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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K






FORM 10-K

Securities and Exchange Commission

Washington, D.C. 20549


(MARK ONE)

þ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934


For the fiscal Year Ended December 31, 2004


OR

o TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE SECURITIES ACT OF 1934


For the transition period from

to


Commission File Number 333-82700


COMPASS MINERALS GROUP, INC.

(Exact name of Registrant as specified in its
charter)


|                                                                                         |  |                                     
|---------------------------------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                                                 |  | 48-1135403                          
|(State or other jurisdiction of incorporation
    or organization)                       |  | (I.R.S. Employer Identification No.)
|8300 College Boulevard
    Overland Park, Kansas(Address of principal executive offices) |  | 66210(Zip Code)                     

Registrants telephone number, including
area code:

(913)344-9200


Securities Registered Pursuant to
Section 12(b) of the Act: None

Securities Registered Pursuant to
Section 12(g) of the Act: None

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 þ         No o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this
Form 10-K.    þ

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Exchange Act
Rule 12b-2).    Yes o         No þ

The number of shares outstanding of the
registrants $0.01 par value common stock at
March 10, 2005 was 1,000 shares. All of such shares
are owned by Compass Minerals International, Inc. (formerly
known as Salt Holdings Corporation).






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TABLE OF CONTENTS




|                                                               |  |                                                                                                     |    |  |          | 
|-------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------- | -- |  | -------- | 
|PART I                                                         |  |                                                                                                     |    |  | Page No. | 
|                                                              
|Item 1.                                                        |  | Business                                                                                            |    |  | 4        | 
|Item 2.                                                        |  | Properties                                                                                          |    |  | 18       | 
|Item 3.                                                        |  | Legal Proceedings                                                                                   |    |  | 18       | 
|Item 4.                                                        |  | Submission of Matters to a Vote of Security
    Holders                                             |    |  | 18       | 
|                                                              
|PART II                                                        |  |                                                                                                     |    |  |          | 
|                                                              
|Item 5.                                                        |  | Market for the Registrants Common Equity
    and Related Stockholder Matters                       |    |  | 19       | 
|Item 6.                                                        |  | Selected Financial Data                                                                             |    |  | 19       | 
|Item 7.                                                        |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations           |    |  | 20       | 
|Item 7A.                                                       |  | Quantitative and Qualitative Disclosures About
    Market Risk                                      |    |  | 31       | 
|Item 8.                                                        |  | Financial Statements and Supplementary Data                                                         |    |  | 32       | 
|Item 9.                                                        |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosures           |    |  | 60       | 
|Item 9A.                                                       |  | Controls and Procedures                                                                             |    |  | 60       | 
|Item 9B.                                                       |  | Other Information                                                                                   |    |  | 61       | 
|                                                              
|PART III                                                       |  |                                                                                                     |    |  |          | 
|                                                              
|Item 10.                                                       |  | Directors and Executive Officers of the Registrant                                                  |    |  | 62       | 
|Item 11.                                                       |  | Executive Compensation                                                                              |    |  | 66       | 
|Item 12.                                                       |  | Security Ownership and Certain Beneficial Owners
    and Management and Related Stockholder Matters |    |  | 69       | 
|Item 13.                                                       |  | Certain Relationships and Related Transactions                                                      |    |  | 69       | 
|Item 14.                                                       |  | Principal Accountant Fees and Services                                                              |    |  | 70       | 
|                                                              
|PART III                                                       |  |                                                                                                     |    |  |          | 
|                                                              
|Item 15.                                                       |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                                 |    |  | 71       | 
|                                                              
|SIGNATURES                                                     |  |                                                                                                     | 74 | 
|Statement of Computation of Ratio of Earnings to Fixed Charges
|Certification                                                 
|Certification                                                 
|Certification                                                 



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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K











CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS




This annual report on Form 10-K (the
report) contains forward-looking statements. These
statements relate to future events or our future financial
performance and involve known and unknown risks, uncertainties
and other factors that may cause our actual results, levels of
activity, performance or achievements to be materially different
from any future results, levels of activity, performance or
achievements, expressed or implied, by these forward-looking
statements. These risks and other factors include, among other
things, those listed under Item 1,
Business  Risk Factors and elsewhere in
this report. In some cases, you can identify forward-looking
statements by terminology such as may,
will, should, expects,
intends, plans, anticipates,
believes, estimates,
predicts, potential,
continue or the negative of these terms or other
comparable terminology. These statements are only predictions.
Actual events or results may differ materially. In evaluating
these statements, you should specifically consider various
factors, including the risks outlined under Item 1,
Business  Risk Factors. These factors may
cause our actual results to differ materially from any
forward-looking statement.


Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance
or achievements. We are under no duty to update any of the
forward-looking statements after the date of this report.


MARKET AND INDUSTRY DATA AND
FORECASTS




This report includes market share and industry
data and forecasts that we obtained from internal company
surveys, market research, consultant surveys, publicly available
information and industry publications and surveys. Industry
surveys, publications, consultant surveys and forecasts
generally state that the information contained therein has been
obtained from sources believed to be reliable, but there can be
no assurance as to the accuracy and completeness of such
information. We have not independently verified any of the data
from third-party sources nor have we ascertained the underlying
economic assumptions relied upon therein. Similarly, internal
company surveys, industry forecasts and market research, which
we believe to be reliable based upon managements knowledge
of the industry, have not been verified by any independent
sources. In addition, we do not know what assumptions regarding
general economic growth were used in preparing the forecasts we
cite. Except where otherwise noted, references to North America
include only the continental United States and Canada, and
statements as to our position relative to our competitors or as
to market share refer to the most recent available data.
Statements concerning (a) North America general trade salt
are generally based on historical sales volumes, (b) North
America highway deicing salt are generally based on historical
production capacity, (c) sulfate of potash are generally
based on historical sales volumes and (d) United Kingdom
salt sales (general trade and highway deicing) are generally
based on historical sales volumes. Except where otherwise noted,
all references to tons refer to short tons. One
short ton equals 2,000 pounds.


WHERE YOU CAN FIND MORE INFORMATION




We file annual, quarterly and current reports and
other information with the Securities and Exchange Commission
(SEC). Our SEC filings are available to the public
over the Internet at the SECs website at
http://www.sec.gov. Please note that the SECs
website is included in this report as an active textual
reference only. The information contained on the SECs
website is not incorporated by reference into this report and
should not be considered to be a part of this report. You may
also read and copy any document we file with the SEC at it s
public reference facility at 450 Fifth Street, N.W.,
Washington, D.C. 20459. You can also obtain copies of the
documents at prescribed rates by writing to the Public Reference
Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20459. Please call the SEC at 
 1-900-SEC-0330 for further information on the operation of the
public reference facility.


You may request a copy of any of our filings, at
no cost, by writing or telephoning:


Investor Relations

Compass Minerals Group, Inc.


8300 College Boulevard


Overland Park, Kansas 66210


For general inquiries concerning us please call:
(913) 344-9200

Unless the context requires otherwise,
references in this annual report to the Company,
Compass, Compass Minerals,
CMG, we, us and
our refer to Compass Minerals Group, Inc. and its
consolidated subsidiaries. Compass Minerals Group, Inc. is a
wholly owned subsidiary of Compass Minerals International, Inc.
(Compass Minerals International, CMI or
parent).

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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K








|        |  |         
|------- |  | --------
|ITEM 1. |  | BUSINESS






COMPANY OVERVIEW




Based in the Kansas City metropolitan area,
Compass is the second-leading salt producer in North America and
the largest in the United Kingdom (U.K.). We operate
11 production facilities, including the largest rock salt mine
in the world in Goderich, Ontario and the largest salt mine in
the United Kingdom in Winsford, Cheshire. Our product lines
include salt for highway deicing, consumer deicing, water
conditioning, consumer and industrial food preparation,
agriculture and industrial applications. In addition, Compass is
North Americas leading producer of sulfate of potash,
which is used in the production of specialty fertilizers for
high-value crops and turf.


Salt is indispensable and enormously versatile
with more than 14,000 uses. In addition, there is an absence of
cost-effective alternatives. As a result, our cash flows are not
materially impacted by economic cycles. We are among the lowest
cost salt producers in our markets because our salt deposits are
high grade and among the most extensive in the world, and
because we use effective mining techniques and efficient
production processes. Our sulfate of potash (SOP)
plant is the largest in North America and one of only two
all-natural solar SOP plants in the Western Hemisphere. Our
North American salt mines and SOP production facility are near
either water or rail transport systems, which minimizes our
shipping and handling costs.


For the year ended December 31, 2004, we
sold approximately 13.7 million tons of salt, sulfate of
potash and other minerals, generating sales of
$695.1 million and net income of $56.5 million.


Previously part of Mosaic Global Holdings Inc.
(Mosaic), formerly IMC Global, Inc., Salt Holdings
Corporation (now known as Compass Minerals International) became
a stand-alone entity on November 28, 2001 through a
leveraged recapitalization (the Recapitalization).


SALT SEGMENT




Through our salt segment we mine, produce,
process and distribute salt in North America and Europe,
including rock, evaporated and solar salt. Our products are
marketed primarily in the United States, Canada and the United
Kingdom. Salt is used in a wide variety of applications,
including as a deicer for both highway and consumer use (rock
salt), an ingredient in the production of chemicals for paper
bleaching, water treatment and a variety of other industrial
uses, a flavor enhancer and preservative in food, a nutrient and
trace mineral delivery vehicle in animal feeds and an essential
component in both industrial and residential water softeners.
The demand for salt has historically remained relatively stable
during economic cycles due to its relatively low cost and high
value with a diverse number of end uses.


However, demand in the highway deicing market is
affected by changes in winter weather conditions. Approximately
63% of our highway deicing annual sales, net of shipping and
handling costs, are generated from December through March when
the need for highway deicing salt is at its peak.


Salt Industry Overview

The salt industry is characterized by stable
demand and steady price increases across various grades. Salt is
one of the most common and widely consumed minerals in the world
due to its low relative cost and its utility in a variety of
applications, including food processing, water conditioning,
industrial chemical processing, nutritional supplements for
animal stock and highway deicing. We estimate that the
consumption of highway deicing salt in North America is
25 million tons per annum (20 million tons per annum
in the markets we serve), while the general trade market totals
11 million tons per annum. In the United Kingdom, we
estimate that the size of the highway deicing market is
1.9 million tons per annum while the general trade market
is approximately 1.0 million tons per annum. According to
the latest available U.S. Geological Survey
(USGS), during the thirty-year period ending 2002,
the production of salt used in highway deicing in the United
States has increased at an historical average of approximately
1% per annum, while the production of general trade salt
products has increased at an historical average of more than
1% per annum over the same period.


Salt prices vary according to purity from the
lowest grade (highway deicing salt) at around $20 per ton
to the highest-grade salt (food-grade salt) at more than
$400 per ton. The price difference between highway and
food-grade salt reflects, among other things, the more elaborate
refining and packaging processes for higher-grade salt. Due to
its low production cost, transportation and handling costs tend
to be a significant component of the total delivered cost making
logistics management and customer service key competitive
factors in the industry. The higher relative cost associated
with transportation also acts as a barrier to entry in favor of
salt manufacturers located in close proximity to their
customers. According to the latest USGS, during the thirty year
period ending 2002, prices for salt used in highway deicing in
the United States have increased at a historical average of
approximately 4% per annum, while prices for general trade
salt products have increased at a historical average of
approximately 5% per annum over the same period.


Processing Methods

We have production capacity, including salt
purchased under long-term contracts, of approximately
14.6 million tons of salt per annum. Mining, other
production activities and packaging


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




are currently conducted at 11 of our facilities
and at two facilities where finished product is purchased from
Mosaic under long-term contracts.

Summarized below are the three processing methods
we use to produce salt.


Underground Rock Salt
Mining.We employ a drill and blast
mining technique at our underground rock salt mines. Mining
machinery moves salt from the salt face to conveyor belts where
it is then crushed and screened. Salt is then hoisted to the
surface where it is loaded onto shipping vessels, railcars or
trucks. The primary power sources for each of our rock salt
mines are electricity and diesel fuel. At our Winsford, U.K.
facility, we also use a continuous miner process. Rock salt is
primarily used in our highway and consumer deicing products.
Based on annual production capacities, our underground rock salt
mining represents approximately 78% of our salt production.

Mechanical
Evaporation.The mechanical
evaporation method involves subjecting salt-saturated brine to
vacuum pressure and heat, generated by natural gas or oil, to
precipitate salt. The salt brine is obtained from underground
salt deposits through a series of brine wells. The resulting
product has both a high purity and uniform physical shape.
Evaporated salt is primarily used in our general trade salt
product lines. Based on annual production capacities, our
mechanical evaporation represents approximately 12% of our salt
production.

Solar Evaporation.The solar evaporation method is used in areas of the world where
high-salinity brine is available and where weather conditions
provide for a high natural-evaporation rate. The brine is pumped
into a series of large open ponds where sun and wind evaporate
the water and crystallize the salt, which is then mechanically
harvested and processed through washing, drying and screening.
Solar salt is used in both our general trade salt product lines
and in highway deicing applications. Based on annual production
capacities, our solar evaporation represents approximately 10%
of our salt production.

Operations and Facilities

United States. Our
Central and Midwestern United States general trade customer base
is served by our mechanical evaporation plant in Lyons, Kansas.
Additionally, we serve areas around the Great Lakes with
evaporated salt purchased from Mosaics potash and salt
facility in Michigan. The Cote Blanche, Louisiana rock salt
mine serves chemical customers in the Southern and Western
United States, highway deicing customers through a series of
depots located along the Mississippi and Ohio Rivers, and
agriculture customers in the Southern and Midwestern United
States. Our solar evaporation facility located in Ogden, Utah is
the largest solar salt production site in the United States.
This facility principally serves the Western United States
general trade markets and also provides salt for chemical
applications and highway deicing, and provides magnesium
chloride which is primarily used in deicing, dust control and
soil stabilization applications. Production capacity of salt at
our Ogden facility is currently only limited by demand. We also
own and operate two salt packaging facilities in Illinois and
Wisconsin, which serve consumer deicing and water conditioning
customers in the Central, Midwestern and parts of the
Northeastern United States.


Canada.Our salt is
produced at five different locations in Canada. Mechanically
evaporated salt is produced at three facilities strategically
located throughout Canada: Amherst, Nova Scotia in Eastern
Canada; Goderich, Ontario in Central Canada; and Unity,
Saskatchewan in Western Canada. From the Goderich, Ontario rock
salt mine, we serve the consumer and highway deicing markets in
Canada and the Great Lakes region of the United States. We also
purchase salt and other products from Mosaics potash and
salt facilities located in Saskatchewan, which serve both the
general trade and the highway deicing markets.

United Kingdom.Our
United Kingdom customer base is served by two facilities.
Highway deicing customers throughout the United Kingdom are
served by the Winsford rock salt mine in Northwest England. The
Weston Point mechanical evaporation plant is located
12 miles north of the mine and serves our general trade and
chemical customers in the United Kingdom as well as in
continental Europe.

The table below shows the capacity and type of
salt produced at each of our owned or leased production
locations:


|               |                              |            |  |           |         |  |  |            | 
|-------------- | ---------------------------- | ---------- |  | --------- | ------- |  |  | ---------- | 
|              
|               |                             
|               |                              |            |  |          
|               |                              | Annual     |  |           |        
|               |                              | Production |  |           |        
|               |                              | Capacity   |  |           | Product | 
|Location       |                              | (tons)     |  |           | Type    | 
|              
|               |                             
|North America  |                              |            |  |           |         |  |  |           
|               | Goderich, Ontario Mine       |            |  | 6,500,000 |         |  |  | Rock       | 
|               | Cote Blanche, Louisiana Mine |            |  | 2,800,000 |         |  |  | Rock       | 
|               | Ogden, Utah Plant            |            |  | 1,500,000 |         |  |  | Solar      | 
|               | Lyons, Kansas Plant          |            |  | 450,000   |         |  |  | Evaporated | 
|               | Unity, Saskatchewan Plant    |            |  | 175,000   |         |  |  | Evaporated | 
|               | Goderich, Ontario Plant      |            |  | 175,000   |         |  |  | Evaporated | 
|               | Amherst, Nova Scotia Plant   |            |  | 120,000   |         |  |  | Evaporated | 
|              
|United Kingdom |                              |            |  |           |         |  |  |           
|               | Winsford, Cheshire Mine      |            |  | 2,000,000 |         |  |  | Rock       | 
|               | Weston Point, Cheshire Plant |            |  | 850,000   |         |  |  | Evaporated | 
|              

Salt production at these facilities totaled an
aggregate 12.8 million tons, 12.0 million tons and
10.0 million tons for the years ended December 31,
2004, 2003 and 2002, respectively.


Salt is found throughout the world and is
typically deposited in extremely large quantities where it is
commercially produced. Our mines at Goderich, Cote Blanche
and Winsford, as well as at our other operating facilities, are
proximate to vast mineral deposits. In most of our production
locations, we estimate the recoverable salt to exceed


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




100 years of reserves at current production
rates and capacities. Our rights to extract those minerals may
currently be contractually limited by either geographic
boundaries or time. We believe that we will be able to continue
to extend these agreements, as we have in the past, at
commercially reasonable terms, without incurring substantial
costs or incurring material modifications to the existing lease
terms and conditions, thereby allowing us to extract the
additional salt necessary to fully develop our existing mineral
rights.

Our underground mines in Canada (Goderich,
Ontario), the United States (Cote Blanche, Louisiana) and
the United Kingdom (Winsford, Cheshire) make up approximately
three-fourths of our salt producing capacity. Each of these
mines are operated with modern mining equipment and utilize
subsurface improvements such as vertical shaft lift systems,
milling and crushing facilities, maintenance and repair shops
and extensive conveyor systems. We believe that the properties
and their operating equipment are maintained in good working
condition.


The mine site at the Goderich mine is owned. We
also maintain a mineral lease at Goderich with the provincial
government, which grants us the right to mine salt. This lease
expires in 2022 with the option to renew until 2043.
Cote Blanche is operated under land and mineral leases with
a third-party landowner who grants us the right to mine salt.
The leases expire in 2060. We own the land, related surface
rights and salt reserves at the Winsford mine.


Our mines at Goderich, Cote Blanche and
Winsford have been in operation for approximately 45, 39 and
159 years, respectively. At current average rates of
production, we estimate that our remaining years of production
for the recoverable minerals we presently own or lease to be
176, 92 and 31 years, respectively. Our mineral interests
are amortized on an individual basis over estimated useful lives
not to exceed 99 years using the units-of-production method
for leased mineral rights and the straight-line method for owned
minerals. Our estimates are based on, among other things, both
internal estimates and the results of reserve studies completed
by a third-party engineering firm. The reserve estimates are
primarily a function of the area and volume covered by the
mining rights and estimates of extraction rates utilized by the
us with the reasonable expectation of reliably operating the
mines on a long-term basis. Established criteria for proven and
probable reserves is primarily applicable to mining deposits of
discontinuous metal, where both presence of ore and its variable
grade need to be precisely identified. However, the massive
continuous nature of evaporative deposits, such as salts,
require proportionately less data for the same degree of
confidence in mineral reserves, both in terms of quantity and
quality. Reserve studies performed by a third-party engineering
firm suggest that our salt reserves most closely resemble
probable reserves and we have therefore classified our reserves
as probable reserves.


We package salt product produced by us or others
at two additional facilities. The table below shows the
packaging capacity at each of these facilities:


|                   |  |           |         | 
|------------------ |  | --------- | ------- | 
|                  
|                   | 
|                   |  | Annual    |        
|                   |  | Packaging |        
|                   |  | Capacity  |        
|Location           |  | (tons)    |        
|                  
|                   | 
|Kenosha, Wisconsin |  |           | 100,000 | 
|Chicago, Illinois  |  |           | 100,000 | 
|                  

We also have a long-term contract to purchase
finished salt from Mosaic, which is produced as a co-product of
their potash operations. The table below shows the amount and
type of salt purchased from each of these production facilities:


|                        |  |            |         |  |         |  |            | 
|----------------------- |  | ---------- | ------- |  | ------- |  | ---------- | 
|                       
|                        | 
|                        |  | Annual     |         |  |        
|                        |  | Purchasing |         |  |        
|                        |  | Capacity   |         |  | Product | 
|Location                |  | (tons)     |         |  | Type    | 
|                       
|                        | 
|Esterhazy, Saskatchewan |  |            | 200,000 |  |         |  | Rock       | 
|Hersey, Michigan        |  |            | 250,000 |  |         |  | Evaporated | 
|                       

We divide our salt products into two separate
product lines: highway deicing salt (including chemical salt)
and general trade salt.


Highway Deicing Salt Products

Products and
Sales

Highway deicing constituted approximately 50% of
our gross sales of salt in 2004. Principal customers are states,
provinces, counties, municipalities and road maintenance
contractors that purchase bulk salt for ice control on public
roadways. Highway deicing salt is sold primarily through an
annual tendered bid contract system as well as through some
longer-term contracts, with price, product quality and delivery
being the primary competitive market factors. Annual supply
contracts generally are awarded on the basis of tendered bids
once the purchaser is assured that the minimum requirements for
purity, service and delivery can be met. The bidding process
eliminates the need to invest significant time and effort in
promotion and advertising. Location of the source of salt and
distribution outlets also play a significant role in determining
a supplier. We have an extensive network of over 70 depots for
storage and distribution of highway deicing salt in North
America. The majority of these depots are located on the Great
Lakes and the Mississippi and Ohio River systems where our
Goderich, Ontario and Cote Blanche, Louisiana mines are
located to serve those markets. Salt from our Ogden, Utah
facility is also partially used for highway deicing.

We produce salt in the United Kingdom for the
highway deicing product line through our facility at Winsford,
Cheshire, the largest rock salt mine in the United Kingdom. We
believe our superior production capacity, productivity and
favorable logistics allow us to be the only supplier of highway
deicing salt capable of meeting peak winter demands in the
United Kingdom. This strong position has resulted in our


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being viewed as a strategic operation by the
United Kingdoms Highway Agency. As such, we work with the
Highway Agency to develop standards for deicing product
specifications and to monitor Highway Agency deicing application
contractors. We further act as a primary contact for the Highway
Agency in connection with winter road management in the United
Kingdom. In the United Kingdom approximately 70% of our highway
deicing business is on multi-year contracts.

Winter weather variability is the most
significant factor affecting salt sales for deicing applications
because mild winters reduce the need for salt used in ice and
snow control. Over the last four years, our North American
highway deicing product line has generated over 63% of our
annual sales, net of shipping and handling costs, from December
through March when the need for highway deicing is at its peak.
Lower than expected sales during this period could have a
material adverse effect on our results of operations. The vast
majority of our North American deicing sales are made in Canada
and the Midwestern United States; where winter weather is
generally harsher than in other parts of North America. In
keeping with industry practice, we stockpile quantities of salt
to meet estimated requirements for the next winter season. See
Item 1, Business  Risk Factors 
The seasonal demand for our products and the variations in our
cash flows from quarter to quarter as a result of weather
conditions may have an adverse effect on our results of
operations and the price of our common stock and
Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operations 
Seasonality.


Chemical customers accounted for approximately 4%
of our 2004 gross sales of salt. Principal customers are
producers of intermediate chemical products used in pulp
bleaching, water treatment and a variety of other industrial
uses. Our customers do not have a captive source of brine.
Distribution into the chemical market is made primarily through
multi-year supply agreements, which are negotiated privately.
Price, service, product quality and security of supply are the
major competitive market factors.


The table below shows our shipments of highway
deicing and chemical salt products to the following regions
(thousands of tons):


|                  |  |                         |        |  |      |  |     |      |  |  |       |  |  |      |     |  |   |  |       |  |  |  |     | 
|----------------- |  | ----------------------- | ------ |  | ---- |  | --- | ---- |  |  | ----- |  |  | ---- | --- |  | - |  | ----- |  |  |  | --- | 
|                 
|                  | 
|                  |  |                        
|                  |  | Year Ended December 31, |       
|                  |  |                         |       
|                  |  |                         |        |  |      | 
|                  |  | 2004                    |        |  | 2003 |  |     | 2002 | 
|                  |  |                         |        | 
|                  |  |                         |        |  |      | 
|                  |  | Tons                    |        |  | %    |  |     | Tons |  |  | %     |  |  | Tons |     |  | % | 
|                  |  |                        
|                  |  |                         |        | 
|North America     |  |                         | 9,153  |  |      |  | 88  |      |  |  | 8,827 |  |  |      | 91  |  |   |  | 7,266 |  |  |  | 91  | 
|Europe and Others |  |                         | 1,180  |  |      |  | 12  |      |  |  | 836   |  |  |      | 9   |  |   |  | 699   |  |  |  | 9   | 
|                  |  |                        
|Total             |  |                         | 10,333 |  |      |  | 100 |      |  |  | 9,663 |  |  |      | 100 |  |   |  | 7,965 |  |  |  | 100 | 
|                  |  |                        

Competition


We face strong competition in each of the markets
in which we operate. In North America, other large, nationally
recognized companies compete against our highway deicing and
chemical salt products. In addition, there are several smaller
regional producers of highway deicing salt. There are several
importers of salt into North America but these mostly impact the
Eastern seaboard where we have a minimal position. In the United
Kingdom, there are two other companies that produce highway
deicing salt, one in Northern England and the other in Northern
Ireland. There are no significant imports of highway deicing
salt into the United Kingdom.

General Trade Salt Products

Products and
Sales


The general trade business accounted for
approximately 46% of our 2004 gross sales of salt. We are the
third largest producer of general trade salt in North America.
This product line includes commercial and consumer applications,
such as table salt, water conditioning, consumer ice control,
food processing, agricultural applications, as well as a variety
of industrial applications. We believe that we are the largest
private label producer of water conditioning and salt-based
agricultural products in North America and sell more than 70
private labels of table salt to major retailers. Our Sifto®
brand is well recognized in the Canadian market.

In the United Kingdom we operate the largest
evaporated-salt plant in the United Kingdom at Weston Point. We
are one of the U.K.s market leaders in branded evaporated
salt for water conditioning. We also produce salt for the food,
chemical, animal feeds and textile markets.


We have maintained a significant presence in the
general trade business over recent years due to our strong focus
on: (i) the Midwestern region of the United States;
(ii) all of Canada and the United Kingdom; (iii) our
distribution network to the grocery trade; and (iv) our
relationships with large distributors of water conditioning salt.


The general trade market is driven by strong
customer relationships. Sales in the general trade salt product
line occur through retail channels, such as grocery stores,
building supply, hardware and automotive stores and feed
suppliers. Distribution in the general trade salt product line
is channeled through a direct sales force located in various
parts of our service territories who sell products to
distributors, dealers and end users. We also maintain a network
of brokers who sell table salt, consumer deicing and water
conditioning products. These brokers service wholesalers,
grocery chains and retailers, as well as the food service
industry.


The table below shows our shipments of general
trade salt products to the following regions (thousands of tons):


|                  |  |                         |       |  |      |  |     |      |  |  |       |  |  |      |     |  |   |  |       |  |  |  |     | 
|----------------- |  | ----------------------- | ----- |  | ---- |  | --- | ---- |  |  | ----- |  |  | ---- | --- |  | - |  | ----- |  |  |  | --- | 
|                 
|                  | 
|                  |  |                        
|                  |  | Year Ended December 31, |      
|                  |  |                         |      
|                  |  |                         |       |  |      | 
|                  |  | 2004                    |       |  | 2003 |  |     | 2002 | 
|                  |  |                         |       | 
|                  |  |                         |       |  |      | 
|                  |  | Tons                    |       |  | %    |  |     | Tons |  |  | %     |  |  | Tons |     |  | % | 
|                  |  |                        
|                  |  |                         |       | 
|North America     |  |                         | 2,404 |  |      |  | 79  |      |  |  | 2,323 |  |  |      | 79  |  |   |  | 2,135 |  |  |  | 77  | 
|Europe and Others |  |                         | 622   |  |      |  | 21  |      |  |  | 604   |  |  |      | 21  |  |   |  | 651   |  |  |  | 23  | 
|                  |  |                        
|Total             |  |                         | 3,026 |  |      |  | 100 |      |  |  | 2,927 |  |  |      | 100 |  |   |  | 2,786 |  |  |  | 100 | 
|                  |  |                        

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Competition

In North America, other large nationally
recognized companies compete against our salt business in
production and marketing of general trade salt products. In
addition, there are several smaller regional producers of
general trade salt. There are several importers of salt into
North America but they mostly impact the East Coast and West
Coast of the United States where we have a minimal position. In
the United Kingdom, there is one other large domestic producer
of general trade salt, one small local producer and some imports
from continental Europe. We also export salt from the United
Kingdom to Scandinavia and continental Europe and compete with
many other European producers in these markets.

SPECIALTY POTASH SEGMENT




SOP is primarily used as a specialty fertilizer,
providing essential potassium to high-value, chloride-sensitive
crops, such as vegetables, fruits, tea, potatoes, grapes, nuts,
tobacco and turf grass. We are the market leader in North
America for SOP and market SOP products both domestically and
overseas. We offer several grades of SOP, which are designed to
better serve the special needs of our customers. In 2004, the
specialty potash segment accounted for approximately 15% of our
sales after shipping and handling costs.


Potash Industry
Overview


The annual worldwide consumption of all potash
fertilizers approaches 50 million tons. Muriate of potash,
or potassium chloride, is the most common source of potassium
and accounts for over 90% of all potash consumed in fertilizer
production. SOP represents about 5% of potash consumption. The
remainder is supplied in the forms of potassium magnesium
sulfate, nitrate of potassium and, to a lesser extent, potassium
thiosulfate and monopotassium phosphate. All of these products
contain varying concentrations of potassium expressed as
potassium oxide (K2O) and different combinations of
co-nutrients.

Muriate of potash is the least expensive form of
potash fertilizer based on the concentration of K2O.
It is the preferred potassium source for most crops. However,
SOP (containing approximately 50% K2O) is utilized by
growers for many high-value crops, especially where the
requirements are for fertilizers with low chloride content. The
use of SOP has been scientifically proven to improve the yield
and quality of certain crops.


Examples of crops where SOP is utilized to
increase yield and quality include tobacco, tea, potatoes,
citrus fruits, grapes, almonds, some vegetables and on
turfgrass, including turf for golf courses. Approximately 73% of
our annual SOP sales volumes in 2004 were made to domestic
customers, which include retail fertilizer dealers and
distributors of professional turf care products. These dealers
and distributors combine or blend SOP with other fertilizers and
minerals to produce fertilizer blends tailored to individual
requirements.


Operations and
Facilities


All of our SOP production is located on the Great
Salt Lake west of Ogden, Utah. It is the largest SOP production
facility in North America. The evaporation facility utilizes
solar energy and operates over 40,000 acres of evaporation
ponds to manufacture SOP and magnesium chloride from the brines
of the Great Salt Lake. The property utilized in our operation
is both owned and leased under annually renewing leases. This
facility has the capacity to annually produce approximately
450,000 tons of SOP, approximately 400,000 tons of magnesium
chloride and over 1.5 million tons of salt. These
recoverable minerals exist in vast quantities in the Great Salt
Lake. We estimate the recoverable minerals exceed 100 years
of reserves at current production rates and capacities. Our
rights to extract these minerals are contractually limited. We
believe we will continue to be able to extend these agreements,
as we have in the past, at commercially reasonable terms,
without incurring substantial costs or incurring material
modifications to the existing lease terms and conditions,
thereby allowing us to extract additional quantities of minerals
necessary to significantly extend the economic life of the
reserves.

The potassium bearing salts are mechanically
harvested and refined to high purity SOP in an integrated
production facility that has been in operation since 1967. We
believe that our property and operating equipment are maintained
in good working condition.


The Ogden facility was unable to produce SOP from
1984 through the beginning of 1989 due to flooding. Following
the flood, dikes were raised to a height three feet over the
historic peak flood level. Also, the State of Utah constructed
and implemented the West Desert Pumping Project, which could be
utilized to lower the level of the Great Salt Lake by up to
12 inches per year thus reducing the risk of flooding.
Although we believe that the subsequent dike improvements and
the West Desert Pumping Project have reduced the likelihood of
future pond flooding, we maintain both property damage and
business interruption insurance policies for this risk.


Products and
Sales


Our domestic sales of SOP are concentrated in the
western states of California, Oregon, Washington, Idaho and the
central tobacco belt area where the crops and soil conditions
favor SOP. We generally export SOP through major trading
companies. International SOP sales volumes in 2004 were 27% of
our annual SOP sales. Beginning in late 2001, we organized and
employed an experienced global sales group to focus on the
specialty aspects and benefits of SOP as a source of potassium
nutrients. We believe our sales growth over the past few years
has been positively influenced by reestablishing this specialty
marketing focus.

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The table below shows our shipments of SOP to the
following regions (thousands of tons):

|          |  |                         |     |  |      |  |     |      |  |  |     |  |  |      |     |  |   |  |     |  |  |  |     | 
|--------- |  | ----------------------- | --- |  | ---- |  | --- | ---- |  |  | --- |  |  | ---- | --- |  | - |  | --- |  |  |  | --- | 
|         
|          | 
|          |  |                        
|          |  | Year Ended December 31, |    
|          |  |                        
|          |  |                         |    
|          |  |                         |     |  |      | 
|          |  | 2004                    |     |  | 2003 |  |     | 2002 | 
|          |  |                         |     | 
|          |  |                         |     |  |      | 
|          |  | Tons                    |     |  | %    |  |     | Tons |  |  | %   |  |  | Tons |     |  | % | 
|          |  |                        
|          |  |                         |     | 
|U.S.      |  |                         | 280 |  |      |  | 73  |      |  |  | 182 |  |  |      | 73  |  |   |  | 151 |  |  |  | 62  | 
|Export(a) |  |                         | 106 |  |      |  | 27  |      |  |  | 69  |  |  |      | 27  |  |   |  | 91  |  |  |  | 38  | 
|          |  |                        
|Total     |  |                         | 386 |  |      |  | 100 |      |  |  | 251 |  |  |      | 100 |  |   |  | 242 |  |  |  | 100 | 
|          |  |                        

|    |                                                                          
|--- | -------------------------------------------------------------------------
|(a) | Export sales include product sold to foreign
    customers at U.S. ports.

Competition


Approximately 60% of the world SOP capacity is
located in Europe, 11% in the United States and the remaining
29% in various other countries. The world consumption of SOP
totals about 3.1 million tons. Our major competition for
SOP sales in North America include imports from Germany, Chile,
Canada and Belgium. In addition, there is also some functional
competition between SOP, muriate of potash and nitrate of
potash. For exports into Asia, the Pacific Rim countries and
Latin America, we compete with various local and European
producers.

INTELLECTUAL PROPERTY




We rely on a combination of patents, trademarks,
copyright and trade secret protection, employee and third-party
non-disclosure agreements, license arrangements and domain name
registrations to protect our intellectual property. We sell many
of our products under a number of registered trademarks that we
believe are widely recognized in the industry. No single patent,
trademark or trade name is material to our business as a whole.


Any issued patents that cover our proprietary
technology and any of our other intellectual property rights may
not provide us with substantial protection or be commercially
beneficial to us. The issuance of a patent is not conclusive as
to its validity or its enforceability. Competitors may also be
able to design around our patents. If we are unable to protect
our patented technologies, our competitors could commercialize
our technologies.


With respect to proprietary know-how, we rely on
trade secret protection and confidentiality agreements.
Monitoring the unauthorized use of our technology is difficult
and the steps we have taken may not prevent unauthorized use of
our technology. The disclosure or misappropriation of our
intellectual property could harm our ability to protect our
rights and our competitive position. See Item 1,
Business  Risk Factors  Protection
of proprietary technology  Our intellectual property
may be misappropriated or subject to claims of
infringement.


EMPLOYEES




As of December 31, 2004, we had 1,541
employees, of which 724 are employed in the United States, 638
in Canada and 179 in the United Kingdom. Approximately 35% of
our U.S. workforce (55% of our global workforce) is
represented by labor unions. Of our nine material collective
bargaining agreements, one will expire in 2005, five will expire
in 2006 and three will expire in 2007. Additionally,
approximately 12% of our workforce is employed in Europe where
trade union membership is common. We consider our labor
relations to be good.


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PROPERTIES




The table below sets forth our principal
properties:


|                             |  |                                        |  |        |                  |  |          |        |  |        |            |     |          |  |           |    
|---------------------------- |  | -------------------------------------- |  | ------ | ---------------- |  | -------- | ------ |  | ------ | ---------- | --- | -------- |  | --------- | ---
|                            
|                             | 
|                             |  |                                        |  |       
|                             |  | Land and Related                       |  |        |                 
|                             |  | Surface Rights                         |  |        | Mineral Reserves | 
|                             |  |                                        |  |        |                  | 
|                             |  | Owned/                                 |  |        | Expiration       |  |          | Owned/ |  |        | Expiration |    
|Location                     |  | Use                                    |  | Leased |                  |  | of Lease |        |  | Leased |            |     | of Lease | 
|                            
|                             | 
|Cote Blanche, Louisiana      |  | Rock salt production facility          |  | Leased |                  |  | 2060     |        |  |        | Leased     |     |          |  | 2060      |    
|Lyons, Kansas                |  | Evaporated salt production facility    |  | Owned  |                  |  | N/A      |        |  |        | Owned      |     |          |  | N/A       |    
|Ogden, Utah                  |  | SOP and solar salt production facility |  | Owned  |                  |  | N/A      |        |  |        | Leased     |     |          |  |           | (1)
|Amherst, Nova Scotia, Canada |  | Evaporated salt production facility    |  | Owned  |                  |  | N/A      |        |  |        | Leased     |     |          |  | 2023      | (2)
|Goderich, Ontario, Canada    |  | Rock salt production facility          |  | Owned  |                  |  | N/A      |        |  |        | Leased     |     |          |  | 2022      | (2)
|Goderich, Ontario, Canada    |  | Evaporated salt production facility    |  | Owned  |                  |  | N/A      |        |  |        | Owned      |     |          |  | N/A       |    
|Unity, Saskatchewan, Canada  |  | Evaporated salt production facility    |  | Owned  |                  |  | N/A      |        |  |        | Leased     |     |          |  | 2009/2016 | (3)
|Weston Point, Cheshire, U.K. |  | Evaporated salt production facility    |  | Owned  |                  |  | N/A      |        |  |        | N/A        | (4) |          |  | N/A       |    
|Winsford, Cheshire, U.K.     |  | Rock salt production facility          |  | Owned  |                  |  | N/A      |        |  |        | Owned      |     |          |  | N/A       |    
|Overland Park, Kansas        |  | Corporate headquarters                 |  | Leased |                  |  | 2005     | (5)    |  |        | N/A        |     |          |  | N/A       |    
|                            

|    |                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Ogden lease automatically renews on an annual
    basis.                                                                                                                                                                                                                
|(2) | Subject to the right of renewal through 2043.                                                                                                                                                                                                                               
|(3) | Consists of two leases expiring in 2009 and 2016
    subject to the right of renewal through 2030 and 2037,
    respectively.                                                                                                                                               
|(4) | Weston Point purchases brine for production
    purposes from a third party pursuant to a supply agreement that
    will expire in 2017.                                                                                                                                    
|(5) | We are moving our corporate headquarters to a new
    location in Overland Park, Kansas in April 2005, and as a
    result, entered into a new lease. The new lease is expected to
    be effective April 2005 and expires in 2015. The old lease
    expires in April 2005.

With respect to each facility at which we extract
salt, brine or SOP, we obtain any required or necessary permits
prior to the commencement of mining. Permits or licenses are
obtained as needed in the normal course of business based on our
mine plans and state, provincial and local regulatory provisions
regarding mine permitting and licensing. Based on our historical
permitting experience, we expect to be able to continue to
obtain necessary mining permits to support historical rates of
production.

Our mineral leases have varying terms. Some will
expire after a set term of years, while others continue
indefinitely. Many of these leases provide for a royalty payment
to the lessor based on a specific amount per ton of mineral
extracted or as a percentage of revenue. We believe we will be
able to continue to extend our material mineral lease
agreements, as we have in the past, at commercially reasonable
terms, without incurring substantial costs or incurring material
modifications to the existing lease terms and conditions. In
addition, we own a number of properties and are party to
non-mining leases that permit us to perform activities that are
ancillary to our mining operations, such as surface use leases,
and storage, depot and warehouse leases. We also believe that
all of our leases were entered into on market terms.


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---

The following map shows the locations of our
principal salt and SOP production facilities:


(MAP OF NORTH AMERICA AND UNITED KINGDOM)

ENVIRONMENTAL, HEALTH AND SAFETY
MATTERS




We produce and distribute crop and animal
nutrients, salt and deicing products. These activities subject
us to an evolving set of international, federal, state,
provincial and local environmental, health and safety
(EHS) laws that regulate, or propose to regulate:
(i) product content; (ii) use of products by both us
and our customers; (iii) conduct of mining and production
operations, including safety procedures followed by employees;
(iv) management and handling of raw materials; (v) air
and water quality impacts from our facilities;
(vi) disposal, storage and management of hazardous and
solid wastes; (vii) remediation of contamination at our
facilities and third-party sites; and (viii) post-mining
land reclamation. For new regulatory programs, it is difficult
for us to ascertain future compliance obligations or estimate
future costs until implementing regulations have been finalized
and definitive regulatory interpretations have been adopted. We
intend to respond to these regulatory requirements at the
appropriate time by implementing necessary modifications to our
facilities and/or operating procedures.


