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, 2007

or

o      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, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer R Accelerated filer £ Non-accelerated filer £

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 23, 2007 was 32,306,815 shares.

COMPASS MINERALS INTERNATIONAL, INC.

TABLE OF CONTENTS

Page

	PART I.  FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2007 (unaudited) and December 31, 2006		2
	Consolidated Statements of Operations for the three-month and six-month periods ended June 30, 2007 and 2006, (unaudited)		3
	Consolidated Statement of Stockholders’ Equity (Deficit) for the six-month period ended June 30, 2007, (unaudited)		4
	Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2007 and 2006, (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		19
Item 4.	Controls and Procedures		19
		PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings		19
Item 1A.	Risk Factors		19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		19
Item 3.	Defaults upon Senior Securities		19
Item 4.	Submission of Matters to a Vote of Security Holders		19
Item 5.	Other Information		20
Item 6.	Exhibits		20
SIGNATURES			21

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,
	2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	31.3		$	7.4
Receivables, less allowance for doubtful accounts of
$1.9in 2007 and $1.6 in 2006		64.5			114.0
Inventories		119.9			146.1
Deferred income taxes, net		10.7			8.5
Other		6.1			7.8
Total current assets		232.5			283.8
Property, plant and equipment, net		387.8			374.6
Intangible assets, net		20.9			21.5
Other		33.2			26.4
Total assets	$	674.4		$	706.3
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt	$	2.9		$	3.1
Accounts payable		47.5			73.0
Accrued expenses		16.7			23.0
Accrued salaries and wages		12.9			12.3
Income taxes payable		9.2			2.9
Accrued interest		4.5			4.7
Total current liabilities		93.7			119.0
Long-term debt, net of current portion		561.7			582.4
Deferred income taxes, net		6.9			11.1
Other noncurrent liabilities		60.9			58.9
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			0.3
Treasury stock, at cost - 3,088,549 shares at June 30, 2007 and
3,270,141 shares at December 31, 2006		(5.9	)		(6.2	)
Accumulated deficit		(91.7	)		(95.4	)
Accumulated other comprehensive income		46.6			35.8
Total stockholders' equity (deficit)		(48.8	)		(65.1	)
Total liabilities and stockholders' equity (deficit)	$	674.4		$	706.3
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,
	2007			2006			2007		2006
Sales	$	127.5		$	108.1		$	391.7	$	326.0
Shipping and handling cost		30.5			29.6			116.4		104.3
Product cost		71.6			58.5			185.3		136.7
Gross profit		25.4			20.0			90.0		85.0
Selling, general and administrative expenses		15.8			12.8			31.4		27.0
Operating earnings		9.6			7.2			58.6		58.0
Other (income) expense:
Interest expense		13.5			13.1			27.4		26.6
Other, net		-			(1.6	)		-		(2.0	)
Earnings (loss) before income taxes		(3.9	)		(4.3	)		31.2		33.4
Income tax expense (benefit)		(0.7	)		(2.2	)		8.3		6.9
Net earnings (loss)	$	(3.2	)	$	(2.1	)	$	22.9	$	26.5
Basic net earnings (loss) per share	$	(0.10	)	$	(0.07	)	$	0.70	$	0.82
Diluted net earnings (loss) per share	$	(0.10	)	$	(0.07	)	$	0.70	$	0.82
Cash dividends per share	$	0.32		$	0.305		$	0.64	$	0.61
Basic weighted-average shares outstanding		32,257,415			32,011,226			32,698,889		32,225,501
Diluted weighted-average shares outstanding		32,257,415			32,011,226			32,861,165		32,499,975
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, 2007
(Unaudited, in millions)
												Accumulated
			Additional									Other
	Common		Paid In			Treasury			Accumulated			Comprehensive
	Stock		Capital			Stock			Deficit			Income		Total
Balance, December 31, 2006	$	0.4	$	0.3		$	(6.2	)	$	(95.4	)	$	35.8	$	(65.1	)
Dividends on common stock				(1.7	)					(19.2	)				(20.9	)
Stock options exercised				2.1			0.3								2.4
Stock-based compensation				1.1											1.1
Comprehensive income:
Net earnings										22.9					22.9
Realization of pension costs													0.4		0.4
Unrealized gain on cash flow hedges													2.6		2.6
Foreign currency translation adjustments													7.8		7.8
Total comprehensive income															33.7
Balance, June 30, 2007	$	0.4	$	1.8		$	(5.9	)	$	(91.7	)	$	46.6	$	(48.8	)
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,
	2007			2006
Cash flows from operating activities:
Net earnings	$	22.9		$	26.5
Adjustments to reconcile net earnings to net cash flows provided by operating activities:
Depreciation, depletion and amortization		19.2			20.3
Finance fee amortization		0.7			0.7
Accreted interest		16.2			14.3
Deferred income taxes		(6.5	)		(12.1	)
Other, net		1.2			0.7
Changes in operating assets and liabilities:
Receivables		52.0			127.3
Inventories		28.5			(23.7	)
Other assets		0.6			3.3
Accounts payable and accrued expenses		(25.3	)		(63.1	)
Other noncurrent liabilities		0.5			1.2
Net cash provided by operating activities		110.0			95.4
Cash flows from investing activities:
Capital expenditures		(22.8	)		(15.9	)
Purchase of a business		(7.6	)		-
Other, net		-			(2.1	)
Net cash used in investing activities		(30.4	)		(18.0	)
Cash flows from financing activities:
Principal payments on long-term debt		(20.7	)		(21.7	)
Revolver activity		(16.2	)		(31.0	)
Dividends paid		(20.9	)		(19.7	)
Proceeds received from stock option exercises		0.3			0.3
Excess tax benefits from stock option exercises		2.1			1.6
Other, net		-			(0.1	)
Net cash used in financing activities		(55.4	)		(70.6	)
Effect of exchange rate changes on cash and cash equivalents		(0.3	)		4.2
Net change in cash and cash equivalents		23.9			11.0
Cash and cash equivalents, beginning of the year		7.4			47.1
Cash and cash equivalents, end of period	$	31.3		$	58.1
Supplemental cash flow information:
Interest paid, net of amounts capitalized	$	10.6		$	12.0
Income taxes paid, net of refunds		12.2			16.2
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 Europe. Its principal products are salt, which includes sodium chloride and magnesium chloride, and sulfate of potash (“SOP”), a specialty fertilizer. The company provides highway deicing salt to customers in North America and the United Kingdom, and produces and distributes consumer deicing and water conditioning products, ingredients used in consumer and commercial foods, specialty fertilizers, and products used in agriculture and other consumer 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 subsidiary, Compass Minerals Group, Inc. (“CMG”), and CMG’s 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 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. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of CMP for the year ended December 31, 2006 as filed with the Securities and Exchange Commission 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 sales. The result of this seasonality is that sales and operating income are generally higher in the first and fourth quarters and lower during the second and third quarters of each year. In particular, sales of highway and consumer deicing salt products are seasonal as they vary based on the severity of the winter conditions in areas where the product is used. Following industry practice in North America, we stockpile sufficient quantities of deicing salt in the second, third and fourth quarters to meet the estimated requirements for the winter season. Due to the seasonal nature of the highway deicing product lines, operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year.

