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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K






FORM 10-K/ A



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, 2003


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(State or other jurisdiction of incorporation or
    organization)               |  | 48-1135403(I.R.S. Employer Identification Number)
|                                                                                        
|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. o

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
November 23, 2004 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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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K











INTRODUCTORY NOTE

Amendment No. 1 on Form 10-K/A to the Annual
Report on Form 10-K for the year ended December 31, 2003.

Compass Minerals Group, Inc. (the
Company), hereby amends its Annual Report on
Form 10-K filed on March 19, 2004 for the years ended
December 31, 2003, 2002 and 2001 to restate the combined
and consolidated financial statements for each of those three
years in order to correct an error in the calculation of the
deferred income tax accounts and the related valuation allowance
dating back to the year ended December 31, 1998. The effect
of the timing of future reversals of existing taxable temporary
differences (deferred tax liabilities) was not previously
considered as a possible source of future taxable income. In
addition, the effect of taxable income expected to be generated
in the future from sources other than the reversals of existing
taxable temporary differences had not been properly considered
at December 31, 2002 as a possible source of future taxable
income. The Company is also restating the historical balance
sheet presentation of advances to its parent company and sole
shareholder, Compass Minerals International, Inc., from other
non-current assets to a deduction from stockholders equity
(deficit) for the years ended December 31, 2003 and 2002.
See the disclosure under the heading
Restatement in Note 1 to the combined
and consolidated financial statements. This amendment reflects
only the changes discussed above and has no impact on cash
flows, operating earnings, income before income taxes or the
Companys ability to realize the benefits from its deferred
tax assets. All other information is unchanged and reflects the
disclosures made at the time of the original filing on
March 19, 2004.

This Amendment No. 1 on Form 10-K/A
amends Parts II and IV of its Annual Report on
Form 10-K filed on March 19, 2004 to include the
following amendments: Part II, Item 6 Selected
Financial Data; Part II, Item 7
Managements Discussion and Analysis of Financial
Condition and Results of Operations; Part II,
Item 8 Financial Statements and Supplementary
Data; Part II, Item 9A Controls and
Procedures; and Part IV, Item 15 Exhibits,
Financial Statement Schedules and Reports on Form 8-K.

TABLE OF CONTENTS




|               |  |                                                                                                        |    |  |          | 
|-------------- |  | ------------------------------------------------------------------------------------------------------ | -- |  | -------- | 
|PART I         |  |                                                                                                        |    |  | Page No. | 
|              
|Item 1.        |  | Business                                                                                               |    |  | 3        | 
|Item 2.        |  | Properties                                                                                             |    |  | 17       | 
|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              |    |  | 21       | 
|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              |    |  | 58       | 
|Item 9A.       |  | Controls and Procedures                                                                                |    |  | 58       | 
|              
|PART III       |  |                                                                                                        |    |  |          | 
|              
|Item 10.       |  | Directors and Executive
    Officers of the Registrant                                                 |    |  | 59       | 
|Item 11.       |  | Executive Compensation                                                                                 |    |  | 61       | 
|Item 12.       |  | Security Ownership of
    Certain Beneficial Owners and Management and Related Stockholder
    Matters |    |  | 64       | 
|Item 13.       |  | Certain Relationships and
    Related Transactions                                                     |    |  | 64       | 
|Item 14.       |  | Principal Accountant Fees
    and Services                                                             |    |  | 65       | 
|              
|PART IV        |  |                                                                                                        |    |  |          | 
|              
|Item 15.       |  | Exhibits, Financial
    Statement Schedules and Reports on Form 8-K                                    |    |  | 66       | 
|SIGNATURES     |  |                                                                                                        | 70 | 
|Certification 
|Certification 
|Certifications



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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K











CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS




This annual report on Form 10-K/A (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 highway deicing
salt are generally based on historical production capacity,
(b) North America general trade salt are generally based on
historical sales volumes, (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.


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).









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




COMPANY OVERVIEW




We are the largest producer of rock, or highway
deicing, salt in North America and the United Kingdom, and
operate the largest highway deicing salt mines in these regions.
We are also the third-largest producer of general trade salt in
North America and the second-largest in the United Kingdom,
serving major retailers, agricultural cooperatives and food
producers. In addition, we are the largest producer of sulfate
of potash, or SOP, in North America, which is used
in the production of specialty fertilizers. Salt is one of the
most widely used minerals in the world and has a wide variety of
end-use applications, including highway deicing, food-grade
applications, water conditioning and various industrial uses.
Our business also includes the following key characteristics:




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We believe that our cash flows are not materially
    impacted by economic cycles due to the stable end-use markets of
    salt and the absence of cost-effective alternatives.                                                                                                                                                                                                                                                                                                    
|
| |  | We operate 11 facilities in North America and the
    United Kingdom, including the largest rock salt mine in the
    world in Goderich, Ontario and the largest salt mine in the
    United Kingdom in Winsford, Cheshire.                                                                                                                                                                                                                                                        
|
| |  | We believe that we are among the lowest cost rock
    salt producers in our markets. Our cost advantage is due to the
    size and quality of our reserves, effective mining techniques
    and efficient production processes. In addition, our salt mines
    in North America are located near either rail or water transport
    systems, thereby minimizing shipping and handling costs, which
    constitute a significant portion of the overall delivered cost
    of salt.

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




For the year ended December 31, 2003, we
sold approximately 12.8 million tons of salt and other
minerals, generating sales of $600.6 million and net income
of $43.5 million.

On November 28, 2001, Salt Holdings
Corporation (now known as Compass Minerals International, Inc.)
completed a leveraged recapitalization (the
Recapitalization) with our assets and liabilities
retaining their historical value. Immediately following the
Recapitalization, Apollo Management V, L.P.
(Apollo), co-investors and management owned
approximately 81% of CMIs, outstanding common stock and
IMC Global, Inc. (IMC Global) owned
approximately 19% of CMIs outstanding common stock as
fully diluted for management options and stock issuable under
our stock option plan.


On December 17, 2003, CMI completed an
initial public offering of 16,675,000 shares of its common
stock, par value $.01 per share, at an initial public
offering price of $13.00 per share. In connection with the
offering, our parent changed its name from Salt Holdings
Corporation to Compass Minerals International, Inc. The shares
were sold by CMIs stockholders. Neither CMI nor CMG
received any proceeds from the sale of the shares. Apollo and
IMC Global each sold portions of their holdings of CMI common
stock, which reduced the ownership, on a fully diluted basis, of
Apollo and co-investors, management and IMC Global to
approximately 35%, 11% and 2%, respectively.


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
61% 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
23 million tons per annum (18 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. 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. 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
14.5 million tons of salt per annum. Mining, other
production activities and packaging are currently conducted at
11 of our facilities and at two facilities where finished
product is purchased from IMC Global 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 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.

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




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 primarily used in our general trade salt product
lines. 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 IMC Global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 also 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 IMC Global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          |  |           |             
|Location       |                              | (tons)            |  |           | Product 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          |                   |  | 425,000   |              |  |  | Evaporated | 
|               | Unity, Saskatchewan Plant    |                   |  | 175,000   |              |  |  | Evaporated | 
|               | Goderich, Ontario Plant      |                   |  | 170,000   |              |  |  | Evaporated | 
|               | Amherst, Nova Scotia Plant   |                   |  | 115,000   |              |  |  | 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 12.0 million tons, 10.0 million tons and
12.2 million tons for the years ended December 31,
2003, 2002 and 2001, 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
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 proper-


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




ties and their operating equipment are maintained
in good working condition.

The land and related surface rights at the
Goderich mine are 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 44, 38 and
158 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
177, 93 and 32 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
company 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 IMC Global, 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          |         |  |             
|Location                |  | (tons)            |         |  | Product 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 47% of
our gross sales of salt in 2003. 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
marketing 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 approximately 72
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 us 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


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Kingdom. In the United Kingdom approximately 59%
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 61% of its
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 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, together with our customers, stockpile
sufficient 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
Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operations 
Seasonality.


Chemical customers accounted for approximately 6%
of our 2003 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 that 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 and product quality 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, |      
|                  |  |                        
|                  |  |                         |      
|                  |  |                         |       |  |      | 
|                  |  | 2003                    |       |  | 2002 |  |     | 2001 | 
|                  |  |                        
|                  |  |                         |      
|                  |  | Tons                    |       |  | %    |  |     | Tons |  |  | %     |  |  | Tons |     |  | % | 
|                 
|                  | 
|U.S.              |  |                         | 6,267 |  |      |  | 65  |      |  |  | 5,104 |  |  |      | 64  |  |   |  | 5,656 |  |  |  | 60  | 
|Canada            |  |                         | 2,560 |  |      |  | 26  |      |  |  | 2,162 |  |  |      | 27  |  |   |  | 2,301 |  |  |  | 25  | 
|Europe and Others |  |                         | 836   |  |      |  | 9   |      |  |  | 699   |  |  |      | 9   |  |   |  | 1,445 |  |  |  | 15  | 
|                 
|Total             |  |                         | 9,663 |  |      |  | 100 |      |  |  | 7,965 |  |  |      | 100 |  |   |  | 9,402 |  |  |  | 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 2003 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, |      
|                  |  |                        
|                  |  |                         |      
|                  |  |                         |       |  |      | 
|                  |  | 2003                    |       |  | 2002 |  |     | 2001 | 
|                  |  |                        
|                  |  |                         |      
|                  |  | Tons                    |       |  | %    |  |     | Tons |  |  | %     |  |  | Tons |     |  | % | 
|                 
|                  | 
|U.S.              |  |                         | 1,758 |  |      |  | 60  |      |  |  | 1,629 |  |  |      | 59  |  |   |  | 1,725 |  |  |  | 61  | 
|Canada            |  |                         | 565   |  |      |  | 19  |      |  |  | 506   |  |  |      | 18  |  |   |  | 513   |  |  |  | 18  | 
|Europe and Others |  |                         | 604   |  |      |  | 21  |      |  |  | 651   |  |  |      | 23  |  |   |  | 584   |  |  |  | 21  | 
|                 
|Total             |  |                         | 2,927 |  |      |  | 100 |      |  |  | 2,786 |  |  |      | 100 |  |   |  | 2,822 |  |  |  | 100 | 
|                 

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

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of general trade salt, several small local
producers 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, 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 differentiate us from our
competitors, as well as to better serve the needs of our
customers. In 2003, the specialty potash segment accounted for
approximately 10% 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 (K20) and different combinations of
co-nutrients.


Muriate of potash is the least expensive form of
potash fertilizer based on the concentration of K20. It is the
preferred potassium source for most crops. However, SOP
(containing approximately 50% K20) 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
for golf courses. Approximately 73% of our annual SOP sales
volumes in 2003 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 2003 were 27% of
our annual SOP sales. Prior to the acquisition by
IMC Global in 1998, our SOP was marketed and sold by a
sales group consisting of trained agronomists and professional
fertilizer agents. These representatives directly contacted
dealers and growers in the United States. Following the
IMC Global acquisition, this SOP sales group was dissolved
and the IMC Global sales force handled SOP sales. The
IMC Global sales group was responsible for selling all
potash and phosphate fertilizer products for IMC Global.
Because the bulk of these fertilizers are sold as commodities,
the focus on specialty products such as SOP diminished under
IMC Global. Upon the purchase of the SOP business from
IMC Global, we organized and employed an experienced global
sales group similar to the one that was in place prior to 1998.


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

|          |  |                         |     |  |      |  |     |      |  |  |     |  |  |      |     |  |   |  |     |  |  |  |     | 
|--------- |  | ----------------------- | --- |  | ---- |  | --- | ---- |  |  | --- |  |  | ---- | --- |  | - |  | --- |  |  |  | --- | 
|         
|          | 
|          |  |                        
|          |  | Year Ended December 31, |    
|          |  |                        
|          |  |                         |    
|          |  |                         |     |  |      | 
|          |  | 2003                    |     |  | 2002 |  |     | 2001 | 
|          |  |                        
|          |  |                         |    
|          |  | Tons                    |     |  | %    |  |     | Tons |  |  | %   |  |  | Tons |     |  | % | 
|         
|          | 
|U.S.      |  |                         | 182 |  |      |  | 73  |      |  |  | 151 |  |  |      | 62  |  |   |  | 148 |  |  |  | 79  | 
|Export(a) |  |                         | 69  |  |      |  | 27  |      |  |  | 91  |  |  |      | 38  |  |   |  | 40  |  |  |  | 21  | 
|         
|Total     |  |                         | 251 |  |      |  | 100 |      |  |  | 242 |  |  |      | 100 |  |   |  | 188 |  |  |  | 100 | 
|         

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

We previously had a long-term contract with
IMC Global following the Recapitalization, whereby we acted
as a sales agent for IMC Global to customers serviced by
IMC Globals Carlsbad, New Mexico facility. The
contract did not limit the amount of SOP we could purchase from
IMC Global. As a result of our June 2003 purchase of
IMC Globals remaining SOP marketing business this
long-term contract with IMC Global terminated on
November 30, 2003.

Competition

Approximately 56% of the world SOP production is
located in Europe, 14% in the United States and the remaining
30% in various other countries. The world consumption of SOP
totals about 2.9 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, 2003, we had
1,497 employees, of which 708 are employed in the United
States, 596 in Canada and 193 in the United Kingdom.
Approximately 38% of our U.S. workforce (54% of our global
workforce) is represented by labor unions. Of our nine material
collective bargaining agreements, four will expire in 2004, one
will expire in 2005 and four will expire in 2006. Additionally,
approximately 13% 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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PRINCIPAL 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 |    
|                            
|                             | 
|Ogden, Utah                  |  | SOP and solar salt production facility |  |        | Owned            |  |          |        | N/A  |        |            |  | Leased   |     |  |  |           | (1)
|Lyons, Kansas                |  | Evaporated salt production facility    |  |        | Owned            |  |          |        | N/A  |        |            |  | Owned    |     |  |  | N/A       |    
|Cote Blanche, Louisiana      |  | Rock salt production facility          |  |        | Leased           |  |          |        | 2060 |        |            |  | Leased   |     |  |  | 2060      |    
|Weston Point, Cheshire, U.K. |  | Evaporated salt production facility    |  |        | Owned            |  |          |        | N/A  |        |            |  | N/A      | (2) |  |  | N/A       |    
|Winsford, Cheshire, U.K.     |  | Rock salt production facility          |  |        | Owned            |  |          |        | N/A  |        |            |  | Owned    |     |  |  | N/A       |    
|Goderich, Ontario, Canada    |  | Rock salt production facility          |  |        | Owned            |  |          |        | N/A  |        |            |  | Leased   |     |  |  | 2022      | (3)
|                             |  | Evaporated salt production facility    |  |        | Owned            |  |          |        | N/A  |        |            |  | Owned    |     |  |  | N/A       |    
|Unity, Saskatchewan, Canada  |  | Evaporated salt production facility    |  |        | Owned            |  |          |        | N/A  |        |            |  | Leased   |     |  |  | 2009/2016 | (4)
|Amherst, Nova Scotia, Canada |  | Evaporated salt production facility    |  |        | Owned            |  |          |        | N/A  |        |            |  | Leased   |     |  |  |           | (5)
|Overland Park, Kansas        |  | Corporate headquarters                 |  |        | Leased           |  |          |        | 2008 |        |            |  | N/A      |     |  |  | N/A       |    
|                            

|    |                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Ogden lease automatically renews on an annual
    basis.                                                                                                
|(2) | Weston Point purchases brine for production
    purposes from a third party pursuant to a supply agreement that
    will expire in 2017.                    
|(3) | Subject to the right of renewal through 2043.                                                                                                               
|(4) | Consists of two leases expiring in 2009 and 2016
    subject to the right of renewal through 2030 and 2037,
    respectively.                               
|(5) | Consists of two leases that are currently in the
    process of being renewed that will expire in 20 years with
    rights of renewal at 20-year increments.

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.


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


LOGO

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;


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(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
2004 EHS capital expenditures will total approximately
$2.6 million, primarily related to air quality devices and
highway deicing salt storage pads. We expect that our estimated
expenditures in 2004 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 2004 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, 2003, 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 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 September 20, 2003,
Environment Canada released a proposed Code of Practice to serve
as these guidelines. The proposed Code of Practice remained
subject to public comment until November 19, 2003.
Environment Canada has indicated that it expects to publish the
final code in 2004. Although the proposed Code of Practice
remains subject to change, the released draft requires large
road-salt users to develop salt management plans. We do not
believe that this would have a material direct effect on us, but
the new salt management plans may reduce the demand from our
customers in Canada for 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 final guidance or regulation 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


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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.
Although we cannot predict whether the proposal to list road
salts will be finalized or the precise form of the proposed Code
of Practice or other future regulation, if standardized
guidelines are developed for the use and storage of road salt or
any alternate deicing products, we could suffer reduced sales
and incur substantial costs and expenses that could have a
material adverse effect on our business, financial condition and
results of operation. 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. For example, since we recently
installed a new grinding circuit, some of our existing equipment
at our Lyons, Kansas facility is subject to the Federal Clean
Air Acts New Source Performance Standard requirement. We
have completed a compliance program with the Kansas Department
of Health and Environment, and do not expect to incur any
additional costs or significant penalties, although there can be
no guarantee.


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.


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 some locations there are areas
where salt-processing waste and ordinary trash may have been
disposed or buried, and have since been closed and covered with
soil and other materials. These past operating practices at
several of our facilities 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, IMC Global has agreed to indemnify us against
liabilities for certain known and unknown conditions at existing
and former sites.


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


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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 or results of operations.


RISK FACTORS




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

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 61% 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 first two
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.

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, 2003, we had
$420.2 million of outstanding indebtedness, including
approximately $78.3 million under our senior credit
facilities, $14.0 million under our revolving credit
facility and $327.9 million of Compass Minerals
Groups senior subordinated notes and stockholders
equity of $55.2 million. At December 31, 2003, CMI had
$75.7 million of senior discount notes and
$107.4 million of subordinated discount notes outstanding.

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.


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

Our senior credit facilities and indebtedness and
the 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
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 34% for the year ended
December 31, 2003. 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


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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 12% of the costs of our
North American salt production in 2003. 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 or results of operations.

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 environmen-


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tal 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 applied for 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 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. 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 September 20,
2003, Environment Canada released a proposed Code of Practice to
serve as these guidelines. The proposed Code of Practice
remained subject to public comment until November 19, 2003.
Environment Canada has indicated that it expects to publish the
final code in 2004. Although the proposed Code of Practice
remains subject to change, the released draft requires large
road-salt users to develop salt management plans. We do not
believe that this would 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 final guideline or regulation would result
in a complete ban on the use of road salt. We do, however,
recognize the importance of environmental protection in
Canadas decision-making process. Although we cannot
predict whether the proposal to designate road salt as a toxic
substance will be finalized or the precise form of the proposed
Code of Practice or other future regulation, if standardized
guidelines are developed for the use and storage of road salt or
any alternate deicing products, we could suffer reduced sales
and incur substantial costs and expenses that could have a
material adverse effect on our business, financial condition and
results of operation. Our road-salt sales, net of shipping and
handling, in Canada generated approximately 13% of our total
sales in 2003. In addition, while we are not aware of any
similar governmental proposals for the designation of road salt
as a toxic substance in either the United States or the United
Kingdom, we cannot guarantee that these proposals will not arise.


Our operations are dependent on our 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.

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

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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




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.

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, 2003, we had 1,497
employees. Approximately 38% of our U.S. workforce (54% of
our global workforce) is represented by labor unions. Of our
nine material collective bargaining agreements, four will expire
in 2004, one will expire in 2005 and four will expire in 2006.
Additionally, approximately 13% 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 2003, 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.

Our principal stockholders interest may
conflict with or differ from the interests of other holders of
our securities.

Apollo and its affiliates own 35% of the fully
diluted equity of CMI. Consequently, Apollo has the ability to
influence the election of our directors, the appointment of new
management and the potential outcome of all matters submitted to
a vote of our stockholders, including entering into mergers, the
sale of substantially all of our assets and other extraordinary
transactions. The interests of Apollo and its affiliates could
conflict with or differ from the interests of our securities
holders.






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




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




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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K








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




We are party from time to time to various routine
legal proceedings. Except as otherwise described in Item 1,
Business  Environmental, Health and Safety
Matters, these primarily involve commercial claims,
products 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 and results of
operations. In addition, in connection with the
Recapitalization, IMC Global has agreed to indemnify us against
certain legal matters.









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




Not Applicable


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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K
















|        |  |                                                                          
|------- |  | -------------------------------------------------------------------------
|ITEM 5. |  | MARKET FOR REGISTRANTS COMMON EQUITY AND
    RELATED STOCKHOLDER MATTERS




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, 2003, 2002
and 2001 and the balance sheet data as of December 31, 2003
and 2002 are derived from our audited combined and consolidated
financial statements included elsewhere in this report. The
statement of operations data for the years ended
December 31, 2000 and 1999 and the balance sheet data as of
December 31, 2001, 2000 and 1999 are derived from our
combined 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 combined and consolidated
financial statements and accompanying notes thereto included
elsewhere in this annual report. The selected financial
information for each of the periods presented below has been
restated to reflect the revisions discussed under the heading
Restatement in Note 1 to the combined
and consolidated financial statements.


|                                             |  |                                 |       |   |            |   |       |            |  |   |            |   |  |            |        |       |  |   |         |      
|-------------------------------------------- |  | ------------------------------- | ----- | - | ---------- | - | ----- | ---------- |  | - | ---------- | - |  | ---------- | ------ | ----- |  | - | ------- | -----
|                                            
|                                             | 
|                                             |  |                                
|                                             |  | For the Year Ended December 31, |      
|                                             |  |                                 |      
|                                             |  |                                 |       |  
|                                             |  | 2003                            |       |   | 2002       |   |       | 2001       |  |   | 2000       |   |  | 1999       |       
|(Dollars in millions, except share data)     |  | (restated)                      |       |   | (restated) |   |       | (restated) |  |   | (restated) |   |  | (restated) |       
|                                            
|                                             | 
|Statement of Operations Data:                |  |                                 |       |   |            |   |       |            |  |   |            |   |  |            |        |       |  |   |         |      
|Sales                                        |  | $                               | 600.6 |   |            | $ | 502.6 |            |  | $ | 523.2      |   |  | $          | 509.2  |       |  | $ | 494.4   |      
|Cost of sales  shipping and handling        |  |                                 | 165.3 |   |            |   | 137.5 |            |  |   | 143.2      |   |  |            | 140.0  |       |  |   | 126.9   |      
|Cost of sales  products(1)                  |  |                                 | 246.2 |   |            |   | 202.1 |            |  |   | 224.4      |   |  |            | 227.7  |       |  |   | 213.1   |      
|Depreciation and amortization(2)             |  |                                 | 42.1  |   |            |   | 37.1  |            |  |   | 32.6       |   |  |            | 44.3   |       |  |   | 55.1    |      
|Selling, general and administrative expenses |  |                                 | 48.6  |   |            |   | 40.5  |            |  |   | 38.9       |   |  |            | 35.5   |       |  |   | 37.2    |      
|Goodwill write-down(3)                       |  |                                 |      |   |            |   |      |            |  |   |           |   |  |            | 191.0  |       |  |   | 87.5    |      
|Restructuring and other charges(3)(4)        |  |                                 |      |   |            |   | 7.7   |            |  |   | 27.0       |   |  |            | 425.9  |       |  |   | 13.7    |      
|Operating earnings (loss)                    |  |                                 | 98.4  |   |            |   | 77.7  |            |  |   | 57.1       |   |  |            | (555.2 | )     |  |   | (39.1   | )    
|Interest expense(5)                          |  |                                 | 39.1  |   |            |   | 41.3  |            |  |   | 14.3       |   |  |            | 16.4   |       |  |   | 19.0    |      
|Net income (loss)                            |  |                                 | 43.5  |   |            |   | 30.9  |            |  |   | 28.6       |   |  |            | (443.5 | ) (7) |  |   | (74.2   | ) (7)
|Balance Sheet Data (at period end):          |  |                                 |       |   |            |   |       |            |  |   |            |   |  |            |        |       |  |   |         |      
|Total cash and cash equivalents              |  | $                               | 2.6   |   |            | $ | 11.9  |            |  | $ | 15.9       |   |  | $          | 0.3    |       |  | $ | 4.3     |      
|Total assets                                 |  |                                 | 679.6 |   |            |   | 641.8 |            |  |   | 655.6      |   |  |            | 636.0  |       |  |   | 1,261.0 | (7)  
|Total debt                                   |  |                                 | 420.2 |   |            |   | 437.6 |            |  |   | 515.1      |   |  |            | 152.3  |       |  |   | 196.0   |      
|Other Financial Data:                        |  |                                 |       |   |            |   |       |            |  |   |            |   |  |            |        |       |  |   |         |      
|Cash flows provided by operating activities  |  | $                               | 70.8  |   |            | $ | 80.0  |            |  | $ | 112.5      |   |  | $          | 72.1   |       |  | $ | 78.4    |      
|Cash flows used for investing activities     |  |                                 | (45.6 | ) |            |   | (19.1 | )          |  |   | (43.6      | ) |  |            | (34.0  | )     |  |   | (48.1   | )    
|Cash flows used for financing activities     |  |                                 | (38.0 | ) |            |   | (67.4 | )          |  |   | (53.8      | ) |  |            | (43.3  | )     |  |   | (33.6   | )    
|Ratio of earnings to fixed charges(6)        |  |                                 | 2.28  | x |            |   | 1.72  | x          |  |   | 3.69       | x |  |            |       |       |  |   |        |      
|Capital expenditures                         |  | $                               | 20.6  |   |            | $ | 19.5  |            |  | $ | 43.0       |   |  | $          | 33.7   |       |  | $ | 45.6    |      
|                                            



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 IMC Global, 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. The goodwill write-down in 1999 was the
    result of lowering goodwill to its recoverable value based on
    estimated future discounted cash flows of the business.                                                                                                                      
|(4) | Restructuring and other charges
    include primarily those charges related to the impairment of
    idled assets in December of 1998, the restructuring of our
    business in the fourth quarter of 1999 designed to reduce
    employee headcount and an asset impairment in the fourth quarter
    of 2000 related to the planned disposition of the Company by IMC
    Global 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 required to establish us
    as a self-sustaining entity.