We have expended, and anticipate that we will
continue to expend, substantial financial and managerial
resources to comply with EHS standards. We estimate that our
2005 EHS capital expenditures will total approximately
$2.5 million, primarily related to air quality devices and
highway deicing salt storage pads. We expect that our estimated
expenditures in 2005 for reclamation activities will be
approximately $0.2 million. It is possible that greater
than anticipated EHS capital expenditures or reclamation
expenditures will be required in 2005 or in the future.


We maintain accounting accruals for certain
contingent environmental liabilities and believe these accruals
comply with generally accepted accounting principles. We record
accruals for environmental investigatory and non-capital
remediation costs when litigation has commenced or a claim or
assessment has been asserted or is imminent, the likelihood of
an unfavorable outcome is probable and the financial impact of
such outcome is reasonably estimable. Based on current
information, it is the opinion of management that our contingent
liabilities arising from EHS matters, taking into account
established accruals, will not have a material adverse effect on
our business, financial condition or results of operations. As
of December 31, 2004, we had recorded environmental
accruals of $2.3 million.


Product Requirements and Impacts

International, federal, state and provincial
standards: (i) require registration of many of our products
before such products can be sold; (ii) impose labeling
requirements on those products; and (iii) require producers
to manufacture the products to formulations set forth on the
labels. Environmental, natural resource and public health
agencies at all regulatory levels continue to evaluate alleged
health and environmental impacts that might arise from the
handling and


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use of products such as those we manufacture. The
U.S. Environmental Protection Agency, or the
EPA, the State of California and The Fertilizer
Institute have each completed independent assessments of
potential risks posed by crop nutrient materials. These
assessments concluded that, based on the available data, crop
nutrient materials generally do not pose harm to human health.
It is unclear whether any further evaluations may result in
additional standards or regulatory requirements for the
producing industries, including us, or for our customers. At
this stage, it is the opinion of management that the potential
impact of these standards on the market for our products or on
the expenditures that may be necessary to meet new requirements
will not have a material adverse effect on our business,
financial condition or results of operations.

In December 2001, the Canadian government
released a Priority Substances List Assessment Report for road
salt. This report found that road salts are entering the
environment under conditions that may have a harmful effect or
constitute a danger to the environment. Based on this report,
the Minister of Environment has proposed designating road salt
as a toxic substance pursuant to the Canadian
Environmental Protection Act. Canadas federal cabinet,
which has ultimate responsibility, has not yet taken final
action with respect to this proposal and is not subject to any
deadline to do so. This proposal was subject to a public
comment, during which individuals and the municipalities which
comprise most of our customers expressed a variety of views,
including noting the utility and cost-efficiency of salt as
compared to other potential measures to reduce ice-related road
hazards. At this point, Environment Canada has indicated that,
whether or not road salts are declared toxic, their preferred
course of action is the establishment of voluntary guidelines
for users as opposed to any form of regulation. Environment
Canada has been developing these guidelines based on
consultation with a broad-based stakeholders group, which
includes the salt industry. On April 3, 2004, Environment
Canada published a Code of Practice to serve as these
guidelines. The Code of Practice requires large road salt users
to develop salt management plans. We do not believe that this
will have a material direct effect on us, but the new salt
management plans may lead our customers in Canada to require
less road salt.


Given the importance of road salt for traffic
safety and the current lack of any practical substitute, we deem
it unlikely that any guidelines or regulations would result in a
complete ban on the use of road salt. As noted in the December
2001 report, the use of road salt and other deicing agents
is an important component of strategies to keep roadways
open and safe during the winter and minimize traffic crashes,
injuries and mortality under icy and snowy conditions. The
report further stated that mitigation measures must be
based on optimization of winter road maintenance practices so as
not to jeopardize road safety, while minimizing the potential
for harm to the environment. Environment Canada recently
confirmed the high importance of road safety in its proposed
regulation of road salt. In its September 22, 2003 press
release in connection with the proposed Code of Practice, it
indicated that the proposed code will provide those who
use road salts with a way to reduce harm to the environment
without jeopardizing road safety. Since the dissemination
of the December 2001 report, we have endeavored to work more
closely with the national government as well as provinces and
municipalities to better manage the use, storage and release of
our road salts. As a result, we believe it has become less
likely that road salts will be designated as a toxic substance.
We cannot predict whether the proposal to designate road salt as
a toxic substance will be finalized or the promulgation of any
other future regulation. Standardized guidelines for the use and
storage of road salt or any alternate deicing products may cause
us to suffer reduced sales and incur substantial costs and
expenses that could have a material adverse effect on our
business, financial condition and results of operations. In
addition, while we are not aware of any similar governmental
proposals for such designation of road salt in either the United
States or the United Kingdom, we cannot guarantee that such
proposals will not arise.


Operating Requirements and Impacts

We hold numerous environmental, mining and other
permits or approvals authorizing operations at each of our
facilities. Our operations are subject to permits for extraction
of salt and brine, discharges of process materials to air and
surface water, and injection of brine and wastewater to
subsurface wells. Some of our proposed activities may require
waste storage permits. A decision by a government agency to deny
or delay issuing a new or renewed permit or approval, or to
revoke or substantially modify an existing permit or approval,
could have a material adverse effect on our ability to continue
operations at the affected facility. In addition, changes to
environmental and mining regulations or permit requirements
could have a material adverse effect on our ability to continue
operations at the affected facility. Expansion of our operations
also is predicated upon securing the necessary environmental or
other permits or approvals.


Pursuant to the Mine Safety and Health Act, new
interim regulatory standards for diesel particulate matter
became effective in 2002 and final standards are expected to
become effective in 2006. In response to litigation regarding
its final rule on diesel particulate matter, the Mine Safety and
Health Administration has initiated a new rule regarding certain
provisions of the final standards. We are currently in
compliance with the interim standards that are in effect between
2002 and 2006. However, material expenditures may be required to
achieve compliance with the final standards at the
Cote Blanche facility in Louisiana.


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Remedial Activities

Remediation at Our
Facilities


Many of our formerly-owned and current facilities
have been in operation for a number of years. Operations have
historically involved the use and handling of regulated chemical
substances, salt and by-products or process tailings by us and
predecessor operators which have resulted in soil, surface water
and groundwater contamination.

At many of these facilities, spills or other
releases of regulated substances have occurred previously and
potentially could occur in the future, possibly requiring us to
undertake or fund cleanup efforts under the
U.S. Comprehensive Environmental Response, Compensation,
and Liability Act, or CERCLA, or state and
provincial or United Kingdom laws governing cleanup or disposal
of hazardous substances. In some instances, we have agreed,
pursuant to consent orders or agreements with the appropriate
governmental agencies, to undertake investigations, which
currently are in progress, to determine whether remedial action
may be required to address such contamination. At other
locations, we have entered into consent orders or agreements
with appropriate governmental agencies to perform required
remedial activities that will address identified site
conditions. At still other locations, we have undertaken
voluntary remediation, and have removed formerly used
underground storage tanks. Taking into account established
reserves, expenditures for these known conditions currently are
not expected, individually or in the aggregate, to be material.
However, material expenditures could be required in the future
to remediate the contamination at these or at other current or
former sites. In addition, in connection with the
Recapitalization, Mosaic has agreed to indemnify us against
liabilities for certain known and unknown conditions at existing
and former sites.


The Wisconsin Department of Agriculture, Trade
and Consumer Protection (DATCP) reportedly has
information indicating that agricultural chemicals are present
in the groundwater in the vicinity of the Kenosha, Wisconsin
plant. DATCP has directed us to conduct an investigation into
the possible presence of agricultural chemicals in soil and
groundwater at the Kenosha plant. We are working with DATCP to
develop and implement a plan to investigate soils and
groundwater at the Kenosha site. Depending on the results of the
investigation, remedial efforts may be necessary. Although
little is currently known about the possible source of such
contamination, or who should be responsible for it, we expect
DATCP will again look to us to undertake those efforts. If
required, we intend to conduct all phases of the investigation
and any required remediation work under the Wisconsin
Agricultural Chemical Cleanup Program, which will provide for
reimbursement of some of the costs. None of the identified
contaminants have been used in association with Compass Minerals
site operations. We expect to seek participation by, or cost
reimbursement from, other parties responsible for the presence
of any agricultural chemicals found in soils at this site.


Remediation at
Third-Party Facilities


Along with impacting the sites at which we have
operated, various third parties have alleged that our historic
operations have resulted in contamination to neighboring
off-site areas or nearby third-party facilities. CERCLA imposes
liability, without regard to fault or to the legality of a
partys conduct, on certain categories of persons who are
considered to have contributed to the release of hazardous
substances into the environment. Under CERCLA, or its
various state analogues, one party may potentially be required
to bear more than its proportional share of cleanup costs at a
site where it has liability if payments cannot be obtained from
other responsible parties.

We have entered into de minimissettlement agreements with the EPA with respect to several
CERCLA sites, pursuant to which we have made one-time cash
payments and received statutory protection from future claims
arising from those sites. In some cases, however, such
settlements have included reopeners, which could
result in additional liability at such sites in the event of
newly discovered contamination or other circumstances.


At other sites for which we have received notice
of potential CERCLA liability, we have provided information to
the EPA that we believe demonstrates that we are not liable, and
the EPA has not asserted claims against us with respect to such
sites. In some instances, we have agreed, pursuant to orders
from or agreements with appropriate governmental agencies or
agreements with private parties, to undertake or fund
investigations, some of which currently are in progress, to
determine whether remedial action, under CERCLA or otherwise,
may be required to address contamination. At other locations, we
have entered into consent orders or agreements with appropriate
governmental agencies to perform required remedial activities
that will address identified site conditions. At the present
time, we are not aware of any additional sites for which we
expect to receive a notice from the EPA or any other party of
potential CERCLA liability. However, based on past operations,
there is a potential that we may receive notices in the future
for sites of which we are currently unaware or that our
liability at currently known sites may increase. Taking into
account established accruals, expenditures for our known
environmental liabilities and site conditions currently are not
expected, individually or in the aggregate, to be material or
have a material adverse effect on our business, financial
condition, results of operations and cash flows.







You should carefully consider the following
risks and all of the information set forth in this annual report
on Form 10-K. The risks described below are not the only
ones facing our company. Additional risks and
uncertain-

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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




ties not currently known to us or that we
currently deem to be immaterial may also materially and
adversely affect our business, financial condition or results of
operations.

Risks Related to Our Business




The seasonal demand for our products and
the variations in our cash flows from quarter to quarter as a
result of weather conditions may have an adverse effect on our
results of operations and the price of our common
stock.

Our highway deicing product line is seasonal,
with operating results varying from quarter to quarter as a
result of weather conditions and other factors. Over the last
four years, our North American highway deicing product line has
generated over 63% of its annual sales, net of shipping and
handling costs, during the months of December through March when
the need for highway deicing is at its peak. We need to
stockpile sufficient highway deicing salt in the last three
fiscal quarters to meet estimated demand for the winter season.

Weather conditions that impact our highway
deicing product line include temperature, levels of
precipitation, number of snow days and duration and timing of
snow fall in our relevant geographic markets. Lower than
expected sales by us during this period could have a material
adverse effect on our results of operations and the price of our
common stock.


Our SOP operating results are dependent in part
upon conditions in the agriculture markets. The agricultural
products business can be affected by a number of factors, the
most important of which for U.S. markets are weather
patterns and field conditions (particularly during periods of
traditionally high crop nutrients consumption) and quantities of
crop nutrients imported to and exported from North America.


Our substantial indebtedness could
adversely affect our financial condition and impair our ability
to operate our business.

As of December 31, 2004, we had
$376.4 million of outstanding indebtedness, including
approximately $37.7 million under our senior credit
facilities, $11.0 million under our revolving credit
facility, and $327.7 million of Compass Minerals
Groups senior subordinated notes.

This level of leverage could have important
consequences, including the following:




| |   |                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | it may limit our ability to borrow money or sell
    stock to fund our working capital, capital expenditures and debt
    service requirements;                                                                   
|
| |  | it may limit our flexibility in planning for, or
    reacting to, changes in our business;                                                                                                                        
|
| |  | we may be more highly leveraged than some of our
    competitors, which may place us at a competitive disadvantage;                                                                                               
|
| |  | it may make us more vulnerable to a downturn in
    our business or the economy;                                                                                                                                  
|
| |  | it will require us to dedicate a substantial
    portion of our cash flow from operations to the repayment of our
    indebtedness, thereby reducing the availability of our cash flow
    for other purposes; and
|
| |  | it may materially and adversely affect our
    business and financial condition if we are unable to service our
    indebtedness or obtain additional financing, as needed.                                       

In addition, our and CMIs indentures and
our senior credit facilities contain financial and other
restrictive covenants discussed below that may limit our ability
to engage in activities that may be in our long-term best
interests. Our failure to comply with those covenants could
result in an event of default which, if not cured or waived,
could result in the acceleration of all of our debt. See
 Restrictive covenants in the agreements
governing our indebtedness and certain indebtedness of CMI may
restrict our ability to pursue our business strategies.

Restrictive covenants in the agreements
governing our indebtedness and certain indebtedness of CMI may
restrict our ability to pursue our business strategies or may
require acceleration of payment.

Our senior credit facilities and indebtedness and
indebtedness of CMI limit our ability and the ability of our
restricted subsidiaries, among other things, to:



| |   |                                                                          
| | - | -------------------------------------------------------------------------
| |  | incur additional indebtedness or contingent
    obligations;             
|
| |  | pay dividends or make distributions to our
    stockholders;             
|
| |  | repurchase or redeem our stock;                                          
|
| |  | make investments;                                                        
|
| |  | grant liens;                                                             
|
| |  | make capital expenditures;                                               
|
| |  | enter into transactions with our stockholders and
    affiliates;        
|
| |  | sell assets; and                                                         
|
| |  | acquire the assets of, or merge or consolidate
    with, other companies.

In addition, our senior credit facilities require
us to maintain financial ratios. These financial ratios include
an interest coverage ratio and a consolidated indebtedness
leverage ratio. Although we have historically been able to
maintain these financial ratios, we may not be able to maintain
these ratios in the future. Covenants in our senior credit
facilities may also impair our ability to finance future
operations or capital needs or to enter into acquisitions or
joint ventures or engage in other favorable business activities.

If we default under our senior credit facilities
under certain circumstances, the lenders could require immediate
payment of the entire principal amount. These circumstances


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




include a change of control, default under
agreements governing our and CMIs other indebtedness,
material judgments in excess of $5,000,000 or breach of
representations and warranties. Any default under our senior
credit facilities or agreements governing our and CMIs
other indebtedness could lead to an acceleration of debt under
our other debt instruments that contain cross-acceleration or
cross-default provisions. If the lenders under our senior credit
facilities require immediate repayment, we will not be able to
repay them and also repay our other indebtedness in full. Our
ability to comply with these covenants and restrictions
contained in our senior credit facilities and other agreements
governing our other indebtedness may be affected by changes in
the economic or business conditions or other events beyond our
control.

Economic and other risks associated with
international sales and operations could adversely affect our
business, including economic loss and a negative impact on
earnings.

Since we manufacture and sell our products
primarily in the United States, Canada and the United Kingdom,
our business is subject to risks associated with doing business
internationally. Our sales outside the United States, as a
percentage of our total sales, were 36% for the year ended
December 31, 2004. Accordingly, our future results could be
adversely affected by a variety of factors, including:



| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | changes in foreign currency exchange rates;                                                                                           
|
| |  | exchange controls;                                                                                                                    
|
| |  | tariffs, other trade protection measures and
    import or export licensing requirements;                                             
|
| |  | potentially negative consequences from changes in
    tax laws;                                                                       
|
| |  | differing labor regulations;                                                                                                          
|
| |  | requirements relating to withholding taxes on
    remittances and other payments by subsidiaries;                                     
|
| |  | restrictions on our ability to own or operate
    subsidiaries, make investments or acquire new businesses in
    these jurisdictions;
|
| |  | restrictions on our ability to repatriate
    dividends from our subsidiaries; and                                                    
|
| |  | unexpected changes in regulatory requirements.                                                                                        

Fluctuations in the value of the U.S. dollar
may adversely affect our results of operations. Because our
consolidated financial results are reported in
U.S. dollars, if we generate sales or earnings in other
currencies the translation of those results into
U.S. dollars can result in a significant increase or
decrease in the amount of those sales or earnings. In addition,
our debt service requirements are primarily in U.S. dollars
even though a significant percentage of our cash flow is
generated in Canadian dollars and pounds sterling. Significant
changes in the value of Canadian dollars and pounds sterling
relative to the U.S. dollar could have a material adverse
effect on our financial condition and our ability to meet
interest and principal payments on U.S. dollar-denominated
debt.

In addition to currency translation risks, we
incur currency transaction risk whenever we or one of our
subsidiaries enter into either a purchase or a sales transaction
using a currency other than the local currency of the
transacting entity. Given the volatility of exchange rates, we
cannot assure you that we will be able to effectively manage our
currency transaction and/or translation risks. It is possible
that volatility in currency exchange rates will have a material
adverse effect on our financial condition or results of
operations. We have in the past experienced and expect to
continue to experience economic loss and a negative impact on
earnings as a result of foreign currency exchange rate
fluctuations. We expect that the amount of our revenues
denominated in non-U.S. dollar currencies will continue to
increase in future periods. See Item 7,
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Effects of
Currency Fluctuations and Inflation and Item 7,
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Market
Risk.


Our overall success as a global business depends,
in part, upon our ability to succeed in differing economic and
political conditions. We cannot assure you that we will continue
to succeed in developing and implementing policies and
strategies that are effective in each location where we do
business.


Our operations are dependent on natural gas
and significant interruption in the supply or increase in the
price of natural gas could have a material adverse effect on our
financial condition or results of operations.

Energy costs, including primarily natural gas and
electricity, represented approximately 11% of the costs of our
North American salt production in 2004. Natural gas is a primary
fuel source used in the evaporated salt production process. Our
profitability is impacted by the price and availability of
natural gas we purchase from third parties. In the fourth
quarter of 2002, we adopted a policy of hedging natural gas
prices through the use of swap agreements. We have not entered
into any long-term contracts for the purchase of natural gas.
Our contractual arrangements for the supply of natural gas do
not specify quantities and are automatically renewed annually
unless either party elects not to do so. We do not have
arrangements in place with back-up suppliers. A significant
increase in the price of natural gas that is not recovered
through an increase in the price of our products or covered
through our hedging arrangements, or an extended interruption in
the supply of natural gas to our production facilities, could
have a material adverse effect on our business, financial
condition, results of operations and cash flows.

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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Competition in our markets could limit our
ability to attract and retain customers, force us to
continuously make capital investments and put pressure on the
prices we can charge for our products.

We encounter competition in all areas of our
business. Competition in our product lines is based on a number
of considerations, including product performance, transportation
costs in salt distribution, brand reputation, quality of client
service and support, and price. Additionally, customers for our
products are attempting to reduce the number of vendors from
which they purchase in order to increase their efficiency. Our
customers increasingly demand a broad product range and we must
continue to develop our expertise in order to manufacture and
market these products successfully. To remain competitive, we
will need to invest continuously in manufacturing, marketing,
customer service and support and our distribution networks. We
may have to adjust the prices of some of our products to stay
competitive. We may not have sufficient resources to continue to
make such investments or maintain our competitive position. Some
of our competitors have greater financial and other resources
than we do.

Environmental laws and regulation may
subject us to significant liability and require us to incur
additional costs in the future.

We are subject to numerous environmental, health
and safety laws and regulations in the United States, Canada and
Europe, including laws and regulations relating to land
reclamation and remediation of hazardous substance releases, and
discharges to air and water. For example CERCLA, imposes
liability, without regard to fault or to the legality of a
partys conduct, on certain categories of persons (known as
potentially responsible parties) who are considered
to have contributed to the release of hazardous
substances into the environment. Although we are not
currently incurring material liabilities pursuant to CERCLA, we
may in the future incur material liabilities under CERCLA and
other environmental cleanup laws, with regard to our current or
former facilities, adjacent or nearby third-party facilities, or
off-site disposal locations. Under CERCLA, or its various state
analogues, one party may, under some circumstances, be required
to bear more than its proportional share of cleanup costs at a
site where it has liability if payments cannot be obtained from
other responsible parties. Liability under these laws involves
inherent uncertainties. Violations of environmental, health and
safety laws are subject to civil, and in some cases, criminal
sanctions.

We have received notices from governmental
agencies that we may be a potentially responsible party at
certain sites under CERCLA or other environmental cleanup laws.
We have entered into de minimis settlement
agreements with the United States with respect to certain CERCLA
sites, pursuant to which we have made one-time cash payments and
received statutory protection from future claims arising from
those sites. At other sites for which we have received notice of
potential CERCLA liability, we have provided information to the
EPA, that we believe demonstrates that we are not liable and the
EPA has not asserted claims against us with respect to such
sites. In some instances, we have agreed, pursuant to consent
orders or agreements with the appropriate governmental agencies,
to undertake investigations, which currently are in progress, to
determine whether remedial action may be required to address
such contamination. At other locations, we have entered into
consent orders or agreements with appropriate governmental
agencies to perform remedial activities that will address
identified site conditions. At the present time, we are not
aware of any additional sites for which we expect to receive a
notice from the EPA of potential CERCLA liability. However,
based on past operations there is a potential that we may
receive such notices in the future for sites of which we are
currently unaware. Taking into account established reserves,
expenditures for our known environmental liabilities and site
conditions currently are not expected, individually or in the
aggregate, to be material. However, material expenditures could
be required in the future to remediate the contamination at
these or at other current or former sites.


We have also developed alternative mine uses. For
example, we entered into a joint venture with a subsidiary of
Violia Environnement that is in the waste management industry.
The joint venture has a permit to allow for the storage of
certain stable types of hazardous waste in our salt mine in the
United Kingdom. We believe that the mine is stable and should
provide a secure storage location. However, we recognize that
any temporary or permanent storage of hazardous waste may
involve risks to the environment. Although we believe that we
have taken these risks into account as much as possible in our
planning process, it is possible that material expenditures
could be required in the future to further reduce this risk, or
to remediate any future contamination.


Continued government and public emphasis on
environmental issues can be expected to result in increased
future investments for environmental controls at ongoing
operations, which will be charged against income from future
operations. Present and future environmental laws and
regulations applicable to our operations may require substantial
capital expenditures and may have a material adverse effect on
our business, financial condition and results of operations. For
more information, see Item 1, Business 
Environmental, Health and Safety Matters.


The Canadian governments proposal to
designate road salt as a toxic substance could have a material
adverse effect on our business, including reduced sales and the
incurrence of substantial costs and expenditures.

In December 2001, the Canadian government
released a Priority Substances List Assessment Report for road
salt. This report found that road salts are entering the
environment under conditions that may have a harmful effect or
constitute a danger to the environment. Based on this report, the

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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Minister of Environment has proposed designating
road salt as a toxic substance pursuant to the
Canadian Environmental Protection Act. Canadas federal
cabinet, which has ultimate responsibility, has not yet taken
final action with respect to this proposal and is not subject to
any deadline to do so. This proposal was subject to a public
comment, during which individuals and the municipalities which
comprise most of our customers expressed a variety of views,
including noting the utility and cost-efficiency of salt as
compared to other potential measures to reduce ice-related road
hazards. At this point, Environment Canada has indicated that,
whether or not road salts are declared toxic, their preferred
course of action is the establishment of voluntary guidelines
for users as opposed to any form of regulation. Environment
Canada has been developing these guidelines based on
consultation with a broad-based stakeholders group, which
includes the salt industry. On April 3, 2004, Environment
Canada published a Code of Practice to serve as these
guidelines. The Code of Practice requires large road salt users
to develop salt management plans. We do not believe that this
will have a material direct effect on us, but the new salt
management plans may lead our customers in Canada to require
less road salt.

Given the importance of road salt for traffic
safety and the current lack of any practical substitute, we deem
it unlikely that any guidelines or regulations would result in a
complete ban on the use of road salt. As noted in the December
2001 report, the use of road salt and other deicing agents
is an important component of strategies to keep roadways
open and safe during the winter and minimize traffic crashes,
injuries and mortality under icy and snowy conditions. The
report further stated that mitigation measures must be
based on optimization of winter road maintenance practices so as
not to jeopardize road safety, while minimizing the potential
for harm to the environment. Environment Canada recently
confirmed the high importance of road safety in its proposed
regulation of road salt. In its September 22, 2003 press
release in connection with the proposed Code of Practice, it
indicated that the proposed code will provide those who
use road salts with a way to reduce harm to the environment
without jeopardizing road safety. Since the dissemination
of the December 2001 report, we have endeavored to work
more closely with the national government as well as provinces
and municipalities to better manage the use, storage and release
of our road salts. As a result, we believe it has become less
likely that road salts will be designated as a toxic substance.
We cannot predict whether the proposal to designate road salt as
a toxic substance will be finalized or the promulgation of any
other future regulation. Standardized guidelines for the use and
storage of road salt or any alternate deicing products may cause
us to suffer reduced sales and incur substantial costs and
expenses that could have a material adverse effect on our
business, financial condition and results of operations. In
addition, while we are not aware of any similar governmental
proposals for such designation of road salt in either the United
States or the United Kingdom, we cannot guarantee that such
proposals will not arise.


Our operations are dependent on our rights
to mine our property and having received the required permits
and approvals from governmental authorities.

We hold numerous governmental, environmental,
mining and other permits and approvals authorizing operations at
each of our facilities. A decision by a governmental agency to
deny or delay issuing a new or renewed permit or approval, or to
revoke or substantially modify an existing permit or approval,
could have a material adverse effect on our ability to continue
operations at the affected facility. Expansion of our existing
operations also is predicated upon securing the necessary
environmental or other permits or approvals. We currently do not
have any material pending permits or approvals.

In addition, we have become aware of an
aboriginal land claim filed by The Chippewas of Nawash and the
Chippewas of Saugeen (the Chippewas) in the Ontario
Superior Court against The Attorney General of Canada and Her
Majesty The Queen In Right of Ontario. The Chippewas claim that
large part of the land under Lake Huron was never conveyed by
treaty and therefore belongs to the Chippewas. The land claimed
includes land in which our Goderich mine operates and has mining
rights granted to it by the government of Ontario. We are not a
party to this court action.


Protection of proprietary
technology  Our intellectual property may be
misappropriated or subject to claims of
infringement.

We attempt to protect our intellectual property
rights through a combination of patent, trademark, copyright and
trade secret protection, as well as licensing agreements and
third-party nondisclosure and assignment agreements. We cannot
assure you that any of our applications for protection of our
intellectual property rights will be approved or that others
will not infringe or challenge our intellectual property rights.
The patents we currently have in place expire between 2009 and
2018. We also rely on unpatented proprietary technology. It is
possible that others will independently develop the same or
similar technology or otherwise obtain access to our unpatented
technology. To protect our trade secrets and other proprietary
information, we require employees, consultants, advisors and
collaborators to enter into confidentiality agreements. Many of
our important brand names are registered as trademarks in the
United States and foreign countries. These registrations can be
renewed if the trademark remains in use. These agreements may
not provide meaningful protection for our trade secrets,
know-how or other proprietary information in the event of any
unauthorized use, misappropriation or disclosure. If we are
unable to maintain the proprietary nature of our technologies,
we may lose the competitive advantage provided by our
intellectual property. As a result, our results of operations
may be adversely affected.

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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




If we are unsuccessful in negotiating new
collective bargaining agreements, we may experience significant
increases in the cost of labor or a disruption in our
operations.

As of December 31, 2004, we had
1,541 employees, of which 724 are employed in the United
States, 638 in Canada and 179 in the United Kingdom.
Approximately 35% of our U.S. workforce (55% of our global
workforce) is represented by labor unions. Of our nine material
collective bargaining agreements, one will expire in 2005, five
will expire in 2006 and three will expire in 2007. Additionally,
approximately 12% of our workforce is employed in Europe where
trade union membership is common. Although we believe that our
relations with our employees are good, as a result of general
economic, financial, competitive, legislative, political and
other factors beyond our control, we cannot assure you that we
will be successful in negotiating new collective bargaining
agreements, that such negotiations will not result in
significant increases in the cost of labor or that a breakdown
in such negotiations will not result in the disruption of our
operations.

We rely on independent distributors and the
loss of a substantial number of these distributors may reduce
our profits and sales.

In addition to our own direct sales force, we
depend on the services of independent distributors to sell our
products and provide service and aftermarket support to our
customers. In 2004, 12% of our sales, net of shipping and
handling costs, were generated through these independent
distributors. Many of these independent distributors are not
bound to us by exclusive distribution contracts and may offer
products of, and services to, businesses that compete with ours.
In addition, the majority of the distribution contracts we have
with these independent distributors are cancelable by the
distributor after providing us with notice, which on average is
six months prior to termination. The loss of a substantial
number of these distributors or the decision by many of these
distributors to offer competitors products to our
customers could materially reduce our sales and profits.

If we cannot successfully complete
acquisitions or integrate acquired businesses, our growth may be
limited and our financial condition adversely
affected.

Our business strategy includes supplementing
internal growth by pursuing acquisitions of small complementary
businesses. We may be unable to complete acquisitions on
acceptable terms, identify suitable businesses to acquire or
successfully integrate acquired businesses in the future. We
compete with other potential buyers for the acquisition of other
small complementary businesses. This competition and regulatory
considerations may result in fewer acquisition opportunities. If
we cannot complete acquisitions, our growth may be limited and
our financial condition may be adversely affected.

Our business is dependent upon highly
skilled personnel, and the loss of key personnel may have a
material adverse effect on our development and results of
operations.

The success of our business is dependent on our
ability to attract and retain highly skilled managers and other
personnel. We cannot assure you that we will be able to attract
and retain the personnel necessary for the development of our
business. The loss of the services of key personnel or the
failure to attract additional personnel as required could have a
material adverse effect on our development and results of
operations. We do not currently maintain key person
life insurance on any of our key employees.






|        |  |           
|------- |  | ----------
|ITEM 2. |  | PROPERTIES




Information regarding our plant and properties is
included in Item 1, Business, of this report.







|        |  |                  
|------- |  | -----------------
|ITEM 3. |  | LEGAL PROCEEDINGS




The Company from time to time is involved in
various routine legal proceedings. These primarily involve
commercial claims, product liability claims, personal injury
claims and workers compensation claims. We cannot predict
the outcome of these lawsuits, legal proceedings and claims with
certainty. Nevertheless, we believe that the outcome of these
proceedings, even if determined adversely, would not have a
material adverse effect on our business, financial condition,
results of operations and cash flows. In addition, Mosaic agreed
to indemnify us against certain legal matters.


We have become aware of an aboriginal land claim
filed by The Chippewas of Nawash and The Chippewas of Saugeen
(the Chippewas) in the Ontario Superior Court
against The Attorney General of Canada and Her Majesty The Queen
In Right of Ontario. The Chippewas claim that a large part of
the land under Lake Huron was never conveyed by treaty and
therefore belongs to the Chippewas. The land claimed includes
land in which our Goderich mine operates and has mining rights
granted to it by the government of Ontario. We are not a party
to this court action. Similar claims are pending with respect to
other parts of the Great Lakes by other aboriginal claimants. We
have been informed by the Ministry of the Attorney General of
Ontario that Canada takes the position that the common law
does not recognize aboriginal title to the Great Lakes and its
connecting waterways. We do not believe that this action
will result in a material adverse financial effect on the
Company.







|        |  |                                                        
|------- |  | -------------------------------------------------------
|ITEM 4. |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS




None


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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K
















|        |  |                                                                                                                         
|------- |  | ------------------------------------------------------------------------------------------------------------------------
|ITEM 5. |  | MARKET FOR THE REGISTRANTS COMMON EQUITY,
    RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES




Not Applicable







|        |  |                        
|------- |  | -----------------------
|ITEM 6. |  | SELECTED FINANCIAL DATA




The following table presents selected combined
and consolidated financial information. The statement of
operations data for the years ended December 31, 2004, 2003
and 2002 and the balance sheet data as of December 31, 2004
and 2003 are derived from our audited consolidated financial
statements included elsewhere in this report. The statement of
operations data for the years ended December 31, 2001 and
2000 and the balance sheet data as of December 31, 2002,
2001 and 2000 are derived from our combined and consolidated
financial statements that are not included herein.


The information included in this table should be
read in conjunction with Item 7, Managements
Discussion and Analysis of Financial Condition and Results of
Operations and the audited consolidated financial
statements and accompanying notes thereto included elsewhere in
this annual report.


|                                             |  |                                 |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|-------------------------------------------- |  | ------------------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ------ | -
|                                            
|                                             | 
|                                             |  |                                
|                                             |  | For the Year Ended December 31, |      
|                                             |  |                                 |      
|                                             |  |                                 |       |  
|(Dollars in millions)                        |  | 2004                            |       |   | 2003 |   |       | 2002 |  |   | 2001  |   |  | 2000 |      
|                                             |  |                                
|                                             |  |                                 |       |  
|Statement of Operations Data:                |  |                                 |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Sales                                        |  | $                               | 695.1 |   |      | $ | 600.6 |      |  | $ | 502.6 |   |  | $    | 523.2 |   |  | $ | 509.2  |  
|Cost of sales  shipping and handling        |  |                                 | 190.2 |   |      |   | 165.3 |      |  |   | 137.5 |   |  |      | 143.2 |   |  |   | 140.0  |  
|Cost of sales  products(1)                  |  |                                 | 274.7 |   |      |   | 246.2 |      |  |   | 202.1 |   |  |      | 224.4 |   |  |   | 227.7  |  
|Depreciation and amortization(2)             |  |                                 | 41.3  |   |      |   | 42.1  |      |  |   | 37.1  |   |  |      | 32.6  |   |  |   | 44.3   |  
|Selling, general and administrative expenses |  |                                 | 58.1  |   |      |   | 48.6  |      |  |   | 40.5  |   |  |      | 38.9  |   |  |   | 35.5   |  
|Goodwill write-down(3)                       |  |                                 |      |   |      |   |      |      |  |   |      |   |  |      |      |   |  |   | 191.0  |  
|Restructuring and other charges(3)(4)        |  |                                 | 4.5   |   |      |   |      |      |  |   | 7.7   |   |  |      | 27.0  |   |  |   | 425.9  |  
|Operating earnings (loss)                    |  |                                 | 126.3 |   |      |   | 98.4  |      |  |   | 77.7  |   |  |      | 57.1  |   |  |   | (555.2 | )
|Interest expense(5)                          |  |                                 | 37.4  |   |      |   | 39.1  |      |  |   | 41.3  |   |  |      | 14.3  |   |  |   | 16.4   |  
|Net income (loss)                            |  |                                 | 56.5  |   |      |   | 43.5  |      |  |   | 30.9  |   |  |      | 28.6  |   |  |   | (443.5 | )
|Balance Sheet Data (at period end):          |  |                                 |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Total cash and cash equivalents              |  | $                               | 9.7   |   |      | $ | 2.6   |      |  | $ | 11.9  |   |  | $    | 15.9  |   |  | $ | 0.3    |  
|Total assets                                 |  |                                 | 715.4 |   |      |   | 688.2 |      |  |   | 641.8 |   |  |      | 655.6 |   |  |   | 636.0  |  
|Total debt                                   |  |                                 | 376.4 |   |      |   | 420.2 |      |  |   | 437.6 |   |  |      | 515.1 |   |  |   | 152.3  |  
|Other Financial Data:                        |  |                                 |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|Cash flows provided by operating activities  |  | $                               | 102.5 |   |      | $ | 71.0  |      |  | $ | 82.2  |   |  | $    | 112.5 |   |  | $ | 72.1   |  
|Cash flows used for investing activities     |  |                                 | (26.0 | ) |      |   | (45.6 | )    |  |   | (19.1 | ) |  |      | (43.6 | ) |  |   | (34.0  | )
|Cash flows used for financing activities     |  |                                 | (74.0 | ) |      |   | (38.2 | )    |  |   | (69.6 | ) |  |      | (53.8 | ) |  |   | (43.3  | )
|Ratio of earnings to fixed charges(6)        |  |                                 | 2.40x |   |      |   | 2.28x |      |  |   | 1.72x |   |  |      | 3.69x |   |  |   |       |  
|Capital expenditures                         |  | $                               | 26.9  |   |      | $ | 20.6  |      |  | $ | 19.5  |   |  | $    | 43.0  |   |  | $ | 33.7   |  
|                                             |  |                                

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Cost of sales  products is
    presented net of depreciation and amortization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(2) | Depreciation and amortization for
    purposes of this table excludes amortization of deferred
    financing costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(3) | Based on anticipated proceeds from the sale of
    the Company by Mosaic, we recorded an asset impairment charge of
    $616.6 million, $482.1 million after tax, in the
    fourth quarter of 2000. In connection with this non-cash charge,
    goodwill was reduced $191.0 million and intangible
    assets  mineral interests was reduced
    $425.6 million.                                                                                                                                                                                                                                                                                                                                      
|(4) | Restructuring and other charges
    include primarily an asset impairment in the fourth quarter of
    2000 related to the planned disposition of the Company by Mosaic
    as described in (3) above. During 2001, we incurred
    $27.0 million of transaction and transition costs in
    connection with the Recapitalization. During 2002, we incurred
    $7.7 million of transition costs in connection with
    separating the Company from Mosaic. In November 2004, Apollo
    elected to terminate the amended management consulting agreement
    resulting in a final payment of approximately $4.5 million
    in that same month.                                                       
|(5) | As we have incurred substantial indebtedness in
    connection with the Recapitalization, we believe it is helpful
    to provide a measure describing the cash requirements necessary
    to satisfy our debt service in terms of cash interest
    expense, which is interest expense excluding the
    amortization of debt issuance costs, plus amortization of the
    original issuance premium. For a discussion of our indebtedness,
    see Note 8 to our audited consolidated financial
    statements. Cash interest expense was $35.9 million,
    $37.6 million and $39.5 million for the years ended
    December 31, 2004, 2003 and 2002, respectively. Cash
    interest expense is not

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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K






| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | calculated under generally accepted accounting
    principles, or GAAP. While cash interest expense and
    similar variations thereof are commonly used as measures of the
    ability to meet debt service requirements, they are not
    necessarily comparable to other similarly titled captions of
    other companies due to potential inconsistencies in the method
    of calculation. The following table reconciles the differences
    between cash interest expense and interest expense, calculated
    in accordance with GAAP.

|                                |                                                          |      |      |      |      |   |      |      |   |   |      |      |  
|------------------------------- | -------------------------------------------------------- | ---- | ---- | ---- | ---- | - | ---- | ---- | - | - | ---- | ---- | -
|                               
|For the Year Ended December 31, |                                                         
|                                |                                                         
|(Dollars in millions)           |                                                          | 2004 |      |      | 2003 |   |      | 2002 |  
|                                |                                                          |     
|                                |                                                          |      |      |     
|Interest expense                |                                                          | $    | 37.4 |      |      | $ | 39.1 |      |   | $ | 41.3 |     
|Less (plus) amortization:       |                                                          |      |      |      |      |   |      |      |   |   |      |     
|                                | Deferred financing costs                                 |      |      | 1.8  |      |   |      | 1.8  |   |   |      | 1.9  |  
|                                | Amortization of premium on senior subordinated
    notes |      |      | (0.3 | )    |   |      | (0.3 | ) |   |      | (0.1 | )
|                                |                                                          |     
|Cash interest expense           |                                                          | $    | 35.9 |      |      | $ | 37.6 |      |   | $ | 39.5 |     
|                                |                                                          |     

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(6) | For the purposes of computing the ratio of
    earnings to fixed charges, earnings consist of earnings before
    income taxes and fixed charges. Fixed charges consist of net
    interest expense including the amortization of deferred debt
    issuance costs and the interest component of our operating
    rents. The ratio of earnings to fixed charges prior to
    November 28, 2001 is not meaningful because we participated
    in a credit facility with IMC Global and its affiliates and the
    level of third-party debt was not comparable to the level of
    third-party debt in place upon consummation of the
    Recapitalization, the offering by Compass Minerals Group of an
    additional $75.0 million in aggregate principal amount of
    senior subordinated notes, or the April 2002 senior
    subordinated notes. Earnings were insufficient to cover
    fixed charges by approximately $572.5 million for the year
    ended December 31, 2000.






|        |  |                                                                                          
|------- |  | -----------------------------------------------------------------------------------------
|ITEM 7. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS




The statements in this discussion regarding the
industry outlook, our expectations regarding the future
performance of our business, and the other non-historical
statements in this discussion are forward-looking statements.
These forward-looking statements are subject to numerous risks
and uncertainties, including, but not limited to, the risks and
uncertainties described in Item 1,
Business  Risk Factors. You should read
the following discussion together with Item 1,
Business  Risk Factors and the
consolidated financial statements and notes thereto included
elsewhere in this annual report on Form 10-K.


