UNITED STATESSECURITIES AND EXCHANGE ~~COMMISSION WASHINGTON~~COMMISSIONWASHINGTON, D.C. 20549 FORM 10-Q |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 OR | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______to______ Commission File Number 333-82700 Compass Minerals Group, Inc. (Exact name of registrant as specified in its charter)

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

For the quarterly period ended June 30, 2003 OR

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

For the transition period from ______to______ Commission File Number 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 Blvd.Overland Park, KS 66210 (913) 344-9200 (Address of principal executive offices and telephone number) 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: X No: Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes: No: X Common Stock, $0.01 Par Value – 1,000 shares outstanding as of August 1, 2003

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: X No:

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes: No: X

Common Stock, $0.01 Par Value – 1,000 shares outstanding as of October 1, 2003

COMPASS MINERALS GROUP, INC.

Part I. FINANCIAL INFORMATION	Page	~~Page~~
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2003
Consolidated Balance Sheets as of September 30, 2003
(unaudited) and December 31, 2002		2
and December 31, 2002 (unaudited)	2
Consolidated Statements of Operations for the three and six month
Consolidated Statements of Operations for the three and nine month
periods ended June 30, 2003 and 2002 (unaudited)		3
periods ended September 30, 2003 and 2002 (unaudited)	3
Consolidated Statement of Stockholder’s Equity (Deficit) for the six
Consolidated Statement of Stockholder’s Equity (Deficit) for the nine
month period ended June 30, 2003 (unaudited)		4
month period ended September 30, 2003 (unaudited)	4
Consolidated Statements of Cash Flows for the six
Consolidated Statements of Cash Flows for the nine
month periods ended June 30, 2003 and 2002 (unaudited)		5
month periods ended September 30, 2003 and 2002 (unaudited)	5
Notes to Consolidated Financial Statements (unaudited)	6	6
Item 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations	19	17
Item 3. Quantitative and Qualitative Disclosure of Market Risk		24
Item 3. Quantitative and Qualitative Disclosure about Market Risk	27
Item 4. Controls and Procedures	28	25
Part II. OTHER INFORMATION
Item 1. Legal Proceedings	28	25
Item 2. Changes in Securities and Use of Proceeds	28	25
Item 3. Defaults upon Senior Securities	28	25
Item 4. Submission of Matters to a Vote of Security Holders	28	25
Item 5. Other Information	28	25
Item 6. Exhibits & Reports on Form 8-K	28	26
SIGNATURES	29	26
CERTIFICATIONS		27

PART I. FINANCIAL INFORMATION Item 1. Financial Statements COMPASS MINERALS GROUP, INC. CONSOLIDATED BALANCE SHEETS (Unaudited)(in millions, except share data)

			June 30,			December 31,
	September 30, 2003			December 31, 2002
			2003			2002
ASSETS
			(Unaudited)
Current assets:
ASSETS
Cash and cash equivalents	$	3.6		$	11.9
Current assets:
Receivables, less allowance for doubtful accounts of
Cash and cash equivalents		$	13.7		$	11.9
$2.0 in 2003 and $1.6 in 2002		54.9			94.5
Receivables, less allowance for doubtful accounts of
Inventories		100.7			96.5
$1.6 million in 2003 and 2002			45.9			94.5
Other		3.8			0.7
Inventories			78.1			96.5
Total current assets		163.0			203.6
Other			3.5			0.7
Property, plant and equipment, net		253.7			263.4
Total current assets			141.2			203.6
Intangible assets - mineral interests and other, net		173.1			149.8
Property, plant and equipment, net			409.4			413.2
Other		30.4			27.2
Intangibles			24.5			—
Total assets	$	620.2		$	644.0
Other			30.1			27.2
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT)
Total assets		$	605.2		$	644.0
Current liabilities:
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT)
Current portion of long-term debt	$	0.8		$	1.2
Current liabilities:
Accounts payable		52.9			62.3
Current portion of long-term debt		$	0.8		$	1.2
Accrued expenses		9.3			8.9
Accounts payable			42.7			62.3
Accrued interest		4.4			12.6
Accrued expenses			9.3			8.9
Accrued salaries and wages		13.2			12.6
Accrued interest			12.5			12.6
Income taxes payable		—			4.8
Accrued salaries and wages			11.8			12.6
Total current liabilities		80.6			102.4
Income taxes payable			1.5			4.8
Long-term debt, net of current portion		423.2			436.4
Total current liabilities			78.6			102.4
Deferred income taxes		92.6			99.6
Long-term debt, net of current portion			405.9			436.4
Other noncurrent liabilities		22.8			25.3
Deferred income taxes			106.6			99.6
Commitments and contingencies
Other noncurrent liabilities			23.6			25.3
Stockholder’s equity (deficit):
Commitments and contingencies
Common stock, $.01 par value, 1,000 shares authorized, issued and
Stockholder’s equity (deficit):
outstanding		—			—
Common stock, $.01 par value, 1,000 shares authorized, issued and
Additional paid in capital		363.6			349.5
outstanding			—			—
Accumulated deficit		(373.6	)		(369.3	)
Additional paid in capital			349.5			349.5
Accumulated other comprehensive income		11.0			0.1
Accumulated deficit			(369.8	)		(369.3	)
Total stockholder’s equity (deficit)		1.0			(19.7	)
Accumulated other comprehensive income			10.8			0.1
Total liabilities and stockholder’s equity (deficit)	$	620.2		$	644.0
Total stockholder’s equity (deficit)			(9.5	)		(19.7	)
Total liabilities and stockholder’s equity (deficit)		$	605.2		$	644.0

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

COMPASS MINERALS GROUP, ~~INCCONSOLIDATED~~INC.CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)(in millions)

			Three Months ended June 30						Six Months ended June 30
	Three Months ended September 30,						Nine Months ended September 30,
	2003			~~2003~~2002			~~2002~~2003			~~2003~~2002			~~2002~~
Sales	$	97.1	$	~~88.7~~$	92.2	$	~~82.3~~$	398.5	$	~~301.4~~$	336.9	$	~~244.7~~
Cost of sales – shipping and handling				21.1			20.2			85.2			68.7
Cost of sales - shipping and handling		24.1			22.5			109.3			91.2
Cost of sales – products				48.9			45.7			144.4			120.0
Cost of sales - products		55.1			53.3			199.5			173.3
Gross profit		17.9		~~18.7~~	16.4		~~16.4~~	89.7		~~71.8~~	72.4		~~56.0~~
Selling, general and administrative expenses		11.2		~~11.5~~	10.8		~~9.7~~	34.3		~~23.1~~	30.1		~~19.3~~
Restructuring and other charges		—		—	2.1		~~2.2~~	—		—	6.8		~~4.7~~
Operating earnings		6.7		~~7.2~~	3.5		~~4.5~~	55.4		~~48.7~~	35.5		~~32.0~~
Other expense:
Other expense (income):
Interest expense		10.0		~~9.5~~	10.5		~~10.3~~	29.2		~~19.2~~	31.0		~~20.5~~
Other, net		1.6		~~3.2~~	(0.3	)	~~4.4~~	4.5		~~2.9~~	4.1		~~4.4~~
Income / (Loss) before income taxes		(4.9	)	~~(5.5~~	)(6.7	)	~~(10.2~~	)21.7		~~26.6~~	0.4		~~7.1~~
Income tax expense (benefit)		(1.1	)	~~0.2~~	(3.2	)	~~(2.9~~	)4.3		~~5.4~~	(0.5	)	~~2.7~~
Net income / (loss)	$	(3.8	$)	~~(5.7~~$	)(3.5	$)	~~(7.3~~$	)17.4	$	~~21.2~~$	0.9	$	~~4.4~~

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

COMPASS MINERALS GROUP, INC. CONSOLIDATED STATEMENT OF STOCKHOLDER’S EQUITY (DEFICIT) (unaudited) For the ~~six~~nine months ended ~~June~~September 30, 2003 (in millions)

													Accumulated
	Common Stock			Additional Paid In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total
							Additional						Other
Balance, December 31, 2002	$	—		$	349.5		$	(369.3	)	$	0.1		$	(19.7	)
				Common			Paid In			Accumulated			Comprehensive
Dividends declared								(21.7	)					(21.7	)
				Stock			Capital			Deficit			Income (Loss)			Total
Comprehensive income:
Balance, December 31, 2002			$	—		$	349.5		$	(369.3	)	$	0.1		$	(19.7	)
Net income								17.4						17.4
Dividends declared										(21.7	)					(21.7	)
Unrealized loss on cash flow hedges, net
Comprehensive income:
of tax											(0.2	)		(0.2	)
Net income										21.2						21.2
Cumulative translation adjustments											11.1			11.1
Unrealized loss on cash flow hedges, net
Comprehensive income														28.3
of tax													(0.2	)		(0.2	)
Capital contributions					14.1									14.1
Cumulative translation adjustments													10.9			10.9
Balance, September 30, 2003	$	—		$	363.6		$	(373.6	)	$	11.0		$	1.0
Comprehensive income															31.9
Balance, June 30, 2003			$	—		$	349.5		$	(369.8	)	$	10.8		$	(9.5	)

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

COMPASS MINERALS GROUP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in millions)

			Six months ended June 30,
	Nine months ended September 30,
	2003		~~2003~~	2002		~~2002~~
Cash flows from operating activities:
Net income	$	17.4	$	~~21.2~~$	0.9	$	~~4.4~~
Adjustments to reconcile net income to net cash flows provided
by operating activities:
Depreciation and depletion				19.4			18.3
Depreciation, depletion and amortization		31.2			28.7
Amortization				0.8			1.0
Finance fee amortization		1.2			1.4
Early extinguishment of long-term debt		—		—	5.3		~~5.3~~
Transition and other charges, net of cash		—		—	1.1		~~1.1~~
Deferred income taxes		(3.5	)	~~5.3~~	(1.9	)	~~(1.1~~	)
Other				—			0.1
Loss (gain) on disposal of property, plant & equipment		0.1			—
Changes in operating assets and liabilities:
Other		—			0.1
Receivables				50.7			48.2
Changes in operating assets and liabilities:
Inventories				21.0			8.0
Receivables		42.0			39.7
Other assets				(2.3	)		(1.2	)
Inventories		(1.3	)		(1.6	)
Accounts payable and accrued expenses				(32.9	)		(13.1	)
Other assets		(2.5	)		(4.4	)
Other noncurrent liabilities				(0.2	)		(0.9	)
Accounts payable and accrued expenses		(32.0	)		(16.7	)
Net cash provided by operating activities				83.0			70.1
Other noncurrent liabilities		(1.1	)		5.2
Cash flows from investing activities:
Net cash provided by operating activities		51.5			57.8
Capital expenditures				(5.4	)		(6.5	)
Cash flows from investing activities:
Acquisition of intangible assets				(21.0	)		—
Capital expenditures		(9.7	)		(12.1	)
Other				—			0.1
Acquisition of intangible assets		(21.1	)		—
Net cash used in investing activities				(26.4	)		(6.4	)
Other		(0.2	)		0.3
Cash flows from financing activities:
Net cash used in investing activities		(31.0	)		(11.8	)
Dividends paid				(21.7	)		—
Cash flows from financing activities:
Revolver activity				—			(39.8	)
Dividends paid		(21.7	)		—
Issuance of long-term debt				—			78.4
Revolver activity		17.5			(39.8	)
Principal payments on other long-term debt, including capital leases				(30.7	)		(95.1	)
Issuance of long-term debt		—			78.4
Deferred financing costs				—			(3.4	)
Principal payments on other long-term debt, including capital leases		(30.9	)		(105.5	)
Other				(3.8	)		1.0
Deferred financing costs		—			(3.4	)
Net cash used in financing activities				(56.2	)		(58.9	)
Capital contribution from SHC		8.8			12.8
Effect of exchange rate changes on cash and cash equivalents				1.4			0.7
Other		(3.9	)		1.0
Net increase in cash and cash equivalents				1.8			5.5
Net cash used in financing activities		(30.2	)		(56.5	)
Cash and cash equivalents, beginning of the period				11.9			15.9
Effect of exchange rate changes on cash and cash equivalents		1.4			2.1
Cash and cash equivalents, end of the period			$	13.7		$	21.4
Net decrease in cash and cash equivalents		(8.3	)		(8.4	)
Supplemental cash flow information:
Cash and cash equivalents, beginning of the period		11.9			15.9
Interest paid excluding capitalized interest			$	18.3		$	10.0
Cash and cash equivalents, end of the period	$	3.6		$	7.5
Income taxes paid				4.8			5.3
Supplemental cash flow information:
Interest paid excluding capitalized interest	$	35.8		$	27.1
Income taxes paid, net of refunds and indemnification		8.7			9.9