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 combined and consolidated
    financial statements. Cash interest expense was
    $37.6 million and $39.5 million for the years ended
    December 31, 2003 and 2002, respectively. Cash interest
    expense is not 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)     |                                                          |                                 | 2003 |      |   | 2002 |     
|                         
|                          |                                                         
|Interest expense          |                                                          | $                               | 39.1 |      |   | $    | 41.3 |     
|Less (plus) amortization: |                                                          |                                 |      |      |   |      |      |     
|                          | Deferred financing costs                                 |                                 |      | 1.8  |   |      |      | 1.9  |  
|                          | Amortization of premium on senior subordinated
    notes |                                 |      | (0.3 | ) |      |      | (0.1 | )
|                         
|Cash interest expense     |                                                          | $                               | 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 and
    $55.6 million, respectively, for the years ended
    December 31, 2000 and 1999.
|(7) | The restatement for 2000 and 1999 includes
    adjustments to deferred income tax accounts and related
    valuation allowance, an adjustment in 1999 to properly account
    for deferred tax assets of $29.5 million previously written
    off in 2000, and other adjustments to income tax liabilities.
    For the year ended December 31, 2000, the adjustments
    decreased net loss by approximately $24.2 million. For the
    year ended December 31, 1999, the adjustments increased net
    loss by approximately ($6.7) million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K








|        |  |                                                                                          
|------- |  | -----------------------------------------------------------------------------------------
|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 combined
and consolidated financial statements and notes thereto included
elsewhere in this annual report on Form 10-K/A.


Company Overview




We are the largest producer of rock, or highway
deicing, salt in North America and the United Kingdom, and
operate the largest highway deicing salt mines in these regions.
We are also the third largest producer of general trade salt in
North America and the second largest in the United Kingdom,
serving major retailers, agricultural cooperatives and food
producers. In addition, we are the largest producer of sulfate
of potash, or SOP, in North America, which is used
in the production of specialty fertilizers. Salt is one of the
most widely used minerals in the world and has a wide variety of
end-use applications, including highway deicing, food-grade
applications, water conditioning and various industrial uses.


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.


Our business also includes the following key
characteristics:




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We believe that our cash flows are not materially
    impacted by economic cycles due to the stable end-use markets of
    salt and the absence of cost-effective alternatives. Short-term
    cash flows are affected by the seasonality of our business and
    are dependent on weather conditions. 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.                                                                   
|
| |  | We operate eleven facilities in North America and
    the United Kingdom, including the largest rock salt mine in the
    world in Goderich, Ontario and the largest salt mine in the
    United Kingdom in Winsford, Cheshire.                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | We believe that we are among the lowest cost rock
    salt producers in our markets. Our cost advantage is due to the
    size and quality of our reserves, effective mining techniques
    and efficient production processes. In addition, our salt mines
    in North America are located near either rail or water transport
    systems, thereby minimizing shipping and handling costs, which
    constitute a significant portion of the overall delivered cost
    of salt. Note 13 to our audited combined and consolidated
    financial statements provides additional information regarding
    geographical data.

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.


For the year ended December 31, 2003, we
sold approximately 12.8 million tons of salt and other
minerals, generating sales of $600.6 million and net income
of $43.5 million. In our North American highway deicing
business, we have been awarded contracts for over 10% more
volume for the 2003  2004 winter season as compared
to the prior winter season, with an increase in contract prices
of almost 1% as compared to last year. Contract bid volumes are
non-binding indications of our customers expected volume
requirements for the upcoming winter season.


Stand-Alone Company




The combined and consolidated financial
information related to periods ending 2001 and prior included in
this annual report on Form 10-K/A have been derived from
the consolidated financial statements of IMC Global. The
preparation of this information was based on assumptions and
estimates, including allocations of costs from IMC Global, that
we believe are reasonable. This financial information may not,
however, necessarily reflect the results of operations,
financial positions and cash flows that would have occurred if
we had been a separate, stand-alone entity during the periods
presented or our future results of operations, financial
position and cash flows.


We believe that there are opportunities to
improve performance on both the revenue and cost sides of our
business. For example, we believe that our new management focus
on operating efficiencies and monitoring capital expenditures
following the consummation of the Recapitalization has led to
reductions in our operating costs and maintenance capital
expenditures. Additionally, we intend to continue to


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




focus on growing our SOP business and regaining
our lost market share.

In connection with the Recapitalization, we have
incurred substantial indebtedness, interest expense and
repayment obligations. The interest expense relating to this
debt has adversely affected our net income. Upon consummation of
the Recapitalization, we incurred a number of one-time fees and
expenses of approximately $35.0 million. Note 3 and
Note 11 to our audited combined and consolidated financial
statements provides additional information.


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 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, 2003, we maintained
$148.0 million of net mineral interests as a part of
mineral interests and other intangible assets and
$7.9 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. Pursuant
to Statement of Financial Accounting Standards, or
SFAS, No. 141, Business
Combinations and SFAS No. 142, Goodwill
and Other Intangible Assets, mineral interests associated
with other-than-owned properties are classified as intangible
assets.


Mineral interests recorded as a part of mineral
interests and other intangible assets are amortized on a
units-of-production method based on internal and third-party
estimates of recoverable reserves. Mineral interests recorded as
a part of property, plant and equipment are amortized on a
straight-line basis.


Our rights to extract minerals are contractually
limited by time. 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.

The Company determines its 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, 2003 we
had $31.5 million of deferred tax assets resulting from our
prior year U.S. NOL carryforwards.


The Company has recorded a valuation allowance
for a portion of its deferred tax assets relating to NOLs that
it does not believe will more likely than not be realized given
the annual limitations from prior ownership changes. At
December 31, 2003, the valuation allowance was
$12.7 million. 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 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.


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




We intend to maintain this valuation allowance to
the extent that we determine that some ($12.7 million at
December 31, 2003) of the deferred tax assets will not be
recovered due to the annual limitations from prior ownership
changes.

In addition, 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.


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 combined and
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 $1.5 and
$1.1 million during the years ended December 31, 2003
and 2002, 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 combined and
consolidated historical financial information for the years
ended December 31, 2003, 2002 and 2001. The table and
discussion should be read in conjunction with the information
contained in our combined and consolidated financial statements
and the notes thereto included in this annual report on
Form 10-K/A. However, our results of operations set forth
below and elsewhere in this annual report may not necessarily
reflect what would have occurred if we had been a separate,
stand-alone entity during the periods presented or what will
occur in the future.


|                                             |                     |                                 |            |       |      |            |        |       |            |   |        |       | 
|-------------------------------------------- | ------------------- | ------------------------------- | ---------- | ----- | ---- | ---------- | ------ | ----- | ---------- | - | ------ | ----- | 
|                                            
|                                             |                    
|                                             |                     |                                
|                                             |                     | For the Year Ended December 31, |           
|                                             |                     |                                 |           
|                                             |                     | 2003                            |            |       | 2002 |            |        | 2001  |           
|(Dollars in millions)                        |                     |                                 | (restated) |       |      | (restated) |        |       | (restated) |  
|                                            
|                                             |                    
|Sales                                        |                     | $                               | 600.6      |       |      | $          | 502.6  |       |            | $ | 523.2  |      
|Cost of sales  shipping and handling        |                     |                                 | 165.3      |       |      |            | 137.5  |       |            |   | 143.2  |      
|Cost of sales  products                     |                     |                                 | 288.3      |       |      |            | 239.2  |       |            |   | 257.0  |      
|                                            
|                                             | Gross profit        |                                 |            | 147.0 |      |            |        | 125.9 |            |   |        | 123.0 | 
|Selling, general and administrative expenses |                     |                                 | 48.6       |       |      |            | 40.5   |       |            |   | 38.9   |      
|Restructuring and other charges              |                     |                                 |           |       |      |            | 7.7    |       |            |   | 27.0   |      
|                                            
|                                             | Operating earnings  |                                 |            | 98.4  |      |            |        | 77.7  |            |   |        | 57.1  | 
|Interest expense                             |                     |                                 | 39.1       |       |      |            | 41.3   |       |            |   | 14.3   |      
|Other (income) expense                       |                     |                                 | 5.6        |       |      |            | 4.9    |       |            |   | (3.1   | )    
|                                            
|                                             | Income before taxes |                                 |            | 53.7  |      |            |        | 31.5  |            |   |        | 45.9  | 
|Income tax expense                           |                     |                                 | 10.2       |       |      |            | 0.6    |       |            |   | 17.3   |      
|                                            
|                                             | Net income          |                                 | $          | 43.5  |      |            | $      | 30.9  |            |   | $      | 28.6  | 
|                                            
|Sales by Segment:                            |                     |                                 |            |       |      |            |        |       |            |   |        |      
|Salt                                         |                     | $                               | 546.6      |       |      | $          | 452.5  |       |            | $ | 485.0  |      
|Specialty potash fertilizers                 |                     |                                 | 54.0       |       |      |            | 50.1   |       |            |   | 38.2   |      
|                                            
|                                             | Total               |                                 | $          | 600.6 |      |            | $      | 502.6 |            |   | $      | 523.2 | 
|                                            
|Sales Volumes (in thousands of
    tons):    |                     |                                 |            |       |      |            |        |       |            |   |        |      
|Highway Deicing                              |                     |                                 | 9,663      |       |      |            | 7,965  |       |            |   | 9,402  |      
|General Trade                                |                     |                                 | 2,927      |       |      |            | 2,786  |       |            |   | 2,822  |      
|Specialty potash fertilizers                 |                     |                                 | 251        |       |      |            | 242    |       |            |   | 188    |      
|Average Sales Price (per ton):               |                     |                                 |            |       |      |            |        |       |            |   |        |      
|Highway Deicing                              |                     | $                               | 29.25      |       |      | $          | 27.96  |       |            | $ | 26.87  |      
|General Trade                                |                     |                                 | 89.50      |       |      |            | 82.48  |       |            |   | 82.35  |      
|Specialty potash fertilizers                 |                     |                                 | 215.21     |       |      |            | 207.02 |       |            |   | 203.19 |      
|                                            

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. 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 $165.3 million during the year ended
December 31, 2003, an increase of $27.8 mil-

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




lion 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 more tons of
deicing salt and general trade salt sold in North America 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.

Restructuring and Other Charges

During 2002, restructuring and 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.

Year Ended December 31, 2002 Compared to
the Year Ended December 31, 2001

Sales

Sales for 2002 of $502.6 million decreased
$20.6 million, or 3.9% compared to $523.2 million in
2001. Sales include 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 $137.5 million during 2002, a decrease of
$5.7 million compared to 2001 shipping and handling fees of
$143.2 million. The decline in shipping and handling
related fees during 2002 was due to fewer tons of products sold
compared to 2001. Product Sales for 2002 of $365.1 million
decreased $14.9 million, or 3.9% compared to
$380.0 million for 2001. Salt Product Sales for 2002 of
$322.3 million decreased $19.5 million, or 5.7%
compared to $341.8 million for 2001. This decrease was
primarily the result of a 1,437,000 ton decline in sales volumes
in our combined North American and U.K. highway deicing product
lines due to the mild winter

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




weather in the March 2002 quarter. The decline in
volumes negatively impacted sales by approximately
$27 million. Additionally, the general trade product lines
had a 36,000 ton reduction in sales volumes which was also
primarily the result of the mild March 2002 quarter winter
weather. This reduction in volumes unfavorably impacted sales by
approximately $7 million. Overall, the reduction in sales
volumes were offset in part by an improvement in the pricing for
our North American salt product lines of $15 million. SOP
Product Sales for 2002 of $42.8 million increased
$4.6 million compared to $38.2 million for 2001
primarily due to a 54,000 ton increase in sales volumes
partially offset by lower average prices.

Gross Profit

Gross profit for 2002 of $125.9 million
increased $2.9 million, or 2.4% compared to
$123.0 million for 2001. The increase in gross profit
primarily reflects the $15 million resulting from the
improvement in the pricing of our North American salt product
lines offset by an approximate $17 million decline due to
lower highway deicing sales volumes. Gross margins also
increased by approximately $2 million due to the increase
in SOP sales volumes partially offset by lower average prices.
Lower operating costs also improved our gross margin by
$4 million.

Selling, General and Administrative
Expenses

Selling, general and administrative expenses of
$40.5 million for 2002 increased $1.6 million, or 4.1%
compared to $38.9 million for 2001. The increase primarily
reflects additional costs related to our transition to a
stand-alone entity for services previously provided by IMC prior
to the Recapitalization.

Restructuring and Other Charges

Transition costs are non-recurring in nature and
relate to charges required to establish us as an independent
entity. During 2002, we incurred $7.7 million of transition
costs that were directly related to our transition from an
entity controlled by IMC Global 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. During 2001, we
incurred $27.0 million in expenses in connection with the
Recapitalization which consisted of transaction and transition
costs. The transaction costs were directly related to the
acquisition and consisted primarily of outside professional
services.

Interest Expense

Interest expense for 2002 of $41.3 million
increased $27.0 million compared to $14.3 million for
2001. This increase is the result of our new capital structure
following the Recapitalization on November 28, 2001.

Other (Income) Expense

Other expense for 2002 of $4.9 million
increased $8.0 million compared to other income of
$3.1 million for 2001. Other income in 2001 was primarily
interest income earned from IMC. We earned no interest income
from IMC in 2002. Additionally, we recorded a $5.3 million
loss related to refinancing our term loan in 2002.

Income Tax Expense

Income tax expense for 2002 of $0.6 million
decreased $16.7 million compared to $17.3 million of
income tax expense for 2001 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 2002, there was a decline
in pre-tax income partially resulting from higher interest
expense following the Recapitalization. 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, changes in the expected utilization of previously
reserved NOLs and foreign mining taxes.

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 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,
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-opportu-


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




nity 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.


For the year ended December 31,
2001

Net cash flow generated by operating activities
was $112.5 million for the year ended December 31,
2001. Of this amount, $51.3 million was generated by
working capital reductions. The largest working capital
reduction, reflective of our exposure to weather conditions, was
a $36.3 million decrease in our receivables. This reduction
was primarily related to more severe winter weather in December
2000 than in December 2001.

Net cash flow used by investing activities was
$43.6 million for the year ended December 31, 2001,
primarily representing capital expenditures of the business. As
part of these capital expenditures, we incurred
$5.7 million related to the new mine shaft, mill and
headframe at the Cote Blanche, Louisiana facility. The
remaining capital expenditures included $26.4 million of
expenditures to maintain our facilities and $10.9 million
of growth and cost reduction capital expenditures. The
significant growth and cost reduction projects related to the
continuing expansion of our Lyons, Kansas evaporation facility
and the purchase of a continuous miner at our Winsford facility.


Net cash flow used by financing activities was
$53.8 million for the year ended December 31, 2001. A
significant level of activity occurred during the fourth quarter
as a result of the Recapitalization. Most notably, we borrowed
$250.0 million from our newly issued Senior Subordinated
Notes, $225.0 million from our new term loan and
approximately $39.8 million on our new revolving credit
facility. These funds were used primarily to repay certain notes
payable to IMC and affiliates and to declare a dividend to IMC.
We also incurred $18.0 million in financing costs.
Additionally, $70.7 million were used in the net repayment
of third-party debt, including a £45.0 million bank
facility for our U.K. operations.


Post-Recapitalization

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. As of December 31,
2003, we had $417.3 million of indebtedness outstanding,
net of issuance


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




premium. 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.

Concurrent with the Recapitalization, Compass
Minerals Group issued $250.0 million aggregate principal
amount of its 10% senior subordinated notes due 2011 and
entered into the senior credit facilities. Our senior credit
facilities provided for a term loan credit facility in the
principal amount of $225.0 million and a revolving credit
facility in an aggregate amount of up to $135.0 million.
Upon consummation of the Recapitalization, Compass Minerals
Group borrowed the full amount available under the term loan
credit facility and made borrowings under the revolving credit
facility based upon our working capital needs. As of
December 31, 2003, $14.0 million of indebtedness and
$9.4 million of letters of credit were outstanding under
the revolving credit facility. 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, 2003, approximately
$111.6 million was available under the revolving credit
facility. The revolving credit facility is available until 2008.
Borrowings under the amended term loan credit facility are due
and payable in quarterly installments that began in 2002. The
quarterly term loan amortization payments due before 2009
approximate $0.8 million on an annual basis, or 1% of the
term loan. The remaining balance of the term loan credit
facility will amortize in equal quarterly installments in the
eighth year of the term loan credit facility. As of
December 31, 2003, the outstanding balance of the term loan
was $78.3 million.


On April 10, 2002, Compass Minerals Group
completed an offering of an additional $75.0 million
aggregate principal amount of its senior subordinated notes. The
April 2002 senior subordinated notes and the senior subordinated
notes are governed by, and treated as a single class of
securities under an indenture, dated November 28, 2001,
between Compass Minerals Group and The Bank of New York, as
trustee. The gross proceeds from the offering of the April 2002
senior subordinated notes in the amount of $78.4 million,
including a purchase premium in the amount of $3.4 million,
were used to refinance borrowings under the term loan credit
facility and pay related fees and expenses. The April 2002
senior subordinated notes mature in August 2011.


On May 5, 2003, we amended our senior credit
facilities 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 CMI securities (other than
the subordinated discount notes and the senior discount notes)
not held by Apollo or management.


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. The
proceeds from the sale of the subordinated discount notes were
distributed to CMIs stockholders. In connection with the
offering of CMIs subordinated discount notes, we amended
our senior credit facilities in order to permit the distribution
of the proceeds from the offering of CMIs subordinated
discount notes to CMI stockholders.


On November 17, 2003, we further amended our
senior 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.


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, 2003, we
had approximately $85.7 million of NOLs remaining that
expire between 2006 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 $12.7 million at
December 31, 2003 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 given the
annual limitations from prior ownership changes.


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, 2003, 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. | 2003 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 % 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 % 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 combined and consolidated
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 $10.4 million and
$2.2 million at December 31, 2003 and 2002,
respectively, are now 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, 2003 are as follows (in millions):


Payments Due by Period

|                                      |  |       |       |  |        |   |      |       |  |   |       |  |  |         |      |  |  |   |       | 
|------------------------------------- |  | ----- | ----- |  | ------ | - | ---- | ----- |  | - | ----- |  |  | ------- | ---- |  |  | - | ----- | 
|                                     
|                                      | 
|                                      |  | Less  |       |  |       
|                                      |  | than  |       |  | 2-3    |   |      | 4-5   |  |   | After | 
|Contractual Cash Obligations          |  | Total |       |  | 1 Year |   |      | Years |  |   | Years |  |  | 5 Years |     
|                                     
|                                      | 
|Long-term Debt                        |  | $     | 417.3 |  |        | $ | 0.8  |       |  | $ | 1.6   |  |  | $       | 15.6 |  |  | $ | 399.3 | 
|Operating Leases(a)                   |  |       | 26.7  |  |        |   | 6.2  |       |  |   | 7.9   |  |  |         | 4.8  |  |  |   | 7.8   | 
|Unconditional Purchase Obligations(b) |  |       | 64.2  |  |        |   | 8.7  |       |  |   | 17.4  |  |  |         | 17.4 |  |  |   | 20.7  | 
|Management Agreement(c)               |  |       | 8.0   |  |        |   | 1.0  |       |  |   | 2.0   |  |  |         | 2.0  |  |  |   | 3.0   | 
|                                     
|Total Contractual Cash Obligations    |  | $     | 516.2 |  |        | $ | 16.7 |       |  | $ | 28.9  |  |  | $       | 39.8 |  |  | $ | 430.8 | 
|                                     

Amount of Commitment Expiration per
Period

|                        |  |       |       |  |        |   |      |       |  |       |           |  |  |         |       |  |  |   |   | 
|----------------------- |  | ----- | ----- |  | ------ | - | ---- | ----- |  | ----- | --------- |  |  | ------- | ----- |  |  | - | - | 
|                       
|                        | 
|                        |  | Less  |       |  |       
|                        |  | than  |       |  | 2-3    |   |      |       |  | After |          
|Other Commitments       |  | Total |       |  | 1 Year |   |      | Years |  |       | 4-5 Years |  |  | 5 Years |      
|                       
|                        | 
|Revolver                |  | $     | 111.6 |  |        | $ |     |       |  | $     |          |  |  | $       | 111.6 |  |  | $ |  | 
|Letters of Credit       |  |       | 9.4   |  |        |   | 9.4  |       |  |       |          |  |  |         |      |  |  |   |  | 
|Performance Bonds(d)    |  |       | 15.3  |  |        |   | 15.3 |       |  |       |          |  |  |         |      |  |  |   |  | 
|                       
|Total Other Commitments |  | $     | 136.3 |  |        | $ | 24.7 |       |  | $     |          |  |  | $       | 111.6 |  |  | $ |  | 
|                       

|    |                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|(a) | We lease property and equipment under
    non-cancelable operating leases for varying periods.                                      
|(b) | We have long-term contracts to purchase certain
    amounts of electricity and steam.                                               
|(c) | Note 11 to our audited combined and
    consolidated financial statements provides additional
    information.                      
|(d) | Note 10 to our audited combined and
    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.


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.


Sensitivity Analysis Related to
EBITDA

In connection with the Recapitalization and prior
to the Recapitalization, we have incurred significant
non-recurring restructuring and other charges that impact our
results of operations. As a result, our results of operations
and cash


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




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
restructuring and 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 non-recurring
restructuring and 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 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 restructuring
and other charges incurred for each of our last three fiscal
years:


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 IMC Global 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.

For the year ended December 31,
2001

In connection with the Recapitalization, we
expensed certain transaction and transition costs. We incurred
$20.1 million of transaction costs related to activities
associated with the Recapitalization (which consisted primarily
of costs related to outside professional services). We also
expensed $6.9 million of transition costs related to
activities and other charges incurred in connection with
separating us from IMC Global.

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 non-recurring restructuring and other
charges, including those resulting from the initial public
offering and the Recapitalization.


|                  |                                               |                                 |       |      |            |   |       |            |  |   |       |      |  
|----------------- | --------------------------------------------- | ------------------------------- | ----- | ---- | ---------- | - | ----- | ---------- |  | - | ----- | ---- | -
|                 
|                  |                                              
|                  |                                               |                                
|                  |                                               | For the Year Ended December 31, |      
|                  |                                               |                                 |      
|                  |                                               | 2003                            |       |      | 2002       |   |       | 2001       | 
|                  |                                               | (restated)                      |       |      | (restated) |   |       | (restated) | 
|                 
|                  |                                              
|Net income (loss) |                                               | $                               | 43.5  |      |            | $ | 30.9  |            |  | $ | 28.6  |     
|                  | Income tax expense (benefit)                  |                                 |       | 10.2 |            |   |       | 0.6        |  |   |       | 17.3 |  
|                  | Interest expense                              |                                 |       | 39.1 |            |   |       | 41.3       |  |   |       | 14.3 |  
|                  | Depreciation and amortization                 |                                 |       | 42.1 |            |   |       | 37.1       |  |   |       | 32.6 |  
|                 
|EBITDA            |                                               |                                 | 134.9 |      |            |   | 109.9 |            |  |   | 92.8  |     
|                  | Adjustments to income (loss) from operations: |                                 |       |      |            |   |       |            |  |   |       |      |  
|                  | Restructuring and other charges               |                                 |       |     |            |   |       | 7.7        |  |   |       | 27.0 |  
|                  | Other (income) expense(1)                     |                                 |       | 5.6  |            |   |       | 4.9        |  |   |       | (3.1 | )
|                 
|Adjusted EBITDA   |                                               | $                               | 140.5 |      |            | $ | 122.5 |            |  | $ | 116.7 |     
|                 

|    |                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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), 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 combined and 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 34% of
our 2003 sales in foreign currencies, and we incurred 41% of our
2003 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 the 2001
and 2002 had a negative impact on our sales and Adjusted EBITDA,
as reported in U.S. dollars in our combined and
consolidated financial statements while the weakening
U.S. dollar against these currencies in 2003 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


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




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 June 2001, the Financial Accounting Standards
Board, or FASB, issued SFAS No. 143,
Accounting for Obligations Associated with the Retirement
of Long-Lived Assets. The objective of SFAS No. 143
is to establish an accounting standard for the recognition and
measurement of an obligation related to the retirement of
certain long-lived assets. The retirement obligation must be one
that results from the acquisition, construction or normal
operation of a long-lived asset. SFAS No. 143 requires
the legal obligation associated with the retirement of a
tangible long-lived asset to be recognized at fair value as a
liability when incurred and the cost to be capitalized by
increasing the carrying amount of the related long-lived asset.
SFAS No. 143 became effective for us and was adopted
on January 1, 2003. Its adoption did not have a material
impact on our financial position, results of operations or cash
flows.


In July 2002, the FASB issued
SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This statement addresses
financial accounting and reporting for costs associated with
exit or disposal activities and nullifies EITF Issue
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring).
This statement requires that a liability for costs associated
with an exit or disposal activity be recognized when the
liability is incurred. The provisions of this statement are
effective for exit or disposal activities that are initiated
after December 31, 2002. The adoption of
SFAS No. 146 on January 1, 2003 did not have a
material impact on our financial position, results of operations
or cash flows.


In January 2003, the FASB issued Interpretation,
or FIN, No. 46, Consolidation of Variable
Interest Entities, an Interpretation of Accounting Research
Bulletin No. 51. FIN No. 46 establishes
accounting guidance for consolidation of variable interest
entities that function to support the activities of the primary
beneficiary. FIN No. 46 applies to any business enterprise,
public or private, that has a controlling interest, contractual
relationship or other business relationship with a variable
interest entity. In December 2003, the FASB issued FIN
No. 46(R) which supercedes FIN No. 46. FIN
No. 46(R) is effective for all Special Purpose Entities
(SPEs) created prior to February 1, 2003 at the
end of the first interim or annual reporting period ending after
December 15, 2003. FIN 46(R) will be applicable to all
non-SPEs created prior to February 1, 2003 by public
entities at the end of the first interim or annual reporting
period ending after March 15, 2004. The Company has
determined that it has no SPEs. We are in the process of
reviewing the applicability of FIN 46(R) to entities other
than SPEs, but we do not expect the adoption to have a material
effect on our consolidated statements.