COMPANY OVERVIEW




Based in the Kansas City metropolitan area,
Compass is the second-leading salt producer in North America and
the largest in the United Kingdom. We operate 11 production
facilities, including the largest rock salt mine in the world in
Goderich, Ontario and the largest salt mine in the United
Kingdom in Winsford, Cheshire. Our product lines include salt
for highway deicing, consumer deicing, water conditioning,
consumer and industrial food preparation, agriculture and
industrial applications. In addition, Compass is North
Americas leading producer of sulfate of potash, which is
used in the production of specialty fertilizers for high-value
crops and turf.


Salt is indispensable and enormously versatile
with more than 14,000 uses. In addition, there is an absence of
cost-effective alternatives. As a result, our cash flows are not
materially impacted by economic cycles. We are among the lowest
cost salt producers in our markets because our salt deposits are
high grade and among the most extensive in the world, and
because we use effective mining techniques and efficient
production processes. SOP plant is the largest in North America
and one of only two all-natural solar SOP plants in the Western
Hemisphere. Our North American salt mines and SOP production
facility are near either water or rail transport systems, which
minimizes our shipping and handling costs.


For the year ended December 31, 2004, we
sold approximately 13.7 million tons of salt, sulfate of
potash and other minerals, generating sales of
$695.1 million and net income of $56.5 million.


Previously part of Mosaic Global Holdings Inc.
(Mosaic), formerly IMC Global, Inc., Salt Holdings
Corporation (now known as Compass Minerals International) became
a stand-alone entity on November 28, 2001 through a
leveraged recapitalization (the Recapitalization).


We focus on building intrinsic value by improving
our earnings before interest, income taxes, depreciation and
amortization, or EBITDA, based on a normal winter
weather season and by improving our cost structure. Our
management teams stewardship is to generate consistent
cash flow despite weather variations and to maximize value from
our cash flow generated from operations. We can employ our
operating cash flow to pay dividends, re-invest in our business,
pay down debt and make small tuck-in acquisitions. Additionally,
through our operational excellence program, we strive to
maintain or improve our flexible, low-cost structure. We design
programs to measure and continuously improve our operating
performance.


We recognize revenue at the time of shipment to
the customer, which coincides with the transfer of title and
risk of ownership to the customer. Sales represent billings to
customers net of sales taxes charged for the sale of the
product. Sales include shipping and handling costs which are
expensed when the related product is sold.


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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Managements Discussion on Critical
Accounting Policies

We have identified the critical accounting
policies that are most important to the portrayal of our
financial condition and results of operations. The policies set
forth below require managements most subjective or complex
judgments, often as a result of the need to make estimates about
the effect of matters that are inherently uncertain.


Inventory
Allowances


We record allowances for unrecoverable, unusable
or slow moving finished goods and raw materials and supplies
inventory. We adjust the value of certain inventory to the
estimated market value to the extent that managements
assumptions of future demand, market or functional conditions
indicate the cost basis is either in excess of market or the
inventory will not be utilized or sold in future operations. If
actual demand or conditions are less favorable than those
projected by management, additional inventory write-downs may be
required.

Mineral
Interests


As of December 31, 2004, we maintained
$154.2 million of net mineral properties as a part of
property, plant and equipment.

Mineral interests include probable mineral
reserves. We lease mineral reserves at several of our extraction
facilities. These leases have varying terms and many provide for
a royalty payment to the lessor based on a specific amount per
ton of mineral extracted or as a percentage of revenue.


Mineral interests in North America, approximately
$146.1, net of amortization as of December 31, 2004, are
amortized on a units-of-production method based on internal and
third-party estimates of recoverable reserves. Mineral interests
in the U.K. are approximately $8.1, net of amortization as of
December 31, 2004, and are amortized on a straight-line
basis.


Our rights to extract minerals are contractually
limited by time or lease boundaries. If we are not able to
continue to extend lease agreements, as we have in the past, at
commercially reasonable terms, without incurring substantial
costs or incurring material modifications to the existing lease
terms and conditions, the assigned lives may be less than that
projected by management, or if the actual size, quality or
recoverability of the minerals is less than that projected by
management, then the rate of amortization could be increased or
the value of the reserves could be reduced by a material amount.


Income Taxes


In determining income for financial statement
purposes, we must make certain estimates and judgments. These
estimates and judgments occur in the calculation of certain tax
liabilities and in the determination of the recoverability of
certain of the deferred tax assets, which arise from temporary
differences between the tax and financial statement recognition
of revenue and expense. We are required to assess the likelihood
that we will ultimately be able to recover our deferred tax
assets. If recovery is not likely, we must increase our
provision for taxes by recording a reserve, in the form of a
valuation allowance, for the deferred tax assets that we
estimate will not ultimately be recoverable.

We determine our current and deferred income
taxes on a separate company basis. In evaluating our ability to
recover our deferred tax assets we consider sources of taxable
income including the reversal of existing temporary differences
and future taxable income exclusive of reversing temporary
differences. In determining future taxable income, we are
responsible for the assumptions utilized including the amount of
state, federal and international pre-tax operating income, the
origination of future temporary differences and the
implementation of feasible and prudent tax planning strategies.
These assumptions require significant judgment about the
forecasts of future taxable income and are consistent with the
plans and estimates we are using to manage the underlying
businesses.


As a result of this analysis, we concluded that a
valuation allowance was required for a portion of our deferred
tax assets that resulted from our U.S. net operating loss
(NOL) carryforwards. As of December 31, 2004 we
had $20.7 million of deferred tax assets resulting from our
prior year U.S. NOL carryforwards. We also have
approximately $11.1 million of alternative minimum tax
credit carryforwards that can be used to reduce future tax
expense.


We have recorded a valuation allowance for a
portion of our deferred tax assets relating to NOL carryforwards
that we do not believe will, more likely than not, be realized
given the annual limitations from prior ownership changes. At
December 31, 2004, the valuation allowance was
$2.6 million. In the future, if we determine, based on
existence of sufficient evidence, that we should realize more or
less of our deferred tax assets, an adjustment to the valuation
allowance will be made in the period such a determination is
made. The actual amount of the deferred tax assets realized
could ultimately be materially different from those recorded, as
impacted by changes in income tax laws and actual operating
results that differ from historical and forecasted amounts.


The calculation of our tax liabilities involves
dealing with uncertainties in the application of complex tax
regulations in multiple jurisdictions. We recognize potential
liabilities for anticipated tax issues in the U.S. and other tax
jurisdictions based on our estimate of whether, and the extent
to which, additional taxes will be due. If payment of these
amounts ultimately proves to be unnecessary, the reversal of the
liabilities would result in tax benefits being recognized in the
period when we determine the liabilities are no longer
necessary. If our estimate of tax liabilities proves to be less
than the ultimate assessment, a further charge to expense would
result.


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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Taxes on Foreign
Earnings

Our effective tax rate includes the impact of
certain undistributed foreign earnings for which no
U.S. taxes have been provided because such earnings are
planned to be reinvested indefinitely outside the U.S. As
described in Note 7 to the Consolidated Financial
Statements, our results for the year ended December 31,
2004 do not reflect the impact of the American Jobs Creation Act
of 2004 (the Jobs Act). We have not completed the
process of reevaluating our position with respect to the
indefinite reinvestment of foreign earnings to take into account
the possible election of the repatriation provisions contained
in the Jobs Act. Future foreign earnings remittance amounts may
be completed based on projected cash flow needs as well as the
working capital and long-term investment requirements of our
foreign subsidiaries and our domestic operations. Material
changes in our estimates of cash, working capital and long-term
investment requirements in the various jurisdictions in which we
do business could impact our effective tax rate. At this time,
we are unable to quantify the amount of future foreign earnings
remittances, if any.

Pension
Plans


We make actuarial assumptions in conjunction with
our actuaries as our advisors that we believe are reasonable.
These assumptions include discount rates, expected long-term
rates of return on plan assets and rate of compensation
increases, and are used in the calculation of the actuarial
valuation of our defined benefit pension plans. If actual
conditions or results vary from those projected by management,
adjustments may be required in future periods to meet minimum
pension funding, thereby increasing pension expense and our
pension liability. Note 9 to our audited consolidated
financial statements provides additional information regarding
pension assumptions used by us.

We have two defined benefit pension plans for
some of our employees in the United States and the United
Kingdom. The size of the U.S. plan is not significant as
compared to the U.K. plan, taken as a whole. The U.K. plan was
closed to new participants in 1992. Our funding policy is to
make the minimum annual contributions required by applicable
regulations. Cash contributions to the plans totaled $1.9 and
$1.6 million during the years ended December 31, 2004
and 2003, respectively.


Other Significant
Accounting Policies


Other significant accounting policies not
involving the same level of measurement uncertainties as those
discussed above are nevertheless important to an understanding
of our financial statements. Policies related to revenue
recognition, environmental accruals, financial instruments and
consolidation require difficult judgments on complex matters
that are often subject to multiple sources of authoritative
guidance. Certain of these matters are among topics currently
under re-examination by accounting standards setters and
regulators. Although no specific conclusions reached to date by
these standard setters appear likely to cause a material change
in our accounting policies, future outcomes cannot be predicted
with confidence.

RESULTS OF OPERATIONS




The following table sets forth consolidated
financial information for the years ended December 31,
2004, 2003 and 2002. The table and discussion should be read in
conjunction with the information contained in our consolidated
financial statements and the notes thereto included in this
annual report on Form 10-K.


|                                             |                     |                                 |        |       |      |   |        |       |  |   |        |       | 
|-------------------------------------------- | ------------------- | ------------------------------- | ------ | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- | 
|                                            
|                                             |                    
|                                             |                     |                                
|                                             |                     | For the Year Ended December 31, |       
|                                             |                     |                                 |       
|(Dollars in millions)                        |                     | 2004                            |        |       | 2003 |   |        | 2002  | 
|                                             |                     |                                
|                                             |                     |                                 |        |      
|Sales                                        |                     | $                               | 695.1  |       |      | $ | 600.6  |       |  | $ | 502.6  |      
|Cost of sales  shipping and handling        |                     |                                 | 190.2  |       |      |   | 165.3  |       |  |   | 137.5  |      
|Cost of sales  products                     |                     |                                 | 316.0  |       |      |   | 288.3  |       |  |   | 239.2  |      
|                                             |                     |                                
|                                             | Gross profit        |                                 |        | 188.9 |      |   |        | 147.0 |  |   |        | 125.9 | 
|Selling, general and administrative expenses |                     |                                 | 58.1   |       |      |   | 48.6   |       |  |   | 40.5   |      
|Other charges                                |                     |                                 | 4.5    |       |      |   |       |       |  |   | 7.7    |      
|                                             |                     |                                
|                                             | Operating earnings  |                                 |        | 126.3 |      |   |        | 98.4  |  |   |        | 77.7  | 
|Interest expense                             |                     |                                 | 37.4   |       |      |   | 39.1   |       |  |   | 41.3   |      
|Other (income) expense                       |                     |                                 | 7.8    |       |      |   | 5.6    |       |  |   | 4.9    |      
|                                             |                     |                                
|                                             | Income before taxes |                                 |        | 81.1  |      |   |        | 53.7  |  |   |        | 31.5  | 
|Income tax expense                           |                     |                                 | 24.6   |       |      |   | 10.2   |       |  |   | 0.6    |      
|                                             |                     |                                
|                                             | Net income          |                                 |        | 56.5  |      |   |        | 43.5  |  |   |        | 30.9  | 
|                                             |                     |                                
|Sales by Segment:                            |                     |                                 |        |       |      |   |        |       |  |   |        |      
|Salt                                         |                     | $                               | 607.5  |       |      | $ | 546.6  |       |  | $ | 452.5  |      
|Specialty potash fertilizers                 |                     |                                 | 87.6   |       |      |   | 54.0   |       |  |   | 50.1   |      
|                                             |                     |                                
|                                             | Total               |                                 | $      | 695.1 |      |   | $      | 600.6 |  |   | $      | 502.6 | 
|                                             |                     |                                
|Sales Volumes (in thousands of
    tons):    |                     |                                 |        |       |      |   |        |       |  |   |        |      
|Highway Deicing                              |                     |                                 | 10,333 |       |      |   | 9,663  |       |  |   | 7,965  |      
|General Trade                                |                     |                                 | 3,026  |       |      |   | 2,927  |       |  |   | 2,786  |      
|Specialty potash fertilizers                 |                     |                                 | 386    |       |      |   | 251    |       |  |   | 242    |      
|Average Sales Price (per ton):               |                     |                                 |        |       |      |   |        |       |  |   |        |      
|Highway Deicing                              |                     | $                               | 30.85  |       |      | $ | 29.25  |       |  | $ | 27.96  |      
|General Trade                                |                     |                                 | 95.49  |       |      |   | 89.50  |       |  |   | 82.48  |      
|Specialty potash fertilizers                 |                     |                                 | 226.88 |       |      |   | 215.21 |       |  |   | 207.02 |      
|                                            

Year Ended December 31, 2004 Compared to
the Year Ended December 31, 2003

Sales

Sales for the year ended December 31, 2004
of $695.1 million increased $94.5 million, or 16%
compared to $600.6 million for the year ended
December 31, 2003. Sales include revenues from the sale of
our products, or Product Sales, as well as
pass-through shipping and handling fees charged to customers to
reimburse us for shipping and handling costs incurred in
delivering salt and SOP product to the customer. Such shipping
and handling fees were $190.2 million during the year ended
December 31, 2004, an increase of $24.9 million
compared to shipping and handling fees of $165.3 million

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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




for the year ended December 31, 2003. The
increase in shipping and handling-related fees for the year
ended December 31, 2004 was primarily due to the increase
in volume of products sold as compared to the same period in
2003.

Product Sales for the year ended
December 31, 2004 of $504.9 million increased
$69.6 million, or 16% compared to $435.3 million for
the same period in 2003. Salt Product Sales for the year ended
December 31, 2004 of $431.1 million increased
$41.1 million, or 11% compared to $390.0 million for
the same period in 2003 primarily due to increased sales volumes
in our highway deicing product lines ($11.4 million) and
increased sales volumes in our general trade product line
($7.0 million). The increased sales volumes in our highway
deicing product line came from North America and the U.K.
(approximately 326,000 tons and 344,000 tons,
respectively) and was primarily due to a combination of
increased contract bid volumes awarded in North America and
slightly above average winter weather in the U.K. in the March
quarter of 2004 compared to an extremely mild March quarter in
2003. Winter weather was also above average in North America in
both 2004 and 2003. The increased sales volumes in our North
American general trade product line of approximately
81,000 tons ($6.2 million) was primarily due to strong
consumer deicing sales in the first quarter, in areas where our
consumer deicing products are sold. Sales prices related to our
general trade product lines in North America and the U.K., net
of foreign exchange effects, also improved approximately
$3.8 million as compared to the same period in 2003.
Average sales prices related to our highway deicing product
lines in North America and the U.K., net of foreign exchange
effects, remained relatively consistent.


Salt Product Sales were also favorably impacted
by approximately $16.9 million from the effect of a
strengthened Canadian dollar and British pound compared to the
U.S. dollar.


Specialty potash fertilizer Product Sales for the
year ended December 31, 2004 of $73.8 million
increased $28.5 million, or 63% compared to
$45.3 million for the same period in 2003 primarily due to
increased sales volumes of approximately 135,000 tons
($26.3 million), reflecting our efforts to expand the SOP
market and our December 2003 acquisition of an SOP marketing
business. Average sales prices were also higher by approximately
$4.1 million.


Gross Profit


Gross profit for the year ended December 31,
2004 of $188.9 million increased $41.9 million, or 28%
compared to $147.0 million for the same period in 2003. The
increase in gross profit primarily reflects the impact of
improved prices and volumes ($8.0 million and
$15.3 million, respectively) and changes in foreign
exchange rates as described above ($5.9 million).
Additionally, a reduction in costs to produce and distribute
products increased our gross profit by approximately
$12.7 million, reflecting the impact of higher production
and our operational excellence programs.

Selling, General and
Administrative Expenses


Selling, general and administrative expenses for
the year ended December 31, 2004 of $58.1 million
increased $9.5 million, or 20% compared to
$48.6 million for the same period in 2003. The increase
primarily reflects increased costs associated with being a
public company, higher professional services for Sarbanes-Oxley
and other accounting services of approximately
$1.4 million, additional variable compensation and selling
costs of approximately $3.1 million due to improved
financial results, and the impact of changes in foreign exchange
rates of approximately $2.0 million.

Other
Charges


Apollo elected to terminate the amended
management consulting agreement in November 2004 resulting in a
final payment of approximately $4.5 million in that same
month.

Interest
Expense


Interest expense for the year ended
December 31, 2004 of $37.4 million decreased
$1.7 million compared to $39.1 million for the same
period in 2003. This decrease is primarily the result of pay
down of $40.6 million on the term loan balance. See
Note 8 to our audited consolidated financial statements.

Other (Income)
Expense


Other expense for the year ended
December 31, 2004 of $7.8 million increased
$2.2 million compared to other expense of $5.6 million
for the same period in 2003. In the year ended December 31,
2003, we recorded $1.4 million of costs related to amending
the Senior Credit Facility and $1.9 million gain related to
the early extinguishment of debt. Additionally, as part of other
expense, we recorded foreign exchange losses of
$6.9 million and $3.9 million in the year ended
December 31, 2004 and 2003, respectively.

Income Tax
Expense


Income tax expense for the year ended
December 31, 2004 of $24.6 million increased
$14.4 million compared to $10.2 million for the same
period in 2003. Income tax expense increased primarily due to
higher income before income taxes in 2004. Our income tax
provision differs from the U.S. statutory federal income
tax rate primarily due to U.S. statutory depletion, state
income taxes (net of federal benefit), foreign income tax rate
differentials, foreign mining taxes and changes in the expected
utilization of previously reserved NOLs.

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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Year Ended December 31, 2003 Compared to
the Year Ended December 31, 2002

Sales

Sales for the year ended December 31, 2003
of $600.6 million increased $98.0 million, or 19%
compared to $502.6 million for the year ended
December 31, 2002. Shipping and handling fees were
$165.3 million during the year ended December 31,
2003, an increase of $27.8 million compared to shipping and
handling fees of $137.5 million for the year ended
December 31, 2002. The increase in shipping and
handling-related fees for the year ended December 31, 2003
was primarily due to the increase in volume of products sold as
compared to the same period in 2002.

Product Sales for the year ended
December 31, 2003 of $435.3 million increased
$70.2 million, or 19% compared to $365.1 million for
the same period in 2002. Salt Product Sales for the year ended
December 31, 2003 of $390.0 million increased
$67.7 million, or 21% compared to $322.3 million for
the same period in 2002. This increase was primarily due to a
1,561,000 ton increase in sales volumes in our North
American deicing product line combined with a 141,000 ton
increase in sales volumes in our general trade product line.
These increases in sales volumes impacted sales by approximately
$30.3 million and $15.1 million, respectively. Also
contributing to the increase in Product Sales was improved
pricing in both our North American deicing product line and
general trade product line of approximately $14.5 million,
of which changes in foreign exchange rates totaled
$9.2 million. SOP Product Sales for the year ended
December 31, 2003 of $45.3 million increased
$2.5 million, or 6% compared to $42.8 million for the
same period in 2002 due to both improved sales volumes and
pricing.


Gross Profit


Gross profit for the year ended December 31,
2003 of $147.0 million increased $21.1 million, or 17%
compared to $125.9 million for the same period in 2002. The
increase in gross profit primarily reflects the impact of
improved highway and consumer deicing sales volumes and improved
pricing as described in the preceding paragraph.

Selling, General and
Administrative Expenses


Selling, general and administrative expenses of
$48.6 million for the year ended December 31, 2003
increased $8.1 million, or 20% compared to
$40.5 million for the same period in 2002. This increase
primarily reflects additional compensation and variable benefit
costs and higher spending on discretionary promotional and
marketing costs. Additionally, changing foreign exchange rates
increased selling, general and administrative expenses by
$2.0 million.

Other
Charges


During 2002, other charges represented transition
costs that are non-recurring in nature and relate to charges
required to establish us as a self-sustaining entity. We
incurred $7.7 million of transition costs in the year ended
December 31, 2002, consisting primarily of one-time
compensation costs, costs to develop stand-alone tax and
inventory strategies and costs associated with determining the
post-closing purchase price adjustment. No such costs were
incurred in 2003.

Interest
Expense


Interest expense for the year ended
December 31, 2003 of $39.1 million decrease
$2.2 million compared to $41.3 million for the same
period in 2002. This decrease is primarily the result of lower
outstanding debt balances during 2003.

Other (Income)
Expense


Other expense for the year ended
December 31, 2003 of $5.6 million increased
$0.7 million compared to $4.9 million for the same
period in 2002. In April 2002, we recorded a $5.3 million
charge related to the write-off of the deferred financing costs
associated with the refinancing of our term loan credit
facility. In the second quarter of 2003, we recorded
$1.4 million of costs related to amending our senior credit
facilities. We also recorded non-cash foreign exchange losses
and (gains) of $3.9 million and $(0.6) million in
the year ended December 31, 2003 and 2002, respectively.

Income Tax
Expense


Income tax expense for the year ended
December 31, 2003 of $10.2 million increased
$9.6 million compared to $0.6 million for the same
period in 2002. This increase was primarily due to consideration
of future taxable income exclusive of taxable temporary
differences in 2002 resulting in a reduction of the valuation
allowance against deferred tax assets for NOLs. Also in 2003,
there was an increase in income before income taxes. Our income
tax provision differs from the U.S. statutory federal
income tax rate primarily due to U.S. statutory depletion,
state income taxes (net of federal tax benefit), foreign income
tax rate differentials, foreign mining taxes and changes in the
expected utilization of previously reserved NOLs.

Liquidity and Capital Resources


Historical Cash
Flow

We have used cash generated from operations to
meet our working capital needs and to fund capital expenditures
and voluntary repayment of debt. We have historically generated
stable cash flows. Our primary sources of liquidity will
continue to be cash from operations and borrowings under our
revolving credit facility. Due to the seasonality of our
business, we expect that ongoing requirements for debt service
and capital expenditures will be funded from these

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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




sources. When we cannot meet our liquidity or
capital needs with cash from operations, we meet those needs
with borrowings under our revolving credit facility.

For the year ended
December 31, 2004


Net cash flow generated by operating activities
for the year ended December 31, 2004 was
$102.5 million. Cash generated from operating activities
includes $7.9 million provided by a decrease in working
capital. The primary working capital reductions were increases
in accounts payable and accrued expenses of $29.9 million
and decreases in inventories of $1.9 million, offset in
part by an increase in receivables of $23.9 million. These
changes are primarily related to increased sales in the fourth
quarter of 2004 as compared to the same period in 2003.

Net cash flow used by investing activities for
the year ended December 31, 2004 was $26.0 million. We
had capital expenditures during 2004 of $22.9 million to
maintain our business and $4.0 million for cost reduction
and new opportunity projects.


Net cash flow used by financing activities was
$74.0 million and was primarily due to $40.0 million
in voluntary principal repayments that reduced the amount of
long-term debt outstanding under our term loan credit facility,
$30.4 million of advances to CMI, primarily to fund
dividends on CMI common stock, and a $3.0 million pay down
of our revolving credit facility.


For the year ended
December 31, 2003


Net cash flow generated by operating activities
for the year ended December 31, 2003 was
$71.0 million. Cash generated from operating activities
includes $15.0 million used for an increase in working
capital. The primary increase in working capital was an increase
in receivables of $18.5 million, offset in part by
decreases in inventories of $4.3 million and decreases in
accounts payable and accrued expenses of $0.8 million.
These changes are indicative of the seasonal nature of highway
deicing product line sales with differences primarily related to
changes in late December quarter sales versus the prior year.

Net cash flow used by investing activities for
the year ended December 31, 2003 was $45.6 million. We
had capital expenditures during 2003 of $18.6 million to
maintain our business and $2.0 million for cost-reduction
and new-opportunity projects. We also spent $24.8 million
related to our purchase of certain intangible assets related to
IMC Globals former SOP business.


Net cash flow used by financing activities was
$38.2 million and was primarily due to $21.7 million
of dividends paid to CMI, $8.2 million paid to third
parties on behalf of CMI primarily for financing activities at
CMI and a $30.0 million voluntary principal repayment that
reduced the amount of long-term debt outstanding under our term
loan credit facility. These outflows were partially offset by
$14.0 million of borrowings under our revolving credit
facility and the receipt of $8.8 million from IMC Global to
pay income taxes for periods prior to the Recapitalization which
were indemnified by IMC Global.


For the year ended
December 31, 2002


Net cash flow generated by operating activities
was $82.2 million for the year ended December 31,
2002. Of this amount, $12.4 million was generated by
working capital reductions. The primary working capital
reductions were increases in accounts payable and accrued
expenses of $14.5 million and decreases in inventories of
$3.8 million offset in part by an increase in receivables
of $5.9 million. The improvement in working capital is
partially due to faster collections of our receivables and the
timing of interest payments. These improvements were partially
offset by more severe winter weather in December 2002 than in
December 2001. Additionally, during 2002, we amended an
agreement with a supplier related to the purchase of salt from
the suppliers chemical production facility. We received a
one-time cash payment of $8.0 million related to the
amendment which terminates in December 2010. In the future we
may elect to resume purchasing salt from the suppliers
facility. In that event, we would repay a ratable portion of the
cash received.

Net cash flow used by investing activities was
$19.1 million for the year ended December 31, 2002,
primarily related to capital expenditures. Extensive efforts
have been made throughout 2002 to focus capital spending on
maintaining the business while leveraging off of our growth and
cost reduction capital spending in prior years. Capital
expenditures during 2002 included $17.0 million of
expenditures to maintain our facilities. During the four years
prior to 2002, on average, we have spent in excess of
$20.0 million per year in growth and cost reduction capital
expenditures to upgrade our core operating facilities, expand
and rationalize production capacities and improve operating
efficiencies. Growth and cost reduction capital expenditures
were $2.5 million for 2002.


Net cash flow used by financing activities was
$69.6 million for the year ended December 31, 2002,
primarily due to the $39.8 million repayment of borrowings
under our revolving credit facility, $2.2 million paid to
third parties on behalf of CMI primarily for financing
activities at CMI and $40.0 million of voluntary principal
repayments that reduced the amount of long-term debt outstanding
under our term loan credit facility. These cash uses were
partially offset by approximately $13 million of capital
contributions from CMI, which represents proceeds received by
CMI from IMC related to the post-closing purchase price
adjustment.


In connection with the offering of the New Notes,
we amended and restated our senior credit facilities and reduced
the term loan credit facility to $150.0 million. In
connection with this transaction, we recorded a charge to Other
(income) expense in the accompanying consolidated statement of
operations of approximately $5.3 million which was
reflected as a non-cash add-back to net cash provided by
operating activities.


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Capital
Resources

Our primary sources of liquidity will continue to
be cash flow from operations and borrowings under our revolving
credit facility. We expect that ongoing requirements for debt
service and capital expenditures will be funded from these
sources.

We have incurred substantial indebtedness in
connection with the Recapitalization. Our significant debt
service obligations could, under certain circumstances,
materially affect our financial condition and prevent us from
fulfilling our debt obligations. See Item 1,
Business  Risk Factors  Our
substantial indebtedness could adversely affect our financial
condition and impair our ability to operate our business.


At December 31, 2004, we had
$325.0 million in aggregate principal amount of
10% senior subordinated notes due August 15, 2011 (the
Senior Subordinated Notes). Interest on the Senior
Subordinated Notes is payable semi-annually in cash on each
February 15 and August 15. The Senior Subordinated Notes may be
redeemed in whole or in part from time to time, on or after
August 15, 2006, at specified redemption prices.


The Company maintains a credit facility (the
Credit Facility) with a syndicate of financial
institutions. The Credit Facility allowed for a term loan (the
Term Loan) with a maturity date of November 2009 and
a revolving credit facility that is available until 2008.
Borrowings under the Term Loan are due and payable in quarterly
installments. The quarterly Term Loan amortization payments due
before 2009 approximate $0.4 million on an annual
basis, or 1% of the term loan. The remaining balance of the Term
Loan will amortize in equal quarterly installments in the last
year of the Credit Facility.


Borrowings of $135 million are available
under the revolving credit facility, $30 million of which
may be drawn in Canadian dollars and $10 million of which
may be drawn in British pounds sterling. Additionally, the
revolving credit facility includes a sub-limit for letters of
credit in an amount not to exceed $50 million.


Borrowings under the Credit Facility incur
interest at either the Eurodollar Rate (LIBOR) or the
greater of a specified U.S. and Canadian prime lending rate or
the federal funds effective rate plus 0.50% (Base
Rate) plus, in each case, a margin ranging from 1.75% to
3.50%, which margin is dependent upon the Companys
leverage ratio, as determined quarterly. Interest on the Credit
Facility is payable at least quarterly.


Future borrowings under the revolving credit
facility will be available to fund our working capital
requirements, capital expenditures and for other general
corporate purposes. As of December 31, 2004, approximately
$8.2 million of letters of credit were outstanding leaving
$115.8 million available under the revolving credit
facility.


Note 8 to the consolidated financial
statements provides more information regarding our indebtedness.
The notes in the table below are listed in order of
subordination with all notes subordinate to the Credit Facility
borrowings. Third-party debt consists of the following at
December 31, 2004 (in millions):


Third-party Debt




|                             |  |            |       | 
|---------------------------- |  | ---------- | ----- | 
|                            
|                             | 
|                             |  | Recorded   |      
|                             |  | Book Value |      
|                            
|                             | 
|Senior Subordinated Notes(1) |  | $          | 325.0 | 
|Term Loan                    |  |            | 37.7  | 
|Revolving Credit Facility    |  |            | 11.0  | 
|                            
|                             |  |            | 373.7 | 
|                            

|    |                                      
|--- | -------------------------------------
|(1) | Shown net of premium of $2.7 million.

In connection with the Recapitalization, we
received NOLs and expect to realize cash tax savings if these
NOLs are able to be utilized. As of December 31, 2004, we
had approximately $52.3 million of NOLs remaining that
expire between 2008 and 2022. These NOLs may be used to offset a
portion of future taxable income, up to the year 2022, and
thereby reduce or eliminate our U.S. federal income taxes
otherwise payable. The Internal Revenue Code of 1986, as
amended, or the Code, imposes significant
limitations on the utilization of NOLs in the event of an
ownership change, as defined in Section 382 of
the Code. Generally, an ownership change occurs with respect to
a corporation if the aggregate increase in the percentage of
stock ownership by value of that corporation by one or more 5%
stockholders, including specified groups of stockholders who in
the aggregate own at least 5% of that corporations stock
(including a group of public stockholders), exceeds
50 percentage points over a three-year testing period. The
Company has incurred three ownership changes, placing annual
limitations on the amount of each loss carryforward utilization.
We cannot assure you that we will be able to use all of the NOLs
to offset future taxable income or that the NOLs will not become
subject to additional limitations due to future ownership
changes. Due to the uncertainty that these carryforwards will be
utilized, a valuation allowance of $2.6 million at
December 31, 2004 has been established against the deferred
tax asset for the portion of the carryforward that we did not
conclude was more likely than not to be utilized. In addition,
we have approximately $11.1 million of alternative minimum
tax credit carryforwards that can be used to reduce future tax
liability.


We have two defined benefit pension plans for
certain of our U.K. and U.S. employees. Our cash funding
policy is to make the minimum annual contributions required by
applicable regulations. Since the plans accumulated
benefit obligations are in excess of the fair value of the
plans assets, we may be required to use cash from
operations above our historical levels to further fund these
plans in the future.


At December 31, 2004, we had no off-balance
sheet arrangements that have or are likely to have a material
current or future effect on our financial statements.


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Parent Company
Obligations

In December 2002, certain holders of CMIs
series A redeemable preferred stock converted their
preferred stock into subordinated discount debentures. CMI then
issued $123.5 million in aggregate principal amount of
senior discount notes in exchange for CMI subordinated discount
debentures. No cash interest will accrue on the senior discount
notes prior to December 15, 2007. The accreted value of
each senior discount note will increase from the date of
issuance until December 15, 2007 at a rate of 12
3/4% per annum, reflecting the accrual of non-cash
interest, such that the accreted value will equal the principal
amount at maturity on December 15, 2007. Cash interest will
accrue on the senior discount notes at a rate of 12
3/4% per annum, beginning December 15, 2007. The first
cash interest payment will be made on June 15, 2008.

On May 22, 2003, CMI issued
$179.6 million in aggregate principal amount at maturity of
subordinated discount notes in a private placement under
Rule 144A and Regulation S of the Securities Act. No
cash interest will accrue on the subordinated discount notes
prior to June 1, 2008. The accreted value of each
subordinated discount note will increase from the date of
issuance until June 1, 2008 at a rate of 12% per
annum, reflected in the accrual of non-cash interest, such that
the accreted value will equal the principal amount at maturity
on June 1, 2008. Cash interest will accrue on the
subordinated discount notes at a rate of 12% per annum,
beginning June 1, 2008 through maturity. The proceeds from
the sale of the subordinated discount notes were distributed to
CMI stockholders in the form of a common stock dividend.


The senior discount notes and subordinated
discount notes are not a part of our consolidated financial
statements. However, our operations are currently the main
source of cash that is expected to service the senior discount
notes, subordinated discount notes and any future dividends on
CMI common stock


Advances to CMGs parent company and sole
shareholder, CMI, in the amount of $40.8 million and
$10.4 million at December 31, 2004 and 2003,
respectively, are presented as a deduction from
stockholders equity. CMI has the intent, but does not
currently have the ability to repay these advances except
through the declaration of a dividend from CMG. The advances to
parent are non-interest bearing.


Our contractual cash obligations and commitments
as of December 31, 2004 are as follows (in millions):

Payments Due by Period




|                                                 |  |           |       |  |        |   |      |       |  |   |         |  |  |       |       |  |  |   |       | 
|------------------------------------------------ |  | --------- | ----- |  | ------ | - | ---- | ----- |  | - | ------- |  |  | ----- | ----- |  |  | - | ----- | 
|                                                
|                                                 | 
|                                                 |  | Less than |       |  | 2-3    |   |      | 4-5   |  |   | After 5 | 
|Contractual Cash Obligations                     |  | Total     |       |  | 1 Year |   |      | Years |  |   | Years   |  |  | Years |      
|                                                
|                                                 | 
|Long-term Debt                                   |  | $         | 373.7 |  |        | $ | 0.4  |       |  | $ | 0.8     |  |  | $     | 47.5  |  |  | $ | 325.0 | 
|Interest(a)                                      |  |           | 224.3 |  |        |   | 34.3 |       |  |   | 68.7    |  |  |       | 68.5  |  |  |   | 52.8  | 
|Operating Leases(b)                              |  |           | 26.9  |  |        |   | 6.6  |       |  |   | 8.9     |  |  |       | 3.4   |  |  |   | 8.0   | 
|Unconditional Purchase Obligations(c)            |  |           | 59.3  |  |        |   | 9.3  |       |  |   | 18.6    |  |  |       | 18.6  |  |  |   | 12.8  | 
|Estimated future pension benefit
    payments(d) |  |           | 20.5  |  |        |   | 2.2  |       |  |   | 3.6     |  |  |       | 3.9   |  |  |   | 10.8  | 
|                                                
|Total Contractual Cash Obligations               |  | $         | 704.7 |  |        | $ | 52.8 |       |  | $ | 100.6   |  |  | $     | 141.9 |  |  | $ | 409.4 | 
|                                                

Amount of Commitment Expiration per
Period




|                        |  |           |       |  |        |   |      |       |  |   |       |  |  |         |       |  |  |   |   | 
|----------------------- |  | --------- | ----- |  | ------ | - | ---- | ----- |  | - | ----- |  |  | ------- | ----- |  |  | - | - | 
|                       
|                        | 
|                        |  | Less than |       |  | 2-3    |   |      | 4-5   |  |   | After | 
|Other Commitments       |  | Total     |       |  | 1 Year |   |      | Years |  |   | Years |  |  | 5 Years |      
|                       
|                        | 
|Revolver                |  | $         | 115.8 |  |        | $ |     |       |  | $ |      |  |  | $       | 115.8 |  |  | $ |  | 
|Letters of Credit       |  |           | 8.2   |  |        |   | 8.2  |       |  |   |      |  |  |         |      |  |  |   |  | 
|Performance Bonds(e)    |  |           | 12.8  |  |        |   | 12.8 |       |  |   |      |  |  |         |      |  |  |   |  | 
|                       
|Total Other Commitments |  | $         | 136.8 |  |        | $ | 21.0 |       |  | $ |      |  |  | $       | 115.8 |  |  | $ |  | 
|                       



|    |                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------
|(a) | Based on maintaining existing debt balances to
    maturity. Estimated interest on the Term Loan was based on a
    rate of 4.85%.
|(b) | We lease property and equipment under
    non-cancelable operating leases for varying periods.                                    
|(c) | We have long-term contracts to purchase certain
    amounts of electricity and steam.                                             
|(d) | Note 9 to our audited consolidated financial
    statements provides additional information.                                      
|(e) | Note 10 to our audited consolidated
    financial statements provides additional information under Sales
    Contracts.           

Our ability to make scheduled payments of
principal of, to pay the interest on, or to refinance our
indebtedness, or to fund planned capital expenditures will
depend on our ability to generate cash in the future. This, to a
certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are
beyond our control.

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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Based on our current level of operations, we
believe that cash flow from operations and available cash,
together with available borrowings under our senior credit
facilities, will be adequate to meet our liquidity needs over
the next 12 months.

There can be no assurance, however, that our
business will generate sufficient cash flow from operations or
that future borrowings will be available to us under our senior
credit facilities in an amount sufficient to enable us to pay
our indebtedness or to fund our other liquidity needs. If we
consummate an acquisition, our debt service requirements could
increase. We may need to refinance all or a portion of our
indebtedness on or before maturity. We cannot assure you that we
will be able to refinance any of our indebtedness on
commercially reasonable terms or at all.


American Jobs Creation
Act of 2004


We maintain undistributed foreign earnings
outside of the United States in Canada and the United Kingdom.
Most of the amounts held outside the U.S. could be
repatriated to the U.S., but, under current law, would be
subject to U.S. federal income taxes, less applicable
foreign tax credits. Repatriation of some foreign balances is
restricted by local laws. We have not provided for the
U.S. federal tax liability on these amounts for financial
statement purposes, since these foreign earnings are considered
indefinitely reinvested outside the U.S.

The American Jobs Creation Act of 2004, enacted
on October 22, 2004 (the Jobs Act), provides
for a temporary 85% dividends received deduction on certain
foreign earnings repatriated during a one-year period. The
deduction would result in an approximate 5.25% federal tax rate
on the repatriated earnings. To qualify for the deduction, the
earnings must be reinvested in the U.S. pursuant to a
domestic reinvestment plan established by a companys chief
executive officer and approved by its board of directors.
Certain other criteria in the Jobs Act must be satisfied as
well. We have not precisely quantified the amount of our foreign
earnings that qualify for the temporary deduction but estimate
this amount to be approximately $129.5 million. For us, the
one-year period during which the qualifying distributions can be
made is the twelve month period ending February 28, 2006.


We are in the process of evaluating whether we
will repatriate any foreign earnings under the repatriation
provisions of the Jobs Act and, if so, the amount that we will
repatriate. The range of reasonably possible amounts that we are
considering for repatriation, which would be eligible for the
temporary deduction, is zero to approximately
$129.5 million. We are awaiting the issuance of further
regulatory guidance and passage of statutory technical
corrections with respect to certain provisions in the Jobs Act
prior to completing our analysis of applying the provisions of
the Act to our particular situation and making a determination
as to the amount we may repatriate, if any. If our analysis
determines that repatriation would be favorable and an
appropriate domestic reinvestment plan can be established that
is applicable to our business model, we would likely repatriate
amounts in the mid to upper end of our range. We expect to
determine the amounts and sources of foreign earnings to be
repatriated, if any, during 2005. Use of the funds will be
governed by a domestic reinvestment plan, as required by the
Jobs Act.


Repatriation of any amount eligible for the
temporary deduction could result in additional U.S. federal
income tax expense during 2005 or 2006. As part of our
evaluation process we will determine the potential income tax
effects of any repatriation. We have not determined the
reasonable range of potential income tax effects at this time
and expect an analysis to be completed during 2005. Repatriation
also could substantially increase liquidity in the U.S.,
although use of the additional liquidity would be restricted by
the domestic reinvestment plan. There would be a corresponding
reduction in liquidity at our foreign subsidiaries. Some foreign
subsidiaries could be required to borrow in order to repatriate
their earnings to the U.S. We expect our foreign cash flows
would be sufficient to repay any foreign debt and replenish
foreign cash balances over time. Should we decide not to
repatriate foreign earnings under the Jobs Act, we would meet
U.S. liquidity needs through ongoing cash flows, external
borrowing, or both. We utilize a variety of tax planning and
financing strategies in an effort to ensure that our worldwide
cash is available in the locations in which it is needed.