Reclassifications – Certain prior period amounts have been reclassified from shipping and handling cost to product cost to conform to the current year presentation.

Recent Accounting Pronouncements – Effective January 1, 2007, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 – “Accounting for Uncertainty in Income Taxes” (FIN 48).  This interpretation provides guidance with regard to the recognition and measurement of uncertain tax positions, the accrual of interest and penalties, and increased disclosure requirements.  In particular, uncertain tax positions can only be recognized if they are “more likely than not” to be upheld based on their technical merits.  The measurement of the uncertain tax position is based on the largest benefit amount that is more likely than not (determined on a cumulative probability basis) to be realized upon settlement.  Compass Minerals has historically used the “more-likely-than-not” threshold for recognizing uncertain tax positions.  The adoption of this interpretation had no effect on the Company’s financial condition or results of operations.

The FASB also issued FASB Statement No. 157 – “Fair Value Measurements” during 2006.  This statement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  It provides a frame-work for measuring fair value and requires additional disclosures about fair value measurements.  This statement applies only to fair value measurements already required or permitted by other statements; it does not impose additional fair value measurements.  This statement is effective for fair value measurements in fiscal years beginning after November 15, 2007.  Management does not currently expect this statement to have a material impact on the Company’s financial condition or results of operations.

During the first quarter of 2007, the FASB issued FASB Statement No. 159 – “The Fair Value Option for Financial Assets and Financial Liabilities.”  This statement allows entities to choose, at specified dates, to measure certain financial instruments and firm commitments at fair value if fair value measurement was not already required by other guidance.  Subsequent unrealized gains and losses due to changes to fair value would be recognized in earnings.  Additionally, this statement establishes presentation and disclosure requirements to facilitate comparisons between entities that choose different measurement

6

attributes for similar types of assets and liabilities.   This statement is effective at the beginning of fiscal years beginning after November 15, 2007.  Management is currently evaluating its alternatives with respect to eligible items.

During the second quarter of 2007, the Emerging Issues Task Force (EITF) ratified EITF No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards.”  The consensus clarifies how a company should account for the income tax benefits received on dividends or dividend equivalents paid to employees on unvested share-based awards.  Under current accounting guidance, those dividends are accounted for as a reduction to retained earnings to the extent management estimates the underlying awards will eventually vest.  The dividends on the assumed forfeitures are treated as compensation expense.  The Task Force reached a consensus that a realized income tax benefit from dividends or dividend equivalents paid to employees for share-based awards that are charged to retained earnings should be recognized as an increase to additional paid-in capital rather than a reduction to income tax expense.  This consensus is to be applied prospectively and is effective for dividends declared in years beginning after December 15, 2007.

Under the Company’s 2005 Incentive Award Plan, the stock options and restricted stock units awarded to employees entitle the participants to receive non-forfeitable dividends.  The Company currently recognizes the tax benefits from these payments as a reduction to its income tax expense.  Management believes the application of this consensus in 2008 will not have a material affect on the Company’s financial condition or results of operations.

