negotiation of agreements with third parties.
| | - |  | ---------------------------------------------



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##### Table of Contents

ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



Company Overview



We are a producer of highway deicing rock salt in North America. We own and operate a rock salt mine located approximately 35 miles south of Rochester,
New York. Our mine is located in the heart of the western and central New York and Pennsylvania snow belt, with on-site access to truck and rail transportation.



Salt mines and mining operations are long-lived assets. Based solely on data extrapolated from areas within a one-mile radius of our drill holes, we
believe that our mine currently has over 55 years of remaining mineable reserves at the current production rate of 3.0 million tons per year.



While winter weather conditions in individual markets can vary from year to year, our target markets in New York and Pennsylvania are the most impacted by
harsh winter snow and ice conditions and overall demand across the region is relatively stable. Our served markets in New York, Pennsylvania, Ohio and eight other states have an aggregate regional demand for over 9.3 million tons of rock salt per
year, and Pennsylvania and New England currently have no operating rock salt mines.



Most of our sales are based on annual supply contracts with set pricing and reserved volume generally awarded on the basis of lowest price of bids tendered. This allows us to plan our production and staffing schedule
and our inventory placement and sales distribution strategy for the upcoming season. We routinely adjust the size of our workforce, as well as the number of hours and days worked, to reflect seasonal demand.



From fiscal year 2001 to 2004, we increased our sales volume from 1.0 million
tons to 3.1 million tons, and increased our revenues from $29.1 million to $96.5 million. This increase in sales corresponds to the increase in the production capacity of our mine; as capacity came online, our market share correspondingly increased.
Sales volume for the completed 2004-2005 season was consistent with fiscal 2004 despite the slow start to the recent winter season.



For the fiscal year ended September 30, 2004, and for the nine months ended June 30, 2005, we generated revenues of $96.5 million and $94.9 million,
respectively, and net income of $9.1 million and $10.8 million, respectively. We believe that our cash flows are not materially impacted by economic cycles due to the stable end use markets for rock salt and the lack of cost effective alternatives.



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##### Table of Contents

Critical Accounting Policies



In preparing financial statements in conformity with accounting principles generally accepted in the United States of
America, or GAAP, we are required to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements and revenues and expenses
during the reporting period. Actual results could differ from those estimates. We have identified the following as critical accounting policies that are most important to the portrayal of our financial condition and results of operation.



Salt Deposits and Mineral Rights



Salt deposits and mineral rights are underground reserves with respect to
which the Company has extraction rights. Depletion of salt deposits and mineral rights occurs as the minerals are extracted based on units of production and engineering estimates of total reserves. As such, our mineral rights interests include
estimates of probable mineral reserves. The impact of revisions to our reserve estimates is recognized on a prospective basis.



Mine Reclamation Cost



We have calculated the estimated net future cost of dismantling, restoring, and reclaiming our mine in its related mine site in accordance with federal,
state and local regulatory requirements, and in accordance with SFAS No. 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets. SFAS No. 143 requires that we recognize the legal obligation of our mine reclamation costs
at fair value as a liability when incurred and capitalize such costs by increasing the carrying amount of our mine assets.



Impairment of Long-Lived Assets



In the event that relevant facts and circumstances indicate that the carrying amounts of our long-lived assets may be impaired, an evaluation of
recoverability is performed. If such an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the assets carrying amount to determine if a write-down is required. If our review
indicates that the assets will not be recoverable, the carrying value of the Companys assets would be reduced to their estimated fair value.



Other Significant Accounting Policies



Other significant accounting policies not involving the same level of estimates and assumptions as those discussed above are important to an understanding
of our financial statements. For example, our policies related to our inventory allowances, revenue recognition and legal contingencies require judgments and estimates.



Results of Operations



The following table sets forth certain historical financial information for the three and nine months ended June 30, 2005 and 2004. We record sales to
customers based upon total billings including shipping and handling costs necessary to transport our products from the production or storage sites to the delivery point. In establishing our prices to our customers, we must take into account the
estimated cost of transportation of our products since we assume responsibility for such costs. We manage the profitability and attractiveness of existing and prospective customers and product lines by analyzing, among other factors, the customer
billings net of related shipping and handling costs. This allows for a more comparable look at the relative profitability of our business as well as providing a more accurate analysis upon which to analyze trends in the business.