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

COMPASS MINERALS GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Organization, Formation and Basis of Presentation: On November 28, 2001, ~~IMC~~Apollo ~~Global~~Management ~~Inc~~V, L.P. (“~~IMC~~Apollo”), ~~completed~~through ~~the~~its ~~sale~~subsidiary, ofYBR ~~Compass~~Holdings ~~Minerals Group~~LLC, ~~Inc.~~acquired ~~(“CMG”~~control orof ~~the “Company”) to~~ Salt Holdings Corporation (“SHC”), anfrom ~~affiliate~~IMC ofGlobal ~~Apollo Management V, L~~Inc.P. (“~~Apollo~~IMC”), ~~whereby~~pursuant ~~SHC~~to ~~acquired control of CMG in~~ a recapitalization transaction (“Recapitalization”). ~~The acquisition has been accounted for as a leveraged recapitalization~~ with ~~the~~ assets and liabilities of Compass Minerals Group, Inc. (“CMG” or “Company”) retaining their historical value. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation, have been included. Operating results for the three-month and ~~six~~nine-month periods ended ~~June~~September 30, 2003 are not necessarily indicative of the results that may be expected for the year ended December 31, 2003. The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto for the year ended December 31, 2002 included in the CMG Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2003. Certain reclassifications were made to prior year amounts in order to conform ~~with~~to the current year’s presentation. Additionally, other reclassifications and disclosures were made to prior year and current year financial statements in order to conform to SHC’s consolidated financial statements and notes thereto for the year ended December 31, 2002 and the six month period ended June 30, 2003 included in SHC’s Form S-4/A filed with the SEC on October 20, 2003. The most significant conforming change to CMG's December 31, 2002 financial statements was the reclassification of $149.8 million of other than owned minerals from property, plant and equipment to intangible assets on the balance sheet. Additional disclosure required by Statement of Financial Accounting Standards ("SFAS") No. 142 have been provided in Note 5 to the interim financial statements. 2. Recent Accounting Pronouncements: In June 2001, the Financial Accounting Standards Board (the “FASB”) issued ~~Statement of Financial Accounting Standards (“~~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. The Company adopted SFAS No. 143 on January 1, 2003. The adoption of SFAS No. 143 did not have a material impact on the Company’s 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 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. 6

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 December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.” SFAS 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation” and requires certain disclosures in the Company’s quarterly and annual financial statements. SHC has a stock option plan that was adopted on November 28, 2001. The Company elected to continue to follow the accounting method under Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for its employee stock options and has adopted the pro forma disclosure requirements under SFAS No. 123, as amended by SFAS 148. Under APB No. 25, because the exercise price of the Company’s employee stock options is equal to or greater than the market price of the underlying stock on the date of grant, no compensation expense is recognized. The effect of applying the fair value method under SFAS No. 123, as amended by SFAS 148, to the Company’s stock-based awards resulted in pro forma net income that is not materially different from amounts reported in the accompanying consolidated statement of operations for the ~~six~~nine month periods ~~ending~~ended ~~June~~September 30, 2003 and 2002. 3. Inventories: Inventories consist of the following (in millions):

				June 30,			December 31,
		September 30, 2003			December 31, 2002
				2003			2002
	Finished goods	$	88.2		$	83.5
Finished goods			$	65.3		$	83.5
	Raw materials and supplies		12.5			13.0
Raw materials and supplies				12.8			13.0
		$	100.7		$	96.5
			$	78.1		$	96.5

Raw materials and supplies primarily consist of raw materials purchased to aid in the production of the Company’s mineral products, maintenance materials and packaging materials. Finished goods are comprised of salt and sulfate of potash (“SOP”) products readily available for sale. All costs associated with the production of salt and SOP at the Company’s producing locations are captured as inventory costs. Additionally, since the Company’s products are often stored at third-party warehousing locations, the Company includes 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. 4. Long-term Debt: On May 5, 2003, the Company amended the senior credit facility (“Senior Credit Facility”) to allow the Company to pay a dividend to be funded with either cash on hand or with borrowings under the amended and restated senior revolving credit facility (“Revolving Credit Facility”). Additionally, the amendment permits the Company to repurchase certain SHC securities (other than the 12¾% Senior Discount Notes due 2012 (“SHC Discount Notes”) and the 12% Senior Subordinated Discount Notes due 2013 (“SHC Subordinated Discount Notes”)) not held by Apollo or management. 7

~~Third-party~~4. ~~long-term~~Property, ~~debt~~Plant and Equipment: Property, plant and equipment consists of the following at December 31 (in millions):

				June 30,			December 31,
		September 30, 2003			December 31, 2002
				2003			2002
	Land and buildings	$	131.9		$	128.4
Senior Subordinated Notes			$	325.0		$	325.0
	Machinery and equipment		407.0			375.7
Term Loan				78.6			109.3
	Furniture and fixtures		9.8			9.9
Revolving Credit Facility				—			—
	Mineral properties		18.8			18.2
Other, including capital lease obligations				—			0.1
	Construction in progress		9.3			13.5
				403.6			434.4
			576.8			545.7
Premium on senior subordinated notes, net				3.1			3.2
	Less accumulated depreciation and depletion		323.1			282.3
Current portion of long-term debt				(0.8	)		(1.2	)
		$	253.7		$	263.4
			$	405.9		$	436.4

5.Owned ~~Commitments~~mineral ~~and~~properties ~~Contingencies:~~are ~~Parent~~stated ~~Company~~at ~~Obligations:~~cost Inand ~~May~~depleted ofon ~~2003~~a ~~SHC~~straight-line ~~issued~~basis ~~$179.6~~over ~~million~~a inlife ~~aggregate principal amount at maturity~~ of ~~the~~20 ~~SHC~~to ~~Subordinated~~30 ~~Discount Notes~~years. ~~The proceeds to SHC approximated $100~~5.0 ~~million~~Mineral Interests and ~~were~~Other ~~used~~Intangible toAssets: ~~pay~~Mineral ~~dividends~~interests oninclude ~~SHC’s~~probable ~~common~~mineral ~~stock~~reserves. NoThe ~~cash~~Company ~~interest~~leases ~~will~~mineral ~~accrue~~reserves onat ~~the~~several ~~SHC~~of ~~Subordinated~~its ~~Discount~~extraction ~~Notes~~facilities. ~~prior~~These toleases ~~June~~have 1varying terms, ~~2008.~~and ~~The~~many ~~accreted~~provide ~~value~~for ofa ~~each~~royalty ~~SHC~~payment ~~Subordinated~~to ~~Discount~~the ~~Note~~lessor ~~will~~based ~~increase~~on ~~from~~a ~~the~~specific ~~date~~amount ofper ~~issuance~~ton ~~until~~of ~~June~~mineral 1,extracted ~~2008~~or atas a ~~rate~~percentage of ~~12%~~revenue. ~~per~~Pursuant ~~annum~~to ~~such~~SFAS ~~that~~No. ~~the~~141, ~~accreted~~“Business ~~value~~Combinations” ~~will~~and ~~equal~~SFAS ~~the~~No. ~~principal amount on June 1~~142, ~~2008.~~“Goodwill ~~Cash~~and ~~interest~~Other ~~will~~Intangible ~~accrue~~Assets,” onmineral ~~the~~interests ~~SHC~~associated ~~Subordinated~~with ~~Discount~~other ~~Notes~~than atowned aproperties ~~rate~~are ofclassified ~~12%~~as ~~per~~intangible ~~annum, beginning June 1, 2008~~assets. AsProbable ofmineral ~~June~~reserves ~~30,~~are ~~2003,~~amortized ~~approximately~~on ~~$71.1~~a ~~million~~units-of-production ~~and~~basis ~~$101.0~~over ~~million are recorded for~~ the ~~SHC~~respective ~~Discount~~estimated ~~Notes~~mine ~~and~~lives ~~SHC~~not ~~Subordinated~~to ~~Discount~~exceed ~~Notes,~~99 ~~respectively~~years. The ~~SHC~~weighted ~~Discount~~average ~~Notes~~amortization ~~and~~period ~~SHC~~for ~~Subordinated~~probable ~~Discount~~mineral ~~Notes~~reserves ~~are~~is ~~not~~93 ayears ~~part~~as of ~~CMG’s~~September ~~consolidated~~30, ~~financial statements~~2003. ~~However,~~The ~~CMG~~Company’s ~~operations~~rights ~~are~~to ~~currently~~extract ~~the~~minerals ~~main~~are ~~source~~contractually oflimited ~~cash~~by ~~that~~time, ishowever, ~~expected~~the toCompany ~~service~~believes ~~these~~it ~~notes.~~will 6.be ~~Related~~able ~~Party~~to ~~Transactions:~~continue Into ~~the~~extend ~~second~~lease ~~quarter of 2003~~agreements, ~~the~~as ~~Company~~it ~~declared~~has ~~and~~in ~~paid~~the ~~$21.7~~past, ~~million~~at ofcommercially ~~dividends~~reasonable interms, ~~order~~without toincurring ~~partially~~substantial ~~fund~~costs ~~SHC’s~~or ~~payment~~incurring ofmaterial ~~dividends~~modifications ~~and~~to the ~~repurchase~~existing oflease aterms ~~portion~~and ofconditions, ~~SHC’s~~and ~~common~~therefore, ~~stock~~believes ~~and~~that ~~all~~the ~~preferred~~assigned ~~stock~~lives ~~held~~are ~~by IMC~~appropriate. In June 2003, the Company purchased, for $24.5 million, intangible assets related to IMC’s ~~sulfate of potash (~~SOP) marketing business including customer lists related to its Carlsbad, New Mexico SOP product line. Asand ~~part~~rights ofto ~~the~~produce ~~transaction, the agreement under which the Company, as agent, markets~~ SOP ~~produced~~at by IMC’s ~~at their~~ Carlsbad, New Mexico facility, ~~will~~(see beNote ~~terminated~~7, inRelated ~~2003~~Party Transactions). ~~The~~As ~~Company~~of ~~paid~~September ~~$21.0~~30, ~~million~~2003, inthe ~~cash~~Company ~~with~~had ~~the~~incurred ~~remaining~~approximately $30.52 million ~~due~~of norelated ~~later~~transaction ~~than November 30, 2003~~costs. The Company’s ~~will~~mineral ~~evaluate~~interests ~~the~~and other intangible assets ~~acquired~~are ~~and~~subject ~~will~~to ~~finalize~~amortization. ~~the~~The ~~purchase~~aggregate ~~price~~amortization ~~allocation~~of ~~within~~probable ~~the~~mineral ~~next~~reserves ~~several~~for ~~months.~~the Innine-month ~~connection~~periods ~~with~~ended ~~this~~September ~~evaluation exercise~~30, ~~the~~2003 ~~Company~~and ~~will~~2002 ~~also~~was ~~determine~~$1.1 ~~the~~million ~~amortization~~and ~~period~~$0.8 ~~for~~million, ~~each~~respectively. ofThe ~~the~~estimated ~~identified~~amortization ~~intangible~~expense ~~assets.~~from ~~The~~fiscal ~~Company~~2003 ~~also~~through ~~purchased~~fiscal 2007 is approximately $21.07 million ofannually. ~~SOP~~Mineral ~~finished~~interests ~~goods inventory from IMC~~ and ~~may~~other beintangible ~~required~~assets toconsist ~~purchase additional amounts~~ of ~~SOP~~the ~~finished~~following ~~goods~~(in ~~inventory by November 30, 2003. 8~~millions):

For the six months ended June 30, 2003, CMG has made approximately $3.8 million of cash payments to third parties on behalf of SHC. These payments primarily consist of deferred financing costs related to the SHC Discount Notes and SHC Subordinated Discount Notes. As of June 30, 2003, the total receivable due from SHC, recorded as other non-current assets, is approximately $6.1 million. 7. Operating Segments: Beginning in 2003, the Company no longer allocates corporate general and administrative costs incurred by 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. Certain reclassifications have been made to the 2002 segment information in order to conform with the current year’s presentation. Segment information as of and for the three-month and six-month periods ended June 30, 2003 and 2002, is as follows (in millions):