2.   Inventories:

Inventories consist of the following (in millions):

	June 30,		December 31,
	2007		2006
Finished goods	$	105.5	$	129.9
Raw materials and supplies		14.4		16.2
Total inventories	$	119.9	$	146.1

3.   Property, Plant and Equipment, Net:

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

	June 30,			December 31,
	2007			2006
Land and buildings	$	146.2		$	142.8
Machinery and equipment		447.1			424.4
Furniture and fixtures		15.4			15.1
Mineral interests		181.3			180.7
Construction in progress		39.3			20.0
		829.3			783.0
Less accumulated depreciation and depletion		(441.5	)		(408.4	)
Net property, plant and equipment	$	387.8		$	374.6

4.   Intangible Assets, Net:

Intangible assets consist of rights to produce SOP and a customer list acquired in connection with the purchase of an SOP marketing business. The accumulated amortization of intangible assets at June 30, 2007 and December 31, 2006 was $3.9 million and $3.3 million, respectively.

5.   Income Taxes:

Effective January 1, 2007, the Company adopted FIN 48 which, among other directives, requires uncertain tax positions to be recognized only if they are more likely than not to be upheld based on their technical merits.  The measurement of the uncertain tax position is based on the largest benefit amount that is more likely than not (determined on a cumulative probability basis) to be realized upon settlement of the matter.  The adoption of this interpretation had no effect on the Company’s financial condition or results of operations.

7

The Company files U.S., Canadian and U.K. tax returns at the federal and local taxing jurisdictional levels.  The Company’s U.S. federal tax returns for tax years 2003 forward remain open and subject to examination.  Generally, the Company’s state, local and foreign tax returns for years 2002 forward remain open and subject to examination, depending on the jurisdiction.

Upon adoption of FIN 48, the Company’s unrecognized tax benefits totaled approximately $27.7 million primarily due to transactions and deductions related to U.S. and Canadian operations. If favorably resolved, these unrecognized tax benefits would decrease the Company’s effective tax rate.  In addition, the Company accrues potential interest and penalties on its uncertain tax positions within its tax provision.  As of January 1, 2007, accrued interest and penalties totaled $8.4 million.  The Company believes its uncertain tax positions could decrease by up to $5 million during the next twelve months.  Additionally, the Company believes that up to $4 million of interest and penalties associated with its uncertain tax positions could be settled during the next 12 months.

The Company recorded income tax benefits of $0.7 million and $2.2 million for the three months ended June 30, 2007 and 2006, respectively, and income tax expense of $8.3 million and $6.9 million for the six months ended June 30, 2007 and 2006, respectively.  During the second quarter of 2006, the Company filed foreign tax returns and recorded a $0.6 million benefit for a true-up of previous accruals.  In addition to this, 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, accrued interest and penalties on uncertain tax positions, and interest expense recognition differences for book and tax purposes.

At June 30, 2007, the Company had approximately $41.7 million of NOLs that expire between 2010 and 2022. 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, 2007 and December 31, 2006, the Company’s valuation allowance was $2.9 million. 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,
	2007			2006
12 3/4% Senior Discount Notes due 2012	$	116.9		$	109.9
12% Senior Subordinated Discount Notes due 2013		161.7			152.6
Term Loan due 2012		286.0			306.7
Revolving Credit Facility due 2010		-			16.3
		564.6			585.5
Less current portion		(2.9	)		(3.1	)
Long-term debt, net of current portion	$	561.7		$	582.4

7.   Pension Plans:

Effective June 1, 2007, the Company terminated its defined benefit pension plan covering certain of its U.S. employees.  The Company intends to make a final contribution of approximately $0.2 million during the third quarter of 2007 to fully fund and settle the plan’s benefit obligations.  As a result of the termination, previously unrealized prior service costs of $0.2 million have been expensed to product cost during the three and six months ended June 30, 2007.

8

The components of net periodic benefit cost for the three and six months ended June 30, 2007 and 2006 are as follows (in millions):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Service cost for benefits earned during the year	$	0.2		$	0.2		$	0.4		$	0.4
Interest cost on projected benefit obligation		1.0			0.9			2.1			1.8
Return on plan assets		(1.2	)		(1.1	)		(2.4	)		(2.1	)
Net amortization		0.1			0.2			0.2			0.2
Curtailment loss		0.2			-			0.2			-
Net pension expense	$	0.3		$	0.2		$	0.5		$	0.3

During the six months ended June 30, 2007, the Company made $0.6 million of contributions to its U.K. plan.

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, 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

9

	Three Months Ended June 30, 2006
			Specialty		Corporate
	Salt		Fertilizer		and Other (a)			Total
Sales to external customers	$	80.4	$	27.7	$	-		$	108.1
Intersegment sales		-		3.1		(3.1	)		-
Shipping and handling cost		25.9		3.7		-			29.6
Operating earnings (loss)(b)		4.8		8.3		(5.9	)		7.2
Depreciation, depletion and amortization		8.1		2.1		-			10.2
Total assets		479.9		147.5		36.6			664.0

	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

	Six Months Ended June 30, 2006
			Specialty		Corporate
	Salt		Fertilizer		and Other (a)			Total
Sales to external customers	$	270.6	$	55.4	$	-		$	326.0
Intersegment sales		-		5.6		(5.6	)		-
Shipping and handling cost		96.4		7.9		-			104.3
Operating earnings (loss)(b)		54.1		16.2		(12.3	)		58.0
Depreciation, depletion and amortization		16.1		4.2		-			20.3

(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.

