Compass Minerals International (CMP) 10-Q 2008 Q2 Quarterly report

UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2008

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 001-31921

Compass Minerals International, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 36-3972986 (I.R.S. Employer Identification Number)

9900 West 109th Street

Suite 600

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: R     No:  £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer R Accelerated filer £ Non-accelerated filer £ Smaller reporting company £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes: £     No: R

The number of shares outstanding of the registrant’s common stock, $0.01 par value per share, at July 24, 2008 was 32,425,039 shares.

COMPASS MINERALS INTERNATIONAL, INC.

TABLE OF CONTENTS

Page

	PART I.  FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2008 (unaudited) and December 31, 2007	2
	Consolidated Statements of Operations for the three-months and six-months ended June 30, 2008 and 2007, (unaudited)	3
	Consolidated Statement of Stockholders’ Equity (Deficit) for the six-months ended June 30, 2008, (unaudited)	4
	Consolidated Statements of Cash Flows for the six-months ended June 30, 2008 and 2007, (unaudited)	5
	Notes to Consolidated Financial Statements, (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 4.	Controls and Procedures	18
	PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults upon Senior Securities	18
Item 4.	Submission of Matters to a Vote of Security Holders	19
Item 5.	Other Information	19
Item 6.	Exhibits	19
SIGNATURES		20

1

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

COMPASS MINERALS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
	(Unaudited)
	June 30,			December 31,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	40.7		$	12.1
Receivables, less allowance for doubtful accounts of
$2.0 in 2008 and $1.8 in 2007		80.4			206.6
Inventories		108.5			128.4
Deferred income taxes, net		9.7			11.3
Other		14.0			7.3
Total current assets		253.3			365.7
Property, plant and equipment, net		394.2			396.8
Intangible assets, net		21.5			22.2
Other		32.8			35.3
Total assets	$	701.8		$	820.0
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt	$	4.1		$	4.1
Accounts payable		66.6			104.9
Accrued expenses		16.9			29.0
Accrued salaries and wages		15.3			17.0
Income taxes payable		-			8.9
Accrued interest		1.8			1.2
Total current liabilities		104.7			165.1
Long-term debt, net of current portion		504.9			602.7
Deferred income taxes, net		21.9			12.6
Other noncurrent liabilities		42.8			44.2
Commitments and contingencies (Note 8)
Stockholders' equity (deficit):
Common stock:  $0.01 par value, 200,000,000 authorized shares;
35,367,264 issued shares		0.4			0.4
Additional paid-in capital		1.8			1.7
Treasury stock, at cost — 2,942,225 shares at June 30, 2008 and
3,025,449 shares at December 31, 2007		(5.6	)		(5.7	)
Accumulated deficit		(20.5	)		(54.5	)
Accumulated other comprehensive income		51.4			53.5
Total stockholders' equity (deficit)		27.5			(4.6	)
Total liabilities and stockholders' equity (deficit)	$	701.8		$	820.0
The accompanying notes are an integral part of the consolidated financial statements.

2

COMPASS MINERALS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions, except share data)
	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2008		2007			2008		2007
Sales	$	162.0	$	127.5		$	542.0	$	391.7
Shipping and handling cost		42.1		30.5			173.3		116.4
Product cost		82.8		71.6			234.6		185.3
Gross profit		37.1		25.4			134.1		90.0
Selling, general and administrative expenses		18.2		15.8			37.1		31.4
Operating earnings		18.9		9.6			97.0		58.6
Other expense:
Interest expense		11.0		13.5			23.0		27.4
Other, net		4.5		-			2.6		-
Earnings (loss) before income taxes		3.4		(3.9	)		71.4		31.2
Income tax expense (benefit)		1.8		(0.7	)		20.7		8.3
Net earnings (loss)	$	1.6	$	(3.2	)	$	50.7	$	22.9
Basic net earnings (loss) per share	$	0.05	$	(0.10	)	$	1.53	$	0.70
Diluted net earnings (loss) per share	$	0.05	$	(0.10	)	$	1.53	$	0.70
Cash dividends per share	$	0.335	$	0.32		$	0.67	$	0.64
Weighted-average shares outstanding (in thousands)
Basic		33,117		32,257			33,055		32,699
Diluted		33,192		32,257			33,132		32,861
The accompanying notes are an integral part of the consolidated financial statements.

3

COMPASS MINERALS INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the six months ended June 30, 2008
(Unaudited, in millions)
												Accumulated
			Additional									Other
	Common		Paid In			Treasury			Accumulated			Comprehensive
	Stock		Capital			Stock			Deficit			Income			Total
Balance, December 31, 2007	$	0.4	$	1.7		$	(5.7	)	$	(54.5	)	$	53.5		$	(4.6	)
Dividends on common stock				(5.4	)					(16.7	)					(22.1	)
Stock options exercised				3.9			0.1									4.0
Stock-based compensation				1.6												1.6
Comprehensive income:
Net earnings										50.7						50.7
Change in unrealized pension costs													-			-
Unrealized gain on cash flow hedges													3.8			3.8
Foreign currency translation adjustments													(5.9	)		(5.9	)
Total comprehensive income																48.6
Balance, June 30, 2008	$	0.4	$	1.8		$	(5.6	)	$	(20.5	)	$	51.4		$	27.5
The accompanying notes are an integral part of the consolidated financial statements.

