KAC 1st Quarter 2003 10-Q
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 10-Q



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


                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003


                          Commission file number 1-9447






                           KAISER ALUMINUM CORPORATION
             (Exact name of registrant as specified in its charter)


                                    DELAWARE
                            (State of incorporation)
                                   94-3030279
                      (I.R.S. Employer Identification No.)


             5847 SAN FELIPE, SUITE 2500, HOUSTON, TEXAS 77057-3268
               (Address of principal executive offices) (Zip Code)


                                 (713) 267-3777
              (Registrant's telephone number, including area code)



      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes  /X/   No  /   /

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

      At April 30, 2003, the registrant had 80,186,095 shares of Common Stock
outstanding.



--------------------------------------------------------------------------------
              KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
                             (Debtor-in-Possession)


                         PART I - FINANCIAL INFORMATION


ITEM 1.    FINANCIAL STATEMENTS

                           CONSOLIDATED BALANCE SHEETS
                            (In millions of dollars)


                                                                                      March 31,      December 31,
                                                                                        2003             2002
                                                                                   --------------   ---------------
                                                                                     (Unaudited)
                                     ASSETS
Current assets:
   Cash and cash equivalents                                                       $        89.7    $         78.7
   Receivables:
      Trade, less allowance for doubtful receivables of $11.0                              122.2             103.1
      Other                                                                                 40.5              46.4
   Inventories                                                                             247.5             254.9
   Prepaid expenses and other current assets                                                33.4              33.5
                                                                                   --------------   ---------------
      Total current assets                                                                 533.3             516.6

Investments in and advances to unconsolidated affiliates                                    73.4              69.7
Property, plant, and equipment - net                                                       990.8           1,009.9
Other assets                                                                               547.5             629.2
                                                                                   --------------   ---------------

      Total                                                                        $     2,145.0    $      2,225.4
                                                                                   ==============   ===============
                  LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities not subject to compromise -
   Current liabilities:
      Accounts payable                                                             $       140.1    $        130.6
      Accrued interest                                                                       3.5               2.9
      Accrued salaries, wages, and related expenses                                         43.9              46.7
      Accrued postretirement medical benefit obligation - current portion                   60.2              60.2
      Other accrued liabilities                                                             49.6              64.2
      Payable to affiliates                                                                 31.2              28.1
      Long-term debt - current portion                                                       1.0                .9
                                                                                   --------------   ---------------
        Total current liabilities                                                          329.5             333.6

   Long-term liabilities                                                                    83.3              86.9
   Long-term debt                                                                           42.6              42.7
                                                                                   --------------   ---------------
                                                                                           455.4             463.2

Liabilities subject to compromise                                                        2,719.8           2,726.0

Minority interests                                                                         122.2             121.8
Commitments and contingencies
Stockholders' equity (deficit):
   Common stock                                                                               .8                .8
   Additional capital                                                                      539.5             539.9
   Accumulated deficit                                                                  (1,447.5)         (1,382.4)
   Accumulated other comprehensive income (loss)                                          (245.2)           (243.9)
                                                                                   --------------   ---------------
      Total stockholders' equity (deficit)                                              (1,152.4)         (1,085.6)
                                                                                   --------------   ---------------
        Total                                                                      $     2,145.0    $      2,225.4
                                                                                   ==============   ===============




   The accompanying notes to interim consolidated financial statements are an
                       integral part of these statements.


                    STATEMENTS OF CONSOLIDATED INCOME (LOSS)
                                   (Unaudited)
          (In millions of dollars, except share and per share amounts)


                                                                                             Quarter Ended
                                                                                               March 31,
                                                                                   --------------------------------
                                                                                        2003             2002
                                                                                   --------------   ---------------

Net sales                                                                          $       339.4    $        370.6
                                                                                   --------------   ---------------

Costs and expenses:
   Cost of products sold                                                                   353.3             340.2
   Depreciation and amortization                                                            19.3              22.5
   Selling, administrative, research and development, and general                           24.6              41.2
   Non-recurring operating charges                                                           1.3               1.6
                                                                                   --------------   ---------------
      Total costs and expenses                                                             398.5             405.5
                                                                                   --------------   ---------------

Operating loss                                                                             (59.1)            (34.9)

Other income (expense):
   Interest expense (excluding unrecorded contractual interest expense of
      $23.7 and $12.8, respectively)                                                        (2.6)            (13.5)
   Reorganization items                                                                     (7.4)             (9.6)
   Other - net                                                                              (1.3)              2.1
                                                                                   --------------   ---------------

Loss from continuing operations before income taxes, minority interests and
   discontinued operations                                                                 (70.4)            (55.9)

Provision for income taxes                                                                  (4.7)             (8.0)

Minority interests                                                                           1.9               1.5
                                                                                   --------------   ---------------

Loss from continuing operations                                                            (73.2)            (62.4)
                                                                                   --------------   ---------------

Discontinued operations:
   Loss from operations of curtailed Tacoma facility                                        (1.4)             (1.7)
   Gain from sale of Tacoma facility                                                         9.5              -
                                                                                   --------------   ---------------
Income (loss) from discontinued operations                                                   8.1              (1.7)
                                                                                   --------------   ---------------

Net loss                                                                           $       (65.1)   $        (64.1)
                                                                                   ==============   ===============

Earnings (loss) per share - Basic/Diluted:
   Loss from continuing operations                                                 $        (.91)   $         (.77)
                                                                                   ==============   ===============
   Income (loss) from discontinued operations                                      $         .10    $         (.02)
                                                                                   ==============   ===============
   Net loss                                                                        $        (.81)   $         (.79)
                                                                                   ==============   ===============

Weighted average shares outstanding (000):
   Basic                                                                                  80,311            80,723
   Diluted                                                                                80,311            80,723

   The accompanying notes to interim consolidated financial statements are an
                       integral part of these statements.



          STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (DEFICIT) AND
                           COMPREHENSIVE INCOME (LOSS)
                                   (Unaudited)
                            (In millions of dollars)

                      For the Quarter Ended March 31, 2003

                                                                                         Accumulated
                                                                                            Other
                                               Common     Additional     Accumulated    Comprehensive
                                                Stock       Capital        Deficit      Income (Loss)       Total
                                             ----------- ------------  -------------- ----------------- ------------
BALANCE, December 31, 2002                   $       .8  $     539.9   $    (1,382.4) $         (243.9) $  (1,085.6)

   Net loss                                          -            -            (65.1)            -            (65.1)
   Unrealized net decrease in value of
      derivative instruments arising during
      the period                                     -            -              -                (1.0)        (1.0)
   Reclassification adjustment
      for net realized gains on
      derivative instruments included in
      net loss                                       -            -              -                 (.3)         (.3)
                                                                                                        ------------
   Comprehensive income (loss)                       -            -              -               -            (66.4)

   Restricted stock cancellations                    -           (.6)            -               -              (.6)
   Restricted stock accretion                        -            .2             -               -               .2
                                             ----------- ------------  -------------- ----------------- ------------
BALANCE, March 31, 2003                      $       .8  $     539.5   $    (1,447.5) $         (245.2) $  (1,152.4)
                                             =========== ============  ============== ================= ============

                      For the Quarter Ended March 31, 2002

                                                                                         Accumulated
                                                                                            Other
                                               Common     Additional     Accumulated    Comprehensive
                                                Stock       Capital        Deficit      Income (Loss)       Total
                                             ----------- ------------  -------------- ----------------- ------------
BALANCE, December 31, 2001                   $       .8  $     539.1   $      (913.7) $          (67.3) $    (441.1)

   Net loss                                          -            -            (64.1)            -            (64.1)
   Unrealized net decrease in value of
      derivative instruments arising
      during the period prior to
      settlement                                     -            -              -               (12.1)       (12.1)
   Reclassification adjustment for
      net realized gains on derivative
      instruments included in net loss               -            -              -                (8.4)        (8.4)
                                                                                                        ------------
   Comprehensive income (loss)                                                                                (84.6)

   Incentive plan and restricted stock
      accretion                                      -            .3             -               -               .3
                                             ----------- ------------  -------------- ----------------- ------------
BALANCE, March 31, 2002                      $       .8  $     539.4   $      (977.8) $          (87.8) $    (525.4)
                                             =========== ============  ============== ================= ============






   The accompanying notes to interim consolidated financial statements are an
                       integral part of these statements.


                      STATEMENTS OF CONSOLIDATED CASH FLOWS
                                   (Unaudited)
                            (In millions of dollars)



                                                                                                 Quarter Ended
                                                                                                   March 31,
                                                                                            -----------------------
                                                                                               2003         2002
                                                                                            -----------  ----------
Cash flows from operating activities:
   Net loss                                                                                 $    (65.1)  $   (64.1)
   Adjustments to reconcile net loss to net cash (used) provided by operating
      activities:
      Depreciation and amortization (including deferred financing costs of $1.2 and $.7,
        respectively)                                                                             20.5        23.2
      Non-cash charges for restructuring charges in 2003 and reorganization items in 2002           .8         5.5
      Gain on sale of Tacoma facility in 2003 and real estate in 2002                             (9.5)       (4.0)
      Equity in (earnings) loss of unconsolidated affiliates, net of distributions                (4.1)       (1.5)
      Minority interests                                                                          (1.9)       (1.5)
      (Increase) decrease in trade and other receivables                                         (13.3)        5.0
      Decrease in inventories                                                                      7.3        13.5
      (Increase) decrease in prepaid expenses and other current assets                            (1.2)       51.1
      Increase in accounts payable and accrued interest                                           12.6        41.6
      Increase (decrease) in payable to affiliates and other accrued liabilities                   8.5       (35.9)
      Decrease in accrued and deferred income taxes                                              (24.0)       (1.5)
      Net cash impact of changes in long-term assets and liabilities                              12.0       (22.4)
      Other                                                                                        3.2        (1.3)
                                                                                            -----------  ----------
        Net cash (used) provided by operating activities                                         (54.2)        7.7
                                                                                            -----------  ----------

Cash flows from investing activities:
   Capital expenditures                                                                           (9.0)       (9.5)
   Net proceeds from dispositions:  primarily Tacoma facility and interests in office
      building complex in 2003; miscellaneous real estate in 2002                                 74.4         4.7
                                                                                            -----------  ----------
        Net cash provided (used) by investing activities                                          65.4        (4.8)
                                                                                            -----------  ----------

Cash flows from financing activities:
   Incurrence of financing costs                                                                   (.2)       (7.3)
                                                                                            -----------  ----------
        Net cash used by financing activities                                                      (.2)       (7.3)
                                                                                            -----------  ----------

Net increase (decrease) in cash and cash equivalents during the period                            11.0        (4.4)
Cash and cash equivalents at beginning of period                                                  78.7       153.3
                                                                                            -----------  ----------
Cash and cash equivalents at end of period                                                  $     89.7   $   148.9
                                                                                            ===========  ==========

Supplemental disclosure of cash flow information:
   Interest paid, net of capitalized interest of $.4 and $.3, respectively                  $       .7   $     1.9
   Income taxes paid                                                                              28.6         9.1




   The accompanying notes to interim consolidated financial statements are an
                       integral part of these statements.


               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
         (In millions of dollars, except prices and per share amounts)

1.    REORGANIZATION PROCEEDINGS

Kaiser Aluminum Corporation ("Kaiser" or the "Company"), its wholly owned
subsidiary, Kaiser Aluminum & Chemical Corporation ("KACC"), and 24 of KACC's
subsidiaries have filed separate voluntary petitions in the United States
Bankruptcy Court for the District of Delaware (the "Court") for reorganization
under Chapter 11 of the United States Bankruptcy Code (the "Code"); the Company,
KACC and 15 of KACC's subsidiaries (the "Original Debtors") filed in the first
quarter of 2002 and nine additional KACC subsidiaries (the "Additional Debtors")
filed in the first quarter of 2003. The Original Debtors and Additional Debtors
are collectively referred to herein as the "Debtors" and the Chapter 11
proceedings of these entities are collectively referred to herein as the
"Cases." For purposes of this Report, the term "Filing Date" shall mean, with
respect to any particular Debtor, the date on which such Debtor filed its Case.
None of KACC's non-U.S. joint ventures are included in the Cases. The Cases are
being jointly administered. The Debtors are managing their businesses in the
ordinary course as debtors-in-possession subject to the control and
administration of the Court.

Original Debtors. During the first quarter of 2002, the Original Debtors filed
separate voluntary petitions for reorganization. The wholly owned subsidiaries
of KACC included in such filings were: Kaiser Bellwood Corporation, Kaiser
Aluminium International, Inc., Kaiser Aluminum Technical Services, Inc., Kaiser
Alumina Australia Corporation (and its wholly owned subsidiary, Kaiser Finance
Corporation) and ten other entities with limited balances or activities.

The necessity for filing the Cases by the Original Debtors was attributable to
the liquidity and cash flow problems of the Company and its subsidiaries arising
in late 2001 and early 2002. The Company was facing significant near-term debt
maturities at a time of unusually weak aluminum industry business conditions,
depressed aluminum prices and a broad economic slowdown that was further
exacerbated by the events of September 11, 2001. In addition, the Company had
become increasingly burdened by asbestos litigation (see Note 7) and growing
legacy obligations for retiree medical and pension costs. The confluence of
these factors created the prospect of continuing operating losses and negative
cash flow, resulting in lower credit ratings and an inability to access the
capital markets.

The outstanding principal of, and accrued interest on, all debt of the Original
Debtors became immediately due and payable upon commencement of the Cases.
However, the vast majority of the claims in existence at the Filing Date
(including claims for principal and accrued interest and substantially all legal
proceedings) are stayed (deferred) during the pendency of the Cases. In
connection with the filing of the Original Debtors' Cases, the Court, upon
motion by the Original Debtors, authorized the Original Debtors to pay or
otherwise honor certain unsecured pre-Filing Date claims, including employee
wages and benefits and customer claims in the ordinary course of business,
subject to certain limitations. In July 2002, the Court also issued a final
order authorizing the Company to fund the cash requirements of its foreign joint
ventures in the ordinary course of business and to continue using the Company's
existing cash management systems. The Original Debtors also have the right to
assume or reject executory contracts existing prior to the Filing Date, subject
to Court approval and certain other limitations. In this context, "assumption"
means that the Original Debtors agree to perform their obligations and cure
certain existing defaults under an executory contract and "rejection" means that
the Original Debtors are relieved from their obligations to perform further
under an executory contract and are subject only to a claim for damages for the
breach thereof. Any claim for damages resulting from the rejection of an
executory contract is treated as a general unsecured claim in the Cases.