The following table and discussion should be read in conjunction with the
information contained in our financial statements and the notes thereto included elsewhere in this Form 10-Q Equivalent.



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|                              |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|----------------------------- |  | --------------------------- | ------ | - | -------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                              |  | Three months ended June 30, |        |   | Nine months ended June 30, |  
|                              |  | 2005                        |        |   | 2004                       |   |        | 2005 |  |   | 2004   |  
|Sales                         |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Bulk                          |  | $                           | 2,644  |   |                            | $ | 2,916  |      |  | $ | 93,014 |   |  | $ | 88,741 |  
|Packaged                      |  |                             | (2     | ) |                            |   |       |      |  |   | 1,864  |   |  |   | 2,744  |  
|                              |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Total sales                   |  |                             | 2,642  |   |                            |   | 2,916  |      |  |   | 94,878 |   |  |   | 91,485 |  
|                              |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Cost of sales                 |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Freight and handling          |  |                             | 1,476  |   |                            |   | 899    |      |  |   | 41,639 |   |  |   | 40,282 |  
|Products                      |  |                             | 738    |   |                            |   | 1,162  |      |  |   | 27,738 |   |  |   | 26,423 |  
|                              |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|                              |  |                             | 2,214  |   |                            |   | 2,061  |      |  |   | 69,377 |   |  |   | 66,705 |  
|                              |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Gross income                  |  |                             | 428    |   |                            |   | 855    |      |  |   | 25,501 |   |  |   | 24,780 |  
|Operating expenses            |  |                             | 1,870  |   |                            |   | 1,389  |      |  |   | 6,139  |   |  |   | 4,787  |  
|                              |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Income (loss) from operations |  |                             | (1,442 | ) |                            |   | (534   | )    |  |   | 19,362 |   |  |   | 19,993 |  
|                              |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Other income (expense)        |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Interest expense              |  |                             | (2,695 | ) |                            |   | (2,712 | )    |  |   | (8,606 | ) |  |   | (5,298 | )
|Other interest                |  |                             |       |   |                            |   |       |      |  |   |       |   |  |   | (2,679 | )
|Interest income               |  |                             | 65     |   |                            |   | 26     |      |  |   | 71     |   |  |   | 118    |  
|Other financing charges       |  |                             |       |   |                            |   | (4     | )    |  |   | (7     | ) |  |   | (308   | )
|Other, net                    |  |                             | 4      |   |                            |   |       |      |  |   | 6      |   |  |   | 9      |  
|                              |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Total other expense, net      |  |                             | (2,626 | ) |                            |   | (2,689 | )    |  |   | (8,536 | ) |  |   | (8,158 | )
|                              |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  
|Net income (loss)             |  | $                           | (4,068 | ) |                            | $ | (3,223 | )    |  | $ | 10,826 |   |  | $ | 11,835 |  
|                              |  |                             |        |   |                            |   |        |      |  |   |        |   |  |   |        |  



Seasonality



The Company experiences a substantial amount of seasonality in salt sales.
The result of this seasonality is that sales and operating income are generally higher in the first and fourth calendar quarters and lower during the second and third calendar quarters of each year. Sales of highway and consumer deicing salt
products are also seasonal as they vary based on the severity of the winter conditions in areas where the product is used. Following industry practice, we and our customers stockpile significant quantities of deicing salt in the second, third and
fourth calendar quarters. The quarter ended June 30 is historically the lowest volume quarter of our fiscal year, with average tons sold approximating only 5% of the volumes for the quarter ended March 31. As a result of the low volume base for the
quarter ended June 30, we can experience large percentage fluctuations in financial data for quarter-to-quarter comparisons, which often do not equate to significant swings on a whole dollar basis. Our results of operations for the fiscal year ended
September 30 and the nine months ended June 30 are more representative of trends in our results.



Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004



Sales



Total sales for the quarter ended June 30, 2005 of $2.6 million decreased $0.3 million, or 9.3%, compared to $2.9 million during the same period in fiscal 2004. Sales primarily consist of bulk salt sales as well as
packaged salt sales. The $0.3 million decrease is primarily attributed to a 21.7% decrease in sales volume offset by a 15.8% average increase in sales prices in the third quarter of fiscal 2005 as compared to the third quarter of fiscal 2004. The
increased sales price per ton was due to an average price increase in excess of 6.0% for contracts awarded prior to the start of the 2004-2005 season combined with sales to customers with higher prices (sales mix) as discussed below in the gross
income section. The decrease in sales volume is the result of reduced end of season orders as compared to the same period in 2004. Sales volumes for the full 2004-2005 season were more in line with the prior season despite the slow start to the
2004-2005 winter season.



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Gross Income



Gross income for the third quarter of fiscal 2005 of $0.4 million decreased by $0.4 million, or 49.9%, compared to $0.9 million for the same period in
fiscal 2004. The decrease in gross income was primarily attributable to the 21.7% decrease in tonnage sold and a 64.2% increase in freight and handling costs, offset by a 36.5% decrease in cost of sales - products. The increase in combined cost of
sales per ton is primarily the result of a change in the mix of tons sold directly from the mine versus tons sold from stockpiles. For the three months ended June 30, 2005, the sales mix approximated 32.0% sold directly from the mine versus 68.0%
sold from stockpiles as compared to our historical 50/50 average split. Cost of sales are higher for salt sold from stockpiles due to the additional freight, handling and storage fees, hence the cost of sales increases if a greater proportion of
stockpile salt is sold. In the highway deicing salt industry, gross margins are typically lower on average for stockpile salt, as the increased gross sales prices obtainable for such salt often do not cover all of the increased logistics charges.



Combined total cost of sales increased by $0.2 million, or
7.4%, as compared to the same period in fiscal 2004. Components of cost of sales changed as follows:



| |  |  | Cost of sales  freight and handling for the third quarter of fiscal 2005 increased by $0.6 million, or 64.2%, as compared to the same period in fiscal 2004. The $0.6 million
increase is primarily the result of the greater proportion of sales from stockpiles during the third quarter of fiscal 2005 as discussed above as well as increases in fuel and freight. In addition, cost of sales  freight and handling for the
quarter ended June 30, 2004 was reduced by $0.24 million due to a reduction in freight charges initially recorded in the prior quarter. Cost of sales  freight and handling excluding this $0.24 million freight reduction would have resulted in a
29.5%, or $0.3 million, increase over the same period in fiscal 2004.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cost of sales  products for the third quarter of fiscal 2005 decreased by $0.4 million, or 36.5%, as compared to the same period in fiscal 2004. The $0.4 million decrease is
primarily the result of a 21.7% decrease in tonnage sold along with slightly increased production efficiencies from reduced repairs and maintenance expenses during the third quarter of fiscal 2005 compared to the same period in fiscal 2004.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Operating Expenses



Operating expenses of $1.9 million for the third quarter of fiscal 2005
increased $0.5 million, or 34.6%, as compared to $1.4 million for the same period in fiscal 2004. Operating expenses primarily consist of selling, general and administrative expenses, miscellaneous overhead and non-production related depreciation
and amortization expenses. The $0.5 million increase for the quarter is primarily attributable to an increase in legal and consulting fees for the litigation with the EPC Contractor, with respect to which the Company reached a settlement on June 30,
2005, as well as increases in stockpile expenses.



Other Income
(Expense)



Other expense of $2.6 million for
the third quarter of fiscal 2005 decreased $0.1 million, or 2.3%, as compared to $2.7 million for the same period in fiscal 2004. Other expense primarily consists of interest expense on our credit facilities and other related financing charges.
Interest expense totaled $2.7 million for the third quarter of fiscal 2005 and 2004, respectively.



Nine Months Ended June 30, 2005 Compared to Nine Months Ended June 30, 2004



Sales



Total sales for the nine months ended June 30, 2005 of $94.9 million increased $3.4 million, or 3.7%, as compared to $91.5 million during the same period in fiscal 2004. Sales primarily consist of bulk salt sales, as
well as packaged salt sales. The $3.4 million increase is primarily attributed to a 6.2% price increase on average, offset by a 2.3% decrease in sales volume for the nine months ended June 30, 2005 as compared to the same period in fiscal 2004. The
increased sales price per ton was primarily due to an average price increase in excess of 6.0% for contracts awarded prior to the start of the 2004-2005 season.