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|COMPASS MINERALS GROUP, INC. | 2003 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, 2003, we had
$78.3 million of debt outstanding under the term loan
credit facility and $14.0 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, 2003, 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, 2003 would have increased by approximately
$0.9 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 $2.0 million
impact on earnings for the year ended December 31, 2003.
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, 2003 that expire in one year or less and
expire greater than one year total $9.7 million and
$3.2 million, respectively.


Excluding gas hedged with derivative instruments,
a hypothetical 10% adverse change in our natural gas prices
during the year ended December 31, 2003 would have had an
estimated $0.7 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. | 2003 FORM 10-K








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




|                                                                                                                                     |  |      |    | 
|------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | -- | 
|Description                                                                                                                          |  | Page |   
|                                                                                                                                    
|                                                                                                                                     | 
|                                                                                                                                    
|Report of Independent Registered Public
    Accounting Firm                                                                          |  |      | 33 | 
|Report of Independent Registered Public
    Accounting Firm                                                                          |  |      | 34 | 
|Consolidated Balance Sheets as of
    December 31, 2003 and 2002, restated                                                           |  |      | 35 | 
|Combined and Consolidated Statements of
    Operations for the three years ended December 31, 2003,
    restated                     |  |      | 36 | 
|Combined and Consolidated Statements of
    Stockholders Equity (Deficit) for the three years ended
    December 31, 2003, restated |  |      | 37 | 
|Combined and Consolidated Statements of Cash
    Flows for the three years ended December 31, 2003, restated                         |  |      | 38 | 
|Notes to Combined and Consolidated Financial
    Statements, restated                                                                |  |      | 39 | 

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Report of Independent Registered Public
Accounting Firm

To the Board of Directors and Shareholder 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, 2003 and 2002, and the results
of their operations and their cash flows for each of the two
years in the period ended December 31, 2003 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 for each of the two years in
the period ended December 31, 2003 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
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 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.

As described under the heading
Restatement in Note 1, the Company has restated its
consolidated financial statements for the years ended
December 31, 2003 and 2002.

PricewaterhouseCoopers LLP

Kansas City, Missouri


March 3, 2004, except for the matter
disclosed


under the heading Restatement in Note
1


for which the date is November 15, 2004


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Report of Independent Registered Public
Accounting Firm

To the Board of Directors and Shareholder


Compass Minerals Group, Inc.


We have audited the accompanying combined and
consolidated statements of operations, stockholders equity
(deficit), and cash flows of Compass Minerals Group, Inc. for
the year ended December 31, 2001. Our audit also included
the financial statement schedule for the year ended
December 31, 2001 listed in the Index at
Item 15(a)(2). These financial statements and schedule are
the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements and schedule based on our audit.

We conducted our audit 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 includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.


In our opinion, the financial statements referred
to above present fairly, in all material respects, the combined
and consolidated results of operations and cash flows of Compass
Minerals Group, Inc. for the year ended December 31, 2001,
in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the related financial
statement schedule for the year ended December 31, 2001,
when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the
information set forth therein.


As described under the heading
Restatement in Note 1, the combined and consolidated
financial statements have been restated for the year ended
December 31, 2001.


/s/ Ernst & Young LLP

Kansas City, Missouri

March 8, 2002,


except for the matter disclosed under the heading


Restatement in Note 1, for which the
date is


November 10, 2004


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Consolidated Balance Sheets




|                                                         |                                                                                                            |              |       |        |            |   |       |        |  
|-------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ------------ | ----- | ------ | ---------- | - | ----- | ------ | -
|                                                         |                                                                                                            |             
|                                                         |                                                                                                            | December 31, |      
|                                                         |                                                                                                            |              |      
|                                                         |                                                                                                            | 2003         |       |        | 2002       |  
|(In millions, except share data)                         |                                                                                                            | (restated)   |       |        | (restated) |  
|                                                        
|                                                         |                                                                                                           
|Assets                                                  
|Current assets:                                          |                                                                                                            |              |       |        |            |   |       |       
|                                                         | Cash and cash equivalents                                                                                  |              | $     | 2.6    |            |   | $     | 11.9   |  
|                                                         | Receivables, less allowance for doubtful accounts
    of $2.1 million in 2003 and $1.6 million in 2002     |              |       | 117.4  |            |   |       | 94.5   |  
|                                                         | Inventories                                                                                                |              |       | 96.7   |            |   |       | 96.5   |  
|                                                         | Other                                                                                                      |              |       | 3.7    |            |   |       | 0.7    |  
|                                                        
|Total current assets                                     |                                                                                                            |              | 220.4 |        |            |   | 203.6 |       
|Property, plant and equipment, net                       |                                                                                                            |              | 262.0 |        |            |   | 263.4 |       
|Intangible assets  mineral interests
    and other, net |                                                                                                            |              | 172.7 |        |            |   | 149.8 |       
|Other                                                    |                                                                                                            |              | 24.5  |        |            |   | 25.0  |       
|                                                        
|Total assets                                             |                                                                                                            | $            | 679.6 |        |            | $ | 641.8 |       
|                                                        
|                                                        
|Liabilities and Stockholders Equity
    (Deficit)      
|Current liabilities:                                     |                                                                                                            |              |       |        |            |   |       |       
|                                                         | Current portion of long-term debt                                                                          |              | $     | 0.8    |            |   | $     | 1.2    |  
|                                                         | Accounts payable                                                                                           |              |       | 72.6   |            |   |       | 62.3   |  
|                                                         | Accrued expenses                                                                                           |              |       | 13.3   |            |   |       | 8.9    |  
|                                                         | Accrued interest                                                                                           |              |       | 12.5   |            |   |       | 12.6   |  
|                                                         | Accrued salaries and wages                                                                                 |              |       | 13.5   |            |   |       | 12.6   |  
|                                                         | Income taxes payable                                                                                       |              |       |       |            |   |       | 4.8    |  
|                                                        
|Total current liabilities                                |                                                                                                            |              | 112.7 |        |            |   | 102.4 |       
|                                                        
|Long-term debt, net of current portion                   |                                                                                                            |              | 419.4 |        |            |   | 436.4 |       
|Deferred income taxes                                    |                                                                                                            |              | 55.9  |        |            |   | 59.5  |       
|Other noncurrent liabilities                             |                                                                                                            |              | 36.4  |        |            |   | 41.4  |       
|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  |            |   |       | 362.3  |  
|                                                         | Accumulated deficit                                                                                        |              |       | (314.6 | )          |   |       | (358.1 | )
|                                                         | Advances to parent                                                                                         |              |       | (10.4  | )          |   |       | (2.2   | )
|                                                         | Accumulated other comprehensive income                                                                     |              |       | 25.5   |            |   |       | 0.1    |  
|                                                        
|Total stockholders equity (deficit)                     |                                                                                                            |              | 55.2  |        |            |   | 2.1   |       
|                                                        
|Total liabilities and stockholders equity
    (deficit) |                                                                                                            | $            | 679.6 |        |            | $ | 641.8 |       
|                                                        

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


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Combined and Consolidated Statements of Operations




|                        |                                              |                                  |        |       |            |   |       |            |  |   |       |       |  
|----------------------- | -------------------------------------------- | -------------------------------- | ------ | ----- | ---------- | - | ----- | ---------- |  | - | ----- | ----- | -
|                        |                                              |                                 
|                        |                                              | For the years ended December 31, |       
|                        |                                              |                                  |       
|                        |                                              | 2003                             |        |       | 2002       |   |       | 2001       | 
|(In millions)           |                                              | (restated)                       |        |       | (restated) |   |       | (restated) | 
|                       
|Sales                   |                                              |                                  | $600.6 |       |            | $ | 502.6 |            |  | $ | 523.2 |      
|                        | Cost of sales  shipping and handling        |                                  |        | 165.3 |            |   |       | 137.5      |  |   |       | 143.2 |  
|                        | Cost of sales  products                     |                                  |        | 288.3 |            |   |       | 239.2      |  |   |       | 257.0 |  
|                       
|Gross profit            |                                              |                                  | 147.0  |       |            |   | 125.9 |            |  |   | 123.0 |      
|                        | Selling, general and administrative expenses |                                  |        | 48.6  |            |   |       | 40.5       |  |   |       | 38.9  |  
|                        | Restructuring and other charges              |                                  |        |      |            |   |       | 7.7        |  |   |       | 27.0  |  
|                       
|Operating earnings      |                                              |                                  | 98.4   |       |            |   | 77.7  |            |  |   | 57.1  |      
|Other (income) expense: |                                              |                                  |        |       |            |   |       |            |  |   |       |      
|                        | Interest expense                             |                                  |        | 39.1  |            |   |       | 41.3       |  |   |       | 14.3  |  
|                        | Other, net                                   |                                  |        | 5.6   |            |   |       | 4.9        |  |   |       | (3.1  | )
|                       
|                        | Income before income taxes                   |                                  |        | 53.7  |            |   |       | 31.5       |  |   |       | 45.9  |  
|Income tax expense      |                                              |                                  | 10.2   |       |            |   | 0.6   |            |  |   | 17.3  |      
|                       
|Net income              |                                              |                                  | $ 43.5 |       |            | $ | 30.9  |            |  | $ | 28.6  |      
|                       

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


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Combined and Consolidated Statements of Stockholders
Equity (Deficit)




|                                       |                                                 |                                                      |   |            |         |   |             |           |  |          |        |       |                   |               |       |   |       |   |      |      |   |   |        |       |  
|-------------------------------------- | ----------------------------------------------- | ---------------------------------------------------- | - | ---------- | ------- | - | ----------- | --------- |  | -------- | ------ | ----- | ----------------- | ------------- | ----- | - | ----- | - | ---- | ---- | - | - | ------ | ----- | -
|                                       |                                                 |                                                     
|                                       |                                                 | For the years ended December 31, 2003, 2002 and 2001 |  
|                                       |                                                 | (restated)                                           |  
|                                       |                                                 |                                                      |  
|                                       |                                                 |                                                      |   | Additional |         |   | Accumulated |           |  | Advances |        |       | Accumulated Other |               |       |  
|                                       |                                                 | Common                                               |   |            | Paid In |   |             | Excess    |  |          | to     |       |                   | Comprehensive |       |   |      
|(In millions)                          |                                                 | Stock                                                |   |            | Capital |   |             | (Deficit) |  |          | Parent |       |                   | Income (Loss) |       |   | Total |  
|                                      
|                                       |                                                
|                                      
|Balance, December 31, 2000             |                                                 | $                                                    |  |            |         | $ | 915.2       |           |  | $        | (624.5 | )     |                   | $             |      |   |       | $ | 1.1  |      |   | $ | 291.8  |      
|Comprehensive income:                  |                                                 |                                                      |   |            |         |   |             |           |  |          |        |       |                   |               |       |   |       |   |      |      |   |   |        |      
|                                       | Net income                                      |                                                      |   |            |         |   |             |           |  |          |        | 45.5  |                   |               |       |   |       |   |      |      |   |   |        | 45.5  |  
|                                       | Cumulative translation adjustments              |                                                      |   |            |         |   |             |           |  |          |        |       |                   |               |       |   |       |   |      | (3.2 | ) |   |        | (3.2  | )
|                                       |                                                 |                                                      |   |            |         |   |             |           |  |          |        |       |                   |               |       |   |       |  
|                                       | Comprehensive income                            |                                                      |   |            |         |   |             |           |  |          |        |       |                   |               |       |   |       |   |      |      |   |   |        | 42.3  |  
|Capital contribution from IMC          |                                                 |                                                      |   |            |         |   | 82.0        |           |  |          |        |       |                   |               |       |   |       |   |      |      |   |   | 82.0   |      
|Dividend to IMC and affiliates         |                                                 |                                                      |   |            |         |   |             |           |  |          | (71.1  | )     |                   |               |       |   |       |   |      |      |   |   | (71.1  | )    
|                                      
|Balance, November 27, 2001             |                                                 | $                                                    |  |            |         | $ | 997.2       |           |  | $        | (650.1 | )     |                   | $             |      |   |       | $ | (2.1 | )    |   | $ | 345.0  |      
|                                      
|Balance, November 28, 2001             |                                                 | $                                                    |  |            |         | $ |            |           |  | $        |       |       |                   | $             |      |   |       | $ |     |      |   | $ |       |      
|Contribution of IMCI net assets to CMG |                                                 |                                                      |   |            |         |   | 345.0       |           |  |          |        |       |                   |               |       |   |       |   |      |      |   |   | 345.0  |      
|Dividend to IMC                        |                                                 |                                                      |   |            |         |   |             |           |  |          | (372.1 | )     |                   |               |       |   |       |   |      |      |   |   | (372.1 | )    
|Comprehensive loss:                    |                                                 |                                                      |   |            |         |   |             |           |  |          |        |       |                   |               |       |   |       |   |      |      |   |   |        |      
|                                       | Net loss                                        |                                                      |   |            |         |   |             |           |  |          |        | (16.9 | )                 |               |       |   |       |   |      |      |   |   |        | (16.9 | )
|                                       | Unfunded pension losses, net of tax             |                                                      |   |            |         |   |             |           |  |          |        |       |                   |               |       |   |       |   |      | (5.4 | ) |   |        | (5.4  | )
|                                       | Cumulative translation adjustments              |                                                      |   |            |         |   |             |           |  |          |        |       |                   |               |       |   |       |   |      | 3.0  |   |   |        | 3.0   |  
|                                       |                                                 |                                                      |   |            |         |   |             |           |  |          |        |       |                   |               |       |   |       |  
|                                       | Comprehensive loss                              |                                                      |   |            |         |   |             |           |  |          |        |       |                   |               |       |   |       |   |      |      |   |   |        | (19.3 | )
|Capital contribution                   |                                                 |                                                      |   |            |         |   | 1.4         |           |  |          |        |       |                   |               |       |   |       |   |      |      |   |   | 1.4    |      
|                                      
|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  |  
|                                       | Unfunded pension losses, 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  |  
|                                       | Unfunded pension 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   |      
|                                      

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


37



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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Combined and Consolidated Statements of Cash Flows




|                                                                 |                                                                                                    |                                                           |       |       |            |   |       |            |       |   |       |        |       |  
|---------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ----- | ----- | ---------- | - | ----- | ---------- | ----- | - | ----- | ------ | ----- | -
|                                                                 |                                                                                                    |                                                          
|                                                                 |                                                                                                    | For the years ended December 31,                          |      
|                                                                 |                                                                                                    |                                                           |      
|                                                                 |                                                                                                    | 2003                                                      |       |       | 2002       |   |       | 2001       |      
|(In millions)                                                    |                                                                                                    | (restated)                                                |       |       | (restated) |   |       | (restated) |      
|                                                                
|                                                                 |                                                                                                   
|                                                                
|Cash flows from operating activities:                            |                                                                                                    |                                                           |       |       |            |   |       |            |       |   |       |       
|                                                                 | Net income                                                                                         |                                                           | $     | 43.5  |            |   | $     | 30.9       |       |   | $     | 28.6   |      
|                                                                 | Adjustments to reconcile net income (loss) to net
    cash flows provided by operating activities: |                                                           |       |       |            |   |       |            |       |   |       |        |      
|                                                                 |                                                                                                    | Depreciation, depletion and amortization                  |       |       | 42.1       |   |       |            | 37.1  |   |       |        | 32.6  |  
|                                                                 |                                                                                                    | Finance fee amortization                                  |       |       | 1.6        |   |       |            | 1.9   |   |       |        | 0.2   |  
|                                                                 |                                                                                                    | Loss/(gain) on early extinguishment of long-term
    debt |       |       |           |   |       |            | 5.3   |   |       |        |      |  
|                                                                 |                                                                                                    | Restructuring charge and other charges, net of
    cash   |       |       |           |   |       |            | 1.1   |   |       |        | 1.4   |  
|                                                                 |                                                                                                    | Deferred income taxes                                     |       |       | 2.2        |   |       |            | (12.7 | ) |       |        | (1.3  | )
|                                                                 |                                                                                                    | Loss on disposal of property, plant and equipment         |       |       | 0.3        |   |       |            | 0.2   |   |       |        | 0.2   |  
|                                                                 | Changes in operating assets and liabilities:                                                       |                                                           |       |       |            |   |       |            |       |   |       |        |      
|                                                                 |                                                                                                    | Receivables                                               |       |       | (18.5      | ) |       |            | (5.9  | ) |       |        | 36.3  |  
|                                                                 |                                                                                                    | Inventories                                               |       |       | 4.3        |   |       |            | 3.8   |   |       |        | (20.9 | )
|                                                                 |                                                                                                    | Other assets                                              |       |       | (4.0       | ) |       |            | 0.6   |   |       |        | 1.8   |  
|                                                                 |                                                                                                    | Accounts payable and accrued expenses                     |       |       | (0.8       | ) |       |            | 14.5  |   |       |        | 3.8   |  
|                                                                 |                                                                                                    | Due to IMC and affiliates                                 |       |       |           |   |       |            |      |   |       |        | 32.1  |  
|                                                                 |                                                                                                    | Other noncurrent liabilities                              |       |       | 0.3        |   |       |            | 5.4   |   |       |        | (2.3  | )
|                                                                
|Net cash provided by operating activities                        |                                                                                                    |                                                           | 71.0  |       |            |   | 82.2  |            |       |   | 112.5 |       
|                                                                
|Cash flows from investing activities:                            |                                                                                                    |                                                           |       |       |            |   |       |            |       |   |       |       
|                                                                 | Capital expenditures                                                                               |                                                           |       | (20.6 | )          |   |       | (19.5      | )     |   |       | (43.0  | )    
|                                                                 | Proceeds from sales of property, plant and
    equipment                                           |                                                           |       | 0.1   |            |   |       | 0.6        |       |   |       | 0.2    |      
|                                                                 | Acquisition of intangible assets                                                                   |                                                           |       | (24.8 | )          |   |       |           |       |   |       |       |      
|                                                                 | Other                                                                                              |                                                           |       | (0.3  | )          |   |       | (0.2       | )     |   |       | (0.8   | )    
|                                                                
|Net cash used in investing activities                            |                                                                                                    |                                                           | (45.6 | )     |            |   | (19.1 | )          |       |   | (43.6 | )     
|                                                                
|Cash flows from financing activities:                            |                                                                                                    |                                                           |       |       |            |   |       |            |       |   |       |       
|                                                                 | Proceeds from issuance of long-term debt                                                           |                                                           |       |      |            |   |       | 78.4       |       |   |       | 475.0  |      
|                                                                 | Principal payments on long-term debt, including
    capital leases                                 |                                                           |       | (31.1 | )          |   |       | (115.9     | )     |   |       | (66.3  | )    
|                                                                 | Revolver activity                                                                                  |                                                           |       | 14.0  |            |   |       | (39.8      | )     |   |       | 35.4   |      
|                                                                 | Advances to CMI, net                                                                               |                                                           |       | (8.2  | )          |   |       | (2.2       | )     |   |       |       |      
|                                                                 | Payments from (to) IMC and affiliates, net                                                         |                                                           |       |      |            |   |       |           |       |   |       | (81.1  | )    
|                                                                 | Dividend to IMC and affiliates                                                                     |                                                           |       |      |            |   |       |           |       |   |       | (398.8 | )    
|                                                                 | Dividends paid                                                                                     |                                                           |       | (21.7 | )          |   |       |           |       |   |       |       |      
|                                                                 | Deferred financing costs                                                                           |                                                           |       |      |            |   |       | (3.9       | )     |   |       | (18.0  | )    
|                                                                 | Capital contributions                                                                              |                                                           |       | 8.8   |            |   |       | 12.8       |       |   |       |       |      
|                                                                 | Other                                                                                              |                                                           |       |      |            |   |       | 1.0        |       |   |       |       |      
|                                                                
|Net cash used in financing activities                            |                                                                                                    |                                                           | (38.2 | )     |            |   | (69.6 | )          |       |   | (53.8 | )     
|Effect of exchange rate changes on cash and cash
    equivalents |                                                                                                    |                                                           | 3.5   |       |            |   | 2.5   |            |       |   | 0.5   |       
|                                                                
|Net increase (decrease) in cash and cash
    equivalents         |                                                                                                    |                                                           | (9.3  | )     |            |   | (4.0  | )          |       |   | 15.6  |       
|Cash and cash equivalents, beginning of year                     |                                                                                                    |                                                           | 11.9  |       |            |   | 15.9  |            |       |   | 0.3   |       
|                                                                
|Cash and cash equivalents, end of year                           |                                                                                                    | $                                                         | 2.6   |       |            | $ | 11.9  |            |       | $ | 15.9  |       
|                                                                
|Supplemental cash flow information:                              |                                                                                                    |                                                           |       |       |            |   |       |            |       |   |       |       
|                                                                 | Interest paid excluding capitalized interest                                                       |                                                           | $     | 36.9  |            |   | $     | 29.4       |       |   | $     | 15.4   |      
|                                                                 | Income taxes paid, net of refunds and
    indemnification                                          |                                                           |       | 8.4   |            |   |       | 10.4       |       |   |       | 14.8   |      
|Supplemental disclosure of noncash activities:                   |                                                                                                    |                                                           |       |       |            |   |       |            |       |   |       |       
|                                                                 | Dividends to IMC and affiliates                                                                    |                                                           | $     |      |            |   | $     |           |       |   | $     | 44.5   |      
|                                                                 | Capital contributions from IMC and affiliates                                                      |                                                           |       |      |            |   |       |           |       |   |       | 82.0   |      
|                                                                

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


38



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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Notes to Combined and Consolidated Financial Statements






1.    Organization,
Formation and Basis of Presentation:




Compass Minerals Group, Inc. (CMG),
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 combined and consolidated financial statements
include the accounts of CMG, formerly IMC Inorganic Chemicals
Inc. (IMCI), and the combined and consolidated
results of CMGs wholly owned subsidiaries. CMGs
primary subsidiaries include those entities listed below
(collectively, the Company).




| |   |                                                                
| | - | ---------------------------------------------------------------
| |  | 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 IMC Global Inc. (IMC)
since IMCs acquisition of IMCI on April 1, 1998.
Those subsidiaries of IMCI as listed above (prior to the
Recapitalization described below) and other immaterial
subsidiaries have been included in the combined financial
statements for periods prior to the Recapitalization.


As part of the recapitalization transaction
described below, IMC Potash Corporation was reincorporated as
Salt Holdings Corporation, which is now known as Compass
Minerals International, Inc. At November 28, 2001, IMC
contributed the net assets of CMG to CMI.


On November 28, 2001, Apollo Management V,
L.P. (Apollo), through its subsidiary YBR Holdings
LLC (YBR Holdings), acquired control of CMI
from IMC pursuant to a recapitalization transaction
(Recapitalization) with assets and liabilities of
CMG retaining their historical value. The excess of the purchase
price over the net assets acquired was recorded in
Stockholders Equity of CMI. Immediately following the
Recapitalization, on a fully-diluted basis for management
options and stock issuable under CMIs stock option plan,
Apollo, co-investors and management owned approximately 81% of
the outstanding common stock of CMI and IMC owned approximately
19% of the outstanding common stock of CMI.


On November 5, 2003, the CMIs board of
directors approved the initial public offering of the CMI common
stock. In connection with the offering, CMI changed its name
from Salt Holdings Corporation to Compass Minerals
International, Inc. The shares were sold by stockholders of CMI
and the Company did not receive any proceeds from the sale of
the shares. Apollo and IMC Global each sold portions of their
holdings of CMI common stock, which reduced the ownership, on a
fully diluted basis, of Apollo and Apollo co-investors,
management, and IMC to approximately 35%, 11% and 2%,
respectively.


These combined and consolidated financial
statements have been prepared to present the historical
financial condition and results of operations and cash flows for
the subsidiaries that were included in the Recapitalization.


Prior to the Recapitalization, sales in the
accompanying 2001 combined and consolidated statement of
operations represent sales directly attributable to the Company.
Costs and expenses in the accompanying 2001 combined and
consolidated statement of operations represent direct costs and
expenses related to the Company. In addition, the 2001 combined
and consolidated statement of operations includes the estimated
cost of all services provided by IMC and its subsidiaries to the
Company through November 27, 2001, which had previously not
been directly allocated to the Company. All of the allocations
and estimates in the 2001 combined and consolidated statement of
operations are based on assumptions that Company management
believes are reasonable under the circumstances. However, these
allocations and estimates are not necessarily indicative of the
costs and expenses that would have resulted if the Company had
been operated as a separate entity.


Restatement: The
Company determines its current and deferred income taxes on a
separate company basis. The Company previously recorded full
valuation allowances against certain U.S. deferred tax assets.
The Company, after discussions with its independent registered
public accounting firms, has subsequently determined that future
reversals of existing taxable temporary differences (deferred
tax liabilities) should have been considered as a possible
source of taxable income when evaluating the need for a
valuation allowance against deferred tax assets. In addition, in
2002, the effect of taxable income expected to be generated in
the future from sources other than the reversals of existing
taxable temporary differences had not been properly considered
as a possible source of future taxable income. Upon
consideration of these possible sources of future taxable
income, the Company has now determined that it had overstated
its deferred tax asset valuation allowance and, thereby,
understated its deferred tax assets.


As a result, the Company has recalculated the
deferred income tax accounts and related valuation allowance at
the


39



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(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




end of each year from December 31, 1998
through December 31, 2003 and has restated the combined and
consolidated financial statements and the accompanying notes to
the combined and consolidated financial statements, as
applicable, for each of the three years in the period ended
December 31, 2003 to reflect the adjustments in the
deferred income tax accounts and related valuation allowance.
These adjustments during the previous reporting periods had no
impact on cash flows, operating earnings, income before income
taxes or the Companys ability to realize the benefits from
its deferred tax assets.