Generally, pre-Filing Date claims, including certain contingent or unliquidated
claims, against the Original Debtors will fall into two categories: secured and
unsecured. Under the Code, a creditor's claim is treated as secured only to the
extent of the value of the collateral securing such claim, with the balance of
such claim being treated as unsecured. Unsecured and partially secured claims do
not accrue interest after the Filing Date. A fully secured claim, however, does
accrue interest after the Filing Date until the amount due and owing to the
secured creditor, including interest accrued after the Filing Date, is equal to
the value of the collateral securing such claim. The amount and validity of
pre-Filing Date contingent or unliquidated claims, although presently unknown,
ultimately may be established by the Court or by agreement of the parties. As a
result of the Cases, additional pre-Filing Date claims and liabilities may be
asserted, some of which may be significant.

In October 2002, the Court set January 31, 2003 as the last date by which
holders of pre-Filing Date claims against the Original Debtors (other than
asbestos-related personal injury claims and certain hearing loss claims) could
file their claims. Any holder of a claim that was required to file a claim by
such date and did not do so may be barred from asserting such claim against any
of the Original Debtors and, accordingly, may not be able to participate in any
distribution in any of the Cases on account of such claim. Because the Company
has not had sufficient time to analyze the proofs of claim to determine their
validity, no provision has been included in the accompanying financial
statements for claims that have been filed. The January 31, 2003 bar date does
not apply to asbestos-related personal injury claims, for which the Original
Debtors reserve the right to establish a separate bar date at a later time. A
separate bar date of June 30, 2003 has been set for certain hearing loss claims.

Additional Debtors. On January 14, 2003, the Additional Debtors filed separate
voluntary petitions for reorganization. The wholly owned subsidiaries included
in such filings were: Kaiser Bauxite Company, Kaiser Jamaica Corporation, Alpart
Jamaica Inc., Kaiser Aluminum & Chemical of Canada Limited and five other
entities with limited balances or activities.

The Cases filed by the Additional Debtors were commenced, among other reasons,
to protect the assets held by these Debtors against possible statutory liens
that may arise and be enforced by the Pension Benefit Guaranty Corporation
("PBGC") primarily as a result of the Company's failure to meet a $17.0
accelerated funding requirement to its salaried employee retirement plan in
January 2003 (see Note 10 of Notes to Consolidated Financial Statements in the
Company's Form 10-K for the year ended December 31, 2002 for additional
information regarding the accelerated funding requirement). From an operating
perspective, the filing of the Cases by the additional Debtors had no impact on
the Company's day-to-day operations.

In connection with the Additional Debtors' filings, the Court authorized the
Additional Debtors to continue to make payments in the normal course of business
(including payments of pre-Filing Date amounts), including payments of wages and
benefits, payments for items such as materials, supplies and freight and
payments of taxes. The Court also approved the continuation of the Company's
existing cash management systems and routine intercompany transactions
involving, among other transactions, the transfer of materials and supplies
among affiliates.

In March 2003, the Court set May 15, 2003, as the last date by which holders of
pre-Filing Date claims against the Additional Debtors (other than
asbestos-related personal injury claims and certain hearing loss claims) must
file their claims.

All Debtors. The Debtors' objective is to achieve the highest possible
recoveries for all creditors and stockholders, consistent with the Debtors'
abilities to pay, and to continue the operations of their businesses. However,
there can be no assurance that the Debtors will be able to attain these
objectives or achieve a successful reorganization. While valuation of the
Debtors' assets and pre-Filing Date claims at this stage of the Cases is subject
to inherent uncertainties, the Debtors currently believe that it is likely that
their liabilities will be found in the Cases to exceed the fair value of their
assets. Therefore, the Debtors currently believe that it is likely that
pre-Filing Date claims will be paid at less than 100% of their face value and
the equity of the Company's stockholders will be diluted or cancelled. Because
of such possibility, the value of the Common Stock is speculative and any
investment in the Common Stock would pose a high degree of risk.

Under the Code, the rights of and ultimate payments to pre-Filing Date creditors
and stockholders may be substantially altered. At this time, it is not possible
to predict the outcome of the Cases, in general, or the effect of the Cases on
the businesses of the Debtors.

Two creditors' committees, one representing the unsecured creditors and the
other representing the asbestos claimants, have been appointed as official
committees in the Cases and, in accordance with the provisions of the Code, will
have the right to be heard on all matters that come before the Court. The
Debtors expect that the appointed committees, together with the legal
representative for potential future asbestos claimants that has been appointed
in the Cases, will play important roles in the Cases and the negotiation of the
terms of any plan or plans of reorganization. The Debtors are required to bear
certain costs and expenses for the committees and the legal representative for
potential future asbestos claimants, including those of their counsel and other
advisors.

The Debtors anticipate that substantially all liabilities of the Debtors as of
the date of the Filing will be resolved under one or more plans of
reorganization to be proposed and voted on in the Cases in accordance with the
provisions of the Code. Although the Debtors intend to file and seek
confirmation of such a plan or plans, there can be no assurance as to when the
Debtors will file such a plan or plans, or that such plan or plans will be
confirmed by the Court and consummated.

As provided by the Code, the Original Debtors had the exclusive right to propose
a plan of reorganization for 120 days following the initial Filing Date. The
Court has subsequently approved several extensions of the exclusivity period for
all Debtors, the most recent of which was set to expire April 30, 2003. A motion
to extend the exclusivity period through July 31, 2003, was filed by the Debtors
in late April 2003. By filing the motion to extend the exclusivity period, the
period is automatically extended until the June 17, 2003 Court hearing date.
As the Debtors' motion to extend the exclusivity period through July 31, 2003
was agreed with by the two creditors' committees in advance of the filing,
the Debtors expect the motion to be approved by the Court. Additional extensions
are likely to be sought. However, no assurance can be given that such future
extension requests will be granted by the Court. If the Debtors fail to file a
plan of reorganization during the exclusivity period, or if such plan is not
accepted by the requisite numbers of creditors and equity holders entitled to
vote on the plan, other parties in interest in the Cases may be permitted to
propose their own plan(s) of reorganization for the Debtors.

The Company expects that, when the Debtors ultimately file a plan of
reorganization, it will reflect the Company's strategic vision for emergence
from Chapter 11: (a) a standalone going concern with manageable leverage,
improved cost structure and competitive strength; (b) a company positioned to
execute its long-standing vision of market leadership and growth in fabricated
products specifically with a financial structure that provides financial
flexibility, including access to capital markets, for accretive acquisitions;
(c) a company that delivers a broad product offering and leadership in service
and quality for its customers and distributors; and (d) a company with continued
presence in those commodities markets that have the potential to generate
significant cash at steady-state metal prices. The Company's advisors have
developed a preliminary timeline that, assuming the current pace of the Cases
continues, could allow the Company to emerge from Chapter 11 in 2004. While no
assurances can be given in this regard, the Company's management continues to
push for an aggressive pace in advancing the Cases. Continued sales of non-core
assets and facilities that are ultimately determined not to be an important part
of the reorganized entity are likely. In light of the Company's stated strategy
of market leadership and growth in fabricated products and to further the
Company's ultimate planned emergence from Chapter 11, the Company has determined
that it is appropriate to explore the possible disposition of one or more of its
commodities assets. Any sale of assets would be subject to various prior
approvals including, but not limited to, approvals by the Company's Board of
Directors, the Court and the DIP Facility lenders and no assurances can be given
that acceptable offers will be received for any assets or that any assets will
ultimately be sold. The Company's strategic vision is subject to continuing
review in consultation with the Company's stakeholders and may also be modified
from time to time as the Cases proceed due to changes in such items as changes
in the global markets, changes in the economics of the Company's facilities or
changing financial circumstances.

Financial Statement Presentation. The accompanying consolidated financial
statements have been prepared in accordance with AICPA Statement of Position
90-7 ("SOP 90-7"), Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code, and on a going concern basis, which contemplates the
realization of assets and the liquidation of liabilities in the ordinary course
of business. However, as a result of the Cases, such realization of assets and
liquidation of liabilities are subject to a significant number of uncertainties.

Financial Information. Condensed consolidating financial statements of the
Debtors and non-Debtors are set forth below:


                     CONDENSED CONSOLIDATING BALANCE SHEETS
                                 MARCH 31, 2003

                                                                                      Consolidation/
                                           Original     Additional                      Elimination
                                            Debtors       Debtors       Non-Debtors       Entries      Consolidated
                                         ------------- -------------  -------------- ---------------- --------------
Current assets                           $      373.6  $       39.2   $       120.5  $          -     $       533.3
Investments in subsidiaries and
    affiliates                                1,428.0         202.9              .1         (1,557.6)          73.4
Intercompany receivables (payables)            (976.8)        887.4            89.4             -               -
Property and equipment, net                     592.6          18.5           379.7             -             990.8
Deferred income taxes                           (81.9)         81.9             -               -               -
Other assets                                    538.6            .5             8.4             -             547.5
                                         ------------- -------------  -------------- ---------------- --------------
                                         $    1,874.1  $    1,230.4   $       598.1  $      (1,557.6) $     2,145.0
                                         ============= =============  ============== ================ ==============

Liabilities not subject to compromise -
   Current liabilities                   $      232.0  $       24.2   $        86.8  $         (13.5) $       329.5
   Long-term liabilities                         74.0          16.4            35.5             -             125.9
Liabilities subject to compromise             2,719.8           -               -               -           2,719.8
Minority interests                                 .7           -             103.1             18.4          122.2
Stockholders' equity (deficit)               (1,152.4)      1,189.8           372.7         (1,562.5)      (1,152.4)
                                         ------------- -------------  -------------- ---------------- --------------
                                         $    1,874.1  $    1,230.4   $       598.1  $      (1,557.6) $     2,145.0
                                         ============= =============  ============== ================ ==============

For condensed consolidating balance sheets of the Debtors and non-Debtors as of
December 31, 2002, see Note 1 of Notes to Consolidated Financial Statements in
the Company's Form 10-K for the year ended December 31, 2002.

               CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS)
                      FOR THE QUARTER ENDED MARCH 31, 2003

                                                                                      Consolidation/
                                           Original     Additional                      Elimination
                                            Debtors       Debtors       Non-Debtors       Entries      Consolidated
                                         ------------- -------------  -------------- ---------------- --------------
Net sales                                $      302.9  $       12.4   $        33.7  $          (9.6) $       339.4
                                         ------------- -------------  -------------- ---------------- --------------
Costs and expenses -
   Operating costs and expenses                 354.4           7.4            45.0             (9.6)         397.2
   Non-recurring operating charges                1.3          -                -               -               1.3
                                         ------------- -------------  -------------- ---------------- --------------
                                                355.7           7.4            45.0             (9.6)         398.5
                                         ------------- -------------  -------------- ---------------- --------------
Operating income (loss)                         (52.8)          5.0           (11.3)            -             (59.1)
Interest expense                                 (2.3)          -               (.3)            -              (2.6)
All other income (expense), net                 (11.0)          (.8)             .4              2.7           (8.7)
Provision for income tax and minority
   interests                                     (1.8)         (5.2)            4.2             -              (2.8)
Equity in income of subsidiaries                 (5.3)          -               -                5.3            -
                                         ------------- -------------  -------------- ---------------- --------------
Income (loss) from continuing operations        (73.2)         (1.0)           (7.0)             8.0          (73.2)
Discontinued operations                           8.1           -               -               -               8.1
                                         ------------- -------------  -------------- ---------------- --------------
Net income (loss)                        $      (65.1) $       (1.0)  $        (7.0) $           8.0  $       (65.1)
                                         ============= =============  ============== ================ ==============


               CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS)
                      FOR THE QUARTER ENDED MARCH 31, 2002

                                                                                      Consolidation/
                                           Original     Additional                      Elimination
                                            Debtors       Debtors       Non-Debtors       Entries      Consolidated
                                         ------------- -------------  -------------- ---------------- --------------
Net sales                                $      335.8  $       11.9   $        54.3  $         (31.4) $       370.6
                                         ------------- -------------  -------------- ---------------- --------------
Costs and expenses -
   Operating costs and expenses                 375.2           (.2)           60.3            (31.4)         403.9
   Non-recurring operating charges                1.6           -               -               -               1.6
                                         ------------- -------------  -------------- ---------------- --------------
                                                376.8           (.2)           60.3            (31.4)         405.5
                                         ------------- -------------  -------------- ---------------- --------------
Operating income (loss)                         (41.0)         12.1            (6.0)            -             (34.9)
Interest expense                                (13.1)          -               (.4)            -             (13.5)
All other income (expense), net                  (7.4)         (2.8)             .1              2.6           (7.5)
Provision for income tax and minority
   interests                                     (2.8)         (5.9)            2.2             -              (6.5)
Equity in income of subsidiaries                  1.9           -               -               (1.9)           -
                                         ------------- -------------  -------------- ---------------- --------------
Income (loss) from continuing operations        (62.4)          3.4            (4.1)              .7          (62.4)
Discontinued operations                          (1.7)          -               -               -              (1.7)
                                         ------------- -------------  -------------- ---------------- --------------
Net income (loss)                        $      (64.1) $        3.4   $        (4.1) $            .7  $       (64.1)
                                         ============= =============  ============== ================ ==============

                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                      FOR THE QUARTER ENDED MARCH 31, 2003

                                                                                      Consolidation/
                                           Original     Additional                      Elimination
                                            Debtors       Debtors       Non-Debtors       Entries      Consolidated
                                         ------------- -------------  -------------- ---------------- --------------
Net cash provided (used) by:
   Operating activities                  $      (61.3) $        -     $         7.1  $          -     $       (54.2)
   Investing activities                          72.1           -              (6.7)            -              65.4
   Financing activities                           (.2)          -               -               -               (.2)
                                         ------------- -------------  -------------- ---------------- --------------
Net (decrease) increase in cash and cash
   equivalents                                   10.6           -                .4             -              11.0
Cash and cash equivalents at beginning
   of period                                     75.5           2.1             1.1             -              78.7
                                         ------------- -------------  -------------- ---------------- --------------
Cash and cash equivalents at end of
   period                                $       86.1  $        2.1   $         1.5  $          -     $        89.7
                                         ============= =============  ============== ================ ==============

                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                      FOR THE QUARTER ENDED MARCH 31, 2002

                                                                                      Consolidation/
                                           Original     Additional                      Elimination
                                            Debtors       Debtors       Non-Debtors       Entries      Consolidated
                                         ------------- -------------  -------------- ---------------- --------------
Net cash provided (used) by:
   Operating activities                  $       (1.8) $        2.0   $         7.5  $          -     $         7.7
   Investing activities                           2.2           (.1)           (6.9)            -              (4.8)
   Financing activities                          (7.3)          -               -               -              (7.3)
                                         ------------- -------------  -------------- ---------------- --------------
Net (decrease) increase in cash and cash
   equivalents                                   (6.9)          1.9              .6             -              (4.4)
Cash and cash equivalents at beginning
   of period                                    151.6           1.4              .3             -             153.3
                                         ------------- -------------  -------------- ---------------- --------------
Cash and cash equivalents at end of
   period                                $      144.7  $        3.3   $          .9  $          -     $       148.9
                                         ============= =============  ============== ================ ==============

Classification of Liabilities as "Liabilities Not Subject to Compromise" Versus
"Liabilities Subject to Compromise." Liabilities not subject to compromise
include: (1) liabilities incurred after the Filing Date of the Cases; (2)
pre-Filing Date liabilities that the Debtors expect to pay in full, including
priority tax and employee claims and certain environmental liabilities, even
though certain of these amounts may not be paid until a plan of reorganization
is approved; and (3) pre-Filing Date liabilities that have been approved for
payment by the Court and that the Debtors expect to pay (in advance of a plan of
reorganization) over the next twelve-month period in the ordinary course of
business, including certain employee related items (salaries, vacation and
medical benefits), claims subject to a currently existing collective bargaining
agreement, and postretirement medical and other costs associated with retirees.