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Gross Income



Gross income for the nine months ended June 30, 2005 of $25.5 million increased by $0.7 million, or 2.9%, compared to $24.8 million for the same period in
fiscal 2004. The increase in gross income was primarily attributable to higher sales prices offset by a 4.0% increase in cost of sales. The increase in cost of sales is the result of a change in the mix of tons sold directly from the mine versus
tons sold from stockpiles, increased fuel and shipping charges and increased production costs. For the nine months ended June 30, 2005, the sales mix approximated 44.0% directly from the mine versus 56.0% sold from stockpiles as compared to our
historical 50/50 average split. Cost of sales are higher for salt sold from stockpiles due to the additional freight, handling and storage fees, hence costs of sales increase if a greater proportion of stockpile salt is sold. In the highway deicing
salt industry, gross margins are typically lower on average for stockpile salt, as the increased gross sales prices obtainable for such salt often do not cover all of the increased logistics charges.



Combined, total cost of sales for the nine months ended June 30, 2005
increased by $2.7 million, or 4.0%, as compared to the same period in fiscal 2004; while on a percentage of sales basis, total cost of sales remained essentially flat. Components of cost of sales changed as follows:



| |  |  | Cost of sales  freight and handling for the nine months ended June 30, 2005 increased by $1.4 million, or 3.4% as compared to the same period in fiscal 2004. The $1.4 million
increase is the result of the greater proportion of sales from stockpiles during the nine months ended June 30, 2005 as discussed above, combined with increased fuel and freight charges.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cost of sales  products for the nine months ended June 30, 2005 totaled $27.7 million and increased by $1.3 million, or 5.0% as compared to the same period in fiscal 2004. The
$1.3 million increase is primarily the result of slightly decreased production efficiencies and increases in labor and maintenance related charges in the first nine months of fiscal 2005 as compared to the same period in fiscal 2004.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Operating Expenses



Operating expenses of $6.1 million for the nine months ended June 30, 2005
increased $1.4 million, or 28.2%, as compared to $4.8 million for the same period in fiscal 2004. Operating expenses primarily consist of selling, general and administrative expenses, miscellaneous overhead, and non-production related depreciation
and amortization expenses. The $1.4 million increase for the nine months ended June 30, 2005 is primarily attributable to an increase in legal and consulting fees of $0.8 million for the litigation with the EPC Contractor with respect to which the
Company reached a settlement on June 30, 2005, as well as increases in stockpile expenses and amortization expense as a result of the $7.7 million of financing costs capitalized in connection with the Companys issuance of the senior secured
notes on March 17, 2004.



Other Income (Expense)



Other expense of $8.5 million for the first nine months
of fiscal 2005 decreased $0.4 million, or 4.6%, as compared to $8.2 million for the same period in fiscal 2004. Other expense primarily consists of interest expense on our credit facilities and other related financing charges. For the nine months
ended June 30, 2004, we incurred other interest expense consisting of $1.9 million in prepayment penalties to exit the prior financing arrangement, and the write-off of $0.8 million of capitalized financing costs and $0.3 million of finance charges
consisting of amendment fees related to our prior financing arrangement. No such other interest and finance charges were incurred for the first nine months of fiscal 2005. Interest expense totaled $8.6 million for the first nine months of fiscal
2005, an increase of $3.3 million over the first nine months of fiscal 2004. The $3.3 million increase primarily represents interest expense related to the Companys financing arrangement which closed on March 17, 2004.



Liquidity and Capital Resources



Historical Cash Flow



We have used the cash generated from operations, borrowings under revolving lines of credit, and borrowings under
construction and post-construction financing facilities to meet our working capital needs and to fund capital expenditures. The Companys strong operating results facilitated the closing of permanent long term financing on March 17, 2004. This
financing consisted of $100.0 million in long-term senior secured notes at 9.5%, a bank term loan financing in the amount of $32.1 million which was issued but not drawn as support of a $32.1 million letter of credit, as well as a $30.0 million
working capital facility. These proceeds, along with cash on hand, were used to repay our construction debt and related fees at the time of closing, together totaling $71.3 million, to make a distribution to our members of $41.4 million, and to pay
accrued NOMI liability of $3.2 million. Additional information regarding our cash flows for the nine month period ended June 30, 2005 is provided below.