	September 30, 2003						December 31, 2002


	Gross Carrying Value		Accumulated Amortization		Net Book Value		Gross Carrying Value		Accumulated Amortization		Net Book Value


Probable mineral
reserves	$	158.6	$	9.9	$	148.7	$	158.6	$	8.8	$	149.8
Other intangible assets		24.7		0.3		24.4		—		—		—

	$	183.3	$	10.2	$	173.1	$	158.6	$	8.8	$	149.8

Three months ended June 30, 2003		Salt		Potash		Other (c)			Total
Sales to external customers	$	74.4	$	14.3	$	—		$	88.7
Intersegment sales		—		2.1		(2.1	)		—
Cost of sales – shipping and handling costs		18.9		2.2		—			21.1
Operating earnings (loss)	$	8.8	$	2.5	$	(4.1	)	$	7.2
Three months ended June 30, 2002		Salt		Potash		Other (c)			Total
Sales to external customers	$	70.2	$	12.1	$	—		$	82.3
Intersegment sales		—		2.6		(2.6	)		—
Cost of sales – shipping and handling costs		18.6		1.6		—			20.2
Operating earnings (loss) (a)	$	9.1	$	1.7	$	(6.3	)	$	4.5
Six months ended June 30, 2003		Salt		Potash		Other (c)			Total
Sales to external customers	$	274.8	$	26.6	$	—		$	301.4
Intersegment sales		—		3.9		(3.9	)		—
Cost of sales – shipping and handling costs		80.9		4.3		—			85.2
Operating earnings (loss)		54.2		2.8		(8.3	)		48.7
Total assets	$	445.0	$	139.1	$	21.1		$	605.2
Six months ended June 30, 2002		Salt		Potash		Other (c)			Total
Sales to external customers	$	219.6	$	25.1	$	—		$	244.7
Intersegment sales		—		4.6		(4.6	)		—
Cost of sales – shipping and handling costs		65.4		3.3		—			68.7
Operating earnings (loss) (b)		41.7		1.6		(11.3	)		32.0
Total assets	$	462.4	$	118.1	$	18.1		$	598.6

~~(a)~~6. Long-term Debt: On May 5, 2003, the Company amended the senior credit facility (“~~Other~~Senior Credit Facility”) ~~includes~~to ~~$2.2~~allow ~~million~~the ~~related~~Company to ~~restructuring~~pay ~~costs.~~a ~~(b)~~dividend to be funded with either cash on hand or with borrowings under the amended and restated senior revolving credit facility (“~~Other”~~Revolving ~~includes~~Credit $4Facility”).7 ~~million~~Additionally, ~~related~~the amendment permits the Company to ~~restructuring~~repurchase ~~costs.~~certain SHC securities (cother than the 12¾% Senior Discount Notes due 2012 (“SHC Discount Notes”) and the 12% Senior Subordinated Discount Notes due 2013 (“~~Other~~SHC Subordinated Discount Notes”)) ~~includes~~not ~~corporate~~held ~~entities~~by ~~and~~Apollo ~~eliminations~~or management. 9Third-party long-term debt consists of the following (in millions):

8. Stock Options: In connection with SHC’s $100.0 million dividend payment on its common stock in May 2003, the number of SHC stock options and the exercise price were adjusted to preserve the intrinsic value of the stock options that existed prior to the dividend through decreasing the exercise price of outstanding options and increasing the number of outstanding options. The following is a summary of SHC’s stock option activity and related information for the six-month period ended June 30, 2003 as adjusted for the transaction described above:

	September 30, 2003			December 31, 2002


Senior Subordinated Notes	$	325.0		$	325.0
Term Loan		78.5			109.3
Revolving Credit Facility		17.5			—
Other, including capital lease obligations		—			0.1

		421.0			434.4
Premium on senior subordinated notes, net		3.0			3.2
Current portion of long-term debt		(0.8	)		(1.2	)

	$	423.2		$	436.4

	Number of options			Weighted-average exercise price
Outstanding at December 31, 2002		501,480		$	7.20
Granted		2,598			25.74
Exercised		(21,434	)		6.97
Cancelled/Expired		(10,484	)		6.97
Outstanding at June 30, 2003		472,160		$	7.33

7. Commitments and Contingencies:

Parent Company Obligations: On May 22, 2003, SHC issued $179.6 million in aggregate principal amount at maturity ($100.0 million in gross proceeds) of SHC Subordinated Discount Notes in a private placement under Rule 144A and Regulation S of the Securities Act. No cash interest will accrue on the SHC Subordinated Discount Notes prior to June 1, 2008. The accreted value of each SHC 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 on June 1, 2008. Cash interest will accrue on the SHC Subordinated Discount Notes at a rate of 12% per annum, beginning June 1, 2008 through maturity. The proceeds from the sale of the SHC Subordinated Discount Notes were distributed to the SHC’s stockholders in the form of a common stock dividend. In connection with the offering of the SHC Subordinated Discount Notes, the Company amended its amended and restated Senior Credit Facility and received consent from the holders of a majority of the aggregate principal amount at maturity of the SHC Discount Notes to amend the indenture governing the SHC Discount Notes in order to permit the distribution of the proceeds from the offering of the SHC Subordinated Discount Notes to SHC’s stockholders.

As of September 30, 2003, approximately $73.3 million and $104.3 million are recorded for the SHC Discount Notes and SHC Subordinated Discount Notes, respectively. The SHC Discount Notes and SHC Subordinated Discount Notes are not a part of CMG’s consolidated financial statements. However, CMG’s operations are currently the main source of cash that is expected to service these notes.

98. ~~Other~~Related ~~Comprehensive~~Party ~~Income~~Transactions: In the second quarter of 2003, the Company declared and paid $21.7 million of dividends in order to partially fund SHC’s payment of dividends and the repurchase of a portion of SHC’s common stock and all preferred stock held by IMC. In June 2003, the Company purchased, for $24.5 million, intangible assets related to IMC’s sulfate of potash (“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. As of September 30, 2003, the Company had incurred approximately $0.2 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, will be terminated in 2003. The ~~following~~Company ~~tables~~paid ~~provide~~IMC $21.0 million in cash with the remaining $3.5 million due no later than November 30, 2003. The Company will evaluate the intangible assets acquired and will finalize the purchase price allocation within the next several months. In connection with this valuation exercise, the Company will also determine the amortization period for each of the identified intangible assets. Through September 30, 2003, the Company has purchased approximately $2.1 million of SOP finished goods inventory from IMC and may be required to purchase additional ~~detail~~amounts of SOP finished goods inventory by November 30, 2003. In the third quarter of 2003, in accordance with the merger agreement related to ~~amounts~~the Recapitalization, IMC indemnified SHC 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 deferred income taxes and an increase to additional paid in ~~Other~~capital. ~~Comprehensive~~SHC ~~Income~~contributed $8.8 million received from IMC to CMG during the ~~six~~third ~~month~~quarter. ~~period~~CMG used this cash to pay income taxes due for tax periods prior to the Recapitalization. For the nine months ended ~~June~~September 30, 2003:, CMG has made approximately $3.9 million of cash payments to third parties on behalf of SHC. These payments primarily consist of deferred financing costs related to the SHC Discount Notes and SHC Subordinated Discount Notes. As of September 30, 2003, the total receivable due from SHC, recorded as other non-current assets, is approximately $6.2 million. On September 29, 2003, the SHC Senior Executives' Deferred Compensation Plan was terminated and the SHC capital stock held in the deferred compensation plan was subsequently distributed to the participants with no impact to the Company. 10

										Accumulated
		Unfunded			Unrealized gains			Foreign		Other
		Pension			on cash flow			currency		Comprehensive
		Losses			hedges			adjustments		Income
Balance at December 31, 2002	$	(11.9	)	$	0.1		$	11.9	$	0.1
2003 changes		—			(0.2	)		10.9		10.7
Balance at June 30, 2003	$	(11.9	)	$	(0.1	)	$	22.8	$	10.8

9. Operating Segments:

Beginning in 2003, the Company no longer allocates corporate general and administrative costs incurred by 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. Certain reclassifications have been made to the 2002 segment information in order to conform with the current year’s presentation.

Segment information as of and for the three-month and nine-month periods ended September 30, 2003 and 2002, is as follows (in millions):

						Tax
	Three months ended September 30, 2003	Salt			Potash		Other (c)			Total
For the six months ended June 30, 2003:			Before tax			(expense)		Net-of-tax
	Sales to external customers	$	85.0		$	12.1	$	—		$	97.1
			Amount			benefit		amount
	Intersegment sales		—			2.5		(2.5	)		—
Gas hedging adjustment		$	(0.3	)	$	0.1	$	(0.2	)
	Cost of sales - shipping and handling costs		22.0			2.1		—			24.1
Foreign currency translation adjustment			10.9			—		10.9
	Operating earnings (loss)	$	9.4		$	1.4	$	(4.1	)	$	6.7
Other comprehensive income		$	10.6		$	0.1	$	10.7
	Three months ended September 30, 2002	Salt			Potash		Other (c)			Total
	Sales to external customers	$	79.9		$	12.3	$	—		$	92.2
	Intersegment sales		—			1.7		(1.7	)		—
	Cost of sales - shipping and handling costs		20.5			2.0		—			22.5
	Operating earnings (loss) (a)	$	9.0		$	0.7	$	(6.2	)	$	3.5
	Nine months ended September 30, 2003	Salt			Potash		Other (c)			Total
	Sales to external customers	$	359.8		$	38.7	$	—		$	398.5
	Intersegment sales		—			6.4		(6.4	)		—
	Cost of sales - shipping and handling costs		102.9			6.4		—			109.3
	Operating earnings (loss)		63.6			4.2		(12.4	)		55.4
	Total assets	$	462.5		$	136.1	$	21.6		$	620.2
	Nine months ended September 30, 2002	Salt			Potash		Other (c)			Total
	Sales to external customers	$	299.5		$	37.4	$	—		$	336.9
	Intersegment sales		—			5.2		(5.2	)		—
	Cost of sales - shipping and handling costs		85.9			5.3		—			91.2
	Operating earnings (loss) (b)		50.7			2.3		(17.5	)		35.5
	Total assets	$	462.3		$	116.1	$	19.6		$	598.0

10(a) “Other” includes $2.1 million related to restructuring costs.

10. Guarantor/Non-guarantor Condensed Consolidating Statements The following condensed consolidating financial statements present the financial position, results of operations and cash flows of the Company, its domestic subsidiaries (~~guarantors~~b) ~~and~~“Other” ~~its~~includes ~~foreign subsidiaries (non-guarantors)~~$6.8 ~~CONDENSED~~million ~~CONSOLIDATING~~related ~~BALANCE~~to ~~SHEETS~~restructuring ~~(unaudited) June 30, 2003 (in millions)~~costs.

					Non-
	Guarantors			guarantors		CMG			Eliminations			Consolidated
Cash and cash equivalents	$	4.6		$	9.1	$	—		$	—		$	13.7
Receivables, net		28.0			17.8		0.1			—			45.9
Inventories		50.2			27.9		—			—			78.1
Other current assets		2.6			0.9		—			—			3.5
Property, plant and equipment, net		209.2			200.2		—			—			409.4
Investment in subsidiaries		—			—		443.4			(443.4	)		—
Intangibles		24.5			—		—			—			24.5
Other		7.7			8.8		13.6			—			30.1
Total assets	$	326.8		$	264.7	$	457.1		$	(443.4	)	$	605.2
Current portion of long-term debt	$	—		$	—	$	0.8		$	—		$	0.8
Other current liabilities		35.5			26.1		16.2			—			77.8
Total current liabilities		35.5			26.1		17.0			—			78.6
Due to (from) affiliates		(119.0	)		75.3		43.7			—			—
Long-term debt, net of current portion		—			—		405.9			—			405.9
Other noncurrent liabilities		126.4			3.8		—			—			130.2
Total stockholder’s equity (deficit)		283.9			159.5		(9.5	)		(443.4	)		(9.5	)
Total liabilities and stockholder’s equity (deficit)	$	326.8		$	264.7	$	457.1		$	(443.4	)	$	605.2

(c)

“Other” includes corporate entities and eliminations.