Liabilities subject to compromise refer to all other pre-Filing Date liabilities
of the Debtors. The amounts of the various categories of liabilities that are
subject to compromise are set forth below. These amounts represent the Company's
estimates of known or probable pre-Filing Date claims that are likely to be
resolved in connection with the Cases. Such claims remain subject to future
adjustments. There can be no assurance that the liabilities of the Debtors will
not be found in the Cases to exceed the fair value of their assets. This could
result in claims being paid at less than 100% of their face value and the equity
of the Company's stockholders being diluted or cancelled.

The amounts subject to compromise at March 31, 2003 and December 31, 2002
consisted of the following items:


                                                                                    March 31,        December 31,
                                                                                      2003               2002
                                                                                 ---------------   ----------------
Items, absent the Cases, that would have been considered current:
   Accounts payable                                                              $         49.3    $          47.6
   Accrued interest                                                                        44.0               44.0
   Accrued salaries, wages and related expenses(1)                                        159.0               59.0
   Other accrued liabilities (including asbestos liability of $130.0 - Note 7)            149.5              150.6
Items, absent the Cases, that would have been considered long-term:
   Accrued pension benefits                                                               275.2              362.7
   Accrued postretirement medical obligation                                              668.7              672.4
   Long-term liabilities(2)                                                               543.9              559.5
   Debt (Note 5)                                                                          830.2              830.2
                                                                                 ---------------   ----------------
                                                                                 $      2,719.8    $       2,726.0
                                                                                 ===============   ================

(1)     Accrued salaries, wages and related expenses represent estimated minimum
        pension contributions that, absent the Cases, would have otherwise been
        payable. Amounts for the period ended March 31, 2003 include
        approximately $100.0 associated with special liquidity payment
        requirements for January 2003 and April 2003 that were not made. As
        previously disclosed, the Company does not currently expect to make any
        pension contributions in respect of its domestic pension plans. See Note
        10 of Notes to Consolidated Financial Statements in the Company's Form
        10-K for the year ended December 31, 2002 for additional information
        about non-payment of pension contributions.
(2)     Long-term liabilities include environmental liabilities of $22.7 at
        March 31, 2003 and $21.7 at December 31, 2002 (Note 7) and asbestos
        liabilities of $480.1 at March 31, 2003 and December 31, 2002 (Note 7).

The classification of liabilities "not subject to compromise" versus liabilities
"subject to compromise" is based on currently available information and
analysis. As the Cases proceed and additional information and analysis is
completed or, as the Court rules on relevant matters, the classification of
amounts between these two categories may change. The amount of any such changes
could be significant. Additionally, as the Company evaluates the proofs of claim
filed in the Cases, adjustments will be made for those claims that the Company
believes will probably be allowed by the Court. The amount of such claims could
be significant.

Reorganization Items. Reorganization items under the Cases are expense or income
items that are incurred or realized by the Company because it is in
reorganization. These items include, but are not limited to, professional fees
and similar types of expenses incurred directly related to the Cases, loss
accruals or gains or losses resulting from activities of the reorganization
process, and interest earned on cash accumulated by the Debtors because they are
not paying their pre-Filing Date liabilities. For the quarters ended March 31,
2003 and 2002, reorganization items were as follows:


                                                                            2003                2002
                                                                       --------------     -----------------
Professional fees                                                      $         7.6      $            3.7
Accelerated amortization of certain deferred financing costs                     -                     4.5
Interest income                                                                  (.2)                  (.4)
Other                                                                            -                     1.8
                                                                       --------------     -----------------
                                                                       $         7.4      $            9.6
                                                                       ==============     =================

As required by SOP 90-7, in the first quarter of 2002, the Company recorded the
Debtors' pre-Filing Date debt that is subject to compromise at the allowed
amount. Accordingly, the Company accelerated the amortization of debt-related
premium, discount and costs attributable to this debt and recorded a net expense
of approximately $4.5 in Reorganization items during the first quarter of 2002.

Trust Fund. During the first quarter of 2002, KACC paid $5.8 into a trust fund
in respect of potential liability obligations of directors and officers.

2.    GENERAL

This Quarterly Report on Form 10-Q should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended December 31, 2002.

Going Concern. The interim consolidated financial statements of the Company have
been prepared on a "going concern" basis which contemplates the realization of
assets and the liquidation of liabilities in the ordinary course of business;
however, as a result of the commencement of the Cases, such realization of
assets and liquidation of liabilities are subject to a significant number of
uncertainties. Specifically, the interim consolidated financial statements do
not present: (a) the realizable value of assets on a liquidation basis or the
availability of such assets to satisfy liabilities, (b) the amount which will
ultimately be paid to settle liabilities and contingencies which may be allowed
in the Cases, or (c) the effect of any changes which may occur in connection
with the Debtors' capitalizations or operations of the Debtors as a result of a
plan of reorganization. Because of the ongoing nature of the Cases, the
discussions and consolidated financial statements contained herein are subject
to material uncertainties.

Principles of Consolidation. The Company is a subsidiary of MAXXAM Inc.
("MAXXAM"). MAXXAM and one of its wholly owned subsidiaries together own
approximately 62% of the Company's Common Stock, with the remaining
approximately 38% publicly held. The Company operates through its subsidiary,
KACC.

The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
for interim financial information and the rules and regulations of the
Securities and Exchange Commission. Accordingly, these financial statements do
not include all of the disclosures required by GAAP for complete financial
statements. In the opinion of management, the unaudited interim consolidated
financial statements furnished herein include all adjustments, all of which are
of a normal recurring nature unless otherwise noted, necessary for a fair
statement of the results for the interim periods presented.

The preparation of financial statements in accordance with GAAP requires the use
of estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities known to exist as
of the date the financial statements are published, and the reported amounts of
revenues and expenses during the reporting period. Uncertainties with respect to
such estimates and assumptions are inherent in the preparation of the Company's
consolidated financial statements; accordingly, it is possible that the actual
results could differ from these estimates and assumptions, which could have a
material effect on the reported amounts of the Company's consolidated financial
position and results of operations.

Operating results for the quarter ended March 31, 2003, are not necessarily
indicative of the results that may be expected for the year ending December 31,
2003.

Earnings per Share. Basic earnings (loss) per share is computed by dividing net
income (loss) by the weighted average number of shares of Common Stock
outstanding during the period including the weighted average impact of the
shares of Common Stock issued during the year from the date(s) of issuance.
However, earnings (loss) per share may not be meaningful, because as a part of a
plan of reorganization, it is likely that the interests of the Company's
existing stockholders will be diluted or cancelled.

Derivative Financial Instruments. Hedging transactions using derivative
financial instruments are primarily designed to mitigate KACC's exposure to
changes in prices for certain of the products which KACC sells and consumes and,
to a lesser extent, to mitigate KACC's exposure to change in foreign currency
exchange rates. KACC does not utilize derivative financial instruments for
trading or other speculative purposes. KACC's derivative activities are
initiated within guidelines established by management and approved by KACC's and
the Company's boards of directors. Hedging transactions are executed centrally
on behalf of all of KACC's business segments to minimize transaction costs,
monitor consolidated net exposure and allow for increased responsiveness to
changes in market factors.

See Note 2 of Notes to Consolidated Financial Statements in the Company's Form
10-K for the year ended December 31, 2002 and Note 8 for additional information
regarding derivative financial instruments.

3.    INVENTORIES

The classification of inventories is as follows:


                                                                March 31,       December 31,
                                                                  2003              2002
                                                             ---------------  ----------------
Finished fabricated aluminum products                        $         25.2   $          28.1
Primary aluminum and work in process                                   77.6              71.2
Bauxite and alumina                                                    62.6              72.9
Operating supplies and repair and maintenance parts                    82.1              82.7
                                                             ---------------  ----------------
      Total                                                  $        247.5   $         254.9
                                                             ===============  ================

Substantially all product inventories are stated at last-in, first-out (LIFO)
cost, not in excess of market. Replacement cost is not in excess of LIFO cost.

4.    PACIFIC NORTHWEST SMELTER CURTAILMENTS AND RELATED POWER MATTERS

Future Power Supply and its Impact on Future Operating Rate. During October
2000, KACC signed a new power contract with the Bonneville Power Administration
("BPA") under which the BPA, starting October 1, 2001, was to provide KACC's
operations in the State of Washington with approximately 290 megawatts of power
through September 2006. The contract provided KACC with sufficient power to
fully operate KACC's Trentwood facility (which requires up to an approximate 40
megawatts), as well as approximately 40% of the combined capacity of KACC's Mead
and Tacoma aluminum smelting operations which have been curtailed since the last
half of 2000.

As a part of the reorganization process, the Company concluded that it was in
its best interest to reject the BPA contract as permitted by the Code. As such,
with the authorization of the Court, the Company rejected the BPA contract on
September 30, 2002. The contract rejection gives rise to a pre-petition claim
(see Note 1). The BPA has filed a proof of claim for approximately $75.0 in
connection with the Cases in respect of the contract rejection. The claim is
expected to be settled in the overall context of the Debtors' plan of
reorganization. Accordingly, any payments that may be required as a result of
the rejection of the BPA contract are expected to only be made pursuant to a
plan of reorganization and upon the Company's emergence from the Cases. The
amount of the BPA claim will be determined either through a negotiated
settlement, litigation or a computation of prevailing power prices over the
contract period. As the amount of the BPA's claim in respect of the contract
rejection has not been determined, no provision has been made for the claim in
the accompanying financial statements. KACC has entered into a rolling
short-term contract with an alternate supplier to provide the power necessary to
operate its Trentwood facility.

In January 2003, the Company announced the indefinite curtailment of the Mead
facility. The curtailment of the Mead facility was due to the continuing
unfavorable market dynamics, specifically unattractive long-term power prices
and weak primary aluminum prices - both of which are significant impediments for
an older smelter with higher-than-average operating costs. The Mead facility is
expected to remain completely curtailed unless and until an appropriate
combination of reduced power prices, higher primary aluminum prices and other
factors occurs. The restart of a portion of KACC's Mead facility would require
the purchase of additional power from available sources. For KACC to make such a
decision, it would have to be able to purchase such power at a reasonable price
in relation to current and expected market conditions for a sufficient term to
justify its restart costs, which could be significant depending on the number of
lines restarted and the length of time between the shutdown and restart. Given
recent primary aluminum prices and the forward price of power in the Northwest,
it is unlikely that KACC will operate the Mead facility in the near future. If
KACC were to restart all or a portion of its Mead facility, it would take
between three to six months to reach the full operating rate for such
operations, depending upon the number of lines restarted. Even after achieving
the full operating rate, operating only a portion of the Mead facility would
result in production/cost inefficiencies such that operating results would, at
best, be breakeven to modestly negative at long-term primary aluminum prices.
See Note 5 of Notes to Consolidated Financial Statements in the Company's Form
10-K for the year ended December 31, 2002, for a discussion of the Northwest
smelters 2002 impairment charge.

In January 2003, the Court approved the sale of the Tacoma facility to the Port
of Tacoma. The sale closed in February 2003. See Note 9 for additional
discussion on the sale of the Tacoma facility.

5.    LONG-TERM DEBT

Debt consists of the following:


                                                                                       March 31,      December 31,
                                                                                         2003             2002
----------------------------------------------------------------------------------  ---------------  --------------
Secured:
   Post-Petition Credit Agreement                                                   $         -      $         -
   8 1/4% Alpart CARIFA Loans due 2007                                                        22.0            22.0
   7.6% Solid Waste Disposal Revenue Bonds due 2027                                           19.0            19.0
   Other borrowings (fixed rate)                                                               2.6             2.6
Unsecured (reflected as Liabilities Subject to Compromise):
   9 7/8% Senior Notes due 2002, net                                                         172.8           172.8
   10 7/8% Senior Notes due 2006, net                                                        225.0           225.0
   12 3/4% Senior Subordinated Notes due 2003                                                400.0           400.0
   Other borrowings (fixed and variable rates)                                                32.4            32.4
                                                                                    ---------------  --------------
Total                                                                                        873.8           873.8

Less - Current portion                                                                         1.0              .9
       Pre-Filing Date claims included in liabilities subject to compromise
          (Note 1)                                                                           830.2           830.2
                                                                                    ---------------  --------------
Long-term debt                                                                      $         42.6   $        42.7
                                                                                    ===============  ==============

DIP Facility. On February 12, 2002, the Company and KACC entered into a
post-petition credit agreement with a group of lenders for debtor-in-possession
financing (the "DIP Facility"). The Court signed a final order approving the DIP
Facility in March 2002. In March 2003, certain of the Additional Debtors were
added as co-guarantors and the DIP Facility lenders received super-priority
status with respect to certain of the Additional Debtors' assets. The DIP
Facility provides for a secured, revolving line of credit through the earlier of
February 12, 2004, the effective date of a plan of reorganization or voluntary
termination by the Company. Under the DIP Facility, KACC is able to borrow
amounts by means of revolving credit advances and to have issued for its benefit
letters of credit (up to $125.0) in an aggregate amount equal to the lesser of
$300.0 or a borrowing base relating to eligible accounts receivable, eligible
inventory and eligible fixed assets reduced by certain reserves, as defined in
the DIP Facility agreement. The DIP Facility is guaranteed by the Company and
certain significant subsidiaries of KACC. Interest on any outstanding borrowings
will bear a spread over either a base rate or LIBOR, at KACC's option. The DIP
Facility requires KACC to comply with certain financial covenants and places
restrictions on the Company's and KACC's ability to, among other things, incur
debt and liens, make investments, pay dividends, undertake transactions with
affiliates, make capital expenditures, and enter into unrelated lines of
business. As of March 31, 2003, $116.0 was available to the Company under the
DIP Facility (of which $73.6 could be used for additional letters of credit) and
no borrowings were outstanding under the revolving credit facility. During March
2003, the Company obtained a waiver from the lenders in respect of its
compliance with a financial covenant covering the four-quarter period ending
March 31, 2003. The waiver was of limited duration and would have lapsed on June
29, 2003. In May 2003, the Company obtained an extension and modification of the
March 2003 limited waiver for the financial covenant for the four-quarter period
ending June 30, 2003. The May 2003 waiver will lapse on September 30, 2003. The
Company is working with the lenders to complete an amendment that would
incorporate the May 2003 limited waiver and also modify the financial covenant
for periods subsequent to June 30, 2003. As part of this amendment, the Company
also plans to request that, among other things, the lenders extend the DIP
Facility past its current February 2004 expiration and increase the amount of
credit available under the DIP Facility. The Company believes that such an
amendment will be agreed with the DIP Facility lenders not later than June 2003.
While absolute assurances cannot be given in respect of the Company's ability to
successfully obtain the necessary covenant modification, based on discussions
with the DIP Facility lenders and the fact that there are currently no
outstanding borrowings and only a limited amount of letters of credit
outstanding under the DIP facility, the Company believes that acceptable
modifications are likely to be obtained.