Sensitivity Analysis Related to
EBITDA

In connection with the Recapitalization, we have
incurred significant non-recurring other charges that impact our
results of operations. As a result, our results of operations
and cash flows are not indicative of what they would have been
had we not incurred these non-recurring charges. We believe it
would be helpful to provide a sensitivity analysis that
describes our ability to satisfy our debt service, capital
expenditures and working capital requirements and make dividend
payments in terms of EBITDA, and EBITDA adjusted for the other
charges described below, or Adjusted EBITDA. We
believe that these non-GAAP measures can assist investors in
understanding our cost structure, cash flows and financial
position. In addition, the financial covenants and ratios in our
senior credit facilities and our indentures, such as
restrictions on payments and indebtedness and ratios relating to
leverage, interest coverage and fixed charge coverage, are also
tied to measures that are calculated by adjusting EBITDA as
described below. We believe it is necessary to adjust EBITDA to
enable investors to see how we view our business given the
significant other charges that have historically affected our
results of operations.


Neither EBITDA nor Adjusted EBITDA are calculated
under GAAP and neither should be considered in isolation or as a
substitute for net income, cash flows or other income or cash
flow data prepared in accordance with GAAP or as a measure of
our profitability or liquidity. While EBITDA and Adjusted EBITDA
and similar variations thereof are frequently


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




used as a measure of operations and the ability
to meet debt service requirements, these terms are not
necessarily comparable to other similarly titled captions of
other companies due to the potential inconsistencies in the
method of calculation.

The following is a summary of our other charges
incurred for each of our last three fiscal years:


For the year ended
December 31, 2004


Apollo elected to terminate the amended
management consulting agreement in November resulting in a final
payment of $4.5 million for all services rendered under the
agreement.

For the year ended
December 31, 2003


No non-recurring costs were incurred or expensed
in 2003

For the year ended
December 31, 2002


Following the Recapitalization, we incurred and
expensed certain non-recurring costs totaling $7.7 million
that consisted of transition costs required to establish us as
an self-sustaining entity. The costs were directly related to
the transition from an entity controlled by Mosaic and consisted
primarily of one-time compensation costs, costs to develop
stand-alone tax and inventory strategies and costs associated
with determining the post-closing purchase price adjustment.

The adjustments to EBITDA set forth in the table
below include adjustments relating to the expenses and charges
described above, which we believe are not likely to recur.
Although these adjustments are not permitted as adjustments in
preparing financial statements in accordance with
Regulation S-X, management believes that the presentation
of EBITDA, as so adjusted, provides useful information in
analyzing the effects of other charges, including those of CMI.


|                |                                        |                                 |       |      |      |   |       |      |  |   |       |      | 
|--------------- | -------------------------------------- | ------------------------------- | ----- | ---- | ---- | - | ----- | ---- |  | - | ----- | ---- | 
|                |                                        |                                
|                |                                        | For the Year Ended December 31, |      
|                |                                        |                                 |      
|                |                                        | 2004                            |       |      | 2003 |   |       | 2002 | 
|                |                                        |                                
|                |                                        |                                 |       |     
|Net income      |                                        | $                               | 56.5  |      |      | $ | 43.5  |      |  | $ | 30.9  |     
|                | Income tax expense                     |                                 |       | 24.6 |      |   |       | 10.2 |  |   |       | 0.6  | 
|                | Interest expense                       |                                 |       | 37.4 |      |   |       | 39.1 |  |   |       | 41.3 | 
|                | Depreciation and amortization          |                                 |       | 41.3 |      |   |       | 42.1 |  |   |       | 37.1 | 
|                |                                        |                                
|EBITDA          |                                        |                                 | 159.8 |      |      |   | 134.9 |      |  |   | 109.9 |     
|                | Adjustments to income from operations: |                                 |       |      |      |   |       |      |  |   |       |      | 
|                | Other charges                          |                                 |       | 4.5  |      |   |       |     |  |   |       | 7.7  | 
|                | Other (income) expense(1)              |                                 |       | 7.8  |      |   |       | 5.6  |  |   |       | 4.9  | 
|                |                                        |                                
|Adjusted EBITDA |                                        | $                               | 172.1 |      |      | $ | 140.5 |      |  | $ | 122.5 |     
|                |                                        |                                

|    |                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Other (income) expense primarily
    includes losses on early retirements of debt ($5.3 million
    in 2002), costs related to amending our senior credit facilities
    ($1.4 million in 2003), gain related to the early
    extinguishment of debt ($1.9 million in 2003), interest
    income and non-cash foreign exchange gains and losses.

Effects of Currency Fluctuations and
Inflation

We conduct operations in Canada, the United
Kingdom and the United States. Therefore, our results of
operations are subject to both currency transaction risk and
currency translation risk. We incur currency transaction risk
whenever we or one of our subsidiaries enter into either a
purchase or sales transaction using a currency other than the
local currency of the transacting entity. With respect to
currency translation risk, our financial condition and results
of operations are measured and recorded in the relevant local
currency and then translated into U.S. dollars for
inclusion in our historical consolidated financial statements.
Exchange rates between these currencies and U.S. dollars in
recent years have fluctuated significantly and may do so in the
future. The majority of our revenues and costs are denominated
in U.S. dollars, with pounds sterling and Canadian dollars
also being significant. We generated 36% of our 2004 sales in
foreign currencies, and we incurred 42% of our 2004 total
operating expenses in foreign currencies. The net depreciation
of the pound sterling and Canadian dollar against the
U.S. dollar and other world currencies during 2002 had a
negative impact on our sales and Adjusted EBITDA, as reported in
U.S. dollars in our consolidated financial statements while
the weakening U.S. dollar against these currencies in 2003
and 2004 had a positive impact on our sales and Adjusted EBITDA.
Significant changes in the value of the Canadian dollar, the
euro or pound sterling relative to the U.S. dollar could
have a material adverse effect on our financial condition and
our ability to meet interest and principal payments on
U.S. dollar denominated debt, including borrowings under
our senior credit facilities.


Seasonality

We experience 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
quarters and lower during the second and third quarters of each
year. In particular, sales of highway and consumer deicing salt
products are seasonal as they vary based on the severity of the
winter conditions in areas where the product is used. Following
industry practice in North America, we stockpile sufficient
quantities of deicing salt in the second, third and fourth
quarters to meet the estimated requirements for the winter
season.


Recent Accounting Pronouncements

In April 2004, the FASB issued FASB staff
position (FSP) FAS 141-1 and FAS 142-1,
Interaction of FASB Statements No. 141, Business
Combinations and No. 142, Goodwill and Other Intangible
Assets, and Emerging Issues Task Force (EITF)
Issue No. 04-2, Whether Mineral Rights Are Tangible
or Intangible Assets. This FSP amends
SFAS Nos. 141 and 142, and requires mineral rights to
be accounted for as tangible assets based on the consensus
reached in EITF 04-2. We adopted the guidance in the FSP on
July 1, 2004, resulting in the balance sheet
reclassification of approximately $147.2 million of net
mineral rights from intangible assets to property, plant and
equipment. At December 31, 2003, approximately
$148.0 million of net mineral rights were similarly
reclassified. This FSP had no impact on our consolidated
statements of operations or cash flows.


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




In November 2004, the FASB issued
SFAS No. 151, Inventory Costs  an
amendment of ARB No. 43, Chapter 4 that is
effective for us beginning January  1, 2006. This
Statement amends the guidance in Accounting Research Bulletin
(ARB) No. 43, Chapter 4, Inventory
Pricing, to clarify the accounting for abnormal amounts of
idle facility expense, freight, handling costs, and wasted
material (spoilage). Paragraph 5 of ARB 43, Chapter 4,
previously stated that . . . under some
circumstances, items such as idle facility expense, excessive
spoilage, double freight, and rehandling costs may be so
abnormal as to require treatment as current period
charges. . . . This Statement requires that
those items be recognized as current-period charges regardless
of whether they meet the criterion of so abnormal.
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. We will determine
the impact, if any, that the adoption of SFAS No. 151
will have on our consolidated statements of operations or cash
flows during 2005.

In December 2004, the FASB issued
SFAS No. 123(R), Shared-Based Payment.
SFAS 123(R) is a revision of SFAS No. 123,
Accounting for Stock Based Compensation, and
supersedes Accounting Principles Board Opinion No. 25
(APB 25), Accounting for Stock Issued to
Employees. Among other items SFAS 123(R) eliminates
the use of APB 25 and the intrinsic value method of
accounting, and requires companies to follow guidance previously
set forth in SFAS 123, and recognize the cost of employee
services received in exchange for awards of equity instruments,
based on the grant date fair value of those awards, in the
financial statements. CMI adopted SFAS 123 in the fourth
quarter of 2003. The effective date of SFAS 123(R) is the
first reporting period beginning after June 15, 2005, which
is the third quarter of 2005 for calendar year companies. CMI
currently expects to adopt SFAS 123(R) effective
July 1, 2005 although early adoption is allowed. We will
determine the impact, if any, that the adoption of
SFAS 123(R) will have on our consolidated statements of
operations or cash flows prior to adoption.


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K








|         |  |                                                               
|-------- |  | --------------------------------------------------------------
|ITEM 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK




Our business is subject to various types of
market risks that include, but are not limited to, interest rate
risk, foreign currency translation risk and commodity pricing
risk. In the future, management may take actions that would
mitigate our exposure to these types of risks including forward
purchase contracts and financial instruments. However, there can
be no assurance that our hedging operations will eliminate or
substantially reduce risks associated with these risks. We will
not enter into any financial instrument arrangements for
speculative purposes.


Interest Rate
Risk


As of December 31, 2004, we had
$37.7 million of debt outstanding under the term loan
credit facility and $11.0 million outstanding under our
revolving credit facility. Both the term loan credit facility
and revolving credit facility are subject to variable rates.
Accordingly, our earnings and cash flows are affected by changes
in interest rates. Assuming no change in the term loan credit
facility borrowings at December 31, 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 year ended
December 31, 2004 would have increased by approximately
$0.5 million. Actual changes will vary from hypothetical
changes.

Foreign Currency
Risk


We conduct our business primarily in the United
Kingdom and North America and export some products to Europe and
Southeast Asia. Our operations may, therefore, be subject to
volatility because of currency fluctuations, inflation changes
and changes in political and economic conditions in these
countries. Sales and expenses are frequently denominated in
local currencies and results of operations may be affected
adversely as currency fluctuations affect our product prices and
operating costs or those of our competitors. We may engage in
hedging operations, including forward foreign exchange
contracts, to reduce the exposure of our cash flows to
fluctuations in foreign currency rates. We will not engage in
hedging for speculative investment reasons. Our historical
results do not reflect any foreign exchange hedging activity.
There can be no assurance that our hedging operations will
eliminate or substantially reduce risks associated with
fluctuating currencies. See Item 1,
Business  Risk Factors  Economic and
other risks associated with international sales and operations
could adversely affect our business, including economic loss and
a negative impact on earnings.

Considering our currency expenses, a hypothetical
10% unfavorable change in the exchange rates compared to the
U.S. dollar would have an estimated $2.4 million
impact on earnings for the year ended December 31, 2004.
Actual changes in market prices or rates will differ from
hypothetical changes.


Commodity Pricing
Risk: Commodity Derivative Instruments and Hedging
Activities


We have reviewed various options to mitigate the
impact of fluctuating natural gas prices. During 2002 and 2003,
we instituted a hedging policy to mitigate the impact of
fluctuations in the price of natural gas. The notional volumes
hedged are based on a combination of factors including estimated
natural gas usage, current market prices and historical market
prices. Pursuant to our policy, we enter into contractual gas
price swaps related to the purchase price of our natural gas
requirements up to 36 months in advance of the physical
purchase of the natural gas and hedge up to approximately 80% of
our expected natural gas usage. We have determined that these
financial instruments qualify as cash flow hedges under
SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activity, as amended. The notional
amount of natural gas swap derivative contracts outstanding at
December 31, 2004 that expire in one year or less and
expire greater than one year total $8.5 million and
$3.4 million, respectively.

Excluding gas hedged with derivative instruments,
a hypothetical 10% adverse change in our natural gas prices
during the year ended December 31, 2004 would have had an
estimated $0.4 million impact on earnings. Actual results
will vary based on actual changes in market prices and rates.


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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K











|        |  |                                            
|------- |  | -------------------------------------------
|ITEM 8. |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




|                                                                                                          |  |  |      | 
|--------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Description                                                                                               |  |  | Page | 
|                                                                                                         
|Report of Independent Registered Public
    Accounting Firm                                               |  |  | 33   | 
|Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                          |  |  | 34   | 
|Consolidated Statements of Operations for the
    three years ended December 31, 2004                     |  |  | 35   | 
|Consolidated Statements of Stockholders
    Equity (Deficit) for the three years ended December 31, 2004 |  |  | 36   | 
|Consolidated Statements of Cash Flows for the
    three years ended December 31, 2004                     |  |  | 37   | 
|Notes to Consolidated Financial Statements                                                                |  |  | 38   | 

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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Report of Independent Registered Public
Accounting Firm

To the Board of Directors and Stockholder of
Compass Minerals Group, Inc.:


In our opinion, the consolidated financial
statements listed in the index appearing under
Item 15(a)(1) present fairly, in all material respects, the
financial position of Compass Minerals Group, Inc. and its
subsidiaries at December 31, 2004 and 2003, and the results
of their operations and their cash flows for each of the three
years in the period ended December 31, 2004 in conformity
with accounting principles generally accepted in the United
States of America. In addition, in our opinion, the financial
statement schedule listed in the index appearing under
Item 15(a)(2) presents fairly, in all material respects,
the information set forth therein when read in conjunction with
the related consolidated financial statements. These financial
statements and financial statement schedule are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits of these statements in accordance with
the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit of financial statements includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Kansas City, Missouri


March 15, 2005


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Consolidated Balance Sheets




|                                                    |                                                                                                        |              |       |        |      |   |       |        |  
|--------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ------------ | ----- | ------ | ---- | - | ----- | ------ | -
|                                                    |                                                                                                        |             
|                                                    |                                                                                                        | December 31, |      
|                                                    |                                                                                                        |              |      
|                                                    |                                                                                                        |              |       |       
|(In millions, except share data)                    |                                                                                                        | 2004         |       |        | 2003 |  
|                                                    |                                                                                                        |              |      
|Assets                                              |                                                                                                        |              |       |        |      |   |       |       
|Current assets:                                     |                                                                                                        |              |       |        |      |   |       |       
|                                                    | Cash and cash equivalents                                                                              |              | $     | 9.7    |      |   | $     | 2.6    |  
|                                                    | Receivables, less allowance for doubtful accounts
    of $2.3 million in 2004 and $2.1 million in 2003 |              |       | 143.0  |      |   |       | 117.4  |  
|                                                    | Inventories                                                                                            |              |       | 96.3   |      |   |       | 96.7   |  
|                                                    | Deferred income taxes, net                                                                             |              |       | 11.5   |      |   |       | 8.6    |  
|                                                    | Other                                                                                                  |              |       | 3.3    |      |   |       | 3.7    |  
|                                                    |                                                                                                        |              |      
|Total current assets                                |                                                                                                        |              | 263.8 |        |      |   | 229.0 |       
|                                                    |                                                                                                        |              |      
|Property, plant and equipment, net                  |                                                                                                        |              | 402.9 |        |      |   | 410.0 |       
|Intangible assets, net                              |                                                                                                        |              | 23.6  |        |      |   | 24.7  |       
|Other                                               |                                                                                                        |              | 25.1  |        |      |   | 24.5  |       
|                                                    |                                                                                                        |              |      
|Total assets                                        |                                                                                                        | $            | 715.4 |        |      | $ | 688.2 |       
|                                                    |                                                                                                        |              |      
|Liabilities and Stockholders Equity
    (Deficit)  |                                                                                                        |              |       |        |      |   |       |       
|Current liabilities:                                |                                                                                                        |              |       |        |      |   |       |       
|                                                    | Current portion of long-term debt                                                                      |              | $     | 0.4    |      |   | $     | 0.8    |  
|                                                    | Accounts payable                                                                                       |              |       | 79.4   |      |   |       | 72.6   |  
|                                                    | Accrued expenses                                                                                       |              |       | 14.8   |      |   |       | 13.3   |  
|                                                    | Accrued interest                                                                                       |              |       | 12.4   |      |   |       | 12.5   |  
|                                                    | Accrued salaries and wages                                                                             |              |       | 19.3   |      |   |       | 13.5   |  
|                                                    | Income taxes payable                                                                                   |              |       | 14.4   |      |   |       |       |  
|                                                    |                                                                                                        |              |      
|Total current liabilities                           |                                                                                                        |              | 140.7 |        |      |   | 112.7 |       
|Long-term debt, net of current portion              |                                                                                                        |              | 376.0 |        |      |   | 419.4 |       
|Deferred income taxes, net                          |                                                                                                        |              | 56.0  |        |      |   | 64.5  |       
|Other noncurrent liabilities                        |                                                                                                        |              | 48.6  |        |      |   | 36.4  |       
|Commitments and contingencies (Notes 10 and
    11) |                                                                                                        |              |       |        |      |   |       |       
|Stockholders equity (deficit):                     |                                                                                                        |              |       |        |      |   |       |       
|                                                    | Common Stock:                                                                                          |              |       |        |      |   |       |        |  
|                                                    | $0.01 par value, authorized
    shares  1,000 shares authorized, issued and
    outstanding           |              |       |       |      |   |       |       |  
|                                                    | Additional paid in capital                                                                             |              |       | 354.7  |      |   |       | 354.7  |  
|                                                    | Accumulated deficit                                                                                    |              |       | (258.1 | )    |   |       | (314.6 | )
|                                                    | Advances to parent                                                                                     |              |       | (40.8  | )    |   |       | (10.4  | )
|                                                    | Accumulated other comprehensive income                                                                 |              |       | 38.3   |      |   |       | 25.5   |  
|                                                    |                                                                                                        |              |      
|Total stockholders equity                          |                                                                                                        |              | 94.1  |        |      |   | 55.2  |       
|                                                    |                                                                                                        |              |      
|Total liabilities and stockholders equity          |                                                                                                        | $            | 715.4 |        |      | $ | 688.2 |       
|                                                    |                                                                                                        |              |      

The accompanying notes are an integral part of
the consolidated financial statements.


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Consolidated Statements of Operations




|                                             |                            |                                 |       |       |      |   |       |       |  |   |       |       | 
|-------------------------------------------- | -------------------------- | ------------------------------- | ----- | ----- | ---- | - | ----- | ----- |  | - | ----- | ----- | 
|                                             |                            |                                
|                                             |                            | For the Year Ended December 31, |      
|                                             |                            |                                 |      
|(In millions)                                |                            | 2004                            |       |       | 2003 |   |       | 2002  | 
|                                             |                            |                                
|                                             |                            |                                 |       |      
|Sales                                        |                            | $                               | 695.1 |       |      | $ | 600.6 |       |  | $ | 502.6 |      
|Cost of sales  shipping and handling        |                            |                                 | 190.2 |       |      |   | 165.3 |       |  |   | 137.5 |      
|Cost of sales  products                     |                            |                                 | 316.0 |       |      |   | 288.3 |       |  |   | 239.2 |      
|                                             |                            |                                
|                                             | Gross profit               |                                 |       | 188.9 |      |   |       | 147.0 |  |   |       | 125.9 | 
|Selling, general and administrative expenses |                            |                                 | 58.1  |       |      |   | 48.6  |       |  |   | 40.5  |      
|Other charges                                |                            |                                 | 4.5   |       |      |   |      |       |  |   | 7.7   |      
|                                             |                            |                                
|                                             | Operating earnings         |                                 |       | 126.3 |      |   |       | 98.4  |  |   |       | 77.7  | 
|Other (income) expense:                      |                            |                                 |       |       |      |   |       |       |  |   |       |      
|                                             | Interest expense           |                                 |       | 37.4  |      |   |       | 39.1  |  |   |       | 41.3  | 
|                                             | Other, net                 |                                 |       | 7.8   |      |   |       | 5.6   |  |   |       | 4.9   | 
|                                             |                            |                                
|                                             | Income before income taxes |                                 |       | 81.1  |      |   |       | 53.7  |  |   |       | 31.5  | 
|Income tax expense                           |                            |                                 | 24.6  |       |      |   | 10.2  |       |  |   | 0.6   |      
|                                             |                            |                                
|Net income                                   |                            | $                               | 56.5  |       |      | $ | 43.5  |       |  | $ | 30.9  |      
|                                             |                            |                                

The accompanying notes are an integral part of
the consolidated financial statements.


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Consolidated Statements of Stockholders Equity (Deficit)




|                           |                                                      |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      |      |   |   |       |      |  
|-------------------------- | ---------------------------------------------------- | ------ | - | ---------- | ------- | - | ----- | ---------------- |  | - | ----------------- | ---- |  | ------------- | ----- | - | ----- | - | ---- | ---- | - | - | ----- | ---- | -
|                           |                                                      |        |   | Additional |         |   |       |                  |  |   | Accumulated Other |      |  |              
|                           |                                                      | Common |   |            | Paid In |   |       | Accumulated      |  |   | Advances          |      |  | Comprehensive |       |   |      
|(In millions)              |                                                      | Stock  |   |            | Capital |   |       | Excess (Deficit) |  |   | to Parent         |      |  | Income (Loss) |       |   | Total |  
|                          
|                           |                                                     
|                          
|Balance, December 31, 2001 |                                                      | $      |  |            |         | $ | 346.4 |                  |  | $ | (389.0            | )    |  | $             |      |   |       | $ | (2.4 | )    |   | $ | (45.0 | )   
|Advances to parent         |                                                      |        |   |            |         |   |       |                  |  |   |                   |      |  |               | (2.2  | ) |       |   |      |      |   |   | (2.2  | )   
|Comprehensive income:      |                                                      |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      |      |   |   |       |     
|                           | Net income                                           |        |   |            |         |   |       |                  |  |   |                   | 30.9 |  |               |       |   |       |   |      |      |   |   |       | 30.9 |  
|                           | Minimum pension liability adjustment, net of tax     |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      | (6.5 | ) |   |       | (6.5 | )
|                           | Unrealized gain on cash flow hedges, net of tax      |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      | 0.1  |   |   |       | 0.1  |  
|                           | Cumulative translation adjustments                   |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      | 8.9  |   |   |       | 8.9  |  
|                           |                                                      |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |  
|                          
|                           | Comprehensive income                                 |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      |      |   |   |       | 33.4 |  
|Capital contributions      |                                                      |        |   |            |         |   | 15.9  |                  |  |   |                   |      |  |               |       |   |       |   |      |      |   |   | 15.9  |     
|                          
|                          
|Balance, December 31, 2002 |                                                      | $      |  |            |         | $ | 362.3 |                  |  | $ | (358.1            | )    |  | $             | (2.2  | ) |       | $ | 0.1  |      |   | $ | 2.1   |     
|Dividends declared to CMI  |                                                      |        |   |            |         |   | (21.7 | )                |  |   |                   |      |  |               |       |   |       |   |      |      |   |   | (21.7 | )   
|Advances to parent         |                                                      |        |   |            |         |   |       |                  |  |   |                   |      |  |               | (8.2  | ) |       |   |      |      |   |   | (8.2  | )   
|Comprehensive income:      |                                                      |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      |      |   |   |       |     
|                           | Net income                                           |        |   |            |         |   |       |                  |  |   |                   | 43.5 |  |               |       |   |       |   |      |      |   |   |       | 43.5 |  
|                           | Minimum pension liability adjustment, net of tax     |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      | 4.9  |   |   |       | 4.9  |  
|                           | Unrealized gain on cash flow hedges, net of tax      |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      | 0.7  |   |   |       | 0.7  |  
|                           | Cumulative translation adjustments                   |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      | 19.8 |   |   |       | 19.8 |  
|                           |                                                      |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |  
|                          
|                           | Comprehensive income                                 |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      |      |   |   |       | 68.9 |  
|Capital contributions      |                                                      |        |   |            |         |   | 14.1  |                  |  |   |                   |      |  |               |       |   |       |   |      |      |   |   | 14.1  |     
|                          
|                          
|Balance, December 31, 2003 |                                                      | $      |  |            |         | $ | 354.7 |                  |  | $ | (314.6            | )    |  | $             | (10.4 | ) |       | $ | 25.5 |      |   | $ | 55.2  |     
|Advances to parent         |                                                      |        |   |            |         |   |       |                  |  |   |                   |      |  |               | (30.4 | ) |       |   |      |      |   |   | (30.4 | )   
|Comprehensive income:      |                                                      |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      |      |   |   |       |     
|                           | Net income                                           |        |   |            |         |   |       |                  |  |   |                   | 56.5 |  |               |       |   |       |   |      |      |   |   |       | 56.5 |  
|                           | Minimum pension liability adjustment, net of
    tax |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      | 0.6  |   |   |       | 0.6  |  
|                           | Unrealized gain on cash flow hedges, net of
    tax  |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      | 0.1  |   |   |       | 0.1  |  
|                           | Cumulative translation adjustments                   |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      | 12.1 |   |   |       | 12.1 |  
|                           |                                                      |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |  
|                          
|                           | Comprehensive income                                 |        |   |            |         |   |       |                  |  |   |                   |      |  |               |       |   |       |   |      |      |   |   |       | 69.3 |  
|                          
|                          
|Balance, December 31, 2004 |                                                      | $      |  |            |         | $ | 354.7 |                  |  | $ | (258.1            | )    |  | $             | (40.8 | ) |       | $ | 38.3 |      |   | $ | 94.1  |     
|                          

The accompanying notes are an integral part of
the consolidated financial statements.


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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Consolidated Statements of Cash Flows




|                                                                 |                                                                                                    |                                                         |                                                                 |       |       |       |       |       |      |       |       |        |       |      |  
|---------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | --------------------------------------------------------------- | ----- | ----- | ----- | ----- | ----- | ---- | ----- | ----- | ------ | ----- | ---- | -
|                                                                 |                                                                                                    |                                                        
|                                                                 |                                                                                                    | For the Year Ended December 31,                         |                                                                
|                                                                 |                                                                                                    |                                                         |                                                                
|(In millions)                                                    |                                                                                                    | 2004                                                    |                                                                 |       | 2003  |       |       | 2002  |     
|                                                                 |                                                                                                    |                                                        
|                                                                 |                                                                                                    |                                                         |                                                                 |      
|Cash flows from operating
    activities:                        |                                                                                                    |                                                         |                                                                 |       |       |       |       |       |      |       |       |       
|                                                                 | Net income                                                                                         |                                                         | $                                                               | 56.5  |       |       | $     | 43.5  |      |       | $     | 30.9   |      
|                                                                 | Adjustments to reconcile net income (loss) to net
    cash flows provided by operating activities: |                                                         |                                                                 |       |       |       |       |       |      |       |       |        |      
|                                                                 |                                                                                                    | Depreciation, depletion and amortization                |                                                                 |       | 41.3  |       |       |       | 42.1 |       |       |        | 37.1  |     
|                                                                 |                                                                                                    | Finance fee amortization                                |                                                                 |       | 1.6   |       |       |       | 1.6  |       |       |        | 1.9   |     
|                                                                 |                                                                                                    | Loss on early extinguishment of long-term debt          |                                                                 |       |      |       |       |       |     |       |       |        | 5.3   |     
|                                                                 |                                                                                                    | Restructuring charge and other charges, net of
    cash |                                                                 |       |      |       |       |       |     |       |       |        | 1.1   |     
|                                                                 |                                                                                                    | Deferred income taxes                                   |                                                                 |       | (13.8 | )     |       |       | 2.2  |       |       |        | (12.7 | )   
|                                                                 |                                                                                                    | Loss on disposal of property, plant and equipment       |                                                                 |       | 0.9   |       |       |       | 0.3  |       |       |        | 0.2   |     
|                                                                 |                                                                                                    | Changes in operating assets and liabilities:            |                                                                 |       |       |       |       |       |      |       |       |        |       |     
|                                                                 |                                                                                                    |                                                         | Receivables                                                     |       |       | (23.9 | )     |       |      | (18.5 | )     |        |       | (5.9 | )
|                                                                 |                                                                                                    |                                                         | Inventories                                                     |       |       | 1.9   |       |       |      | 4.3   |       |        |       | 3.8  |  
|                                                                 |                                                                                                    |                                                         | Other assets                                                    |       |       |      |       |       |      | (4.0  | )     |        |       | 0.6  |  
|                                                                 |                                                                                                    |                                                         | Accounts payable, accrued expenses and income
    taxes payable |       |       | 29.9  |       |       |      | (0.8  | )     |        |       | 14.5 |  
|                                                                 |                                                                                                    |                                                         | Other noncurrent liabilities                                    |       |       | 8.1   |       |       |      | 0.3   |       |        |       | 5.4  |  
|                                                                 |                                                                                                    |                                                        
|Net cash provided by operating
    activities                    |                                                                                                    |                                                         | 102.5                                                           |       |       |       | 71.0  |       |      |       | 82.2  |       
|                                                                 |                                                                                                    |                                                        
|                                                                
|Cash flows from investing activities:                            |                                                                                                    |                                                         |                                                                 |       |       |       |       |       |      |       |       |       
|                                                                 | Capital expenditures                                                                               |                                                         |                                                                 | (26.9 | )     |       |       | (20.6 | )    |       |       | (19.5  | )    
|                                                                 | Proceeds from sales of property, plant and
    equipment                                           |                                                         |                                                                 | 0.7   |       |       |       | 0.1   |      |       |       | 0.6    |      
|                                                                 | Acquisition of intangible assets                                                                   |                                                         |                                                                 |      |       |       |       | (24.8 | )    |       |       |       |      
|                                                                 | Other                                                                                              |                                                         |                                                                 | 0.2   |       |       |       | (0.3  | )    |       |       | (0.2   | )    
|                                                                 |                                                                                                    |                                                        
|Net cash used in investing
    activities                        |                                                                                                    |                                                         | (26.0                                                           | )     |       |       | (45.6 | )     |      |       | (19.1 | )     
|                                                                 |                                                                                                    |                                                        
|                                                                
|Cash flows from financing activities:                            |                                                                                                    |                                                         |                                                                 |       |       |       |       |       |      |       |       |       
|                                                                 | Proceeds from issuance of long-term debt                                                           |                                                         |                                                                 |      |       |       |       |      |      |       |       | 78.4   |      
|                                                                 | Principal payments on long-term debt, including
    capital leases                                 |                                                         |                                                                 | (40.6 | )     |       |       | (31.1 | )    |       |       | (115.9 | )    
|                                                                 | Revolver activity                                                                                  |                                                         |                                                                 | (3.0  | )     |       |       | 14.0  |      |       |       | (39.8  | )    
|                                                                 | Advances to CMI, net                                                                               |                                                         |                                                                 | (30.4 | )     |       |       | (8.2  | )    |       |       | (2.2   | )    
|                                                                 | Dividends paid                                                                                     |                                                         |                                                                 |      |       |       |       | (21.7 | )    |       |       |       |      
|                                                                 | Deferred financing costs                                                                           |                                                         |                                                                 |      |       |       |       |      |      |       |       | (3.9   | )    
|                                                                 | Capital contributions                                                                              |                                                         |                                                                 |      |       |       |       | 8.8   |      |       |       | 12.8   |      
|                                                                 | Other                                                                                              |                                                         |                                                                 |      |       |       |       |      |      |       |       | 1.0    |      
|                                                                 |                                                                                                    |                                                        
|Net cash used in financing
    activities                        |                                                                                                    |                                                         | (74.0                                                           | )     |       |       | (38.2 | )     |      |       | (69.6 | )     
|                                                                 |                                                                                                    |                                                        
|Effect of exchange rate changes on cash and
    cash equivalents |                                                                                                    |                                                         | 4.6                                                             |       |       |       | 3.5   |       |      |       | 2.5   |       
|                                                                 |                                                                                                    |                                                        
|Net increase (decrease) in cash and cash
    equivalents         |                                                                                                    |                                                         | 7.1                                                             |       |       |       | (9.3  | )     |      |       | (4.0  | )     
|Cash and cash equivalents, beginning of
    year                 |                                                                                                    |                                                         | 2.6                                                             |       |       |       | 11.9  |       |      |       | 15.9  |       
|                                                                 |                                                                                                    |                                                        
|                                                                
|Cash and cash equivalents, end of
    year                       |                                                                                                    | $                                                       | 9.7                                                             |       |       | $     | 2.6   |       |      | $     | 11.9  |       
|                                                                 |                                                                                                    |                                                        
|                                                                
|Supplemental cash flow information:                              |                                                                                                    |                                                         |                                                                 |       |       |       |       |       |      |       |       |       
|                                                                 | Interest paid, excluding capitalized interest                                                      |                                                         | $                                                               | 35.6  |       |       | $     | 36.9  |      |       | $     | 29.4   |      
|                                                                 | Income taxes paid, net of refunds and
    indemnification                                          |                                                         |                                                                 | 9.6   |       |       |       | 8.4   |      |       |       | 10.4   |      
|                                                                

The accompanying notes are an integral part of
the consolidated financial statements.


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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Notes to Consolidated Financial Statements






1.    ORGANIZATION AND
FORMATION





Compass Minerals Group, Inc. (CMG or
the Company), is a producer and marketer of
inorganic mineral products with manufacturing sites in North
America and Europe. Its principal products are salt and sulfate
of potash (SOP). CMG serves a variety of markets,
including agriculture, food processing, chemical processing,
water conditioning and highway deicing. The consolidated
financial statements include the accounts of CMG, formerly IMC
Inorganic Chemicals Inc. (IMCI), and the
consolidated results of CMGs wholly owned subsidiaries.
CMGs primary subsidiaries include those entities listed
below:




| |   |                                        
| | - | ---------------------------------------
| |  | NAMSCO Inc. (NAMSCO) and subsidiaries



| |   |                                     
| | - | ------------------------------------
| |  | North American Salt Company (NASC)
|
| |  | Carey Salt Company                  
|
| |  | Sifto Canada Inc. (Sifto)         



| |   |                                       
| | - | --------------------------------------
| |  | GSL Corporation and subsidiary (GSL)



| |   |                                     
| | - | ------------------------------------
| |  | Great Salt Lake Minerals Corporation



| |   |                                                                
| | - | ---------------------------------------------------------------
| |  | Compass Minerals (Europe) Limited
    (CMGE) and subsidiaries



| |   |                                                     
| | - | ----------------------------------------------------
| |  | Compass Minerals (UK) Limited                       
|
| |  | Salt Union Limited U.K. (SUL) and
    subsidiaries

CMG has been a wholly owned subsidiary of Compass
Minerals International, Inc. (CMI) since CMIs
acquisition of the Company on November 28, 2001. CMG was a
wholly owned subsidiary of Mosaic Global Holdings Inc.
(Mosaic), formerly IMC Global Inc. since
Mosaics acquisition of IMCI on April 1, 1998.

On November 28, 2001, Apollo
Management V, L.P. (Apollo), through its
subsidiary YBR Holdings LLC (YBR Holdings), acquired
control of CMI from Mosaic pursuant to a recapitalization
transaction (Recapitalization) with assets and
liabilities of CMG retaining their historical value.


2.    SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES




a. Management
Estimates: The preparation of
financial statements in conformity with generally accepted
accounting principles, or GAAP, requires management
to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and
accompanying notes. Actual results could differ from those
estimates.


b. Basis of
Consolidation:The Companys
consolidated financial statements include the accounts of the
Company, which include its wholly-owned domestic and foreign
subsidiaries. All significant intercompany balances and
transactions have been eliminated.

c. Foreign Currency
Translation:Assets and liabilities
are translated into U.S. dollars at end of period exchange
rates. Revenues and expenses are translated using the average
rates of exchange for the year. Adjustments resulting from the
translation of foreign-currency financial statements into the
reporting currency, U.S. dollars, are included in
accumulated other comprehensive income (loss). Aggregate
exchange (gains) losses from transactions denominated in a
currency other than a companys functional currency
included in income for the years ended December 31, 2004,
2003 and 2002, were $6.9 million, $3.9 million and
$(0.6) million, respectively.

d. Revenue
Recognition:The Company sells mineral
products, primarily salt and SOP. Revenue is recognized by the
Company at the time of shipment to the customer, which coincides
with the transfer of title and risk of ownership to the
customer. Sales represent billings to customers net of sales
taxes charged for the sale of the product. Sales include
shipping and handling costs which are expensed when the related
product is sold.

e. Cash and Cash
Equivalents:The Company considers all
investments with original maturities of three months or less to
be cash equivalents. The Company maintains the majority of its
cash in bank deposit accounts with several commercial banks with
high credit ratings in the U.S., Canada and Europe. The Company
does not believe it is exposed to any significant credit risk on
cash and cash equivalents.

f. Accounts Receivable and Allowance for
Doubtful Accounts:Receivables consist
almost entirely of trade accounts receivables. Trade accounts
receivable are recorded at the invoiced amount and do not bear
interest. The allowance for doubtful accounts is our best
estimate of the amount of probable credit losses in our existing
accounts receivable. We determine the allowance based on
historical write-off experience by business line. We review our
allowance for doubtful accounts periodically and significant
balances past due are reviewed for collectibility. Account
balances are charged off against the allowance when the Company
believes it is probable that the receivable will not be
recovered. We do not have off-balance-sheet credit exposure
related to our customers.

g. Inventories:Inventories are stated at the lower of cost or market. Finished
goods costs are determined by the average cost method. Raw
materials and supply costs are determined by either the
first-in, first-out (FIFO) or the average cost
method. Raw materials and supplies primarily consist of raw
materials purchased to aid in the production of our mineral
products, maintenance materials and packaging materials.
Finished goods are comprised of salt and SOP products readily
available for sale. All costs associated with the

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(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




production of salt and SOP at our producing
locations are captured as inventory costs. Additionally, since
our products are often stored at third-party warehousing
locations, we include in the cost of inventory the freight and
handling costs necessary to move the product to storage until
the product is sold to a customer.

h. Property, Plant and
Equipment:Property, plant and
equipment are stated at cost and include interest on funds
borrowed to finance construction. The costs of replacements or
renewals which improve or extend the life of existing property
are capitalized. Maintenance and repairs are expensed as
incurred. Upon retirement or disposition of an asset, any
resulting gain or loss is included in operations.

Property, plant and equipment also includes
mineral interests. The Company leases probable mineral reserves
at several of its extraction facilities. These leases have
varying terms, and many provide for a royalty payment to the
lessor based on a specific amount per ton of mineral extracted
or as a percentage of revenue. The Companys leased mineral
interests are amortized on a units-of-production basis over the
respective estimated lives of mineral deposits not to exceed
99 years. The weighted average amortization period for
these probable mineral reserves is 92 years as of
December 31, 2004. The Company also owns other mineral
properties. The Companys rights to extract minerals are
contractually limited by time. However, the Company believes it
will be able to continue to extend lease agreements, as it has
in the past, at commercially reasonable terms, without incurring
substantial costs or incurring material modifications to the
existing lease terms and conditions, and therefore, believes
that assigned lives are appropriate.


The Companys owned mineral interests and
all other asset classes or groups are amortized on a
straight-line basis over the following estimated useful lives:


|                           |  |  |                 | 
|-------------------------- |  |  | --------------- | 
|                          
|Land improvements          |  |  | 7 to 25 years   | 
|Buildings and improvements |  |  | 7 to 30 years   | 
|Machinery and equipment    |  |  | 3 to 20 years   | 
|Furniture and fixtures     |  |  | 3 to 10 years   | 
|Mineral interests          |  |  | 20 to 99  years | 
|                          

The Company recognizes and measures obligations
related to the retirement of tangible long-lived assets in
accordance with SFAS No. 143, Accounting for
Obligations Associated with the Retirement of Long-Lived
Assets.

To review for possible impairments, the Company
uses the methodology prescribed in Statement of Financial
Accounting Standards (SFAS) No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets. The
Company reviews long-lived assets and the related intangible
assets for impairment whenever events or changes in
circumstances indicate the carrying amounts of such assets may
not be recoverable. If an indication of a potential impairment
exists, recoverability of the respective assets is determined by
comparing the forecasted undiscounted net cash flows of the
operation to which the assets relate, to the carrying amount,
including associated intangible assets, of such operation. If
the operation is determined to be unable to recover the carrying
amount of its assets, then intangible assets are written down
first, followed by the other long-lived assets of the operation,
to fair value. Fair value is determined based on discounted cash
flows or appraised values, depending upon the nature of the
assets.


i. Other Intangible
Assets:The Company follows the rules
on accounting for intangible assets as set forth in
SFAS No. 142. Under these rules, intangible assets
deemed to have indefinite lives are not amortized but are
subject to annual impairment tests in accordance with the
Statement. The Company does not have any indefinite lived
intangible assets. The Companys other intangible assets
are amortized over their estimated useful lives that range from
5 to 25 years.

j. Other Noncurrent
Assets:Other noncurrent assets
include deferred financing costs of $16.3 million net of
accumulated amortization of $5.5 million and
$3.6 million as of December 31, 2004 and 2003,
respectively. Deferred financing costs are being amortized on a
straight-line basis over the terms of the debt to which the
costs relate and the related amortization is recorded as
interest expense.