4

COMPASS MINERALS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
	Six Months Ended
	June 30,
	2008			2007
Cash flows from operating activities:
Net earnings	$	50.7		$	22.9
Adjustments to reconcile net earnings to net cash flows provided by operating activities:
Depreciation, depletion and amortization		20.8			19.2
Finance fee amortization		0.7			0.7
Accreted interest		8.5			16.2
Loss on early extinguishment of long-term debt		5.1			-
Deferred income taxes		8.9			(6.5	)
Other, net		0.4			1.2
Changes in operating assets and liabilities:
Receivables		125.1			52.0
Inventories		19.0			28.5
Other assets		(1.8	)		0.6
Accounts payable and accrued expenses		(58.1	)		(25.3	)
Other noncurrent liabilities		(1.0	)		0.5
Net cash provided by operating activities		178.3			110.0
Cash flows from investing activities:
Capital expenditures		(20.0	)		(22.8	)
Purchase of a business		-			(7.6	)
Other, net		1.2			-
Net cash used in investing activities		(18.8	)		(30.4	)
Cash flows from financing activities:
Principal payments on long-term debt		(72.2	)		(20.7	)
Revolver activity		(33.9	)		(16.2	)
Call premium on redemption of debt		(4.2	)		-
Dividends paid		(22.1	)		(20.9	)
Proceeds received from stock option exercises		1.7			0.3
Excess tax benefits from equity compensation awards		2.3			2.1
Net cash used in financing activities		(128.4	)		(55.4	)
Effect of exchange rate changes on cash and cash equivalents		(2.5	)		(0.3	)
Net change in cash and cash equivalents		28.6			23.9
Cash and cash equivalents, beginning of the year		12.1			7.4
Cash and cash equivalents, end of period	$	40.7		$	31.3
Supplemental cash flow information:
Interest paid, net of amounts capitalized	$	13.8		$	10.6
Income taxes paid, net of refunds		18.5			12.2
The accompanying notes are an integral part of the consolidated financial statements.

5

COMPASS MINERALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.   Accounting Policies and Basis of Presentation:

Compass Minerals International, Inc., through its subsidiaries (“CMP”, “Compass Minerals”, or the “Company”), is a producer and marketer of inorganic mineral products with manufacturing sites in North America and the United Kingdom. Its principal products are salt, consisting of sodium chloride, potassium chloride and magnesium chloride, and sulfate of potash (“SOP”), a specialty fertilizer.  The company provides highway deicing products to customers in North America and the United Kingdom, and specialty fertilizer to growers worldwide.  The Company also produces and distributes consumer deicing and water conditioning products, ingredients used in consumer and commercial foods, and other mineral-based products for consumer, agricultural and industrial applications.  Compass Minerals also provides records management services to businesses throughout the U.K.

Compass Minerals International, Inc. is a holding company with no operations other than those of its wholly owned subsidiaries.  The consolidated financial statements include the accounts of Compass Minerals International, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information in accordance 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 (“GAAP”) for complete financial statements. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of CMP for the year ended December 31, 2007 as filed with the Securities and Exchange Commission (“SEC”) in its Annual Report on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included.

The Company experiences a substantial amount of seasonality in salt segment sales. As a result, 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 and professional deicing products are seasonal as they vary based on the severity of the winter conditions in areas where the product is used. Following industry practice, we stockpile sufficient quantities of deicing salt throughout the second, third and fourth quarters to meet the estimated requirements for the upcoming winter season. Production of deicing salt during the first quarter can vary based on the severity or mildness of the preceding winter season.  Due to the seasonal nature of the deicing product lines, operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year.

Recent Accounting Pronouncements – During the first quarter of 2008, the FASB issued FASB Statement No. 161 – “Disclosures about Derivative Instruments and Hedging Activities”.  This statement will require holders of derivative instruments to provide qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements.  This statement is effective for interim and annual periods beginning after November 15, 2008.  Although the Company is evaluating the additional disclosure requirements, adoption of this statement will not have any effect on the Company’s results of operations, financial condition or cash flows.

2.   Inventories:

Inventories consist of the following (in millions):

	June 30,		December 31,
	2008		2007
Finished goods	$	82.5	$	105.1
Raw materials and supplies		26.0		23.3
Total inventories	$	108.5	$	128.4

6

3.   Property, Plant and Equipment, Net:

Property, plant and equipment, net consists of the following (in millions):

	June 30,			December 31,
	2008			2007
Land and buildings	$	199.4		$	197.7
Machinery and equipment		404.8			407.2
Furniture and fixtures		19.2			19.3
Mineral interests		180.6			181.0
Construction in progress		34.0			21.6
		838.0			826.8
Less accumulated depreciation and depletion		(443.8	)		(430.0	)
Net property, plant and equipment	$	394.2		$	396.8

4.   Intangible Assets, Net:

Intangible assets consist primarily of purchased rights to produce SOP and customer relationships acquired in connection with the 2007 purchase of a records management business.  The SOP production rights and records management customer relationships are being amortized over 25 years and 7 years, respectively. Amortization expense was $0.4 million and $0.3 million during the three months ended June 30, 2008 and 2007, respectively, and $0.7 million and $0.6 million during the six months ended June 30, 2008 and 2007, respectively.

5.   Income Taxes:

Income tax expense for the three months ended June 30, 2008 was $1.8 million, an increase of $2.5 million compared to a benefit of $0.7 million for the second quarter of 2007.  Income tax expense for the six months ended June 30, 2008 was $20.7 million, an increase of $12.4 million compared to $8.3 million for the six months ended June 30, 2007.  The Company’s income tax provision differs from the U.S. statutory federal income tax rate primarily due to U.S. statutory depletion, state income taxes (net of federal tax benefit), foreign income tax rate differentials, foreign mining taxes, interest on uncertain tax positions, and interest expense recognition differences for book and tax purposes.

At June 30, 2008, the Company had approximately $48.0 million of gross federal net operating losses (“NOLs”) that expire in various years through 2026. The Company records valuation allowances for portions of its deferred tax assets relating to NOLs that it does not believe are more likely than not to be realized.  As of June 30, 2008 and December 31, 2007, the Company’s valuation allowance was $4.1 million and $4.6 million, respectively. In the future, if the Company determines, based on the existence of sufficient evidence, that it should realize more or less of its deferred tax assets, an adjustment to any existing valuation allowance will be made in the period such determination is made.