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##### Table of Contents

Operating Activities. Net cash provided by operating activities was $24.5 million for the
first nine months of fiscal 2005 compared to $25.9 million during the same period in fiscal 2004. Net cash provided by operating activities decreased compared to the first nine months of fiscal 2004 primarily due to decreased earnings. During the
nine months ended June 30, 2004, $4.5 million in payments were made to NOMI holders representing the amount accrued and payable from the Companys inception through March 31, 2004, as compared to only $2.0 million in payments to NOMI holders
for the nine months ended June 30, 2005. NOMI expense accruals are included in the Companys statement of cash flows as borrowings and (repayments) of related party payables. Prior to the quarter ended June 30, 2005 related party payables were
included in financing activities. Net income for the nine months ended June 30, 2005 decreased by $1.0 million as compared to the same period in fiscal 2004. The decrease in net income for the first nine months of fiscal 2005 as compared to the same
period in fiscal 2004 was primarily due to an increase in gross income offset by increased interest expense and a $1.4 million increase in operating expenses. Net working capital increased by $4.9 million during the first nine months of fiscal 2005
as compared to a $2.9 million increase during the first nine months of fiscal 2004.



Investing Activities. Net cash flow used in investing activities for the first nine months of fiscal 2005 and 2004 was $11.6 million and $2.3 million, respectively. The increase includes $4.8 million in
capitalized mine development expenditures in connection with the settlement of litigation with the EPC Contractor, $4.2 million of mine construction retention previously withheld and owed to the EPC Contractor, and the last invoice dated December
2001 totaling $1.0 million. Both mine construction retention amounts had been previously recorded as accrued liabilities on the Companys balance sheet. No such expenditures were incurred during the first nine months of fiscal 2004. The Company
made maintenance-related capital expenditures of $1.6 million during the nine months ended June 30, 2005 and 2004.



Financing Activities. Net cash used in financing activities was $15.5 million for the first nine months of fiscal 2005 as compared to $26.1
million during the same period in fiscal 2004. Financing activities during the nine months ended June 30, 2005 included $4.4 million of cash that was provided via seasonal borrowing under our revolving line of credit, $2.0 million of financed
payables related to the timing of the EPC litigation settlement payment, and $17.2 million in seasonal repayments under our revolving line of credit. In addition, on April 14, 2005, the Company paid a distribution to its members in the aggregate
amount of $1.9 million. Sinking fund and excess cash flow payments due under the credit facility on the then un-drawn $32.1 million term loan made between October 1, 2004 and June 30, 2005 totaled $2.9 million and are shown on the Companys
balance sheet as restricted cash. During the nine months ended June 30, 2004, the net use of $26.1 million of cash was the result of refinancing construction debt, the payment of a $44.1 million distribution to the Companys members and $17.8
million in seasonal repayments of the revolving line of credit.



The amount of cash and cash equivalents shown on the Companys balance sheet as of June 30, 2005 is unusually low, due to the timing of payment in connection with the settlement of litigation with the EPC Contractor. The settlement
payment was made on June 30, 2005; however, as described in Note 8 to our unaudited financial statements included in this Quarterly Report on Form 10-Q Equivalent, the term loan was not drawn upon until July 5, 2005, after the end of the quarter
covered by this Report. On July 5, 2005, the letter of credit facility converted to a $32.1 million term loan, the $4.2 million in restricted cash shown on the balance sheet ceased to be restricted and was applied against the term loan leaving a net
term loan balance of $27.9 million, and the Company paid a distribution to its members in the aggregate amount of $22.1 million. The Companys balance of unrestricted cash and cash equivalents on July 6, 2005 was approximately $8.5 million
compared to $9.1 million as of the June 30, 2004 balance sheet date.



During the nine months ended June 30, 2004, we used the $100.0 million proceeds from the senior secured notes, plus available cash, to repay long-term construction debt of $64.2 million, to make a distribution of $41.4 million to our
existing members, and to pay $7.5 million of transaction expenses in connection with the new financing. The $64.2 million consisted of the retirement of the $48.8 million in senior secured construction debt and the $15.4 million in subordinated
construction debt.