~~CONDENSED~~10. ~~CONSOLIDATING~~Stock ~~BALANCE~~Options: ~~SHEETS~~In ~~(unaudited)~~connection ~~December~~with ~~31,~~SHC’s ~~2002~~$100.0 (million dividend payment on its common stock in ~~millions)~~May 2003, the number of SHC stock options and the exercise price were adjusted to preserve the intrinsic value of the stock options that existed prior to the dividend through decreasing the exercise price of outstanding options and increasing the number of outstanding options. The following is a summary of SHC’s stock option activity and related information for the nine-month period ended September 30, 2003 as adjusted for the transaction described above:

					Non-
		Number of options		Weighted- average exercise price
	Guarantors			guarantors		CMG			Eliminations			Consolidated
	Outstanding at December 31, 2002	501,480		$	7.20
Cash and cash equivalents	$	6.5		$	5.4	$	—		$	—		$	11.9
	Granted	2,598			25.74
Receivables, net		59.1			35.4		—			—			94.5
	Exercised	(54,785	)		6.97
Inventories		65.7			30.8		—			—			96.5
	Cancelled	(10,484	)		6.97
Other current assets		0.2			0.5		—			—			0.7
	Outstanding at September 30, 2003	438,809		$	7.35
Property, plant and equipment, net		216.5			196.7		—			—			413.2
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 (deficit)		230.4			145.0		(19.7	)		(375.4	)		(19.7	)
Total liabilities and stockholder’s equity (deficit)	$	355.6		$	271.5	$	392.3		$	(375.4	)	$	644.0

11. Other Comprehensive Income:

The following tables provide additional detail related to amounts recorded in Other Comprehensive Income during the nine month period ended September 30, 2003:

	Unfunded Pension Losses			Unrealized gains (losses) on cash flow hedges			Foreign currency Adjustments		Accumulated Other Comprehensive Income

Balance at December 31, 2002	$	(11.9	)	$	0.1		$	11.9	$	0.1
2003 changes		—			(0.2	)		11.1		10.9

Balance at September 30, 2003	$	(11.9	)	$	(0.1	)	$	23.0	$	11.0

For the nine months ended September 30, 2003:	Before tax Amount			Tax (expense) benefit		Net-of-tax Amount

Gas hedging adjustment	$	(0.3	)	$	0.1	$	(0.2	)
Foreign currency translation adjustment		11.1			—		11.1

Other comprehensive income	$	10.8		$	0.1	$	10.9

~~CONDENSED~~12. ~~CONSOLIDATING~~Guarantor/Non-guarantor ~~STATEMENTS~~Condensed OFConsolidating ~~OPERATIONS~~Statements The following condensed consolidating financial statements present the financial position, results of operations and cash flows of the Company, its domestic subsidiaries (~~unaudited~~guarantors) ~~For~~and ~~the~~its ~~Three~~foreign ~~Months~~subsidiaries ~~Ended~~(non-guarantors). ~~June~~CONDENSED CONSOLIDATING BALANCE SHEETS (unaudited)September 30, 2003 (in millions)

					Non-
	Guarantors			Non- guarantors			CMG			Eliminations			Consolidated
	Guarantors			guarantors			CMG			Eliminations			Consolidated
Cash and cash equivalents	$	2.2		$	1.4		$	—		$	—		$	3.6
Sales	$	53.5		$	35.2		$	—		$	—		$	88.7
Receivables, net		33.2			21.7			—			—			54.9
Cost of sales – shipping and handling		15.3			5.8			—			—			21.1
Inventories		69.6			31.1			—			—			100.7
Cost of sales – products		27.3			21.6			—			—			48.9
Other current assets		2.4			1.4			—			—			3.8
Gross profit		10.9			7.8			—			—			18.7
Property, plant and equipment, net		55.9			197.8			—			—			253.7
Selling, general and administrative expenses		6.3			5.2			—			—			11.5
Intangible assets - minerals rights and other, net		173.0			—			0.1			—			173.1
Operating income		4.6			2.6			—			—			7.2
Investment in subsidiaries		—			—			458.8			(458.8	)		—
Interest expense		0.2			2.0			7.3			—			9.5
Other		7.6			9.6			13.2			—			30.4
Other (income) expense		(0.2	)		2.3			1.1			—			3.2
Total assets	$	343.9		$	263.0		$	472.1		$	(458.8	)	$	620.2
(Earnings) in equity of subsidiary		—			—			(3.0	)		3.0			—
Current portion of long-term debt	$	—		$	—		$	0.8		$	—		$	0.8
Income (loss) before income taxes		4.6			(1.7	)		(5.4	)		(3.0	)		(5.5	)
Other current liabilities		46.3			28.0			5.5			—			79.8
Income tax expense (benefit)		0.1			(0.2	)		0.3			—			0.2
Total current liabilities		46.3			28.0			6.3			—			80.6
Net income (loss)	$	4.5		$	(1.5	)	$	(5.7	)	$	(3.0	)	$	(5.7	)
Due to (from) affiliates		(117.7	)		75.9			41.8			—			—
Long-term debt, net of current portion		—			—			423.2			—			423.2
Other noncurrent liabilities		111.7			3.9			(0.2	)		—			115.4
Total stockholder’s equity (deficit)		303.6			155.2			1.0			(458.8	)		1.0
Total liabilities and stockholder’s equity (deficit)	$	343.9		$	263.0		$	472.1		$	(458.8	)	$	620.2

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (unaudited) For the Three Months Ended June 30, 2002 (in millions)

					Non-
	Guarantors			guarantors			CMG			Eliminations			Consolidated
Sales	$	54.9		$	27.4		$	—		$	—		$	82.3
Cost of sales – shipping and handling		15.2			5.0			—			—			20.2
Cost of sales – products		29.8			15.9			—			—			45.7
Gross profit		9.9			6.5			—			—			16.4
Selling, general and administrative expenses		6.1			3.6			—			—			9.7
Restructuring and other charges		0.7			0.1			1.4			—			2.2
Operating income (loss)		3.1			2.8			(1.4	)		—			4.5
Interest expense		0.1			2.7			7.5			—			10.3
Other (income) expense		(0.4	)		(0.5	)		5.3			—			4.4
(Earnings) in equity of subsidiary		—			—			(0.5	)		0.5			—
Income (loss) before income taxes		3.4			0.6			(13.7	)		(0.5	)		(10.2	)
Income tax expense (benefit)		2.8			0.7			(6.4	)		—			(2.9	)
Net income (loss)	$	0.6		$	(0.1	)	$	(7.3	)	$	(0.5	)	$	(7.3	)

CONDENSED CONSOLIDATING ~~STATEMENTS~~BALANCE OFSHEETS ~~OPERATIONS~~ (unaudited)December ~~For the Six Months Ended June 30~~31, ~~2003~~ 2002(in millions)

					Non-
	Guarantors			Non- guarantors		CMG			Eliminations			Consolidated
	Guarantors			guarantors		CMG			Eliminations			Consolidated
Cash and cash equivalents	$	6.5		$	5.4	$	—		$	—		$	11.9
Sales	$	193.5		$	107.9	$	—		$	—		$	301.4
Receivables, net		59.1			35.4		—			—			94.5
Cost of sales – shipping and handling		61.7			23.5		—			—			85.2
Inventories		65.7			30.8		—			—			96.5
Cost of sales – products		87.3			57.1		—			—			144.4
Other current assets		0.2			0.5		—			—			0.7
Gross profit		44.5			27.3		—			—			71.8
Property, plant and equipment, net		66.7			196.7		—			—			263.4
Selling, general and administrative expenses		13.0			10.1		—			—			23.1
Intangible assets - minerals rights and other, net		149.8			—		—			—			149.8
Operating income (loss)		31.5			17.2		—			—			48.7
Investment in subsidiaries		—			—		375.4			(375.4	)		—
Interest expense		0.3			4.3		14.6			—			19.2
Other		7.6			2.7		16.9			—			27.2
Other (income) expense		(0.4	)		2.2		1.1			—			2.9
Total assets	$	355.6		$	271.5	$	392.3		$	(375.4	)	$	644.0
Equity earning in subsidiaries		—			—		(28.0	)		28.0			—
Current portion of long-term debt	$	—		$	0.1	$	1.1		$	—		$	1.2
Income (loss) before income taxes		31.6			10.7		12.3			(28.0	)		26.6
Other current liabilities		59.0			27.3		14.9			—			101.2
Income tax expense (benefit)		9.5			4.8		(8.9	)		—			5.4
Total current liabilities		59.0			27.4		16.0			—			102.4
Net income (loss)	$	22.1		$	5.9	$	21.2		$	(28.0	)	$	21.2
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 (deficit)		230.4			145.0		(19.7	)		(375.4	)		(19.7	)
Total liabilities and stockholder’s equity (deficit)	$	355.6		$	271.5	$	392.3		$	(375.4	)	$	644.0

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (unaudited) For the Six Months Ended June 30, 2002 (in millions)

					Non-
	Guarantors				guarantors		CMG				Eliminations		Consolidated
Sales	$	162.6		$	82.1		$	—		$	—		$	244.7
Cost of sales – shipping and handling		49.7			19.0			—			—			68.7
Cost of sales – products		76.3			43.7			—			—			120.0
Gross profit		36.6			19.4			—			—			56.0
Selling, general and administrative expenses		11.2			8.1			—			—			19.3
Restructuring and other charges		2.4			0.5			1.8			—			4.7
Operating income (loss)		23.0			10.8			(1.8	)		—			32.0
Interest expense		0.1			5.3			15.1			—			20.5
Other (income) expense		(0.4	)		(0.5	)		5.3			—			4.4
Equity earning in subsidiaries		—			—			(17.6	)		17.6			—
Income (loss) before income taxes		23.3			6.0			(4.6	)		(17.6	)		7.1
Income tax expense (benefit)		8.8			2.9			(9.0	)		—			2.7
Net income (loss)	$	14.5		$	3.1		$	4.4		$	(17.6	)	$	4.4

CONDENSED CONSOLIDATING STATEMENTS OF ~~CASH~~OPERATIONS ~~FLOWS~~ (unaudited) For the ~~Six~~Three Months Ended ~~June~~September 30, 2003 (in millions)

				Non-
	Guarantors			Non- guarantors			CMG			Eliminations			Consolidated
	Guarantors			guarantors			CMG			Eliminations			Consolidated
Sales	$	60.7		$	36.4		$	—		$	—		$	97.1
Net cash provided by operating activities	$	74.6		$	25.6		$	(17.2	)	$	—		$	83.0
Cost of sales - shipping and handling		17.8			6.3			—			—			24.1
Cash flows from investing activities:
Cost of sales - products		32.1			23.0			—			—			55.1
Capital expenditures		(2.8	)		(2.6	)		—			—			(5.4	)
Gross profit		10.8			7.1			—			—			17.9
Acquisition of intangible assets		(21.0	)		—			—			—			(21.0	)
Selling, general and administrative expenses		6.3			4.9			—			—			11.2
Net cash used in investing activities		(23.8	)		(2.6	)		—			—			(26.4	)
Operating income		4.5			2.2			—			—			6.7
Cash flows from financing activities:
Interest expense		0.1			2.5			7.4			—			10.0
Dividends paid		—			—			(21.7	)		—			(21.7	)
Other (income) expense		(0.7	)		1.4			0.9			—			1.6
Principal payments on other long-term
(Earnings) in equity of subsidiary		—			—			(2.6	)		2.6			—
debt, including capital leases		—			—			(30.7	)		—			(30.7	)
Income (loss) before income taxes		5.1			(1.7	)		(5.7	)		(2.6	)		(4.9	)
Payments (to) from Affiliates, net		(52.7	)		(19.2	)		71.9			—			—
Income tax expense (benefit)		1.0			(0.2	)		(1.9	)		—			(1.1	)
Other		—			—			(3.8	)		—			(3.8	)
Net income (loss)	$	4.1		$	(1.5	)	$	(3.8	)	$	(2.6	)	$	(3.8	)
Net cash provided by (used in)
financing activities		(52.7	)		(19.2	)		15.7			—			(56.2	)
Effect of exchange rate changes on cash and cash
equivalents		—			(0.1	)		1.5			—			1.4
Net increase (decrease) in cash and cash
Equivalents		(1.9	)		3.7			—			—			1.8
Cash and cash equivalents, beginning of period		6.5			5.4			—			—			11.9
Cash and cash equivalents, end of period	$	4.6		$	9.1		$	—		$	—		$	13.7