6.   Long-term Debt:

Long-term debt consists of the following (in millions):

	June 30,			December 31,
	2008			2007
12% Senior Subordinated Discount Notes due 2013 (a)	$	109.8		$	171.4
Term Loan due 2012		273.2			274.6
Incremental Term Loan due 2012		126.0			126.7
Revolving Credit Facility due 2010		-			34.1
		509.0			606.8
Less current portion		(4.1	)		(4.1	)
Long-term debt, net of current portion	$	504.9		$	602.7

(a)  In June 2008, the Company called $70.0 million of its 12% Senior Subordinated Discount Notes due 2013.  In connection with this transaction, the Company recorded a one-time loss on the extinguishment of debt of $5.1 million in the second quarter of 2008, which included a call premium of $4.2 million and the write-off of deferred financing fees of $0.9 million for a proportionate amount of the discount notes.

7

7.   Pension Plans:

The components of net periodic benefit cost for the three-and six months ended June 30, 2008 and 2007 are as follows (in millions):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Service cost for benefits earned during the year	$	0.2		$	0.2		$	0.3		$	0.4
Interest cost on projected benefit obligation		1.1			1.0			2.3			2.1
Return on plan assets		(1.3	)		(1.2	)		(2.6	)		(2.4	)
Net amortization		-			0.1			-			0.2
Curtailment loss		-			0.2			-			0.2
Net pension expense	$	-		$	0.3		$	-		$	0.5

During the six months ended June 30, 2008, the Company made $0.7 million of contributions to its pension plans.

8.   Commitments and Contingencies:

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

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

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

9.   Operating Segments:

Segment information is as follows (in millions):

	Three Months Ended June 30, 2008
			Specialty		Corporate
	Salt		Fertilizer		and Other (a)			Total
Sales to external customers	$	104.9	$	53.9	$	3.2		$	162.0
Intersegment sales		0.2		6.0		(6.2	)		-
Shipping and handling cost		35.8		6.3		-			42.1
Operating earnings (loss)		4.9		21.7		(7.7	)		18.9
Depreciation, depletion and amortization		7.0		2.5		0.6			10.1
Total assets		483.1		156.2		62.5			701.8

8

	Three Months Ended June 30, 2007
			Specialty		Corporate
	Salt		Fertilizer		and Other (a)			Total
Sales to external customers	$	89.2	$	35.5	$	2.8		$	127.5
Intersegment sales		0.2		2.9		(3.1	)		-
Shipping and handling cost		25.5		5.0		-			30.5
Operating earnings (loss)		8.9		8.9		(8.2	)		9.6
Depreciation, depletion and amortization		6.8		2.3		0.2			9.3
Total assets		475.4		149.2		49.8			674.4

	Six Months Ended June 30, 2008
			Specialty		Corporate
	Salt		Fertilizer		and Other (a)			Total
Sales to external customers	$	434.1	$	101.6	$	6.3		$	542.0
Intersegment sales		0.3		10.3		(10.6	)		-
Shipping and handling cost		160.1		13.2		-			173.3
Operating earnings (loss)		74.4		38.8		(16.2	)		97.0
Depreciation, depletion and amortization		14.8		4.9		1.1			20.8

	Six Months Ended June 30, 2007
			Specialty		Corporate
	Salt		Fertilizer		and Other (a)			Total
Sales to external customers	$	319.1	$	67.6	$	5.0		$	391.7
Intersegment sales		0.2		6.0		(6.2	)		-
Shipping and handling cost		106.7		9.7		-			116.4
Operating earnings (loss)		57.0		16.6		(15.0	)		58.6
Depreciation, depletion and amortization		14.1		4.7		0.4			19.2

(a)  “Corporate and Other” includes corporate entities, the records management business and eliminations.  Corporate assets include deferred tax assets, deferred financing fees, investments related to the non-qualified retirement plan, and other assets not allocated to the operating segments.

10.   Stockholders’ Equity and Equity Instruments:

On March 10, 2008, the Company granted 99,425 options and 31,275 restricted stock units to certain key employees under its 2005 Incentive Award Plan.  The Company’s stock price on the grant date of $55.12 was used to set the exercise price for the options and the fair value of the restricted stock units (“RSUs”).  The options vest ratably on each anniversary date over a four-year service period.  Unexercised options expire after seven years. The RSUs vest on the third anniversary following the grant date. Both types of instruments entitle the holders to receive non-forfeitable dividends or other distributions equal to and at the same time as those declared on the Company’s common stock.

To estimate the fair value of options on the grant date, the Company uses the Black Scholes option valuation model.  Award recipients are grouped according to expected exercise behavior. Unless better information is available to estimate the expected term of the options, the estimate is based on historical exercise experience. The risk-free rate, using U.S. Treasury yield curves in effect at the time of grant, is selected based on the expected term of each group. The Company’s historical stock price is used to estimate expected volatility.  The range of estimates and fair values for options granted during the first six months of 2008 is included in the table below. The weighted average grant date fair value of these options was $16.34.

9

	Range
Fair value of options granted	$11.53 - $17.36
Exercise price	$55.12
Expected term (years)	3 – 6
Expected volatility	27.5%
Dividend yield(a)	0%
Risk-free rate of return	1.67% - 2.55%

(a) The assumed dividend yield reflects the non-forfeiting dividend feature.