The following is a summary of the effects of
these non-cash adjustments (in millions):


|                                                                                                              |  |   |      |  
|------------------------------------------------------------------------------------------------------------- |  | - | ---- | -
|Cumulative increase to deferred income tax assets
    and increase to stockholders equity at January 1, 2001 |  | $ | 3.3  |  
|Decrease in income tax expense and increase in
    net income for the year ended December 31, 2001            |  |   | 9.5  |  
|Decrease in income tax expense and increase in
    net income for the year ended December 31, 2002            |  |   | 11.2 |  
|Increase in income tax expense and decrease in
    net income for the year ended December 31, 2003            |  |   | (2.2 | )

Prior to September 30, 2004, the Company
presented advances to its parent company and sole shareholder,
Compass Minerals International, Inc., as a component of other
non-current assets. The Company has subsequently determined that
these advances should have been presented as a deduction from
stockholders equity (deficit) in the consolidated balance
sheets and statements of stockholders equity (deficit).
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 effect of this restatement is a reduction
in total assets and stockholders equity (deficit) of
$10.4 million and $2.2 million at December 31,
2003 and 2002, respectively.

The following tables present (in millions) the
impact of the restatement on the combined and consolidated
statements of operations, the consolidated balance sheets, and
combined and consolidated statements of cash flows. The amounts
previously reported are derived from the Companys original
annual report on Form 10-K for the year ended
December 31, 2003 filed March 19, 2004 with the
Securities and Exchange Commission (SEC).


|                                                        |                            |                    |   |      |                    |  |         |                    |  |  |          |         |  |            |   |      |          |  |   |      |  |  |   |      | 
|------------------------------------------------------- | -------------------------- | ------------------ | - | ---- | ------------------ |  | ------- | ------------------ |  |  | -------- | ------- |  | ---------- | - | ---- | -------- |  | - | ---- |  |  | - | ---- | 
|                                                       
|                                                        |                           
|                                                        |                            |                    |   |      |                    | 
|                                                        |                            | For the year ended |   |      | For the year ended |  |         | For the year ended | 
|                                                        |                            | December 31, 2003  |   |      | December 31, 2002  |  |         | December 31, 2001  | 
|                                                        |                            |                    |   |      |                    |  |         |                    | 
|                                                        |                            | Amounts            |   |      |                    |  | Amounts |                    |  |  |          | Amounts |  |            |  
|                                                        |                            | previously         |   |      | As                 |  |         | previously         |  |  | As       |         |  | previously |   |      | As       | 
|                                                        |                            | reported           |   |      | restated           |  |         | reported           |  |  | restated |         |  | reported   |   |      | restated | 
|                                                        |                            |                   
|                                                        |                            |                    |   |     
|Combined and consolidated statements of
    operations: |                            |                    |   |      |                    |  |         |                    |  |  |          |         |  |            |   |      |          |  |   |      |  |  |   |     
|                                                        | Income before income taxes |                    | $ | 53.7 |                    |  | $       | 53.7               |  |  | $        | 31.5    |  |            | $ | 31.5 |          |  | $ | 45.9 |  |  | $ | 45.9 | 
|                                                        | Income tax expense         |                    |   | 8.0  |                    |  |         | 10.2               |  |  |          | 11.8    |  |            |   | 0.6  |          |  |   | 26.8 |  |  |   | 17.3 | 
|                                                        | Net income                 |                    |   | 45.7 |                    |  |         | 43.5               |  |  |          | 19.7    |  |            |   | 30.9 |          |  |   | 19.1 |  |  |   | 28.6 | 
|                                                       

|                             |                                      |                   |   |        |                   |  |         |            |   |  |          |        |   |  |   |        |  
|---------------------------- | ------------------------------------ | ----------------- | - | ------ | ----------------- |  | ------- | ---------- | - |  | -------- | ------ | - |  | - | ------ | -
|                            
|                             |                                     
|                             |                                      |                   |   |       
|                             |                                      | December 31, 2003 |   |        | December 31, 2002 | 
|                             |                                      |                   |   |        |                   | 
|                             |                                      | Amounts           |   |        |                   |  | Amounts |            |   | 
|                             |                                      | previously        |   |        | As                |  |         | previously |   |  | As       |       
|                             |                                      | reported          |   |        | restated          |  |         | reported   |   |  | restated |       
|                             |                                      |                  
|                             |                                      |                   |   |       
|Consolidated balance sheets: |                                      |                   |   |        |                   |  |         |            |   |  |          |        |   |  |   |       
|                             | Other noncurrent assets              |                   | $ | 34.9   |                   |  | $       | 24.5       |   |  | $        | 27.2   |   |  | $ | 25.0   |  
|                             | Total assets                         |                   |   | 690.0  |                   |  |         | 679.6      |   |  |          | 644.0  |   |  |   | 641.8  |  
|                             | Deferred income taxes                |                   |   | 77.7   |                   |  |         | 55.9       |   |  |          | 83.5   |   |  |   | 59.5   |  
|                             | Additional paid in capital           |                   |   | 341.9  |                   |  |         | 354.7      |   |  |          | 349.5  |   |  |   | 362.3  |  
|                             | Accumulated deficit                  |                   |   | (323.6 | )                 |  |         | (314.6     | ) |  |          | (369.3 | ) |  |   | (358.1 | )
|                             | Advances to parent                   |                   |   |       |                   |  |         | (10.4      | ) |  |          |       |   |  |   | (2.2   | )
|                             | Total stockholders equity (deficit) |                   |   | 43.8   |                   |  |         | 55.2       |   |  |          | (19.7  | ) |  |   | 2.1    |  

|                                                        |                                           |                    |   |      |                    |  |         |                    |  |  |          |         |   |            |   |       |          |  |   |       |  |  |   |       |  
|------------------------------------------------------- | ----------------------------------------- | ------------------ | - | ---- | ------------------ |  | ------- | ------------------ |  |  | -------- | ------- | - | ---------- | - | ----- | -------- |  | - | ----- |  |  | - | ----- | -
|                                                       
|                                                        |                                          
|                                                        |                                           |                    |   |      |                    | 
|                                                        |                                           | For the year ended |   |      | For the year ended |  |         | For the year ended | 
|                                                        |                                           | December 31, 2003  |   |      | December 31, 2002  |  |         | December 31, 2001  | 
|                                                        |                                           |                    |   |      |                    |  |         |                    | 
|                                                        |                                           | Amounts            |   |      |                    |  | Amounts |                    |  |  |          | Amounts |   |            |  
|                                                        |                                           | previously         |   |      | As                 |  |         | previously         |  |  | As       |         |   | previously |   |       | As       | 
|                                                        |                                           | reported           |   |      | restated           |  |         | reported           |  |  | restated |         |   | reported   |   |       | restated | 
|                                                        |                                           |                   
|                                                        |                                           |                    |   |     
|Combined and consolidated statements of cash
    flows: |                                           |                    |   |      |                    |  |         |                    |  |  |          |         |   |            |   |       |          |  |   |       |  |  |   |      
|                                                        | Net income                                |                    | $ | 45.7 |                    |  | $       | 43.5               |  |  | $        | 19.7    |   |            | $ | 30.9  |          |  | $ | 19.1  |  |  | $ | 28.6  |  
|                                                        | Deferred income taxes                     |                    |   |     |                    |  |         | 2.2                |  |  |          | (1.5    | ) |            |   | (12.7 | )        |  |   | 8.2   |  |  |   | (1.3  | )
|                                                        | Net cash provided by operating activities |                    |   | 71.0 |                    |  |         | 71.0               |  |  |          | 82.2    |   |            |   | 82.2  |          |  |   | 112.5 |  |  |   | 112.5 |  
|                                                       

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




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 combined and consolidated financial statements
and accompanying notes. Actual results could differ from those
estimates.

b. Basis of Combination/
Consolidation:The Companys
combined and consolidated financial statements include the
accounts of the Company, which include the domestic and foreign
subsidiaries discussed in Note 1. The Companys
financial statements have been combined through the
Recapitalization date and consolidated thereafter. 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). Exchange gains
and losses from transactions denominated in a currency other
than a companys functional currency are included in income.

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. 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 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.

g. Property, Plant and
Equipment:Tangible property, plant
and equipment, including assets under capital leases, 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 results from operations.

Asset classes or groups are depreciated or
amortized on a straight-line basis over the following estimated
useful lives:


|                           |  |  |                 | 
|-------------------------- |  |  | --------------- | 
|                          
|Land improvements          |  |  | 5 to 25 years   | 
|                          
|Buildings and improvements |  |  | 10 to 40  years | 
|                          
|Machinery and equipment    |  |  | 3 to 25 years   | 
|                          
|Furniture and fixtures     |  |  | 3 to 10 years   | 
|                          
|Mineral properties         |  |  | 20 to 30  years | 
|                          

To review for possible impairments, the Company
uses 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. Once
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.


h. Mineral
Interests:Mineral interests include
probable mineral reserves. The Company leases 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. Pursuant to SFAS No. 141,
Business Combinations (SFAS
No. 141), and SFAS No. 142, Goodwill and
Other Intangible Assets (SFAS No. 142),
mineral interests associated with other than owned properties
are classified as intangible assets. Probable mineral reserves
are amortized on a units-of-production basis over the respective

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




estimated mine lives not to exceed 99 years.
The weighted average amortization period for probable mineral
reserves is 93 years as of December 31, 2003. 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 the assigned
lives are appropriate.

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 Statements. 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 and
$14.5 million net of accumulated amortization of
$3.6 million and $1.9 million as of December 31,
2003 and 2002, 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.

k. Income
Taxes:The Company determines its
current and deferred income taxes on a separate company basis.
The Companys U.S. subsidiaries participated in the
consolidated federal income tax return of IMC for periods owned
by IMC. The foreign subsidiaries file separate-company returns
in their respective jurisdictions. For financial reporting
purposes, while owned by IMC, the Company computed a provision
for income taxes on a stand alone basis. 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.

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 due to the long lives of the Companys
mineral deposits. The Companys environmental accrual was
$2.3 million and $2.0 million as of December 31,
2003 and 2002, respectively.

m. Asset Retirement
Obligations:The Company adopted SFAS
No. 143, Accounting for Obligations Associated with
the Retirement of Long-Lived Assets on January 1,
2003. The Company recognizes and measures obligations related to
the retirement of tangible long-lived assets. The retirement
obligation must be one that results from the acquisition,
construction or normal operation of the long-lived asset. The
legal obligation associated with the retirement of a tangible
long-lived asset is recognized at fair value as a liability when
incurred and the cost is capitalized by increasing the carrying
amount of the related long-lived asset. The adoption of
SFAS No. 143 did not have a material impact on the
Companys financial position, results of operations or cash
flows.

n. Stock
Options:The following relates to the
Companys parent, CMI, and is provided for informational
purposes only. CMI has a stock option plan that was adopted on
November 28, 2001 for employees and officers of CMG and
directors of CMG and CMI (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 years ended
December 31, 2002 and 2001, 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 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 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.


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




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:

|                              |  |      |       |   |      |   |      |      |  |   |      |  
|----------------------------- |  | ---- | ----- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                             
|                              | 
|                              |  | 2003 |       |   | 2002 |   |      | 2001 | 
|                             
|                              | 
|Fair value of options granted |  | $    | 10.98 |   |      | $ | 2.11 |      |  | $ | 2.01 |  
|Expected lives (years)        |  |      | 7.8   |   |      |   | 7.8  |      |  |   | 8.0  |  
|Expected volatility*          |  |      |      |   |      |   |     |      |  |   |     |  
|Dividend yield                |  |      |      |   |      |   |     |      |  |   |     |  
|Risk-free interest rates      |  |      | 3.4   | % |      |   | 4.9  | %    |  |   | 4.3  | %
|                             

|  |                                                             
|- | ------------------------------------------------------------
|* | Under the minimum value method, volatility was
    excluded.

o. 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, 2003 and 2002 qualify as cash
flow hedges. The Company does not engage in trading activities
with these financial instruments.


p. 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, 2003, or for more than 10% of accounts
receivable at December 31, 2003 or 2002.

q. Recent Accounting
Pronouncements:In July 2002, the FASB
issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This Statement addresses
financial accounting and reporting for costs associated with
exit or disposal activities and nullifies EITF Issue
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring).
This Statement requires that a liability for costs associated
with an exit or disposal activity be recognized when the
liability is incurred. The Company adopted SFAS No. 146 in
the first quarter of 2003 as the provisions of this Statement
are effective for exit or disposal activities initiated after
December 31, 2002. The adoption of SFAS No. 146 did
not have a material impact on the Companys financial
position, results of operations or cash flows.

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest Entities, an
Interpretation of Accounting Research Bulletin No. 51
(FIN 46). FIN 46 establishes accounting
guidance for consolidation of variable interest entities that
function to support the activities of the primary beneficiary.
FIN 46 applies to any business enterprise, public or
private, that has a controlling interest, contractual
relationship or other business relationship with a variable
interest entity. In December 2003, the FASB issued
Interpretation No. 46(R) (FIN 46(R)) which
supercedes FIN 46. FIN 46(R) is effective for all
Special Purpose Entities (SPEs) created prior to
February 1, 2003 at the end of the first interim or annual
reporting period ending after December 15, 2003.
FIN 46(R) will be applicable to all non-SPEs created prior
to February 1, 2003 by public entities at the end of the
first interim or annual reporting period ending after
March 15, 2004. The Company has determined that it has no
SPEs. The Company is in the process of reviewing the
applicability of FIN 46(R) to entities other than SPEs, but
does not expect the adoption to have a material effect on its
consolidated statements.


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

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




3.    Asset Impairment,
Restructuring and Other Charges:




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
IMC 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.

2001

In connection with the Recapitalization, the
Company expensed certain costs totaling $27.0 million which
consist of transaction and transition costs. The transaction
costs were directly related to the acquisition and consisted
primarily of outside professional services. Below is a more
detailed description of such costs:



| |     |                                                                                                                                                                                                                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | $20.1 million of transaction costs related
    to activities associated with the sale and Recapitalization,
    including approximately $6.4 million in legal fees and
    other fees, and $13.7 million in financial services and
    advice.                                                                              
|
| | (2) | $6.9 million of transition costs, the
    majority of which related to retention, recruiting, systems
    design and migration and other activities and charges related to
    separating CMG from IMC, as well as charges for legal costs and
    other asset write-offs associated with CMGs new strategic
    direction.

4.    Inventories:




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





|                           |  |      |      |  |      |   |      | 
|-------------------------- |  | ---- | ---- |  | ---- | - | ---- | 
|                           |  | 2003 |      |  | 2002 |  
|                          
|                           | 
|Finished goods             |  | $    | 84.1 |  |      | $ | 83.5 | 
|Raw materials and supplies |  |      | 12.6 |  |      |   | 13.0 | 
|                          
|                           |  | $    | 96.7 |  |      | $ | 96.5 | 
|                          

Certain inventories of approximately
$7.7 million and $7.5 million at December 31,
2003 and 2002, respectively, that will be utilized with respect
to long-lived assets have been classified in the consolidated
balance sheets as other noncurrent assets.


5.    Property, Plant and
Equipment:




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


|                                            |  |      |       |  |      |   |       | 
|------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | 
|                                           
|                                            | 
|                                            |  | 2003 |       |  | 2002 |  
|                                           
|                                            | 
|Land and buildings                          |  | $    | 135.9 |  |      | $ | 128.4 | 
|Machinery and equipment                     |  |      | 408.3 |  |      |   | 375.7 | 
|Furniture and fixtures                      |  |      | 9.6   |  |      |   | 9.9   | 
|Mineral properties and rights               |  |      | 20.3  |  |      |   | 18.2  | 
|Construction in progress                    |  |      | 6.5   |  |      |   | 13.5  | 
|                                           
|                                            |  |      | 580.6 |  |      |   | 545.7 | 
|Less accumulated depreciation and depletion |  |      | 318.6 |  |      |   | 282.3 | 
|                                           
|                                            |  | $    | 262.0 |  |      | $ | 263.4 | 
|                                           

6.    Mineral Interests
and Other Intangible Assets:




Mineral interests include probable mineral
reserves. The Company leases 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 mineral interests are subject to
amortization.


In June 2003, the Company purchased, for
$24.8 million, intangible assets related to IMCs SOP
marketing business including customer lists related to its
Carlsbad, New Mexico SOP product line and rights to produce SOP
at IMC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 IMC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 IMCs
facility will be amortized on a straight-line basis estimated at
25 years. Neither asset has a residual value.


The aggregate amortization of mineral interests
and other intangible assets for the years ended
December 31, 2003, 2002 and 2001 was $1.9 million,
$1.3 million $1.4 million, respectively. Estimated
amortization expense for fiscal 2004 through fiscal 2008 is
approximately $2.9 million, annually.




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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Mineral interests and other intangible assets
consist of the following at December 31 (in millions):

|                                |  |          |        |  |              |   |       |          |  |  |          |  |  |              |        |  |          |   |     |  |  |  |        | 
|------------------------------- |  | -------- | ------ |  | ------------ | - | ----- | -------- |  |  | -------- |  |  | ------------ | ------ |  | -------- | - | --- |  |  |  | ------ | 
|                               
|                                | 
|                                |  |          |        | 
|                                |  | 2003     |        |  | 2002         |  
|                               
|                                | 
|                                |  | Gross    |        |  |              |   | Gross |          |  | 
|                                |  | Carrying |        |  | Accumulated  |   |       | Net Book |  |  | Carrying |  |  | Accumulated  |        |  | Net Book |  
|                                |  | Value    |        |  | Amortization |   |       | Value    |  |  | Value    |  |  | Amortization |        |  | Value    |  
|                               
|                                | 
|Probable mineral reserves       |  |          | $158.6 |  |              | $ | 10.6  |          |  |  | $148.0   |  |  |              | $158.6 |  |          | $ | 8.8 |  |  |  | $149.8 | 
|SOP long-term customer contract |  |          | 0.5    |  |              |   |      |          |  |  | 0.5      |  |  |              |       |  |          |   |    |  |  |  |       | 
|Other SOP intangible asset      |  |          | 24.3   |  |              |   | 0.1   |          |  |  | 24.2     |  |  |              |       |  |          |   |    |  |  |  |       | 
|                               
|                                |  |          | 183.4  |  |              |   | 10.7  |          |  |  | 172.7    |  |  |              | 158.6  |  |          |   | 8.8 |  |  |  | 149.8  | 
|                               

7.    Income
Taxes:




The Company determines its current and deferred
income taxes on a separate company basis. As discussed in
Note 2, the Companys income tax provision and related
assets and liabilities have been computed on a stand-alone basis
for the periods owned by IMC, without regard to actual
liabilities and benefits related to consolidated tax return
filings by IMC. The schedule of deferred tax assets and
liabilities below reflects assets related to net operating loss
carryforwards and alternative minimum tax credits, net of the
necessary reserves, on a historical basis based upon the
Recapitalization and related transfer of certain tax assets to
the Company.


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


|                                 |         |                |      |      |            |   |     |            |       |   |      |      |      |  
|-------------------------------- | ------- | -------------- | ---- | ---- | ---------- | - | --- | ---------- | ----- | - | ---- | ---- | ---- | -
|                                
|                                 |        
|                                 |         | 2003           |      |      | 2002       |   |     | 2001       |      
|                                 |         | (restated)     |      |      | (restated) |   |     | (restated) |      
|                                
|                                 |        
|Current:                         |         |                |      |      |            |   |     |            |       |   |      |     
|                                 | Federal |                | $    | 0.6  |            |   | $   |           |       |   | $    | 5.9  |     
|                                 | State   |                |      | 0.2  |            |   |     | 1.3        |       |   |      | 0.8  |     
|                                 | Foreign |                |      | 7.2  |            |   |     | 12.0       |       |   |      | 11.9 |     
|                                
|                                 |         | Total current  |      |      | 8.0        |   |     |            | 13.3  |   |      |      | 18.6 |  
|                                
|Deferred:                        |         |                |      |      |            |   |     |            |       |   |      |     
|                                 | Federal |                |      | 2.1  |            |   |     | (14.0      | )     |   |      | (2.3 | )   
|                                 | State   |                |      | (3.2 | )          |   |     | (0.4       | )     |   |      | 0.4  |     
|                                 | Foreign |                |      | 3.3  |            |   |     | 1.7        |       |   |      | 0.6  |     
|                                
|                                 |         | Total deferred |      |      | 2.2        |   |     |            | (12.7 | ) |      |      | (1.3 | )
|                                
|Total provision for income taxes |         | $              | 10.2 |      |            | $ | 0.6 |            |       | $ | 17.3 |     
|                                

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):


|                                                          |  |            |      |   |            |   |       |            |  |   |      |  
|--------------------------------------------------------- |  | ---------- | ---- | - | ---------- | - | ----- | ---------- |  | - | ---- | -
|                                                         
|                                                          | 
|                                                          |  | 2003       |      |   | 2002       |   |       | 2001       | 
|                                                          |  | (restated) |      |   | (restated) |   |       | (restated) | 
|                                                         
|                                                          | 
|Domestic income                                           |  | $          | 33.4 |   |            | $ | 9.6   |            |  | $ | 22.2 |  
|Foreign income                                            |  |            | 20.3 |   |            |   | 21.9  |            |  |   | 23.7 |  
|                                                         
|Income before income taxes                                |  | $          | 53.7 |   |            | $ | 31.5  |            |  | $ | 45.9 |  
|                                                         
|Computed tax at the federal statutory rate of 35%         |  | $          | 18.8 |   |            | $ | 11.0  |            |  | $ | 16.1 |  
|Foreign income, mining, and withholding taxes             |  |            | 3.5  |   |            |   | 6.0   |            |  |   | 3.0  |  
|Foreign exchange gain                                     |  |            |     |   |            |   |      |            |  |   | 2.6  |  
|Percentage depletion in excess of basis                   |  |            | (5.1 | ) |            |   | (1.9  | )          |  |   | (2.9 | )
|State income taxes, net of federal income tax
    benefit |  |            | (3.2 | ) |            |   | 0.6   |            |  |   | 1.1  |  
|Restructuring and other charges                           |  |            |     |   |            |   |      |            |  |   | 6.8  |  
|Change in valuation allowance on deferred tax
    assets  |  |            | (4.2 | ) |            |   | (14.6 | )          |  |   | (7.7 | )
|Other                                                     |  |            | 0.4  |   |            |   | (0.5  | )          |  |   | (1.7 | )
|                                                         
|Income tax expense (benefit)                              |  | $          | 10.2 |   |            | $ | 0.6   |            |  | $ | 17.3 |  
|                                                         
|Effective tax rate                                        |  |            | 19   | % |            |   | 2     | %          |  |   | 38   | %
|                                                         

The Company does not provide U.S. federal
income taxes on undistributed earnings of foreign companies that
are not currently taxable in the United States. No undistributed
earnings of foreign companies were subject to U.S. income
tax in the years ended December 31, 2003, 2002 and 2001.
Total undistributed earnings on which no U.S. federal
income tax has been provided were $94.1 million at
December 31, 2003. If these earnings are distributed,
foreign tax credits may become available under current law to
reduce or possibly eliminate the resulting U.S. income tax
liability.


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


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




assets and liabilities were as follows at
December 31 (in millions):

|                               |                                              |            |      |       |            |   |      |       |  
|------------------------------ | -------------------------------------------- | ---------- | ---- | ----- | ---------- | - | ---- | ----- | -
|                              
|                               |                                             
|                               |                                              | 2003       |      |       | 2002       |  
|                               |                                              | (restated) |      |       | (restated) |  
|                              
|                               |                                             
|Deferred tax liabilities:      |                                              |            |      |       |            |   |      |      
|                               | Property, plant and equipment                |            | $    | 90.5  |            |   | $    | 99.2  |  
|                              
|Total deferred tax liabilities |                                              |            | 90.5 |       |            |   | 99.2 |      
|Deferred tax assets:           |                                              |            |      |       |            |   |      |      
|                               | Net operating loss carryforwards             |            |      | 31.5  |            |   |      | 38.5  |  
|                               | Alternative minimum tax credit carryforwards |            |      | 3.0   |            |   |      | 2.4   |  
|                               | Other assets                                 |            |      | 12.8  |            |   |      | 15.7  |  
|                              
|                               | Subtotal                                     |            |      | 47.3  |            |   |      | 56.6  |  
|                               | Valuation allowance                          |            |      | (12.7 | )          |   |      | (16.9 | )
|                              
|Total deferred tax assets      |                                              |            | 34.6 |       |            |   | 39.7 |      
|                              
|Net deferred tax liabilities   |                                              | $          | 55.9 |       |            | $ | 59.5 |      
|                              

At December 31, 2003, the Company has net
operating loss carryforwards of approximately
$85.7 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 2006 and 2022. The
Company also has a U.S. federal alternative minimum tax
credit carryforward at December 31, 2003 of approximately
$3.0 million. This credit carryforward may be carried
forward indefinitely to offset any excess of regular tax
liability over alternative minimum tax liability.


The Company determined that a valuation allowance
against certain U.S. deferred tax assets in the amount of
$13.1 million for the fourth quarter of 2002 was no longer
necessary based on an assessment of potential sources of future
taxable income other than reversals of existing taxable
temporary differences. 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, 2003
and 2002, the Companys valuation allowance was
$12.7 million and $16.9 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.


In the third quarter of 2003, in accordance with
the merger agreement related to the Recapitalization, IMC
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 IMC during the third quarter and used the
cash to pay income taxes for periods prior to Recapitalization.


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 $341.1 million
at December 31, 2003.


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
$9.4 million as of December 31, 2003. 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, 2003, additional borrowings of up to
$111.6 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 2003.


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




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, 2003, 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.


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. The
proceeds from the sale of the subordinated discount notes were
distributed to CMIs stockholders in the form of common
stock dividends. In connection with the offering of CMIs
subordinated discount notes, the Company amended its senior
credit facilities in order to permit the distribution of the
proceeds from the offering of CMIs subordinated discount
notes to CMI stockholders.


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.