Certain inventories of spare parts and related
inventory of approximately $9.1 million and
$7.7 million at December 31, 2004 and 2003,
respectively, that will be utilized with respect to long-lived
assets have been classified in the consolidated balance sheets
as other noncurrent assets.


k. Income
Taxes:The Company accounts for income
taxes using the liability method in accordance with the
provisions of SFAS No. 109, Accounting for
Income Taxes. Under the liability method, deferred taxes
are determined based on the differences between the financial
statement and the tax basis of assets and liabilities using
enacted tax rates in effect in the years in which the
differences are expected to reverse. The Companys foreign
subsidiaries file separate-company returns in their respective
jurisdictions

l. Environmental
Costs:Environmental costs, other than
those of a capital nature, are accrued at the time the exposure
becomes known and costs can reasonably be estimated. Costs are
accrued based upon managements estimates of all direct
costs, after taking into account reimbursement by third parties.
The Company does not accrue liabilities for unasserted claims
that are not probable of assertion and the Company does not
provide for environmental clean-up costs, if any, at the end of
the useful lives of its facilities, since it is not practical to
estimate such costs

39



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(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




due to the long lives of the Companys
mineral deposits. The Companys environmental accrual was
$2.3 million as of December 31, 2004 and 2003.

m. Stock
Options:The following relates to the
Companys parent, CMI, and is for informational purposes
only. CMI has a stock option plan that was adopted on
November 28, 2001 (see Note 14, Stock Options).
Prior to the fourth quarter of 2003, CMI accounted for its
stock-based employee compensation plan under the recognition and
measurement provisions of Accounting Principles Board
(APB) Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations. No
stock-based employee compensation expense for stock options was
reflected in net income for the year ended December 31,
2002, as all stock options granted under the plan had an
exercise price equal to the fair market value of the underlying
common stock on the date of grant. During the fourth quarter of
2003, CMI adopted the preferable fair value recognition
provisions of SFAS No. 123, Accounting for
Stock-Based Compensation. CMI selected the prospective
method of adoption described in SFAS No. 148,
Accounting for Stock-Based Compensation 
Transition and Disclosure. Under the prospective method,
all options granted or modified after January 1, 2003 are
accounted for under the fair value method retroactively
effective as of January 1, 2003.

Awards to CMIs directors vest immediately.
Awards to employees under the Companys plan vest over
periods ranging from one to eight years. Therefore, the cost
related to stock-based employee compensation included in the
determination of net income for 2004 and 2003 is less than that
which would have been recognized if the fair value based method
had been applied to all awards since the original effective date
of SFAS No. 123 (December 1994).


The following table sets forth information about
the fair value of each option grant on the date of grant using
the Black-Scholes option-pricing model and the weighted-average
assumptions used for such grants for the years ended
December 31:


|                              |  |      |      |  |       |   |       |       |  |   |      | 
|----------------------------- |  | ---- | ---- |  | ----- | - | ----- | ----- |  | - | ---- | 
|                             
|                              | 
|                              |  | 2004 |      |  | 2003* |   |       | 2002* | 
|                              |  |     
|Fair value of options granted |  | $    | 2.37 |  |       | $ | 10.98 |       |  | $ | 2.11 | 
|                             
|Expected lives (years)        |  |      | 1.9  |  |       |   | 7.8   |       |  |   | 7.8  | 
|Expected volatility           |  |      | 24%  |  |       |   |      |       |  |   |     | 
|Dividend yield                |  |      | 4.7% |  |       |   |      |       |  |   |     | 
|Risk-free interest rates      |  |      | 3.1% |  |       |   | 3.4%  |       |  |   | 4.9% | 
|                             



|  |                                                                                                                                             
|- | --------------------------------------------------------------------------------------------------------------------------------------------
|* | Under the minimum value method, volatility was
    excluded. CMI used this method before CMIs initial public
    offering in December 2003.

n. Derivatives:The Company accounts for derivative financial instruments in
accordance with SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended,
which requires companies to record derivative financial
instruments as assets or liabilities measured at fair value.
SFAS No. 133 further requires that changes in the
derivatives fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Accounting
for qualifying hedges allows a derivatives gains and
losses to offset related results from the hedged item on the
income statement. Companies must formally document, designate,
and assess the effectiveness of transactions that receive hedge
accounting.

The Company is exposed to the impact of
fluctuations in the purchase price of natural gas consumed in
operations, as well as changes in the market value of its
financial instruments. Prior to the fourth quarter of 2002, the
Company historically entered into natural gas supply agreements
to minimize natural gas pricing risks, but not for trading
purposes. These supply agreements did not meet the definition of
a derivative instrument under the provisions of
SFAS No. 133.


In the fourth quarter of 2002, the Company
adopted a policy of hedging natural gas prices through the use
of swap agreements in order to protect against commodity price
fluctuations. All of these derivative instruments held by the
Company as of December 31, 2004 and 2003 qualify as cash
flow hedges. The Company does not engage in trading activities
with these financial instruments.


o. Concentration of Credit
Risk:The Company sells its salt
products to various governmental agencies, manufacturers,
distributors and retailers primarily in the Midwestern United
States, and throughout Canada and the United Kingdom. The
Companys potash products are sold across North America and
internationally. No single customer or group of affiliated
customers accounted for more than 10% of the Companys
sales in any year during the three year period ended
December 31, 2004, or for more than 10% of accounts
receivable at December 31, 2004 or 2003.

p. Recent Accounting
Pronouncements:In November 2004, the
FASB issued SFAS No. 151, Inventory
Costs  an amendment of ARB No. 43,
Chapter 4 that is effective for the Company beginning
January 1, 2006. This Statement amends the guidance in
Accounting Research Bulletin (ARB) No. 43,
Chapter 4, Inventory Pricing, to clarify the
accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage).
Paragraph 5 of ARB 43, Chapter 4, previously
stated that ... under some circumstances, items such
as idle facility expense, excessive spoilage, double freight,
and rehandling costs may be so abnormal as to require treatment
as current period charges... . This Statement requires
that those items be recognized as current-period charges
regardless of whether they meet the criterion of so
abnormal. 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. The Company will

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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




determine the impact, if any, that the adoption
of SFAS No. 151 will have on its consolidated
statements of operations or cash flows during 2005.

In December 2004, the FASB issued
SFAS No. 123(R), Shared-Based Payment.
SFAS 123(R) is a revision of SFAS No. 123,
Accounting for Stock Based Compensation, and
supersedes Accounting Principles Board Opinion No. 25
(APB 25), Accounting for Stock Issued to
Employees. Among other items SFAS 123(R) eliminates
the use of APB 25 and the intrinsic value method of
accounting, and requires companies to follow guidance previously
set forth in SFAS 123, and recognize the cost of employee
services received in exchange for awards of equity instruments,
based on the grant date fair value of those awards, in the
financial statements. CMI adopted SFAS 123 in the fourth
quarter of 2003. The effective date of SFAS 123(R) is the
first reporting period beginning after June 15, 2005, which
is the third quarter of 2005 for calendar year companies. CMI
currently expects to adopt SFAS 123(R) effective
July 1, 2005 although early adoption is allowed. We will
determine the impact, if any, that the adoption of
SFAS 123(R) will have on our consolidated statements of
operations or cash flows prior to adoption.


q. Reclassifications:Certain reclassifications were made to
prior-year amounts in order to conform with the current
years presentation.

3.    OTHER CHARGES




2004


Apollo elected to terminate the amended
management consulting agreement in November 2004 resulting in a
charge of $4.5 million for all services rendered under the
agreement.

2002


Following the Recapitalization, the Company
incurred and expensed certain non-recurring costs totaling
$7.7 million that consist of transition costs required to
establish the Company as an independent entity. The costs were
directly related to the transition from an entity controlled by
Mosaic Global Holdings Inc. (Mosaic) and consisted
primarily of one-time compensation costs, costs to develop
stand-alone tax and inventory strategies, and costs associated
with determining the post-closing purchase price adjustment.

4.    INVENTORIES




Inventories consist of the following at
December 31 (in millions):


|                           |  |      |      |  |      |   |      | 
|-------------------------- |  | ---- | ---- |  | ---- | - | ---- | 
|                          
|                           | 
|                           |  | 2004 |      |  | 2003 |  
|                           |  |      |     
|Finished goods             |  | $    | 83.4 |  |      | $ | 84.1 | 
|                          
|Raw materials and supplies |  |      | 12.9 |  |      |   | 12.6 | 
|                           |  |      |     
|                           |  | $    | 96.3 |  |      | $ | 96.7 | 
|                           |  |      |     

5.    PROPERTY, PLANT AND
EQUIPMENT




In April 2004, the FASB issued FASB staff
position (FSP) FAS 141-1 and FAS 142-1,
Interaction of FASB Statements No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible
Assets, and Emerging Issues Task Force (EITF) Issue
No. 04-2, Whether Mineral Rights Are Tangible or
Intangible Assets. This FSP amends SFAS No. 141
and 142, and requires mineral rights to be accounted for as
tangible assets based on the consensus reached in
EITF 04-2. The Company adopted the guidance in the FSP on
July 1, 2004, resulting in the balance sheet
reclassification of approximately $147.2 million of net
mineral rights from intangible assets to property, plant and
equipment. At December 31, 2003, approximately
$148.0 million of net mineral rights were similarly
reclassified. This FSP had no impact on the Companys
consolidated statements of operations or cash flows.


At December 31, 2004, mineral interests
include leased probable mineral reserves and owned mineral
properties of approximately $158.6 million and
$21.5 million, respectively, with accumulated depletion of
$12.5 million and $13.4 million respectively. At
December 31, 2003, mineral interests include leased
probable mineral reserves and owned mineral properties of
approximately $158.6 million and $20.3 million,
respectively, with accumulated depletion of $10.6 million
and $12.3 million, respectively.


Property, plant and equipment consists of the
following at December 31 (in millions):


|                                            |  |      |       |  |      |   |       | 
|------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | 
|                                           
|                                            | 
|                                            |  | 2004 |       |  | 2003 |  
|                                            |  |      |      
|Land and buildings                          |  | $    | 143.6 |  |      | $ | 135.9 | 
|Machinery and equipment                     |  |      | 436.8 |  |      |   | 408.3 | 
|Furniture and fixtures                      |  |      | 11.5  |  |      |   | 9.6   | 
|Mineral interests                           |  |      | 180.1 |  |      |   | 178.9 | 
|Construction in progress                    |  |      | 5.0   |  |      |   | 6.5   | 
|                                            |  |      |      
|                                            |  |      | 777.0 |  |      |   | 739.2 | 
|Less accumulated depreciation and depletion |  |      | 374.1 |  |      |   | 329.2 | 
|                                            |  |      |      
|                                            |  | $    | 402.9 |  |      | $ | 410.0 | 
|                                            |  |      |      

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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




6.    INTANGIBLE
ASSETS




In June 2003, the Company purchased, for
$24.8 million, intangible assets related to Mosaics
SOP marketing business including customer lists related to its
Carlsbad, New Mexico SOP product line and rights to produce SOP
at Mosaics Carlsbad, New Mexico facility (see
Note 11, Related Party Transactions). In accordance
with SFAS No. 142, the Company allocated the purchase
price to these intangible assets based on their estimated fair
values. The Company allocated approximately $0.5 million to
a long-term customer contract and the remaining
$24.3 million to the rights to produce SOP at Mosaics
Carlsbad facility. The long-term sales contract terminates at
the end of 2008 and will be amortized over its remaining life on
a straight-line basis. The life over which the rights to produce
SOP at Mosaics facility will be amortized on a
straight-line basis estimated at 25 years. Neither asset
has a residual value.


The accumulated amortization of intangible assets
for the years ended December 31, 2004 and 2003 was
$1.2 million and $0.1 million, respectively.
Amortization expense during the year ended December 31,
2004 and 2003 was $1.1 million and $0.1 million,
respectively. Amortization expense for fiscal 2005 through
fiscal 2009 is estimated to be approximately $1.1 million,
annually.


7.    INCOME
TAXES




The following table summarizes the income tax
provision of the Company for the years ended December 31
(in millions):


|                                 |         |                |      |      |       |   |      |      |     |   |     |       |       |  
|-------------------------------- | ------- | -------------- | ---- | ---- | ----- | - | ---- | ---- | --- | - | --- | ----- | ----- | -
|                                
|                                 |        
|                                 |         | 2004           |      |      | 2003  |   |      | 2002 |    
|                                
|                                 |        
|Current:                         |         |                |      |      |       |   |      |      |     |   |     |      
|                                 | Federal |                | $    | 18.3 |       |   | $    | 0.6  |     |   | $   |      |      
|                                 | State   |                |      | 1.8  |       |   |      | 0.2  |     |   |     | 1.3   |      
|                                 | Foreign |                |      | 18.3 |       |   |      | 7.2  |     |   |     | 12.0  |      
|                                 |         |               
|                                
|                                 |         | Total current  |      |      | 38.4  |   |      |      | 8.0 |   |     |       | 13.3  |  
|                                 |         |               
|Deferred:                        |         |                |      |      |       |   |      |      |     |   |     |      
|                                 | Federal |                |      | (8.5 | )     |   |      | 2.1  |     |   |     | (14.0 | )    
|                                 | State   |                |      | (0.6 | )     |   |      | (3.2 | )   |   |     | (0.4  | )    
|                                 | Foreign |                |      | (4.7 | )     |   |      | 3.3  |     |   |     | 1.7   |      
|                                 |         |               
|                                
|                                 |         | Total deferred |      |      | (13.8 | ) |      |      | 2.2 |   |     |       | (12.7 | )
|                                 |         |               
|Total provision for income taxes |         | $              | 24.6 |      |       | $ | 10.2 |      |     | $ | 0.6 |      
|                                 |         |               

The following table summarizes components of
income before taxes and the effects of significant adjustments
to tax computed at the federal statutory rate for the years
ended December 31 (in millions):


|                                                          |  |      |       |   |      |   |      |      |  |   |       |  
|--------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ---- | ---- |  | - | ----- | -
|                                                         
|                                                          | 
|                                                          |  | 2004 |       |   | 2003 |   |      | 2002 | 
|                                                          |  |     
|                                                          |  |      |       |  
|Domestic income                                           |  | $    | 45.8  |   |      | $ | 33.4 |      |  | $ | 9.6   |  
|Foreign income                                            |  |      | 35.3  |   |      |   | 20.3 |      |  |   | 21.9  |  
|                                                          |  |     
|Income before income taxes                                |  | $    | 81.1  |   |      | $ | 53.7 |      |  | $ | 31.5  |  
|                                                          |  |     
|Computed tax at the federal statutory rate of 35%         |  | $    | 28.3  |   |      | $ | 18.8 |      |  | $ | 11.0  |  
|Foreign income, mining, and withholding taxes             |  |      | 1.3   |   |      |   | (0.7 | )    |  |   | 6.0   |  
|Percentage depletion in excess of basis                   |  |      | (6.1  | ) |      |   | (5.1 | )    |  |   | (1.9  | )
|State income taxes, net of federal income tax
    benefit |  |      | 0.7   |   |      |   | (3.2 | )    |  |   | 0.6   |  
|Change in valuation allowance on deferred tax
    assets  |  |      | (10.1 | ) |      |   | (4.2 | )    |  |   | (14.6 | )
|Change in tax contingency accrual                         |  |      | 10.1  |   |      |   | 4.2  |      |  |   |      |  
|Other                                                     |  |      | 0.4   |   |      |   | 0.4  |      |  |   | (0.5  | )
|                                                          |  |     
|Income tax expense                                        |  | $    | 24.6  |   |      | $ | 10.2 |      |  | $ | 0.6   |  
|                                                          |  |     
|Effective tax rate                                        |  |      | 30%   |   |      |   | 19%  |      |  |   | 2%    |  
|                                                          |  |     

Under SFAS No. 109 deferred tax assets
and liabilities are recognized for the estimated future tax
effects, based on enacted tax law, of temporary differences
between the values of assets and liabilities recorded for
financial reporting and for tax purposes and of net operating
loss and other carryforwards. Significant components of the
Companys deferred tax assets and liabilities were as
follows at December 31 (in millions):


|                            |                                  |      |      |     |      |   |     |     |  |  | 
|--------------------------- | -------------------------------- | ---- | ---- | --- | ---- | - | --- | --- |  |  | 
|                           
|                            |                                 
|                            |                                  | 2004 |      |     | 2003 |   |     |    
|                            |                                  |     
|                            |                                  |      |      |    
|Current deferred taxes:     |                                  |      |      |     |      |   |     |     |  | 
|Deferred tax assets:        |                                  |      |      |     |      |   |     |     |  | 
|                            | Net operating loss carryforwards |      | $    | 2.7 |      |   | $   | 2.5 |  |  | 
|                            | Accrued expenses                 |      |      | 5.2 |      |   |     | 4.3 |  |  | 
|                            | Other assets                     |      |      | 3.6 |      |   |     | 1.8 |  |  | 
|                            |                                  |      |      |     |     
|                           
|Current deferred tax assets |                                  | $    | 11.5 |     |      | $ | 8.6 |     |  | 
|                            |                                  |      |      |     |     

|                                         |                                              |      |      |      |      |   |      |       |   |  | 
|---------------------------------------- | -------------------------------------------- | ---- | ---- | ---- | ---- | - | ---- | ----- | - |  | 
|                                        
|                                         |                                             
|                                         |                                              | 2004 |      |      | 2003 |   |      |      
|                                         |                                              |     
|                                         |                                              |      |      |     
|                                        
|Non-current deferred taxes:              |                                              |      |      |      |      |   |      |       |   | 
|                                         | Property, plant and equipment                |      | $    | 89.5 |      |   | $    | 86.2  |   |  | 
|                                         |                                              |      |      |      |     
|                                        
|Total deferred tax liabilities           |                                              |      | 89.5 |      |      |   | 86.2 |       |   | 
|                                         |                                              |      |      |      |     
|                                        
|Deferred tax assets:                     |                                              |      |      |      |      |   |      |       |   | 
|                                         | Net operating loss carryforwards             |      |      | 18.0 |      |   |      | 29.0  |   |  | 
|                                         | Alternative minimum tax credit carryforwards |      |      | 11.1 |      |   |      | 3.0   |   |  | 
|                                         | Purchase agreement (see Note 10)             |      |      | 1.8  |      |   |      | 2.1   |   |  | 
|                                         | Other assets                                 |      |      | 5.2  |      |   |      | 0.3   |   |  | 
|                                         |                                              |      |      |      |     
|                                        
|                                         | Subtotal                                     |      |      | 36.1 |      |   |      | 34.4  |   |  | 
|                                         | Valuation allowance                          |      |      | (2.6 | )    |   |      | (12.7 | ) |  | 
|                                         |                                              |      |      |      |     
|                                        
|Total deferred tax assets                |                                              |      | 33.5 |      |      |   | 21.7 |       |   | 
|                                         |                                              |      |      |      |     
|                                        
|Net non-current deferred tax liabilities |                                              | $    | 56.0 |      |      | $ | 64.5 |       |   | 
|                                         |                                              |      |      |      |     

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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




At December 31, 2004, the Company has net
operating loss carryforwards of approximately
$52.3 million. The Company is a loss corporation as defined
in Section 382 of the Internal Revenue Code. The Company
has previously incurred three ownership changes placing annual
limitations on the utilization of each loss carryforward. If not
utilized, these carryforwards expire between 2008 and 2022. The
Company also has a U.S. federal alternative minimum tax
credit carryforward at December 31, 2004 of approximately
$11.1 million. This credit carryforward may be carried
forward indefinitely to offset any excess of regular tax
liability over alternative minimum tax liability.

The Company has recorded a valuation allowance
for a portion of its deferred tax asset relating to net
operating loss carryforwards that it does not believe will, more
likely than not, be realized. As of December 31, 2004 and
2003, the Companys valuation allowance was
$2.6 million and $12.7 million, respectively. In the
future, if the Company determines, based on existence of
sufficient evidence, that it should realize more or less of its
deferred tax assets, an adjustment to the valuation allowance
will be made in the period such a determination is made.


The calculation of the Companys tax
liabilities involves dealing with uncertainties in the
application of complex tax regulations in multiple
jurisdictions. The Company recognizes potential liabilities for
anticipated tax issues in the U.S. and other tax jurisdictions
based on the Companys estimate of whether, and the extent
to which, additional taxes will be due. If payment of these
amounts ultimately proves to be unnecessary, the reversal of the
liabilities would result in tax benefits being recognized in the
period when the Company determines the liabilities are no longer
necessary. If the Companys estimate of tax liabilities
proves to be less than the ultimate assessment, a further charge
to expense would result.


In 2003, in accordance with the merger agreement
related to the Recapitalization, Mosaic indemnified the Company
for approximately $14.1 million for income taxes related to
periods prior to the Recapitalization. The Company had
previously recognized income tax expense for these items. The
Company recorded the indemnification as a reduction to income
taxes provided for in prior years and an increase to additional
paid in capital. The Company received $8.8 million from
Mosaic during the third quarter and used the cash to pay income
taxes for periods prior to Recapitalization.


| |                                                                          
| | -------------------------------------------------------------------------
| | American Jobs Creation Act of 2004 
    Repatriation of Foreign Earnings

The Company maintains undistributed foreign
earnings outside of the United States in Canada and the United
Kingdom. Most of the amounts held outside the U.S. could be
repatriated to the U.S., but, under current law, would be
subject to U.S. federal income taxes, less applicable
foreign tax credits. Repatriation of some foreign balances is
restricted by local laws. The Company has not provided for the
U.S. federal tax liability on these amounts for financial
statement purposes, since these foreign earnings are considered
indefinitely reinvested outside the U.S.

The American Jobs Creation Act of 2004, enacted
on October 22, 2004 (the Jobs Act), provides
for a temporary 85% dividends received deduction on certain
foreign earnings repatriated during a one-year period. The
deduction would result in an approximate 5.25% federal tax rate
on the repatriated earnings. To qualify for the deduction, the
earnings must be reinvested in the U.S. pursuant to a
domestic reinvestment plan established by a companys chief
executive officer and approved by its board of directors.
Certain other criteria in the Jobs Act must be satisfied as
well. The Company has not precisely quantified the amount of our
foreign earnings that qualify for the temporary deduction but
estimate this amount to be approximately $129.5 million.
For the Company, the one-year period during which the qualifying
distributions can be made is the twelve month period ending
February 28, 2006 (February 28th is CMIs tax
year end).


The Company is in the process of evaluating
whether it will repatriate any foreign earnings under the
repatriation provisions of the Jobs Act and, if so, the amount
that it will repatriate. The range of reasonably possible
amounts that the Company is considering for repatriation, which
would be eligible for the temporary deduction, is zero to
approximately $129.5 million. The Company is awaiting the
issuance of further regulatory guidance and passage of statutory
technical corrections with respect to certain provisions in the
Jobs Act prior to completing its analysis of applying the
provisions of the Act to its particular situation and making a
determination as to the amount it may repatriate, if any. If the
analysis determines that repatriation would be favorable and an
appropriate domestic reinvestment plan can be established that
is applicable to the Companys business model, the Company
would likely repatriate amounts in the mid to upper end of its
range. The Company expects to determine the amounts and sources
of foreign earnings to be repatriated, if any, during 2005. Use
of the funds will be governed by a domestic reinvestment plan,
as required by the Jobs Act.


Repatriation of any amount eligible for the
temporary deduction could result in additional U.S. federal
income tax expense during 2005 or 2006. As part of our
evaluation process the Company will determine the potential
income tax effects of any repatriation. The Company has not
determined the reasonable range of potential income tax effects
at this time and expects an analysis to be completed during
2005. Repatriation also could substantially increase liquidity
in the U.S., although use of the additional liquidity would be
restricted by the domestic reinvestment plan. There would be a
corresponding reduction in liquidity at the Companys
foreign subsidiaries. Some foreign subsidiaries could be


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required to borrow in order to repatriate their
earnings to the U.S. The Company expects its foreign cash
flows would be sufficient to repay any foreign debt and
replenish foreign cash balances over time. Should the Company
decide not to repatriate foreign earnings under the Jobs Act, it
would meet U.S. liquidity needs through ongoing cash flows,
external borrowing, or both. The Company utilizes a variety of
tax planning and financing strategies in an effort to ensure
that the Companys worldwide cash is available in the
locations in which it is needed.

8.    LONG-TERM
DEBT




In November 2001, the Company issued
$250 million aggregate principal amount of 10% Senior
Subordinated Notes due August 15, 2011 (the
Notes) in a private offering pursuant to
Rule 144A under the Securities Act of 1933. The proceeds
from the issuance of the Notes were used to finance the
Recapitalization and certain related costs. Interest on the
Notes is payable semi-annually in cash on each February 15 and
August 15. The Notes may be redeemed in whole or in part from
time to time, on or after August 15, 2006, at specified
redemption prices. The Companys domestic restricted
subsidiaries as of the issue date are the guarantors of the
Notes, with restricted net assets of $438.9 million at
December 31, 2004.


On November 28, 2001, the Company entered
into a $360 million credit facility (the Credit
Facility) with a syndicate of financial institutions. The
Credit Facility allowed for an eight-year $225 million term
loan (the Term Loan). The Term Loan was fully drawn
as of closing and used to finance the Recapitalization and
certain related costs. In addition, the Credit Facility also
provides a six and one-half year, $135 million revolving
credit facility, $30 million of which may be drawn in
Canadian dollars and $10 million of which may be drawn in
British pounds sterling. Additionally, the revolving credit
facility includes a sub-limit for letters of credit in an amount
not to exceed $50 million.


Borrowings under the Credit Facility incur
interest at either the Eurodollar Rate (LIBOR) or the
greater of a specified U.S. and Canadian prime lending rate or
the federal funds effective rate plus 0.50% (Base
Rate) plus, in each case, a margin ranging from 1.75% to
3.50%, which margin is dependent upon the Companys
leverage ratio, as determined quarterly. Interest on the Credit
Facility is payable at least quarterly.


The Company had outstanding letters of credit of
$8.2 million as of December 31, 2004. For each drawn
letter of credit, the Company is required to pay a per annum
participation fee ranging from 2.75% to 3.50%, depending on the
Companys leverage ratio, plus other administrative
charges. Additionally, the Company will pay a commitment fee
ranging from 0.375% to 0.500% per annum, depending on the
Companys leverage ratio, and is payable quarterly on the
available portion of the revolving credit facility. As of
December 31, 2004, additional borrowings of up to
$115.8 million under the revolving credit facility were
available for working capital and general corporate purposes,
subject to certain conditions.


The Term Loan requires quarterly principal
reductions. Also, the Company may be required to make mandatory
additional principal reductions, based on the Companys
excess cash flow and certain other events as described in the
Credit Facility. No mandatory additional principal reductions
were required in 2004.


On April 10, 2002, the Company completed an
offering of $75.0 million aggregate principal amount of
10% Senior Subordinated Notes due 2011 (the New
Notes). The New Notes were issued to the bondholders at a
premium of $3.4 million, plus accrued interest of
$1.1 million from February 15, 2002 and accordingly,
the Company received gross proceeds of $79.5 million from
the offering of the notes. The New Notes, together with the
$250.0 million aggregate principal amount of Notes, are
treated as a single class of securities under the Companys
existing indenture. The proceeds from the offering of the New
Notes, net of transaction costs, were used to repay borrowings
under the Companys Credit Facility. In connection with the
offering, the Company amended and restated the Credit Facility
with respect to a reduction in the Term Loan to
$150.0 million and a 0.75% reduction in the interest rate
margin charged to the Company on the Term Loan. The Company also
incurred a charge of approximately $5.3 million in April
2002, related to the write-off of the deferred financing costs
associated with the refinancing of the original Term Loan.


The Credit Facility is principally secured by all
existing and future assets of the Company, and requires the
Company to maintain certain minimum financial covenants
including minimum interest coverage ratio, a maximum total
leverage ratio, and a maximum level of capital expenditures. The
Credit Facility and the indentures governing the Notes limit the
Companys ability, among other things, to: incur additional
indebtedness or contingent obligations; pay dividends or make
distributions to stockholders; repurchase or redeem stock; make
investments; grant liens; make capital expenditures; enter into
transactions with stockholders and affiliates; sell assets; and
acquire the assets of, or merge or consolidate with, other
companies. As of December 31, 2004, the Company was in
compliance with each of its covenants.


On May 5, 2003, the Company amended the
Credit Facility to allow CMI to pay a dividend to be funded with
either cash on hand or with borrowings under the amended and
restated senior revolving credit facility. Additionally, the
amendment permits CMI to repurchase certain securities (other
than the Notes) not held by Apollo or management.


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




On November 17, 2003, the Company further
amended the Credit Facilities to allow CMI to pay future
dividends funded with either cash on hand or with borrowings
under the amended and restated senior revolving credit facility.
CMI paid dividends subsequent to this amendment.

The notes in the table below are listed in order
of subordination with all notes subordinate to the Credit
Facility borrowings. Third-party long-term debt consists of the
following at December 31 (in millions):


|                                               |  |      |       |   |      |   |       |  
|---------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | -
|                                              
|                                               | 
|                                               |  | 2004 |       |   | 2003 |  
|                                               |  |      |      
|Senior Subordinated Notes                      |  | $    | 325.0 |   |      | $ | 325.0 |  
|Term Loan                                      |  |      | 37.7  |   |      |   | 78.3  |  
|Revolving Credit Facility                      |  |      | 11.0  |   |      |   | 14.0  |  
|                                               |  |      |      
|                                               |  |      | 373.7 |   |      |   | 417.3 |  
|Plus premium on Senior Subordinated Notes, net |  |      | 2.7   |   |      |   | 2.9   |  
|Less current portion                           |  |      | (0.4  | ) |      |   | (0.8  | )
|                                               |  |      |      
|                                               |  | $    | 376.0 |   |      | $ | 419.4 |  
|                                               |  |      |      

Future minimum maturities of long-term debt for
the years ending December 31, are as follows (in millions):


|           |  |   |       | 
|---------- |  | - | ----- | 
|          
|2005       |  | $ | 0.4   | 
|2006       |  |   | 0.4   | 
|2007       |  |   | 0.4   | 
|2008       |  |   | 0.4   | 
|2009       |  |   | 47.1  | 
|Thereafter |  |   | 325.0 | 
|          
|           |  | $ | 373.7 | 
|          

As of December 31, 2004, the estimated fair
value of the notes, based on available trading information, was
$365.6 million, and the estimated fair value of amounts
outstanding under the Credit Facility approximated book value.


9.    PENSION PLANS AND
OTHER BENEFITS




The Company has two defined benefit pension plans
for certain of its U.K. and U.S. employees. Benefits of the
U.K. plan are based on a combination of years of service and
compensation levels. The Companys funding policy is to
make the minimum annual contributions required by applicable
regulations.


The Company made contributions to the plans of
approximately $1.9 million, $1.6 million and
$1.1 million in the years ended December 31, 2004,
2003 and 2002, respectively. The Company expects to make
contributions to the plans of approximately $2.0 million in
the year ended December 31, 2005.


The Companys pension plan assets are
managed by external investment managers. The Companys
investment strategy is to maximize return on investments while
minimizing risk. The Company believes the best way to accomplish
this goal is to take a conservative approach to its investment
strategy by investing in high-grade equity and debt securities.
Policy requires that equity securities comprise approximately
75% of the total portfolio, and that approximately 25% be
invested in debt securities. The Companys weighted-average
asset allocations by asset category are as follows:


|                          |  |                |      |  |      |  |      | 
|------------------------- |  | -------------- | ---- |  | ---- |  | ---- | 
|                         
|                          | 
|                          |  |               
|                          |  | Plan Assets at |     
|                          |  | December 31,   |     
|                          |  |                |     
|Asset Category            |  | 2004           |      |  | 2003 | 
|                         
|                          | 
|Cash and cash equivalents |  |                | 3%   |  |      |  | 1%   | 
|Equity Securities         |  |                | 72   |  |      |  | 76   | 
|Debt Securities           |  |                | 25   |  |      |  | 23   | 
|                          |  |                |     
|Total                     |  |                | 100% |  |      |  | 100% | 
|                          |  |                |     

The Company makes actuarial assumptions that it
believes are reasonable. Those assumptions for the years ended
December 31 were as follows:


|                               |  |      |       |  |      |  |       |      |  |  |       | 
|------------------------------ |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                              
|                               | 
|                               |  | 2004 |       |  | 2003 |  |       | 2002 | 
|                               |  |     
|Discount rate                  |  |      | 5.25% |  |      |  | 5.25% |      |  |  | 5.50% | 
|Expected return on plan assets |  |      | 6.25  |  |      |  | 6.25  |      |  |  | 6.50  | 
|Rate of compensation increase  |  |      | 2.75  |  |      |  | 2.75  |      |  |  | 3.50  | 
|                              

The overall expected long-term rate of return on
assets is a weighted-average expectation for the return on plan
assets. The Company considers historical performance and current
benchmarks to arrive at expected long-term rates of return in
each asset category. The Company assumed that 75% of its
portfolio would be invested in equity securities, with the
remainder invested in debt securities.


The following benefit payments, which reflect
expected future service, as appropriate, are expected to be paid
(in millions):


|              |  |          |      | 
|------------- |  | -------- | ---- | 
|             
|              | 
|              |  | Future   |     
|              |  | Expected |     
|              |  | Benefit  |     
|Calendar Year |  | Payments |     
|             
|              | 
|2005          |  | $        | 2.2  | 
|2006          |  |          | 1.8  | 
|2007          |  |          | 1.8  | 
|2008          |  |          | 1.8  | 
|2009          |  |          | 2.1  | 
|2010 - 2013   |  |          | 10.8 | 
|             

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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




The following table sets forth pension
obligations and plan assets for the Companys defined
benefit plans, based on a November 30 measurement date, as
of December 31 (in millions):

|                                             |  |      |       |   |      |   |       |  
|-------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | -
|                                            
|                                             | 
|                                             |  | 2004 |       |   | 2003 |  
|                                             |  |      |      
|Change in benefit obligation:                |  |      |       |   |      |   |       |  
|Benefit obligation as of January 1           |  | $    | 61.8  |   |      | $ | 56.2  |  
|Service cost                                 |  |      | 1.2   |   |      |   | 1.4   |  
|Interest cost                                |  |      | 3.3   |   |      |   | 2.9   |  
|Actuarial (gain) loss                        |  |      | 2.1   |   |      |   | (3.3  | )
|Benefits paid                                |  |      | (1.8  | ) |      |   | (1.4  | )
|Currency fluctuation adjustment              |  |      | 4.1   |   |      |   | 5.9   |  
|Other                                        |  |      | 0.1   |   |      |   | 0.1   |  
|                                             |  |      |      
|Benefit obligation as of December 31         |  | $    | 70.8  |   |      | $ | 61.8  |  
|                                             |  |      |      
|Change in plan assets:                       |  |      |       |   |      |   |       |  
|Fair value as of January 1                   |  | $    | 46.0  |   |      | $ | 35.0  |  
|Actual return                                |  |      | 5.4   |   |      |   | 6.4   |  
|Company contributions                        |  |      | 1.9   |   |      |   | 1.6   |  
|Currency fluctuation adjustment              |  |      | 3.1   |   |      |   | 4.4   |  
|Benefits paid                                |  |      | (1.8  | ) |      |   | (1.4  | )
|                                             |  |      |      
|Fair value as of December 31                 |  | $    | 54.6  |   |      | $ | 46.0  |  
|                                             |  |      |      
|Funded status of the plans                   |  | $    | (16.2 | ) |      | $ | (15.8 | )
|Unrecognized net (gain) loss                 |  |      | 13.5  |   |      |   | 13.6  |  
|Unrecognized transition liability            |  |      | 0.5   |   |      |   | 0.4   |  
|                                             |  |      |      
|Net amount recognized                        |  | $    | (2.2  | ) |      | $ | (1.8  | )
|                                             |  |      |      
|Amounts recognized in the balance
    sheet: |  |      |       |   |      |   |       |  
|Prepaid (accrued) benefit cost               |  | $    |      |   |      | $ | (0.2  | )
|Accrued benefit liability                    |  |      | (11.7 | ) |      |   | (12.0 | )
|Other noncurrent assets                      |  |      | 0.5   |   |      |   | 0.4   |  
|Accumulated other comprehensive loss         |  |      | 9.0   |   |      |   | 10.0  |  
|                                             |  |      |      
|Net amount recognized                        |  | $    | (2.2  | ) |      | $ | (1.8  | )
|                                             |  |      |      

The accumulated benefit obligations for the
defined benefit pension plans were $66.1 million and
$58.1 million, as of December 31, 2004 and 2003,
respectively. The accumulated benefit obligations are in excess
of the plans assets.


The components of net pension expense were as
follows for the years ended December 31 (in millions):


|                                                 |  |      |      |   |      |   |      |      |  |   |      |  
|------------------------------------------------ |  | ---- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                                
|                                                 | 
|                                                 |  | 2004 |      |   | 2003 |   |      | 2002 | 
|                                                 |  |     
|Service cost for benefits earned during the year |  | $    | 1.2  |   |      | $ | 1.4  |      |  | $ | 1.2  |  
|Interest cost on projected benefit obligation    |  |      | 3.3  |   |      |   | 2.9  |      |  |   | 2.6  |  
|Return on plan assets                            |  |      | (2.9 | ) |      |   | (2.2 | )    |  |   | (2.4 | )
|Net amortization and deferral                    |  |      | 0.6  |   |      |   | 1.1  |      |  |   | 0.5  |  
|                                                 |  |     
|Net pension expense                              |  | $    | 2.2  |   |      | $ | 3.2  |      |  | $ | 1.9  |  
|                                                 |  |     

The Company has defined contribution and pre-tax
savings plans (Savings Plans) for certain of its employees.
Under each of the Savings Plans, participants are permitted to
defer a portion of their compensation. Company contributions to
the Savings Plans are based on a percentage of employee
contributions. Additionally, certain of the Companys
Savings Plans have a profit sharing feature for salaried and
non-union hourly employees. The Company contribution to the
profit-sharing feature is based on the employees age and
pay and the Companys financial performance. Expense
attributable to these Savings Plans was $5.1 million,
$4.1 million and $3.3 million for the years ended
December 31, 2004, 2003 and 2002, respectively.




|    |  |                              
|--- |  | -----------------------------
|10. |  | COMMITMENTS AND CONTINGENCIES




The Company is involved in legal and
administrative proceedings and claims of various types from
normal Company activities.


The Company has become aware of an aboriginal
land claim filed by The Chippewas of Nawash and The Chippewas of
Saugeen (the Chippewas) in the Ontario Superior
Court against The Attorney General of Canada and Her Majesty The
Queen In Right of Ontario. The Chippewas claim that a large part
of the land under Lake Huron was never conveyed by treaty and
therefore belongs to the Chippewas. The land claimed includes
land in which the Companys Goderich mine operates and has
mining rights granted to it by the government of Ontario. The
Company is not a party to this court action. Similar claims are
pending with respect to other parts of the Great Lakes by other
aboriginal claimants. The Company has been informed by the
Ministry of the Attorney General of Ontario that Canada
takes the position that the common law does not recognize
aboriginal title to the Great Lakes and its connecting
waterways.


The Company does not believe that this action
will result in a material adverse financial effect on the
Company. Furthermore, while any litigation contains an element
of uncertainty, management presently believes that the outcome
of each such proceeding or claim which is pending or known to be
threatened, or all of them combined, will not have a material
adverse effect on the Companys results of operations, cash
flows or financial position.


The Wisconsin Department of Agriculture, Trade
and Consumer Protection (DATCP) reportedly has
information indicating that agricultural chemicals are present
in the groundwater in the vicinity of the Kenosha, Wisconsin
plant. DATCP has directed the Company to conduct an
investigation into the possible presence of agricultural
chemicals in soil and groundwater at the Kenosha plant. The
Company is working with DATCP to develop and implement a plan to
investigate soils and groundwater at the Kenosha site. Depending
on the results of the investigation, remedial efforts may be
necessary. Although little is currently known about the possible
source of such contamination, or who should be responsible for
it, the Company expects DATCP will again look to the Company to
undertake those efforts. If required, the Company intends to
conduct all phases of the investigation and any required
remediation work under the Wisconsin Agricultural Chemical
Cleanup Program, which will provide for reimbursement of some of
the costs. None of the identified contaminants have been used in
association with the Companys site operations.


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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




The Company expects to seek participation by, or
cost reimbursement from, other parties responsible for the
presence of any agricultural chemicals found in soils at this
site.

Leases: The Company
leases certain property and equipment under non-cancelable
operating leases for varying periods. The aggregate future
minimum annual rentals under lease arrangements as of
December 31, 2004, are as follows (in millions):


|              |  |           |      | 
|------------- |  | --------- | ---- | 
|             
|              | 
|              |  | Operating |     
|Calendar Year |  | Leases    |     
|             
|              | 
|2005          |  | $         | 6.6  | 
|2006          |  |           | 4.8  | 
|2007          |  |           | 4.1  | 
|2008          |  |           | 2.4  | 
|2009          |  |           | 1.0  | 
|Thereafter    |  |           | 8.0  | 
|             
|              |  | $         | 26.9 | 
|             

Rental expense, net of sublease income, was
$9.3 million, $8.2 million and $8.1 million for
the years ended December 31, 2004, 2003 and 2002,
respectively.