During the six months ended June 30, 2008, the Company reissued 82,594 shares of treasury stock related to the exercise of stock options and 630 shares related to the distribution of deferred stock units from the Directors’ Deferred Compensation Plan.  The Company recorded additional tax benefits of $2.3 million from its equity compensation awards as additional paid-in capital. Stock-based compensation expense was $0.9 million and $0.7 million during the three months ended June 30, 2008 and 2007, respectively, and $1.6 million and $1.1 million during the six months ended June 30, 2008 and 2007, respectively.  No amounts have been capitalized. The following table summarizes stock-based compensation activity during the six months ended June 30, 2008.

	Stock Options					Restricted Stock Units
	Number of			Weighted-		Number of			Weighted-
	Options			Average		RSUs			Average
	Outstanding			Exercise price		Outstanding			Fair Value
Outstanding at December 31, 2007		652,041		$	25.15		121,525		$	28.80
Granted		99,425			55.12		31,275			55.12
Cancelled		(422	)		55.12		(132	)		55.12
Exercised		(82,594	)		20.70		-			-
Outstanding at June 30, 2008		668,450		$	30.14		152,668		$	34.17

Other Comprehensive Income

The Company’s comprehensive income consists of net earnings, amortization of the unrealized net pension costs, and the change in the unrealized gain (loss) on natural gas and interest rate swap cash flow hedges and foreign currency translation adjustments.

The components of and changes in accumulated other comprehensive income as of and for the six months ended June 30, 2008 are provided below (in millions):

	Balance						Balance
	December 31,			2008			June 30,
	2007			Change			2008
Unrealized net pension costs	$	(5.2	)	$	-		$	(5.2	)
Unrealized gain (loss) on cash flow hedges		(3.2	)		3.8			0.6
Cumulative foreign currency translation adjustment		61.9			(5.9	)		56.0
Accumulated other comprehensive income	$	53.5		$	(2.1	)	$	51.4

With the exception of the cumulative foreign currency translation adjustment, for which no tax effect is recorded, the changes in the components of accumulated other comprehensive income are reflected net of applicable tax impact of $2.3 million.

11.   Fair Value Measurements:

The Company adopted FASB Statement No. 157 – “Fair Value Measurements” effective January 1, 2008 for its financial instruments that are measured and reported at estimated fair value.   Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction.  When available, the Company uses quoted prices in active markets to determine the fair values for its financial instruments (“level one” inputs), or absent quoted market prices, observable market-corroborated inputs over the term of the financial instruments (“level two” inputs).

10

The Company holds trading securities associated with its non-qualified savings plan which are valued based on readily available quoted market prices.  Additionally, the Company utilizes derivative instruments to manage its risk of changes in natural gas prices and interest rates.  The fair values of the derivative instruments are determined using observable yield curves or other market-corroborated data matching the terms of the derivatives (level two inputs).   The estimated fair values for each type of instrument are presented below (in millions).

	June 30, 2008			Level One			Level Two
Assets:
Trading securities	$	4.8		$	4.8		$	-
Derivatives - natural gas swaps		5.4			-			5.4
Total Assets	$	10.2		$	4.8		$	5.4
Liabilities:
Liabilities related to non-qualified savings plan	$	(4.8	)	$	(4.8	)	$	-
Derivatives - interest rate swaps		(4.5	)		-			(4.5	)
Total Liabilities	$	(9.3	)	$	(4.8	)	$	(4.5	)

12.   Earnings per Share:

The following table sets forth the computation of basic and diluted earnings per common share (in millions, except for share data):

	Three months ended					Six months ended
	June 30,					June 30,
	2008		2007			2008		2007
Numerator:
Net earnings (loss)	$	1.6	$	(3.2	)	$	50.7	$	22.9
Denominator:
Weighted average common shares outstanding,
shares for basic earnings per share (a)		33,117		32,257			33,055		32,699
Weighted average stock options outstanding (b)		75		-			77		162
Shares for diluted earnings per share		33,192		32,257			33,132		32,861
Earnings (loss) per share, basic	$	0.05	$	(0.10	)	$	1.53	$	0.70
Earnings (loss) per share, diluted	$	0.05	$	(0.10	)	$	1.53	$	0.70

(a) Includes the weighted-average number of participating securities outstanding during the period unless securities are anti-dilutive due to a net loss.

(b) For the calculation of diluted earnings per share, the Company uses the treasury stock method to determine the weighted-average number of outstanding common shares unless the securities are anti-dilutive due to a net loss.

For the three months ended June 30, 2007, participating securities relative to 561,400 shares were not included in the calculation of basic earnings (loss) per share because they were anti-dilutive.  Additionally, the calculation of diluted earnings (loss) per share for the second quarter of 2007 excluded non-participating stock options relative to 264,466 shares because they were anti-dilutive.

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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; uninsured risks and hazards associated with underground mining operations; 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 and the availability of transportation services; capacity constraints limiting the production of certain products; labor relations including without limitation, the impact of work rules, strikes or other disruptions, wage and benefit requirements; 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; 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 in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) as updated quarterly on Form 10-Q.

In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “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 undertake no duty to update any of the forward-looking statements after the date hereof or to reflect the occurrence of unanticipated events.

Unless the context requires otherwise, references in this quarterly report to the “Company,” “Compass,” “Compass Minerals,” “CMP,” “we,” “us” and “our” refer to Compass Minerals International, Inc. (“CMI”, the parent holding company) and its consolidated subsidiaries.

Critical Accounting Estimates

Preparation of our consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Management believes the most complex and sensitive judgments result primarily from the need to make estimates about matters that are inherently uncertain. Management’s Discussion and Analysis and Note 2 to the Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on February 22, 2008, describe the significant accounting estimates and policies used in preparation of our consolidated financial statements. Actual results in these areas could differ from management’s estimates.