6.    INCOME TAXES

The income tax provisions of $4.7 and $8.0 for the quarters ended March 31, 2003
and 2002, respectively, relate primarily to foreign income taxes. For the
quarters ended March 31, 2003 and 2002, as a result of the Cases, the Company
did not recognize any U.S. income tax benefit for the losses incurred from its
domestic operations (including temporary differences) or any U.S. income tax
benefit for foreign income taxes. Instead, the increases in federal and state
deferred tax assets as a result of additional net operating losses and foreign
tax credits generated in 2003 and 2002 were fully offset by increases in
valuation allowances. See Note 9 of Notes to Consolidated Financial Statements
in the Company's Form 10-K for the year ended December 31, 2002 for additional
information regarding the Deferred Tax Assets and Valuation Allowances.

In March 2003, the Company paid approximately $22.0 in settlement of certain
foreign tax matters in respect of a number of prior periods.

7.    COMMITMENTS AND CONTINGENCIES

Impact of Reorganization Proceedings. During the pendency of the Cases,
substantially all pending litigation, except certain environmental claims and
litigation, against the Debtors is stayed. Generally, claims against a Debtor
arising from actions or omissions prior to its Filing Date will be settled in
connection with the plan of reorganization.

Commitments. KACC has a variety of financial commitments, including purchase
agreements, tolling arrangements, forward foreign exchange and forward sales
contracts (see Note 8), letters of credit, and guarantees. Such purchase
agreements and tolling arrangements include long-term agreements for the
purchase and tolling of bauxite into alumina in Australia by Queensland Alumina
Limited ("QAL"). These obligations are scheduled to expire in 2008. Under the
agreements, KACC is unconditionally obligated to pay its proportional share of
debt, operating costs, and certain other costs of QAL. KACC's share of the
aggregate minimum amount of required future principal payments at December 31,
2002, was $49.0 which matures as follows: $32.0 in July 2003 and $17.0 in 2006.
During July 2002, KACC made payments of approximately $29.5 to QAL to fund
KACC's share of QAL's scheduled debt maturities. KACC's share of payments,
including operating costs and certain other expenses under the agreements, has
ranged between $95.0 - $103.0 per year over the past three years. KACC also has
agreements to supply alumina to and to purchase aluminum from Anglesey Aluminium
Limited.

Minimum rental commitments under operating leases at December 31, 2002, are as
follows: years ending December 31, 2003 - $15.2; 2004 - $6.2; 2005 - $5.4; 2006
- $3.1; 2007 - $2.4; thereafter - $3.7. Pursuant to the Code, the Debtors may
elect to reject or assume unexpired pre-petition leases. At this time, no
decisions have been made as to which significant leases will be accepted or
rejected (see Note 1).

Rental expenses were $38.3, $41.0 and $42.5 for the years ended December 31,
2002, 2001 and 2000, respectively.

KACC had a long-term liability, net of estimated subleases income, on the Kaiser
Center office complex in Oakland, California, in which KACC had not maintained
offices for a number of years, but for which it was responsible for lease
payments as master tenant through 2008 under a sale-and-leaseback agreement. The
Company also held an investment in certain notes issued by the owners of the
building (which were included in Other Assets). In October 2002, the Company
entered into a contract to sell its interests in the office complex. As the
contract amount was less than the asset's net carrying value, the Company
recorded a non-cash impairment charge in 2002 of approximately $20.0. The sale
was approved by the Court in February 2003 and closed in March 2003. Net cash
proceeds were approximately $61.1.

Environmental Contingencies. The Company and KACC are subject to a number of
environmental laws, to fines or penalties assessed for alleged breaches of the
environmental laws, and to claims and litigation based upon such laws. KACC
currently is subject to a number of claims under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments Reauthorization Act of 1986 ("CERCLA"), and, along with certain other
entities, has been named as a potentially responsible party for remedial costs
at certain third-party sites listed on the National Priorities List under
CERCLA.

Based on the Company's evaluation of these and other environmental matters, the
Company has established environmental accruals, primarily related to potential
solid waste disposal and soil and groundwater remediation matters. At March 31,
2003, the balance of such accruals was $59.7 (of which $22.7 was included in
Liabilities subject to compromise - see Note 1). These environmental accruals
represent the Company's estimate of costs reasonably expected to be incurred
based on presently enacted laws and regulations, currently available facts,
existing technology, and the Company's assessment of the likely remediation
action to be taken. The Company expects that these remediation actions will be
taken over the next several years and estimates that annual expenditures to be
charged to these environmental accruals will be approximately $.6 to $12.3 for
the years 2003 through 2007 and an aggregate of approximately $33.3 thereafter.

As additional facts are developed and definitive remediation plans and necessary
regulatory approvals for implementation of remediation are established or
alternative technologies are developed, changes in these and other factors may
result in actual costs exceeding the current environmental accruals. The Company
believes that it is reasonably possible that costs associated with these
environmental matters may exceed current accruals by amounts that could range,
in the aggregate, up to an estimated $27.0. As the resolution of these matters
is subject to further regulatory review and approval, no specific assurance can
be given as to when the factors upon which a substantial portion of this
estimate is based can be expected to be resolved. However, the Company is
currently working to resolve certain of these matters.

The Company believes that KACC has insurance coverage available to recover
certain incurred and future environmental costs and is pursuing claims in this
regard. However, no amounts have been accrued in the financial statements with
respect to such potential recoveries.

While uncertainties are inherent in the final outcome of these environmental
matters, and it is presently impossible to determine the actual costs that
ultimately may be incurred, management currently believes that the resolution of
such uncertainties should not have a material adverse effect on the Company's
consolidated financial position, results of operations, or liquidity.

Asbestos Contingencies. KACC has been one of many defendants in a number of
lawsuits, some of which involve claims of multiple persons, in which the
plaintiffs allege that certain of their injuries were caused by, among other
things, exposure to asbestos during, and as a result of, their employment or
association with KACC or exposure to products containing asbestos produced or
sold by KACC. The lawsuits generally relate to products KACC has not sold for
more than 20 years. As of the initial Filing Date, approximately 112,000 claims
were pending. The lawsuits are currently stayed by the Cases.

Due to the Cases, holders of asbestos claims are stayed from continuing to
prosecute pending litigation and from commencing new lawsuits against the
Debtors. However, during the pendency of the Cases, KACC expects additional
asbestos claims will be filed as part of the claims process. A separate
creditors' committee representing the interests of the asbestos claimants has
been appointed. The Debtors' obligations with respect to present and future
asbestos claims will be resolved pursuant to a plan of reorganization.

The Company has accrued a liability for estimated asbestos-related costs for
claims filed to date and an estimate of claims to be filed through 2011. At
March 31, 2003, the balance of such accrual was $610.1, all of which was
included in Liabilities subject to compromise (see Note 1). The Company's
estimate is based on the Company's view, at March 31, 2003, of the current and
anticipated number of asbestos-related claims, the timing and amounts of
asbestos-related payments, the status of ongoing litigation and settlement
initiatives, and the advice of Wharton Levin Ehrmantraut & Klein, P.A., with
respect to the current state of the law related to asbestos claims. However,
there are inherent uncertainties involved in estimating asbestos-related costs
and the Company's actual costs could exceed the Company's estimates due to
changes in facts and circumstances after the date of each estimate. Further,
while the Company does not presently believe there is a reasonable basis for
estimating asbestos-related costs beyond 2011 and, accordingly, no accrual has
been recorded for any costs which may be incurred beyond 2011, the Company
expects that the plan of reorganization process may require an estimation of
KACC's entire asbestos-related liability, which may go beyond 2011, and that
such costs could be substantial.

The Company believes that KACC has insurance coverage available to recover a
substantial portion of its asbestos-related costs. Although the Company has
settled asbestos-related coverage matters with certain of its insurance
carriers, other carriers have not yet agreed to settlements and disputes with
carriers exist. The timing and amount of future recoveries from these insurance
carriers will depend on the pendency of the Cases and on the resolution of any
disputes regarding coverage under the applicable insurance policies. The Company
believes that substantial recoveries from the insurance carriers are probable
and additional amounts may be recoverable in the future if additional claims are
added. The Company reached this conclusion after considering its prior
insurance-related recoveries in respect of asbestos-related claims, existing
insurance policies, and the advice of Heller Ehrman White & McAuliffe LLP with
respect to applicable insurance coverage law relating to the terms and
conditions of those policies. During 2000, KACC filed suit in San Francisco
Superior Court against a group of its insurers, which suit was thereafter split
into two related actions. Additional insurers were added to the litigation in
2000 and 2002. During October 2001, the court ruled favorably on a number of
policy interpretation issues, one of which was affirmed in February 2002 by an
intermediate appellate court in response to a petition from the insurers. The
rulings did not result in any changes to the Company's estimates of its current
or future asbestos-related insurance recoveries. The trial court held a trial on
certain policy interpretation issues during March 2003 but has not yet issued
its rulings. The trial court may hear additional issues from time to time. Given
the expected significance of probable future asbestos-related payments, the
receipt of timely and appropriate payments from its insurers is critical to a
successful plan of reorganization and KACC's long-term liquidity.

The following tables present historical information regarding KACC's
asbestos-related balances and cash flows:


                                                                March 31,          December 31,
                                                                  2003                 2002
---------------------------------------------------------   -----------------   ------------------
Liability                                                   $          610.1    $           610.1
Receivable (included in Other assets)(1)                               476.9                484.0
                                                            -----------------   ------------------
                                                            $          133.2    $           126.1
                                                            =================   ==================

(1)   The asbestos-related receivable was determined on the same basis as the
      asbestos-related cost accrual. However, no assurances can be given that
      KACC will be able to project similar recovery percentages for future
      asbestos-related claims or that the amounts related to future
      asbestos-related claims will not exceed KACC's aggregate insurance
      coverage. As of March 31, 2003 and December 31, 2002, $17.6 and $24.7,
      respectively, of the receivable amounts relate to costs paid. The
      remaining receivable amounts relate to costs that are expected to be paid
      by KACC in the future.


                                                                     Quarter
                                                                      Ended              Inception
                                                                 March 31, 2003           To Date
-------------------------------------------------------------   -----------------   ------------------
Payments made, including related legal costs                    $          -        $           355.7
Insurance recoveries                                                         7.1                252.2
                                                                -----------------   ------------------
                                                                $           (7.1)   $           103.5
                                                                =================   ==================

During the pendency of the Cases, all asbestos litigation is stayed. As a
result, the Company does not expect to make any asbestos payments in the near
term. Despite the Cases, the Company continues to pursue insurance collections
in respect of asbestos-related amounts paid prior to its Filing Date.

Management continues to monitor claims activity, the status of lawsuits
(including settlement initiatives), legislative developments, and costs incurred
in order to ascertain whether an adjustment to the existing accruals should be
made to the extent that historical experience may differ significantly from the
Company's underlying assumptions. Additional asbestos-related claims are likely
to be asserted as a part of the Chapter 11 process. Management cannot reasonably
predict the ultimate number of such claims or the amount of the associated
liability. However, it is likely that such amounts could exceed, perhaps
significantly, the liability amounts reflected in the Company's consolidated
financial statements, which (as previously stated) is only reflective of an
estimate of claims through 2011. KACC's obligations in respect of the currently
pending and future asbestos-related claims will ultimately be determined (and
resolved) as a part of the overall Chapter 11 proceedings. It is anticipated
that resolution of these matters will be a lengthy process. Management will
continue to periodically reassess its asbestos-related liabilities and estimated
insurance recoveries as the Cases proceed. However, absent unanticipated
developments such as asbestos-related legislation, material developments in
other asbestos-related proceedings or in the Company's or KACC's Chapter 11
proceedings, it is not anticipated that the Company will have sufficient
information to reevaluate its asbestos-related obligations and estimated
insurance recoveries until much later in the Cases. Any adjustments ultimately
deemed to be required as a result of the reevaluation of KACC's asbestos-related
liabilities or estimated insurance recoveries could have a material impact on
the Company's future financial statements.

Labor Matters. In connection with the United Steelworkers of America ("USWA")
strike and subsequent lock-out by KACC, which was settled in September 2000,
certain allegations of unfair labor practices ("ULPs") were filed with the
National Labor Relations Board ("NLRB") by the USWA. As previously disclosed,
KACC has responded to all such allegations and believes that they were without
merit. Twenty-two of twenty-four allegations of ULPs previously brought against
KACC by the USWA have been dismissed. A trial before an administrative law judge
for the two remaining allegations concluded in September 2001. In May 2002, the
administrative law judge ruled against KACC in respect of the two remaining ULP
allegations and recommended that the NLRB award back wages, plus interest, less
any earnings of the workers during the period of the lockout. The administrative
law judge's ruling did not contain any specific amount of proposed award and is
not self-executing. The USWA has filed a proof of claim for $240.0 in the Cases
in respect of this matter. The NLRB also filed a proof of claim in respect of
this matter. The NLRB claim was for $117.0, including interest of approximately
$18.0. Depending on the ultimate amount of any interest due and amount of
offsetting employee earnings and other factors, if the USWA ultimately were to
prevail it is possible that the amount of the award could exceed $100.0. It is
also possible that the Company may ultimately prevail on appeal and that no loss
will occur.