Royalties: The
Company has various private, state and Canadian provincial
leases associated with the salt and specialty potash businesses.
Royalty expense related to these leases was $6.4 million,
$5.8 million and $4.5 million for the years ended
December 31, 2004, 2003 and 2002, respectively.


Sales Contracts: The
Company has various salt and other deicing-product sales
contracts that include performance provisions governing delivery
and product quality. These sales contracts either require the
Company to maintain performance bonds for stipulated amounts or
contain contractual penalty provisions in the event of
non-performance. For the three years ended December 31,
2004, the Company has had no material penalties related to these
sales contracts. At December 31, 2004, the Company had
approximately $12.8 million of outstanding performance
bonds.


Purchase
Commitments: In connection with the
operations of the Companys facilities, the Company
purchases electricity, steam, other raw materials and services
from third parties under existing contracts, extending, in some
cases, for multiple years. Purchases under these contracts are
generally based on prevailing market prices. The Companys
future minimum long-term purchase commitments are approximately
$9.3 million annually from 2005 to 2009 and approximately
$12.8 million in total, thereafter.


Environmental
Matters: At December 31, 2004 and
2003, the Company has recorded accruals of $2.3 million,
for estimated future costs associated with existing
environmental exposures at certain of its facilities. The
Company estimates that a significant portion of these accruals
will be used over the next five years.


Purchase Agreement: During 2002, the Company amended an agreement with a supplier
related to the purchase of salt from the suppliers
chemical production facility in Tennessee. The Company has
received a one-time cash payment of $8.0 million related to
the amendment. In 2002, the Company recognized $0.6 million
as a net reduction to cost of sales in the Consolidated
Statement of Operations resulting from recognition of a ratable
portion of the cash received and the sale of certain assets. In
2004 and 2003, the Company recognized other ratable portions of
approximately $0.9 million each year, as a net reduction to
cost of sales. Approximately $4.5 million of the original
one-time cash payment, included in non-current liabilities,
remains to be recognized over the remaining life of the amended
agreement, terminating December 2010, as certain conditions are
met by the Company and the supplier. Alternatively, the Company
may elect to resume purchasing salt from the suppliers
facility. In that event, the Company would repay a ratable
portion of the cash received.


Parent Company
Obligations: In December 2002, certain
holders of CMIs series A redeemable preferred stock
converted their preferred stock into subordinated discount
debentures. CMI then issued $123.5 million in aggregate
principal amount of senior discount notes in exchange for CMI
subordinated discount debentures. No cash interest will accrue
on the senior discount notes prior to December 15, 2007.
The accreted value of each senior discount note will increase
from the date of issuance until December 15, 2007 at a rate
of 12 3/4% per annum, reflecting the accrual of non-cash
interest, such that the accreted value will equal the principal
amount at maturity on December 15, 2007. Cash interest will
accrue on the senior discount notes at a rate of 12
3/4% per annum, beginning December 15, 2007. The first
cash interest payment will be made on June 15, 2008. The
accreted value of the senior discount notes was
$85.8 million and $75.7 million at December 31,
2004 and 2003, respectively.


On May 22, 2003, CMI issued
$179.6 million in aggregate principal amount at maturity of
subordinated discount notes in a private placement under
Rule 144A and Regulation S of the Securities Act. No
cash interest will accrue on the subordinated discount notes
prior to June 1, 2008. The accreted value of each
subordinated discount note will increase from the date of
issuance until June 1, 2008 at a rate of 12% per
annum, reflected in the accrual of non-cash interest, such that
the accreted value will equal the principal amount at maturity
on June 1, 2008. Cash interest will accrue on the
subordinated discount notes at a rate of 12% per annum,
beginning June 1, 2008 through maturity. The proceeds from
the sale of the subordinated discount notes were distributed to
CMI stockholders. The accreted value of the senior subordinated
discount notes was $120.9 million and $107.4 million
at December 31, 2004 and 2003, respectively.


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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




The senior discount notes and subordinated
discount notes are not a part of CMGs consolidated
financial statements. However, CMGs operations are
currently the main source of cash that is expected to service
CMIs senior discount notes, subordinated discount notes
and any future dividends on CMI common stock.



|    |  |                           
|--- |  | --------------------------
|11. |  | RELATED PARTY TRANSACTIONS






The following related party transactions are in
addition to those disclosed elsewhere in the notes to the
consolidated financial statements.


Transactions with Apollo and its subsidiaries
(Apollo affiliates) are considered related parties.
Following the CMIs IPO in December 2003 Mosaic ownership
in the Company was less than 3%. As a result, transactions with
Mosaic and its subsidiaries (Mosaic affiliates) are
considered related parties for the years ending
December 31, 2003 and 2002. The Company believes that all
of the related party transactions approximate terms which would
otherwise be negotiated by the Company with unrelated third
parties.


During the year ended December 31, 2002, CMI
and Mosaic reached an agreement related to the settlement of
certain provisions of the agreement to transfer controlling
interest in CMG to CMI. As part of the settlement, CMG received
approximately $13.0 million in cash. CMG recorded the
proceeds as a capital contribution from CMI.


The Company recorded interest expense with Mosaic
affiliates of $0.1 million and $0.9 million for the
years ended December 31, 2003 and 2002, respectively.


The Company recorded purchases from Mosaic
affiliates of $25.6 million and $19.0 million for the
years ended December 31, 2003 and 2002, respectively.


Subsequent to the Recapitalization, the Company
entered into an agreement with Mosaic whereby the Company
marketed SOP produced by Mosaic at their New Mexico facility as
an agent. The Company recognized approximately $0.7 million
and $0.5 million in fees from Mosaic for the years ended
December 31, 2003 and 2002, respectively.


In June 2003, the Company purchased, for
$24.5 million, intangible assets related to Mosaics
SOP marketing business including customer lists related to its
Carlsbad, New Mexico SOP product line and rights to produce SOP
at Mosaics Carlsbad, New Mexico facility. The Company also
incurred approximately $0.3 million of related transaction
costs. As part of the transaction, the agreement under which the
Company, as agent, marketed SOP produced by Mosaic at their
Carlsbad, New Mexico facility terminated on November 30,
2003. For the year ended December 31, 2003, the Company had
purchased approximately $3.9 million of SOP finished goods
inventory from Mosaic.


In May and June 2003, the Company made dividend
payments to CMI of $3.7 million and $18.0 million,
respectively.


On September 29, 2003, the CMI Senior
Executives Deferred Compensation Plan was terminated and
the CMI capital stock held in the deferred compensation plan was
subsequently distributed to the participants with no impact to
the Company.


The Company subleased railcars from affiliates of
Mosaic that are used by us to transport products. The lease
amounts expensed were $0.5 million and $0.8 million
for the years ended December 31, 2003 and 2002,
respectively.


In connection with the Recapitalization, the
Company entered into a management agreement with Apollo. The
agreement allowed the Company and any of its affiliates to
utilize Apollos expertise in areas such as financial
transactions, acquisitions and other matters that related to its
business, administration and policies. Apollo was to receive an
annual fee of approximately $1.0 million for its management
services and advice through 2011. During the years ended
December 31, 2004, 2003 and 2002, the Company recorded
management fee charges of $0.7 million, $1.0 million
and $0.9 million, respectively, from Apollo.


Upon completion of CMIs IPO, the Company
amended the management consulting agreement with Apollo, whereby
Apollo had the right to terminate the amended management
consulting agreement at any time upon prior written notice to
the Company. Apollo elected to terminate the amended management
consulting agreement in November 2004. The Company paid Apollo
approximately $4.5 million as a final payment for all
services rendered under the agreement. Upon termination of the
agreement by Apollo, any future obligations of Apollo under the
agreement effectively terminated. The payment was expensed as
other charges to operating earnings.


Advances to CMGs parent company and sole
shareholder, CMI, in the amount of $40.8 million and
$10.4 million at December 31, 2004 and 2003,
respectively, are presented as a deduction from
stockholders equity. CMI has the intent, but does not
currently have the ability to repay these advances except
through the declaration of a dividend from CMG. The advances to
parent are non-interest bearing.




|    |  |                                                            
|--- |  | -----------------------------------------------------------
|12. |  | COMMODITY DERIVATIVE INSTRUMENTS AND HEDGING
    ACTIVITIES




The Company has a policy of hedging natural gas
prices through the use of swap agreements in order to protect
against commodity price fluctuations. The Company does not
engage in trading activities with these financial instruments.


All derivative instruments held by the Company as
of December 31, 2004 and 2003 qualify as cash flow hedges.
The derivative instruments outstanding at December 31, 2004
had expiration dates extending into December 2006. For
derivatives classified as cash flow hedges, changes in fair
value are recognized in other comprehensive income until the
hedged item is recognized in earnings. The ineffective portion
of a derivative designated as a hedge, if any, is immediately


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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




recognized in earnings. Hedge effectiveness is
measured quarterly based on the change in relative fair value
between the derivative contract and the hedged item over time.
Hedge ineffectiveness had no significant impact on earnings for
2004 or 2003. We had net derivative assets of approximately $1.3
and $1.1 million, at December 31, 2004 and 2003,
respectively, and related accumulated other comprehensive income
of approximately $0.9 and $0.8 million, at
December 31, 2004 and 2003, respectively. The notional
amounts of natural gas swap derivative contracts outstanding
were $11.9 million and $12.9 million, at
December 31, 2004 and 2003, respectively.



|    |  |                   
|--- |  | ------------------
|13. |  | OPERATING SEGMENTS




The Companys reportable segments are
strategic business units that offer different products and
services. They are managed separately because each business
requires different technology and marketing strategies. The
Company has two reportable segments: Salt and Potash. Salt
produces salt for use in road deicing, food processing, water
softeners, and agricultural and industrial applications. Potash
crop nutrients and industrial grade potash are produced and
marketed through the Potash segment.


The accounting policies of the segments are the
same as those described in the summary of significant accounting
policies. All intersegment sales prices are market-based. The
Company evaluates performance based on operating earnings of the
respective segments. The notes to the consolidated financial
statements include detail related to special charges and should
be referred to when viewing the segment information herein.


Segment information as of and for the years ended
December 31, is as follows (in millions):

|                                             |  |      |       |  |        |   |       |          |  |   |       |   |  |   |       |  |  |  |  | 
|-------------------------------------------- |  | ---- | ----- |  | ------ | - | ----- | -------- |  | - | ----- | - |  | - | ----- |  |  |  |  | 
|                                            
|                                             | 
|                                             |  |      |       | 
|2004                                         |  | Salt |       |  | Potash |   |       | Other(c) |  |   | Total |   |  |  
|                                            
|                                             | 
|Sales from external customers                |  | $    | 607.5 |  |        | $ | 87.6  |          |  | $ |      |   |  | $ | 695.1 |  |  |  |  | 
|Intersegment sales                           |  |      |      |  |        |   | 11.3  |          |  |   | (11.3 | ) |  |   |      |  |  |  |  | 
|Cost of sales  shipping and
    handling    |  |      | 176.4 |  |        |   | 13.8  |          |  |   |      |   |  |   | 190.2 |  |  |  |  | 
|Operating earnings
    (loss)(a)             |  |      | 128.8 |  |        |   | 20.7  |          |  |   | (23.2 | ) |  |   | 126.3 |  |  |  |  | 
|Depreciation, depletion and
    amortization |  |      | 33.2  |  |        |   | 8.1   |          |  |   |      |   |  |   | 41.3  |  |  |  |  | 
|Total assets                                 |  |      | 555.1 |  |        |   | 134.9 |          |  |   | 25.4  |   |  |   | 715.4 |  |  |  |  | 
|Capital expenditures                         |  |      | 21.7  |  |        |   | 5.2   |          |  |   |      |   |  |   | 26.9  |  |  |  |  | 
|                                            
|                                            
|2003                                         |  |      |       |  |        |   |       |          |  |   |       |   |  |   |       |  |  |  |  | 
|                                            
|Sales from external customers                |  | $    | 546.6 |  |        | $ | 54.0  |          |  | $ |      |   |  | $ | 600.6 |  |  |  |  | 
|Intersegment sales                           |  |      |      |  |        |   | 9.4   |          |  |   | (9.4  | ) |  |   |      |  |  |  |  | 
|Cost of sales  shipping and handling        |  |      | 156.6 |  |        |   | 8.7   |          |  |   |      |   |  |   | 165.3 |  |  |  |  | 
|Operating earnings (loss)                    |  |      | 108.8 |  |        |   | 7.5   |          |  |   | (17.9 | ) |  |   | 98.4  |  |  |  |  | 
|Depreciation, depletion and amortization     |  |      | 34.2  |  |        |   | 7.9   |          |  |   |      |   |  |   | 42.1  |  |  |  |  | 
|Total assets                                 |  |      | 522.6 |  |        |   | 141.5 |          |  |   | 24.1  |   |  |   | 688.2 |  |  |  |  | 
|Capital expenditures                         |  |      | 17.7  |  |        |   | 2.9   |          |  |   |      |   |  |   | 20.6  |  |  |  |  | 
|                                            
|                                            
|2002                                         |  |      |       |  |        |   |       |          |  |   |       |   |  |   |       |  |  |  |  | 
|                                            
|Sales from external customers                |  | $    | 452.5 |  |        | $ | 50.1  |          |  | $ |      |   |  | $ | 502.6 |  |  |  |  | 
|Intersegment sales                           |  |      |      |  |        |   | 8.9   |          |  |   | (8.9  | ) |  |   |      |  |  |  |  | 
|Cost of sales  shipping and handling        |  |      | 130.2 |  |        |   | 7.3   |          |  |   |      |   |  |   | 137.5 |  |  |  |  | 
|Operating earnings (loss)(b)                 |  |      | 95.1  |  |        |   | 4.8   |          |  |   | (22.2 | ) |  |   | 77.7  |  |  |  |  | 
|Depreciation, depletion and amortization     |  |      | 29.2  |  |        |   | 7.9   |          |  |   |      |   |  |   | 37.1  |  |  |  |  | 
|Total assets                                 |  |      | 509.8 |  |        |   | 116.0 |          |  |   | 16.0  |   |  |   | 641.8 |  |  |  |  | 
|Capital expenditures                         |  |      | 15.3  |  |        |   | 4.2   |          |  |   |      |   |  |   | 19.5  |  |  |  |  | 
|                                            

|    |                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------
|(a) | Includes $4.5 million related to
    Apollos cancellation of their management consulting
    agreement.
|(b) | Includes $7.7 million related to transition
    costs.                                                  
|(c) | Other includes corporate entities and
    eliminations.                                                 



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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Financial information relating to the
Companys operations by geographic area for the years ended
December 31, is as follows (in millions):

|               |  |      |       |  |      |   |       |      |  |   |       | 
|-------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|              
|               | 
|Sales          |  | 2004 |       |  | 2003 |   |       | 2002 | 
|               |  |     
|               |  |      |       | 
|United States  |  | $    | 444.2 |  |      | $ | 394.5 |      |  | $ | 345.2 | 
|Canada         |  |      | 148.1 |  |      |   | 128.7 |      |  |   | 90.8  | 
|United Kingdom |  |      | 90.0  |  |      |   | 68.2  |      |  |   | 60.0  | 
|Other          |  |      | 12.8  |  |      |   | 9.2   |      |  |   | 6.6   | 
|               |  |     
|               |  | $    | 695.1 |  |      | $ | 600.6 |      |  | $ | 502.6 | 
|               |  |     

Financial information relating to the
Companys long-lived assets, including deferred financing
costs and other long-lived assets, by geographic area as of
December 31 (in millions):

|                  |  |      |       |  |      |   |       | 
|----------------- |  | ---- | ----- |  | ---- | - | ----- | 
|                 
|                  | 
|Long-Lived Assets |  | 2004 |       |  | 2003 |  
|                  |  |      |      
|United States     |  | $    | 249.7 |  |      | $ | 262.7 | 
|Canada            |  |      | 127.4 |  |      |   | 122.4 | 
|United Kingdom    |  |      | 74.5  |  |      |   | 74.1  | 
|                  |  |      |      
|                  |  | $    | 451.6 |  |      | $ | 459.2 | 
|                  |  |      |      



|    |  |        
|--- |  | -------
|14. |  | OPTIONS




On November 28, 2001, CMI adopted a stock
option plan pursuant to which options with respect to a total of
2,783,283 shares of CMIs common stock are available
for grant to employees of, consultants to, or directors of CMI
or the Company. The board of directors of CMI administers the
option plan. The right to grant options under the plan expires
November 2011, the tenth anniversary of the closing date of the
Recapitalization. Options granted under the plan are or will be
either non-qualified or incentive stock options. Options are
granted in amounts and at such times and to such eligible
persons as determined by the board of directors of CMI.


In connection with the Recapitalization, one-half
of the options granted to employees vest in varying amounts from
one to four years depending on the terms of the individual
option agreements. The other one-half of the options granted to
employees are performance options and vested upon completion of
the IPO in December 2003. Options granted to members of the
board of directors of the Company vest at the time of grant.
Options expire on the thirtieth day immediately following the
eighth anniversary of issuance.


The weighted-average exercise price approximates
the weighted-average grant-date fair value of options granted
during 2002 and 2001. The weighted average fair value for
options granted during 2004 and 2003 was $2.37 and $10.98,
respectively.


The table below has been adjusted to reflect the
4.982 for one stock split on December 11, 2003 by CMI. The
following is a summary of CMIs stock option activity and
related information for the following periods:


|                                                                          |                    |           |           |           |                |  |        |       | 
|------------------------------------------------------------------------- | ------------------ | --------- | --------- | --------- | -------------- |  | ------ | ----- | 
|                                                                         
|                                                                          |                   
|                                                                          |                    |           |           | Weighted- |               
|                                                                          |                    | Number of |           |           | average        | 
|                                                                          |                    | options   |           |           | Exercise price | 
|                                                                         
|                                                                          |                   
|Outstanding at December 31, 2002                                          |                    |           | 1,739,476 |           |                |  | $2.08  |      
|                                                                          | Exercised          |           |           | (23,053   | )              |  |        | 2.01  | 
|                                                                          | Cancelled/ Expired |           |           | (6,592    | )              |  |        | 2.01  | 
|                                                                         
|Outstanding at May 22, 2003                                               |                    |           | 1,709,831 |           |                |  | 2.08   |      
|Outstanding at May 23, 2003 after the
    amendment to the option plan(a) |                    |           | 2,455,943 |           |                |  | 1.45   |      
|                                                                          | Granted            |           |           | 50,311    |                |  |        | 7.04  | 
|                                                                          | Exercised(b)       |           |           | (246,458  | )              |  |        | 1.41  | 
|                                                                          | Cancelled/ Expired |           |           | (42,832   | )              |  |        | 1.40  | 
|                                                                         
|Outstanding at December 31, 2003                                          |                    |           | 2,216,964 |           |                |  | 1.58   |      
|                                                                          | Granted            |           |           | 167,367   |                |  |        | 21.58 | 
|                                                                          | Exercised(c)       |           |           | (721,208  | )              |  |        | 1.74  | 
|                                                                          | Cancelled/ Expired |           |           | (11,308   | )              |  |        | 1.40  | 
|                                                                         
|Outstanding at December 31,
    2004                                      |                    |           | 1,651,815 |           |                |  | $ 3.54 |      
|                                                                         

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In connection with CMIs $100.0 million
    dividend payment on its common stock in May 2003, the number of
    CMI stock options and their exercise prices were adjusted to
    preserve the intrinsic value of the stock options that existed
    prior to the dividend. This was accomplished by decreasing the
    exercise price of outstanding options and increasing the number
    of outstanding options by a factor of 1.436 to one.
|(b) | Exercised options include 6,077 shares of
    common stock that were issued from CMI treasury stock.                                                                                                                                                                                                                                                                                                                                          
|(c) | Common stock issued for exercised options were
    all issued from CMI treasury stock.                                                                                                                                                                                                                                                                                                                                                        

The following table summarizes information about
options outstanding and exercisable at December 31, 2004:


|                         |  |             |           |                  |                  |                  |                |             |  |  |                  |                |  |         |           |  |  |  |      | 
|------------------------ |  | ----------- | --------- | ---------------- | ---------------- | ---------------- | -------------- | ----------- |  |  | ---------------- | -------------- |  | ------- | --------- |  |  |  | ---- | 
|                         |  |             |           |                  |                  | Weighted-average |                |             |  |  | Weighted-average |               
|                         |  |             |           | Weighted-average |                  |                  | exercise price |             |  |  |                  | exercise price | 
|                         |  |             |           | remaining        |                  |                  | of options     |             |  |  |                  | of exercisable | 
|                         |  | Options     |           |                  | contractual life |                  |                | outstanding |  |  | Options          |                |  | options |          
|Range of exercise prices |  | outstanding |           |                  | (years)          |                  |                | ($)         |  |  | exercisable      |                |  | ($)     |          
|                         |  |             |           |                  |                  |                  |                |             |  | 
|                        
|                         | 
|$ 1.40                   |  |             | 1,412,395 |                  |                  |                  | 5.1            |             |  |  | 1.40             |                |  |         | 1,182,933 |  |  |  | 1.40 | 
|$ 1.41 - $ 5.17          |  |             | 72,053    |                  |                  |                  | 6.0            |             |  |  | 3.55             |                |  |         | 63,570    |  |  |  | 2.60 | 
|$ 5.18 - $16.66          |  |             | 37,367    |                  |                  |                  | 7.3            |             |  |  | 16.66            |                |  |         | 37,367    |  |  |  | 3.23 | 
|$16.67 - $23.00          |  |             | 130,000   |                  |                  |                  | 7.9            |             |  |  | 23.00            |                |  |         |          |  |  |  |     | 
|                        
|                        
|Totals                   |  |             | 1,651,815 |                  |                  |                  | 5.4            |             |  |  | 3.54             |                |  |         | 1,283,870 |  |  |  | 1.95 | 
|                        

Options exercisable at December 31, 2003
numbered 1,723,540.


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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K






|    |  |                           
|--- |  | --------------------------
|15. |  | OTHER COMPREHENSIVE INCOME




The following tables provide additional detail
related to amounts recorded in Other Comprehensive Income:


|                             |              |          |       |      |                  |   |     |             |  |   |               |      |  |   |      |      | 
|---------------------------- | ------------ | -------- | ----- | ---- | ---------------- | - | --- | ----------- |  | - | ------------- | ---- |  | - | ---- | ---- | 
|                             |              |          |       |      |                  |   |     | Accumulated | 
|                             |              | Unfunded |       |      | Unrealized Gains |   |     | Foreign     |  |   | Other         |     
|                             |              | Pension  |       |      | on Cash Flow     |   |     | Currency    |  |   | Comprehensive |     
|                             |              | Losses   |       |      | Hedges           |   |     | Adjustments |  |   | Income        |     
|                            
|                             |             
|                            
|Balance at December 31, 2001 |              | $        | (5.4  | )    |                  | $ |    |             |  | $ | 3.0           |      |  | $ | (2.4 | )   
|                             | 2002 changes |          |       | (6.5 | )                |   |     | 0.1         |  |   |               | 8.9  |  |   |      | 2.5  | 
|                            
|                            
|Balance at December 31, 2002 |              |          | (11.9 | )    |                  |   | 0.1 |             |  |   | 11.9          |      |  |   | 0.1  |     
|                            
|                             | 2003 changes |          |       | 4.9  |                  |   |     | 0.7         |  |   |               | 19.8 |  |   |      | 25.4 | 
|                            
|                            
|Balance at December 31, 2003 |              | $        | (7.0  | )    |                  | $ | 0.8 |             |  | $ | 31.7          |      |  | $ | 25.5 |     
|                             | 2004 changes |          |       | 0.6  |                  |   |     | 0.1         |  |   |               | 12.1 |  |   |      | 12.8 | 
|                            
|Balance at December 31, 2004 |              | $        | (6.4  | )    |                  | $ | 0.9 |             |  | $ | 43.8          |      |  | $ | 38.3 |     
|                            

|                                          |                            |            |      |      |           |   |      |            |   |   |      |      | 
|----------------------------------------- | -------------------------- | ---------- | ---- | ---- | --------- | - | ---- | ---------- | - | - | ---- | ---- | 
|                                         
|                                          |                           
|                                          |                            | Tax        |      |      |          
|                                          |                            | Before tax |      |      | (expense) |   |      | Net-of-tax |  
|                                          |                            | amount     |      |      | benefit   |   |      | amount     |  
|                                         
|                                          |                           
|For the year ended December 31,
    2004: |                            |            |      |      |           |   |      |            |   |   |      |     
|Minimum pension liability adjustment      |                            | $          | 0.8  |      |           | $ | (0.2 | )          |   | $ | 0.6  |     
|Gas hedging adjustment                    |                            |            | 0.1  |      |           |   |     |            |   |   | 0.1  |     
|Foreign currency translation adjustment   |                            |            | 12.1 |      |           |   |     |            |   |   | 12.1 |     
|                                         
|                                          | Other comprehensive income |            | $    | 13.0 |           |   | $    | (0.2       | ) |   | $    | 12.8 | 
|                                         



|    |  |                                                   
|--- |  | --------------------------------------------------
|16. |  | QUARTERLY RESULTS (Unaudited)(a)
    (in millions)




|             |  |       |       |  |        |   |      |       |  |   |        |   |  |   |       | 
|------------ |  | ----- | ----- |  | ------ | - | ---- | ----- |  | - | ------ | - |  | - | ----- | 
|             |  |       |       |  |        |   |      |      
|Quarter      |  | First |       |  | Second |   |      | Third |  |   | Fourth |  
|            
|             | 
|2004         |  |       |       |  |        |   |      |       |  |   |        |   |  |   |       | 
|Sales        |  | $     | 250.5 |  |        | $ | 96.9 |       |  | $ | 111.7  |   |  | $ | 236.0 | 
|Gross profit |  |       | 72.0  |  |        |   | 20.1 |       |  |   | 25.9   |   |  |   | 70.9  | 
|Net income   |  |       | 33.7  |  |        |   | (1.1 | )     |  |   | (0.6   | ) |  |   | 24.5  | 
|            

|             |  |       |       |  |        |   |      |       |  |   |        |   |  |   |       | 
|------------ |  | ----- | ----- |  | ------ | - | ---- | ----- |  | - | ------ | - |  | - | ----- | 
|            
|             | 
|Quarter      |  | First |       |  | Second |   |      | Third |  |   | Fourth |  
|            
|             | 
|2003         |  |       |       |  |        |   |      |       |  |   |        |   |  |   |       | 
|Sales        |  | $     | 212.7 |  |        | $ | 88.7 |       |  | $ | 97.1   |   |  | $ | 202.1 | 
|Gross profit |  |       | 53.1  |  |        |   | 18.7 |       |  |   | 17.9   |   |  |   | 57.3  | 
|Net income   |  |       | 21.0  |  |        |   | (3.0 | )     |  |   | (2.7   | ) |  |   | 28.2  | 
|            



|    |                                                                                                
|--- | -----------------------------------------------------------------------------------------------
|(a) | See Note 3 to the Consolidated Financial
    Statements for details related to special charges.

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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K






|    |  |                                                                
|--- |  | ---------------------------------------------------------------
|17. |  | GUARANTOR/ NON-GUARANTOR CONDENSED
    CONSOLIDATING STATEMENTS




As discussed in Note 8, the Company issued a
total of $325.0 million of 10% Senior Subordinated
Notes due 2011. These notes were unsecured obligations of CMG,
however, they were guaranteed on an unsecured basis by its
domestic subsidiaries. The guarantee is full and unconditional.


The following condensed consolidated financial
statements present the financial position, results of operations
and cash flows of the Company, its domestic subsidiaries
(guarantors) and its foreign subsidiaries (non-guarantors).


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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K











|                                                      |  |                   |        |   |                |   |       |     |  |   |              |  |  |              |        |   |  |   |       | 
|----------------------------------------------------- |  | ----------------- | ------ | - | -------------- | - | ----- | --- |  | - | ------------ |  |  | ------------ | ------ | - |  | - | ----- | 
|                                                      |  |                  
|                                                      |  | December 31, 2004 |       
|                                                      |  |                   |       
|                                                      |  |                   |        |  
|(In millions)                                         |  | Guarantors        |        |   | Non-guarantors |   |       | CMG |  |   | Eliminations |  |  | Consolidated |       
|                                                     
|                                                      | 
|Cash and cash equivalents                             |  | $                 | 1.4    |   |                | $ | 8.3   |     |  | $ |             |  |  | $            |       |   |  | $ | 9.7   | 
|Receivables, net                                      |  |                   | 81.4   |   |                |   | 61.6  |     |  |   |             |  |  |              |       |   |  |   | 143.0 | 
|Inventories                                           |  |                   | 65.6   |   |                |   | 30.7  |     |  |   |             |  |  |              |       |   |  |   | 96.3  | 
|Deferred tax asset                                    |  |                   |       |   |                |   |      |     |  |   | 11.5         |  |  |              |       |   |  |   | 11.5  | 
|Other current assets                                  |  |                   | 2.0    |   |                |   | 1.3   |     |  |   |             |  |  |              |       |   |  |   | 3.3   | 
|Property, plant and equipment, net                    |  |                   | 211.8  |   |                |   | 191.1 |     |  |   |             |  |  |              |       |   |  |   | 402.9 | 
|Intangible assets                                     |  |                   | 23.6   |   |                |   |      |     |  |   |             |  |  |              |       |   |  |   | 23.6  | 
|Investment in subsidiaries                            |  |                   |       |   |                |   |      |     |  |   | 560.0        |  |  |              | (560.0 | ) |  |   |      | 
|Other                                                 |  |                   | 9.3    |   |                |   | 4.9   |     |  |   | 10.9         |  |  |              |       |   |  |   | 25.1  | 
|                                                     
|Total assets                                          |  | $                 | 395.1  |   |                | $ | 297.9 |     |  | $ | 582.4        |  |  | $            | (560.0 | ) |  | $ | 715.4 | 
|                                                     
|Current portion of long-term debt                     |  | $                 |       |   |                | $ |      |     |  | $ | 0.4          |  |  | $            |       |   |  | $ | 0.4   | 
|Other current liabilities                             |  |                   | 83.1   |   |                |   | 49.8  |     |  |   | 7.4          |  |  |              |       |   |  |   | 140.3 | 
|                                                     
|Total current liabilities                             |  |                   | 83.1   |   |                |   | 49.8  |     |  |   | 7.8          |  |  |              |       |   |  |   | 140.7 | 
|Long-term debt, net of current portion                |  |                   |       |   |                |   |      |     |  |   | 376.0        |  |  |              |       |   |  |   | 376.0 | 
|Due to (from) affiliates                              |  |                   | (197.8 | ) |                |   | 93.6  |     |  |   | 104.2        |  |  |              |       |   |  |   |      | 
|Other noncurrent liabilities                          |  |                   | 70.9   |   |                |   | 33.4  |     |  |   | 0.3          |  |  |              |       |   |  |   | 104.6 | 
|Total stockholders equity                            |  |                   | 438.9  |   |                |   | 121.1 |     |  |   | 94.1         |  |  |              | (560.0 | ) |  |   | 94.1  | 
|                                                     
|Total liabilities and common stockholders
    equity |  | $                 | 395.1  |   |                | $ | 297.9 |     |  | $ | 582.4        |  |  | $            | (560.0 | ) |  | $ | 715.4 | 
|                                                     

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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Condensed Consolidating Balance Sheets




|                                                      |  |                   |        |   |                |   |       |     |  |   |              |   |  |          |        |   |  |   |       | 
|----------------------------------------------------- |  | ----------------- | ------ | - | -------------- | - | ----- | --- |  | - | ------------ | - |  | -------- | ------ | - |  | - | ----- | 
|                                                      |  |                  
|                                                      |  | December 31, 2003 |       
|                                                      |  |                   |       
|(In millions)                                         |  | Guarantors        |        |   | Non-guarantors |   |       | CMG |  |   | Eliminations |   |  | Combined |       
|                                                      |  |                   |        |   |                |   |       |     |  |  
|                                                     
|                                                      | 
|Cash and cash equivalents                             |  | $                 | 0.3    |   |                | $ | 2.3   |     |  | $ |             |   |  | $        |       |   |  | $ | 2.6   | 
|Receivables, net                                      |  |                   | 68.6   |   |                |   | 48.8  |     |  |   |             |   |  |          |       |   |  |   | 117.4 | 
|Inventories                                           |  |                   | 66.5   |   |                |   | 30.2  |     |  |   |             |   |  |          |       |   |  |   | 96.7  | 
|Deferred tax asset                                    |  |                   |       |   |                |   |      |     |  |   | 8.6          |   |  |          |       |   |  |   | 8.6   | 
|Other current assets                                  |  |                   | 2.8    |   |                |   | 1.7   |     |  |   | (0.8         | ) |  |          |       |   |  |   | 3.7   | 
|Property, plant and equipment, net                    |  |                   | 203.9  |   |                |   | 206.1 |     |  |   |             |   |  |          |       |   |  |   | 410.0 | 
|Intangible assets                                     |  |                   | 24.7   |   |                |   |      |     |  |   |             |   |  |          |       |   |  |   | 24.7  | 
|Investment in subsidiaries                            |  |                   |       |   |                |   |      |     |  |   | 524.8        |   |  |          | (524.8 | ) |  |   |      | 
|Other                                                 |  |                   | 7.9    |   |                |   | 3.9   |     |  |   | 12.7         |   |  |          |       |   |  |   | 24.5  | 
|                                                     
|Total assets                                          |  | $                 | 374.7  |   |                | $ | 293.0 |     |  | $ | 545.3        |   |  | $        | (524.8 | ) |  | $ | 688.2 | 
|                                                     
|Current portion of long-term debt                     |  | $                 |       |   |                | $ |      |     |  | $ | 0.8          |   |  | $        |       |   |  | $ | 0.8   | 
|Other current liabilities                             |  |                   | 55.2   |   |                |   | 45.6  |     |  |   | 11.1         |   |  |          |       |   |  |   | 111.9 | 
|                                                     
|Total current liabilities                             |  |                   | 55.2   |   |                |   | 45.6  |     |  |   | 11.9         |   |  |          |       |   |  |   | 112.7 | 
|Long-term debt, net of current portion                |  |                   |       |   |                |   |      |     |  |   | 419.4        |   |  |          |       |   |  |   | 419.4 | 
|Due to (from) affiliates                              |  |                   | (122.4 | ) |                |   | 83.1  |     |  |   | 39.3         |   |  |          |       |   |  |   |      | 
|Other noncurrent liabilities                          |  |                   | 79.0   |   |                |   | 2.4   |     |  |   | 19.5         |   |  |          |       |   |  |   | 100.9 | 
|Total stockholders equity                            |  |                   | 362.9  |   |                |   | 161.9 |     |  |   | 55.2         |   |  |          | (524.8 | ) |  |   | 55.2  | 
|                                                     
|Total liabilities and common stockholders
    equity |  | $                 | 374.7  |   |                | $ | 293.0 |     |  | $ | 545.3        |   |  | $        | (524.8 | ) |  | $ | 688.2 | 
|                                                     

54



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(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Condensed Consolidating Statements of Operations




|                                             |                                   |                                      |       |       |                |   |       |      |  |   |              |      |  |          |      |       |   |   |       |       | 
|-------------------------------------------- | --------------------------------- | ------------------------------------ | ----- | ----- | -------------- | - | ----- | ---- |  | - | ------------ | ---- |  | -------- | ---- | ----- | - | - | ----- | ----- | 
|                                             |                                   |                                     
|                                             |                                   | For the Year Ended December 31, 2004 |      
|                                             |                                   |                                      |      
|(In millions)                                |                                   | Guarantors                           |       |       | Non-guarantors |   |       | CMG  |  |   | Eliminations |      |  | Combined |     
|                                            
|                                             |                                  
|Sales                                        |                                   | $                                    | 435.2 |       |                | $ | 259.9 |      |  | $ |             |      |  | $        |     |       |   | $ | 695.1 |      
|Cost of sales  shipping and handling        |                                   |                                      | 130.9 |       |                |   | 59.3  |      |  |   |             |      |  |          |     |       |   |   | 190.2 |      
|Cost of sales  products                     |                                   |                                      | 193.3 |       |                |   | 122.7 |      |  |   |             |      |  |          |     |       |   |   | 316.0 |      
|                                            
|                                             | Gross profit                      |                                      |       | 111.0 |                |   |       | 77.9 |  |   |              |     |  |          |      |      |   |   |       | 188.9 | 
|Selling, general and administrative expenses |                                   |                                      | 33.6  |       |                |   | 24.5  |      |  |   |             |      |  |          |     |       |   |   | 58.1  |      
|Restructuring and other charges              |                                   |                                      | 3.2   |       |                |   | 1.3   |      |  |   |             |      |  |          |     |       |   |   | 4.5   |      
|                                            
|                                             | Operating income                  |                                      |       | 74.2  |                |   |       | 52.1 |  |   |              |     |  |          |      |      |   |   |       | 126.3 | 
|Interest expense                             |                                   |                                      | 0.3   |       |                |   | 9.0   |      |  |   | 28.1         |      |  |          |     |       |   |   | 37.4  |      
|Other (income) expense                       |                                   |                                      | 0.1   |       |                |   | 7.7   |      |  |   |             |      |  |          |     |       |   |   | 7.8   |      
|Earnings in equity of subsidiary             |                                   |                                      |      |       |                |   |      |      |  |   | (74.0        | )    |  |          | 74.0 |       |   |   |      |      
|                                            
|                                             | Income (loss) before income taxes |                                      |       | 73.8  |                |   |       | 35.4 |  |   |              | 45.9 |  |          |      | (74.0 | ) |   |       | 81.1  | 
|Income tax expense (benefit)                 |                                   |                                      | 20.8  |       |                |   | 14.4  |      |  |   | (10.6        | )    |  |          |     |       |   |   | 24.6  |      
|                                            
|                                             | Net income (loss)                 |                                      | $     | 53.0  |                |   | $     | 21.0 |  |   | $            | 56.5 |  |          | $    | (74.0 | ) |   | $     | 56.5  | 
|                                            






|                                             |                                   |                                      |       |      |                |   |       |      |  |   |              |      |  |          |      |       |   |   |       |       | 
|-------------------------------------------- | --------------------------------- | ------------------------------------ | ----- | ---- | -------------- | - | ----- | ---- |  | - | ------------ | ---- |  | -------- | ---- | ----- | - | - | ----- | ----- | 
|                                             |                                   |                                     
|                                             |                                   | For the Year Ended December 31, 2003 |      
|                                             |                                   |                                      |      
|(In millions)                                |                                   | Guarantors                           |       |      | Non-guarantors |   |       | CMG  |  |   | Eliminations |      |  | Combined |     
|                                            
|                                             |                                  
|Sales                                        |                                   | $                                    | 383.7 |      |                | $ | 216.9 |      |  | $ |             |      |  | $        |     |       |   | $ | 600.6 |      
|Cost of sales  shipping and handling        |                                   |                                      | 118.7 |      |                |   | 46.6  |      |  |   |             |      |  |          |     |       |   |   | 165.3 |      
|Cost of sales  products                     |                                   |                                      | 173.8 |      |                |   | 114.5 |      |  |   |             |      |  |          |     |       |   |   | 288.3 |      
|                                            
|                                             | Gross profit                      |                                      |       | 91.2 |                |   |       | 55.8 |  |   |              |     |  |          |      |      |   |   |       | 147.0 | 
|Selling, general and administrative expenses |                                   |                                      | 26.7  |      |                |   | 21.9  |      |  |   |             |      |  |          |     |       |   |   | 48.6  |      
|                                            
|                                             | Operating income                  |                                      |       | 64.5 |                |   |       | 33.9 |  |   |              |     |  |          |      |      |   |   |       | 98.4  | 
|Interest expense                             |                                   |                                      | 0.5   |      |                |   | 9.1   |      |  |   | 29.5         |      |  |          |     |       |   |   | 39.1  |      
|Other (income) expense                       |                                   |                                      | (1.2  | )    |                |   | 4.6   |      |  |   | 2.2          |      |  |          |     |       |   |   | 5.6   |      
|Earnings in equity of subsidiary             |                                   |                                      |      |      |                |   |      |      |  |   | (53.7        | )    |  |          | 53.7 |       |   |   |      |      
|                                            
|                                             | Income (loss) before income taxes |                                      |       | 65.2 |                |   |       | 20.2 |  |   |              | 22.0 |  |          |      | (53.7 | ) |   |       | 53.7  | 
|Income tax expense (benefit)                 |                                   |                                      | 21.2  |      |                |   | 10.5  |      |  |   | (21.5        | )    |  |          |     |       |   |   | 10.2  |      
|                                            
|                                             | Net income (loss)                 |                                      | $     | 44.0 |                |   | $     | 9.7  |  |   | $            | 43.5 |  |          | $    | (53.7 | ) |   | $     | 43.5  | 
|                                            