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (unaudited)
For the Three Months Ended September 30, 2002 (in millions)

	Guarantors			Non- guarantors			CMG			Eliminations			Consolidated


Sales	$	60.3		$	31.9		$	—		$	—		$	92.2
Cost of sales - shipping and handling		16.3			6.2			—			—			22.5
Cost of sales - products		33.0			20.3			—			—			53.3

Gross profit		11.0			5.4			—			—			16.4
Selling, general and administrative expenses		6.3			4.5			—			—			10.8
Restructuring and other charges		2.5			0.1			(0.5	)		—			2.1

Operating income (loss)		2.2			0.8			0.5			—			3.5
Interest expense		0.1			2.9			7.5			—			10.5
Other (income) expense		(0.1	)		(0.2	)		—			—			(0.3	)
(Earnings) in equity of subsidiary		—			—			(0.1	)		0.1			—

Income (loss) before income taxes		2.2			(1.9	)		(6.9	)		(0.1	)		(6.7	)
Income tax expense (benefit)		0.6			(0.4	)		(3.4	)		—			(3.2	)

Net income (loss)	$	1.6		$	(1.5	)	$	(3.5	)	$	(0.1	)	$	(3.5	)

CONDENSED CONSOLIDATING STATEMENTS OF ~~CASH~~OPERATIONS ~~FLOWS~~ (unaudited) For the ~~Six~~Nine Months Ended ~~June~~September 30, ~~2002~~2003 (in millions)

				Non-
	Guarantors			Non- guarantors			CMG			Eliminations			Consolidated
	Guarantors			guarantors			CMG			Eliminations			Consolidated
Sales	$	254.2		$	144.3		$	—		$	—		$	398.5
Net cash provided by operating activities	$	56.7		$	18.4		$	(5.0	)	$	—		$	70.1
Cost of sales - shipping and handling		79.5			29.8			—			—			109.3
Cash flows from investing activities:
Cost of sales - products		119.4			80.1			—			—			199.5
Capital expenditures		(3.5	)		(3.0	)		—			—			(6.5	)
Gross profit		55.3			34.4			—			—			89.7
Other		0.1			—			—			—			0.1
Selling, general and administrative expenses		19.3			15.0			—			—			34.3
Net cash used in investing activities		(3.4	)		(3.0	)		—			—			(6.4	)
Operating income		36.0			19.4			—			—			55.4
Cash flows from financing activities:
Interest expense		0.4			6.8			22.0			—			29.2
Revolver activity		—			(10.8	)		(29.0	)		—			(39.8	)
Other (income) expense		(1.1	)		3.6			2.0			—			4.5
Issuance of long-term debt		—			—			78.4			—			78.4
(Earnings) in equity of subsidiary		—			—			(30.6	)		30.6			—
Principal payments on other long-term
Income (loss) before income taxes		36.7			9.0			6.6			(30.6	)		21.7
debt, including capital leases		—			(0.1	)		(95.0	)		—			(95.1	)
Income tax expense (benefit)		10.5			4.6			(10.8	)		—			4.3
Payments (to) from Affiliates, net		(48.6	)		(1.6	)		50.2			—			—
Net income (loss)	$	26.2		$	4.4		$	17.4		$	(30.6	)	$	17.4
Deferred financing costs		—			—			(3.4	)		—			(3.4	)
Other		—			—			1.0			—			1.0
Net cash provided by (used in)
financing activities		(48.6	)		(12.5	)		2.2			—			(58.9	)
Effect of exchange rate changes on cash and cash
equivalents		—			(2.1	)		2.8			—			0.7
Net increase in cash and cash
Equivalents		4.7			0.8			—			—			5.5
Cash and cash equivalents, beginning of period		8.2			7.7			—			—			15.9
Cash and cash equivalents, end of period	$	12.9		$	8.5		$	—		$	—		$	21.4

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (unaudited)
For the Nine Months Ended September 30, 2002 (in millions)

	Guarantors			Non- guarantors			CMG			Eliminations			Consolidated


Sales	$	222.9		$	114.0		$	—		$	—		$	336.9
Cost of sales - shipping and handling		66.0			25.2			—			—			91.2
Cost of sales - products		109.3			64.0			—			—			173.3

Gross profit		47.6			24.8			—			—			72.4
Selling, general and administrative expenses		17.5			12.6			—			—			30.1
Restructuring and other charges		4.9			0.6			1.3			—			6.8

Operating income		25.2			11.6			(1.3	)		—			35.5
Interest expense		0.2			8.2			22.6			—			31.0
Other (income) expense		(0.5	)		(0.7	)		5.3			—			4.1
(Earnings) in equity of subsidiary		—			—			(17.7	)		17.7			—

Income (loss) before income taxes		25.5			4.1			(11.5	)		(17.7	)		0.4
Income tax expense (benefit)		9.4			2.5			(12.4	)		—			(0.5	)

Net income (loss)	$	16.1		$	1.6		$	0.9		$	(17.7	)	$	0.9

~~Item~~CONDENSED 2.CONSOLIDATING ~~MANAGEMENT’S~~STATEMENTS ~~DISCUSSION~~OF ~~AND~~CASH ~~ANALYSIS~~FLOWS OF(unaudited)For ~~FINANCIAL~~the ~~CONDITION~~Nine ~~AND~~Months ~~RESULTS~~Ended OFSeptember ~~OPERATIONS~~30, 2003(in millions)

All statements, other than statements of historical fact contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking 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. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following: general business and economic conditions; governmental policies affecting the agricultural industry or highway maintenance programs in localities where the Company or its customers operate; weather conditions; the impact of competitive products; pressure on prices realized by the Company for its products; constraints on supplies of raw materials used in manufacturing certain of the Company’s products; capacity constraints limiting the production of certain products; difficulties or delays in the development, production, testing and marketing of products; difficulties or delays in receiving required governmental and regulatory approvals; market acceptance issues, including the failure of products to generate anticipated sales levels; difficulties in integrating acquired businesses and in realizing related cost savings and other benefits; the effects of and changes in trade, monetary, environmental and fiscal policies, laws and regulations; foreign exchange rates and fluctuations in those rates; the costs and effects of legal proceedings including environmental and administrative proceedings involving the Company; and other risk factors reported from time to time in the Company’s Securities and Exchange Commission reports. 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. 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 hereof or to reflect the occurrence of unanticipated events. 17

	Guarantors			Non- guarantors			CMG			Eliminations		Consolidated


Net cash provided (used in) by operating activities	$	68.3		$	15.3		$	(32.1	)	$	—	$	51.5

Cash flows from investing activities:
Capital expenditures		(5.3	)		(4.4	)		—			—		(9.7	)
Acquisition of intangible assets		(21.1	)		—			—			—		(21.1	)
Other		—			(0.2	)							(0.2	)


Net cash used in investing activities		(26.4	)		(4.6	)		—			—		(31.0	)

Cash flows from financing activities:
Dividends paid		—			—			(21.7	)		—		(21.7	)
Revolver		—			—			17.5			—		17.5
Principal payments on other long-term
debt, including capital leases		—			—			(30.9	)		—		(30.9	)
Payments (to) from Affiliates, net		(46.2	)		(22.9	)		69.1			—		—
Capital contribution from SHC		—			8.8			—					8.8
Other		—			—			(3.9	)		—		(3.9	)

Net cash provided by (used in)
financing activities		(46.2	)		(14.1	)		30.1			—		(30.2	)
Effect of exchange rate changes on cash and cash equivalents		—			(0.6	)		2.0			—		1.4

Net increase (decrease) in cash and cash
equivalents		(4.3	)		(4.0	)		—			—		(8.3	)
Cash and cash equivalents, beginning of period		6.5			5.4			—			—		11.9

Cash and cash equivalents, end of period	$	2.2		$	1.4		$	—		$	—	$	3.6

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (unaudited)
For the Nine Months Ended September 30, 2002
(in millions)

	Guarantors			Non- guarantors			CMG			Eliminations		Consolidated


Net cash provided by (used in) operating activities	$	63.7		$	14.9		$	(20.8	)	$	—	$	57.8

Cash flows from investing activities:
Capital expenditures		(6.3	)		(5.8	)		—			—		(12.1	)
Other		0.4			(0.1	)		—			—		0.3


Net cash used in investing activities		(5.9	)		(5.9	)		—			—		(11.8	)

Cash flows from financing activities:
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	)		(105.3	)		—		(105.5	)
Payments (to) from Affiliates, net		(60.7	)		0.5			60.2			—		—
Deferred financing costs		—			—			(3.4	)		—		(3.4	)
Capital contribution from SHC		—			—			12.8			—		12.8
Other		—			—			1.0			—		1.0


Net cash provided by (used in)
financing activities		(60.8	)		(10.4	)		14.7			—		(56.5	)
Effect of exchange rate changes on cash and cash
equivalents		—			(4.0	)		6.1			—		2.1

Net increase (decrease) in cash and cash
equivalents		(3.0	)		(5.4	)		—			—		(8.4	)
Cash and cash equivalents, beginning of period		8.2			7.7			—			—		15.9

Cash and cash equivalents, end of period	$	5.2		$	2.3		$	—		$	—	$	7.5

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

All statements, other than statements of historical fact contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking 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. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following: general business and economic conditions; governmental policies affecting the agricultural industry or highway maintenance programs in localities where the Company or its customers operate; weather conditions; the impact of competitive products; pressure on prices realized by the Company for its products; constraints on supplies of raw materials used in manufacturing certain of the Company’s products; capacity constraints limiting the production of certain products; difficulties or delays in the development, production, testing and marketing of products; difficulties or delays in receiving required governmental and regulatory approvals; market acceptance issues, including the failure of products to generate anticipated sales levels; difficulties in integrating acquired businesses and in realizing related cost savings and other benefits; the effects of and changes in trade, monetary, environmental and fiscal policies, laws and regulations; foreign exchange rates and fluctuations in those rates; the costs and effects of legal proceedings including environmental and administrative proceedings involving the Company; and other risk factors reported from time to time in the Company’s Securities and Exchange Commission reports.

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.

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 hereof or to reflect the occurrence of unanticipated events.

Results of Operations

The consolidated financial statements have been prepared to present the historical financial condition and results of operations and cash flows for the Company. The following tables and discussion should be read in conjunction with the information contained in our consolidated financial statements and the notes thereto included elsewhere in this quarterly report.