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##### Table of Contents

EBITDA



EBITDA represents net income before interest expense, depreciation, depletion, and amortization (the Company does not incur income taxes). EBITDA does not
represent and should not be considered as an alternative to net income or cash flow from operations, as determined by GAAP, and our calculations of EBITDA may not be comparable to those reported by other companies. Investors should carefully
consider the specific items included in our computation of EBITDA. EBITDA is included herein because it is a basis upon which we assess our liquidity position and performance and because certain covenants in our borrowing arrangements are tied to
similar measures. EBITDA is also included herein because we believe that it presents useful information to investors regarding a companys ability to service and/or incur indebtedness. This belief is based on negotiations with lenders who have
indicated that the amount of indebtedness we will be permitted to incur will be based, in part, on measures similar to our EBITDA. EBITDA does not take into account working capital requirements, capital expenditures, debt service requirements and
other commitments, and accordingly, EBITDA is not necessarily indicative of amounts that may be available for discretionary use.



The following table reconciles EBITDA to net income and net cash provided (used in) by operating activities, the most directly comparable GAAP financial measures, for the
periods indicated (dollars in thousands):



American Rock Salt
Company LLC

EBITDA Reconciliation to Net Income



|                                                            |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|----------------------------------------------------------- |  | --------------------------- | ------- | - | -------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                            |  | Three Months Ended June 30, |         |   | Nine Months Ended June 30, |  
|                                                            |  | 2005                        |         |   | 2004                       |   |        | 2005 |  |   | 2004    |  
|Net Income (Loss) to Members                                |  | $                           | (4,068  | ) |                            | $ | (3,223 | )    |  | $ | 10,826  |   |  | $ | 11,835  |  
|Interest Expense                                            |  |                             | 2,695   |   |                            |   | 2,712  |      |  |   | 8,606   |   |  |   | 5,298   |  
|Other Interest                                              |  |                             |        |   |                            |   |       |      |  |   |        |   |  |   | 2,679   |  
|Depletion, Depreciation and Amortization                    |  |                             | 1,754   |   |                            |   | 1,717  |      |  |   | 5,314   |   |  |   | 4,873   |  
|                                                            |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|EBITDA                                                      |  | $                           | 381     |   |                            | $ | 1,206  |      |  | $ | 24,746  |   |  | $ | 24,685  |  
|                                                            |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Add/Subtract                                                |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Interest Expense                                            |  |                             | (2,695  | ) |                            |   | (2,712 | )    |  |   | (8,606  | ) |  |   | (5,298  | )
|Other Interest                                              |  |                             |        |   |                            |   |       |      |  |   |        |   |  |   | (2,679  | )
|Changes in working capital and other assets and liabilities |  |                             | 1,615   |   |                            |   | (2,193 | )    |  |   | 8,339   |   |  |   | 9,150   |  
|                                                            |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Net cash provided by (used in) operating activities         |  | $                           | (699    | ) |                            | $ | (3,699 | )    |  | $ | 24,479  |   |  | $ | 25,858  |  
|                                                            |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Net cash used in investing activities                       |  | $                           | (10,483 | ) |                            | $ | (382   | )    |  | $ | (11,634 | ) |  | $ | (2,250  | )
|                                                            |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  
|Net cash used in financing activities                       |  | $                           | (609    | ) |                            | $ | (804   | )    |  | $ | (15,532 | ) |  | $ | (26,114 | )
|                                                            |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |         |  



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##### Table of Contents

Contractual Cash Obligations



There have been no material changes outside the ordinary course of the Companys business to the Companys contractual cash
obligations as reported in its Annual Report on Form 10-K Equivalent for the fiscal year ended September 30, 2004.



Recent Accounting Pronouncements



In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 151, Inventory Costs  an amendment of ARB No. 43, Chapter 4 to clarify the
accounting for idle facility expense, freight, handling costs, and wasted material (spoilage). This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of so abnormal
as defined in ARB No. 43. In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 is effective for the Company beginning
January 1, 2006. The Company is currently evaluating the impact of FASB No. 151 on its financial statements.