55



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(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Condensed Consolidating Statements of Operations




|                                             |                                   |                                      |       |      |                |   |       |      |  |   |              |      |   |          |      |       |   |   |       |       | 
|-------------------------------------------- | --------------------------------- | ------------------------------------ | ----- | ---- | -------------- | - | ----- | ---- |  | - | ------------ | ---- | - | -------- | ---- | ----- | - | - | ----- | ----- | 
|                                             |                                   |                                     
|                                             |                                   | For the Year Ended December 31, 2002 |      
|                                             |                                   |                                      |      
|(In millions)                                |                                   | Guarantors                           |       |      | Non-guarantors |   |       | CMG  |  |   | Eliminations |      |   | Combined |     
|                                            
|                                             |                                  
|Sales                                        |                                   | $                                    | 334.1 |      |                | $ | 168.5 |      |  | $ |             |      |   | $        |     |       |   | $ | 502.6 |      
|Cost of sales  shipping and handling        |                                   |                                      | 99.6  |      |                |   | 37.9  |      |  |   |             |      |   |          |     |       |   |   | 137.5 |      
|Cost of sales  products                     |                                   |                                      | 157.2 |      |                |   | 82.0  |      |  |   |             |      |   |          |     |       |   |   | 239.2 |      
|                                            
|                                             | Gross profit                      |                                      |       | 77.3 |                |   |       | 48.6 |  |   |              |     |   |          |      |      |   |   |       | 125.9 | 
|Selling, general and administrative expenses |                                   |                                      | 24.1  |      |                |   | 16.5  |      |  |   | (0.1         | )    |   |          |     |       |   |   | 40.5  |      
|Restructuring and other charges              |                                   |                                      | 4.6   |      |                |   | 1.4   |      |  |   | 1.7          |      |   |          |     |       |   |   | 7.7   |      
|                                            
|                                             | Operating income (loss)           |                                      |       | 48.6 |                |   |       | 30.7 |  |   |              | (1.6 | ) |          |      |      |   |   |       | 77.7  | 
|Interest expense                             |                                   |                                      | 0.4   |      |                |   | 9.4   |      |  |   | 31.5         |      |   |          |     |       |   |   | 41.3  |      
|Other (income) expense                       |                                   |                                      | (0.3  | )    |                |   | (0.1  | )    |  |   | 5.3          |      |   |          |     |       |   |   | 4.9   |      
|Earnings in equity of subsidiary             |                                   |                                      |      |      |                |   |      |      |  |   | (50.8        | )    |   |          | 50.8 |       |   |   |      |      
|                                            
|                                             | Income (loss) before income taxes |                                      |       | 48.5 |                |   |       | 21.4 |  |   |              | 12.4 |   |          |      | (50.8 | ) |   |       | 31.5  | 
|Income tax expense (benefit)                 |                                   |                                      | 8.1   |      |                |   | 11.0  |      |  |   | (18.5        | )    |   |          |     |       |   |   | 0.6   |      
|                                            
|                                             | Net income (loss)                 |                                      | $     | 40.4 |                |   | $     | 10.4 |  |   | $            | 30.9 |   |          | $    | (50.8 | ) |   | $     | 30.9  | 
|                                            

56



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(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Condensed Consolidating Statements of Cash Flows




|                                                         |                                                                          |                                      |       |       |                |   |       |       |   |   |              |       |   |              |   |   |  |   |       |       |  
|-------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------------ | ----- | ----- | -------------- | - | ----- | ----- | - | - | ------------ | ----- | - | ------------ | - | - |  | - | ----- | ----- | -
|                                                         |                                                                          |                                     
|                                                         |                                                                          | For the Year Ended December 31, 2004 |      
|                                                         |                                                                          |                                      |      
|(In millions)                                            |                                                                          | Guarantors                           |       |       | Non-guarantors |   |       | CMG   |   |   | Eliminations |       |   | Consolidated |  
|                                                        
|                                                         |                                                                         
|Net cash provided by (used in) operating
    activities  |                                                                          | $                                    | 90.2  |       |                | $ | 38.8  |       |   | $ | (26.5        | )     |   | $            |  |   |  | $ | 102.5 |      
|                                                        
|Cash flows from investing:                               |                                                                          |                                      |       |       |                |   |       |       |   |   |              |       |   |              |   |   |  |   |       |      
|                                                         | Capital expenditure                                                      |                                      |       | (13.9 | )              |   |       | (13.0 | ) |   |              |      |   |              |   |  |  |   |       | (26.9 | )
|                                                         | Proceeds from sales of property, plant and
    equipment                 |                                      |       | 0.1   |                |   |       | 0.6   |   |   |              |      |   |              |   |  |  |   |       | 0.7   |  
|                                                         | Other                                                                    |                                      |       |      |                |   |       | 0.2   |   |   |              |      |   |              |   |  |  |   |       | 0.2   |  
|                                                        
|Net cash used in investing
    activities                |                                                                          |                                      | (13.8 | )     |                |   | (12.2 | )     |   |   |             |       |   |              |  |   |  |   | (26.0 | )    
|                                                        
|Cash flows from financing:                               |                                                                          |                                      |       |       |                |   |       |       |   |   |              |       |   |              |   |   |  |   |       |      
|                                                         | Principal payments on other long-term debt,
    including capital leases |                                      |       |      |                |   |       |      |   |   |              | (40.6 | ) |              |   |  |  |   |       | (40.6 | )
|                                                         | Revolver activity                                                        |                                      |       |      |                |   |       |      |   |   |              | (3.0  | ) |              |   |  |  |   |       | (3.0  | )
|                                                         | Payments (to) from Affiliates, net                                       |                                      |       | (75.3 | )              |   |       | (20.1 | ) |   |              | 65.0  |   |              |   |  |  |   |       | (30.4 | )
|                                                        
|Net cash provided by (used in) financing
    activities  |                                                                          |                                      | (75.3 | )     |                |   | (20.1 | )     |   |   | 21.4         |       |   |              |  |   |  |   | (74.0 | )    
|                                                        
|Effect of exchange rate changes on
    cash              |                                                                          |                                      |      |       |                |   | (0.5  | )     |   |   | 5.1          |       |   |              |  |   |  |   | 4.6   |      
|                                                        
|Net increase (decrease) in cash and cash
    equivalents |                                                                          |                                      | 1.2   |       |                |   | 5.9   |       |   |   |             |       |   |              |  |   |  |   | 7.1   |      
|Cash and cash equivalents:                               |                                                                          |                                      |       |       |                |   |       |       |   |   |              |       |   |              |   |   |  |   |       |      
|                                                         | Beginning of year                                                        |                                      |       | 0.3   |                |   |       | 2.3   |   |   |              |      |   |              |   |  |  |   |       | 2.6   |  
|                                                        
|                                                         | End of year                                                              |                                      | $     | 1.4   |                |   | $     | 8.3   |   |   | $            |      |   |              | $ |  |  |   | $     | 9.7   |  
|                                                        

57



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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Condensed Consolidating Statements of Cash Flows




|                                                         |                                                                          |                                      |       |       |                |   |       |       |   |   |              |       |   |              |   |   |  |   |       |       |  
|-------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------------ | ----- | ----- | -------------- | - | ----- | ----- | - | - | ------------ | ----- | - | ------------ | - | - |  | - | ----- | ----- | -
|                                                         |                                                                          |                                     
|                                                         |                                                                          | For the Year Ended December 31, 2003 |      
|                                                         |                                                                          |                                      |      
|(In millions)                                            |                                                                          | Guarantors                           |       |       | Non-guarantors |   |       | CMG   |   |   | Eliminations |       |   | Consolidated |  
|                                                         |                                                                          |                                     
|                                                         |                                                                          |                                      |       |      
|Net cash provided by (used in) operating
    activities  |                                                                          | $                                    | 79.4  |       |                | $ | 23.8  |       |   | $ | (32.2        | )     |   | $            |  |   |  | $ | 71.0  |      
|                                                        
|                                                        
|Cash flows from investing:                               |                                                                          |                                      |       |       |                |   |       |       |   |   |              |       |   |              |   |   |  |   |       |      
|                                                        
|                                                         | Capital expenditure                                                      |                                      |       | (10.0 | )              |   |       | (10.6 | ) |   |              |      |   |              |   |  |  |   |       | (20.6 | )
|                                                        
|                                                         | Proceeds from sales of property, plant and
    equipment                 |                                      |       |      |                |   |       | 0.1   |   |   |              |      |   |              |   |  |  |   |       | 0.1   |  
|                                                        
|                                                         | Acquisition of intangible assets                                         |                                      |       | (24.8 | )              |   |       |      |   |   |              |      |   |              |   |  |  |   |       | (24.8 | )
|                                                        
|                                                         | Other                                                                    |                                      |       |      |                |   |       | (0.3  | ) |   |              |      |   |              |   |  |  |   |       | (0.3  | )
|                                                        
|                                                        
|Net cash used in investing
    activities                |                                                                          |                                      | (34.8 | )     |                |   | (10.8 | )     |   |   |             |       |   |              |  |   |  |   | (45.6 | )    
|                                                        
|                                                        
|Cash flows from financing:                               |                                                                          |                                      |       |       |                |   |       |       |   |   |              |       |   |              |   |   |  |   |       |      
|                                                        
|                                                         | Principal payments on other long-term debt,
    including capital leases |                                      |       |      |                |   |       |      |   |   |              | (31.1 | ) |              |   |  |  |   |       | (31.1 | )
|                                                        
|                                                         | Revolver activity                                                        |                                      |       |      |                |   |       |      |   |   |              | 14.0  |   |              |   |  |  |   |       | 14.0  |  
|                                                        
|                                                         | Dividends paid                                                           |                                      |       |      |                |   |       |      |   |   |              | (21.7 | ) |              |   |  |  |   |       | (21.7 | )
|                                                        
|                                                         | Advances to CMI, net                                                     |                                      |       |      |                |   |       |      |   |   |              | (8.2  | ) |              |   |  |  |   |       | (8.2  | )
|                                                        
|                                                         | Payments (to) from Affiliates, net                                       |                                      |       | (50.8 | )              |   |       | (20.0 | ) |   |              | 70.8  |   |              |   |  |  |   |       |      |  
|                                                        
|                                                         | Capital contribution from CMI                                            |                                      |       |      |                |   |       | 8.8   |   |   |              |      |   |              |   |  |  |   |       | 8.8   |  
|                                                        
|                                                        
|Net cash provided by (used in) financing
    activities  |                                                                          |                                      | (50.8 | )     |                |   | (11.2 | )     |   |   | 23.8         |       |   |              |  |   |  |   | (38.2 | )    
|                                                        
|                                                        
|Effect of exchange rate changes on
    cash              |                                                                          |                                      |      |       |                |   | (4.9  | )     |   |   | 8.4          |       |   |              |  |   |  |   | 3.5   |      
|                                                        
|                                                        
|Net increase (decrease) in cash and cash
    equivalents |                                                                          |                                      | (6.2  | )     |                |   | (3.1  | )     |   |   |             |       |   |              |  |   |  |   | (9.3  | )    
|                                                        
|Cash and cash equivalents:                               |                                                                          |                                      |       |       |                |   |       |       |   |   |              |       |   |              |   |   |  |   |       |      
|                                                        
|                                                         | Beginning of year                                                        |                                      |       | 6.5   |                |   |       | 5.4   |   |   |              |      |   |              |   |  |  |   |       | 11.9  |  
|                                                        
|                                                        
|                                                         | End of year                                                              |                                      | $     | 0.3   |                |   | $     | 2.3   |   |   | $            |      |   |              | $ |  |  |   | $     | 2.6   |  
|                                                        

58



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(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Condensed Consolidating Statements of Cash Flows




|                                                         |                                                                          |                                      |       |       |                |   |       |       |   |   |              |        |   |              |   |   |  |   |       |        |  
|-------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------------ | ----- | ----- | -------------- | - | ----- | ----- | - | - | ------------ | ------ | - | ------------ | - | - |  | - | ----- | ------ | -
|                                                         |                                                                          |                                     
|                                                         |                                                                          | For the Year Ended December 31, 2002 |      
|                                                         |                                                                          |                                      |      
|(In millions)                                            |                                                                          | Guarantors                           |       |       | Non-guarantors |   |       | CMG   |   |   | Eliminations |        |   | Consolidated |  
|                                                         |                                                                          |                                     
|                                                         |                                                                          |                                      |       |      
|Net cash provided by (used in) operating
    activities  |                                                                          | $                                    | 78.8  |       |                | $ | 26.5  |       |   | $ | (23.1        | )      |   | $            |  |   |  | $ | 82.2  |       
|                                                        
|                                                        
|Cash flows from investing:                               |                                                                          |                                      |       |       |                |   |       |       |   |   |              |        |   |              |   |   |  |   |       |       
|                                                        
|                                                         | Capital expenditure                                                      |                                      |       | (10.4 | )              |   |       | (9.1  | ) |   |              |       |   |              |   |  |  |   |       | (19.5  | )
|                                                        
|                                                         | Other                                                                    |                                      |       | 0.4   |                |   |       |      |   |   |              |       |   |              |   |  |  |   |       | 0.4    |  
|                                                        
|                                                        
|Net cash used in investing
    activities                |                                                                          |                                      | (10.0 | )     |                |   | (9.1  | )     |   |   |             |        |   |              |  |   |  |   | (19.1 | )     
|                                                        
|                                                        
|Cash flows from financing:                               |                                                                          |                                      |       |       |                |   |       |       |   |   |              |        |   |              |   |   |  |   |       |       
|                                                        
|                                                         | Revolver activity                                                        |                                      |       |      |                |   |       | (10.8 | ) |   |              | (29.0  | ) |              |   |  |  |   |       | (39.8  | )
|                                                        
|                                                         | Issuance of long-term debt                                               |                                      |       |      |                |   |       |      |   |   |              | 78.4   |   |              |   |  |  |   |       | 78.4   |  
|                                                        
|                                                         | Principal payments on other long-term debt,
    including capital leases |                                      |       | (0.1  | )              |   |       | (0.1  | ) |   |              | (115.7 | ) |              |   |  |  |   |       | (115.9 | )
|                                                        
|                                                         | Advances to CMI, net                                                     |                                      |       |      |                |   |       |      |   |   |              | (2.2   | ) |              |   |  |  |   |       | (2.2   | )
|                                                        
|                                                         | Payments (to) from Affiliates, net                                       |                                      |       | (70.4 | )              |   |       | (3.3  | ) |   |              | 73.7   |   |              |   |  |  |   |       |       |  
|                                                        
|                                                         | Deferred financing costs                                                 |                                      |       |      |                |   |       |      |   |   |              | (3.9   | ) |              |   |   |  |   |       | (3.9   | )
|                                                        
|                                                         | Capital contribution from CMI                                            |                                      |       |      |                |   |       |      |   |   |              | 12.8   |   |              |   |  |  |   |       | 12.8   |  
|                                                        
|                                                         | Other                                                                    |                                      |       |      |                |   |       |      |   |   |              | 1.0    |   |              |   |  |  |   |       | 1.0    |  
|                                                        
|                                                        
|Net cash provided by (used in) financing
    activities  |                                                                          |                                      | (70.5 | )     |                |   | (14.2 | )     |   |   | 15.1         |        |   |              |  |   |  |   | (69.6 | )     
|                                                        
|                                                        
|Effect of exchange rate changes on
    cash              |                                                                          |                                      |      |       |                |   | (5.5  | )     |   |   | 8.0          |        |   |              |  |   |  |   | 2.5   |       
|                                                        
|                                                        
|Net increase (decrease) in cash and cash
    equivalents |                                                                          |                                      | (1.7  | )     |                |   | (2.3  | )     |   |   |             |        |   |              |  |   |  |   | (4.0  | )     
|                                                        
|Cash and cash equivalents:                               |                                                                          |                                      |       |       |                |   |       |       |   |   |              |        |   |              |   |   |  |   |       |       
|                                                        
|                                                         | Beginning of year                                                        |                                      |       | 8.2   |                |   |       | 7.7   |   |   |              |       |   |              |   |  |  |   |       | 15.9   |  
|                                                        
|                                                        
|                                                         | End of year                                                              |                                      | $     | 6.5   |                |   | $     | 5.4   |   |   | $            |       |   |              | $ |  |  |   | $     | 11.9   |  
|                                                        

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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K






|    |  |                                                   
|--- |  | --------------------------------------------------
|18. |  | SUBSEQUENT EVENT  QUARTERLY
    DIVIDEND DECLARED




CMGs operations are currently the main
source of cash that is expected to service dividends on CMI
common stock. On February 11, 2005, the board declared a
quarterly cash dividend of $0.275 per share on CMIs
outstanding common stock. The dividend, in the amount of
$8.6 million, was paid on March 15, 2005 to
stockholders of record as of the close of business on
March 1, 2005.







|        |  |                                                                                         
|------- |  | ----------------------------------------------------------------------------------------
|ITEM 9. |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE




None.







|         |  |                        
|-------- |  | -----------------------
|ITEM 9A. |  | CONTROLS AND PROCEDURES




Disclosure Controls
and Procedures


The Company maintains disclosure controls and
procedures that are designed to ensure that information required
to be disclosed in the Companys reports under the
Securities Exchange Act of 1934, as amended (the Exchange
Act), is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and
forms and that such information is accumulated and communicated
to management, including the Companys Chief Executive
Officer (CEO) and Chief Financial Officer (CFO), as
appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls
and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired
control objectives and management necessarily was required to
apply its judgment in evaluating the cost-benefit relationship
of possible controls and procedures.

In connection with the preparation of this Annual
Report on Form 10-K for the fiscal year ended
December 31, 2004, an evaluation was performed under the
supervision and with the participation of the Companys
management, including the CEO and CFO, of the effectiveness of
the design and operation of the Companys disclosure
controls and procedures (as defined in Rule 13a-15(e) under
the Exchange Act). Based on that evaluation, the Companys
CEO and CFO concluded that the Companys disclosure
controls and procedures were not effective as of
December 31, 2004 at the reasonable assurance level,
because of the material weakness described below. In light of
the material weakness described below, the Company performed
additional analysis and other post-closing procedures to ensure
our consolidated financial statements are prepared in accordance
with generally accepted accounting principles. Accordingly,
management believes that the financial statements included in
this report fairly present, in all material respects, our
financial condition, results of operations and cash flows for
the periods presented.


A material weakness is a control deficiency, or
combination of control deficiencies, that results in more than a
remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected.
As of December 31, 2004, the Company did not maintain
effective controls over the valuation and completeness of its
income taxes payable, deferred income tax assets and liabilities
(including the associated valuation allowance) and the income
tax provision because it did not have accounting personnel with
sufficient knowledge of generally accepted accounting principles
related to income tax accounting and reporting. Specifically,
the Companys processes, procedures and controls related to
the preparation and review of the liability for income taxes
payable were not effective to ensure that the additions to the
liability were complete and accurate. Also, the Company did not
have effective controls over the preparation and review of the
valuation allowance related to deferred tax assets. This control
deficiency resulted in the restatement of the Companys
consolidated financial statements for 2003, 2002, and 2001, for
each of the quarters for the two years in the period ended
December 31, 2003 and for the first and second quarters for
2004 as well as audit adjustments to the fourth quarter 2004
consolidated financial statements. Accordingly, Management
determined that this control deficiency constitutes a material
weakness.


Remediation Steps to
Address Material Weakness

In November 2004, the Company reported a material
weakness in internal control over financial reporting related to
the Companys accounting for income taxes in connection
with filing its restated Annual Report on Form 10-K/ A for
the year ended December 31, 2003 and its Quarterly Report
on Form 10-Q for the period ended September 30, 2004.

In order to remediate this matter, beginning in
November 2004, the Company identified and began implementing
actions to improve the effectiveness of its disclosure controls
and procedures and internal control over financial reporting
related to its income tax accounting. In connection with this
effort, the Company has and continues to (a) strengthen the
resources in the income tax accounting function, (b) adopt
more rigorous policies and procedures with respect to the income
tax account balance sheet review process, including the income
taxes payable and deferred tax asset valuation allowance
accounts, (c) implement a standardized tax accounting
software package to assist in the SFAS No. 109
accounting process, (d) implement greater senior level
financial officer review of the income tax balance sheet
accounts and the related journal entries; and (e) engage a
third party specialist to assist the Companys personnel
conducting comprehensive and detailed reviews of the
Companys tax reporting and accounting, in particular with
respect to developing more effective processes for establishing
and monitoring deferred income taxes, valuation allowances and
the Companys annual effective tax rate.


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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Changes in Internal
Control Over Financial Reporting

Except as otherwise discussed herein, there have
been no changes in the Companys internal control over
financial reporting during the most recently completed fiscal
quarter that has materially affected, or is reasonably likely to
materially affect, the Companys internal control over
financial reporting.






|         |  |                  
|-------- |  | -----------------
|ITEM 9B. |  | OTHER INFORMATION




None.


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K
















|         |  |                                                       
|-------- |  | ------------------------------------------------------
|ITEM 10. |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE
    REGISTRANT




Executive Officers of the Registrant

The following table sets forth the name, age and
position of each person who is an executive officer on the date
of this annual report.



|                        |  |     |    |  |          |                                                                                                   
|----------------------- |  | --- | -- |  | -------- | --------------------------------------------------------------------------------------------------
|                       
|                       
|Name                    |  | Age |    |  | Position
|                       
|Michael E. Ducey        |  |     | 56 |  |          | President, Chief Executive Officer and Director
    of CMI and CMG                                
|                       
|Ronald Bryan            |  |     | 52 |  |          | Vice President and General Manager, Sulfate of
    Potash of CMI and CMG                          
|                       
|Keith E. Clark          |  |     | 49 |  |          | Vice President and General Manager, General Trade
    of CMI and CMG                              
|                       
|John Fallis             |  |     | 57 |  |          | Vice President and General Manager, Highway
    Deicing of CMI and CMG                            
|                       
|David J. Goadby         |  |     | 50 |  |          | Vice President and Managing Director, Salt Union
    Ltd of CMI and Vice President of CMG         
|                       
|Rodney L. Underdown     |  |     | 38 |  |          | Chief Financial Officer and Vice President of CMI
    and CMG                                     
|                       
|Steven Wolf             |  |     | 59 |  |          | Senior Vice President, Strategy and Development
    of CMI; Senior Vice President, Strategy of CMG
|                       
|Bradley J. Bell         |  |     | 52 |  |          | Director of CMI                                                                                   
|                       
|David J. DAntoni       |  |     | 60 |  |          | Director of CMI                                                                                   
|                       
|Richard S. Grant        |  |     | 58 |  |          | Director of CMI                                                                                   
|                       
|Joshua J. Harris        |  |     | 40 |  |          | Director of CMI and CMG                                                                           
|                       
|Douglas A. Pertz        |  |     | 50 |  |          | Director of CMI                                                                                   
|                       
|Perry W. Premdas        |  |     | 52 |  |          | Director of CMI                                                                                   
|                       
|Heinn F. Tomfohrde, III |  |     | 71 |  |          | Director of CMI                                                                                   
|                       

Michael E. Duceywas
appointed the President and Chief Executive Officer of CMI in
December 2002. Mr. Ducey joined CMG as the President and
Chief Executive Officer in April 2002. Prior to joining CMG,
Mr. Ducey worked approximately 30 years for Borden
Chemical, a diversified chemical company, in various positions
including President and Chief Executive Officer (December 1999
to March 2002) and Executive Vice President and Chief Operation
Officer (October 1997 to December 1999).

Ronald Bryan has
served as the Vice President and General Manager of CMI and
CMGs Sulfate of potash business unit since January 2005.
Mr. Bryan joined CMG in June 2003 as Vice
President  Sales and Marketing, Highway Deicing.
Prior to his career at CMG, Mr. Bryan was employed by
Borden Chemical and Plastics, from 2000, where he most recently
served as Senior Vice President  Commercial. From
1980 to 2000, Mr. Bryan was employed by Conoco Chemicals,
spending 20 years in various positions, beginning as
engineer and moving into commercial functions such as business
management and sales.


Keith E. Clark was
named as the Vice President and General Manager, General Trade
for CMI since August 2004. He has served as the Vice President
and General Manager of CMGs General trade business unit
since August 1997, when North American Salt Company was still
under the management of Harris Chemical Group. Prior to this
position, Mr. Clark served as Vice President, Operations
for North American Salt for two years, beginning in April 1995.
Prior to his career at Harris Chemical Group, Mr. Clark
held various operations positions at US Steel Corporation and
General Chemical Inc., where he most recently served as the
Operations Manager at General Chemical.


John Fallis was
appointed Vice President and General Manager of CMIs and
CMGs Highway deicing business unit in January 2005.
Mr. Fallis previously served as the Vice President, Mining
of CMG since 1994, when CMG, formerly known as IMC Inorganic
Chemicals, Inc., was still under the management of Harris
Chemical Group. From 1980 until 1994, Mr. Fallis served as
a mine manager.


David J. Goadby was
named as Vice President and Managing Director of Salt Union
Ltd., our U.K. subsidiary, in August 2004 for CMI. He has served
as Vice President of CMG since February 2002 and as the Managing
Director of Salt Union Ltd., since April 1994, when IMC
Inorganic Chemicals, Inc. was still under the management of
Harris Chemical Group. Prior to that position, Mr. Goadby
served as the Commercial Manager of Salt Union Ltd. for two
years. From 1984 until 1992, Mr. Goadby was employed with
Imperial Chemical Industries plc in various production and
distribution positions, where he most recently served as
Business Manager Sulfur Chemicals.


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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Rodney L. Underdownwas appointed Chief Financial Officer
of CMI in December 2002 and has served as a Vice President of
CMI since May 2002. Mr. Underdown has served as the Chief
Financial Officer of CMG since February 2002 and Vice President,
Finance of CMG since November 2001. Prior to that he served as
the Vice President, Finance of CMGs salt division since
June 1998 when the company was purchased by Mosaic.
Mr. Underdown joined the Harris Chemical Group in September
1997, where he served as the Director of Corporate Reporting.
Prior to his career at Harris Chemical Group, Mr. Underdown
was employed with Arthur Andersen for nine years, where he most
recently served as an Audit Manager.

Steven Wolf was
appointed Senior Vice President, Strategy and Development of CMI
and Senior Vice President, Strategy of CMG beginning
January 1, 2005. He was named Vice President and General
Manager, Highway Deicing for CMI since August 2004.
Mr. Wolf previously served as the Vice President and
General Manager, Highway Deicing of CMG since 1994, when CMG,
formerly known as IMC Inorganic Chemicals, Inc., was still under
the management of Harris Chemical Group. Mr. Wolf joined
Harris Chemical Group in 1991, assuming various management
responsibilities. Prior to his career at Harris Chemical Group,
Mr. Wolf was employed by Kerr McGee, where he served as a
Senior Vice President. Mr. Wolf also served as the General
Manager, SOP of CMG from August 2003 to December 2004.


Bradley J. Bell has
been a director of CMI since December 2003 and a director of CMG
since November 2003. Mr. Bell has been Executive Vice
President and Chief Financial Officer of Nalco Company since
November 2003. From 1997 to 2003, Mr. Bell served as Senior
Vice President and Chief Financial Officer of Rohm and Haas
Company. Prior to that time, Mr. Bell served from 1987 to
1997 as Vice President and Treasurer of the Whirlpool
Corporation, and from 1980 to 1987 as Vice President and
Treasurer of the Bundy Corporation. Mr. Bell is also a
Director and Chairman of the Audit Committee of IDEX Corporation.


David J. DAntoni has been a director since November
2004. Mr. DAntoni retired from Ashland, Inc. in
September 2004. At Ashland, Mr. DAntoni served as
Senior Vice President and Group Operating Officer of APAC and
Valveline beginning in March 1999. During that period he also
served as President of APAC from July 2003 until January 2004.
From March 1997, Mr. DAntoni served as Senior Vice
President and Group Operating Officer of Ashland Specialty
Chemical and Ashland Distribution Companies.
Mr. DAntoni served as President of Ashland Chemical
beginning in 1988. Mr. DAntoni is also a director of
State Auto Financial Corporation and Omnova Solutions, Inc.


Richard S. Grant has
been a director since April 2004. From January 1998 through
December 2002, Mr. Grant served as Chief Executive Officer
of BOC Process Gas Solutions, a global business providing
utilities and services primarily to chemical, petrochemical and
metals industries. During this same period, Mr. Grant
served as Chairman of CNC sa, a Mexican consortium joint
venture, which operates the worlds largest nitrogen
project for oilfield pressurization.


Joshua J. Harris has
been a director since November 2001. Mr. Harris is a
founding Senior Partner at Apollo and has served as an officer
of certain affiliates of Apollo since 1990. Prior to that time,
Mr. Harris was a member of the Mergers and Acquisitions
Department of Drexel Burnham Lambert Incorporated.
Mr. Harris also sits on several boards, including Borden
Chemicals, Inc., United Agri Products, Pacer International,
Inc., QDI and Nalco Company.


Douglas A. Pertz has
been a director of CMI since December 2003 and a director of CMG
since November 2002. Mr. Pertz was Chairman and Chief
Executive Officer of IMC Global Inc., one of the worlds
leading producers and marketers of concentrated phosphate and
potash crop nutrients, from October 2000 to October 2004. From
October 1999 to October 2000, Mr. Pertz served as President
and Chief Executive Officer of IMC Global Inc., and from October
1997 to October 1999, as President and Chief Executive Officer
of IMC Global Inc. Prior to joining IMC Global Inc.,
Mr. Pertz served from 1995 to 1998 as President and Chief
Executive Officer and as a director of Culligan Water
Technologies, Inc., a leading manufacturer and distributor of
water, purification and treatment products. Mr. Pertz is
also a director of Bowater Incorporated, Nalco Holding Company
and The Mosaic Company.


Perry W. Premdas Perry W. Premdas has been a director
since December 14, 2004. Mr. Premdas was formerly the
chief financial officer of Celanese AG and a member of its board
of management. Celanese is a worldwide leader in the production
of chemical products, acetate products, technical polymers and
performance products. Mr. Premdas has also served as chief
financial officer of Centeon LLC and of Hoechst Celanese.


Heinn F. Tomfohrde, III has been a director of CMI since
December 2003 and a director of CMG since February 2002.
Mr. Tomfohrde has served the chemicals industry in a
variety of leadership positions for 44 years. Currently,
Mr. Tomfohrde serves in directorship positions only.
Mr. Tomfohrde served as President and Chief Operating
Officer of International Specialty Products, Inc. and its
predecessor company, GAF Chemicals Corp., from 1987 to 1993.
Prior to that time, Mr. Tomfohrde spent 31 years with
Union Carbide Corp., rising from positions in research and
development and marketing to senior management, serving as
President of Union Carbidess Consumer and Industrial
Products Group from 1983 to 1986. Mr. Tomfohrde is also a
Director of Resolution Performance Products Inc.


Board of Directors


CMGs board of directors is comprised of
Mr. Ducey and Mr. Harris. CMIs board of
directors is comprised of Messrs. Ducey, Bell,
DAntoni, Grant, Harris, Pertz, Premdas and Tomfohrde and
is divided into three classes, each of whose members serve for
staggered three-year terms. Mr. Bell


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




and Mr. Grant serve in the class of
directors whose term will expire at our 2005 annual meeting.
Messrs. Harris, DAntoni and Premdas serve in the
class of directors whose term will expire at our 2006 annual
meeting, and Messrs. Ducey, Tomfohrde and Pertz serve in
the class of directors whose terms will expire at our 2007
annual meeting. Because less than half of our directors are
elected at each annual meeting, two annual meetings of
stockholders could be required for the stockholders to change a
majority of the board.

Board Committees

CMIs board of directors has an audit
committee established in accordance with Section 3(a)(58)
of the Exchange Act. The audit committee, environmental, health
and safety committee, compensation committee and
nominating/corporate governance committee of CMI all operate
under written charters that have been adopted by our board of
directors. We may appoint additional committees of our board of
directors in the future, including for purposes of complying
with all applicable corporate governance rules of the New York
Stock Exchange.


Audit
Committee


CMIs audit committee oversees the
engagement of independent public accountants, reviews our annual
financial statements and the scope of annual audits and
considers matters relating to accounting policies and internal
controls. The audit committee is currently comprised of
directors Messrs. Bell, Grant and Premdas. CMIs board
of directors has determined that each of these directors satisfy
the independence requirements of Rule 10A-3 of the Exchange
Act. In addition, CMIs board of directors has determined
that directors Mr. Bell and Mr. Premdas meet the New
York Stock Exchange standard of possessing accounting or related
financial management expertise and qualifies as an audit
committee financial expert under the SECs
definition. We comply with the corporate governance rules of the
New York Stock Exchange.

The charter of the audit committee is available
on our website at www.compassminerals.com.


Environmental, Health
and Safety Committee


CMIs environmental, health and safety
(EH&S) committee was established to ensure
compliance with environmental, health and safety initiatives and
policies adopted by us, including education of site personnel;
integration of environmental, health and safety policies into
all business decisions; design, operation and management of
facilities to protect the environment and the health and safety
of all personnel. The EH&S committee is currently comprised
of directors Messrs. DAntoni, Ducey and Tomfohrde.

The charter of the EH&S committee is
available on our website.


Compensation
Committee


CMIs compensation committee discharges our
board of directors responsibilities related to
compensation of our executive officers and directors; produces
an annual report on executive compensation for inclusion in our
proxy statement; provides general oversight of our compensation
structure, including our equity compensation plans and benefits
programs; and retains and approves the terms of the retention of
any compensation consultants and other compensation experts.
Other specific duties of the compensation committee include:
reviewing and approving objectives relevant to executive officer
compensation; evaluation performance and determining the
compensation of executive officers in accordance with those
objectives; recommending to our board of directors appropriate
director compensation; and annually evaluating its performance
and its charter. The compensation committee is currently
comprised of directors Messrs. DAntoni, Premdas and
Tomfohrde.

The charter of the compensation committee is
available on our website.


Nominating/Corporate
Governance Committee


CMIs nominating/corporate governance
committee identifies individuals qualified to become members of
our board of directors, consistent with criteria approved by our
board of directors; oversees the organization of our board of
directors to discharge the boards duties and
responsibilities properly and efficiently; identifies best
practices and recommends corporate governance principles,
including giving proper attention and making effective responses
to stockholder concerns regarding corporate governance; and is
responsible for developing and recommending to our board of
directors a set of corporate governance guidelines and
principles applicable to us. Other specific duties of the
nominating/corporate governance committee include: annually
assessing the size and composition of our board of directors,
developing membership qualifications for board committees,
monitoring compliance with board and board committee membership
criteria; annually reviewing and recommending directors for
continued service; coordinating and assisting management and our
board in recruiting new members to our board of directors;
reviewing governance-related stockholder proposals and
recommending board responses; and overseeing the evaluation of
our board of directors and management. We comply with the
corporate governance rules of the New York Stock Exchange. The
nominating/corporate governance committee is currently comprised
of directors Mr. Grant and Mr. Tomfohrde.

The charter of the nominating/corporate
governance committee is available on our website.


Procedures for Nominations by
Stockholders

CMIs Corporate Governance Guidelines
provide for the consideration of director candidates submitted
by stockholders. CMIs Nominating/Corporate Governance
Committee will consider CMI director candidates submitted by
stockholders

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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




of Compass. Any stockholder who has beneficially
owned more than 5% of the CMIs common stock for at least
one year wishing to submit a candidate for consideration should
send the following information to the Secretary of the Company,
Compass Minerals International, Inc., 9900 West 109th St.,
Suite 600, Overland Park, KS 66210:



| |   |                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The name and address of the stockholder
    submitting the candidate as it appears on the CMIs books;
    the number and class of shares owned beneficially and of record
    by such stockholder and the length of period held; and proof of
    ownership of such shares;                  
|
| |  | Name, age and address of the candidate;                                                                                                                                                                                                                                                       
|
| |  | A detailed resume describing, among other things,
    the candidates educational background, occupation,
    employment history, and material outside commitments (e.g.,
    memberships on other boards and committees, charitable
    foundations, etc.);                                  
|
| |  | Any information relating to such candidate that
    is required to be disclosed in solicitations of proxies for
    election of directors in an election contest, or is otherwise
    required, in each case pursuant to the Securities Exchange Act
    of 1934 and rules adopted thereunder;
|
| |  | A description of any arrangements or
    understandings between the recommending stockholder and such
    candidate; and                                                                                                                                                                      
|
| |  | A signed statement from the candidate, confirming
    his or her willingness to serve on the Board of Directors and to
    sign the Companys Code of Ethics, if elected.                                                                                                                     

The Secretary of CMI will promptly forward such
materials to CMIs Nominating/Corporate Governance
Committee Chair. The Secretary will also maintain copies of such
materials for future reference by the Committee when filling
Board positions.

If a vacancy arises or CMIs Board decides
to expand its membership, CMIs Nominating/Corporate
Governance Committee will seek recommendations of potential
candidates from a variety of sources (including incumbent
directors, stockholders, the Corporations management and
third-party search firms). At that time, CMIs
Nominating/Corporate Governance Committee also will consider
potential candidates submitted by its stockholders in accordance
with the procedures described above. CMIs
Nominating/Corporate Governance Committee then evaluates each
potential candidates educational background, employment
history, outside commitments and other relevant factors to
determine whether he or she is potentially qualified to serve on
CMIs board. The Committee seeks to identify and recruit
the best available candidates, and it intends to evaluate
qualified stockholder candidates on the same basis as those
submitted by other sources.


Compensation Committee Interlocks and Insider
Participation

None of the members of CMIs compensation
committee are officers or employees of CMI or any of its
subsidiaries. None of our executive officers currently serves,
or in the past year has served, as a member of the board of
directors or compensation committee of any entity that has one
or more executive officers serving on CMIs board of
directors or compensation committee.

Board Compensation

The members of CMIs and CMGs board of
directors are reimbursed for their out-of-pocket expenses. Those
directors who are not employees of the Company also receive
compensation for their service on the board of directors.

CMI Directors Deferred Compensation
Plan

Under the Compass Minerals International, Inc.
Directors Deferred Compensation Plan, adopted effective
October 1, 2004, non-employee directors may defer all or a
portion of the fees payable for their service, which deferred
fees are converted into units equivalent to the value of the
CMIs common stock. Accumulated deferred fees are
distributed in the form of CMI common stock.

Code of Ethics

We have adopted a code of ethics for our
executive and senior financial officers, violations of which are
required to be reported to the audit committee. The code of
ethics is filed as Exhibit 14 to this Form 10-K and
posted on our website at www.compassminerals.com.

Section 16(a) Beneficial Ownership
Reporting Compliance

Section 16(a) of the Exchange Act requires
our officers and directors, executive officers and certain other
officers, and persons who own more than 10% of a registered
class of our equity securities, to file reports of ownership and
changes of ownership with the SEC. Officers, directors and
greater than 10% stockholders are required to furnish us with
copies of all Section 16(a) reports they file.

Based solely on a review of the forms we have
received or prepared, we believe that during the year ended
December 31, 2004, all filing requirements applicable to
the directors, officers and greater than 10% stockholders were
timely met, except for three reports on Form 4 filed late
for Mr. Clark, Mr. Goadby and Mr. Underdown
related to the sale of shares that occurred as part of the
secondary offering that was completed in November 2004.