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


|                                               |  |      |       |   |      |   |       |  
|---------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | -
|                                              
|                                               | 
|                                               |  | 2003 |       |   | 2002 |  
|                                              
|                                               | 
|Senior Subordinated Notes                      |  | $    | 325.0 |   |      | $ | 325.0 |  
|Term Loan                                      |  |      | 78.3  |   |      |   | 109.3 |  
|Revolving Credit Facility                      |  |      | 14.0  |   |      |   |      |  
|                                              
|Other, including capital lease obligations     |  |      |      |   |      |   | 0.1   |  
|                                              
|                                               |  |      | 417.3 |   |      |   | 434.4 |  
|Plus premium on Senior Subordinated Notes, net |  |      | 2.9   |   |      |   | 3.2   |  
|Less current portion                           |  |      | (0.8  | ) |      |   | (1.2  | )
|                                              
|                                               |  | $    | 419.4 |   |      | $ | 436.4 |  
|                                              

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

|           |  |   |       | 
|---------- |  | - | ----- | 
|           |  |  
|          
|           | 
|2004       |  | $ | 0.8   | 
|2005       |  |   | 0.8   | 
|2006       |  |   | 0.8   | 
|2007       |  |   | 0.8   | 
|2008       |  |   | 14.8  | 
|Thereafter |  |   | 399.3 | 
|          
|           |  | $ | 417.3 | 
|          

As of December 31, 2003, the estimated fair
value of the notes, based on available trading information, was
$364.0 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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


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




asset allocations at December 31, 2003 and
2002, by asset category are as follows:

|                          |  |                |     |   |      |  |     |  
|------------------------- |  | -------------- | --- | - | ---- |  | --- | -
|                         
|                          | 
|                          |  |               
|                          |  | Plan Assets at |    
|                          |  | December 31,   |    
|Asset Category            |  | 2003           |     |   | 2002 | 
|                         
|                          | 
|Cash and cash equivalents |  |                | 1   | % |      |  | 1   | %
|Equity Securities         |  |                | 76  |   |      |  | 78  |  
|Debt Securities           |  |                | 23  |   |      |  | 21  |  
|                         
|Total                     |  |                | 100 | % |      |  | 100 | %
|                         

The Company makes actuarial assumptions that it
believes are reasonable. Those assumptions for the year ended
December 31, 2003 include a discount rate of 5.25%,
expected return on plan assets of 6.25%, and rate of
compensation increase of 2.75%. Those assumptions for the years
ended December 31, 2002 and 2001 include a discount rate of
5.5%, expected return on plan assets of 6.5%, and rate of
compensation increase of 3.5%.


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 Company made contributions to the plans of
approximately $1.5 million, $1.1 million and
$0.8 million in the years ended December 31, 2003,
2002 and 2001, respectively.


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


|              |  |                  |     | 
|------------- |  | ---------------- | --- | 
|             
|              | 
|              |  | Future Expected  |    
|Calendar Year |  | Benefit Payments |    
|             
|              | 
|2004          |  | $                | 1.6 | 
|2005          |  |                  | 1.5 | 
|2006          |  |                  | 1.3 | 
|2007          |  |                  | 1.4 | 
|2008          |  |                  | 1.4 | 
|2009  2013   |  |                  | 8.5 | 
|             

The following table sets forth pension
obligations and plan assets for the Companys defined
benefit plans, based on a November 30 measurement date for
2003 and a September 30 measurement date for 2002, as of
December 31 (in millions):


|                                             |  |      |       |   |      |   |       |  
|-------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | -
|                                            
|                                             | 
|                                             |  | 2003 |       |   | 2002 |  
|                                            
|                                             | 
|Change in benefit obligation:                |  |      |       |   |      |   |       |  
|Benefit obligation as of January 1           |  | $    | 56.2  |   |      | $ | 44.4  |  
|Service cost                                 |  |      | 1.4   |   |      |   | 1.2   |  
|Interest cost                                |  |      | 2.9   |   |      |   | 2.6   |  
|Transfer in from IMC                         |  |      |      |   |      |   | 2.2   |  
|Actuarial (gain) loss                        |  |      | (3.3  | ) |      |   | 1.6   |  
|Benefits paid                                |  |      | (1.4  | ) |      |   | (1.1  | )
|Currency fluctuation adjustment              |  |      | 5.9   |   |      |   | 5.2   |  
|Other                                        |  |      | 0.1   |   |      |   | 0.1   |  
|                                            
|Benefit obligation as of December 31         |  | $    | 61.8  |   |      | $ | 56.2  |  
|                                            
|Change in plan assets:                       |  |      |       |   |      |   |       |  
|Fair value as of January 1                   |  | $    | 35.0  |   |      | $ | 34.2  |  
|Actual return                                |  |      | 6.4   |   |      |   | (4.7  | )
|Company contributions                        |  |      | 1.5   |   |      |   | 1.1   |  
|Transfer in from IMC                         |  |      |      |   |      |   | 2.3   |  
|Currency fluctuation adjustment              |  |      | 4.4   |   |      |   | 3.1   |  
|Benefits paid                                |  |      | (1.4  | ) |      |   | (1.1  | )
|Other                                        |  |      | 0.1   |   |      |   | 0.1   |  
|                                            
|Fair value as of December 31                 |  | $    | 46.0  |   |      | $ | 35.0  |  
|                                            
|Funded status of the plans                   |  | $    | (15.8 | ) |      | $ | (21.2 | )
|Unrecognized net (gain) loss                 |  |      | 13.6  |   |      |   | 20.5  |  
|Unrecognized transition liability            |  |      | 0.4   |   |      |   | 0.4   |  
|                                            
|Net amount recognized                        |  | $    | (1.8  | ) |      | $ | (0.3  | )
|                                            
|Amounts recognized in the balance
    sheet: |  |      |       |   |      |   |       |  
|Prepaid (accrued) benefit cost               |  | $    | (0.2  | ) |      | $ | (0.3  | )
|Accrued benefit liability                    |  |      | (12.0 | ) |      |   | (17.4 | )
|Other noncurrent assets                      |  |      | 0.4   |   |      |   | 0.4   |  
|Accumulated other comprehensive loss         |  |      | 10.0  |   |      |   | 17.0  |  
|                                            
|Net amount recognized                        |  | $    | (1.8  | ) |      | $ | (0.3  | )
|                                            

The accumulated benefit obligations for the
defined benefit pension plans with accumulated benefit
obligations in excess of the plans assets were
$58.1 million and $52.7 million, as of
December 31, 2003 and 2002, respectively.


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


|                                                 |  |      |      |   |      |   |      |      |  |   |      |  
|------------------------------------------------ |  | ---- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                                
|                                                 | 
|                                                 |  | 2003 |      |   | 2002 |   |      | 2001 | 
|                                                
|                                                 | 
|Service cost for benefits earned during the year |  | $    | 1.4  |   |      | $ | 1.2  |      |  | $ | 1.1  |  
|Interest cost on projected benefit obligation    |  |      | 2.9  |   |      |   | 2.6  |      |  |   | 2.3  |  
|Return on plan assets                            |  |      | (2.2 | ) |      |   | (2.4 | )    |  |   | (3.0 | )
|Net amortization and deferral                    |  |      | 1.1  |   |      |   | 0.5  |      |  |   | 0.1  |  
|                                                
|Net pension expense                              |  | $    | 3.2  |   |      | $ | 1.9  |      |  | $ | 0.5  |  
|                                                

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


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




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 $4.1 million,
$3.3 million and $2.9 million for the years ended
December 31, 2003, 2002 and 2001, respectively.

10.    Commitments and
Contingencies:




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


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, 2003, are as follows (in millions):

|              |  |           |       | 
|------------- |  | --------- | ----- | 
|             
|              | 
|              |  | Operating |      
|Calendar Year |  | Leases    |      
|             
|              | 
|2004          |  |           | $ 6.2 | 
|2005          |  |           | 4.5   | 
|2006          |  |           | 3.4   | 
|2007          |  |           | 3.0   | 
|2008          |  |           | 1.8   | 
|Thereafter    |  |           | 7.8   | 
|             
|              |  |           | $26.7 | 
|             

Rental expense, net of sublease income, was
$8.2 million, $8.1 million and $7.7 million for
the years ended December 31, 2003, 2002 and 2001,
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 $5.8 million,
$4.5 million and $5.3 million for the years ended
December 31, 2003, 2002 and 2001, 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,
2003, the Company has had no material penalties related to these
sales contracts. At December 31, 2003, the Company had
approximately $15.3 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
$8.7 million annually from 2004 to 2008 and approximately
$20.7 million in total, thereafter.

Environmental
Matters:At December 31, 2003 and
2002, the Company has recorded accruals of $2.3 million and
$2.0 million, respectively, 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
2003, the Company recognized another ratable portion,
$0.9 million, as a net reduction to cost of sales.
Approximately $5.4 million of the original one-time cash
payment 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
$75.7 million and $66.9 million at December 31,
2003 and 2002, respectively.

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




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 subordinated
discount notes at December 31, 2003 was $107.4 million.

The senior discount notes and subordinated
discount notes are not a part of our combined and consolidated
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.


11.    Related Party
Transactions:




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


Transactions with IMC and its subsidiaries
(IMC affiliates) and Apollo and its subsidiaries
(Apollo affiliates) are considered related parties.
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 IMC 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 did not record any interest income or
expense related to IMC affiliates for the years ended
December 31, 2003 and 2002. For the year ended
December 31, 2001, the Company recorded interest income and
interest expense related to IMC affiliates of $2.9 million
and $10.8 million, respectively.


The Company did not record any sales to IMC
affiliates for the years ended December 31, 2003 and 2002.
The Companys sales to IMC affiliates were
$33.7 million for the year ended December 31, 2001.
The Company recorded purchases from IMC affiliates of
$25.6 million, $19.0 million and $16.5 million
for the years ended December 31, 2003, 2002 and 2001,
respectively.


Until November 28, 2001, the Company sold
potash to IMC affiliates who marketed, distributed and sold this
product to the agriculture industry. The Company was not charged
for these services and received a discounted price for the
product sales. The Company estimates its sales and operating
earnings for the year ended December 31, 2001 would have
been $528.4 million and $60.3 million, respectively,
had the Company provided its own sales and marketing resources
and directly sold its potash product (unaudited).


Subsequent to November 28, 2001, the Company
entered into an agreement with IMC whereby the Company markets
SOP produced by IMC at their New Mexico facility as an agent.
The Company recognized approximately $0.7 million and
$0.5 million in fees from IMC for the years ended
December 31, 2003 and 2002, respectively.


In June 2003, the Company purchased, for
$24.5 million, intangible assets related to IMCs SOP
marketing business including customer lists related to its
Carlsbad, New Mexico SOP product line and rights to produce SOP
at IMC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, markets SOP produced by IMC at their
Carlsbad, New Mexico facility terminated on November 30,
2003. As of November 30, 2003, the Company had purchased
approximately $3.9 million of SOP finished goods inventory
from IMC.


IMC has provided certain management services to
the Company. The Company estimates the cost of these services to
be $0.7 million for the year ended December 31, 2001.
These costs have been included in the Companys results for
that period and have discontinued effective with the
Recapitalization. Services provided by IMC included tax,
treasury and cash management, risk management, information
systems and certain employee benefit administration costs. These
estimates are not necessarily indicative of future expenses of
the Company or expenses that would have resulted if the Company
had been operated as a separate entity.


The Company subleases railcars from affiliates of
IMC that are used by us to transport products. At
December 31, 2003, the Company leased approximately 46
railcars with terms that expire on various dates throughout 2005
and with renewal options available on some railcars until 2014.
The lease amounts expensed were $0.5 million,
$0.8 million and $0.8 million for the years ended
December 31, 2003, 2002, and 2001, respectively.


In connection with the Recapitalization, the
Company entered into a management agreement with Apollo. The
agreement allows us and any of our affiliates to utilize
Apollos expertise in areas such as financial transactions,
acquisitions and other matters that relate to our business,
administration and policies. Apollo will receive an annual fee
of approximately $1.0 million for its management services
and


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




advice through 2011. During the years ended
December 31, 2003, 2002 and 2001, the Company recorded
management fee charges of $1.0 million, $0.9 million
and $0.1 million, respectively, from Apollo. Additionally,
during the year ended December 31, 2001, the Company
recorded a $7.5 million charge to Apollo for transaction
fees related to the Recapitalization.

Upon completion of CMIs initial public
offering in December 2003, the Company amended the management
consulting agreement with Apollo, whereby Apollo will have the
right to terminate the amended management consulting agreement
at any time upon prior written notice to the Company. Upon
Apollos election to terminate the amended management
consulting agreement, the Company will pay Apollo approximately
$5.5 million, less any amounts paid under the annual fee
from the date of the amended agreement, 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 will effectively terminate. Such payment will be
expensed as incurred.


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.


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


Advances to CMGs parent company and sole
shareholder, CMI, in the amount of $10.4 million and
$2.2 million at December 31, 2003 and 2002,
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:




During 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. No derivative instruments existed prior to the
fourth quarter of 2002. The Company does not engage in trading
activities with these financial instruments.


All derivative instruments held by the Company as
of December 31, 2003 and 2002 qualify as cash flow hedges.
The derivative instruments outstanding at December 31, 2003
had expiration dates extending into December 2005. 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
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 2003
or 2002. We recognized increases in the net derivative asset and
associated increases in accumulated other comprehensive income
of approximately $1.1 and $0.1 million, at
December 31, 2003 and 2002, respectively. The notional
amounts of natural gas swap derivative contracts outstanding
were $12.9 million and $1.5 million, at
December 31, 2003 and 2002, 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 combined and consolidated
financial statements include detail related to special charges
and should be referred to when viewing the segment information
herein.


Beginning in 2003, the Company no longer
allocates corporate general and administrative costs incurred by
CMI and CMG to its operating segments. For purposes of segment
disclosure information, these costs are now classified in
Other. The Company believes that this action will
improve its ability to analyze its segment operating results.
The annual periods presented below have been updated to conform
to the Companys 2003 manner of analyzing its operating
segment results.


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K






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


|                                         |  |      |       |  |        |   |       |          |  |   |       |   |  |   |       | 
|---------------------------------------- |  | ---- | ----- |  | ------ | - | ----- | -------- |  | - | ----- | - |  | - | ----- | 
|                                        
|                                         | 
|2003                                     |  | Salt |       |  | Potash |   |       | Other(c) |  |   | Total |  
|                                        
|                                         | 
|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, restated                   |  |      | 522.6 |  |        |   | 141.5 |          |  |   | 15.5  |   |  |   | 679.6 | 
|Capital expenditures                     |  |      | 17.7  |  |        |   | 2.9   |          |  |   |      |   |  |   | 20.6  | 
|                                        

|                                         |  |      |       |  |        |   |       |          |  |   |       |   |  |   |       | 
|---------------------------------------- |  | ---- | ----- |  | ------ | - | ----- | -------- |  | - | ----- | - |  | - | ----- | 
|                                        
|                                         | 
|2002                                     |  | Salt |       |  | Potash |   |       | Other(d) |  |   | Total |  
|                                        
|                                         | 
|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)(a)             |  |      | 95.1  |  |        |   | 4.8   |          |  |   | (22.2 | ) |  |   | 77.7  | 
|Depreciation, depletion and amortization |  |      | 29.2  |  |        |   | 7.9   |          |  |   |      |   |  |   | 37.1  | 
|Total assets, restated                   |  |      | 509.8 |  |        |   | 116.0 |          |  |   | 16.0  |   |  |   | 641.8 | 
|Capital expenditures                     |  |      | 15.3  |  |        |   | 4.2   |          |  |   |      |   |  |   | 19.5  | 
|                                        

|                                         |  |      |       |  |        |   |       |          |  |   |       |   |  |   |       | 
|---------------------------------------- |  | ---- | ----- |  | ------ | - | ----- | -------- |  | - | ----- | - |  | - | ----- | 
|                                        
|                                         | 
|2001                                     |  | Salt |       |  | Potash |   |       | Other(d) |  |   | Total |  
|                                        
|                                         | 
|Sales from external customers            |  | $    | 485.0 |  |        | $ | 38.2  |          |  | $ |      |   |  | $ | 523.2 | 
|Intersegment sales                       |  |      |      |  |        |   | 8.8   |          |  |   | (8.8  | ) |  |   |      | 
|Cost of sales  shipping and handling    |  |      | 143.2 |  |        |   |      |          |  |   |      |   |  |   | 143.2 | 
|Operating earnings (loss)(b)             |  |      | 94.3  |  |        |   | 0.7   |          |  |   | (37.9 | ) |  |   | 57.1  | 
|Depreciation, depletion and amortization |  |      | 24.5  |  |        |   | 8.1   |          |  |   |      |   |  |   | 32.6  | 
|Total assets                             |  |      | 514.2 |  |        |   | 120.9 |          |  |   | 20.5  |   |  |   | 655.6 | 
|Capital expenditures                     |  |      | 38.5  |  |        |   | 4.5   |          |  |   |      |   |  |   | 43.0  | 
|                                        

|    |                                                               
|--- | --------------------------------------------------------------
|(a) | Includes $7.7 million related to transition
    costs.        
|(b) | $27.0 million related to transaction and
    transition costs.
|(c) | Other includes corporate entities and
    eliminations.       

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

|               |  |      |       |  |      |   |       |      |  |   |       | 
|-------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|              
|               | 
|Sales          |  | 2003 |       |  | 2002 |   |       | 2001 | 
|              
|               | 
|United States  |  | $    | 394.5 |  |      | $ | 345.2 |      |  | $ | 339.1 | 
|Canada         |  |      | 128.7 |  |      |   | 90.8  |      |  |   | 99.4  | 
|United Kingdom |  |      | 68.2  |  |      |   | 60.0  |      |  |   | 79.4  | 
|Other          |  |      | 9.2   |  |      |   | 6.6   |      |  |   | 5.3   | 
|              
|               |  | $    | 600.6 |  |      | $ | 502.6 |      |  | $ | 523.2 | 
|              

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 |  | 2003 |       |  | 2002 |  
|                 
|                  | 
|United States     |  | $    | 262.7 |  |      | $ | 246.2 | 
|Canada            |  |      | 122.4 |  |      |   | 128.2 | 
|United Kingdom    |  |      | 74.1  |  |      |   | 63.8  | 
|                 
|                  |  | $    | 459.2 |  |      | $ | 438.2 | 
|                 

14.    Stock
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.


One-half of the options granted to employees will
vest in varying amounts from one to four years depending on the
terms of the individual option agreements. However, generally
upon termination of a grantees employment within one year
following the sale of the Company, all of the time vesting
options allocated to such terminated employee shall vest
immediately. The other one-half of the options granted to
employees are performance options and vested upon completion of
CMIs initial public offering in December 2003. Options
granted to members of the board of directors vest at the time of
grant. Options expire on the thirtieth day immediately following
the eighth anniversary of issuance.


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




The weighted-average exercise price approximates
the weighted-average grant-date fair value of options granted
during 2002 and 2001. As a result of CMIs initial public
offering, the Company determined that certain stock option
issuances made during 2003 were issued with exercise prices
below the fair value. The weighted average fair value for
options granted during 2003 was $10.98.

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


|                                                                          |  |           |           |   |                  |   |      | 
|------------------------------------------------------------------------- |  | --------- | --------- | - | ---------------- | - | ---- | 
|                                                                         
|                                                                          | 
|                                                                          |  | Number of |           |   | Weighted-average |  
|                                                                          |  | options   |           |   | Exercise price   |  
|                                                                         
|                                                                          | 
|Outstanding at December 31, 2001                                          |  |           | 617,043   |   |                  | $ | 2.01 | 
|Granted                                                                   |  |           | 1,122,433 |   |                  |   | 2.11 | 
|Exercised                                                                 |  |           |          |   |                  |   |     | 
|Cancelled / Expired                                                       |  |           |          |   |                  |   |     | 
|                                                                         
|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 | 
|                                                                         



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.                                                                                                                                                                                                                                                                                                                                          



The following table summarizes information about
options outstanding and exercisable at December 31, 2003:


|                         |  |                     |  |             |                     |  |           |                |      |  |             |           |           |                |  |   |      | 
|------------------------ |  | ------------------- |  | ----------- | ------------------- |  | --------- | -------------- | ---- |  | ----------- | --------- | --------- | -------------- |  | - | ---- | 
|                        
|                         | 
|                         |  |                     |  |            
|                         |  | Options outstanding |  |             | Options exercisable | 
|                         |  |                     |  |             |                     | 
|                         |  |                     |  | Weighted-   |                     |  |           |                |     
|                         |  |                     |  | average     |                     |  |           |                |     
|                         |  |                     |  | remaining   |                     |  |           |                |     
|                         |  |                     |  | contractual |                     |  | Weighted- |                |      |  |             | Weighted- |          
|                         |  | Number              |  |             | life                |  |           | average        |      |  | Number      |           |           | average        | 
|Range of exercise prices |  | outstanding         |  |             | (years)             |  |           | exercise price |      |  | outstanding |           |           | exercise price | 
|                         |  |                    
|                         |  |                     |  |            
|$1.40                    |  | 2,100,298           |  |             | 6.15                |  |           | $              | 1.40 |  |             |           | 1,618,787 |                |  | $ | 1.40 | 
|$1.41  $2.60            |  | 6,377               |  |             | 6.58                |  |           | $              | 2.60 |  |             |           | 3,642     |                |  | $ | 2.60 | 
|$2.61  $3.23            |  | 59,980              |  |             | 6.83                |  |           | $              | 3.23 |  |             |           | 57,273    |                |  | $ | 3.23 | 
|$3.24  $5.17            |  | 12,942              |  |             | 7.58                |  |           | $              | 5.17 |  |             |           | 6,471     |                |  | $ | 5.17 | 
|$5.18  $7.70            |  | 37,367              |  |             | 7.93                |  |           | $              | 7.70 |  |             |           | 37,367    |                |  | $ | 7.70 | 
|                         |  |                    
|                         |  |                    
|Totals                   |  | 2,216,964           |  |             | 6.19                |  |           | $              | 1.58 |  |             |           | 1,723,540 |                |  | $ | 1.61 | 
|                         |  |                    
|                         |  |                    

Options exercisable at December 31, 2002
numbered 532,534. There were no options exercisable at
December 31, 2001.




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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




15.    Other Comprehensive
Income:




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


|                                                  |              |             |       |      |               |   |     |             |  |   |               |      |  |   |      |      | 
|------------------------------------------------- | ------------ | ----------- | ----- | ---- | ------------- | - | --- | ----------- |  | - | ------------- | ---- |  | - | ---- | ---- | 
|                                                 
|                                                  |             
|                                                  |              | Accumulated |      
|                                                  |              | Unfunded    |       |      | Unrealized    |   |     | Foreign     |  |   | Other         |     
|                                                  |              | Pension     |       |      | gains on cash |   |     | currency    |  |   | comprehensive |     
|                                                  |              | Losses      |       |      | flow hedges   |   |     | Adjustments |  |   | income        |     
|                                                 
|                                                  |             
|Balance at December 31, 2000                      |              | $           |      |      |               | $ |    |             |  | $ | 1.1           |      |  | $ | 1.1  |     
|January 1, 2001  November 27,
    2001 changes   |              |             |      |      |               |   |    |             |  |   | (3.2          | )    |  |   | (3.2 | )   
|                                                 
|Balance at November 27, 2001                      |              | $           |      |      |               | $ |    |             |  | $ | (2.1          | )    |  | $ | (2.1 | )   
|                                                 
|Balance at November 28, 2001                      |              | $           |      |      |               | $ |    |             |  | $ |              |      |  | $ |     |     
|November 28, 2001 
    December 31, 2001 changes |              |             | (5.4  | )    |               |   |    |             |  |   | 3.0           |      |  |   | (2.4 | )   
|                                                 
|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 |     
|                                                 

|                                        |                            |            |      |      |               |   |      |            |   |   |      |      | 
|--------------------------------------- | -------------------------- | ---------- | ---- | ---- | ------------- | - | ---- | ---------- | - | - | ---- | ---- | 
|                                       
|                                        |                           
|                                        |                            | Before tax |      |      | Tax (expense) |   |      | Net-of-tax |  
|For the year ended December 31, 2003:   |                            | amount     |      |      | benefit       |   |      | amount     |  
|                                       
|                                        |                           
|Minimum pension liability adjustment    |                            | $          | 7.0  |      |               | $ | (2.1 | )          |   | $ | 4.9  |     
|Gas hedging adjustment                  |                            |            | 1.1  |      |               |   | (0.4 | )          |   |   | 0.7  |     
|Foreign currency translation adjustment |                            |            | 19.8 |      |               |   |     |            |   |   | 19.8 |     
|                                       
|                                        | Other comprehensive income |            | $    | 27.9 |               |   | $    | (2.5       | ) |   | $    | 25.4 | 
|                                       

54



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##### Table of Contents



(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K






|    |                                                    
|--- | ---------------------------------------------------
|16. | Quarterly Results (Unaudited)(a)
    (in millions):




|                                      |  |            |       |  |            |   |      |            |  |   |            |   |  |            |       |  |  |   |       | 
|------------------------------------- |  | ---------- | ----- |  | ---------- | - | ---- | ---------- |  | - | ---------- | - |  | ---------- | ----- |  |  | - | ----- | 
|                                      |  | First      |       |  | Second     |   |      | Third      |  |   | Fourth     |   |  | Year       |      
|Quarter                               |  | (restated) |       |  | (restated) |   |      | (restated) |  |   | (restated) |   |  | (restated) |      
|                                     
|                                      | 
|2003                                  |  |            |       |  |            |   |      |            |  |   |            |   |  |            |       |  |  |   |       | 
|Sales                                 |  | $          | 212.7 |  |            | $ | 88.7 |            |  | $ | 97.1       |   |  | $          | 202.1 |  |  | $ | 600.6 | 
|Cost of sales  shipping and handling |  |            | 64.1  |  |            |   | 21.1 |            |  |   | 24.1       |   |  |            | 56.0  |  |  |   | 165.3 | 
|Cost of sales  products              |  |            | 95.5  |  |            |   | 48.9 |            |  |   | 55.1       |   |  |            | 88.8  |  |  |   | 288.3 | 
|Gross profit                          |  |            | 53.1  |  |            |   | 18.7 |            |  |   | 17.9       |   |  |            | 57.3  |  |  |   | 147.0 | 
|Operating earnings (loss)             |  |            | 41.5  |  |            |   | 7.2  |            |  |   | 6.7        |   |  |            | 43.0  |  |  |   | 98.4  | 
|Net income                            |  |            | 21.0  |  |            |   | (3.0 | )          |  |   | (2.7       | ) |  |            | 28.2  |  |  |   | 43.5  | 
|                                     

|           |  |            |      |  |            |   |      |            |  |   |            |   |  |            |      |  |  |   |      | 
|---------- |  | ---------- | ---- |  | ---------- | - | ---- | ---------- |  | - | ---------- | - |  | ---------- | ---- |  |  | - | ---- | 
|           |  | Amounts    |      |  | Amounts    |   |      | Amounts    |  |   | Amounts    |   |  | Amounts    |     
|           |  | previously |      |  | previously |   |      | previously |  |   | previously |   |  | previously |     
|           |  | reported   |      |  | reported   |   |      | reported   |  |   | reported   |   |  | reported   |     
|          
|           | 
|Net income |  | $          | 26.9 |  |            | $ | (5.7 | )          |  | $ | (3.8       | ) |  | $          | 28.3 |  |  | $ | 45.7 | 
|          

|                                      |  |       |       |  |        |   |      |       |  |   |        |   |  |      |       |  |  |   |       | 
|------------------------------------- |  | ----- | ----- |  | ------ | - | ---- | ----- |  | - | ------ | - |  | ---- | ----- |  |  | - | ----- | 
|                                     
|                                      | 
|Quarter                               |  | First |       |  | Second |   |      | Third |  |   | Fourth |   |  | Year |      
|                                     
|                                      | 
|2002                                  |  |       |       |  |        |   |      |       |  |   |        |   |  |      |       |  |  |   |       | 
|Sales                                 |  | $     | 162.4 |  |        | $ | 82.3 |       |  | $ | 92.2   |   |  | $    | 165.7 |  |  | $ | 502.6 | 
|Cost of sales  shipping and handling |  |       | 48.5  |  |        |   | 20.2 |       |  |   | 22.5   |   |  |      | 46.3  |  |  |   | 137.5 | 
|Cost of sales  products              |  |       | 74.3  |  |        |   | 45.7 |       |  |   | 53.3   |   |  |      | 65.9  |  |  |   | 239.2 | 
|Gross profit                          |  |       | 39.6  |  |        |   | 16.4 |       |  |   | 16.4   |   |  |      | 53.5  |  |  |   | 125.9 | 
|Operating earnings (loss)(b)          |  |       | 27.5  |  |        |   | 4.5  |       |  |   | 3.5    |   |  |      | 42.2  |  |  |   | 77.7  | 
|Net income                            |  |       | 10.7  |  |        |   | (8.3 | )     |  |   | (2.3   | ) |  |      | 30.8  |  |  |   | 30.9  | 
|                                     

|           |  |            |      |  |            |   |      |            |  |   |            |   |  |            |      |  |  |   |      | 
|---------- |  | ---------- | ---- |  | ---------- | - | ---- | ---------- |  | - | ---------- | - |  | ---------- | ---- |  |  | - | ---- | 
|           |  | Amounts    |      |  | Amounts    |   |      | Amounts    |  |   | Amounts    |   |  | Amounts    |     
|           |  | previously |      |  | previously |   |      | previously |  |   | previously |   |  | previously |     
|           |  | reported   |      |  | reported   |   |      | reported   |  |   | reported   |   |  | reported   |     
|          
|           | 
|Net income |  | $          | 11.7 |  |            | $ | (7.3 | )          |  | $ | (3.5       | ) |  | $          | 18.8 |  |  | $ | 19.7 | 
|          



|    |                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | See Notes to Combined and Consolidated Financial
    Statements for detail related to special charges.                                                                           
|(b) | Annual quarterly operating results include
    special charges of $7.7 million ($7.6 million after
    tax) related to transition costs associated with the
    Recapitalization.