In December 2004, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 153, Exchange of Non-monetary Assets (FAS 153). This statement is based on the principle that exchanges of non-monetary assets
should be measured based on the fair value of the assets exchanged. FAS 153 is effective for non monetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not expect that the adoption of this statement will
have a material impact on its financial statements.



The SEC recently issued
guidance on the ways in which its full-cost rules interact with the accounting requirements that the FASB established for asset retirement obligations  specifically, how FASB Statement No. 143, Accounting for Asset Retirement
Obligations (FAS 143), interacts with the full-cost requirements in Rule 4-10 of Regulation S-X (Rule 4-10). The SECs new guidance appears in Staff Accounting Bulletin No. 106 (SAB 106) issued in October 2004. The Company adopted SAB 106
on January 1, 2005. The adoption did not have an impact on the Companys financial statements.



In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations - an interpretation of FASB Statement No. 143 (FIN 47), which clarifies the term
conditional asset retirement obligation used in SFAS No. 143, Accounting for Asset Retirement Obligations, and specifically when an entity would have sufficient information to reasonably estimate the fair value of an asset
retirement obligation. The Company is required to adopt FIN 47 no later than September 30, 2005. The Company does not expect the adoption of FIN 47 to have a material impact on its financial statements.



In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections (FAS
154), which replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements - An Amendment of APB Opinion No. 28. FAS 154 provides guidance on the accounting for
and reporting of accounting changes and error corrections. It establishes retrospective application, or the latest practicable date, as the required method for reporting a change in accounting principle and the reporting of a correction of an error.
FAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not expect that the adoption of this statement will have a material impact on its financial statements.



Item 3. Quantitative and Qualitative Disclosures About Market Risk



The Companys business is subject to a variety of market risks, including but not limited to, interest rate risks and commodity pricing risks.
Although the Companys senior secured notes bear interest at a fixed rate of 9.5% per annum, borrowings under its bank facility are subject to variable interest rates keyed to LIBOR. As of June 30, 2005, the variable rate was 6.25%. As of June
30, 2005, we had $100.0 million of debt outstanding under our senior secured notes, and $0.0 million outstanding under our bank facility. Our bank facility, in the aggregate principal amount of $62.1 million, consists of (a) a $32.1 million term
loan facility, and (b) a $30.0 million working capital facility. The working capital facility permits us to borrow up to $30.0 million in revolving loans with a sub-limit available for the issuance of letters of credit. As of June 30, 2005, there
was $0.0 million drawn and $3.3 million of standby letters of credit outstanding under the working capital facility. Until July 5, 2005, the undrawn term loan facility was used to support the litigation with the EPC Contractor. More specifically,
the lenders facilitated the issuance of a $32.1 million letter of credit, which supported a $32.1 million bond to remove the EPC Contractors lien on the mine property. Upon conclusion of the litigation, the letter of credit facility would
convert to a term loan. On June 30, 2005, the Company reached a settlement regarding the litigation, and on July 5, 2005, the letter of credit facility was converted to a fully drawn term loan, offset by restricted cash payments. As of June 30,
2005, the end of the period covered by this Quarterly Report on Form 10-Q Equivalent, no monies had yet been drawn against the $32.1 million letter of credit facility. At that date, the letter of credit facility bore an interest rate of 4.125%, and
if the term loan had been outstanding, it would have borne an interest rate of 6.25%. At July 5, 2005, the fully-drawn term loan facility bore an interest rate of 6.25%.



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##### Table of Contents

Our earnings and cash flows are affected by changes in interest rates applicable to our bank facility.
Assuming our current debt structure, plus a fully drawn $32.1 million term loan facility had been in place since October 1, 2004, and an average level of borrowings from our revolving credit facility at variable rates, and assuming a one hundred
basis point increase in the average interest rate under these borrowings, it is estimated that our interest expense for the nine months ended June 30, 2005 would increase by approximately $0.3 million.



Item 4. Controls and Procedures



The Companys management, with the participation of its Co-Principal Executive Officers and Principal Financial Officer, evaluated the effectiveness of the design and operation of the Companys disclosure controls and procedures
(as defined in Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based on that evaluation, the Companys Principal Executive and Principal Financial Officers concluded that the Companys
disclosure controls and procedures as of June 30, 2005 (the end of the period covered by this report) have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in
reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms.