The Company continues to believe that the allegations are without merit and will
vigorously defend its position. KACC has appealed the ruling of the
administrative law judge to the full NLRB. The general counsel of the NLRB and
the USWA have cross-appealed. Any outcome from the NLRB appeal would be subject
to additional appeals in a United States Circuit Court of Appeals by the general
counsel of the NLRB, the USWA or KACC. This process could take several years.
Because the Company believes that it may prevail in the appeals process, the
Company has not recognized a charge in response to the adverse ruling. However,
it is possible that, if the Company's appeal(s) are not ultimately successful, a
charge in respect of this matter may be required in one or more future periods
and the amount of such charge(s) could be significant.

This matter is not currently stayed by the Cases. However, as previously stated,
seeing this matter to its ultimate outcome could take several years. Further,
any amounts ultimately determined by a court to be payable in this matter will
be dealt with in the overall context of the Debtors' plan of reorganization and
will be subject to compromise. Accordingly, any payments that may ultimately be
required in respect of this matter would only be paid upon or after the
Company's emergence from the Cases.

Other Contingencies. The Company or KACC is involved in various other claims,
lawsuits, and other proceedings relating to a wide variety of matters related to
past or present operations. While uncertainties are inherent in the final
outcome of such matters, and it is presently impossible to determine the actual
costs that ultimately may be incurred, management currently believes that the
resolution of such uncertainties and the incurrence of such costs should not
have a material adverse effect on the Company's consolidated financial position,
results of operations, or liquidity.

8.    DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING PROGRAMS

In conducting its business, KACC uses various instruments, including forward
contracts and options, to manage the risks arising from fluctuations in aluminum
prices, energy prices and exchange rates. KACC enters into hedging transactions
from time to time to limit its exposure resulting from (1) its anticipated sales
of alumina, primary aluminum, and fabricated aluminum products, net of expected
purchase costs for items that fluctuate with aluminum prices, (2) the energy
price risk from fluctuating prices for natural gas, fuel oil and diesel oil used
in its production process, and (3) foreign currency requirements with respect to
its cash commitments with foreign subsidiaries and affiliates. As KACC's hedging
activities are generally designed to lock-in a specified price or range of
prices, gains or losses on the derivative contracts utilized in the hedging
activities (except the impact of those contracts discussed below which have been
marked to market) generally offset at least a portion of any losses or gains,
respectively, on the transactions being hedged.

2003. The Company has entered into hedging transactions with respect to a
portion of its 2003 fuel oil and natural gas requirements. As of March 31, 2003,
KACC held option contracts which cap the price that KACC would have to pay for
substantially all of KACC's exposure to fuel oil requirements for the second
through fourth quarter of 2003 (2.0 million barrels). In addition, as of March
31, 2003, KACC held option contracts for substantially all of its natural gas
requirements for May 2003 and June 2003. The carrying/market value as of March
31, 2003 of the fuel oil option contracts was $.8 and natural gas option
contracts was $.3 (included in Prepaid expenses and other current assets).

The Company anticipates that, subject to prevailing economic conditions, it may
enter into additional hedging transactions with respect to primary aluminum
prices, natural gas and fuel oil prices and foreign currency values to protect
the interests of its constituents. However, no assurance can be given as to when
or if the Company will enter into such additional hedging activities.

As of March 31, 2003, KACC had sold forward substantially all for 2003 and a
vast majority for 2004 of the alumina available to it in excess of its projected
internal smelting requirements at prices indexed to future prices of primary
aluminum.

2002. Because the agreements underlying KACC's hedging positions provided that
the counterparties to the hedging contracts could liquidate KACC's hedging
positions if KACC filed for reorganization, KACC chose to liquidate these
positions in advance of the Filing Date. Proceeds from the liquidation totaled
approximately $42.2. A net gain of $23.3 associated with these liquidated
positions was deferred and is being recognized over the period during which the
underlying transactions to which the hedges related are expected to occur. The
net gain upon liquidation consisted of: gains of $30.2 for aluminum contracts
and losses of $5.0 for Australian dollars and $1.9 for energy contracts. As of
March 31, 2003, the remaining unamortized amount was approximately a net loss of
$1.6.

9.    DISCONTINUED OPERATIONS

The Company has previously disclosed that, in connection with the development of
a plan of reorganization, it conducted a study of the long-term competitive
position of the Mead and Tacoma facilities and potential options for these
facilities. When the Company received the preliminary results of the study, it
analyzed the findings and met with the USWA and other parties prior to making
its determination as to the appropriate action(s). The outcome of the study and
the Company's ongoing work on developing a plan of reorganization led the
Company to conclude that the Tacoma facility, whose aluminum smelting operations
had been curtailed since the last half of 2000, could not compete with the much
larger, newer and more efficient smelters, generally located outside the United
States. As a result, the Company entered into an agreement, which was approved
by the Court in January 2003, to sell the Tacoma facility to the Port of Tacoma
(the "Port"). Gross proceeds from the sale, before considering approximately
$4.0 of proceeds being held in escrow pending the resolution of certain
environmental and other issues, were approximately $12.1. The Port also agreed
to assume the on-site environmental remediation obligations. The sale closed in
February 2003. The sale resulted in a pre-tax gain of approximately $9.5. In
accordance with Statement of Financial Accounting Standards No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"), the
operating results of the Tacoma facility for the quarters ended March 31, 2003
and 2002 and the gain from the sale of the Tacoma facility have been reported as
discontinued operations in the accompanying Statements of Consolidated Income
(Loss). The balances and operating results associated with the Tacoma facility
were previously included in the Primary Aluminum business segment.

10.   OTHER INCOME (EXPENSE) AND NON-RECURRING ITEMS

Non-Recurring Operating Charges. The income (loss) impact associated with
non-recurring operating charges for the quarters ended March 31, 2003 and 2002,
were related to restructuring activities.

Restructuring charges of $1.3 in 2003 consist of employee benefit costs
associated with 17 salaried job eliminations during the first quarter of 2003
resulting from the Mead facility's indefinite curtailment (see Note 4 - Primary
Aluminum business unit). The 2002 restructuring charges of $1.6 consisted
primarily of third-party costs associated with cost reduction initiatives at the
Bauxite and alumina business unit.

Other Income (Expense). Other income (expense), other than interest expense, for
the quarter ended March 31, 2003 included approximately $1.7 of adverse foreign
currency exchange impacts associated with a foreign tax settlement. Other income
(expense), other than interest expense, for the quarter ended March 31, 2002
included a gain of $4.0 from the sale, in the ordinary course of business, of
certain non-operating property. Proceeds from the sale totaled $4.5.

11.   VALCO RELATED MATTERS

The amount of power made available to the Company's 90%-owned Volta Aluminium
Company ("Valco") by the Volta River Authority ("VRA") depends in large part on
the level of the lake that is the primary source for generating the
hydroelectric power used to supply the smelter. The level of the lake is
primarily a function of the level of annual rainfall and the alternative
(non-Valco) uses of the power generated, as directed by the VRA. The Company has
previously disclosed that Valco's power allocation was reduced in January 2003
resulting in the curtailment of two of its three operating potlines. In
connection with such curtailments, $6.9 million of employee end-of-service
benefits were paid resulting in $4.3 million of charges (included in Cost of
products sold) in the first quarter of 2003.

As previously disclosed, the lake level has been at or near a record low level.
Based on the level of the lake and the rate at which it had been declining, the
Company believed that curtailment of Valco's last remaining operating potline
was inevitable. Accordingly, on May 5, 2003, the Company voluntarily curtailed
the last operating potline. Voluntary curtailment of the last operating potline:
(1) is expected to provide Valco with an opportunity to run a greater number of
potlines later in 2003 once the annual rainy season has replenished the lake
level and Valco's 2004 power allocation is known (although no assurances can be
provided in this regard) and (2) offers the VRA and the Government of Ghana
("GoG") a contribution toward conservation of the water supply to improve their
ability to meet Valco's power needs later in the year as well as meet the
near-term needs of the rest of Ghana.

The Company is still evaluating the financial impacts of the curtailment,
including potential charges and cash requirements for affected Valco employees.
The net cash impact of such curtailment is expected to be offset, in part, by a
reduction in working capital. Excluding special items, the impact of the
additional curtailment on ongoing operating income is expected to be modest.

Valco has met with the GoG and the VRA and anticipates such discussions will
continue in respect of the current and future power situations. Valco has
objected to the power curtailments and expects to seek appropriate compensation
from the GoG. In addition, Valco and the Company have filed for arbitration with
the International Chamber of Commerce in Paris against both the GoG and the VRA.
However, no assurances can be given as to the ultimate success of any such
actions. Valco and the Company do not expect the voluntary curtailment of the
last operating potline to have any adverse impact on the pending arbitrations or
negotiations with the VRA and GoG.

12.   INTERIM OPERATING SEGMENT INFORMATION

The Company uses a portion of its bauxite, alumina and primary aluminum
production for additional processing at its downstream facilities. Transfers
between business units are made at estimated market prices. The accounting
policies of the segments are the same as those described in Note 2 of Notes to
Consolidated Financial Statements in the Company's Form 10-K for the year ended
December 31, 2002. Business unit results are evaluated internally by management
before any allocation of corporate overhead and without any charge for income
taxes or interest expense. See Note 16 of Notes to Consolidated Financial
Statements in the Company's Form 10-K for the year ended December 31, 2002.

Financial information by operating segment for the quarters ended March 31, 2003
and 2002 is as follows:


                                                                                      2003               2002
                                                                                 --------------    ----------------
Net Sales:
   Bauxite and Alumina:
      Net sales to unaffiliated customers                                        $       135.6     $         113.6
      Intersegment sales                                                                  10.3                23.2
                                                                                 --------------    ----------------
                                                                                         145.9               136.8
                                                                                 --------------    ----------------
   Primary Aluminum:
      Net sales to unaffiliated customers                                                 30.8                71.0
      Intersegment sales                                                                   -                   1.7
                                                                                 --------------    ----------------
                                                                                          30.8                72.7
                                                                                 --------------    ----------------
   Flat-Rolled Products                                                                   44.1                48.3
   Engineered Products                                                                   102.9               103.8
   Commodities Marketing (Note 8)                                                          2.0                11.0
   Minority Interests                                                                     24.0                22.9
   Eliminations                                                                          (10.3)              (24.9)
                                                                                 --------------    ----------------
                                                                                 $       339.4     $          370.6
                                                                                 ==============    ================
Operating income (loss):
   Bauxite and Alumina                                                           $       (24.2)    $          (3.2)
   Primary Aluminum (Note 9)                                                             (13.6)               (1.4)
   Flat-Rolled Products                                                                   (4.5)               (9.9)
   Engineered Products                                                                     (.6)                3.3
   Commodities Marketing (Note 8)                                                          1.2                10.7
   Eliminations                                                                            2.5                  .5
   Corporate and Other                                                                   (18.6)              (33.3)
   Non-Recurring Operating Charges (Note 10)                                              (1.3)               (1.6)
                                                                                 --------------    ----------------
                                                                                 $       (59.1)    $         (34.9)
                                                                                 ==============    ================
Depreciation and amortization:
   Bauxite and Alumina                                                           $         9.9     $           9.8
   Primary Aluminum                                                                        2.2                 5.3
   Flat-Rolled Products                                                                    2.9                 3.9
   Engineered Products                                                                     3.1                 3.2
   Corporate and Other                                                                     1.2                  .3
                                                                                 --------------    ----------------
                                                                                 $        19.3     $          22.5
                                                                                 ==============    ================


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

This section should be read in conjunction with the response to Part I, Item 1,
of this Report.

This section contains statements which constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements appear in a number of places in this section (see, for example,
"Recent Events and Developments," "Results of Operations," and "Liquidity and
Capital Resources"). Such statements can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "estimates,"
"will," "should," "plans" or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of strategy.
Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may vary materially from those in the
forward-looking statements as a result of various factors. These factors include
the effectiveness of management's strategies and decisions, general economic and
business conditions, developments in technology, new or modified statutory or
regulatory requirements, and changing prices and market conditions. This section
and Part I, Item 1. "Business - Factors Affecting Future Performance" in the
Company's Annual Report on Form 10-K for the year ended December 31, 2002, each
identify other factors that could cause actual results to vary. No assurance can
be given that these are all of the factors that could cause actual results to
vary materially from the forward-looking statements.

REORGANIZATION PROCEEDINGS

The Company, its wholly owned subsidiary, Kaiser Aluminum & Chemical Corporation
("KACC"), and 24 of KACC's subsidiaries have filed separate voluntary petitions
in the United States Bankruptcy Court for the District of Delaware (the "Court")
for reorganization under Chapter 11 of the United States Bankruptcy Code (the
"Code"); the Company, KACC and 15 of KACC's subsidiaries (the "Original
Debtors") filed in the first quarter of 2002 and nine additional KACC
subsidiaries (the "Additional Debtors") filed in the first quarter of 2003. The
Original Debtors and Additional Debtors are collectively referred to herein as
the "Debtors" and the Chapter 11 proceedings of these entities are collectively
referred to herein as the "Cases." For purposes of this Report, the term "Filing
Date" shall mean, with respect to any particular Debtor, the date on which such
Debtor filed its Case. None of KACC's non-U.S. joint ventures are included in
the Cases. The Cases are being jointly administered. The Debtors are managing
their businesses in the ordinary course as debtors-in-possession subject to the
control and administration of the Court.

Original Debtors. The necessity for filing the Cases by the Original Debtors was
attributable to the liquidity and cash flow problems of the Company and its
subsidiaries arising in late 2001 and early 2002. The Company was facing
significant near-term debt maturities at a time of unusually weak aluminum
industry business conditions, depressed aluminum prices and a broad economic
slowdown that was further exacerbated by the events of September 11, 2001. In
addition, the Company had become increasingly burdened by asbestos litigation
and growing legacy obligations for retiree medical and pension costs. The
confluence of these factors created the prospect of continuing operating losses
and negative cash flow, resulting in lower credit ratings and an inability to
access the capital markets. In connection with the filing of the Original
Debtors' Cases, the Original Debtors are prohibited from paying pre-Filing Date
obligations other than those related to certain joint ventures and in certain
other limited circumstances approved by the Court.

In October 2002, the Court set January 31, 2003 as the last date by which
holders of pre-Filing Date claims against the Original Debtors (other than
asbestos-related personal injury claims and certain hearing loss claims) could
file their claims. Any holder of a claim that was required to file a claim by
such date and did not do so may be barred from asserting such claim against any
of the Original Debtors and, accordingly, may not be able to participate in any
distribution in any of the Cases on account of such claim. Because the Company
has not had sufficient time to analyze the proofs of claim to determine their
validity, no provision has been included in the accompanying financial
statements for claims that have been filed. The bar date does not apply to
asbestos-related claims, for which the Original Debtors reserve the right to
establish a separate bar date at a later date. A separate bar date of June 30,
2003 has been set for certain hearing loss claims.