(b) The salt segment includes $1.0 million and $5.1 million of insurance proceeds for the three and six months ended June 30, 2006, respectively, as discussed below.

“Corporate and Other” in the 2007 tables above include the results of operations and assets of our records management business acquired effective November 1, 2006.  Additionally, effective January 12, 2007, the Company acquired all of the outstanding common stock of Interactive Records Management Limited (IRM), a records management business located in London, England for approximately $7.6 million in cash, consisting of assets with a fair value of $8.7 million, net of liabilities assumed of $1.1 million.  The purchase agreement also provides for up to approximately $2 million of contingent consideration depending on the level of revenues achieved over the next two years.

During the second quarter of 2006, the Company settled with its insurers and recognized the final $1.0 million of proceeds from a business interruption insurance recovery as a reduction to product cost for the salt segment. The recovery recorded during the six months ended June 30, 2006 totaled $5.1 million. The business interruption claim was due to a temporary production interruption at the Goderich mine in late 2004 that resulted in reduced sales during the first quarter of 2005.

10.   Stockholders’ Equity and Equity Instruments:

In 2007, the Company granted 138,375 options and 45,925 restricted stock units to certain key employees under its 2005 Incentive Award Plan.  The Company’s stock price on the grant date of $33.44 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.

10

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 the options granted during 2007 is included in the table below. The weighted average grant date fair value of these options was $10.65.

	Range
Fair value of options granted	$7.61 - $11.23
Exercise price	$33.44
Expected term (years)	3 - 6
Expected volatility	24.25%
Dividend yield(a)	0%
Risk-free rate of return	4.5% - 4.55%

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

During the six months ended June 30, 2007, the Company reissued 177,516 shares of treasury stock related to the exercise of stock options and 4,076 shares related to the distribution of deferred stock units from the Directors’ Deferred Compensation Plan.  During the six months ended June 30, 2007 and 2006, the Company recorded $0.9 million and $0.4 million of compensation expense, respectively, pursuant to its stock-based compensation plans.  No amounts have been capitalized. The following table summarizes stock-based compensation activity during the six months ended June 30, 2007.

	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, 2006		746,182		$	15.91		72,900	$	25.60
Granted		138,375			33.44		45,925		33.44
Exercised		(177,516	)		1.74		-		-
Outstanding at June 30, 2007		707,041		$	22.90		118,825	$	28.63

Other Comprehensive Income

The Company’s comprehensive income is comprised of net earnings, the change in the unrealized gain (loss) on natural gas and interest rate swap cash flow hedges, foreign currency translation adjustments and realization of the previously unrealized net pension costs.  The components of comprehensive income for the three and six months ended June 30, 2007 and 2006 are as follows (in millions):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007		2006
Net earnings (loss)	$	(3.2	)	$	(2.1	)	$	22.9	$	26.5
Amortization of unrealized net pension costs		0.2			-			0.4		-
Unrealized gain (loss) on cash flow hedges		0.8			1.0			2.6		(1.0	)
Cumulative translation adjustments		7.0			6.7			7.8		7.9
Total comprehensive income	$	4.8		$	5.6		$	33.7	$	33.4

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The components of accumulated other comprehensive income as of June 30, 2007 are provided below.

	Balance					Balance
	December 31,			2007		June 30,
	2006			Change		2007
Unrealized net pension costs	$	(9.6	)	$	0.4	$	(9.2	)
Unrealized gain (loss) on cash flow hedges		(3.0	)		2.6		(0.4	)
Cumulative foreign currency translation adjustment		48.4			7.8		56.2
Accumulated other comprehensive income	$	35.8		$	10.8	$	46.6

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 income taxes of $1.8 million.

11.   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,
	2007			2006			2007		2006
Numerator:
Net earnings (loss)	$	(3.2	)	$	(2.1	)	$	22.9	$	26.5
Denominator:
Weighted average common shares outstanding,
shares for basic earnings per share (a)		32,257,415			32,011,226			32,698,889		32,225,501
Weighted average stock options outstanding (b)		-			-			162,276		274,474
Shares for diluted earnings per share		32,257,415			32,011,226			32,861,165		32,499,975
Earnings (loss) per share, basic	$	(0.10	)	$	(0.07	)	$	0.70	$	0.82
Earnings (loss) per share, diluted	$	(0.10	)	$	(0.07	)	$	0.70	$	0.82

(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 and 2006, participating securities relative to 561,400 and 373,100 shares, respectively, 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 each year also excluded non-participating stock options relative to 264,466 and 517,611 shares, respectively, because they were anti-dilutive.