There were no changes to the Companys internal control over financial reporting that occurred during the fiscal
quarter ended June 30, 2005 that materially affected or are reasonably likely to materially affect the Companys internal control over financial reporting.



Part II. Other Information



Item 1. Legal Proceedings



The Company has been
involved in litigation with Frontier-Kemper Constructors, Inc., Flatiron Constructors, Inc. (formerly known as Flatiron Constructors, LLC, and also known as Flatiron Structures LLC), Jointly and Severally with Frontier-Kemper Constructors, Inc. and
d/b/a Frontier-Kemper/Flatiron Joint Venture (together, the EPC Contractor or FKF), whom the Company engaged to design and construct its mine facility, and Travelers Casualty and Surety Company of America and Liberty Mutual
Insurance Company. The litigation was previously reported in the Companys Annual Report on Form 10-K Equivalent for the fiscal year ended September 30, 2004 and its Quarterly Report on Form 10-Q Equivalent for the fiscal quarter ended December
31, 2004. On June 30, 2005, the above parties reached a settlement agreement with respect to the litigation, pursuant to which the parties agreed to dismiss all claims and counterclaims, subject to limited exceptions, with no findings or admissions
of liability by any party. All of the settled claims were dismissed with prejudice. The settlement also freed the Company from any further obligation under a $32.1 million bond the Company had posted as security to discharge a mechanics lien
the EPC Contractor had filed against the Hampton Corners Salt Mine arising out of the litigation. The settlement does not include the settling parties claims against Willis Corroon Corporation of Missouri, Willis Limited, Willis Faber and
Dumas and Lloyds U/W at London, Sponsoring Syndicates, third-party defendants in the above-described action, which claims are still pending. Other terms of the settlement are confidential by agreement of the parties.



In addition, the Company is involved in various routine legal proceedings
from time to time. These typically involve commercial claims, personal injury claims, and workers compensation claims. While the Company cannot predict the outcome of such proceedings, it does not believe that these proceedings will have a
material adverse effect on its business.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds



Nothing to report.



Item 3. Defaults upon Senior Securities



Nothing
to report.



Item 4. Submission of Matters to a Vote of Security Holders



Nothing to report.



Item 5. Other Information



Nothing to report.

|
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##### Table of Contents

Item 6. Exhibits



The following exhibits are
filed as part of this report on Form 10-Q Equivalent:



|            |  |                                                                                                                                                                                                                                                                                                                              
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                                                       
|10.1        |  | Amendment No.1 to Credit Agreement, dated as of June 30, 2005, by and among American Rock Salt Company LLC, the financial institutions from time to time party thereto, and Manufacturers and
Traders Trust Company as administrative agent, as collateral agent and as issuer of certain letters of credit pursuant thereto.
|            | 
|31.1        |  | Certificate of the Co-Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)                                                                                                                                                                                   
|            | 
|31.2        |  | Certificate of the Co-Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)                                                                                                                                                                                   
|            | 
|31.3        |  | Certificate of the Co-Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)                                                                                                                                                                                   
|            | 
|31.4        |  | Certificate of the Chief Financial Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)                                                                                                                                                                                      



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##### Table of Contents

SIGNATURES



The registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.



August 10, 2005



AMERICAN ROCK SALT COMPANY LLCBy:

/s/ Raymond R. MartelRaymond R. Martel,Chief Financial Officer(Principal Financial Officer)




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##### Table of Contents

EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                                                                                              
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                                                       
|10.1        |  | Amendment No.1 to Credit Agreement, dated as of June 30, 2005, by and among American Rock Salt Company LLC, the financial institutions from time to time party thereto, and Manufacturers and
Traders Trust Company as administrative agent, as collateral agent and as issuer of certain letters of credit pursuant thereto.
|            | 
|31.1        |  | Certificate of the Co-Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)                                                                                                                                                                                   
|            | 
|31.2        |  | Certificate of the Co-Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)                                                                                                                                                                                   
|            | 
|31.3        |  | Certificate of the Co-Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)                                                                                                                                                                                   
|            | 
|31.4        |  | Certificate of the Chief Financial Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)                                                                                                                                                                                      



21