			Three Months Ended June 30,						Six Months Ended June 30,
		Three Months Ended September 30,						Nine Months Ended September 30,
		2003		~~2003~~	2002		~~2002~~	2003		~~2003~~	2002		~~2002~~
				(in millions)						(in millions)
		(dollars in millions, except per ton data)
~~Sales~~	Sales	$	$97.1	~~88.7~~	$	$92.2	~~82.3~~	$	$398.5	~~301.4~~	$	$336.9	~~244.7~~
Cost of sales – shipping and handling				21.1			20.2			85.2			68.7
	Cost of sales - shipping and handling		24.1			22.5			109.3			91.2
Cost of sales – products				48.9			45.7			144.4			120.0
	Cost of sales - products		55.1			53.3			199.5			173.3
~~Gross profit~~	Gross profit		17.9	~~18.7~~		16.4	~~16.4~~		89.7	~~71.8~~		72.4	~~56.0~~
~~Selling, general and administrative expenses~~	Selling, general and administrative expenses		11.2	~~11.5~~		10.8	~~9.7~~		34.3	~~23.1~~		30.1	~~19.3~~
~~Restructuring and other charges~~	Restructuring and other charges		—	—		2.1	~~2.2~~		—	—		6.8	~~4.7~~
~~Operating income~~	Operating income		6.7	~~7.2~~		3.5	~~4.5~~		55.4	~~48.7~~		35.5	~~32.0~~
~~Interest expense~~	Interest expense		10.0	~~9.5~~		10.5	~~10.3~~		29.2	~~19.2~~		31.0	~~20.5~~
~~Other expense / (income)~~	Other expense / (income)		1.6	~~3.2~~		(0.3	~~4.4~~)		4.5	~~2.9~~		4.1	~~4.4~~
~~Income / (loss) before income taxes~~	Income / (loss) before income taxes		(4.9	~~(5.5~~)	)	(6.7	~~(10.2~~)	)	21.7	~~26.6~~		0.4	~~7.1~~
~~Income tax expense / (benefit)~~	Income tax expense / (benefit)		(1.1	~~0.2~~)		(3.2	~~(2.9~~)	)	4.3	~~5.4~~		(0.5	~~2.7~~)
~~Net income / (loss)~~	Net income / (loss)	$	$(3.8	~~(5.7~~)	)$	$(3.5	~~(7.3~~)	)$	$17.4	~~21.2~~	$	$0.9	~~4.4~~
~~Sales by Segment:~~	Sales by Segment:
~~Salt~~	Salt	$	$85.0	~~74.4~~	$	$79.9	~~70.2~~	$	$359.8	~~274.8~~	$	$299.5	~~219.6~~
~~Specialty potash fertilizers~~	Specialty potash fertilizers		12.1	~~14.3~~		12.3	~~12.1~~		38.7	~~26.6~~		37.4	~~25.1~~
~~Total~~	Total	$	$97.1	~~88.7~~	$	$92.2	~~82.3~~	$	$398.5	~~301.4~~	$	$336.9	~~244.7~~
	Sales Volumes (in thousands of tons):
	Highway deicing		1,068			1,119			6,355			5,266
	General trade		677			671			2,042			1,926
	Specialty potash		59			67			183			181
	Average Sales Price (per ton):
	Highway deicing	$	25.31		$	23.31		$	28.77		$	27.45
	General trade		85.42			80.24			86.64			80.48
	Specialty potash		206.34			183.31			211.84			206.28

~~The~~Three ~~table~~Months ~~below~~Ended ~~shows~~September ~~shipments~~30, 2003 Compared to Three Months Ended September 30, 2002 Sales Sales for the third quarter of 2003 of $97.1 million increased $4.9 million, or 5% compared to $92.2 million for the third quarter of 2002. Sales include revenues from the sale of our products, ~~(thousands~~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 $24.1 million during the third quarter of 2003, an increase of $1.6 million compared to the third quarter of 2002 shipping and handling fees of $22.5 million. The increase in shipping and handling related fees for the third quarter of 2003 is primarily due to more tons): of North American general trade salt sold as compared to 2002. Product Sales for the third quarter of 2003 of $73.0 million increased $3.3 million, or 5% compared to $69.7 million for the same period in 2002. Salt Product Sales for the third quarter of 2003 of $63.0 million increased $3.6 million, or 6% compared to $59.4 million for the same period in 2002. This increase was primarily due to improved pricing in both our North American deicing product line and North American general trade product line of approximately $2.6 million. Also contributing to the increase was an approximate 33,000 ton increase in sales volumes in our North American general trade product line. This increase in sales volume impacted sales by approximately $1.6 million but was almost entirely offset by lower sales volumes of approximately 42,000 tons and 25,000 tons in our North American deicing product line and our United Kingdom general trade product line, respectively. SOP Product Sales for the third quarter of 2003 of $10.0 million remained relatively consistent as compared to the third quarter of 2002 on approximately 8,000 fewer sales tons. 20

	Three Months Ended June 30,			Six Months Ended June 30,
		2003	2002		2003	2002
Highway deicing salt		909	859		5,287	4,147
General trade salt		632	621		1,364	1,255
Specialty potash		66	53		124	114

Gross Profit

Gross profit for the third quarter of 2003 of $17.9 million increased $1.5 million, or 9% compared to $16.4 million for the same period in 2002. The increase in gross profit primarily reflects the impact of improved customer mix and pricing as described above. Higher natural gas costs and accelerated depreciation expense related to certain obsolete mining equipment reduced gross profit by approximately $2.6 million.

Selling, General and Administrative Expenses

Selling, general and administrative expenses of $11.2 million for the third quarter of 2003 increased $0.4 million, or 4% compared to $10.8 million for the same period in 2002. The increase primarily reflects additional compensation and benefit costs and higher spending on discretionary promotional and marketing costs.

Restructuring and Other Charges

Restructuring and other charges are transition costs that are non-recurring in nature and relate to charges required to establish us as an independent entity. We incurred $2.1 million of restructuring costs in the third quarter of 2002 consisting primarily of costs to develop stand-alone tax 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 third quarter of 2003 of $10.0 million decreased $0.5 million compared to $10.5 million for the same period in 2002. This decrease is primarily the result of lower outstanding debt balances during 2003.

Other Expense / (Income)

Other expense for the third quarter of 2003 of $1.6 million increased $1.9 million compared to other income of $0.3 million for the same period in 2002. We recorded non-cash foreign exchange losses and (gains) of $1.4 million and $(0.1) million for the third quarter of 2003 and 2002, respectively.

Income Tax Expense / (Benefit)

Our income tax benefit for third quarter of 2003 of $1.1 million decreased $2.1 million compared to an income tax benefit of $3.2 million for the same period in 2002. 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, non-deductible transaction costs incurred in 2002 and foreign mining taxes.

~~Three~~We have approximately $98.6 million of NOLs at September 30, 2003 that expire between 2009 and 2020. All NOLs are U.S. based. Nine Months Ended ~~June~~September 30, 2003 Compared to ~~Three~~Nine Months Ended ~~June~~September 30, 2002 Sales Sales for the ~~second~~nine ~~quarter~~months ofended September 30, 2003 of $88398.75 million increased $661.46 million, or 818% compared to $82336.39 million for the ~~second~~nine ~~quarter~~months ended September 30, 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 $21109.13 million during the ~~second~~nine ~~quarter~~months ofended September 30, 2003, an increase of $018.91 million compared to the ~~second~~nine ~~quarter~~months ofended September 30, 2002 shipping and handling fees of $2091.2 million. The increase in shipping and handling related fees for the ~~second~~nine ~~quarter~~months ofended September 30, 2003 is primarily due to more tons of ~~products~~North American deicing salt and North American general trade salt sold as compared to 2002. Product Sales for the ~~second~~nine ~~quarter~~months ofended September 30, 2003 of $67289.62 million increased $543.5 million, or 918% compared to $62245.17 million for the ~~second~~same ~~quarter~~period ofin 2002. Salt Product Sales for the ~~second~~nine ~~quarter~~months ofended September 30, 2003 of $55256.59 million increased $343.93 million, or 820% compared to $51213.6 million for the ~~second~~same ~~quarter~~period ofin 2002. This increase was ~~partially~~primarily due to a 771,073,000 ton increase in sales volumes in our North American ~~highway~~ deicing product line, ~~partially~~combined ~~offset~~ with a 27145,000 ton ~~decrease~~increase in sales volumes in our ~~U.K.~~North ~~highway~~American ~~deicing~~general trade product line. These increases in sales volumes impacted sales by approximately $22.1 million and $9.0 million, respectively. Also contributing to the increase was improved pricing in both our North American ~~highway~~ deicing product line and general trade product ~~lines~~line of approximately $7.7. SOP Product Sales for the ~~second~~nine ~~quarter~~months ended September 30, 2003 of $32.3 million remained relatively consistent as compared to the same period in 2002. Gross Profit Gross profit for the nine months ended September 30, 2003 of $1289.17 million increased $117.63 million, or 1524% compared to $1072.54 million for the ~~second~~same ~~quarter~~period ofin 2002. The increase ~~was~~in ~~almost~~gross ~~entirely~~profit ~~due~~primarily toreflects athe ~~13,000~~impact ~~ton~~of ~~increase~~improved inhighway and consumer deicing sales volumes and improved pricing as described above. Selling, General and Administrative Expenses Selling, general and administrative expenses of $34.3 million for the nine months ended September 30, 2003 increased $4.2 million, or 14% compared to $30.1 million for the ~~second~~same ~~quarter~~period in 2002. The increase primarily reflects additional compensation and benefit costs and higher spending on discretionary promotional and marketing costs. Restructuring and Other Charges Restructuring and other charges are transition costs that are non-recurring in nature and relate to charges required to establish us as an independent entity. We incurred $6.8 million of restructuring costs in the nine months ended September 30, 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. 18No such costs were incurred in 2003. 22

~~Gross~~Interest ~~Profit~~Expense ~~Gross~~Interest ~~profit~~expense for the ~~second~~nine ~~quarter~~months ofended September 30, 2003 of $1829.72 million ~~increased~~decreased $21.38 million, ~~or 14%~~ compared to $1631.40 million for the ~~second~~same ~~quarter~~period ofin 2002. ~~The~~This ~~increase~~decrease inis ~~gross profit~~ primarily ~~reflects~~ the ~~impact~~result of ~~improved~~lower ~~highway~~outstanding ~~deicing~~debt ~~and~~balances ~~SOP~~during ~~sales volumes and improved pricing partially offset by higher production costs primarily attributable to $0~~2003.8 ~~million~~Other ofExpense ~~higher~~Other ~~natural~~expense ~~gas~~for ~~costs.~~the ~~Selling,~~nine ~~General~~months ~~and~~ended ~~Administrative~~September ~~Expenses Selling~~30, ~~general~~2003 ~~and administrative expenses~~ of $114.5 million ~~for the second quarter of 2003~~ increased $10.84 million, ~~or 19%~~ compared to $94.71 million for the ~~second~~same ~~quarter~~period ofin 2002. ~~The~~In ~~increase~~April ~~primarily~~2002, ~~reflects~~we ~~additional~~recorded ~~compensation~~a ~~and benefit costs and higher spending on discretionary promotional and marketing costs~~$5.3 ~~Restructuring~~million ~~and~~charge ~~Other~~related ~~Charges~~to ~~Restructuring~~the ~~and~~write-off ~~other~~of ~~charges~~the ~~are~~deferred ~~transition~~financing costs ~~that~~associated ~~are~~with ~~non-recurring~~the inrefinancing ~~nature~~of ~~and~~our ~~relate~~original toterm ~~charges~~loan. ~~required~~In tothe ~~establish~~second usquarter asof an2003, ~~independent~~we ~~entity.~~recorded ~~We incurred~~ $21.21 million of ~~restructuring~~ costs inrelated ~~the second quarter of 2002 consisting primarily of costs~~ to ~~develop~~amending ~~stand-alone~~our ~~tax~~senior ~~and~~credit ~~inventory management strategies~~facilities. NoWe ~~such~~also ~~costs~~recorded ~~were~~non-cash ~~incurred~~foreign inexchange ~~2003.~~losses ~~Interest~~and ~~Expense~~(gains) ~~Interest expense for the second quarter~~ of ~~2003 of~~ $93.53 million ~~decreased~~and $0(1.80) million ~~compared to $10.3 million~~ for the ~~second~~nine ~~quarter~~months ofended ~~2002.~~September ~~This~~30, ~~decrease~~2003 isand ~~primarily~~2002, ~~the result of lower outstanding debt balances during 2003~~respectively. Income Tax Expense / (Benefit) Income tax expense for ~~second~~nine ~~quarter~~months ofended September 30, 2003 of $04.23 million increased $34.18 million compared to ~~a $2.9 million~~ income tax benefit of $0.5 million for the ~~second~~same ~~quarter~~period ofin 2002. A ~~lesser~~greater portion of pre-tax income was generated in the U.S. in 2003 than in 2002 causing an increase in ~~the effective~~ income tax ~~rate~~ due to ~~lower~~ utilization of previously reserved net operating loss carryforwards (“NOLs”) that would offset U.S. taxable income. 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, non-deductible transaction costs incurred in 2002 and foreign mining taxes. Liquidity and Capital Resources Historically, we have used cash generated from operations to meet our working capital needs and to fund capital expenditures. 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 ~~approximately~~incurred substantial indebtedness in connection with the Recapitalization. As of September 30, 2003, we had $95421.70 million of ~~NOLs~~principal atindebtedness, ~~June~~net of issuance premium, primarily consisting of $325.0 million of Senior Subordinated Notes and a $78.5 million term loan (“Term Loan”) under our Senior Credit Facility. The Senior Credit Facility provides for a Revolving Credit Facility in an aggregate amount of up to $135.0 million. As of September 30, 2003, ~~that~~we ~~expire~~also ~~between~~had ~~2009~~$17.5 million of borrowings outstanding under the Revolving Credit Facility and ~~2020~~the Company maintained $3.6 19million in cash on hand as of September 30, 2003. 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 September 30, 2003, approximately $108.5 million was available under the Revolving Credit Facility. As of September 30, 2003, our parent corporation, SHC, also had $73.3 million and $104.3 million of SHC Discount Notes and SHC Subordinated Discount Notes outstanding, respectively. The discount notes are not part of our consolidated financial statements. These notes have no cash interest obligations until December 15, 2007 and June 1, 2008, respectively. Our operations are currently the main source of cash that is expected to service this debt. 23