55



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##### Table of Contents



(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K






|    |                                                                             
|--- | ----------------------------------------------------------------------------
|17. | Guarantor/Non-guarantor Condensed Combining
    and 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 combined and 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). As discussed in Note 1, this information
has been restated.


Condensed Consolidating Balance Sheets
(unaudited)

|                                       |                                                       |                             |        |       |            |   |       |       |  |   |              |       |  |              |        |        |   |   |       |       | 
|-------------------------------------- | ----------------------------------------------------- | --------------------------- | ------ | ----- | ---------- | - | ----- | ----- |  | - | ------------ | ----- |  | ------------ | ------ | ------ | - | - | ----- | ----- | 
|                                      
|                                       |                                                      
|                                       |                                                       |                            
|                                       |                                                       | December 31, 2003, restated |       
|                                       |                                                       |                             |       
|                                       |                                                       |                             |        | Non-  |            |   |      
|(In millions)                          |                                                       | Guarantors                  |        |       | guarantors |   |       | CMG   |  |   | Eliminations |       |  | Consolidated |       
|                                      
|                                       |                                                      
|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  |      
|Other current assets                   |                                                       |                             | 2.8    |       |            |   | 1.7   |       |  |   | (0.8         | )     |  |              |       |        |   |   | 3.7   |      
|Property, plant and equipment, net     |                                                       |                             | 55.9   |       |            |   | 206.1 |       |  |   |             |       |  |              |       |        |   |   | 262.0 |      
|Intangible assets                      |                                                       |                             | 172.7  |       |            |   |      |       |  |   |             |       |  |              |       |        |   |   | 172.7 |      
|Investment in subsidiaries             |                                                       |                             |       |       |            |   |      |       |  |   | 524.8        |       |  |              | (524.8 | )      |   |   |      |      
|Other                                  |                                                       |                             | 7.9    |       |            |   | 3.9   |       |  |   | 12.7         |       |  |              |       |        |   |   | 24.5  |      
|                                      
|                                       | Total assets                                          |                             | $      | 374.7 |            |   | $     | 293.0 |  |   | $            | 536.7 |  |              | $      | (524.8 | ) |   | $     | 679.6 | 
|                                      
|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   |       |  |   | 10.9         |       |  |              |       |        |   |   | 92.3  |      
|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 |  |   | $            | 536.7 |  |              | $      | (524.8 | ) |   | $     | 679.6 | 
|                                      

Condensed Consolidating Balance
Sheets

|                                                         |                                                       |                                           |        |       |            |   |       |       |  |   |              |       |  |              |        |        |   |   |       |       | 
|-------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------- | ------ | ----- | ---------- | - | ----- | ----- |  | - | ------------ | ----- |  | ------------ | ------ | ------ | - | - | ----- | ----- | 
|                                                        
|                                                         |                                                      
|                                                         |                                                       |                                          
|                                                         |                                                       | December 31, 2003, as previously reported |       
|                                                         |                                                       |                                           |       
|                                                         |                                                       |                                           |        | Non-  |            |   |      
|(In millions)                                            |                                                       | Guarantors                                |        |       | guarantors |   |       | CMG   |  |   | Eliminations |       |  | Consolidated |       
|                                                        
|                                                         |                                                      
|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  |      
|Other current assets                                     |                                                       |                                           | 2.8    |       |            |   | 1.7   |       |  |   | (0.8         | )     |  |              |       |        |   |   | 3.7   |      
|Property, plant and equipment, net                       |                                                       |                                           | 55.9   |       |            |   | 206.1 |       |  |   |             |       |  |              |       |        |   |   | 262.0 |      
|Intangible assets  mineral interests and
    other, net |                                                       |                                           | 172.7  |       |            |   |      |       |  |   |             |       |  |              |       |        |   |   | 172.7 |      
|Investment in subsidiaries                               |                                                       |                                           |       |       |            |   |      |       |  |   | 512.7        |       |  |              | (512.7 | )      |   |   |      |      
|Other                                                    |                                                       |                                           | 7.9    |       |            |   | 14.3  |       |  |   | 12.7         |       |  |              |       |        |   |   | 34.9  |      
|                                                        
|                                                         | Total assets                                          |                                           | $      | 374.7 |            |   | $     | 303.4 |  |   | $            | 524.6 |  |              | $      | (512.7 | ) |   | $     | 690.0 | 
|                                                        
|Current portion of long-term debt                        |                                                       | $                                         |       |       |            | $ |      |       |  | $ | 0.8          |       |  | $            |       |        |   | $ | 0.8   |      
|Other current liabilities                                |                                                       |                                           | 55.2   |       |            |   | 46.3  |       |  |   | 10.4         |       |  |              |       |        |   |   | 111.9 |      
|                                                        
|Total current liabilities                                |                                                       |                                           | 55.2   |       |            |   | 46.3  |       |  |   | 11.2         |       |  |              |       |        |   |   | 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                             |                                                       |                                           | 100.8  |       |            |   | 2.4   |       |  |   | 10.9         |       |  |              |       |        |   |   | 114.1 |      
|Total stockholders equity                               |                                                       |                                           | 341.1  |       |            |   | 171.6 |       |  |   | 43.8         |       |  |              | (512.7 | )      |   |   | 43.8  |      
|                                                        
|                                                         | Total liabilities and common stockholders
    equity |                                           | $      | 374.7 |            |   | $     | 303.4 |  |   | $            | 524.6 |  |              | $      | (512.7 | ) |   | $     | 690.0 | 
|                                                        

56



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##### Table of Contents



(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Condensed Consolidating Balance
Sheets

|                                                         |                                                       |                                |       |       |            |   |       |       |  |   |              |       |  |              |        |        |   |   |       |       | 
|-------------------------------------------------------- | ----------------------------------------------------- | ------------------------------ | ----- | ----- | ---------- | - | ----- | ----- |  | - | ------------ | ----- |  | ------------ | ------ | ------ | - | - | ----- | ----- | 
|                                                        
|                                                         |                                                      
|                                                         |                                                       |                               
|                                                         |                                                       | December 31, 2002, as restated |      
|                                                         |                                                       |                                |      
|                                                         |                                                       |                                |       | Non-  |            |   |      
|(In millions)                                            |                                                       | Guarantors                     |       |       | guarantors |   |       | CMG   |  |   | Eliminations |       |  | Consolidated |       
|                                                        
|                                                         |                                                      
|Cash and cash equivalent                                 |                                                       | $                              | 6.5   |       |            | $ | 5.4   |       |  | $ |             |       |  | $            |       |        |   | $ | 11.9  |      
|Receivables, net                                         |                                                       |                                | 59.1  |       |            |   | 35.4  |       |  |   |             |       |  |              |       |        |   |   | 94.5  |      
|Inventories                                              |                                                       |                                | 65.7  |       |            |   | 30.8  |       |  |   |             |       |  |              |       |        |   |   | 96.5  |      
|Other current assets                                     |                                                       |                                | 0.2   |       |            |   | 0.5   |       |  |   |             |       |  |              |       |        |   |   | 0.7   |      
|Property, plant and equipment, net                       |                                                       |                                | 66.7  |       |            |   | 196.7 |       |  |   |             |       |  |              |       |        |   |   | 263.4 |      
|Intangible assets  mineral interests and
    other, net |                                                       |                                | 149.8 |       |            |   |      |       |  |   |             |       |  |              |       |        |   |   | 149.8 |      
|Investment in subsidiaries                               |                                                       |                                |      |       |            |   |      |       |  |   | 399.4        |       |  |              | (399.4 | )      |   |   |      |      
|Other                                                    |                                                       |                                | 7.6   |       |            |   | 2.7   |       |  |   | 14.7         |       |  |              |       |        |   |   | 25.0  |      
|                                                        
|                                                         | Total assets                                          |                                | $     | 355.6 |            |   | $     | 271.5 |  |   | $            | 414.1 |  |              | $      | (399.4 | ) |   | $     | 641.8 | 
|                                                        
|Current portion of long-term debt                        |                                                       | $                              |      |       |            | $ | 0.1   |       |  | $ | 1.1          |       |  | $            |       |        |   | $ | 1.2   |      
|Other current liabilities                                |                                                       |                                | 59.0  |       |            |   | 27.3  |       |  |   | 14.9         |       |  |              |       |        |   |   | 101.2 |      
|                                                        
|Total current liabilities                                |                                                       |                                | 59.0  |       |            |   | 27.4  |       |  |   | 16.0         |       |  |              |       |        |   |   | 102.4 |      
|Long-term debt, net of current portion                   |                                                       |                                |      |       |            |   |      |       |  |   | 436.4        |       |  |              |       |        |   |   | 436.4 |      
|Due to (from) affiliates                                 |                                                       |                                | (70.8 | )     |            |   | 92.8  |       |  |   | (22.0        | )     |  |              |       |        |   |   |      |      
|Other noncurrent liabilities                             |                                                       |                                | 113.0 |       |            |   | 6.3   |       |  |   | (18.4        | )     |  |              |       |        |   |   | 100.9 |      
|Total stockholders equity                               |                                                       |                                | 254.4 |       |            |   | 145.0 |       |  |   | 2.1          |       |  |              | (399.4 | )      |   |   | 2.1   |      
|                                                        
|                                                         | Total liabilities and common stockholders
    equity |                                | $     | 355.6 |            |   | $     | 271.5 |  |   | $            | 414.1 |  |              | $      | (399.4 | ) |   | $     | 641.8 | 
|                                                        

Condensed Consolidating Balance
Sheets

|                                                         |                                                       |                                           |       |       |            |   |       |       |  |   |              |       |  |              |        |        |   |   |       |       | 
|-------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------- | ----- | ----- | ---------- | - | ----- | ----- |  | - | ------------ | ----- |  | ------------ | ------ | ------ | - | - | ----- | ----- | 
|                                                        
|                                                         |                                                      
|                                                         |                                                       |                                          
|                                                         |                                                       | December 31, 2002, as previously reported |      
|                                                         |                                                       |                                           |      
|                                                         |                                                       |                                           |       | Non-  |            |   |      
|(In millions)                                            |                                                       | Guarantors                                |       |       | guarantors |   |       | CMG   |  |   | Eliminations |       |  | Consolidated |       
|                                                        
|                                                         |                                                      
|Cash and cash equivalent                                 |                                                       | $                                         | 6.5   |       |            | $ | 5.4   |       |  | $ |             |       |  | $            |       |        |   | $ | 11.9  |      
|Receivables, net                                         |                                                       |                                           | 59.1  |       |            |   | 35.4  |       |  |   |             |       |  |              |       |        |   |   | 94.5  |      
|Inventories                                              |                                                       |                                           | 65.7  |       |            |   | 30.8  |       |  |   |             |       |  |              |       |        |   |   | 96.5  |      
|Other current assets                                     |                                                       |                                           | 0.2   |       |            |   | 0.5   |       |  |   |             |       |  |              |       |        |   |   | 0.7   |      
|Property, plant and equipment, net                       |                                                       |                                           | 66.7  |       |            |   | 196.7 |       |  |   |             |       |  |              |       |        |   |   | 263.4 |      
|Intangible assets  mineral interests and
    other, net |                                                       |                                           | 149.8 |       |            |   |      |       |  |   |             |       |  |              |       |        |   |   | 149.8 |      
|Investment in subsidiaries                               |                                                       |                                           |      |       |            |   |      |       |  |   | 375.4        |       |  |              | (375.4 | )      |   |   |      |      
|Other                                                    |                                                       |                                           | 7.6   |       |            |   | 2.7   |       |  |   | 16.9         |       |  |              |       |        |   |   | 27.2  |      
|                                                        
|                                                         | Total assets                                          |                                           | $     | 355.6 |            |   | $     | 271.5 |  |   | $            | 392.3 |  |              | $      | (375.4 | ) |   | $     | 644.0 | 
|                                                        
|Current portion of long-term debt                        |                                                       | $                                         |      |       |            | $ | 0.1   |       |  | $ | 1.1          |       |  | $            |       |        |   | $ | 1.2   |      
|Other current liabilities                                |                                                       |                                           | 59.0  |       |            |   | 27.3  |       |  |   | 14.9         |       |  |              |       |        |   |   | 101.2 |      
|                                                        
|Total current liabilities                                |                                                       |                                           | 59.0  |       |            |   | 27.4  |       |  |   | 16.0         |       |  |              |       |        |   |   | 102.4 |      
|Long-term debt, net of current portion                   |                                                       |                                           |      |       |            |   |      |       |  |   | 436.4        |       |  |              |       |        |   |   | 436.4 |      
|Due to (from) affiliates                                 |                                                       |                                           | (70.8 | )     |            |   | 92.8  |       |  |   | (22.0        |       |  |              |       |        |   |   |      |      
|Other noncurrent liabilities                             |                                                       |                                           | 137.0 |       |            |   | 6.3   |       |  |   | (18.4        | )     |  |              |       |        |   |   | 124.9 |      
|Total stockholders equity                               |                                                       |                                           | 230.4 |       |            |   | 145.0 |       |  |   | (19.7        | )     |  |              | (375.4 | )      |   |   | (19.7 | )    
|                                                        
|                                                         | Total liabilities and common stockholders
    equity |                                           | $     | 355.6 |            |   | $     | 271.5 |  |   | $            | 392.3 |  |              | $      | (375.4 | ) |   | $     | 644.0 | 
|                                                        

57



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##### Table of Contents



(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Condensed Consolidating Statements of
Operations

|                                             |                                   |                                                |       |      |            |   |       |      |  |   |              |      |  |              |      |       |   |   |       |       | 
|-------------------------------------------- | --------------------------------- | ---------------------------------------------- | ----- | ---- | ---------- | - | ----- | ---- |  | - | ------------ | ---- |  | ------------ | ---- | ----- | - | - | ----- | ----- | 
|                                            
|                                             |                                  
|                                             |                                   |                                               
|                                             |                                   | For the Year Ended December 31, 2003, restated |      
|                                             |                                   |                                                |      
|                                             |                                   |                                                |       | Non- |            |   |      
|(In millions)                                |                                   | Guarantors                                     |       |      | guarantors |   |       | CMG  |  |   | Eliminations |      |  | Consolidated |     
|                                            
|                                             |                                  
|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  | 
|                                            

Condensed Consolidating Statements of
Operations

|                                             |                                   |                                                |       |      |            |   |       |      |  |   |              |      |   |              |      |       |   |   |       |       | 
|-------------------------------------------- | --------------------------------- | ---------------------------------------------- | ----- | ---- | ---------- | - | ----- | ---- |  | - | ------------ | ---- | - | ------------ | ---- | ----- | - | - | ----- | ----- | 
|                                            
|                                             |                                  
|                                             |                                   |                                               
|                                             |                                   | For the Year Ended December 31, 2002, restated |      
|                                             |                                   |                                                |      
|                                             |                                   |                                                |       | Non- |            |   |      
|(In millions)                                |                                   | Guarantors                                     |       |      | guarantors |   |       | CMG  |  |   | Eliminations |      |   | Consolidated |     
|                                            
|                                             |                                  
|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  | 
|                                            

Condensed Combining and Consolidating
Statements of Operations

|                                             |                                   |                                                |       |      |            |   |       |      |              |   |              |       |   |              |      |       |   |   |       |       | 
|-------------------------------------------- | --------------------------------- | ---------------------------------------------- | ----- | ---- | ---------- | - | ----- | ---- | ------------ | - | ------------ | ----- | - | ------------ | ---- | ----- | - | - | ----- | ----- | 
|                                            
|                                             |                                  
|                                             |                                   |                                               
|                                             |                                   | For the Year Ended December 31, 2001, restated |      
|                                             |                                   |                                                |      
|                                             |                                   |                                                |       | Non- |            |   |       |      | Combined and |  
|(In millions)                                |                                   | Guarantors                                     |       |      | guarantors |   |       | CMG  |              |   | Eliminations |       |   | Consolidated |     
|                                            
|                                             |                                  
|Sales                                        |                                   | $                                              | 342.8 |      |            | $ | 180.4 |      |              | $ |             |       |   | $            |     |       |   | $ | 523.2 |      
|Cost of sales  shipping and handling        |                                   |                                                | 100.9 |      |            |   | 42.3  |      |              |   |             |       |   |              |     |       |   |   | 143.2 |      
|Cost of sales  products                     |                                   |                                                | 166.5 |      |            |   | 90.5  |      |              |   |             |       |   |              |     |       |   |   | 257.0 |      
|                                            
|                                             | Gross profit                      |                                                |       | 75.4 |            |   |       | 47.6 |              |   |              |      |   |              |      |      |   |   |       | 123.0 | 
|Selling, general and administrative expenses |                                   |                                                | 22.0  |      |            |   | 16.8  |      |              |   | 0.1          |       |   |              |     |       |   |   | 38.9  |      
|Restructuring and other charges              |                                   |                                                | 3.7   |      |            |   | 0.1   |      |              |   | 23.2         |       |   |              |     |       |   |   | 27.0  |      
|                                            
|                                             | Operating income (loss)           |                                                |       | 49.7 |            |   |       | 30.7 |              |   |              | (23.3 | ) |              |      |      |   |   |       | 57.1  | 
|Interest expense                             |                                   |                                                | 1.0   |      |            |   | 10.2  |      |              |   | 3.1          |       |   |              |     |       |   |   | 14.3  |      
|Other (income) expense                       |                                   |                                                | (2.5  | )    |            |   | (0.9  | )    |              |   | 0.3          |       |   |              |     |       |   |   | (3.1  | )    
|Earnings in equity of subsidiary             |                                   |                                                |      |      |            |   |      |      |              |   | (51.2        | )     |   |              | 51.2 |       |   |   |      |      
|                                            
|                                             | Income (loss) before income taxes |                                                |       | 51.2 |            |   |       | 21.4 |              |   |              | 24.5  |   |              |      | (51.2 | ) |   |       | 45.9  | 
|Income tax expense (benefit)                 |                                   |                                                | 8.4   |      |            |   | 13.0  |      |              |   | (4.1         | )     |   |              |     |       |   |   | 17.3  |      
|                                            
|                                             | Net income (loss)                 |                                                | $     | 42.8 |            |   | $     | 8.4  |              |   | $            | 28.6  |   |              | $    | (51.2 | ) |   | $     | 28.6  | 
|                                            

58



---



##### Table of Contents



(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Condensed Consolidating Statements of
Operations

|                                             |                                   |                                                              |       |      |            |   |       |      |  |   |              |      |  |              |      |       |   |   |       |       | 
|-------------------------------------------- | --------------------------------- | ------------------------------------------------------------ | ----- | ---- | ---------- | - | ----- | ---- |  | - | ------------ | ---- |  | ------------ | ---- | ----- | - | - | ----- | ----- | 
|                                            
|                                             |                                  
|                                             |                                   |                                                             
|                                             |                                   | For the Year Ended December 31, 2003, as previously reported |      
|                                             |                                   |                                                              |      
|                                             |                                   |                                                              |       | Non- |            |   |      
|(In millions)                                |                                   | Guarantors                                                   |       |      | guarantors |   |       | CMG  |  |   | Eliminations |      |  | Consolidated |     
|                                            
|                                             |                                  
|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             |                                   |                                                              |      |      |            |   |      |      |  |   | (55.9        | )    |  |              | 55.9 |       |   |   |      |      
|                                            
|                                             | Income (loss) before income taxes |                                                              |       | 65.2 |            |   |       | 20.2 |  |   |              | 24.2 |  |              |      | (55.9 | ) |   |       | 53.7  | 
|Income tax expense (benefit)                 |                                   |                                                              | 19.0  |      |            |   | 10.5  |      |  |   | (21.5        | )    |  |              |     |       |   |   | 8.0   |      
|                                            
|                                             | Net income (loss)                 |                                                              | $     | 46.2 |            |   | $     | 9.7  |  |   | $            | 45.7 |  |              | $    | (55.9 | ) |   | $     | 45.7  | 
|                                            

Condensed Consolidating Statements of
Operations

|                                             |                                   |                                                              |       |      |            |   |       |      |  |   |              |      |   |              |      |       |   |   |       |       | 
|-------------------------------------------- | --------------------------------- | ------------------------------------------------------------ | ----- | ---- | ---------- | - | ----- | ---- |  | - | ------------ | ---- | - | ------------ | ---- | ----- | - | - | ----- | ----- | 
|                                            
|                                             |                                  
|                                             |                                   |                                                             
|                                             |                                   | For the Year Ended December 31, 2002, as previously reported |      
|                                             |                                   |                                                              |      
|                                             |                                   |                                                              |       | Non- |            |   |      
|(In millions)                                |                                   | Guarantors                                                   |       |      | guarantors |   |       | CMG  |  |   | Eliminations |      |   | Consolidated |     
|                                            
|                                             |                                  
|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             |                                   |                                                              |      |      |            |   |      |      |  |   | (39.6        | )    |   |              | 39.6 |       |   |   |      |      
|                                            
|                                             | Income (loss) before income taxes |                                                              |       | 48.5 |            |   |       | 21.4 |  |   |              | 1.2  |   |              |      | (39.6 | ) |   |       | 31.5  | 
|Income tax expense (benefit)                 |                                   |                                                              | 19.3  |      |            |   | 11.0  |      |  |   | (18.5        | )    |   |              |     |       |   |   | 11.8  |      
|                                            
|                                             | Net income (loss)                 |                                                              | $     | 29.2 |            |   | $     | 10.4 |  |   | $            | 19.7 |   |              | $    | (39.6 | ) |   | $     | 19.7  | 
|                                            