Results of Operations

Deicing products, consisting of deicing salt and magnesium chloride used by highway deicing and consumer and industrial customers, constitute a significant portion of the Company’s salt segment sales.  Our deicing sales are seasonal and can fluctuate from year to year depending on the severity of the winter season weather in our markets.  Inventory management practices are employed to respond to the varying level of demand which impacts our production volumes, the resulting per ton cost of inventory and ultimately profit margins, particularly during the non-winter quarters when we build our inventory levels.  The 2007 – 2008 winter season in our North American markets was more severe than normal.  By contrast, the prior year North American winter season (2006 – 2007) was milder than normal.  Our U.K. subsidiary experienced the second straight year of significantly milder than normal weather.

Our sulfate of potash (“SOP”) product is used in the production of specialty fertilizers for high-value crops and turf.  Our domestic sales of SOP are concentrated in the western and southeastern portions of the United States where the crops and soil conditions favor the use of SOP as a source of potassium nutrients.  Consequently, weather patterns and field conditions in these locations can impact the amount of specialty fertilizer sales volumes.  Agricultural activities may also be responsive to economic factors as they may impact the amount or type of crop grown in certain locations or the type of fertilizer product used.  However, high-value or chloride-sensitive crop quality and yields tend to decline when alternative fertilizer products are used.  Worldwide consumption of standard potash has increased in response to growing populations and reduced arable land per capita requiring improved crop yield efficiencies.  Additionally, relatively high energy prices have improved the

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economics of ethanol and bio-diesel production which utilize agricultural products as feedstock.  The increased demand and limited supply of potash has led to improved overall potash market prices.

Our North American salt mines and SOP production facility are near either water or rail transport systems which helps to reduce our shipping and handling costs when compared to alternative methods of distribution.  However, shipping and handling costs still account for a relatively large portion of the total cost of our delivered products.  Consequently, changes in transportation rates and fuel costs can also impact our margins.  The higher costs of transportation services and higher fuel costs have continued to increase our shipping and handling costs on a per ton basis.

Manpower costs, energy costs, packaging, and certain raw material costs, particularly potassium chloride (“KCl”), a deicing and water conditioning agent and feed-stock used in making our sulfate of potash fertilizer product, are also significant.  The Company’s production workforce is represented by labor unions with multi-year collective bargaining agreements.  Our energy costs result from the consumptions of electricity with relatively stable, rate-regulated pricing, and natural gas which can have significant pricing volatility. We manage the pricing volatility of our natural gas purchases with natural gas forward contracts up to 36 months in advance of purchases.  We purchase KCl under long-term supply contracts with annual changes in price based on previous year changes in the market price for KCl.  The market price for KCl has increased significantly in recent years, causing continued price increases under our contract.  Although we cannot predict future changes in market prices for KCl, we expect our 2008 per ton costs to be higher than 2007.

The consolidated financial statements have been prepared to present the historical financial condition and results of operations and cash flows for the Company which include our salt segment, specialty fertilizer segment, our records management business and unallocated corporate activities.  The results of operations of the records management business, including sales of $3.2 million and $2.8 million for the three months ended June 30, 2008 and 2007, respectively, and $6.3 million and $5.0 million for the six months ended June 30, 2008 and 2007, respectively, are not material to our consolidated financial statements and consequently, are not included in the table below.  The following tables and discussion should be read in conjunction with the information contained in our consolidated financial statements and the accompanying notes included elsewhere in this quarterly report.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007
Salt Sales (in millions)
Salt sales	$	104.9	$	89.2	$	434.1	$	319.1
Less: salt shipping and handling		35.8		25.5		160.1		106.7
Salt product sales	$	69.1	$	63.7	$	274.0	$	212.4
Salt Sales Volumes (thousands of tons)
Highway deicing		1,108		990		6,246		5,102
Consumer and industrial		566		503		1,328		1,084
Total tons sold		1,674		1,493		7,574		6,186
Average Salt Sales Price (per ton)
Highway deicing	$	30.98	$	29.55	$	42.08	$	37.53
Consumer and industrial		124.61		119.09		128.99		117.80
Combined		62.66		59.73		57.32		51.59
Specialty Fertilizer (SOP) Sales (in millions)
Specialty fertilizer sales	$	53.9	$	35.5	$	101.6	$	67.6
Less: SOP shipping and handling		6.3		5.0		13.2		9.7
Specialty fertilizer product sales	$	47.6	$	30.5	$	88.4	$	57.9
Specialty Fertilizer Sales Volumes (thousands of tons)		111		115		234		222
Specialty Fertilizer Average Sales Price (per ton)	$	484.81	$	307.62	$	434.25	$	304.23

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Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007

Sales

Sales for the second quarter of 2008 of $162.0 million increased $34.5 million, or 27% compared to $127.5 million for the same quarter of 2007. Sales primarily include revenues from the sale of our products, or “product sales,” revenues from our records management business, and shipping and handling costs incurred to deliver salt and specialty fertilizer products to our customers. Shipping and handling costs increased from $30.5 million in second quarter of 2007 to $42.1 million in the second quarter of 2008 due primarily to higher sales volumes during the second quarter of 2008 when compared to the same period of 2007, although the higher price of fuel and transportation services have increased our per unit cost of shipping products to our customers.

Product sales for the second quarter of 2008 of $116.7 million increased $22.5 million, or 24% compared to $94.2 million for the same period in 2007 reflecting higher sales volumes of salt products as well as higher pricing for specialty potash fertilizer products.

Salt product sales for the second quarter of 2008 of $69.1 million increased $5.4 million, or 8% compared to $63.7 million for the same period in 2007 due to higher salt sales volumes.  Salt sales volumes in 2008 grew by 0.2 million tons or 12% over 2007 which when combined with the improved product mix, increased product sales by approximately $5 million.  In addition, the strengthening of the Canadian dollar compared to exchange rates during the second quarter of 2007 increased product sales by $2 million.