~~Six~~On ~~Months~~May ~~Ended June 30~~5, 2003, ~~Compared~~we toamended ~~Six~~our ~~Months~~Senior ~~Ended~~Credit ~~June~~Facility ~~30,~~to ~~2002~~allow ~~Sales~~SHC ~~Sales~~to ~~for~~pay ~~2003~~a ofdividend ~~$301.4~~to ~~million~~be ~~increased~~funded ~~$56.7~~with ~~million,~~either orcash ~~23%~~on ~~compared~~hand toor ~~$244.7~~with ~~million~~borrowings ~~for~~under ~~2002.~~the ~~Sales~~amended ~~include~~and ~~revenues~~restated ~~from~~Revolving ~~Product~~Credit ~~Sales~~Facility. asAdditionally, ~~well~~the asamendment ~~pass-through~~permits ~~shipping~~SHC ~~and~~to ~~handling~~repurchase ~~fees~~certain ~~charged~~securities toissued ~~customers~~by toSHC ~~reimburse~~(other usthan ~~for~~the ~~shipping~~SHC Discount Notes and ~~handling~~SHC ~~costs~~Subordinated ~~incurred~~Discount inNotes) ~~delivering~~not ~~salt~~held ~~and~~by ~~SOP~~Apollo ~~product~~or tomanagement. During the ~~customer.~~nine ~~Such~~months ~~shipping~~ended ~~and~~September ~~handling~~30, ~~fees~~2003, cash flows from operations were $8551.25 million. ~~during~~We ~~2003,~~used ana ~~increase~~portion of those cash flows to make a $1630.50 million ~~compared~~voluntary toprincipal ~~2002~~payment ~~shipping~~on ~~and~~our ~~handling~~Term ~~fees~~Loan, ofto pay a $6821.7 million. ~~The~~dividend ~~increase~~to inSHC ~~shipping~~ and ~~handling~~to ~~related~~purchase ~~fees~~certain ~~for~~intangible ~~2003~~assets isrelated ~~primarily~~to ~~due~~IMC’s toSOP ~~more~~business. ~~tons~~Our ofsignificant ~~North~~debt ~~American~~service ~~highway~~obligations ~~and~~following ~~consumer~~the ~~deicing~~Recapitalization ~~salt~~could, ~~sold~~under ascertain ~~compared~~circumstances, tomaterially ~~2002.~~affect ~~Product~~our ~~Sales~~financial ~~for~~condition ~~2003~~and ofprevent ~~$216.2~~us ~~million~~from ~~increased~~fulfilling ~~$40.2~~our ~~million,~~obligations orunder ~~23%~~the ~~compared~~Senior toSubordinated ~~$176.0~~Notes, ~~million~~Senior ~~for~~Credit ~~2002.~~Facility, ~~Salt~~SHC ~~Product~~Discount ~~Sales~~Notes ~~for~~and ~~2003~~SHC ofSubordinated ~~$193~~Discount Notes.9 ~~million~~As ~~increased~~of ~~$39.7~~September ~~million~~30, or2003, ~~26%~~we ~~compared~~are toin ~~$154.2~~compliance ~~million~~with ~~for~~all ~~2002.~~conditions ~~This~~and ~~increase~~covenants ~~was~~related ~~primarily~~to ~~due~~the toSenior aSubordinated 1Notes,~~140~~ Senior Credit Facility,~~000~~ ~~ton~~SHC ~~increase~~Discount inNotes ~~sales~~and ~~volumes~~SHC inSubordinated ~~our~~Discount ~~North~~Notes. ~~American~~For ~~highway~~the ~~deicing~~Nine ~~combined~~Months ~~with~~Ended aSeptember ~~109~~30,~~000~~ ~~ton~~2003 ~~increase~~and in2002 ~~sales~~Net ~~volumes~~cash inflows ~~our~~generated ~~North~~by ~~American~~operating ~~general~~activities ~~trade~~for ~~product~~the ~~line.~~nine ~~Also~~months ~~contributing~~ended toSeptember ~~the~~30, ~~increase~~2003 ~~was~~and ~~improved~~2002 ~~pricing~~were in$51.5 ~~both~~million ~~our~~and ~~North~~$57.8 ~~American~~million, ~~highway~~respectively. ~~deicing~~Of ~~and~~these ~~general~~amounts, ~~trade~~$8.7 ~~product~~million ~~lines~~and $21.4 ~~SOP~~million ~~Product~~for ~~Sales~~2003 ~~for~~and ~~the~~2002, ~~2003~~respectively, ofwere ~~$22~~generated by working capital reductions.3 ~~million~~The ~~remained~~primary ~~relatively~~working ~~consistent~~capital asreductions ~~compared~~for to2003 and 2002 were decreases in receivables of $42.0 ~~Gross~~million ~~Profit~~and ~~Gross~~$39.7 ~~profit~~million, ~~for~~respectively, ~~2003~~decreases in inventories of $711.83 million ~~increased~~and $151.86 million, orrespectively, ~~28%~~and ~~compared~~decreases toin accounts payable and accrued expenses of $5632.0 million ~~for~~and ~~2002~~$16.7 ~~The~~million, ~~increase~~respectively. inThe ~~gross~~reductions ~~profit~~are ~~primarily~~indicative ~~reflects~~of the ~~impact~~seasonal nature of ~~improved~~ highway ~~and~~deicing ~~consumer~~product ~~deicing~~line sales ~~volumes~~with differences primarily related to more normal winter weather in the ~~March~~2002 ~~quarter~~- as2003 ~~discussed~~winter ~~above~~than in the mild 2001 - 2002 winter. ~~Selling,~~Net ~~General~~cash ~~and~~flows ~~Administrative~~used ~~Expenses~~by ~~Selling~~investing activities for the nine months ended September 30, ~~general~~2003 and ~~administrative~~2002, ~~expenses~~were of $2331.10 million ~~for~~and ~~2003 increased~~ $311.8 million, orrespectively. ~~20%~~These ~~compared~~cash flows consisted of capital expenditures primarily to maintain our facilities of $199.37 million ~~for~~and ~~2002~~$12.1 ~~The~~million ~~increase~~in ~~primarily~~2003 ~~reflects additional compensation~~ and ~~benefit~~2002, ~~costs~~respectively, and ~~higher~~$21.1 ~~spending~~million onin ~~discretionary~~2003 ~~promotional~~related ~~and~~to ~~marketing~~our ~~costs.~~purchase ~~Restructuring~~of ~~and~~certain ~~Other~~intangible ~~Charges~~assets ~~Restructuring~~related ~~and~~to ~~other~~IMC’s ~~charges~~SOP ~~are~~business. ~~transition~~Net ~~costs~~cash ~~that~~flow ~~are~~used ~~non-recurring~~by infinancing ~~nature~~activities ~~and~~was ~~relate~~$30.2 tomillion ~~charges~~for ~~required~~the tonine ~~establish~~months usended asSeptember an30, ~~independent~~2003, ~~entity.~~primarily Wedue ~~incurred~~to $421.7 million of ~~restructuring~~dividends ~~costs~~paid into ~~2002~~SHC ~~that~~and ~~consisted~~the ~~primarily~~$30.0 ofmillion ~~compensation~~voluntary ~~costs~~principal ~~and~~repayment ~~costs~~that toreduced ~~develop~~the ~~stand~~amount of long-~~alone~~term ~~tax~~debt ~~and~~outstanding ~~inventory~~under ~~strategies~~the Term Loan. NoThese ~~such~~cash ~~costs~~uses were ~~incurred~~partially inoffset ~~2003~~by $17.5 ~~Interest~~million ~~Expense~~of ~~Interest~~borrowings ~~expense~~under ~~for~~the ~~2003~~Revolving Credit Facility and receipt of a $198.28 million ~~decreased~~capital ~~$1.3~~contribution ~~million~~from ~~compared~~SHC to pay income taxes for periods prior to the Recapitalization indemnified by IMC. Net cash flows used by financing activities were $2056.5 million for ~~2002.~~the ~~This~~nine ~~decrease~~months isending September 30, 2002, primarily due to the ~~result~~$39.8 million repayment of ~~lower~~our ~~outstanding~~revolver ~~debt~~borrowings ~~balances~~combined ~~during~~with ~~2003~~a $30.0 ~~Income~~million ~~Tax~~voluntary ~~Expense~~principal ~~Income~~repayment ~~tax~~that ~~expense~~reduced ~~for~~the ~~2003~~amount of $5long-term debt outstanding under the Term Loan.4 ~~million~~These ~~increased~~cash uses were partially offset by approximately $213.70 million ~~compared~~of tocapital $2contribution from SHC.7 ~~million~~Additionally, ~~for~~on April 10, 2002, we completed an offering of $75.0 Amillion ~~greater~~aggregate ~~portion~~principal amount of ~~pre-tax~~10% ~~income~~Senior ~~was~~Subordinated ~~generated~~Notes indue 2011 (the U“New Notes”).S. inThe ~~2003~~New ~~than~~Notes inwere ~~2002~~issued ~~causing~~to bondholders at a ~~decrease~~premium inof ~~the~~$3.4 ~~effective~~million, ~~income~~plus ~~tax~~accrued ~~rate~~interest ~~due~~from toFebruary ~~utilization~~15, of2002 ~~previously~~and ~~reserved~~accordingly, ~~NOL’s~~we ~~offsetting~~received ~~U.S.~~gross ~~taxable~~proceeds ~~income~~of $79.5 ~~Our~~million ~~income~~from ~~tax~~the ~~provision~~offering ~~differs~~of the notes. The proceeds from the ~~U.S.~~offering ~~statutory~~of ~~federal~~the ~~income~~New ~~tax~~Notes, ~~rate~~net ~~primarily~~of ~~due~~transaction costs, were used to ~~U.S.~~repay ~~statutory~~borrowings ~~depletion,~~under ~~state~~the ~~income~~Revolving ~~taxes~~Credit ~~(net~~Facility. ofIn ~~federal~~connection ~~tax~~with ~~benefit)~~this transaction, ~~foreign~~we ~~income~~recorded ~~tax~~a ~~rate~~charge ~~differentials,~~to ~~changes~~Other (income) expense in the ~~expected~~accompanying ~~utilization~~Consolidated Statement of ~~previously~~Operations ~~reserved~~of ~~NOLs,~~approximately $5.3 million which was reflected as a non-~~deductible~~cash ~~transaction~~add-back ~~costs~~to ~~incurred~~Net incash ~~2002~~provided ~~and~~by ~~foreign~~operating ~~mining taxes~~activities. 2024