Condensed Combining and Consolidating
Statements of Operations

|                                             |                                   |                                                              |       |      |            |   |       |      |              |   |              |       |   |              |      |       |   |   |       |       | 
|-------------------------------------------- | --------------------------------- | ------------------------------------------------------------ | ----- | ---- | ---------- | - | ----- | ---- | ------------ | - | ------------ | ----- | - | ------------ | ---- | ----- | - | - | ----- | ----- | 
|                                            
|                                             |                                  
|                                             |                                   |                                                             
|                                             |                                   | For the Year Ended December 31, 2001, as previously reported |      
|                                             |                                   |                                                              |      
|                                             |                                   |                                                              |       | Non- |            |   |       |      | Combined and |  
|(In millions)                                |                                   | Guarantors                                                   |       |      | guarantors |   |       | CMG  |              |   | Eliminations |       |   | Consolidated |     
|                                            
|                                             |                                  
|Sales                                        |                                   | $                                                            | 342.8 |      |            | $ | 180.4 |      |              | $ |             |       |   | $            |     |       |   | $ | 523.2 |      
|Cost of sales  shipping and handling        |                                   |                                                              | 100.9 |      |            |   | 42.3  |      |              |   |             |       |   |              |     |       |   |   | 143.2 |      
|Cost of sales  products                     |                                   |                                                              | 166.5 |      |            |   | 90.5  |      |              |   |             |       |   |              |     |       |   |   | 257.0 |      
|                                            
|                                             | Gross profit                      |                                                              |       | 75.4 |            |   |       | 47.6 |              |   |              |      |   |              |      |      |   |   |       | 123.0 | 
|Selling, general and administrative expenses |                                   |                                                              | 22.0  |      |            |   | 16.8  |      |              |   | 0.1          |       |   |              |     |       |   |   | 38.9  |      
|Restructuring and other charges              |                                   |                                                              | 3.7   |      |            |   | 0.1   |      |              |   | 23.2         |       |   |              |     |       |   |   | 27.0  |      
|                                            
|                                             | Operating income (loss)           |                                                              |       | 49.7 |            |   |       | 30.7 |              |   |              | (23.3 | ) |              |      |      |   |   |       | 57.1  | 
|Interest expense                             |                                   |                                                              | 1.0   |      |            |   | 10.2  |      |              |   | 3.1          |       |   |              |     |       |   |   | 14.3  |      
|Other (income) expense                       |                                   |                                                              | (2.5  | )    |            |   | (0.9  | )    |              |   | 0.3          |       |   |              |     |       |   |   | (3.1  | )    
|Earnings in equity of subsidiary             |                                   |                                                              |      |      |            |   |      |      |              |   | (41.7        | )     |   |              | 41.7 |       |   |   |      |      
|                                            
|                                             | Income (loss) before income taxes |                                                              |       | 51.2 |            |   |       | 21.4 |              |   |              | 15.0  |   |              |      | (41.7 | ) |   |       | 45.9  | 
|Income tax expense (benefit)                 |                                   |                                                              | 17.9  |      |            |   | 13.0  |      |              |   | (4.1         | )     |   |              |     |       |   |   | 26.8  |      
|                                            
|                                             | Net income (loss)                 |                                                              | $     | 33.3 |            |   | $     | 8.4  |              |   | $            | 19.1  |   |              | $    | (41.7 | ) |   | $     | 19.1  | 
|                                            

59



---



##### Table of Contents



(continued)







|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Condensed Consolidating Statements of Cash
Flows

|                                                         |                                                                          |                                                         |      |       |            |   |      |       |       |   |              |       |      |              |   |   |   |   |      |       |       |  
|-------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------------------------------- | ---- | ----- | ---------- | - | ---- | ----- | ----- | - | ------------ | ----- | ---- | ------------ | - | - | - | - | ---- | ----- | ----- | -
|                                                        
|                                                         |                                                                         
|                                                         |                                                                          |                                                        
|                                                         |                                                                          | For the Year Ended December 31, 2003                    |     
|                                                         |                                                                          |                                                         |     
|                                                         |                                                                          |                                                         |      | Non-  |            |   |     
|(In millions)                                            |                                                                          | Guarantors                                              |      |       | 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   |      
|                                                        

Condensed Consolidating Statements of
Flows

|                                                         |                                                                          |                                                         |      |       |            |   |      |       |       |   |              |        |      |              |   |   |   |   |      |        |       |  
|-------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------------------------------- | ---- | ----- | ---------- | - | ---- | ----- | ----- | - | ------------ | ------ | ---- | ------------ | - | - | - | - | ---- | ------ | ----- | -
|                                                        
|                                                         |                                                                         
|                                                         |                                                                          |                                                        
|                                                         |                                                                          | For the Year Ended December 31, 2002                    |     
|                                                         |                                                                          |                                                         |     
|                                                         |                                                                          |                                                         |      | Non-  |            |   |     
|(In millions)                                            |                                                                          | Guarantors                                              |      |       | 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. | 2003 FORM 10-K




Condensed Combining and Consolidating
Statements of Cash Flows

|                                                         |                                                |                                                                          |                                                         |       |            |       |       |      |              |       |              |        |       |              |   |   |   |   |       |        |       |       |  
|-------------------------------------------------------- | ---------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------------------------------- | ----- | ---------- | ----- | ----- | ---- | ------------ | ----- | ------------ | ------ | ----- | ------------ | - | - | - | - | ----- | ------ | ----- | ----- | -
|                                                        
|                                                         |                                               
|                                                         |                                                |                                                                         
|                                                         |                                                | For the Year Ended December 31, 2001                                     |                                                        
|                                                         |                                                |                                                                          |                                                        
|                                                         |                                                |                                                                          |                                                         | Non-  |            |       |       |      | Combined and |      
|(In millions)                                            |                                                | Guarantors                                                               |                                                         |       | guarantors |       |       | CMG  |              |       | Eliminations |        |       | Consolidated |  
|                                                        
|                                                         |                                               
|Net cash provided by (used in) operating
    activities  |                                                | $                                                                        | 65.0                                                    |       |            | $     | 66.2  |      |              | $     | (18.7        | )      |       | $            |  |   |   | $ | 112.5 |       
|Cash flows from investing:                               |                                                |                                                                          |                                                         |       |            |       |       |      |              |       |              |        |       |              |   |   |   |   |       |       
|                                                         |                                                | Capital expenditure                                                      |                                                         |       | (22.8      | )     |       |      | (20.2        | )     |              |        |      |              |   |   |  |   |       |        | (43.0 | )    
|                                                         |                                                | Proceeds from sales                                                      |                                                         |       |           |       |       |      | 0.2          |       |              |        |      |              |   |   |  |   |       |        | 0.2   |      
|                                                         |                                                | Other                                                                    |                                                         |       | (0.8       | )     |       |      |             |       |              |        |      |              |   |   |  |   |       |        | (0.8  | )    
|                                                        
|Net cash used in investing activities                    |                                                |                                                                          | (23.6                                                   | )     |            |       | (20.0 | )    |              |       |             |        |       |              |  |   |   |   | (43.6 | )     
|Cash flows from financing:                               |                                                |                                                                          |                                                         |       |            |       |       |      |              |       |              |        |       |              |   |   |   |   |       |       
|                                                         |                                                | Revolver activity                                                        |                                                         |       | 6.4        |       |       |      |             |       |              |        | 29.0  |              |   |   |  |   |       |        | 35.4  |      
|                                                         |                                                | Issuance of long-term debt                                               |                                                         |       |           |       |       |      |             |       |              |        | 475.0 |              |   |   |  |   |       |        | 475.0 |      
|                                                         |                                                | Principal payments on other long-term debt,
    including capital leases |                                                         |       | (0.8       | )     |       |      | (65.5        | )     |              |        |      |              |   |   |  |   |       |        | (66.3 | )    
|                                                         | Borrowings from IMC Global and affiliates, net |                                                                          |                                                         | (12.9 | )          |       |       | 27.0 |              |       |              | (95.2  | )     |              |   |  |   |   |       | (81.1  | )    
|                                                         | Dividends paid                                 |                                                                          |                                                         | (26.7 | )          |       |       |     |              |       |              | (372.1 | )     |              |   |  |   |   |       | (398.8 | )    
|                                                         | Deferred financing costs                       |                                                                          |                                                         |      |            |       |       |     |              |       |              | (18.0  | )     |              |   |  |   |   |       | (18.0  | )    
|                                                        
|                                                         |                                                |                                                                          | Net cash provided by (used in) Financing
    activities |       |            | (34.0 | )     |      |              | (38.5 | )            |        |       | 18.7         |   |   |   |  |       |        |       | (53.8 | )
|                                                        
|Effect of exchange rate changes on cash                  |                                                |                                                                          | (1.6                                                    | )     |            |       | 2.1   |      |              |       |             |        |       |              |  |   |   |   | 0.5   |       
|                                                        
|Net increase (decrease) in cash and cash
    equivalents |                                                |                                                                          | 5.8                                                     |       |            |       | 9.8   |      |              |       |             |        |       |              |  |   |   |   | 15.6  |       
|Cash and cash equivalents:                               |                                                |                                                                          |                                                         |       |            |       |       |      |              |       |              |        |       |              |   |   |   |   |       |       
|                                                         |                                                | Beginning of year                                                        |                                                         |       | 2.3        |       |       |      | (2.0         | )     |              |        |      |              |   |   |  |   |       |        | 0.3   |      
|                                                        
|                                                         |                                                | End of year                                                              |                                                         | $     | 8.1        |       |       | $    | 7.8          |       |              | $      |      |              |   | $ |  |   |       | $      | 15.9  |      
|                                                        

18.    Subsequent
Event




On February 9, 2004, CMIs board of
directors declared a quarterly cash dividend of $0.1875 per
share, approximately $5.7 million, on its outstanding
common stock. The dividend is payable on March 15, 2004 to
stockholders of record as of the close of business on
March 1, 2004. The Companys operations are currently
the main source of cash that is expected to service dividends
declared on CMIs common stock.


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

FINANCIAL DISCLOSURE





None.







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




Within the 90 days prior to the date of this
annual report, the Company carried out an evaluation, under the
supervision and with the participation of its management,
including its Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the
disclosure controls and procedures of the Company pursuant to
Exchange Act Rule 13a-14.


The Company regularly evaluates the critical
estimates and assumptions that it makes in the preparation of
its financial statements. As a result of this evaluation
process, the Company determined that its deferred income tax
accounts and related valuation allowance should be adjusted for
periods prior to September 30, 2004 to reflect the
consideration of (1) future reversals of existing taxable
temporary differences and (2) taxable income expected to be
generated in the future from sources other than reversals of
existing taxable temporary differences, as possible sources of
taxable income. These non-cash adjustments were the basis for
the determination to restate the Companys financial
statements reflected in this amendment to the Companys
Annual Report on Form 10-K/A.


The non-cash adjustments to the deferred income
tax accounts and related valuation allowance, reflected as
non-cash adjustments to income tax expense on the combined and
consolidated financial statements, are an (increase)/decrease of
$(2.2) million, $11.2 million and $9.5 million
for the years ended December 31, 2003, 2002 and 2001,
respectively. The adjustments have no impact on cash flows,
operating earnings, income before income taxes or the
Companys ability to realize benefits from its deferred tax
assets.


The non-cash adjustments to the Companys
deferred income tax accounts and related valuation allowance
were the result of the consideration of (1) future
reversals of existing taxable temporary differences and
(2) taxable income expected to be generated in the future
from sources other than reversals of existing taxable temporary
differences, as possible sources of taxable income, which had
not been done previously. In designing and evaluating their
disclosure controls and procedures, the Company recognizes that
any controls and procedures, regardless of how 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. The Company
believes that the errors which led to the restatement were the
result of a material weakness in internal control over financial
reporting related to the Companys accounting for income
taxes. The material weakness was the result of (a) internal
control deficiencies relating to the analysis and reconciliation
of income tax accounts, (b) resource constraints related to
the income tax accounting function and (c) incorrect
conclusions reached regarding the accounting for our deferred
income tax accounts and related valuation allowance. As a result
of the material weakness described above, we concluded that our
internal controls and procedures were ineffective as of
December 31, 2003. The conclusion of the Chief Executive
Officer and Chief Financial Officer from this evaluation was
communicated to the Audit Committee of the Companys
parent, CMI.


In order to remediate this matter, the Company
has been identifying and implementing actions to improve the
effectiveness of its disclosure controls and procedures and
internal controls over its income tax accounting. In connection
with this effort the Company has (a) added additional
resources to the income tax accounting function and
(b) adopted more rigorous policies and procedures with
respect to the income tax account balance sheet review process.
In addition, the Company plans to implement additional
procedures effective immediately with respect to its income tax
accounting process: (i) greater senior level financial
officer review of the income tax balance sheet accounts and the
related journal entries; and (ii) engaging an independent
consultant to assist the Companys personnel to conduct a
comprehensive and detailed review 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. The Company believes
that implementation of these steps will remediate this matter by
the end of 2004 or beginning of 2005.


There were no other significant changes in our
disclosure controls or in other factors that could significantly
affect these controls subsequent to the date of the evaluation.


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




Directors and Executive Officers

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


________________________________________________________________

|                        |  |     |  |                                                                       
|----------------------- |  | --- |  | ----------------------------------------------------------------------
|                        |  |     |  |                                                                       
|Name                    |  | Age |  |                                                                       
|                       
|Michael E. Ducey        |  | 55  |  | President, Chief Executive Officer and Director
    of CMG            
|Keith E. Clark          |  | 48  |  | Vice President and General Manager, General Trade
    of CMG          
|David J. Goadby         |  | 49  |  | Vice President of CMG and Managing Director, Salt
    Union           
|Rodney L. Underdown     |  | 37  |  | Chief Financial Officer and Vice President of CMG                     
|Steven Wolf             |  | 58  |  | Vice President and General Manager, Highway
    Deicing and SOP of CMG
|Joel A. Asen            |  | 53  |  | Director of CMG                                                       
|Bradley J. Bell         |  | 51  |  | Director of CMG                                                       
|Robert F. Clark         |  | 61  |  | Director of CMG                                                       
|Peter P. Copses         |  | 45  |  | Director of CMG                                                       
|Robert H. Falk          |  | 65  |  | Director of CMG                                                       
|Joshua J. Harris        |  | 39  |  | Director of CMG                                                       
|Scott M. Kleinman       |  | 31  |  | Director of CMG                                                       
|Douglas A. Pertz        |  | 49  |  | Director of CMG                                                       
|Heinn F. Tomfohrde, III |  | 70  |  | Director of CMG                                                       
|                       

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 on April 1, 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).

Keith E. Clarkhas
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.

David J. Goadbyhas
served as the Vice President of CMG since November 2001 and as
the Managing Director of Salt Union Ltd., our U.K. subsidiary,
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 Sulphur Chemicals.

Rodney L. Underdownwas appointed Chief Financial Officer of CMI in December 2002
and has served as a Vice President of CMI since November 2001.
Mr. Underdown has served as the Chief Financial Officer and
Vice President 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 IMC
Global. 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 Wolfhas
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 became the General Manager, SOP of
CMG in August 2003.

Joel A. Asenhas
been a director of CMI since December 2003 and a director of CMG
since November 2001. Mr. Asen has been the Managing
Director of PLASE Capital Group LP, an affiliate of Apollo,
since June 2003 and has served as the President of Asen Advisory
since April 1992, which provides strategic and financial
advisory services. He was Managing Director at Whitehead
Sterling from 1991 to 1992, at Paine Webber, Inc. from 1990 to
1991 and at Drexel Burnham Lambert Incorporated from 1988 to
1990. From 1985 to 1988, he was a Senior Vice President at GAF
Corporation. Prior to that time, Mr. Asen was a Manager of
Business Development

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




at GE and Manager of Marketing and Business
Development at GECC. Mr. Asen is also a Director of
Resolution Performance Products Inc. and Anchor Glass Container
Corp.

Bradley J. Bellhas
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.

Robert F. Clarkhas
been a director of CMI since December 2003 and a director of CMG
since November 2001. Mr. Clark served as the President and
Chief Executive Officer of CMG from November 2001 to April 2002.
From April 1999 to November 2001, Mr. Clark served as
Senior Vice President of IMC Global and President of IMC
Salt, Inc. since joining IMC Global in April 1998 as a
result of the acquisition of Harris Chemical Group. From 1993 to
1998, Mr. Clark served as President of Great Salt Lake
Minerals, a division of Harris Chemical Group.

Peter P. Copseshas
been a director of CMI since December 2003 and a director of CMG
since November 2001. Mr. Copses is a founding Senior
Partner at Apollo where he has worked since September 1990. From
1986 to 1990, Mr. Copses was initially an investment banker
at Drexel Burnham Lambert Incorporated, and subsequently at
Donaldson, Lufkin & Jenrette Securities Corporation,
concentrating on the structuring, financing and negotiation of
mergers and acquisitions. Mr. Copses is also a Director of
Rent-A-Center, Inc., Zale Corporation and Resolution Performance
Products Inc.

Robert H. Falkhas
been a director of CMI and CMG since November 2001.
Mr. Falk is a Partner at Apollo and has served as an
officer of certain affiliates of Apollo since 1992. Prior to
1992, Mr. Falk was a Partner in the law firm of Skadden,
Arps, Slate, Meagher & Flom LLP. Mr. Falk is
a Director of Newiesy Gmbh.

Joshua J. Harrishas
been a director of CMI and CMG 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 is also a Director of Breuners
Home Furnishings Corporation, Pacer International, Inc., Quality
Distribution Inc., Resolution Performance Products Inc. and
Nalco Company.

Scott M. Kleinmanhas been a director of CMI and CMG since November 2001.
Mr. Kleinman is a Partner at Apollo, where he has worked
since February 1996. Prior to that time, Mr. Kleinman was
employed by Smith Barney Inc. in its Investment Banking
division. Mr. Kleinman is also a Director of Resolution
Performance Products Inc.

Douglas A. Pertzhas
been a director of CMI since December 2003 and a director of CMG
since November 2001. Mr. Pertz has been Chairman and Chief
Executive Officer of IMC Global since March 2002. From
October 2000 to March 2002, Mr. Pertz served as Chairman,
President and Chief Executive Officer of IMC Global, and from
October 1999 to October 2000, Mr. Pertz served as President
and Chief Executive Officer of IMC Global. Mr. Pertz
served as President and Chief Operating Officer of
IMC Global from October 1998 to October 1999. Prior to
joining IMC Global, 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.

Heinn F.
Tomfohrde, IIIhas been a
director of CMI since December 2003 and a director of CMG since
November 2001. 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 Committees

In connection with the initial public offering of
our parent, CMI, CMI established an audit committee in
accordance with Section 3(a)(58) of the Exchange Act, as
well as a compensation committee, nominating/ corporate
governance committee, operating committee and environmental,
health and safety committee. In conjunction with the
establishment of those committees by CMI, in February 2004, we
dissolved our audit committee, compensation committee, executive
committee and environmental, health and safety committee. The
audit committee of CMI, similar to our previous audit committee,
oversees the engagement of our independent public accountants,
reviews our annual financial statements and the scope of annual
audits and considers matters relating to accounting policies and
internal controls.


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|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Board Compensation

The members of our 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.


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 of CMI. The code
of ethics is posted on our Web site at www.compassminerals.com.









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




Summary Compensation Table

The following table sets forth the compensation
for the year ended December 31, 2003 paid or awarded to the
Chief Executive Officer and the four other most highly
compensated executive officers serving as executive officers of
CMG, or the named executive officers.


|                            |                                                                        |                        |  |            |        |  |              |          |  |           |                |         |              |        |  |         |  |  |  |         | 
|--------------------------- | ---------------------------------------------------------------------- | ---------------------- |  | ---------- | ------ |  | ------------ | -------- |  | --------- | -------------- | ------- | ------------ | ------ |  | ------- |  |  |  | ------- | 
|                           
|                            |                                                                       
|                            |                                                                        |                        |  |           
|                            |                                                                        | Long Term Compensation |  |            |       
|                            |                                                                        |                        |  |            |        |  |             
|                            |                                                                        | Annual Compensation    |  |            | Awards |  |              | Pay outs |  |           |               
|                            |                                                                        |                        |  |            |        |  |              |          |  |           |               
|                            |                                                                        |                        |  | Securities |        |  |              |          | 
|                            |                                                                        |                        |  | Underlying |        |  | Long Term    |          |  | All Other |               
|                            |                                                                        |                        |  | Bonus      |        |  | Options/SARs |          |  | Incentive |                |         | Compensation |       
|Name and Principal Position |                                                                        | Salary ($)             |  |            | ($)(1) |  |              | (#)(2)   |  |           | Pay outs($)(5) |         |              | ($)(3) | 
|                           
|                            |                                                                       
|Michael E. Ducey            |                                                                        |                        |  |            |        |  |              |          |  |           |                |         |              |        |  |         |  |  |  |        
|                            | President and Chief Executive Officer of CMG                           |                        |  |            |        |  |              |          |  |           |                |         |              |        |  |         |  |  |  |         | 
|                            | 2003                                                                   |                        |  | 356,563    |        |  |              | 413,368  |  |           |                |        |              |        |  |        |  |  |  | 167,514 | 
|                            | April (date of hire) to December 2002                                  |                        |  | 262,500    |        |  |              | 251,328  |  |           |                | 540,774 |              |        |  |        |  |  |  | 130,761 | 
|Steven Wolf                 |                                                                        |                        |  |            |        |  |              |          |  |           |                |         |              |        |  |         |  |  |  |        
|                            | Vice President and General Manager, Highway
    Deicing and SOP of CMG |                        |  |            |        |  |              |          |  |           |                |         |              |        |  |         |  |  |  |         | 
|                            | 2003                                                                   |                        |  | 282,042    |        |  |              | 236,283  |  |           |                |        |              |        |  | 852,920 |  |  |  | 113,985 | 
|                            | 2002                                                                   |                        |  | 258,803    |        |  |              | 143,465  |  |           |                |        |              |        |  | 63,408  |  |  |  | 412,430 | 
|                            | 2001                                                                   |                        |  | 247,108    |        |  |              | 91,998   |  |           |                | 220,961 |              |        |  |        |  |  |  | 50,348  | 
|Keith E. Clark              |                                                                        |                        |  |            |        |  |              |          |  |           |                |         |              |        |  |         |  |  |  |        
|                            | Vice President and General Manager, General Trade
    of CMG           |                        |  |            |        |  |              |          |  |           |                |         |              |        |  |         |  |  |  |         | 
|                            | 2003                                                                   |                        |  | 207,763    |        |  |              | 111,054  |  |           |                |        |              |        |  | 824,733 |  |  |  | 88,995  | 
|                            | 2002                                                                   |                        |  | 199,190    |        |  |              | 93,234   |  |           |                |        |              |        |  | 8,150   |  |  |  | 325,054 | 
|                            | 2001                                                                   |                        |  | 193,804    |        |  |              | 75,323   |  |           |                | 213,411 |              |        |  |        |  |  |  | 34,405  | 
|David J. Goadby(4)          |                                                                        |                        |  |            |        |  |              |          |  |           |                |         |              |        |  |         |  |  |  |        
|                            | Vice President of CMG and Managing Director, Salt
    Union Ltd.       |                        |  |            |        |  |              |          |  |           |                |         |              |        |  |         |  |  |  |         | 
|                            | 2003                                                                   |                        |  | 192,492    |        |  |              | 69,859   |  |           |                |        |              |        |  |        |  |  |  | 46,199  | 
|                            | 2002                                                                   |                        |  | 168,774    |        |  |              | 47,095   |  |           |                |        |              |        |  |        |  |  |  | 219,886 | 
|                            | 2001                                                                   |                        |  | 150,932    |        |  |              | 27,860   |  |           |                | 140,494 |              |        |  |        |  |  |  | 45,801  | 
|Rodney L. Underdown         |                                                                        |                        |  |            |        |  |              |          |  |           |                |         |              |        |  |         |  |  |  |        
|                            | Vice President and Chief Financial Officer of CMG                      |                        |  |            |        |  |              |          |  |           |                |         |              |        |  |         |  |  |  |         | 
|                            | 2003                                                                   |                        |  | 165,129    |        |  |              | 76,751   |  |           |                |        |              |        |  | 380,004 |  |  |  | 48,144  | 
|                            | 2002                                                                   |                        |  | 150,000    |        |  |              | 48,960   |  |           |                |        |              |        |  |        |  |  |  | 211,294 | 
|                            | 2001                                                                   |                        |  | 128,105    |        |  |              | 31,832   |  |           |                | 98,214  |              |        |  |        |  |  |  | 13,864  | 
|                           

|    |                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 CMIs
    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 £0.5814 per $1.00.                                                                                                                                                                                                                                                
|(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.                                                                                                                                                                       

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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




Option Grants in 2003




There were no grants of options to acquire shares
of CMI common stock made to the named executive officers during
2003.


Aggregate Option Exercises in 2003 and Fiscal
Year-end Option Values




The following table contains the aggregate number
of shares of CMIs common stock underlying stock options
exercised in 2003 and the number of shares of CMIs common
stock underlying stock options held by each named executive
officer as of December 31, 2003.


|                    |  |             |        |  |          |                        |        |             |                              |  |               |  |  |             |         |  |               |  |           |  |  |  |           | 
|------------------- |  | ----------- | ------ |  | -------- | ---------------------- | ------ | ----------- | ---------------------------- |  | ------------- |  |  | ----------- | ------- |  | ------------- |  | --------- |  |  |  | --------- | 
|                    |  |             |        |  |          |                        |        |             |                              | 
|                    |  |             |        |  |          | Number of Securities   |        |             |                              |  |              
|                    |  |             |        |  |          | Underlying Unexercised |        |             |                             
|                    |  |             |        |  |          | Options/SARs at        |        |             | Value of Unexercised         | 
|                    |  |             |        |  |          | December 31, 2003      |        |             | In-the-Money Options/SARs at | 
|                    |  | Number of   |        |  |          |                        |        |             | December 31, 2003 ($)(1)     | 
|                    |  | Shares      |        |  | Value    |                        |        |            
|                    |  | Acquired on |        |  | Realized |                        |        |             |                             
|Name                |  | Exercise    |        |  | ($)      |                        |        | Exercisable |                              |  | Unexercisable |  |  | Exercisable |         |  | Unexercisable | 
|                   
|                    | 
|Michael E. Ducey    |  |             | 67,595 |  |          |                        | 77,740 |             |                              |  | 337,980       |  |  |             | 135,193 |  |               |  | 4,353,182 |  |  |  | 1,741,286 | 
|Steven Wolf         |  |             | 27,617 |  |          |                        | 52,769 |             |                              |  | 138,101       |  |  |             | 55,242  |  |               |  | 1,778,741 |  |  |  | 711,517   | 
|Keith E. Clark      |  |             | 26,675 |  |          |                        | 50,970 |             |                              |  | 133,379       |  |  |             | 53,352  |  |               |  | 1,717,922 |  |  |  | 687,174   | 
|David J. Goadby     |  |             | 12,227 |  |          |                        | 5,365  |             |                              |  | 87,802        |  |  |             | 35,125  |  |               |  | 1,130,890 |  |  |  | 452,410   | 
|Rodney L. Underdown |  |             | 12,276 |  |          |                        | 23,457 |             |                              |  | 61,381        |  |  |             | 24,553  |  |               |  | 790,587   |  |  |  | 316,243   | 
|                   

|    |                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Calculated by multiplying the difference between
    the fair market value of the shares of CMIs common stock
    underlying the options as of December 31, 2003 ($14.28 per
    share) and the exercise price of the options by the number of
    shares of CMIs 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 the CMI 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 CMIs 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 CMIs 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
shares of CMIs 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, we have 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 CMIs common stock as of the
date of the grant. The options 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. In addition, this offering or future offerings of CMI
    common stock may cause these performance vesting options to
    become immediately vested.