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

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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,” “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, 2007, 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.  Due to the relatively low value of salt, transportation costs constitute a relatively large portion of the total delivered cost of our product.  Our deicing sales are seasonal and can fluctuate from year to year depending on the severity of the winter season weather in our markets.  Consequently, inventory management practices can affect our production volumes which may impact our per ton cost of inventory and ultimately our profit margins.  Although the winter weather in our North American markets during the first quarter of 2007 was more severe than the winter weather during the first quarter of 2006, it remained milder than normal.  Our U.K. subsidiary experienced significantly milder weather during the first quarter of 2007 when compared to normal and when compared to the first quarter of the prior year.

Our sulfate of potash (SOP) product is used in the production of specialty fertilizers for high-value crops and turf.  Agricultural activities are also affected by weather conditions, primarily in the western and southeastern portions of the United States where the crops and soil conditions favor SOP.  Agricultural activities may also be responsive to economic factors as they may impact the amount or type of crop grown in certain locations.

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 new records management business and unallocated corporate activities and net assets.  As discussed in Note 9 to the Consolidated Financial Statements, we acquired a records management business in the U.K. (“DeepStore”) effective November 1, 2006 and another U.K. records management business in January 2007.  The results of operations of the records management business, including sales of $2.8 million and $5.0 million for the three and six months ended June 30, 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.

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	Three Months Ended				Six Months Ended
	June 30,				June 30,
Millions of dollars, except per ton data	2007		2006		2007		2006
Sales by Segment:
Salt sales	$	89.2	$	80.4	$	319.1	$	270.6
Less: salt shipping and handling		25.5		25.9		106.7		96.4
Salt product sales	$	63.7	$	54.5	$	212.4	$	174.2
Specialty fertilizer (SOP) sales	$	35.5	$	27.7	$	67.6	$	55.4
Less: SOP shipping and handling		5.0		3.7		9.7		7.9
Specialty fertilizer product sales	$	30.5	$	24.0	$	57.9	$	47.5
Sales Volumes (thousands of tons)
Highway deicing		990		833		5,102		4,418
Consumer and industrial		503		519		1,084		1,060
Specialty fertilizer		115		95		222		192
Average Sales Price (per ton)
Highway deicing	$	29.55	$	29.50	$	37.53	$	35.59
Consumer and industrial		119.09		107.66		117.80		106.99
Specialty fertilizer		307.62		292.61		304.23		288.95

Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006

Sales

Sales for the second quarter of 2007 of $127.5 million increased $19.4 million, or 18% compared to $108.1 million for the same quarter of 2006. Sales primarily include revenues from the sale of our products, or “product sales,” revenues from our new records management business, and shipping and handling costs incurred to deliver salt and specialty fertilizer products to our customers. Such shipping and handling costs were $30.5 million during the second quarter of 2007, an increase of $0.9 million compared to $29.6 million for the same quarter of 2006.  Shipping and handling costs increased primarily as a result of higher sales volumes during the second quarter of when compared to the same period of 2006.

Product sales for the second quarter of 2007 of $94.2 million increased $15.7 million, or 20% compared to $78.5 million for the same period in 2006 reflecting higher sales of both salt and specialty potash fertilizer products.

Salt product sales for the second quarter of 2007 of $63.7 million increased $9.2 million, or 17% compared to $54.5 million for the same period in 2006 due to price improvements and higher North American deicing salt sales volumes.  Product sales price improvements increased sales by approximately $5.3 million, principally for consumer and industrial products.  Higher North American highway deicing sales volumes also contributed an additional $4.4 million over the 2006 second quarter, partially offset by lower deicing sales volumes in the U.K. and lower volumes of consumer and industrial salt products.  The North American highway deicing sales volumes in the second quarter of 2006 were negatively impacted by an eight-week strike at our Goderich mine which reduced inventory volumes and resulted in lower sales to our chemical customers in that quarter.

Specialty potash fertilizer product sales for the second quarter of 2007 of $30.5 million increased $6.5 million, or 27% compared to $24.0 million for the same period in 2006.  Higher SOP sales volumes contributed approximately $5.6 million of additional sales while higher product sales prices increased sales by approximately $0.9 million. The improved sales volumes reflect more normal weather conditions in the western U.S. in 2007 compared to the wet weather conditions during the 2006 spring season, and improved agricultural conditions in the eastern U.S. during 2007 which strengthened sales in that market.

Gross Profit

Gross profit for the second quarter of 2007 of $25.4 million increased $5.4 million or 27% compared to $20.0 million in the second quarter of 2006, mainly reflecting the product sales price improvements of approximately $6.2 million and favorable North American highway and specialty fertilizer sales volumes as discussed above, and efficiency improvements attributable to increased production at our Goderich mine as a consequence of the strike during the second quarter of 2006.  Management estimates the impact of the reduced production and incremental costs caused by the strike reduced gross profit by

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approximately $3 million to $4 million during the second quarter of 2006 when compared to planned production spending and volumes during that period.  These margin improvements were partially offset by lower margins from our U.K. operations due to curtailed production during the second quarter of 2007 following the extremely mild winter weather which negatively impacted our gross profit by approximately $3 million, and by higher raw material costs.  The higher raw material costs primarily reflect the higher costs of potassium chloride (KCl), a raw material used in making our sulfate of potash fertilizer.  KCl is purchased under a long-term supply contract with annual changes in price based on previous year changes in the market price for KCl.  Although the pricing under this contract continues to be favorable to market, the contract price has increased significantly over the prior year.  Additionally, the second quarter of 2006 benefited from a $1.0 million business interruption insurance recovery that reduced cost of sales in that period.  The 2006 business interruption recovery was caused by a 2004 temporary production interruption at the Goderich mine which resulted in unavailable finished goods inventory and our inability to meet the incremental demand for deicing salt products in certain of the Company’s markets in 2005.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the second quarter of 2007 of $15.8 million increased $3.0 million, or 23% compared to $12.8 million for the same period of 2006.  The increase in expense for 2007 is primarily due to higher accruals for variable compensation and benefits and additional expenses from the new records management business.