Specialty potash fertilizer product sales for the second quarter of 2008 of $47.6 million increased $17.1 million, or 56% compared to $30.5 million for the same period in 2007 due primarily to higher pricing for specialty potash fertilizer products.  Product sales price improvements contributed approximately $18 million to the product sales increase which were partially offset by a decline of approximately $1 million in product sales due to slightly lower SOP sales volumes.

Gross Profit

Gross profit for the second quarter of 2008 of $37.1 million increased $11.7 million or 46% compared to $25.4 million in the second quarter of 2007, mainly reflecting the product sales price improvements of specialty potash fertilizer products of approximately $18 million as discussed above.  This margin improvement was partially offset by lower margins due to higher maintenance and energy per unit costs at our rock salt mining operation in Goderich, Ontario as well as our solar evaporation production facility in Ogden, Utah.  Much of the increased maintenance costs relates to the timing of the annual shutdown for maintenance at the Goderich mine and the preparation of both facilities for increased production capacity.  Our annual shutdown for maintenance in 2008 fell mostly in the second quarter, while it typically occurs in the first quarter of each year.  The severity of the past winter season was a significant factor in the 2008 timing.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the second quarter of 2008 of $18.2 million increased $2.4 million, or 15% compared to $15.8 million for the same period of 2007.  The increase in expense for 2008 is primarily due to investments to support ongoing salt-segment growth and productivity initiatives.

Interest Expense

Interest expense for the second quarter of 2008 of $11.0 million decreased $2.5 million compared to $13.5 million for the same period in 2007. This decrease is primarily due to the refinancing of our 12 ¾% senior discount notes in the fourth quarter of 2007 with lower-rate incremental term loan under our senior secured credit agreement, lower average level of borrowings outstanding including the early extinguishment of $70 million of our 12% senior subordinated discount notes in June of 2008 and lower interest rates on our floating-rate debt.

Other Expense, Net

In the second quarter of 2008, other expense includes a call premium of $4.2 million and a write-off of deferred financing fees of $0.9 million related to the early extinguishment of $70 million of the Company’s 12% senior subordinated discount notes, foreign currency exchange losses and interest income.  The same period in 2007 includes foreign exchange losses offset by interest income.

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Income Tax Expense (Benefit)

Income tax expense of $1.8 million for the three months ended June 30, 2008 increased from a benefit of $0.7 million for the same period in 2007 primarily reflecting a higher level of pre-tax income in 2008.  In addition, our effective tax rate for the three months ended June 30, 2008 increased due to higher pre-tax income in 2008 and the effects of refinements made in the second quarter to the expected full-year tax rate primarily resulting from an increase in the level of expected U.S. pre-tax income.  Our income tax provision also differs from the U.S. statutory federal income tax rate primarily due to U.S. statutory depletion, state income taxes (net of federal tax benefit), foreign income tax rate differentials, foreign mining taxes, interest and penalties on uncertain tax positions and interest expense recognition differences for book and tax purposes.

Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007

Sales

Sales for the six months ended June 30, 2008 of $542.0 million increased $150.3 million, or 38% compared to $391.7 million for the six months ended June 30, 2007.  Shipping and handling costs were $173.3 million during the first six months of 2008, an increase of $56.9 million compared to $116.4 million for the same period in 2007.  The increase in shipping and handling costs primarily reflects the higher sales volumes for the six months ended June 30, 2008 when compared to same period of 2007, and the impact of higher per unit fuel and transportation costs.

Product sales for the six months ended June 30, 2008 of $362.4 million increased $92.1 million, or 34% compared to $270.3 million for the same period in 2007.  This increase reflects improvements in both the salt and specialty fertilizer segments as discussed below.

Salt product sales of $274.0 million for the six months ended June 30, 2008 increased $61.6 million or 29% compared to $212.4 million in 2007 reflecting price improvements and higher sales volumes in 2008.  The severe winter weather in our North American markets during the first quarter of 2008 compared to the milder-than normal weather of 2007 led to higher sales volumes for highway deicing and consumer and industrial products which was supplemented by higher sales volumes of non-seasonal consumer and industrial products.  Salt sales volumes in 2008 grew by 1.4 million tons or 22% over 2007 levels, which, when combined with the improved customer and product mix, increased sales by approximately $47 million.  Price improvements, net of higher shipping and handling, contributed approximately $1 million.  The strengthening of the Canadian dollar compared to exchange rates during the first six months of 2008 further boosted product sales, adding approximately $13 million to 2008 product sales.  In the U.K., we experienced the second straight mild winter weather season keeping sales levels lower than normal but comparable to a year ago.

SOP product sales of $88.4 million for the six months ended June 30, 2008 increased $30.5 million or 53% over $57.9 million during the same period in 2007 as improvements in both price and volume reflect the strong demand and limited supply of potash products generally, both domestically and abroad.  We believe the market for fertilizer products is responding to economic factors which are increasing worldwide demand for crop nutrients, including the need for improved yields in locations with growing populations and less arable land per capita, and alternative crop uses.  Conditions such as these have affected the agricultural markets and the demand for all types of potash fertilizer products, including SOP.  Higher product sales prices yielded approximately $27 million over the same period of the prior year.