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K








|         |  |                       
|-------- |  | ----------------------
|ITEM 11. |  | EXECUTIVE COMPENSATION




Summary Compensation Table

The following table sets forth the compensation
for the year ended December 31, 2004 paid or awarded to the
Chief Executive Officer and the four other most highly
compensated executive officers serving as executive officers of
our wholly owned subsidiary, CMG, or the named executive
officers. There was no compensation paid to the executive
officers of CMI, in their capacity as executive officers of CMI,
for the year ended December 31, 2004.



|                                                                                                              |  |                        |         |       |            |  |              |           |  |           |                 |  |           |                     |         |  |  |  |         | 
|------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | ----- | ---------- |  | ------------ | --------- |  | --------- | --------------- |  | --------- | ------------------- | ------- |  |  |  | ------- | 
|                                                                                                             
|                                                                                                              | 
|                                                                                                              |  |                        |         |      
|                                                                                                              |  | Long Term Compensation |         |       |           
|                                                                                                              |  |                        |         |       |           
|                                                                                                              |  | Awards                 |         |       | Pay outs   |  |              |          
|                                                                                                              |  |                        |         |       |            |  |              |           |  |          
|                                                                                                              |  | Annual Compensation    |         |       | Securities |  |              |           |  |          
|                                                                                                              |  |                        |         |       | Underlying |  |              | Long Term |  |           |                
|                                                                                                              |  |                        |         | Bonus |            |  | Options/SARs |           |  | Incentive |                 |  | All Other |                    
|Name and Principal Position                                                                                   |  | Salary ($)             |         |       | ($)(1)     |  |              | (#)(2)    |  |           | Pay outs ($)(5) |  |           | Compensation ($)(3) |        
|                                                                                                             
|                                                                                                              | 
|Michael E. DuceyPresident and Chief Executive Officer
    of CMI and CMG                                      |  |                        |         |       |            |  |              |           |  |           |                 |  |           |                     |         |  |  |  |         | 
|2004                                                                                                          |  |                        | 364,427 |       |            |  | 818,553      |           |  |           |                |  |           |                     |        |  |  |  | 138,459 | 
|2003                                                                                                          |  |                        | 356,563 |       |            |  | 413,368      |           |  |           |                |  |           |                     |        |  |  |  | 167,514 | 
|April (date of hire) to December 2002                                                                         |  |                        | 262,500 |       |            |  | 251,328      |           |  |           | 540,774         |  |           |                     |        |  |  |  | 130,761 | 
|                                                                                                             
|Steven WolfSenior Vice President, Strategy and
    Development of CMI; Senior Vice President, Strategy of CMG |  |                        |         |       |            |  |              |           |  |           |                 |  |           |                     |         |  |  |  |         | 
|2004                                                                                                          |  |                        | 289,722 |       |            |  | 291,420      |           |  |           |                |  |           |                     |        |  |  |  | 90,992  | 
|2003                                                                                                          |  |                        | 282,042 |       |            |  | 236,283      |           |  |           |                |  |           |                     | 852,920 |  |  |  | 113,985 | 
|2002                                                                                                          |  |                        | 258,803 |       |            |  | 143,465      |           |  |           |                |  |           |                     | 63,408  |  |  |  | 412,430 | 
|                                                                                                             
|Keith E. ClarkVice President and General Manager,
    General Trade of CMI and CMG                            |  |                        |         |       |            |  |              |           |  |           |                 |  |           |                     |         |  |  |  |         | 
|2004                                                                                                          |  |                        | 218,151 |       |            |  | 162,195      |           |  |           |                |  |           |                     |        |  |  |  | 49,301  | 
|2003                                                                                                          |  |                        | 207,763 |       |            |  | 111,054      |           |  |           |                |  |           |                     | 824,733 |  |  |  | 88,995  | 
|2002                                                                                                          |  |                        | 199,190 |       |            |  | 93,234       |           |  |           |                |  |           |                     | 8,150   |  |  |  | 325,054 | 
|                                                                                                             
|David J. Goadby(4)Vice President and Managing Director,
    Salt Union Ltd. of CMI and Vice President of CMG  |  |                        |         |       |            |  |              |           |  |           |                 |  |           |                     |         |  |  |  |         | 
|2004                                                                                                          |  |                        | 218,738 |       |            |  | 146,943      |           |  |           |                |  |           |                     |        |  |  |  | 71,249  | 
|2003                                                                                                          |  |                        | 192,492 |       |            |  | 69,859       |           |  |           |                |  |           |                     |        |  |  |  | 46,199  | 
|2002                                                                                                          |  |                        | 168,774 |       |            |  | 47,095       |           |  |           |                |  |           |                     |        |  |  |  | 219,886 | 
|                                                                                                             
|Rodney L. UnderdownChief Financial Officer and Vice
    President of CMI and CMG                              |  |                        |         |       |            |  |              |           |  |           |                 |  |           |                     |         |  |  |  |         | 
|2004                                                                                                          |  |                        | 188,921 |       |            |  | 116,838      |           |  |           |                |  |           |                     |        |  |  |  | 36,383  | 
|2003                                                                                                          |  |                        | 165,129 |       |            |  | 76,751       |           |  |           |                |  |           |                     | 380,004 |  |  |  | 48,144  | 
|2002                                                                                                          |  |                        | 150,000 |       |            |  | 48,960       |           |  |           |                |  |           |                     |        |  |  |  | 211,294 | 
|                                                                                                             

|    |                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Bonuses were paid pursuant to the Compass
    Minerals Group Incentive Compensation Program. Under this
    program, bonus amounts were calculated on an annual basis
    according to business and individual performance.                                                                                                                                                                   
|(2) | Represents the number of shares of our common
    stock underlying options (as adjusted to reflect changes in our
    capital structure following the date of grant).                                                                                                                                                                                                                         
|(3) | Consists of sale and retention bonuses related to
    the change in ownership subsequent to the Recapitalization,
    certain moving expenses incurred by Mr. Ducey considered by
    the U.S. Internal Revenue Service to be compensation and
    other employer contributions to our tax-qualified and non-tax-
    qualified defined contribution and defined benefit retirement
    plans.
|(4) | Mr. Goadbys compensation is paid in
    British pounds sterling, which has been converted to
    U.S. dollars at a rate of £0.5231, £0.5814 and
    £0.6427 per $1.00 for the years ended
    December 31, 2004, 2003 and 2002, respectively.                                                                                                                                                
|(5) | In September of 2003, the deferred compensation
    plan was terminated resulting in distribution of all of its
    holdings to its participants. See Item 11, Executive
    Compensation  Deferred Compensation Plan.                                                                                                                                                                     

Option Grants in 2004

There were no grants of options to acquire shares
of our common stock made to the named executive officers during
2004.

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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




Aggregate Option Exercises in 2004 and Fiscal
Year-end Option Values

The following table contains the aggregate number
of shares of common stock underlying stock options exercised in
2004 and the number of shares of common stock underlying stock
options held by each named executive officer as of
December 31, 2004.

|                    |  |                        |        |  |                                   |  |                              |             |  |                                   |               |  |  |             |        |  |               |  |           |  |  |  |           | 
|------------------- |  | ---------------------- | ------ |  | --------------------------------- |  | ---------------------------- | ----------- |  | --------------------------------- | ------------- |  |  | ----------- | ------ |  | ------------- |  | --------- |  |  |  | --------- | 
|                   
|                    | 
|                    |  |                        |        | 
|                    |  | Number of Securities   |        |  |                                  
|                    |  | Underlying Unexercised |        |  | Value of Unexercised In-the-Money | 
|                    |  | Number of              |        |  |                                   |  | Options/SARs at December 31, |             |  | Options/SARs at December 31, 2004 |              
|                    |  | Shares                 |        |  |                                   |  | 2004                         |             |  | ($)(1)                            |              
|                    |  | Acquired on            |        |  | Value Realized                    |  |                              |             |  |                                   |               | 
|Name                |  | Exercise               |        |  | ($)                               |  |                              | Exercisable |  |                                   | Unexercisable |  |  | Exercisable |        |  | Unexercisable | 
|                   
|                    | 
|Michael E. Ducey    |  |                        | 93,000 |  |                                   |  | 1,634,475                    |             |  |                                   | 312,576       |  |  |             | 67,597 |  |               |  | 7,573,716 |  |  |  | 1,637,875 | 
|Steven Wolf         |  |                        | 12,500 |  |                                   |  | 187,625                      |             |  |                                   | 153,222       |  |  |             | 27,621 |  |               |  | 3,712,569 |  |  |  | 669,257   | 
|Keith E. Clark      |  |                        | 33,500 |  |                                   |  | 613,712                      |             |  |                                   | 126,555       |  |  |             | 26,676 |  |               |  | 3,066,428 |  |  |  | 646,359   | 
|David J. Goadby     |  |                        | 20,000 |  |                                   |  | 302,600                      |             |  |                                   | 85,364        |  |  |             | 17,563 |  |               |  | 2,068,370 |  |  |  | 425,551   | 
|Rodney L. Underdown |  |                        | 11,285 |  |                                   |  | 245,167                      |             |  |                                   | 62,372        |  |  |             | 12,277 |  |               |  | 1,511,274 |  |  |  | 297,472   | 
|                   

|    |                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Calculated by multiplying the difference between
    the fair market value of the shares of common stock underlying
    the options as of December 31, 2004 ($24.23 per share)
    and the exercise price of the options by the number of shares of
    common stock underlying the options.

2001 Option Plan

Our employees, consultants and directors (and
employees, consultants and directors of our subsidiaries) are
eligible to receive options under our 2001 Stock Option Plan.
The option plan will be administered by a committee of two or
more members of our board of directors, each of whom is both a
non-employee director for purposes of
Rule 16b-3 under the Exchange Act and an outside
director for purposes of Section 162(m) of the Code.
Notwithstanding the foregoing, our full board of directors will
administer the option plan with respect to options granted to
members of our board of directors who are not also our employees.


Options granted under the option plan may be
non-qualified stock options or incentive stock options. The
maximum number of shares of common stock that are issuable under
the option plan is 2,783,283 (as adjusted to reflect changes in
our capital structure and as may be further adjusted for future
changes in our capital structure and other corporate
transactions, such as stock dividends, stock splits, mergers and
reorganizations). Furthermore, following the first meeting of
our stockholders to occur after the close of the third calendar
year following the calendar year in which our common stock is
first registered under the Exchange Act (or such earlier date as
required by Section 162(m) of the Code or the regulations
issued thereunder), the maximum number of shares of common stock
that may be subject to options granted to any individual in any
calendar year may not exceed 1,000,000.


Following the consummation of the
Recapitalization, we granted non-qualified options to purchase
common stock to certain management employees, including the
named executive officers. The per share exercise price of each
option granted immediately following the Recapitalization was
$1.40 (as adjusted to reflect changes in our capital structure
following the date of grant), which was equal to the
Recapitalization consideration per share of common stock (as
adjusted to reflect changes in our capital structure following
the date of grant). During the period following the
Recapitalization and prior to the IPO, we granted options under
the option plan to designated newly-hired and other employees.
The exercise price per share of these options is equal to an
estimate of the fair market value per share of our common stock
as of the date of the grant. We have also granted options under
the option plan subsequent to the IPO. The exercise price per
share of these options is equal to the closing market price on
the day of grant.


Options granted to directors become vested
immediately. Options granted to officers and employees shall
generally become vested and exercisable as follows:




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | one-half of the options are time vesting options
    that will become vested and exercisable in equal annual
    installments on each of the first four anniversaries of the date
    of grant, so long as the optionee continues to provide services
    to us or one of our subsidiaries as of such anniversary.                                                                                                                                                                                                                         
|
| |  | one-half of the options are performance vesting
    options that will become vested and exercisable on the eighth
    anniversary of the date of grant, so long as the optionee
    continues to provide services to us or one of our subsidiaries
    as of such date. However, all or a portion of such performance
    vesting options will become vested and exercisable prior to such
    eighth anniversary upon a sale of our assets or capital stock
    pursuant to which Apollo achieves a specified internal rate of
    return.

The term of the options is eight years and thirty
days from the date of grant. However, all unvested options will
automatically expire upon the date of an optionees
termination of employment (or termination of directorship or
consultancy, as applicable). In addition, all vested options
will generally expire one year following the termination of an
optionees services by us, subject to certain exceptions.
Shares of common stock purchased or acquired under the stock
plan will generally be subject to restrictions on transfer,
repurchase rights and other limitations set forth in the


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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




investor rights agreement. We filed a
registration statement on Form S-8 under the Securities Act
to register the issuance of those shares issuable or reserved
for issuance under our 2001 Stock Option Plan.

The option plan may be modified or amended in any
respect by the committee administering the option plan with the
prior approval of our board of directors, except that the
consent of each optionee is required with respect to any
amendment that impairs such optionees rights. In addition,
to the extent required by any applicable law, regulation or
stock exchange rule, no amendment will be effective without the
consent of our stockholders.


Deferred Compensation Plan


In connection with the consummation of the
Recapitalization, we adopted the Salt Holdings Corporation
Senior Executives Deferred Compensation Plan. The deferred
compensation plan is not a tax qualified retirement plan. The
deferred compensation plan is intended to allow certain
highly-compensated employees to elect in advance to defer
certain retention bonuses or other compensation and to allow
such employees to transfer liabilities from certain Mosaic
deferred compensation plans to our deferred compensation plan.
Any amounts deferred into the deferred compensation plan
represent a conditional right to receive our capital stock as
described below. Amounts deferred under the deferred
compensation plan are represented by bookkeeping accounts
established and maintained by the administrator on behalf of the
participants. Each such account is deemed to be invested in
shares of our capital stock. Distributions shall generally be
made to a participant under the deferred compensation plan in
one lump sum in the form of our capital stock upon the
participants termination of employment or upon Apollo
exit events. In connection with the establishment of
the deferred compensation plan, we have established a
rabbi trust, which has been funded with shares of
our capital stock. All assets contained in the rabbi trust will
be subject to the claims of creditors in the event of bankruptcy
or insolvency.


On September 29, 2003, the deferred
compensation plan was terminated and our capital stock held in
the deferred compensation plan was subsequently distributed to
the participants.


Employment Agreements


Michael E. Ducey. CMG entered into an employment
agreement, dated March 12, 2002, with Mr. Ducey
pursuant to which he agreed to serve as its Chief Executive
Officer and be nominated for a seat on its board of directors.
Under the agreement, Mr. Ducey is paid a base salary and is
eligible for incentive bonuses based upon CMG meeting or
exceeding financial objectives. Under the terms of the
agreement, Mr. Ducey is subject to non-compete,
non-solicitation and confidentiality requirements. In the event
that Mr. Duceys employment is terminated without
cause, he will receive his base pay until the earlier of
12 months, the day he accepts other employment or the day
he violates the non-compete agreement.


David J. Goadby.Salt Union Limited entered into a
service agreement, dated September 1, 1997, with
Mr. Goadby pursuant to which he was appointed as Managing
Director of Salt Union until his employment is terminated by
either Salt Union, giving Mr. Goadby not less than
12 months prior written notice, or Mr. Goadby, giving
Salt Union not less than three months prior written notice. The
agreement provides that Mr. Goadby be paid a base salary,
as well as bonuses or additional remuneration, if any, as the
board of directors of Salt Union may determine. For a period of
six months following his termination, Mr. Goadby will be
subject to non-compete, non-solicitation and non-dealing
covenants with regard to customers and non-solicitation of
suppliers and managerial, supervisory, technical, sales,
financial and administrative employees. In the event of a change
of control of Salt Union, Mr. Goadby will be entitled to
terminate the agreement immediately and Salt Union will be
obligated to pay him an amount equal to his annual base salary
and the value of his company car and medical insurance
calculated over a 12 month period.

Steven Wolf.CMI
entered into an employment agreement, dated January 12,
2005, with Mr. Wolf pursuant to which he agreed to serve as
Senior Vice President, Strategy and Development effective
January 1, 2005. The employment agreement provides for
Mr. Wolfs employment through December 31, 2005,
unless the term is shortened or extended by mutual agreement.
Under the Employment Agreement, Mr. Wolf will be paid a
base salary and is eligible for incentive bonuses based upon the
Company meeting or exceeding financial objectives. Mr. Wolf
is subject to the certain terms of a non-competition,
non-solicitation and confidentiality agreement executed as part
of the employment agreement at any time he is employed by the
Company and for 24 months thereafter. In the event that
Mr. Wolfs employment is terminated without cause or
he resigns for good reason (as each term is referenced in the
employment agreement) or if the Employment Agreement is not
extended by mutual agreement, he will receive his base pay until
the earlier of the second anniversary of his termination date or
the day he violates the employment agreement or the
non-competition, non-solicitation and confidentiality agreement.

Other Named Executive
Officers.We have not entered into
employment agreements with any of our executive officers, except
for the agreements entered into by our subsidiaries with
Messrs. Ducey, Goadby and Wolf. Accordingly, each of our
executive officers is currently an at will employee.

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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K








|         |  |                                                                                                    
|-------- |  | ---------------------------------------------------------------------------------------------------
|ITEM 12. |  | SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS
    AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS




The following table sets forth information
regarding the beneficial ownership of our common stock as of the
date of this annual report on Form 10-K with respect to
(i) each person that is a beneficial owner of more than 5%
of our outstanding common stock, (ii) each director and
named executive officer of the Company and (iii) all
directors and executive officers of the Company as a group:


|                                              |  |              |           |  |            |  |      |  
|--------------------------------------------- |  | ------------ | --------- |  | ---------- |  | ---- | -
|                                             
|                                              | 
|                                              |  |              |           | 
|                                              |  | Number of    |           |  |           
|                                              |  | Shares of    |           |  |           
|                                              |  | Common Stock |           |  |           
|Name and Address of                           |  | Beneficially |           |  | Percent of | 
|Beneficial Owner                              |  | Owned(1)     |           |  | Class      | 
|                                             
|                                              | 
|American Express Financial
    Corporation(2) |  |              | 1,726,920 |  |            |  | 5.5  | %
|Chilton Investment Company, Inc.(3)           |  |              | 3,688,672 |  |            |  | 11.8 | %
|Citigroup Global Markets Holdings
    Inc.(4) |  |              | 1,718,711 |  |            |  | 5.5  | %
|Neuberger Berman, Inc.(5)                     |  |              | 3,805,400 |  |            |  | 12.1 | %
|Michael E. Ducey(6)                           |  |              | 562,086   |  |            |  | 1.8  | %
|Ronald Bryan(6)                               |  |              | 9,263     |  |            |  | *    |  
|Keith E. Clark(6)                             |  |              | 236,290   |  |            |  | *    |  
|John Fallis(6)                                |  |              | 101,024   |  |            |  | *    |  
|David J. Goadby(6)                            |  |              | 123,030   |  |            |  | *    |  
|Rodney L. Underdown(6)                        |  |              | 115,301   |  |            |  | *    |  
|Steven Wolf(6)                                |  |              | 267,446   |  |            |  | *    |  
|Bradley J. Bell(7)                            |  |              | 37,367    |  |            |  | *    |  
|David J. DAntoni(7)                          |  |              |          |  |            |  | *    |  
|Richard S. Grant(8)                           |  |              | 37,367    |  |            |  | *    |  
|Joshua J. Harris(7)                           |  |              | 53,669    |  |            |  | *    |  
|Douglas A. Pertz(8)                           |  |              | 53,669    |  |            |  | *    |  
|Perry W. Premdas(7)                           |  |              | 500       |  |            |  | *    |  
|Heinn F. Tomfohrde, III(9)                    |  |              | 77,155    |  |            |  | *    |  
|All directors and officers as a group         |  |              | 1,674,167 |  |            |  | 5.3  | %
|                                             

|  |                                                                       
|- | ----------------------------------------------------------------------
|* | Represents less than 1% of the outstanding shares
    of common stock.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For purposes of this table, information as to the
    percentage of shares beneficially owned is calculated based on
    31,341,473 shares of common stock outstanding as of the
    date of this annual report on Form 10-K. The amounts and
    percentages of common stock beneficially owned are reported on
    the basis of regulations of the SEC governing the determination
    of beneficial ownership of securities. Under the rules of the
    SEC, a person is deemed to be a beneficial owner of
    a security if that person has or shares voting power, which
    includes the power to vote or direct the voting of such
    security, or investment power, which includes the power to
    dispose of or to direct the disposition of such security. A
    person is also deemed to be a beneficial owner of any securities
    of which that person has a right to acquire beneficial ownership
    within 60 days. Securities that can be so acquired are
    deemed to be outstanding for purposes of computing such
    persons ownership percentage, but not for purposes of
    computing any other persons percentage. Under these rules,
    more than one person may be deemed beneficial owner of the same
    securities and a person may be deemed to be a beneficial owner
    of securities as to which such person has no economic interest.
    Except as otherwise indicated in these footnotes, each of the
    beneficial owners has, to our knowledge, sole voting and
    investment power with respect to the indicated shares of common
    stock.
|(2) | Represents the number amount of shares
    beneficially owned as of December 31, 2004, as reported on
    Schedule 13G filed with the SEC on February 1, 2005.
    The address of American Express Financial Corporation is 200 AXP
    Financial Center, Minneapolis, MN 55474.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(3) | Represents the number amount of shares
    beneficially owned as of December 31, 2004, as reported on
    Schedule 13G filed with the SEC on February 14, 2005.
    The address of Chilton Investment Company, Inc. is
    1266 East Main Street, 7th Floor, Stamford, Connecticut
    06902.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(4) | Represents the number amount of shares
    beneficially owned as of December 31, 2004, as reported on
    Schedule 13G filed with the SEC on February 8, 2005.
    The address of Citigroup Global Markets Holdings Inc. is
    388 Greenwich Street, New York, New York 10013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(5) | Represents the number amount of shares
    beneficially owned as of July 30, 2004, as reported on
    Schedule 13G filed with the SEC on August 5, 2004. The
    address of Neuberger Berman, Inc. is 605 Third Ave., New York,
    New York 10158-3698.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(6) | Includes options that are currently exercisable
    or will become exercisable in the next 60 days. Does not
    include options to purchase 67,597, 3,236, 26,676, 134,734,
    17,563, 12,277, and 27,621 shares of our common stock
    that we have granted to Messrs. M. Ducey,
    R. Bryan, K. Clark, J. Fallis, D. Goadby,
    R. Underdown and S. Wolf, respectively. These options
    are subject to time vesting conditions and are not currently
    exercisable (and will not become exercisable within the next
    60 days). See Item 11, Executive
    Compensation  2001 Option Plan. The address of
    each of Messrs. M. Ducey, R. Bryan,
    K. Clark, J. Fallis, D. Goadby, R. Underdown
    and S. Wolf is c/o Compass Minerals International,
    Inc., 8300 College Boulevard, Overland Park, Kansas 66210.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(7) | The address of each of Messrs. B. Bell,
    D. DAntoni, J. Harris and P. Premdas is c/o
    Compass Minerals International, Inc., 8300 College Boulevard,
    Overland Park, Kansas 66210.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(8) | Represents options to purchase 37,367 shares
    of our common stock that we have granted to Mr. R. Grant
    and 53,669 shares of our common stock that we have granted
    to Mr. D. Pertz. The address of each of
    Messrs. R. Grant and D. Pertz is c/o Compass
    Minerals International, Inc., 8300 College Boulevard, Overland
    Park, Kansas 66210.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(9) | Includes deferred stock units that are or will be
    issuable in the form of common stock in the next 60 days.
    See Directors Deferred Compensation Plan. The address of
    Mr. H. Tomfohrde is c/o Compass Minerals International,
    Inc., 8300 College Boulevard, Overland Park, Kansas 66210.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         






|         |  |                                               
|-------- |  | ----------------------------------------------
|ITEM 13. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS




Management Consulting Agreement

In connection with the Recapitalization, we
entered into a management consulting agreement with Apollo. The
agreement allows us and any of our affiliates to avail itself of
Apollos expertise in areas such as financial transactions,
acquisitions and other matters that relate to our business,
administration and policies. Following the Recapitalization,
Apollo received annual fees for its management services and
advice. In connection with the IPO, we amended the management
consulting agreement whereby Apollo had the right to terminate
the amended management consulting agreement at any time upon
prior written notice to the Company. Apollo elected to terminate
the amended management consulting agreement in November 2004
resulting in a final payment of approximately $4.5 million
in that same month.

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|         |  |                                       
|-------- |  | --------------------------------------
|ITEM 14. |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES




A summary of the services provided to CMI and CMG
by PricewaterhouseCoopers LLP, independent registered public
accounting firm, for the years ended December 31, 2004 and
2003 are as follows (in millions):


|                      |  |      |     |  |      |   |     | 
|--------------------- |  | ---- | --- |  | ---- | - | --- | 
|                     
|                      | 
|                      |  |      |     | 
|                      |  | 2004 |     |  | 2003 |  
|                     
|                      | 
|Audit fees(a)         |  | $    | 1.6 |  |      | $ | 0.8 | 
|Audit related fees(b) |  |      |    |  |      |   | 0.1 | 
|Tax fees(c)           |  |      | 0.5 |  |      |   | 1.0 | 
|All other fees        |  |      |    |  |      |   |    | 
|                      |  |      |    
|                      |  | $    | 2.1 |  |      | $ | 1.9 | 
|                      |  |      |    

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Relates to services for the annual financial
    statement audits included in our Form 10-K for CMI and CMG,
    quarterly reviews for the financial statements included in our
    Form 10-Qs, other financial statement audits that
    were required by SEC rules, reviews of registration statements
    and other SEC filings, and procedures performed for comfort
    letters issued to underwriters in connection with capital market
    transactions. Also includes fees for services rendered in
    relation to the restatement of the Companys financial
    statements in 2004.
|(b) | Relates to due diligence services for mergers and
    acquisitions, audits of pension and retirement plans, and
    consultation services concerning financial accounting and
    reporting standards.                                                                                                                                                                                                                                                                                                                                                                                         
|(c) | Relates to services for reviews of certain tax
    filings, as well as research and advice on tax planning matters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

The audit committees policy is to
pre-approve all audit and permissible audit-related services
provided by the independent auditors. The audit committee will
consider annually for pre-approval a list of specific services
and categories of services, including audit and audit-related
services, for the upcoming or current fiscal year. All non-audit
services are approved by the audit committee in advance on a
case-by-case basis. Any service that is not included in the
approved list of services or that does not fit within the
definition of a pre-approved service is required to be presented
separately to the audit committee for consideration at its next
regular meeting or, if earlier consideration is required, by
other means of communication.

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|         |  |                                                                    
|-------- |  | -------------------------------------------------------------------
|ITEM 15. |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
    REPORTS ON FORM 8-K




(a)(1) Financial statements and
supplementary data required by this Item 15 are set forth
below:


|                                                                                                          |  |  |      | 
|--------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Description                                                                                               |  |  | Page | 
|                                                                                                         
|Report of Independent Registered Public
    Accounting Firm                                               |  |  | 33   | 
|Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                          |  |  | 34   | 
|Consolidated Statements of Operations for the
    three years ended December 31, 2004                     |  |  | 35   | 
|Consolidated Statements of Stockholders
    Equity (Deficit) for the three years ended December 31, 2004 |  |  | 36   | 
|Consolidated Statements of Cash Flows for the
    three years ended December 31, 2004                     |  |  | 37   | 
|Notes to Consolidated Financial Statements                                                                |  |  | 38   | 






(a)(2) Financial Statement Schedule:




---

Schedule II  Valuation Reserves


Compass Minerals Group, Inc.

December 31, 2004, 2003 and 2002


|                                                                |      |               |             |      |            |         |   |     |               |        |   |          |   |  |   |      | 
|--------------------------------------------------------------- | ---- | ------------- | ----------- | ---- | ---------- | ------- | - | --- | ------------- | ------ | - | -------- | - |  | - | ---- | 
|                                                               
|                                                                |     
|                                                                |      |               |             |      |            | Balance |  
|                                                                |      | Balance at    |             |      | Additions  |         |   |     |               | at the |  
|Description                                                     |      | the Beginning |             |      | Charged to |         |   |     |               | End of |  
|(in millions)                                                   |      |               | of the Year |      |            | Expense |   |     | Deductions(1) |        |   | the Year |  
|                                                               
|                                                                |     
|Deducted from Receivables  Allowance
    for Doubtful Accounts |      |               |             |      |            |         |   |     |               |        |   |          |   |  |   |     
|                                                                | 2004 |               | $           | 2.1  |            |         | $ | 1.4 |               |        | $ | (1.2     | ) |  | $ | 2.3  | 
|                                                                | 2003 |               |             | 1.6  |            |         |   | 1.1 |               |        |   | (0.6     | ) |  |   | 2.1  | 
|                                                                | 2002 |               |             | 2.0  |            |         |   | 0.0 |               |        |   | (0.4     | ) |  |   | 1.6  | 
|Deducted from Deferred Income Taxes 
    Valuation Allowance   |      |               |             |      |            |         |   |     |               |        |   |          |   |  |   |     
|                                                                | 2004 |               | $           | 12.7 |            |         | $ |    |               |        | $ | (10.1    | ) |  | $ | 2.6  | 
|                                                                | 2003 |               |             | 16.9 |            |         |   |    |               |        |   | (4.2     | ) |  |   | 12.7 | 
|                                                                | 2002 |               |             | 31.5 |            |         |   |    |               |        |   | (14.6    | ) |  |   | 16.9 | 
|                                                               

|    |                                                          
|--- | ---------------------------------------------------------
|(1) | Deduction for purposes for which reserve was
    created.






(b) Exhibits




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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K




EXHIBIT INDEX




|        |       |  |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | ----- |  | ---------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |                       
|No.     |       |  | Description of Exhibit
|       
|       
|        | 2.1   |  |                        | Agreement and Plan of Merger, dated
    October 13, 2001, among IMC Global Inc., Salt Holdings
    Corporation, YBR Holdings LLC and YBR Acquisition Corp
    (incorporated herein by reference to Exhibit 2.1 to Salt
    Holdings Registration Statement on Form S-4, File
    No. 333-104603).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 2.2   |  |                        | Amendment No. 1 to Agreement and Plan of
    Merger, dated November 28, 2001, among IMC Global Inc.,
    Salt Holdings Corporation, YBR Holdings LLC and YBR Acquisition
    Corp (incorporated herein by reference to Exhibit 2.2 to
    Salt Holdings Registration Statement on Form S-4,
    File No. 333-104603).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 3.1   |  |                        | Amended and Restated Certificate of Incorporation
    of Compass Minerals International, Inc. (incorporated herein by
    reference to Exhibit 3.1 to Compass Minerals
    Internationals Registration Statement on Form S-4,
    File No. 333-111953).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 3.2   |  |                        | Amended and Restated By-laws of Compass Minerals
    International, Inc. (incorporated herein by reference to
    Exhibit 3.2 to Compass Minerals Internationals
    Registration Statement on Form S-4, File
    No. 333-111953).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10.1  |  |                        | Indenture, dated December 20, 2002, between
    Salt Holdings Corporation, as issuer, and The Bank of New York,
    as trustee (incorporated herein by reference to Exhibit 4.1
    to Salt Holdings Registration Statement on Form S-4,
    File No. 333-104603).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10.2  |  |                        | Form of Initial Note (included as Exhibit A
    to Exhibit 10.1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 10.3  |  |                        | Form of Exchange Note (included as Exhibit B
    to Exhibit 10.1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10.4  |  |                        | First Supplemental Indenture to the Indenture
    governing the 12 3/4% Senior Discount Notes Due 2012 of
    Salt Holdings Corporation, dated May 21, 2003, between Salt
    Holdings Corporation and The Bank of New York, as trustee
    (incorporated herein by reference to Exhibit 4.5 to Salt
    Holdings Registration Statement on Form S-4,
    File No. 333-104603).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10.5  |  |                        | Indenture, dated May 22, 2003, governing the
    12% Senior Subordinated Discount Notes Due 2013 of Salt
    Holdings Corporation, between Salt Holdings Corporation, as
    issuer, and The Bank of New York, as trustee (incorporated
    herein by reference to Exhibit 4.6 to Salt Holdings
    Registration Statement on Form S-4, File No. 333-104603).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 10.6  |  |                        | Form of 12% Senior Subordinated Discount
    Note (included as Exhibit A to Exhibit 10.5).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10.7  |  |                        | Salt mining lease, dated November 9, 2001,
    between the Province of Ontario, as lessor, and Sifto Canada
    Inc. as lessee (incorporated herein by reference to
    Exhibit 10.1 to Salt Holdings Registration Statement
    on Form S-4, File No. 333-104603).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 10.8  |  |                        | Salt and Surface Agreement, dated June 21,
    1961, by and between John Taylor Caffery, as agent for Marcie
    Caffery Gillis, Marcel A. Gillis, Bethia Caffery McCay, Percey
    McCay, Mary Louise Caffery Ellis, Emma Caffery Jackson, Edward
    Jackson, Liddell Caffery, Marion Caffery Campbell, Martha Gillis
    Restarick, Katherine Baker Senter, Caroline Baker, Bethia McCay
    Brown, Donelson Caffery McCay, Lucius Howard McCurdy Jr., John
    Andersen McCurdy, Edward Rader Jackson III, individually
    and as trustee for Donelson Caffery Jackson, and the J.M.
    Burguieres Company, LTD., and Carey Salt Company as amended by
    Act of Amendment to Salt Lease, dated May 30, 1973, as
    further amended by Agreement, dated November 21, 1990, and
    as further amended by Amendment to Salt and Surface lease, dated
    July 1, 1997 (incorporated herein by reference to
    Exhibit 10.2 to Salt Holdings Registration Statement
    on Form S-4, File No. 333-104603).
|        | 10.9  |  |                        | Royalty Agreement, dated September 1, 1962,
    between IMC Kalium Ogden Corp. and the Utah State Land Board
    (incorporated herein by reference to Exhibit 10.3 to Salt
    Holdings Registration Statement on Form S-4,
    File No. 333-104603).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10.10 |  |                        | Amended and Restated Credit Agreement, dated
    April 10, 2002, among Salt Holdings Corporation, Compass
    Minerals Group, Inc., as U.S. borrower, Sifto Canada Inc.,
    as Canadian borrower, Salt Union Limited, as U.K. borrower,
    JPMorgan Chase Bank, as administrative agent, J.P. Morgan
    Bank Canada, as Canadian agent, Chase Manhattan International
    Limited, as U.K. agent, J.P. Morgan Securities Inc., as
    joint advisor, co-lead arranger and joint bookrunner, Deutsche
    Banc Alex. Brown Inc., as syndication agent, joint advisor,
    co-lead arranger and joint-bookrunner, Credit Suisse First
    Boston Corporation, as co-documentation agent, and Credit
    Lyonnais, as co-documentation agent (incorporated herein by
    reference to Exhibit 10.4 to Salt Holdings
    Registration Statement on Form S-4, File No. 333-104603).                                                                                                                                
|        | 10.11 |  |                        | Amendment No. 1 to the Amended and Restated
    Credit Agreement, dated December 19, 2002, among Salt
    Holdings Corporation, Compass Minerals Group, Inc., as
    U.S. borrower, Sifto Canada Inc., as Canadian borrower,
    Salt Union Limited, as U.K. borrower, JPMorgan Chase Bank, as
    administrative agent, J.P. Morgan Bank Canada, as Canadian
    agent, Chase Manhattan International Limited, as U.K. agent,
    J.P. Morgan Securities Inc., as joint advisor, co-lead
    arranger and joint bookrunner, Deutsche Banc Alex. Brown Inc.,
    as syndication agent, joint advisor, co-lead arranger and joint
    bookrunner, Credit Suisse First Boston Corporation, as
    co-documentation agent, and Credit Lyonnais, as co-documentation
    agent (incorporated herein by reference to Exhibit 10.5 to
    Salt Holdings Registration Statement on Form S-4,
    File No. 333-104603).                                                                                                  
|        | 10.12 |  |                        | Amendment No. 2 to the Amended and Restated
    Credit Agreement, dated May 5, 2003, among Salt Holdings
    Corporation, Compass Minerals Group, Inc., as
    U.S. borrower, Sifto Canada Inc., as Canadian borrower,
    Salt Union Limited, as U.K. borrower, JPMorgan Chase Bank, as
    administrative agent, J.P. Morgan Bank Canada, as Canadian
    agent, and J.P. Morgan Europe Limited, as U.K. agent
    (incorporated herein by reference to Exhibit 10.6 to Salt
    Holdings Registration Statement on Form S-4, File
    No. 333-104603).                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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|        |       |  |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- | ----- |  | ---------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |                       
|No.     |       |  | Description of Exhibit
|       
|       
|        | 10.13 |  |                        | Amendment No. 3 to the Amended and Restated
    Credit Agreement, dated May 21, 2003, among Salt
    HoldingsCorporation, Compass Minerals Group, Inc., as
    U.S. borrower, Sifto Canada Inc., as Canadian borrower,
    Salt Union Limited, as U.K. borrower, JPMorgan Chase Bank, as
    administrative agent, J.P. Morgan Bank Canada, as Canadian
    agent, and J.P. Morgan Europe Limited, as U.K. agent
    (incorporated herein by reference to Exhibit 10.7 to Salt
    Holdings Registration Statement on Form S-4,
    File No. 333-104603).                               
|        | 10.14 |  |                        | Amendment No. 4 to the Amended and Restated
    Credit Agreement and Waiver, dated November 17, 2003, among
    Compass Minerals International, Inc., Compass Minerals Group,
    Inc., as U.S. borrower, Sifto Canada Inc., as Canadian
    borrower, Salt Union Limited, as U.K. borrower, JPMorgan Chase
    Bank, as administrative agent, J.P. Morgan Bank Canada, as
    Canadian agent, and J.P. Morgan Europe Limited, as U.K.
    agent (incorporated herein by reference to Exhibit 10.8 to
    Compass Minerals Registration Statement on Form S-1,
    File No. 333-110250).
|        | 10.15 |  |                        | U.S. Collateral and Guaranty Agreement,
    dated November 28, 2001, among Salt Holdings Corporation,
    Compass Minerals Group, Inc., Carey Salt Company, Great Salt
    Lake Minerals Corporation, GSL Corporation, NAMSCO Inc., North
    American Salt Company and JPMorgan Chase Bank, as collateral
    agent (incorporated herein by reference to Exhibit 10.8 to
    Salt Holdings Registration Statement on Form S-4,
    File No. 333-104603).                                                                                                                               
|        | 10.16 |  |                        | U.S. Collateral Assignment, dated
    November 28, 2001, among Salt Holdings Corporation, Compass
    Minerals Group, Inc. and JPMorgan Chase Bank (incorporated
    herein by reference to Exhibit 10.9 to Salt Holdings
    Registration Statement on Form S-4, File
    No. 333-104603).                                                                                                                                                                                                                                                                                             
|        | 10.17 |  |                        | Foreign Guaranty, dated November 28, 2001,
    among Sifto Canada Inc., Salt Union Limited, IMC Global (Europe)
    Limited, IMC Global (UK) Limited, London Salt Limited, Direct
    Salt Supplies Limited, J.T. Lunt & Co. (Nantwich)
    Limited, and JPMorgan Chase Bank, as collateral agent
    (incorporated herein by reference to Exhibit 10.10 to Salt
    Holdings Registration Statement on Form S-4, File
    No. 333-104603).                                                                                                                                             
|        | 10.18 |  |                        | Amended and Restated 2001 Stock Option Plan of
    Compass Minerals International, Inc., as adopted by the Board of
    Directors of Compass Minerals International, Inc. on
    December 11, 2003 (incorporated herein by reference to
    Exhibit 10.12 to Compass Minerals Internationals
    Registration Statement on Form S-4, File
    No. 333-111953).                                                                                                                                                                                                                          
|        | 10.19 |  |                        | Service Agreement, dated September 1, 1997,
    between Salt Union Limited and David J. Goadby (incorporated
    herein by reference to Exhibit 10.13 to Salt Holdings
    Registration Statement on Form S-4, File
    No. 333-104603).                                                                                                                                                                                                                                                                                                                                                
|        | 10.20 |  |                        | Master Assignment Agreement, dated April 10,
    2002, among Compass Minerals Group, Inc., a Delaware
    corporation, the lenders party thereto and JPMorgan Chase Bank,
    as administrative agent for the Existing Lenders (as defined in
    the Master Assignment Agreement) (incorporated herein by
    reference to Exhibit 10.17 to Salt Holdings
    Registration Statement on Form S-4, File No. 333-104603).                                                                                                                                                                
|        | 10.21 |  |                        | Employment Agreement, dated March 12, 2002,
    between Compass Minerals Group, Inc. and Michael E. Ducey
    (incorporated herein by reference to Exhibit 10.18 to Salt
    Holdings Registration Statement on Form S-4,
    File No. 333-104603).                                                                                                                                                                                                                                                                                                                                     
|        | 10.22 |  |                        | Rights Plan, dated as of December 11, 2003,
    between Compass Minerals International, Inc. and American Stock
    Transfer & Trust Company, as rights agent (incorporated
    herein by reference to Exhibit 10.25 to Compass Minerals
    Internationals Registration Statement on Form S-4,
    File No. 333-111953).                                                                                                                                                                                                                                                               
|        | 10.23 |  |                        | Certificate of Designation for the Series A
    Junior Participating Preferred Stock, par value $0.01 per
    share (included as Exhibit A to Exhibit 10.19).                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 12.1* |  |                        | Statement of Computation of Ratio of Earnings to
    Fixed Charges.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 14    |  |                        | Compass Minerals International, Inc. Code of
    Ethics.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 21.1  |  |                        | Subsidiaries of the Registrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 31.1* |  |                        | Section 302 Certifications of Michael E.
    Ducey, President and Chief Executive Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 31.2* |  |                        | Section 302 Certifications of Rodney L.
    Underdown, Chief Financial Officer and Vice President.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 32*   |  |                        | Certification Pursuant to
    18 U.S.C.§1350 of Michael E. Ducey, President and
    Chief Executive Officer and Rodney L. Underdown, Chief Financial
    Officer and Vice President.                                                                                                                                                                                                                                                                                                                                                                                                     



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|  |                
|- | ---------------
|* | Filed herewith.

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|COMPASS MINERALS GROUP, INC. | 2004 FORM 10-K











Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.




| |                                      
| | -------------------------------------
| | COMPASS MINERALS GROUP, INC.         
|
| | /s/ MICHAEL E. DUCEY                 
| |                                      
| | Michael E. Ducey                     
| | President and Chief Executive Officer

Date: March 15, 2005



| |                                           
| | ------------------------------------------
| | /s/ RODNEY L. UNDERDOWN                   
| |                                           
| | Rodney L. Underdown                       
| | Chief Financial Officer and Vice President

Date: March 15, 2005

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of Compass Minerals Group, Inc.
and in the capacities indicated on March 15, 2005.

|                                           |  |                                                                                             |  | 
|------------------------------------------ |  | ------------------------------------------------------------------------------------------- |  | 
|                                           |  |                                                                                            
|Signature                                  |  | Capacity                                                                                   
|                                           |  |                                                                                             |  | 
|                                          
|                                          
|                                          
|/s/ MICHAEL E. DUCEYMichael E. Ducey       |  | President, Chief Executive Officer
    and Director (Principal Executive Officer)          
|                                          
|/s/ RODNEY L. UNDERDOWNRodney L. Underdown |  | Chief Financial Officer and Vice President
    (Principal Financial and Accounting Officer)
|                                          
|/s/ JOSHUA J. HARRISJoshua J. Harris       |  | Director                                                                                   

74