Additional Debtors. The Cases filed by the Additional Debtors were commenced,
among other reasons, to protect the assets held by these Debtors against
possible statutory liens that might arise and be enforced by the Pension Benefit
Guaranty Corporation ("PBGC") primarily as a result of the Company's failure to
meet a $17.0 million accelerated funding requirement to its salaried employee
retirement plan in January 2003. From an operating perspective, the filing of
the Cases by the Additional Debtors had no impact on the Company's day-to-day
operations. In contrast to the circumstances of the Original Debtors, the Court
authorized the Additional Debtors to continue to make all payments in the normal
course of business (including payments of pre-Filing Date amounts) to creditors.

In March 2003, the Court set May 15, 2003 as the last date by which holders of
pre-Filing Date claims against the Additional Debtors (other than
asbestos-related personal injury claims and certain hearing loss claims) must
file their claims.

All Debtors. The Debtors' objective in the Cases is to achieve the highest
possible recoveries for all creditors and stockholders and to continue the
operation of their businesses. However, there can be no assurance that the
Debtors will be able to attain these objectives or to achieve a successful
reorganization. While valuation of the Debtors' assets and pre-Filing Date
claims at this stage of the Cases is subject to inherent uncertainties, the
Debtors currently believe that it is likely that their liabilities will be found
in the Cases to exceed the fair value of their assets. Therefore, the Debtors
currently believe that it is likely that pre-Filing Date claims will be paid at
less than 100% of their face value and the equity of the Company's stockholders
will be diluted or cancelled. Because of such possibility, the value of the
Common Stock is speculative and any investment in the Common Stock would pose a
high degree of risk.

As provided by the Code, the Original Debtors had the exclusive right to propose
a plan of reorganization for 120 days following the initial Filing Date. The
Court has subsequently approved several extensions of the exclusivity period for
all Debtors, the most recent of which was set to expire April 30, 2003. A motion
to extend the exclusivity period through July 31, 2003, was filed by the Debtors
in late April 2003. By filing the motion to extend the exclusivity period, the
period is automatically extended until the June 17, 2003 Court hearing date.
As the Debtors' motion to extend the exclusivity period through July 31, 2003
was agreed with by the two creditors' committees in advance of the filing,
the Debtors expect the motion to be approved by the Court. Additional extensions
are likely to be sought. Extensions of this nature are believed to be routine in
complex cases such as the Debtors' Cases. However, no assurance can be given
that such future requests will be granted by the Court. If the Debtors fail to
file a plan of reorganization during the exclusivity period, or if such plan is
not accepted by the requisite numbers of creditors and equity holders entitled
to vote on the plan, other parties in interest in the Cases may be permitted to
propose their own plan(s) of reorganization for the Debtors.

The Company expects that, when the Debtors ultimately file a plan of
reorganization, it will reflect the Company's strategic vision for emergence
from Chapter 11: (a) a standalone going concern with manageable leverage,
improved cost structure and competitive strength, (b) a company positioned to
execute its long-standing vision of market leadership and growth in fabricated
products specifically with a financial structure that provides financial
flexibility, including access to capital markets, for accretive acquisitions,
(c) a company that delivers a broad product offering and leadership in service
and quality for its customers and distributors, and (d) a company with continued
presence in those commodities markets that have the potential to generate
significant cash at steady-state metal prices. The Company's advisors have
developed a preliminary timeline that, assuming the current pace of the Cases
continues, could allow the Company to emerge from Chapter 11 in 2004. While no
assurances can be given in this regard, the Company's management continues to
push for an aggressive pace in advancing the Cases. Continued sales of non-core
assets and facilities that are ultimately determined not to be an important part
of the reorganized entity are likely. In light of the Company's stated strategy
of market leadership and growth in fabricated products and to further the
Company's ultimate planned emergence from Chapter 11, the Company has determined
that it is appropriate to explore the possible disposition of one or more of its
commodities assets. Any sale of assets would be subject to various prior
approvals including, but not limited to, approvals by the Company's Board of
Directors, the Court and the DIP Facility lenders and no assurances can be given
that acceptable offers will be received for any assets or that any assets will
ultimately be sold. The Company's strategic vision is subject to continuing
review in consultation with the Company's stakeholders and may also be modified
from time to time as the Cases proceed due to changes in such items as changes
in the global markets, changes in the economics of the Company's facilities or
changing financial circumstances.

Impact of the Cases on Financial Information. In light of the Cases, the
accompanying financial information of the Company and related discussions of
financial condition and results of operations are based on the assumption that
the Company will continue as a "going concern," which contemplates the
realization of assets and the liquidation of liabilities in the ordinary course
of business; however, as a result of the commencement of the Cases, such
realization of assets and liquidation of liabilities are subject to a
significant number of uncertainties. Specifically, the financial information for
the year ended December 31, 2002, contained herein does not present: (a) the
realizable value of assets on a liquidation basis or the availability of such
assets to satisfy liabilities, (b) the amount which will ultimately be paid to
settle liabilities and contingencies that may be allowed in the Cases, or (c)
the effect of any changes that may occur in connection with the Debtors'
capitalizations or operations resulting from a plan of reorganization. Because
of the ongoing nature of the Cases, the discussions and consolidated financial
statements contained herein are subject to material uncertainties.

RECENT EVENTS AND DEVELOPMENTS

Liquidity/Negative Cash Flow. Cash and cash equivalents increased $11.0 million
during the first quarter of 2003. The net increase resulted from cash generated
from investing activities of $65.4 million (see Notes 7 and 10 of Notes to
Interim Consolidated Financial Statements) offset by cash used in operating
activities ($54.2 million) and financing activities ($.2 million). The $54.2
million of cash and cash equivalents used by operating activities included the
following items not typically considered part of the Company's normal recurring
operating rate: (a) asbestos-related insurance recoveries of $7.1 million, (b) a
foreign income tax payment related to prior periods of $22.0 million, (c) end of
service benefit payments totaling approximately $6.9 million in connection with
the Company's 90%-owned Volta Aluminium Company Limited ("Valco") potline
curtailments (see below), and (d) net cash outflows for Valco's production costs
during the first quarter of 2003 which were not offset by cash receipts from
sales as, for logistical reasons, shipments were planned to occur on a quarterly
basis, but the first shipment did not occur until early April 2003
(approximately $11.0 million).

During 2002, the Company experienced a net decrease in cash and cash equivalents
of $74.6 million; $49.6 million of which was used in operating activities and
$25.0 million of which was used in investing and financing activities. The $49.6
million of cash and cash equivalents used in operations included several items
not typically considered part of the Company's normal recurring operations
including: (a) asbestos-related insurance recoveries of $23.3 million, (b)
approximately $30.0 million of funding to Queensland Alumina Limited ("QAL") in
respect of QAL's scheduled debt maturities, and (c) foreign income tax payments
related to prior year activities of $8.0 million.

The balance of the cash and cash equivalents used in operating activities
(approximately $21.4 million during the first quarter of 2003 and $34.9 million
during 2002) resulted from a combination of adverse market factors in the
business segments in which the Company operates including (a) primary aluminum
prices that were below long-term averages, (b) a weak demand for fabricated
metal products, particularly aerospace products, and (c) higher than average
power, fuel oil and natural gas prices.

Despite the foregoing, the Company's liquidity (cash and cash equivalents plus
unused credit availability under the DIP Facility) has remained strong,
averaging approximately $200.0 million during the first quarter of 2003.
However, no assurances can be given that recent improvements in primary aluminum
price and fabricated product demand will be sustained or that the Company's
liquidity will not erode for other reasons.

Valco Operating Level. The amount of power made available to Valco by the Volta
River Authority ("VRA") depends in large part on the level of the lake that is
the primary source for generating the hydroelectric power used to supply the
smelter. The level of the lake is primarily a function of the level of annual
rainfall and the alternative (non-Valco) uses of the power generated, as
directed by the VRA.

During late 2000, Valco, the Government of Ghana ("GoG") and the VRA reached an
agreement, subject to Parliamentary approval, that would provide sufficient
power for Valco to operate at least three and one-half of its five potlines
through 2017. However, Parliamentary approval was not received and, in March
2002, the GoG reduced Valco's power allocation forcing Valco to curtail one of
its four operating potlines. Valco's power allocation was further reduced in
January 2003 resulting in the curtailment of two additional operating potlines.
In connection with such curtailments, $6.9 million of employee end-of-service
benefits were paid resulting in $4.3 million of charges (included in Cost of
products sold) in the first quarter of 2003. As of April 30, 2003, Valco was
operating only one of its five potlines.

Valco has met with the GoG and the VRA and anticipates such discussions will
continue in respect of the current and future power situations. Valco has
objected to the power curtailments and expects to seek appropriate compensation
from the GoG. In addition, Valco and the Company have filed for arbitration with
the International Chamber of Commerce in Paris against both the GoG and the VRA.
However, no assurances can be given as to the ultimate success of any such
actions.

As previously disclosed, the lake level has been at or near a record low level.
Based on the level of the lake and the rate at which it had been declining, the
Company believed that curtailment of Valco's last remaining operating potline
was inevitable. Accordingly, on May 5, 2003, the Company voluntarily curtailed
the last operating potline. Voluntary curtailment of the last operating potline:
(1) is expected to provide Valco with an opportunity to run a greater number of
potlines later in 2003 once the annual rainy season has replenished the lake
level and Valco's 2004 power allocation is known (although no assurances can be
provided in this regard) and (2) offers the VRA and GoG a contribution toward
conservation of the water supply to improve their ability to meet Valco's power
needs later in the year as well as meet the near-term needs of the rest of
Ghana. Valco and the Company do not expect the voluntary curtailment of the last
operating potline to have any adverse impact on the pending arbitrations or
negotiations with the VRA and GoG.

The Company is still evaluating the financial impacts of the curtailment,
including potential charges and cash requirements for affected Valco employees.
The net cash impact of such curtailment is expected to be offset, in part, by a
reduction in working capital. Excluding special items, the impact of the
additional curtailment on ongoing operating income is expected to be modest.

Pension Related Matters. The Company's 2003 operating results are expected to be
adversely impacted by substantially higher pension-related expenses than those
experienced in 2002 (see Note 10 of Notes to Consolidated Financial Statements
in the Company's Form 10-K for the year ended December 31, 2002 for further
information regarding higher pension-related expenses in 2003). Before
considering any special pension-related charges that may occur in 2003,
pension-related expenses for 2003 are expected to be approximately $48.0
million, more than $20.0 million higher than comparable 2002 pension-related
expenses. Higher pension-related expenses during the first quarter of 2003
adversely impacted the operating results of all business units. Further, the
Company did not make certain accelerated funding payments ($17.0 million in
January 2003 and $83.0 million in April 2003) to its salaried employee
retirement plan. Nor did the Company make required minimum quarterly
contributions in respect of its other domestic pension plans. As previously
disclosed, the Company does not currently expect to make any pension
contributions in respect to its domestic pension plans during the pendency of
the Cases as it believes that virtually all amounts are pre-Filing Date
obligations.

As previously announced, the Company has met on several occasions with the PBGC,
the government agency that guarantees annuity payments from defined pension
plans, to discuss alternative solutions to the pension funding issue that would
help the Company's emergence from bankruptcy. These options could include
extended amortization periods for payments of unfunded liabilities or the
potential termination of the plans.

Indefinite Curtailment of Mead Facility. In January 2003, the Company announced
the indefinite curtailment of the Mead facility. The curtailment of the facility
was due to the continuing unfavorable market dynamics, specifically unattractive
long-term power prices and weak primary aluminum prices, both of which are
significant impediments for an older smelter with higher-than-average operating
costs. The Mead facility is expected to remain completely curtailed unless and
until an appropriate combination of reduced power prices, higher primary
aluminum prices and other factors occurs. See Note 4 of Notes to Interim
Consolidated Financial Statements and Note 5 of Notes to Consolidated Financial
Statements in the Company's Form 10-K for the year ended December 31, 2002 for
additional discussion of the Mead curtailment.

RESULTS OF OPERATIONS

As an integrated aluminum producer, the Company uses a portion of its bauxite,
alumina, and primary aluminum production for additional processing at certain of
its downstream facilities. Intersegment transfers are valued at estimated market
prices. The following table provides selected operational and financial
information on a consolidated basis with respect to the Company for the quarters
ended March 31, 2003 and 2002. The following data should be read in conjunction
with the Company's interim consolidated financial statements and the notes
thereto contained elsewhere herein. See Note 16 of Notes to Consolidated
Financial Statements in the Company's Form 10-K for the year ended December 31,
2002, for further information regarding segments.

Interim results are not necessarily indicative of those for a full year. Average
realized prices for the Company's Flat-rolled products and Engineered products
segments are not presented in the following table as such prices are subject to
fluctuations due to changes in product mix.


                 SELECTED OPERATIONAL AND FINANCIAL INFORMATION
                                   (Unaudited)
              (In millions of dollars, except shipments and prices)


                                                                                            Quarter Ended
                                                                                              March 31,
                                                                                  ---------------------------------
                                                                                       2003              2002
                                                                                  --------------    ---------------
Shipments:  (000 tons)
   Alumina
      Third Party                                                                         750.7              625.2
      Intersegment                                                                         62.5              134.9
                                                                                  --------------    ---------------
        Total Alumina                                                                     813.2              760.1
                                                                                  --------------    ---------------
   Primary Aluminum
      Third Party                                                                          21.6               51.3
      Intersegment                                                                          -                  1.1
                                                                                  --------------    ---------------
        Total Primary Aluminum                                                             21.6               52.4
                                                                                  --------------    ---------------
   Flat-Rolled Products                                                                    10.2               12.5
                                                                                  --------------    ---------------
   Engineered Products                                                                     30.6               29.3
                                                                                  --------------    ---------------
Average Realized Third Party Sales Price:
   Alumina (per ton)                                                              $         172     $          169
   Primary Aluminum (per pound)                                                   $         .65     $          .63
Net Sales:
   Bauxite and Alumina
      Third Party (includes net sales of bauxite)                                 $       135.6     $        113.6
      Intersegment                                                                         10.3               23.2
                                                                                  --------------    ---------------
        Total Bauxite and Alumina                                                         145.9              136.8
                                                                                  --------------    ---------------
   Primary Aluminum
      Third Party                                                                          30.8               71.0
      Intersegment                                                                          -                  1.7
                                                                                  --------------    ---------------
        Total Primary Aluminum                                                             30.8               72.7
                                                                                  --------------    ---------------
   Flat-Rolled Products                                                                    44.1               48.3
   Engineered Products                                                                    102.9              103.8
   Commodities Marketing (Note 8)                                                           2.0               11.0
   Minority Interests                                                                      24.0               22.9
   Eliminations                                                                           (10.3)             (24.9)
                                                                                  --------------    ---------------
      Total Net Sales                                                             $       339.4     $        370.6
                                                                                  ==============    ===============

Operating Income (Loss):
   Bauxite and Alumina                                                            $       (24.2)    $         (3.2)
   Primary Aluminum (Note 9)                                                              (13.6)              (1.4)
   Flat-Rolled Products                                                                    (4.5)              (9.9)
   Engineered Products                                                                      (.6)               3.3
   Commodities Marketing (Note 8)                                                           1.2               10.7
   Eliminations                                                                             2.5                 .5
   Corporate and Other                                                                    (18.6)             (33.3)
   Non-Recurring Operating Charges (Note 10)                                               (1.3)              (1.6)
                                                                                  --------------    ---------------
      Total Operating Income (Loss)                                               $       (59.1)    $        (34.9)
                                                                                  ==============    ===============
Net Loss                                                                          $       (65.1)    $        (64.1)
                                                                                  ==============    ===============
Capital Expenditures                                                              $         9.0     $          9.5
                                                                                  ==============    ===============

OVERVIEW
The Company's operating results are sensitive to changes in prices of alumina,
primary aluminum, and fabricated aluminum products, and also depend to a
significant degree on the volume and mix of all products sold and on KACC's
hedging strategies. Primary aluminum prices have historically been subject to
significant cyclical price fluctuations. See Notes 2 and 8 of Notes to Interim
Consolidated Financial Statements for a discussion of KACC's hedging activities.