~~Liquidity~~Contractual ~~and~~Obligations ~~Capital Resources Historically, we have used cash generated from operations to meet our working capital needs~~ and toCommitments fund capital expenditures. 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 June 30, 2003, we had $403.6 million of principal indebtedness, net of issuance premium, consisting of $325.0 million of Senior Subordinated Notes and a $78.6 million term loan (“Term Loan”) under our Senior Credit Facility. The ~~Senior Credit Facility also provides for a Revolving Credit Facility in an aggregate amount of up to $135.0 million. No borrowings were outstanding under the Revolving Credit Facility and the~~ Company maintained $13.7 million in cash on hand as of June 30, 2003. 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 June 30, 2003, approximately $126.0 million was available under the Revolving Credit Facility. As of June 30, 2003, our parent corporation, SHC, also had $71.1 million and $101.0 million of SHC Discount Notes and SHC Subordinated Discount Notes outstanding, respectively. The discount notes are not part of our consolidated financial statements. These notes have no cash interest obligations until December 15, 2007 and June 1, 2008, respectively. Our operations are currently the main source of cash that is expected to service this debt. On May 5, 2003, we amended our Senior Credit Facility to allow SHC to pay a dividend to be funded with either cash on hand or with borrowings under the amended and restated Revolving Credit Facility. Additionally, the amendment permits SHC to repurchase certain securities issued by SHC (other than the SHC Discount Notes and SHC Subordinated Discount Notes) not held by Apollo or management. During the six months ended June 30, 2003, cash flows from operations were $83.0 million. We used a portion of those cash flows to make a $30.0 million voluntary principal payment on our Term Loan, to pay a $21.7 million dividend to SHC and to purchase certain intangible assets related to IMC’s ~~SOP~~contractual ~~business. Our significant debt service~~ obligations ~~following the Recapitalization could, under certain circumstances, materially affect our financial condition~~ and ~~prevent~~commitments usat ~~from~~September ~~fulfilling our obligations under the Senior Subordinated Notes, Senior Credit Facility, SHC Discount Notes and SHC Subordinated Discount Notes. As of June~~ 30, 2003, we are inas ~~compliance~~follows with all conditions and covenants related to the Senior Subordinated Notes, Senior Credit Facility, SHC Discount Notes and SHC Subordinated Discount Notes. For the Six Months Ended June 30, 2003 and 2002 Net cash flows generated by operating activities for the six months ended June 30, 2003 and 2002 were $83.0 million and $70.1 million, respectively. Of these amounts, $38.8 million and $43.1 million for 2003 and 2002, respectively, were generated by working capital reductions. The primary working capital reductions for 2003 and 2002 were decreases (in receivables of $50.7 million and $48.2 million, respectively, decreases in inventories of $21.0 million and $8.0 million, respectively, and decreases in accounts payable and accrued expenses of $32.9 million and $13.1 million, respectively. The reductions are indicative of the seasonal nature of highway deicing product line sales with differences primarily related to more normal winter weather in the 2002 – 2003 winter than in the mild 2001 – 2002 winter. 21millions):

Net cash flows used by investing activities for the six months ended June 30, 2003 and 2002, were $26.4 million and $6.4 million, respectively. These cash flows consisted of normal capital expenditures to maintain our facilities of $5.4 million and $6.5 million, respectively, and $21.0 million in 2003 related to our purchase of certain intangible assets related to IMC’s SOP business. Net cash flow used by financing activities was $56.2 million for the six months ended June 30, 2003, primarily due to $21.7 million of dividends paid to SHC and the $30.0 million voluntary principal repayment that reduced the amount of long-term debt outstanding under the Term Loan. Net cash flows used by financing activities were $58.9 million for the six months ending June 30, 2002, primarily due to the $39.8 million repayment of our revolver borrowings combined with a $20.0 million voluntary principle repayment that reduced the amount of long-term debt outstanding under the Term Loan. Additionally, on April 10, 2002, we 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 bondholders at a premium of $3.4 million, plus accrued interest from February 15, 2002 and accordingly, we received gross proceeds of $79.5 million from the offering of the notes. The proceeds from the offering of the New Notes, net of transaction costs, were used to repay borrowings under the Revolving Credit Facility. 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. Contractual Obligations and Commitments The Company’s contractual obligations and commitments at June 30, 2003 are as follows (in millions):


	Payments Due by Period

Contractual Obligations	Total		Less than 1 Year		2 -3 Years		4 -5 Years		After 5 Years


Long-term Debt	$	421.0	$	0.8	$	1.6	$	19.1	$	399.5
Operating Leases (a)		24.9		5.8		7.5		4.3		7.3
Unconditional purchase obligations (b)		62.0		8.1		16.2		16.2		21.5


Total Contractual Cash Obligations	$	507.9	$	14.7	$	25.3	$	39.6	$	428.3

	Payments Due by Period
				Less than		2 – 3		4 – 5		After 5
Contractual Obligations		Total		1 Year		Years		Years		Years
Long-term Debt	$	403.6	$	0.8	$	1.6	$	1.6	$	399.6
Operating Leases (a)		25.3		6.1		7.6		4.5		7.1
Unconditional purchase obligations (b)		63.6		8.0		16.1		16.1		23.4
Total Contractual Cash Obligations	$	492.5	$	14.9	$	25.3	$	22.2	$	430.1

(a)

The Company leases property and equipment under non-cancelable operating leases for varying periods.

(b)

The Company has long-term contracts to purchase certain amounts of electricity and steam.

	Amount of Commitment Expiration per Period	~~Amount of Commitment Expiration per Period~~
						Less than			2 – 3			4 – 5			After 5
Other Commitments	Total			Less than 1 Year			2 -3 Years			4 -5 Years			After 5 Years
Other Commitments			Total			1 Year			Years			Years			Years
Revolver	$	108.5		$	—		$	—		$	108.5		$	—
Revolver		$	126.0		$	—		$	—		$	126.0		$	—
Letters of Credit		9.0			9.0			—			—			—
Letters of Credit			9.0			9.0			—			—			—
Total Other Commitments	$	117.5		$	9.0		$	—		$	108.5		$	—
Total Other Commitments		$	135.0		$	9.0		$	—		$	126.0		$	—

22Our ability to make scheduled payments of principal, 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 twelve 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. 25

Our ability to make scheduled payments of principal, 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 twelve 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. 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 and our customers 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 (the “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. The Company adopted SFAS No. 143 on January 1, 2003. The adoption of SFAS No. 143 did not have a material impact on the Company’s 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 Company adopted SFAS No. 146 in the second 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. 23In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.” SFAS 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation” and requires certain disclosures in the Company’s quarterly and annual financial statements. SHC has a stock option plan that was adopted on November 28, 2001. The Company elected to continue to follow the accounting method under Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for its employee stock options and has adopted the pro forma disclosure requirements under SFAS No. 123, as amended by SFAS 148. Under APB No. 25, because the exercise price of the Company’s employee stock options is equal to or greater than the market price of the underlying stock on the date of grant, no compensation expense is recognized. The effect of applying the fair value method under SFAS No. 123, as amended by SFAS 148, to the Company’s stock-based awards resulted in pro forma net income that is not materially different from amounts reported in the accompanying consolidated statement of operations for the nine month periods ended September 30, 2003 and 2002. 26

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.” SFAS 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation” and requires certain disclosures in the Company’s quarterly and annual financial statements. SHC has a stock option plan that was adopted on November 28, 2001. The Company elected to continue to follow the accounting method under Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for its employee stock options and has adopted the pro forma disclosure requirements under SFAS No. 123, as amended by SFAS 148. Under APB No. 25, because the exercise price of the Company’s employee stock options is equal to or greater than the market price of the underlying stock on the date of grant, no compensation expense is recognized. The effect of applying the fair value method under SFAS No. 123, as amended by SFAS 148, to the Company’s stock-based awards resulted in pro forma net income that is not materially different from amounts reported in the accompanying consolidated statement of operations for the six month periods ending June 30, 2003 and 2002. Item 3. 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. The Company will not enter into any financial instrument arrangements for speculative purposes. Interest Rate Risk As of ~~June~~September 30, 2003, we had $78.65 million of debt outstanding under the term loan facility and ~~zero~~$17.5 million outstanding under our revolving credit facility. Both the term loan 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 facility borrowings at ~~June~~September 30, 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 ~~six~~nine months ended ~~June~~September 30, 2003 would have increased by approximately $0.46 million. Effects of Currency Fluctuations Our 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 exchange rate for the Canadian dollar has changed significantly from December 31, 2002 to ~~June~~September 30, 2003. The majority of our revenues and costs are denominated in U.S. dollars, with British pound sterling and Canadian dollars also being significant. Our historical results do not reflect any foreign exchange hedging activity. Considering our currency expenses, a hypothetical 10% unfavorable change in the exchange rates compared to the U.S. dollar could have an estimated $1.05 million impact on earnings for the ~~six~~nine months ended ~~June~~September 30, 2003. Actual changes in market prices or rates may differ from hypothetical changes. 24Commodity Pricing Risk: Commodity Derivative Instruments and Hedging Activities We have reviewed various options available to mitigate the impact of fluctuating natural gas prices. During 2002 and 2003, we have entered into certain financial instruments related to the purchase of natural gas. We have determined that these financial instruments qualify as hedges under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activity.” 27

Commodity Pricing Risk: Commodity Derivative Instruments and Hedging Activities We have reviewed various options available to mitigate the impact of fluctuating natural gas prices. During 2002 and 2003, we have entered into certain financial instruments related to the purchase of natural gas. We have determined that these financial instruments qualify as hedges under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activity.” Excluding the effects of our derivative instruments and our commodity price exposures to natural gas, a hypothetical 10% adverse change in our natural gas prices during the ~~six~~nine months ended ~~June~~September 30, 2003 could have had an estimated $0.58 million impact on earnings. Actual results may vary based on actual changes in market prices and rates. Item 4. CONTROLS AND PROCEDURES ~~Within~~An ~~the~~evaluation 90was ~~days prior to the filing date of this quarterly report, we~~ carried ~~out~~our ~~an evaluation,~~ under the supervision and with the participation of ~~our~~the Company's management, including ~~our~~its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures of(as ~~Compass~~defined ~~Minerals~~in ~~Group,~~Rule ~~Inc.~~13a-15(e) ~~pursuant~~and to15d-15(e) under the Securities Exchange Act ~~Rule~~of ~~13a-14~~1934) as of September 30, 2003. Based onupon that evaluation, the Chief Executive Officer and ~~the~~ Chief Financial Officer ~~have~~ concluded that ~~these~~the ~~disclosure~~design ~~controls~~ and ~~procedures~~operation ~~are~~of ~~effective~~these indisclosure ~~timely~~controls ~~alerting~~and ~~them~~procedures towere ~~material information required to be included in our periodic SEC filings~~effective. There ~~were~~have been no significant changes in ~~our~~the ~~disclosure~~Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of ~~the~~their evaluation. PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS The Company from time to time is involved in various routine legal proceedings. These primarily involve commercial claims, product liability claims, personal injury claims and workers’ compensation claims. We cannot predict the outcome of these lawsuits, legal proceedings and claims with certainty. Nevertheless, we believe that the outcome of these proceedings, even if determined adversely, would not have a material adverse effect on our business, financial condition and results of operations. In addition, in connection with the Recapitalization, IMC Global has agreed to indemnify us against certain legal matters. Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None Item 3. DEFAULTS UPON SENIOR SECURITIES None Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable Item 5. OTHER INFORMATION Not Applicable 25Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits

Item 6. EXHIBITS AND REPORTS ON FORM 8-K Form 8-K filed May 13, 2003 “Regulation FD Disclosure” Form 8-K filed June 27, 2003 “Other Events” SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Exhibit No.		Description of Exhibit


31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
32.1		Certification of Chief Executive Officer pursuant to U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer pursuant to U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

~~Date:~~(b) Reports on Form 8-K Form 8-K filed August 13, 2003 ~~COMPASS~~“Regulation ~~MINERALS~~FD ~~GROUP~~Disclosure” 28 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, ~~INC.~~each ~~/s/~~Registrant ~~Michael~~has E.duly ~~Ducey~~caused ~~——————————————~~this ~~Michael~~report E.to ~~Ducey~~be ~~President~~signed ~~and~~on ~~Chief~~its ~~Executive~~behalf ~~Officer~~by the undersigned thereunto duly authorized.

Date: August 13, 2003 /s/ Rodney L. Underdown —————————————— Rodney L. Underdown Chief Financial Officer

		COMPASS MINERALS GROUP, INC.
Date: November 3, 2003		/s/ Michael E. Ducey —————————————— Michael E. Ducey President and Chief Executive Officer
Date: November 3, 2003		/s/ Rodney L. Underdown —————————————— Rodney L. Underdown Chief Financial Officer

2629

CERTIFICATIONS Certification requirements set forth in Section 302 (a) of the Sarbanes-Oxley Act. I, Michael E. Ducey, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Compass Minerals Group, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weakness in internal controls; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: August 13, 2003 /s/ Michael E. Ducey —————————————— Michael E. Ducey President and Chief Executive Officer

Certification requirements set forth in Section 302 (a) of the Sarbanes-Oxley Act. I, Rodney L. Underdown, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Compass Minerals Group, Inc.;

(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Date: August 13, 2003 /s/ Rodney L. Underdown —————————————— Rodney L. Underdown Chief Financial Officer

COMPASS MINERALS GROUP, INC.

Table of Contents

7. Commitments and Contingencies:

9. Operating Segments:

11. Other Comprehensive Income:

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Filing Compare · COMPASS MINERALS GROUP INC