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 CMI 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
investor rights agreement. We filed a registration state-


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|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




ment on Form S-8 under the Securities Act to
register the issuance of those shares issuable or reserved for
issuance under the CMI 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 IMC Global
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.

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
Mr. Ducey and Mr. Goadby. Accordingly, each of our
executive officers is currently an at will employee.

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|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 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 CMI 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 CMIs 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 CMI         |            |  |         
|                                      |  | Common Stock          |            |  | Percent  | 
|Name and Address of Beneficial Owner  |  | Beneficially Owned(1) |            |  | of Class | 
|                                     
|                                      | 
|Apollo(2)                             |  |                       | 11,462,064 |  |          |  | 35.93% | 
|Neuberger Berman, Inc.(3)             |  |                       | 1,754,000  |  |          |  | 5.50%  | 
|Michael E. Ducey(4)                   |  |                       | 617,190    |  |          |  | 1.93%  | 
|Keith E. Clark(4)                     |  |                       | 255,883    |  |          |  | *      | 
|David J. Goadby(4)                    |  |                       | 155,578    |  |          |  | *      | 
|Rodney L. Underdown(4)                |  |                       | 117,810    |  |          |  | *      | 
|Steven Wolf(4)                        |  |                       | 264,825    |  |          |  | *      | 
|Joel A. Asen(5)                       |  |                       | 53,669     |  |          |  | *      | 
|Robert F. Clark(6)                    |  |                       | 177,832    |  |          |  | *      | 
|Peter P. Copses(5)                    |  |                       | 53,669     |  |          |  | *      | 
|Robert H. Falk(5)                     |  |                       | 53,669     |  |          |  | *      | 
|Joshua J. Harris(5)                   |  |                       | 53,669     |  |          |  | *      | 
|Scott M. Kleinman(5)                  |  |                       | 53,669     |  |          |  | *      | 
|Douglas A. Pertz(5)                   |  |                       | 53,669     |  |          |  | *      | 
|Heinn F. Tomfohrde, III(5)            |  |                       | 53,669     |  |          |  | *      | 
|Bradley J. Bell(5)                    |  |                       | 37,367     |  |          |  | *      | 
|All directors and officers as a group |  |                       | 2,002,168  |  |          |  | 6.28%  | 
|                                     

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Represents less than 1% of the outstanding shares
    of CMI common stock (excluding any shares held by YBR Holdings
    that could be attributed to any of these individuals).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(1) | For purposes of this table, information as to the
    percentage of shares beneficially owned is calculated based on
    31,899,567 shares of CMI common stock outstanding. The amounts
    and percentages of CMI 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 CMI
    common stock.
|(2) | Represents all shares held of record by
    YBR Holdings. YBR Holdings is an affiliate of, and is
    controlled by, Apollo through Apollos majority ownership
    of YBR Holdings membership interests. The address of
    each of YBR Holdings, Apollo and of Messrs. P. Copses,
    R. Falk, J. Harris and S. Kleinman is c/o Apollo
    Management, L.P., 1301 Avenue of the Americas, New
    York, New York 10019.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|   |                                                                                            
|-- | -------------------------------------------------------------------------------------------
|(3 | The address of Neuberger Berman, Inc. is
    605 Third Ave., New York, New York 10158-3698.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Includes options that are currently exercisable
    or will become exercisable in the next 60 days. Does not
    include options to purchase 135,192, 53,352, 35,125, 24,553 and
    55,242 shares of CMI common stock that we have granted to
    Messrs. M. Ducey, K. Clark, D. Goadby,
    R. Underdown and S. Wolf, respectively. These options
    are subject to time and performance 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, K. Clark, D. Goadby,
    R. Underdown and S. Wolf is c/o Compass Minerals
    International, Inc., 8300 College Boulevard, Overland Park,
    Kansas 66210.
|(5) | Represents options to purchase 37,367 shares
    of CMI common stock that we have granted to Mr. B. Bell and
    53,669 shares of CMI common stock that we have granted
    to each of Messrs. J. Asen, P. Copses, R. Falk,
    J. Harris, S. Kleinman, D. Pertz and
    H. Tomfohrde III. These options are exercisable
    immediately.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(6) | The address of Mr. R. Clark is
    c/o Compass Minerals International, Inc., 8300 College
    Boulevard, Overland Park, Kansas 66210.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   






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




Ongoing Relationship with IMC Global

In connection with the Recapitalization, we
entered into several additional agreements with IMC Global or
its affiliates providing for the continuation or transfer and
transition of certain aspects of our business operations. These
agreements were the result of arms-length negotiations,
and we believe they are on terms at least as favorable to us as
those we could have obtained from unaffiliated third parties.
Set forth below are descriptions of the material agreements that
we or our affiliates have entered into with IMC Global.


Supply Agreements

We have contracted with IMC Global or its
affiliates to supply some of our facilities with raw materials
used in the production of our products and to supply to other
facilities finished products that we distribute to our customers
or other distributors. IMC Global supplies us with the following
products:



| |   |                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |  | coarse and mixed highway deicing salt, as a
    finished product, from IMC Globals Esterhazy,
    Saskatchewan facility;       
|
| |  | bulk white granular ice melt muriate of potash
    from IMC Globals Belle Plaine, Saskatchewan facility;                       
|
| |  | packaged water softener muriate of potash, as a
    finished product, from IMC Globals Belle Plaine,
    Saskatchewan facility;
|
| |  | muriate of potash, as a raw material, from
    IMC Globals Esterhazy, Saskatchewan facility to our
    Ogden facility; and     
|
| |  | a variety of general trade salt products, as
    finished products, from IMC Globals Hersey, Michigan
    facility.            

The initial terms of these supply contracts range
from five to 12 years and are automatically extended by
one-year intervals unless termination notice is given by either
party six

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months prior to the end of the term. The prices
we pay for these products vary depending on the product.
However, we believe that the prices IMC Global charges us
are generally as favorable as the prices that we can obtain from
third parties. Some contracts require the purchase of all of our
requirements for a particular product from IMC Global.
Others require the purchase of no less than 90% of our
requirements from IMC Global, while others have no purchase
requirement at all. Certain of those contracts permit us to
obtain a lower price elsewhere and, if IMC Global does not
match the lower price, we can purchase at the lower price from
the third party. We cannot exercise our matching rights under
these provisions more than twice in a year. Under the Hersey
salt supply contract, we are required to purchase no less than
200,000 tons of salt products each year under most circumstances
and we can purchase from third parties if a force majeure event
prevents IMC Global from delivering products to us. Pricing
for the Esterhazy highway deicing salt contract is adjusted each
year based on a Canadian product price index. Pricing under the
other supply contracts is generally adjusted each year based on
the movement in the sales prices of the products to our own or
IMC Globals customers. Under the Hersey salt supply
contract, the price is adjusted each year based on a salt
producer price index, although we have the right to change the
pricing adjustment formula to a quarterly adjustment based on
the prices at which we sell the products to our customers.

In June 2003, we purchased intangible assets
related to IMC Globals SOP marketing business for
$24.8 million, including customer lists related to its
Carlsbad, New Mexico SOP product line and rights to produce SOP
at IMC Globals Carlsbad, New Mexico facility. We also
purchased finished goods SOP inventory in the amount of
$3.9 million. The SOP supply contract that grants us the
right to purchase SOP from IMC Global had been in place
since the Recapitalization and, as a result of the purchase of
IMC Globals remaining SOP business in June 2003,
terminated on November 30, 2003.


Railcars

We sublease railcars from affiliates of
IMC Global that are used by us to transport products used
in our business. At December 31, 2003, we leased
approximately 46 railcars with terms that expire on various
dates throughout 2005 and with renewal options available on some
railcars until 2014.

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. Apollo received a one-time
transaction fee for structuring the Recapitalization and
thereafter received an annual fee for its management services
and advice. In connection with the initial public offering, we
amended the management consulting agreement whereby Apollo has
the right to terminate the amended management consulting
agreement at any time upon prior written notice to the Company.
Upon Apollos election to terminate the amended management
consulting agreement, we will pay Apollo approximately
$5.5 million, less any amounts paid under the annual fee
from December 10, 2003, 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
will effectively terminate. Such payment will be expensed as
incurred. Apollo maintains the right following termination to
act, in return for additional fees, as our financial advisor or
investment banker for any merger, acquisition, disposition or
the like if we decide to hire someone to fill such a role.







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




A summary of the services provided to CMG and CMI
by PricewaterhouseCoopers LLP for the years ended
December 31, 2003 and 2002 are as follows (in millions):


|                  |  |      |     |  |      |   |     | 
|----------------- |  | ---- | --- |  | ---- | - | --- | 
|                 
|                  | 
|                  |  | 2003 |     |  | 2002 |  
|                 
|                  | 
|Audit fees(a)     |  | $    | 0.6 |  |      | $ | 1.0 | 
|Tax fees(b)       |  |      | 1.0 |  |      |   | 0.9 | 
|All other fees(c) |  |      | 0.1 |  |      |   |    | 
|                 
|                  |  | $    | 1.7 |  |      | $ | 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, 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.
|(b) | Relates to services for reviews of certain tax
    filings, as well as research and advice on tax planning matters.                                                                                                                                                                                                                                                                                                                                           
|(c) | Relates to audits of pension and retirement plans.                                                                                                                                                                                                                                                                                                                                                                                                            

Our audit committees policy has
pre-approved all audit and permissible audit-related services
provided by the independent auditors. Going forward, the audit
committee of CMI, our parent company, 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 of CMI 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 of CMI 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:


|                                                                                                                                     |  |  |    | 
|------------------------------------------------------------------------------------------------------------------------------------ |  |  | -- | 
|Consolidated Balance Sheets as of
    December 31, 2003 and 2002, restated                                                           |  |  | 35 | 
|Combined and Consolidated Statements of
    Operations for the three years ended December 31, 2003,
    restated                     |  |  | 36 | 
|Combined and Consolidated Statements of
    Stockholders Equity (Deficit) for the three years ended
    December 31, 2003, restated |  |  | 37 | 
|Combined and Consolidated Statements of Cash
    Flows for the three years ended December 31, 2003, restated                         |  |  | 38 | 
|Notes to Combined and Consolidated Financial
    Statements, restated                                                                |  |  | 39 | 

(a)(2) Financial Statement Schedule:

Schedule II  Valuation
Reserves

Compass Minerals Group, Inc.




December 31, 2003, 2002 and 2001 (in
millions)

|                                                                            |         |              |   |      |            |  |   |               |  |               |       |       |   |          |   |      |   |  |   |      | 
|--------------------------------------------------------------------------- | ------- | ------------ | - | ---- | ---------- |  | - | ------------- |  | ------------- | ----- | ----- | - | -------- | - | ---- | - |  | - | ---- | 
|                                                                           
|                                                                            |        
|                                                                            |         | Balance      |   |      |           
|                                                                            |         | at the       |   |      | Additions  |  |   |               |  | Balance       |      
|                                                                            |         | Beginning of |   |      | Charged to |  |   |               |  | at the End of |      
|Description                                                                 |         | the Year     |   |      | Expense    |  |   | Deductions(1) |  |               | Other |       |   | the Year |  
|                                                                           
|                                                                            |        
|Deducted from Receivables  Allowance
    for Doubtful Accounts             |         |              |   |      |            |  |   |               |  |               |       |       |   |          |   |      |   |  |   |     
|                                                                            | 2003    |              | $ | 1.6  |            |  | $ | 1.1           |  |               | $     | (0.6  | ) |          | $ |     |   |  | $ | 2.1  | 
|                                                                            | 2002    |              |   | 2.0  |            |  |   | 0.0           |  |               |       | (0.4  | ) |          |   |     |   |  |   | 1.6  | 
|                                                                            | 2001    |              |   | 1.8  |            |  |   | 1.6           |  |               |       | (1.4  | ) |          |   |     |   |  |   | 2.0  | 
|Deducted from Deferred Income Taxes 
    Valuation Allowance (restated)(3) |         |              |   |      |            |  |   |               |  |               |       |       |   |          |   |      |   |  |   |     
|                                                                            | 2003    |              | $ | 16.9 |            |  | $ |              |  |               | $     | (4.2  | ) |          | $ |     |   |  | $ | 12.7 | 
|                                                                            | 2002    |              |   | 31.5 |            |  |   |              |  |               |       | (14.6 | ) |          |   |     |   |  |   | 16.9 | 
|                                                                            | 2001(2) |              |   | 43.2 |            |  |   |              |  |               |       | (7.7  | ) |          |   | (4.0 | ) |  |   | 31.5 | 
|                                                                           

|    |                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Deduction for purposes for which reserve was
    created.                                                                                                
|(2) | Other includes a corresponding tax asset that
    diminished upon Recapitalization.                                                                      
|(3) | As discussed under the heading
    Restatementin Note 1 to the combined
    and consolidated financial statements, amounts here have been
    restated.

(b) Exhibits

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 Compass
    Minerals Registration Statement on Form S-4, File
    No. 33-82700).                                                                   
|        | 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 Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).                                              
|        | 3.1 |  |                        | Restated Certificate of Incorporation of IMC
    Inorganic Chemicals Inc., filed as Exhibit A to the
    Certificate of Merger of IMC Merger Sub Inc. with and into
    Harris Chemical Group, Inc., filed on April 1, 1998
    (incorporated herein by reference to Exhibit 3.1 to Compass
    Minerals Registration Statement on Form S-4, File
    No. 333-82700).
|        | 3.2 |  |                        | Certificate of Amendment of Certificate of
    Incorporation of IMC Inorganic Chemicals Inc., changing its name
    from IMC Inorganic Chemicals Inc. to Compass Minerals Group,
    Inc., filed on November 28, 2001 (incorporated herein by
    reference to Exhibit 3.2 to Compass Minerals
    Registration Statement on Form S-4, File
    No. 333-82700).      
|        | 3.3 |  |                        | By-laws of Compass Minerals Group, Inc.
    (incorporated herein by reference to Exhibit 3.3 to Compass
    Minerals Registration Statement on Form S-4, File
    No. 333-82700).                                                                                                                                                                                    
|        | 3.4 |  |                        | Certificate of Incorporation of GSL Corporation,
    filed as Exhibit A to the Certificate of Merger of GSL
    Acquisition Corp. into GSL Corporation, filed on
    September 24, 1993 (incorporated herein by reference to
    Exhibit 3.4 to Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).                                        

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|        |      |  |                        |                                                                                                                                                                                                                                                                                                                                                                                                                             
|------- | ---- |  | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |                       
|No.     |      |  | Description of Exhibit
|       
|        |     
|       
|        | 3.5  |  |                        | Certificate of Ownership and Merger merging GSL
    Holdings Inc. into GSL Corporation filed on May 17, 1994
    (incorporated herein by reference to Exhibit 3.5 to Compass
    Minerals Registration Statement on Form S-4, File
    No. 333-82700).                                                                                                                                                                     
|        | 3.6  |  |                        | Certificate of Amendment to Certificate of
    Incorporation of GSL Corporation filed on January 12, 2001
    (incorporated herein by reference to Exhibit 3.6 to Compass
    Minerals Registration Statement on Form S-4, File
    No. 333-82700).                                                                                                                                                                        
|        | 3.7  |  |                        | By-laws of GSL Corporation (incorporated herein
    by reference to Exhibit 3.7 to Compass Minerals
    Registration Statement on Form S-4, File
    No. 333-82700).                                                                                                                                                                                                                                                       
|        | 3.8  |  |                        | Certificate of Incorporation of Sifto Louisiana
    Inc. filed on March 22, 1990 (incorporated herein by
    reference to Exhibit 3.8 to Compass Minerals
    Registration Statement on Form S-4, File
    No. 333-82700).                                                                                                                                                                                                 
|        | 3.9  |  |                        | Certificate of Amendment to the Certificate of
    Incorporation of Sifto Louisiana Inc., changing its name from
    Sifto Louisiana Inc. to Carey Louisiana Inc., filed on
    August 22, 1990 (incorporated herein by reference to
    Exhibit 3.9 to Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).                                                                                      
|        | 3.10 |  |                        | Certificate of Amendment to the Certificate of
    Incorporation of Carey Louisiana Inc., changing its name from
    Carey Louisiana Inc. to Carey Salt Company, filed on
    November 8, 1990 (incorporated herein by reference to
    Exhibit 3.10 to Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).                                                                                      
|        | 3.11 |  |                        | By-laws of Carey Salt Company (incorporated
    herein by reference to Exhibit 3.11 to Compass
    Minerals Registration Statement on Form S-4, File
    No. 333-82700).                                                                                                                                                                                                                                                   
|        | 3.12 |  |                        | Restated Certificate of Incorporation of American
    Salt Company, filed as Exhibit A to Certificate of Merger
    of Carey Salt, Inc. into American Salt Company, filed on
    March 30, 1990 (incorporated herein by reference to
    Exhibit 3.12 to Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).                                                                                     
|        | 3.13 |  |                        | Certificate of Merger of Sifto Acquisition, Inc.
    into American Salt Company filed on March 30, 1990
    (incorporated herein by reference to Exhibit 3.13 to
    Compass Minerals Registration Statement on Form S-4,
    File No. 333-82700).                                                                                                                                                                         
|        | 3.14 |  |                        | Certificate of Amendment to Restated Certificate
    of Incorporation of American Salt Company, changing its name
    from American Salt Company to North American Salt Company, filed
    on August 20, 1990 (incorporated herein by reference to
    Exhibit 3.14 to Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).                                                                       
|        | 3.15 |  |                        | Certificate of Amendment to Restated Certificate
    of Incorporation of North American Salt Company, changing its
    name from North American Salt Company to IMC Salt Inc., filed on
    May 1, 1998 (incorporated herein by reference to
    Exhibit 3.15 to Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).                                                                             
|        | 3.16 |  |                        | Certificate of Amendment of Certificate of
    Incorporation of IMC Salt Inc., changing its name from IMC Salt
    Inc. to North American Salt Company, filed on November 28,
    2001 (incorporated herein by reference to Exhibit 3.16 to
    Compass Minerals Registration Statement on Form S-4,
    File No. 333-82700).                                                                                              
|        | 3.17 |  |                        | By-laws of North American Salt Company
    (incorporated herein by reference to Exhibit 3.17 to
    Compass Minerals Registration Statement on Form S-4,
    File No. 333-82700).                                                                                                                                                                                                                                          
|        | 3.18 |  |                        | Restated Certificate of Incorporation of Great
    Salt Lake Minerals and Chemicals Corporation filed on
    March 29, 1990 (incorporated herein by reference to
    Exhibit 3.18 to Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).                                                                                                                                                         
|        | 3.19 |  |                        | Certificate of Amendment to Restated Certificate
    of Incorporation of Great Salt Lake Minerals and Chemicals
    Corporation, changing its name from Great Salt Lake Minerals and
    Chemicals Corporation to Great Salt Lake Minerals Corporation,
    filed on October 9, 1991 (incorporated herein by reference
    to Exhibit 3.19 to Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).
|        | 3.20 |  |                        | Certificate of Amendment to Restated Certificate
    of Incorporation of Great Salt Lake Minerals Corporation,
    changing its name from Great Salt Lake Minerals Corporation to
    IMC Kalium Ogden Corp., filed on June 18, 1998
    (incorporated herein by reference to Exhibit 3.20 to
    Compass Minerals Registration Statement on Form S-4,
    File No. 333-82700).                                            
|        | 3.21 |  |                        | Certificate of Amendment to Restated Certificate
    of Incorporation of IMC Kalium Ogden Corp., changing its name
    from IMC Kalium Ogden Corp. to Great Salt Lake Minerals
    Corporation, dated November 28, 2001 (incorporated herein
    by reference to Exhibit 3.21 to Compass Minerals
    Registration Statement on Form S-4, File
    No. 333-82700).                                                         
|        | 3.22 |  |                        | By-laws of Great Salt Lake Minerals Corporation
    (incorporated herein by reference to Exhibit 3.22 to
    Compass Minerals Registration Statement on Form S-4,
    File No. 333-82700).                                                                                                                                                                                                                                 
|        | 3.23 |  |                        | Restated Certificate of Incorporation of NAMSCO
    Inc., filed as Exhibit A to the Certificate of Merger of
    NAMSCO Acquisition Corp. with and into NAMSCO Inc., filed on
    September 24, 1993 (incorporated herein by reference to
    Exhibit 3.23 to Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).                                                                                
|        | 3.24 |  |                        | Certificate of Amendment to Certificate of
    Incorporation of NAMSCO Inc. filed on January 16, 2001
    (incorporated herein by reference to Exhibit 3.24 to
    Compass Minerals Registration Statement on Form S-4,
    File No. 333-82700).                                                                                                                                                                           
|        | 3.25 |  |                        | By-laws of NAMSCO Inc. (incorporated herein by
    reference to Exhibit 3.25 to Compass Minerals
    Registration Statement on Form S-4, File
    No. 333-82700).                                                                                                                                                                                                                                                          
|        | 10.1 |  |                        | Indenture, dated November 28, 2001, among
    Compass Minerals Group, Inc., as issuer, Carey Salt Company,
    Great Salt Lake Minerals Corporation, GSL Corporation, NAMSCO
    Inc., North American Salt Company, as guarantors, and The Bank
    of New York, as trustee (incorporated herein by reference to
    Exhibit 4.1 to Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).          
|        | 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 |  |                        | 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 Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).                                                                                                                                                      

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|        |       |  |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | ----- |  | ---------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |                       
|No.     |       |  | Description of Exhibit
|       
|        |      
|       
|        | 10.5  |  |                        | 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 Compass Minerals Registration
    Statement on Form S-4, File No. 333-82700).
|        | 10.6  |  |                        | 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
    Compass Minerals Registration Statement on Form S-4, File
    No. 333-82700).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10.7  |  |                        | 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 Corporations
    Registration Statement on Form S-4, File
    No. 333-104603).                                                                                                                 
|        | 10.8  |  |                        | 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 Corporations Registration Statement on
    Form S-4, File No. 333-104603).                                                                                       
|        | 10.9  |  |                        | 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 Corporations Registration Statement on
    Form S-4, File No. 333-104603).                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10.10 |  |                        | Amendment No. 3 to the Amended and Restated
    Credit Agreement, dated May 21, 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 10.7 to Salt
    Holdings Corporations Registration Statement on
    Form S-4, File No. 333-104603).                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10.11 |  |                        | 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 Internationals Registration Statement on
    Form S-1, File No. 333-110250).                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10.12 |  |                        | 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 10.5 to
    Compass Minerals Registration Statement on Form S-4,
    File No. 333-82700).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 10.13 |  |                        | 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 10.6 to Compass
    Minerals Registration Statement on Form S-4, File
    No. 333-82700).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10.14 |  |                        | 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 10.7 to Compass
    Minerals Registration Statement on Form S-4, File
    No. 333-82700).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 10.15 |  |                        | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10.16 |  |                        | Service Agreement, dated September 1, 1997,
    between Salt Union Limited and David J. Goadby (incorporated
    herein by reference to Exhibit 10.10 to Compass
    Minerals Registration Statement on Form S-4, File
    No. 333-82700).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 10.17 |  |                        | Investor Rights Agreement, dated
    November 28, 2001, between Salt Holdings Corporation and
    the holders of securities of Salt Holdings Corporation party
    thereto (incorporated herein by reference to Exhibit 10.11
    to Compass Minerals Registration Statement on
    Form S-4, File No. 333-82700).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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##### Table of Contents



|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 FORM 10-K




|        |        |  |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | ------ |  | ---------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |  |                       
|No.     |        |  | Description of Exhibit
|       
|        |       
|       
|        | 10.18  |  |                        | Amended and Restated Stock Rights Agreement,
    dated as of June 23, 2003, by and among Salt Holdings
    Corporation, Apollo Management V, L.P., each of the stockholders
    listed on Schedule A attached thereto and IMC Global Inc.
    (incorporated herein by reference to Exhibit 10.15 to Salt
    Holdings Corporations Registration Statement on
    Form S-4, File No. 333-104603).                                         
|        | 10.19  |  |                        | Amended and Restated Management Consulting
    Agreement, dated December 10, 2003, between Compass
    Minerals International, Inc. and Apollo Management V, L.P.
    (incorporated herein by reference to Exhibit 10.16 to
    Compass Minerals Internationals Registration Statement on
    Form S-4, File No. 333-111953).                                                                                                            
|        | 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
    Corporations 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 Corporations Registration Statement on
    Form S-4, File No. 333-104603).                                                                                                                                                                         
|        | 12.1** |  |                        | Statement of Computation of Ratio of Earnings to
    Fixed Charges.                                                                                                                                                                                                                                                                                                                                                                       
|        | 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.                                                                                                                                                                                                                                                          
|       

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

|   |                                
|-- | -------------------------------
|** | Previously filed with Form 10-K

|    |                     
|--- | --------------------
|(c) | Reports on Form 8-K:

From 8-K, filed
May 13, 2003, Regulation FD Disclosure


From 8-K, filed
June 27, 2003, Other Events


From 8-K, filed
August 13, 2003, Regulation FD Disclosure


From 8-K, filed
November 7, 2003, Regulation FD Disclosure


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##### Table of Contents



|                             |               
|---------------------------- | --------------
|COMPASS MINERALS GROUP, INC. | 2003 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: November 23, 2004



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

Date: November 23, 2004

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 November 23, 2004.

|                                           |  |                                                                                             |  | 
|------------------------------------------ |  | ------------------------------------------------------------------------------------------- |  | 
|                                           |  |                                                                                            
|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                                                                                   
|                                          
|/s/ SCOTT M. KLEINMANScott M. Kleinman     |  | Director                                                                                   

74