Changes in global, regional, or country-specific economic conditions can have a
significant impact on overall demand for aluminum-intensive fabricated products
in the transportation, distribution, packaging, and other markets. Such changes
in demand can directly affect the Company's earnings by impacting the overall
volume and mix of such products sold. To the extent that these end-use markets
weaken, demand can also diminish for what the Company sometimes refers to as the
"upstream" products: alumina and primary aluminum.

During the quarter ended March 31, 2002, the average London Metal Exchange
transaction price ("LME price") per pound of primary aluminum was $.63 per
pound. During the quarter ended March 31, 2003, the average LME price was $.63
per pound. The average LME price for primary aluminum for the week ended April
25, 2003 was $.61 per pound.

QUARTER ENDED MARCH 31, 2003, COMPARED TO QUARTER ENDED MARCH 31, 2002

SUMMARY
The Company reported a net loss of $65.1 million, or $.81 of basic loss per
common share, for the quarter ended March 31, 2003, compared to a net loss of
$64.1 million, or $.79 of basic loss per common share, for the same period of
2002.

Net sales in the first quarter of 2003 totaled $339.4 million compared to $370.6
million in the first quarter of 2002.

Bauxite and Alumina. Third party net sales of alumina for the quarter ended
March 31, 2003, increased 22% as compared to the same period in 2002, due to a
20% increase in third party shipments and a 2% increase in third party average
realized prices. Third party shipments were up primarily due to reduced
intersegment requirements resulting from Valco's curtailment of two additional
potlines during January 2003 (see "Recent Events and Developments -- Valco
Operating Level" above). The increase in average realized prices was due to an
increase in primary aluminum market prices to which the Company's third-party
alumina sales contracts are linked.

Intersegment net sales of alumina for the quarter ended March 31, 2003 decreased
56% as compared to the same period in 2002 primarily as the result of reduced
shipments to the Primary aluminum business unit caused by Valco's potline
curtailments discussed above.

Segment operating loss (before non-recurring items) for the quarter ended March
31, 2003 was worse than the comparable period in 2002. The primary reason for
the period-to-period decrease in operating income was approximately $20.0
million of higher energy costs during the first quarter of 2003. This impact was
only partially offset by the net increase in shipments and increase in average
realized prices discussed above. Segment operating loss for 2002 excluded
non-recurring restructuring charges of $1.6 million resulting from cost
reduction initiatives.

Primary Aluminum. Third party net sales of primary aluminum decreased 57% for
the first quarter of 2003 as compared to the same period in 2002 as a result of
a 58% decrease in third party shipments offset by a 3% increase in third party
average realized prices. The decrease in third party shipments is primarily due
to the curtailment of the Valco operating potlines discussed above as well as
the fact that for logistical reasons, while operating at a one potline rate,
Valco only planned to ship materials on a quarterly basis, however, the first
shipment in 2003 did not occur until early April 2003. The increase in the
average realized prices was primarily due to the increase in primary aluminum
market prices.

Segment operating loss (before non-recurring items) for the quarter ended March
31, 2003, was worse than the comparable period in 2002. The primary reasons for
the decrease were the decrease in net shipments discussed above and
approximately $4.3 million of charges for end-of-service benefits at Valco
associated with the January 2003 potline curtailments discussed above. The
foregoing was only partially offset by the increase in average realized prices
and lower depreciation expense (approximately $3.0 million) resulting from the
2002 year-end impairment of the Mead smelter assets. Segment operating loss for
2003 excludes non-recurring restructuring charges of $1.3 million resulting from
the Mead facility indefinite curtailment (see Note 10 of Notes to Interim
Consolidated Financial Statements).

Flat-Rolled Products. Net sales of flat-rolled products decreased by 9% during
the first quarter 2003 as compared to 2002, as an 18% decrease in shipments was
offset partially by a 12% increase in average realized prices. Current period
shipments were lower than first quarter 2002 shipments as a result of the exit
of the can lid and tab stock and brazing sheet products in the second quarter of
2002 offset, in part, by increased demand for general engineering and aerospace
heat-treat products. The increase in the average realized prices was primarily
due to the impact of the shift in product mix in mid-2002 (i.e. to higher
value-added product lines).

Segment operating loss for the quarter ended March 31, 2003, was lower than the
comparable period in 2002 primarily due to reductions in overhead and other
operating costs as a result of cost cutting initiatives offset in part by the
decrease in shipments and approximately $1.0 million of higher energy costs.

Engineered Products. Net sales of engineered products were essentially unchanged
during the first quarter 2003 as compared to 2002, as a 5% decrease in average
realized prices was offset by a 4% increase in product shipments. The decrease
in average realized prices was primarily due to erosion in overall product
prices resulting from continuing weak overall market conditions. The increase in
product shipments was primarily the result of increased ground transportation
shipments (other than auto) and general engineering shipments due to modest
improvement in market demand.

The decrease in segment operating income for the quarter ended March 31, 2003,
as compared to the comparable period in 2002 was primarily due to the price and
volume factors discussed above and increased energy costs of approximately $2.0
million.

Commodities Marketing. In 2003, net sales for this segment represents net
settlements with third-party brokers for maturing derivative positions. In 2002,
net sales for this segment primarily represents recognition of deferred gains
from hedges closed prior to the commencement of the Cases. Gains or losses
associated with these liquidated positions were deferred in Other comprehensive
income and are being recognized as income and costs over the original hedging
periods as the underlying purchases/sales occur.

Segment operating income for the quarter ended March 31, 2003, decreased
compared to the comparable period in 2002 due to the prevailing market prices
during the first quarter of 2003 versus the higher prices implicit in the
liquidation of the positions in January 2002.

Eliminations. Eliminations of intersegment profit vary from period to period
depending on fluctuations in market prices as well as the amount and timing of
the affected segments' production and sales.

Corporate and Other. Corporate operating expenses represent corporate general
and administrative expenses which are not allocated to the Company's business
segments. Corporate operating expenses in 2003 were lower than in 2002 due in
part to a decrease in payroll-related costs resulting from 2002 salaried job
eliminations. Also, corporate expenses in 2002 included special pension
settlement charges of approximately $10.6 million. See Note 10 of Notes to
Consolidated Financial Statements in the Company's Form 10-K for the year ended
December 31, 2002 for a discussion of the special pension settlement charges in
2002.

LIQUIDITY AND CAPITAL RESOURCES
As a result of the filing of the Cases, claims against the Debtors for principal
and accrued interest on secured and unsecured indebtedness existing on the
Filing Date are stayed while the Debtors continue business operations as
debtors-in-possession, subject to the control and supervision of the Court. See
Note 1 of Notes to Interim Consolidated Financial Statements for additional
discussion of the Cases. At this time, it is not possible to predict the effect
of the Cases on the businesses of the Debtors.

Operating Activities. Operating activities used $54.2 million of cash during the
quarter ended March 31, 2003. This compares with the quarter ended March 31,
2002, when operating activities provided cash of $7.7 million. The $54.2 million
of cash and cash equivalents used in operations in the quarter ended March 31,
2003 included several items not typically considered part of the Company's
normal recurring operating rate: (a) asbestos-related insurance recoveries of
$7.1 million, (b) a foreign income tax payment related to prior periods of $22.0
million, (c) end of service benefits payments totaling approximately $6.9
million in connection with the Valco potline curtailments and (d) net cash
outflows for Valco's production costs which were not offset by cash receipts
from sales as, for logistical reasons, shipments were planned to occur on a
quarterly basis, but the first shipment did not occur until early April 2003
(approximately $11.0 million). The balance of the cash and cash equivalents
($21.4 million) resulted from a combination of adverse market factors in the
business segments in which the Company operates including: (a) primary aluminum
prices that are below long-term averages, (b) a weak demand for fabricated metal
products, particularly aerospace products, and (c) higher than average power,
fuel oil and natural gas prices. The cash and cash equivalents provided by
operations in the quarter ended March 31, 2002 resulted primarily from the
timing of payments due to the Cases.

Investing Activities. Capital expenditures during the quarter ended March 31,
2003 were $9.0 million. The 2003 capital expenditures were incurred to improve
production efficiency and reduce operating costs at the Company's facilities.
Total consolidated capital expenditures are expected to be between $35.0 and
$80.0 million per annum in each of 2003 and 2004 (of which approximately 20% is
expected to be funded by the Company's minority partners in certain foreign
joint ventures). The level of capital expenditures may be adjusted from time to
time depending on the Company's price outlook for primary aluminum and other
products, the Company's ability to assure future cash flows through hedging or
other means, the Company's financial position and other factors.

Financing Activities and Liquidity. On February 12, 2002, the Company and KACC
entered into the DIP Facility which provides for a secured, revolving line of
credit through the earlier of February 12, 2004, the effective date of a plan of
reorganization or voluntary termination by the Company. The Court signed a final
order approving the DIP Facility in March 2002. In March 2003, certain of the
Additional Debtors were added as co-guarantors and the DIP Facility lenders
received super priority status with respect to certain of the Additional
Debtors' assets. KACC is able to borrow under the DIP Facility by means of
revolving credit advances and to issue letters of credit (up to $125.0 million)
in an aggregate amount equal to the lesser of $300.0 million or a borrowing base
relating to eligible accounts receivable, eligible inventory and eligible fixed
assets reduced by certain reserves, as defined in the DIP Facility agreement.
The DIP Facility is guaranteed by the Company and certain significant
subsidiaries of KACC. Interest on any outstanding borrowings will bear a spread
over either a base rate or LIBOR, at KACC's option. During March 2003, the
Company obtained a waiver from the lenders in respect of its compliance with a
financial covenant covering the four-quarter period ending March 31, 2003. The
waiver was of limited duration and would have lapsed on June 29, 2003. In May
2003, the Company obtained an extension and modification of the March 2003
limited waiver for the financial covenant for the four-quarter period ending
June 30, 2003. The May 2003 waiver will lapse on September 30, 2003. The Company
is working with the lenders to complete an amendment that would incorporate the
May 2003 limited waiver and also modify the financial covenant for periods
subsequent to June 30, 2003. As a part of this amendment, the Company also plans
to request that, among other things, the lenders extend the DIP Facility past
its current February 2004 expiration and increase the amount of credit available
under the DIP Facility. The Company believes that such an amendment will be
agreed with the DIP Facility lenders not later than June 2003. While absolute
assurances cannot be given in respect of the Company's ability to successfully
obtain the necessary covenant modification, based on discussions with the DIP
Facility lenders and the fact that there are currently no outstanding borrowings
and only a limited amount of letters of credit outstanding under the DIP
Facility, the Company believes that acceptable modifications are likely to be
obtained.

The Company and KACC currently believe that the cash and cash equivalents of
$89.7 million at March 31, 2003, cash flows from operations, cash proceeds from
the sale of assets that are ultimately determined not to be an important part of
the reorganized entity and cash available from the DIP Facility will provide
sufficient working capital to allow the Company to meet its obligations during
the pendency of the Cases. At April 30, 2003, there were no outstanding
borrowings under the revolving credit facility and there were outstanding
letters of credit of approximately $51.3 million. As of April 30, 2003, $116.2
million (of which $73.7 million could be used for additional letters of credit)
was available to the Company under the DIP Facility and cash and cash
equivalents were approximately $99.5 million.

CAPITAL STRUCTURE
MAXXAM Inc. ("MAXXAM") and one of its wholly owned subsidiaries collectively own
approximately 62% of the Company's Common Stock, with the remaining
approximately 38% of the Company's Common Stock being publicly held. At this
time, it is not possible to predict the outcome of the Cases, in general, or the
effect of the Cases on the interests of the stockholders. However, it is likely
that all or a portion of MAXXAM's interests will be diluted or cancelled as a
part of a plan of reorganization.

In accordance with the Code and the DIP Facility, the Company and KACC are not
permitted to pay any dividends or purchase any of their common or preference
stock.

CRITICAL ACCOUNTING POLICIES
Critical accounting policies are those that are both very important to the
portrayal of the Company's financial condition and results, and require
management's most difficult, subjective, and/or complex judgments. Typically,
the circumstances that make these judgments difficult, subjective and/or complex
have to do with the need to make estimates about the effect of matters that are
inherently uncertain. While the Company believes that all aspect of its
financial statements should be studied and understood in assessing its current
(and expected future) financial condition and results, the Company believes that
the accounting policies that warrant additional attention include:

   1. The fact that the consolidated financial statements as of (and for the
      quarter ending) March 31, 2003 have been prepared on a "going concern"
      basis in accordance with Statement of Position 90-7, Financial Reporting
      by Entities in Reorganization Under the Bankruptcy Code, and do not
      include possible impacts arising in respect of the Cases.