Gross Profit

Gross profit for the six months ended June 30, 2008 of $134.1 million increased $44.1 million, or 49% compared to $90.0 million for the same period in 2007.  As a percent of total sales, 2008 gross margin increased by 2% to 25%.  These improvements primarily reflect the higher average salt and SOP product sales prices totaling approximately $28 million, and increased sales volumes together with improved product and customer mix as discussed above totaling approximately $25 million.  Our per unit product costs were higher in the first six months of 2008, principally reflecting differences in the cost of beginning inventory and consumer product mix.  Our salt production level was higher for the six months ended June 30, 2008 at our North American rock salt mines and other deicing production facilities in response to strong winter sales in contrast to a lower production level in 2007 during a mild winter season.  In addition, margin improvements were partially offset by higher maintenance and energy per unit costs at our rock salt mining operation in Goderich, Ontario as well as our solar evaporation production facility in Ogden, Utah.  Much of the increased maintenance costs for the first six months of 2008 relates to costs incurred to operate our facilities at or near capacity.  Our annual shutdown for maintenance for 2008 fell mostly in the second quarter for the Goderich mine, while it occurred in the third quarter of 2007.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses for the 2008 six month period of $37.1 million increased $5.7 million, or 18% compared to $31.4 million for the same period of 2007.  The increase in expense is primarily due to higher employee compensation and benefits, particularly variable compensation expense and selling commissions, both of which result from stronger sales volumes and improved financial performance, and higher consumer and industrial promotional activities.

Interest Expense

Interest expense for the six months ended June 30, 2008 of $23.0 million decreased $4.4 million compared to $27.4 million for the same period in 2007.  This decrease is primarily due to the refinancing of our 12¾% senior discount notes in the fourth quarter of 2007 with lower-rate incremental term loan under our senior secured credit agreement, the early extinguishment of $70 million of our 12% senior subordinated discount notes in June of 2008 and lower interest rates on our floating-rate debt.

Other expense, net

Other expense of $2.6 million for the six months ended June 30, 2008 primarily consists of a call premium of $4.2 million and a write-off of $0.9 million related to the early extinguishment of a portion of the Company’s 12% senior subordinated discount notes which were offset by foreign currency exchange gains and interest income.

Income Tax Expense

Income tax expense of $20.7 million for the six months ended June 30, 2008 increased $12.4 million from $8.3 million for the same period in 2007 primarily reflecting the higher level of pre-tax income in 2008.  Our income tax provision differs from the U.S. statutory federal income tax rate primarily due to U.S. statutory depletion, state income taxes (net of federal tax benefit), foreign income tax rate differentials, foreign mining taxes, accrued interest and penalties on uncertain tax positions, and interest expense recognition differences for book and tax purposes.

Liquidity and Capital Resources

Historically, we have used cash generated from operations to meet our working capital needs, fund capital expenditures, pay dividends and make payments on our debt.  When we cannot meet our liquidity needs with cash flows from operations due to the seasonality of our business, we borrow under our revolving credit facility. We expect that ongoing cash requirements will be funded from our operations or available borrowing facilities. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

Cash and cash equivalents of $40.7 million as of June 30, 2008 increased $28.6 million over December 31, 2007 due to the strong winter season sales which generated operating cash flows of $178.3 million for the first six months of 2008, a $68.3 million increase when compared to 2007.  We used a portion of those cash flows principally to fund capital expenditures of $20.0 million, pay $22.1 million of dividends on our common stock, repay $72.2 million of our 12% senior subordinated discount notes, including a $70 million partial call of these notes, and repay $33.9 million of our revolving credit facility which was outstanding as of December 31, 2007.

As of June 30, 2008, we had $509.0 million of principal indebtedness including $109.8 million of senior subordinated discount notes and $399.2 million of term loan borrowings under our senior secured credit agreement. Our senior secured credit agreement also includes a revolving credit facility which provides borrowing capacity up to an aggregate amount of $125.0 million.  No amounts were borrowed under our revolving credit facility as of June 30, 2008. We had $10.0 million of outstanding letters of credit as of June 30, 2008 which reduced our borrowing availability to $115.0 million.

Our 12% subordinated discount notes became fully-accreted on June 1, 2008 with subsequent interest expense to be paid semi-annually in cash.  The notes mature in 2013.  We are continuing to monitor the credit markets and evaluate the economics of refinancing that debt.  However, we believe our cash flows from operations and borrowing availability under the revolving credit agreement will allow us the liquidity to pay cash interest on our indebtedness without materially adversely affecting our financial condition.

Our significant debt service obligations could, under certain circumstances, materially affect our financial condition and impair our ability to operate our business or pursue our business strategies.  As a holding company, CMI’s investments in its operating subsidiaries constitute substantially all of its assets. Consequently, our subsidiaries conduct all of our consolidated operations and own substantially all of our operating assets. The principal source of the cash needed to pay our obligations is the cash generated from our subsidiaries’ operations and their borrowings. Our subsidiaries are not obligated to make funds available to CMI.  Furthermore, we must remain in compliance with the terms of our senior secured credit facilities, including the total leverage ratio and interest coverage ratio, in order to make payments on our subordinated discount notes or pay dividends to our stockholders.  We must also comply with the terms of our indenture which limit the amount of dividends we can pay to our stockholders.  Although we are in compliance with our debt covenants as of June 30, 2008, we cannot assure you that we will remain in compliance with these ratios nor can we assure you that the agreements governing the current and future

16

indebtedness of our subsidiaries will permit our subsidiaries to provide us with sufficient dividends, distributions or loans to fund scheduled interest and principal payments on the subordinated discount notes when due. If we consummate an acquisition, our debt service requirements could increase. Furthermore, we may need to refinance all or a portion of our indebtedness on or before maturity, but we cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all.

For the Six Months Ended June 30, 2008 and 2007

Net cash flows provided by operating activities for the six months ended June 30, 2008 were $178.3 million, an increase of $68.3 million compared to $110.0 million for the six months ended June 30, 2007.  Of these amounts, approximately $86.1 million and $55.2 million for 2008 and 2007, respectively, were generated by net working capital reductions.  These working capital changes are indicative of the seasonal nature of our deicing products and will vary with the severity of the winter weather in our markets.