Interest Expense

Interest expense for the second quarter of 2007 of $13.5 million increased $0.4 million compared to $13.1 million for the same period in 2006. This increase is due to higher accreted interest expense on the higher principal balances of our discount notes, partially offset by lower interest expense on our credit agreement due to a lower average level of borrowings outstanding.   Subsequent to June 30, 2006, we have reduced our borrowings under our term loan by approximately $42.4 million, principally through voluntary early repayments.

Other (Income) Expense, Net

Other (income) expense, net primarily includes foreign currency exchange gains and losses and interest income.  For the three months ended June 30, 2007, foreign exchange losses were offset by interest income while the same period of 2006 includes foreign exchange gains and interest income.

Income Tax Expense (Benefit)

Income tax benefit of $0.7 million for the three months ended June 30, 2007 decreased from $2.2 million for the same period in 2006.  During the second quarter of 2006, the Company filed foreign tax returns and recorded a $0.6 million benefit for a true-up of previous accruals.  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.  See Note 5 to the Consolidated Financial Statements for a discussion of the Company’s uncertain tax positions.

Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006

Sales

Sales for the six months ended June 30, 2007 of $391.7 million increased $65.7 million, or 20% compared to $326.0 million for the six months ended June 30, 2006.  Shipping and handling costs were $116.4 million during six months of 2007, an increase of $12.1 million compared to $104.3 million for the same 2006 period.  The increase in shipping and handling-related costs for 2007 is due to the higher volume of products sold as compared to 2006.

Product sales for the six months ended June 30, 2007 of $270.3 million increased $48.6 million, or 22% compared to $221.7 million for the same period in 2006 reflecting an increase in the salt and specialty fertilizer segments as discussed below.

Salt product sales of $212.4 million for six months of 2007 increased $38.2 million or 22% compared to $174.2 million in 2006 reflecting price improvements and higher sales volumes in 2007.  Product sales price improvements increased sales by approximately $21.6 million for the six months ended June 30, 2007.  Although the winter weather in our markets during the first quarter of 2007 was milder than normal, it was more severe than the mild winter weather during the first quarter of 2006.  Additionally, the 2006 sales volume was negatively impacted by the eight-week strike at our Goderich mine during the second quarter of 2006 which depleted inventory levels resulting in lower sales to our chemical customers. Consequently, in North America, we sold approximately 992,000 more tons of salt in 2007 than in 2006, increasing sales by approximately $22.5 million.  The North American increase in sales volume was partially offset by volume declines in the U.K. caused by the

15

extremely mild winter weather during 2007 which negatively impacted sales by approximately $7.6 million.  The strengthening of the British pound sterling relative to the U.S. dollar also improved sales by approximately $1.0 million.

Specialty potash fertilizer product sales of $57.9 million for the six months ended June 30, 2007 increased $10.4 million or 22% over $47.5 million during the same period in 2006 reflecting an increase in sales price and higher sales volumes.  Product sales price increases improved sales by $1.8 million and higher domestic and export sales volumes contributed approximately $8.6 million of additional sales.  The improved sales volumes in the western United States reflect improved weather conditions as compared to the prolonged wet weather conditions during the 2006 spring season while the improved agricultural conditions in the eastern U.S. strengthened sales in that market.

Gross Profit

Gross profit for the six months ended June 30, 2007 of $90.0 million increased $5.0 million, or 6% compared to $85.0 million for the same period in 2006, although as a percentage of sales gross margin decreased to 23% from 26% in 2006.  The net improvement in sales volumes and prices discussed above were partially offset by higher per ton production costs during 2007 that resulted from lower deicing salt production volumes when compared to the prior year, higher raw material costs (principally KCl), and the benefit in 2006 of the $5.1 million of business interruption insurance proceeds received and recorded as a reduction of product costs.

The per unit cost of deicing product sold increased as a result of curtailed production during the first quarter of 2007 as a consequence of the milder weather in North America and the U.K. during the 2006 - 2007 winter season as compared to the 2005 – 2006 winter season.  Deicing salt production levels were higher than normal during the first quarter of 2006 in response to the severe winter weather during the prior quarter ended December 2005, while production volumes in North America were lower than normal in the second quarter of 2006 due to the eight week strike at our Goderich mine.  Higher raw material costs in 2007 also resulted in higher per ton production cost.  KCl, used in making our sulfate of potash fertilizer, is purchased under a long-term supply contract with annual changes in price based on previous year changes in the market price for KCl.  Although the pricing under this contract continues to be favorable to market, the contract price has increased significantly over the prior year.