Net cash flows used by investing activities of $18.8 million and $30.4 million for the six months ended June 30, 2008 and 2007, respectively, resulted from capital expenditures of $20.0 million and $22.8 million respectively, and for 2007, also included $7.6 million of expenditures for the acquisition of a records management business.  Capital expenditures for 2008 include costs for our expansion and productivity projects at our Goderich mine and Great Salt Lake evaporation ponds and SOP processing plant.  Our Goderich mine expansion project is designed to increase that mine’s production capacity by 750,000 tons by the end of 2008.  At the Great Salt Lake, we are initially upgrading our SOP processing plant and modifying existing ponds to improve productivity, and conducting engineering and permitting activities to support our longer-term SOP evaporation pond expansion project.  The remaining capital expenditures were primarily for routine replacements.

Financing activities during the 2008 six-month period used $128.4 million of cash flows, primarily to make $110.3 million of payments to reduce our outstanding debt and $22.1 million of dividend payments.  During 2007, we repaid $16.2 million of borrowings under our revolving credit facility and made principal repayments totaling $20.7 million to reduce the balance of our term loan, including approximately $19.3 million of reductions in excess of our scheduled maturities.

Recent Accounting Pronouncements

During the first quarter of 2008, the FASB issued FASB Statement No. 161 – “Disclosures about Derivative Instruments and Hedging Activities”.  This statement will require holders of derivative instruments to provide qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses from derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements.  This statement is effective for interim and annual periods beginning after November 15, 2008.  Although the Company is evaluating the additional disclosure requirements, adoption of this statement will not have any effect on the Company’s results of operations, financial condition or cash flows.

Effects of Currency Fluctuations

We conduct operations in Canada, the United Kingdom and the United States. Therefore, our results of operations are subject to both currency transaction risk and currency translation risk. We incur currency transaction risk whenever we or one of our subsidiaries enter into 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 functional currency and then translated into U.S. dollars for inclusion in our consolidated financial statements. The majority of our revenues and costs are denominated in U.S. dollars, with pounds sterling and Canadian dollars also being significant.  Exchange rates between those currencies and U.S. dollars in recent years have fluctuated significantly and may do so in the future. Significant changes in the value of the Canadian dollar or pound sterling relative to the U.S. dollar could have a material adverse effect on our financial condition and our ability to meet interest and principal payments on U.S. dollar denominated debt.

Seasonality

We experience a substantial amount of seasonality in salt segment 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 and professional 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, we stockpile sufficient quantities of deicing salt throughout the second, third and fourth quarters to meet the estimated requirements for the upcoming winter season.

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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 exchange rate risk and commodity pricing risk. Management has taken actions to mitigate our exposure to commodity pricing and interest rate risk by entering into forward derivative instruments and interest rate swap agreements, and may take further actions to mitigate our exposure to changes in the cost of transporting our products due to variations in our contracted carriers’ cost of fuel, which is typically diesel fuel.  However, there can be no assurance that our hedging activities will eliminate or substantially reduce these risks.  We do not enter into any financial instrument arrangements for speculative purposes. The Company’s market risk exposure related to these items has not changed materially since December 31, 2007.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures – As of the end of the period covered by this report, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) was performed under the supervision and with the participation of the Company’s management, including the CEO and CFO. Based on that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2008 to ensure that information required to be disclosed in the reports it files and submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.

For this purpose, disclosure controls and procedures include controls and procedures designed to ensure that information that is required to be disclosed under the Exchange Act is accumulated and communicated to the Company's management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting - There have been no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

The Company, 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. There have been no material developments during 2008 with respect to legal proceedings.

Item 1A. Risk Factors

There have been no material changes to the risk factors previously discussed in Item 1A of the Company’s Form 10-K for the year ended December 31, 2007.

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

None.

Item 3.  Defaults upon Senior Securities

None.

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

The annual meeting of stockholders was held on May 8, 2008 in Overland Park, Kansas.  Two items were submitted to a vote of stockholders as described in our 2008 Proxy Statement filed with the Securities and Exchange Commission on April 4, 2008.  The following table briefly describes the proposals and result of the stockholders’ vote.

1.   To elect the following persons as directors for a term of three years.

	Votes in Favor	Votes Withheld
Mr. Vernon G. Baker, II	29,447,042	1,089,429
Mr. Bradley J. Bell	29,643,938	892,533
Mr. Richard S. Grant	29,448,792	1,087,679

In addition to the directors listed above whose terms will expire in 2011, continuing directors whose terms will expire in 2009 are Mr. David J. D’Antoni, Mr. Perry W. Premdas and Mr. Allan R. Rothwell.  Continuing directors whose terms will expire in 2010 are Dr. Angelo C. Brisimitzakis and Mr. Timothy R. Snider.

2.   To ratify the appointment of Ernst & Young LLP as Compass’s independent auditors for fiscal year 2008.

Vote in Favor	Votes Against	Votes Abstaining
30,496,621	24,914	14,936

Item 5.  Other Information

Not applicable.

Item 6.  Exhibits

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
10.1*	Form of Dividend Equivalents Agreement.
31.1*	Section 302 Certifications of Angelo C. Brisimitzakis, President and Chief Executive Officer.
31.2*	Section 302 Certifications of Rodney L. Underdown, Vice President and Chief Financial Officer.
32*	Certification Pursuant to 18 U.S.C.§1350 of Angelo C. Brisimitzakis, President and Chief Executive Officer and Rodney L. Underdown, Vice President and Chief Financial Officer.

* Filed herewith

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SIGNATURES

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

		COMPASS MINERALS INTERNATIONAL, INC.
Date:	July 29, 2008	/s/ Angelo C. Brisimitzakis
		Angelo C. Brisimitzakis
		President and Chief Executive Officer
Date:	July 29, 2008	/s/ Rodney L. Underdown
		Rodney L. Underdown
		Vice President and Chief Financial Officer

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