The $5.1 million of business interruption insurance proceeds received in 2006 resulted from a 2004 temporary production interruption at the Goderich mine which resulted in unavailable finished goods inventory and our inability to meet the incremental demand for deicing salt products in certain of the Company’s markets in 2005.  Finally, we also experienced an unfavorable customer margin mix in 2007 compared to 2006 as the snowfall in our markets was more concentrated at lower-margin market locations.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the 2007 six month period of $31.4 million increased $4.4 million, or 16% compared to $27.0 million for the same period of 2006.  The increase in expense for 2007 is primarily due to higher accruals for variable compensation and benefits expense, additional expenses from our new records management business in the U.K., and higher expense due to a change in the timing of the vacation accrual resulting from a change in the Company’s earned vacation policy.

Interest Expense

Interest expense for the six months ended June 30, 2007 of $27.4 million increased $0.8 million compared to $26.6 million for the same period in 2006.  This increase is due to higher accreted interest expense on the higher principal balances of our discount notes, partially offset by lower interest expense on our credit agreement due to a lower average level of borrowings outstanding.  Subsequent to June 30, 2006, we have reduced our borrowings under our term loan by approximately $42.4 million, principally through voluntary early repayments.

Other (Income) Expense, Net

Other (income) expense, net for the six months ended June 30, 2007 primarily includes foreign currency exchange losses offset by interest income.  The 2006 six-month period includes higher levels of interest income due to higher average balances of cash and cash equivalents, and foreign currency exchange gains.

Income Tax Expense (Benefit)

Income tax expense of $8.3 million for the six months ended June 30, 2007 increased $1.4 million from $6.9 million for the same period in 2006.  During the second quarter of 2006, the Company filed foreign tax returns and recorded a $0.6 million benefit for a true-up of previous accruals.  Our income tax provision also differs from the U.S. statutory federal income tax rate

16

primarily due to U.S. statutory depletion, state income taxes (net of federal tax benefit), foreign income tax rate differentials, foreign mining income taxes, accrued interest and penalties on uncertain tax positions, and interest expense recognition differences for book and tax purposes.  See Note 5 to the Consolidated Financial Statements for a discussion of the Company’s uncertain tax positions.

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.

During the six months ended June 30, 2007, cash flows from operations were $110.0 million.  We used a portion of those cash flows to fund capital expenditures of $22.8 million, pay $20.9 million of dividends to the holders of our common stock, repay the $16.2 million balance of our revolving credit facility and make $20.7 million of principal payments on our term loan, including approximately $19.3 million which we voluntarily paid early.

As of June 30, 2007, we had $564.6 million of principal indebtedness including $116.9 million of senior discount notes with a face value of $123.5 million, $161.7 million of senior subordinated discount notes with a face value of $179.6 million and $286.0 million of term loan 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, 2007 and we had cash on hand totaling $31.3 million.  As of June 30, 2007, borrowing availability under our revolving credit facility was reduced by $12.6 million of letters of credit, leaving an available balance of approximately $112.4 million.  As of June 30, 2007, we are in compliance with all conditions and covenants related to these borrowings.

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.  CMI is a holding company with no operations of its own and accordingly, our operations are conducted through our operating subsidiaries. The CMG senior secured credit agreement is collateralized by substantially all of the operating assets of our subsidiaries.  Our subsidiaries have not guaranteed and have no legal obligation to make funds available to CMI for payment on the senior subordinated notes or discount notes (“Notes”) or to pay dividends on our capital stock.  However, our ability to make payments on the Notes and distribute dividends to our stockholders is dependent on the earnings and the distribution of funds from our subsidiaries. Additionally, the terms of the CMG senior secured credit agreement limit the transferability of assets and the amount of dividends that our subsidiaries can distribute to CMI. The terms also restrict our subsidiaries from paying dividends to CMI in order to fund cash interest on the discount notes if we do not comply with the provisions relating to the adjusted total leverage ratio and consolidated fixed charge coverage ratio, or if a default or event of default has occurred and is continuing under CMG’s senior secured credit agreement. In addition, we cannot assure you that we will maintain these ratios. We cannot assure you that the agreements governing the current and future indebtedness of our subsidiaries will permit our subsidiaries to provide CMI with sufficient dividends, distributions or loans to fund scheduled interest and principal payments on the 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 Notes on or before maturity and we cannot assure you that we will be able to refinance any of it on commercially reasonable terms or at all.

For the Six Months Ended June 30, 2007 and 2006

Net cash flows provided by operating activities for the six months ended June 30, 2007 and 2006 were $110.0 million and $95.4 million, respectively. Of these amounts, $55.2 million and $40.5 million for 2007 and 2006 respectively, were generated by net working capital reductions.  In 2007, the decrease in receivables of $52.0 million as compared to the decrease of $127.3 million in 2006 reflects the impact of milder winter weather during the fourth quarter of 2006 as compared to the severe weather during the fourth quarter of 2005.  The decrease in inventory of $28.5 million during the first half of 2007 as compared to the inventory build of $23.7 million in 2006 also reflects the contrasting seasons as beginning 2007 inventory levels were higher following the milder winter weather in the fourth quarter of 2006 resulting in curtailed production during 2007.  Finally, the decrease in accounts payable and accrued expenses of $25.3 million for 2007 and $63.1 million for 2006 also reflect the seasonal nature of our highway deicing product line.

Net cash flows used by investing activities for the six months ended June 30, 2007 and 2006, of $30.4 million and $18.0 million, respectively, resulted from capital expenditures of $22.8 million and $15.9 million, respectively, and the acquisition of a records management business for $7.6 million in 2007. The 2007 capital expenditures include $3.9 million for projects to replace an existing underground rock salt mill at our Canadian mine and expand that mine’s production capacity by approximately 750,000 tons.  The new mill is expected to be placed in service during the third quarter of 2007 and the

17

expansion project is expected to be completed by 2008.  The remaining capital expenditures were primarily for routine replacements.

Financing activities in the 2007 six-month period used $55.4 million, primarily for $20.9 million of dividend payments and $36.9 million of payments to reduce our outstanding debt.  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.  Net cash flow used in financing activities during 2006 was $70.6 million, including $21.7 million to reduce our term loan balance (of which $20.0 million resulted from voluntary early principal repayments), $31.0 million of payments on our revolving credit facility, and $19.7 million of dividends.

Recent Accounting Pronouncements

During 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 157 – “Fair Value Measurements”.  This statement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  It provides a frame-work for measuring fair value and requires additional disclosures about fair-value measurements.  This statement applies only to fair-value measurements already required or permitted by other statements; it does not impose additional fair value measurements.  This statement is effective for fair value measurements in fiscal years beginning after November 15, 2007.  Management does not currently expect this statement to have a material impact on our financial condition or results of operations.

During the first quarter of 2007 the FASB issued FASB Statement No. 159 – “The Fair Value Option for Financial Assets and Financial Liabilities.”  This statement allows entities to choose, at specified dates, to measure certain financial instruments and firm commitments at fair value if fair value measurement was not already required by other guidance.  Subsequent unrealized gains and losses due to changes in fair value would be recognized in earnings.  Additionally, this statement establishes presentation and disclosure requirements to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities.   This statement is effective at the beginning of fiscal years beginning after November 15, 2007.  Management is currently evaluating its alternatives with respect to eligible items.

During the second quarter of 2007, the Emerging Issues Task Force (EITF) ratified EITF No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards.”  The issue is how a company should account for the income tax benefits received on dividends or dividend equivalents paid to employees on unvested share-based awards.  Under current accounting guidance, those dividends are accounted for as a reduction to retained earnings to the extent management estimates the underlying awards will eventually vest.  The dividends on the assumed forfeitures are treated as compensation expense.  The Task Force reached a consensus that a realized income tax benefit from dividends or dividend equivalents paid to employees for share-based awards that are charged to retained earnings should be recognized as an increase to additional paid-in capital rather than a reduction to income tax expense.  This consensus is to be applied prospectively and is effective for dividends declared in years beginning after December 15, 2007.

Under our 2005 Incentive Award Plan, the stock options and restricted stock units awarded to employees entitle the participants to receive non-forfeitable dividends.  The tax benefits recognized from these payments are currently recorded as a reduction to income tax expense.  Management believes the application of this consensus in 2008 will not have a material affect on our financial condition or results of operations.

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 local 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 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

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conditions in areas where the product is used.  Following industry practice in North America, we stockpile sufficient quantities of deicing salt in the second, third and fourth quarters to meet the estimated requirements for the winter season.

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 an interest rate swap agreement, and may take further actions to mitigate our exposure to other risks.  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, 2006.

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, 2007 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 as and when required.

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 2007 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.

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

The annual meeting of stockholders was held on May 10, 2007 in Overland Park, Kansas.  Two items were submitted to a vote of stockholders as described in our 2007 Proxy Statement dated April 4, 2007.  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
Dr. Angelo C. Brisimitzakis	30,119,063	207,009
Mr. Timothy R. Snider	30,116,024	210,048

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In addition to the directors listed above whose terms will expire in 2010, continuing directors whose terms will expire in 2008 are Mr. Vernon G. Baker II, Mr. Bradley J. Bell and Mr. Richard S. Grant.  Continuing directors whose terms will expire in 2009 are Mr. David J. D’Antoni, Mr. Perry W. Premdas and Mr. Allan R. Rothwell.

2.   To ratify the appointment of Ernst & Young LLP as Compass’s independent auditors for fiscal year 2007.

Vote in Favor	Votes Against	Votes Abstaining
30,257,617	37,690	30,765

Item 5.  Other Information

Not applicable.

Item 6.  Exhibits

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
10.1*	Form of Restricted Stock Unit Award Agreement.
10.2*	Compass Minerals Group, Inc. Restoration Plan.
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 30, 2007	/s/ Angelo C. Brisimitzakis
		Angelo C. Brisimitzakis
		President and Chief Executive Officer
Date:	July 30, 2007	/s/ Rodney L. Underdown
		Rodney L. Underdown
		Vice President and Chief Financial Officer

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