      The consolidated financial statements included elsewhere in this Report do
      not include any adjustments relating to the recoverability and
      classification of recorded asset amounts or the amount and classification
      of liabilities or the effect on existing stockholders' equity that may
      result from any plans, arrangements or other actions arising from the
      Cases, or the possible inability of the Company to continue in existence.
      Adjustments necessitated by such plans, arrangements or other actions
      could materially change the consolidated financial statements included
      elsewhere in this Report. For example,

      a.If the Company were to decide to sell certain assets not deemed a
        critical part of a reorganized Kaiser, such asset sales could result in
        gains or losses (depending on the asset sold) and such gains or losses
        could be significant. This is because, under generally accepted
        accounting principles ("GAAP"), assets to be held and used are evaluated
        for recoverability differently than assets to be sold or disposed of.
        Assets to be held and used are evaluated based on their expected
        undiscounted future net revenues. So long as the Company reasonably
        expects that such undiscounted future net revenues for each asset will
        exceed the recorded value of the asset being evaluated, no impairment is
        required. However, if possible or probable plans to sell or dispose of
        an asset or group of assets meet a number of specific criteria, then,
        under GAAP, such assets should be considered held for sale/disposition
        and their recoverability should be evaluated, for each asset, based on
        expected consideration to be received upon disposition. Sales or
        dispositions at a particular time will be affected by, among other
        things, the existing industry and general economic circumstances as well
        as the Company's own circumstances, including whether or not assets will
        (or must) be sold on an accelerated or more extended timetable. Such
        circumstances may cause the expected value in a sale or disposition
        scenario to differ materially from the realizable value over the normal
        operating life of assets, which would likely be evaluated on long-term
        industry trends.

      b.Additional pre-Filing Date claims may be identified through the proof of
        claim reconciliation process and may arise in connection with actions
        taken by the Debtors in the Cases. For example, while the Debtors
        consider rejection of the Bonneville Power Administration ("BPA")
        contract to be in the Company's best long-term interests, such rejection
        may increase the amount of pre-Filing Date claims by approximately $75.0
        million based on the BPA's proof of claim filed in connection with the
        Cases in respect of the contract rejection.

      c.As more fully discussed below, the amount of pre-Filing Date claims
        ultimately allowed by the Court in respect of contingent claims and
        benefit obligations may be materially different from the amounts
        reflected in the Interim Consolidated Financial Statements.

      While valuation of the Company's assets and pre-Filing Date claims at this
      stage of the Cases is subject to inherent uncertainties, the Company
      currently believes that it is likely that its liabilities will be found in
      the Cases to exceed the fair value of its assets. Therefore, the Company
      currently believes that it is likely that pre-Filing Date claims will be
      paid at less than 100% of their face value and the equity of the Company's
      stockholders will be diluted or cancelled. Because of such possibility,
      the value of the Common Stock is speculative and any investment in the
      Common Stock would pose a high degree of risk.

   2. The Company's judgments and estimates with respect to commitments and
      contingencies; in particular: (a) future asbestos related costs and
      obligations as well as estimated insurance recoveries, and (b) possible
      liability in respect of claims of unfair labor practices ("ULPs") which
      were not resolved as a part of the Company's September 2000 labor
      settlement.

      Valuation of legal and other contingent claims is subject to a great deal
      of judgment and substantial uncertainty. Under GAAP, companies are
      required to accrue for contingent matters in their financial statements
      only if the amount of any potential loss is both "probable" and the amount
      (or a range) of possible loss is "estimatable." In reaching a
      determination of the probability of an adverse ruling in respect of a
      matter, the Company typically consults outside experts. However, any such
      judgments reached regarding probability are subject to significant
      uncertainty. The Company may, in fact, obtain an adverse ruling in a
      matter that it did not consider a "probable" loss and which, therefore,
      was not accrued for in its financial statements. Further, in estimating
      the amount of any loss, in many instances a single estimation of the loss
      may not be possible. Rather, the Company may only be able to estimate a
      range for possible losses. In such event, GAAP requires that a liability
      be established for at least the minimum end of the range.

      The Company has two potentially material contingent obligations that are
      subject to significant uncertainty and variability in their outcome: (a)
      the United Steelworkers of America's ("USWA") ULP claim, and (b) the net
      obligation in respect of asbestos-related matters. Both of these matters
      are discussed in Note 7 of Notes to Interim Consolidated Financial
      Statements and it is important that you read this note.

      As more fully discussed in Note 7, we have not accrued any amount in our
      March 31, 2003 financial statements in respect of the USWA ULP matter as
      we do not consider the contingent loss to be "probable." The possible
      range of loss in this matter is in the $100.0 million to $250.0 million
      range based on the proof of claims filed by the National Labor Relations
      Board ("NLRB") and USWA in connection with the Company's and KACC's
      reorganization proceedings. This matter is not currently stayed by the
      Cases. However, as previously stated, seeing this matter to its ultimate
      outcome could take several years. Further, any amounts ultimately
      determined by a court to be payable in this matter will be dealt with in
      the overall context of the Debtors' plan of reorganization and will be
      subject to compromise. Accordingly, any payments that may ultimately be
      required in respect of this matter would only be paid upon or after the
      Company's emergence from the Cases.

      Also, as more fully discussed in Note 7, KACC is one of many defendants in
      personal injury claims by large number of persons who assert that their
      injuries were caused by, among other things, exposure to asbestos during
      their employment or association with KACC or by exposure to products
      containing asbestos last produced or sold by KACC more than 20 years ago.
      It is difficult to predict the number of claims that will ultimately be
      made against KACC or the settlement value of such claims. As of March 31,
      2003, KACC had recorded an obligation for approximately $610.1 million in
      respect of pending and an estimate of possible future asbestos claims
      through 2011. The Company did not accrue for amounts past 2011 because the
      Company believed that significant uncertainty existed in trying to
      estimate any such amounts. However, it is possible that a different number
      of claims will be made through 2011 and that the settlement amounts during
      this period may differ and that this will cause the actual amounts to
      differ materially from the Company's estimate. Further, the Company
      expects that, during its reorganization process, an estimate will have to
      be made in respect of its exposure to asbestos-related claims after 2011
      and that such amounts could be substantial. Due to the Cases, holders of
      asbestos claims are stayed from continuing to prosecute pending litigation
      and from commencing new lawsuits against the Debtors. However, during the
      pendency of the Cases, KACC expects additional asbestos claims will be
      asserted as part of the claims process. A separate creditors' committee
      representing the interests of the asbestos claimants has been appointed.
      The Debtors' obligations with respect to present and future asbestos
      claims will be resolved pursuant to a plan of reorganization.

      The Company believes that KACC has insurance coverage in respect of its
      asbestos-related exposures and that substantial recoveries in this regard
      are probable. At March 31, 2003, KACC had recorded a receivable for
      approximately $476.9 million in respect of expected insurance recoveries
      related to existing claims and the estimate future claims through 2011.
      However, the actual amount of insurance recoveries may differ from the
      amount recorded and the amount of such differences could be material.
      Further, depending on the amount of asbestos-related claims ultimately
      determined to exist (including those in the periods after 2011), it is
      possible that the amount of such claims could exceed the amount of
      additional insurance recoveries available.

      See Note 7 of Notes to Interim Consolidated Financial Statements for a
      more complete discussion of these matters.

   3. The Company's judgments and estimates in respect of its employee benefit
      plans.

      Pension and post-retirement medical obligations included in the
      consolidated balance sheet are based on assumptions that are subject to
      variation from year-to-year. Such variations can cause the Company's
      estimate of such obligations to vary significantly. Restructuring actions
      (such as the indefinite curtailment of the Mead smelter) can also have a
      significant impact on such amounts.

      For pension obligations, the most significant assumptions used in
      determining the estimated year-end obligation are the assumed discount
      rate and long-term rate of return ("LTRR") on pension assets. Since
      recorded pension obligations represent the present value of expected
      pension payments over the life of the plans, decreases in the discount
      rate (used to compute the present value of the payments) will cause the
      estimated obligations to increase. Conversely, an increase in the discount
      rate will cause the estimated present value of the obligations to decline.
      The LTRR on pension assets reflects the Company's assumption regarding
      what the amount of earnings will be on existing plan assets (before
      considering any future contributions to the plans). Increases in the
      assumed LTRR will cause the projected value of plan assets available to
      satisfy pension obligations to increase, yielding a reduced net pension
      obligation. A reduction in the LTRR reduces the amount of projected net
      assets available to satisfy pension obligations and, thus, causes the net
      pension obligation to increase.

      For post-retirement obligations, the key assumptions used to estimate the
      year-end obligations are the discount rate and the assumptions regarding
      future medical costs increases. The discount rate affects the
      post-retirement obligations in a similar fashion to that described above
      for pension obligations. As the assumed rate of increase in medical costs
      goes up, so does the net projected obligation. Conversely, if the rate of
      increase is assumed to be smaller, the projected obligation will decline.

      Please refer to Note 10 of Notes to Consolidated Financial Statements in
      the Company's Form 10-K for the year ended December 31, 2002 for
      information regarding the Company's pension and post-retirement
      obligations. Actual results may differ from the assumptions made in
      computing the estimated March 31, 2003 obligations and such differences
      may be material.

   4. The Company's judgment and estimates in respect to environmental
      commitments and contingencies.

      The Company and KACC are subject to a number of environmental laws and
      regulations ("environmental laws"), to fines or penalties assessed for
      alleged breaches of the environmental laws, and to claims and litigation
      based upon such laws. KACC currently is subject to a number of claims
      under the Comprehensive Environmental Response, Compensation and Liability
      Act of 1980, as amended by the Superfund Amendments Reauthorization Act of
      1986 ("CERCLA"), and, along with certain other entities, has been named as
      a potentially responsible party for remedial costs at certain third-party
      sites listed on the National Priorities List under CERCLA.

      Based on the Company's evaluation of these and other environmental
      matters, the Company has established environmental accruals, primarily
      related to potential solid waste disposal and soil and groundwater
      remediation matters. These environmental accruals represent the Company's
      estimate of costs reasonably expected to be incurred based on presently
      enacted laws and regulations, currently available facts, existing
      technology, and the Company's assessment of the likely remediation action
      to be taken. However, making estimates of possible environmental
      remediation costs is subject to inherent uncertainties. As additional
      facts are developed and definitive remediation plans and necessary
      regulatory approvals for implementation of remediation are established
      or alternative technologies are developed, changes in these and other
      factors may result in actual costs exceeding the current environmental
      accruals.

      An example of how environmental accruals could change is the current
      situation of KACC's Mead smelter. KACC announced the indefinite
      curtailment of the Mead smelter in January 2003. The Mead smelter is
      expected to remain curtailed indefinitely unless and until an appropriate
      combination of reduced power prices, higher primary aluminum prices and
      other factors occurs to make a restart commercially feasible. However, at
      some point in the future, the Company may decide, due to economic
      conditions, foreign competition or other factors, to dispose of the
      facility. If, in connection with such hypothetical disposition the Company
      were required to dismantle, demolish or otherwise permanently close the
      Mead facility, the demolition and environmental remediation costs could be
      significant. While proceeds of a disposition might offset such costs, no
      assurances can be provided that receipts would fully or substantially
      offset the total costs of the environmental remediation costs.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
In a new regulation issued in January 2003, the Securities and Exchange
Commission adopted amendments to existing rules requiring disclosure of all
material off-balance sheet contractual arrangements. The amendments require the
Company to provide explanations of its off-balance sheet arrangements in a
separately captioned subsection of the Management's Discussion and Analysis
("MD&A") section of the Company's Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q. Although such items are already fully disclosed in the
Company's Commitments and Contingencies notes (see Note 7 of Notes to Interim
Consolidated Financial Statements and Note 12 of Notes to Consolidated Financial
Statements in the Company's Form 10-K for the year ended December 31, 2002), the
principle of the amendments is that the Company should disclose, in a single
section, information regarding: (1) its obligations and commitments to make
future payments, such as debt and lease agreements and (2) material off-balance
sheet arrangements and their material effects on the Company's financial
condition, results of operations, liquidity, etc. in a tabular format.

The following summarizes the Company's significant contractual obligations at
March 31, 2003 (dollars in millions):


                                                                                 Payments due in
                                                            --------------------------------------------------------
                                                               Less than       2 - 3          4 - 5       More than
           Contractual Obligations                Total         1 Year         Years          Years        5 years
--------------------------------------------  ------------- -------------- -------------  ------------- ------------
Long-term debt, including capital lease of
   $2.6(a)                                    $       43.6  $         1.0  $        1.0   $       22.6  $      19.0
Operating leases                                      32.4            9.7          10.2            6.6          5.9
                                              ------------- -------------- -------------  ------------- ------------

Total cash contractual obligations            $       76.0  $        10.7  $       11.2   $       29.2  $      24.9
                                              ============= ============== =============  ============= ============

(a)     See Note 5 of Notes to Interim Consolidated Financial Statements for
        information in respect of long-term debt. Long-term debt obligations
        exclude debt subject to compromise of approximately $830.2 million which
        amounts will be dealt with in connection with a plan of reorganization.
        See Notes 1 and 5 of Notes to Interim Consolidated Financial Statements
        for additional information about debt subject to compromise.

The following paragraphs summarize the Company's off-balance sheet arrangements.

KACC owns a 20% interest in QAL, which owns one of the largest and most
competitive alumina refineries in the world, located in Queensland, Australia.
QAL refines bauxite into alumina, essentially on a cost basis, for the account
of its shareholders under long-term tolling contracts. KACC currently sells its
share of QAL's production to third parties. The shareholders, including KACC,
purchase bauxite from another QAL shareholder under long-term purchase
contracts. These tolling and purchase contracts are scheduled to expire in 2008.
Under the agreements, KACC is unconditionally obligated to pay its proportional
share of debt, operating costs and certain other costs of QAL. KACC's share of
the aggregate minimum amount of future principal payments at March 31, 2003 is
$49.0 million, which matures as follows: $32.0 million in 2003 and $17.0 million
in 2006. KACC's share of payments, including operating costs and certain other
expenses under the agreements, has ranged between $95.0 million and $103.0
million per year over the past three years.

The Company has agreements to supply alumina to and to purchase aluminum from
Anglesey Aluminium Limited, a 49.0% owned aluminum smelter in Holyhead, Wales.

As of March 31, 2003, outstanding letters of credit under the DIP Facility were
approximately $51.4 million, all which expire within the next twelve months. The
letters of credit relate to environmental, insurance, trade credit and other
activities. Approximately $15.3 million of the letters of credit are in respect
of the Company's 65% share of the $22.0 million Alpart CARIFA financing (see
Note 5 of Notes to Interim Consolidated Financial Statements) which are
reflected in the debt maturities table above. As such, that portion of the
letters of credit is duplicative of the obligation reflected in the table above.


I
TEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's operating results are sensitive to changes in the prices of
alumina, primary aluminum, and fabricated aluminum products, and also depend to
a significant degree upon the volume and mix of all products sold. As discussed
more fully in Notes 2 and 8 of Notes to Interim Consolidated Financial
Statements, KACC historically has utilized hedging transactions to lock-in a
specified price or range of prices for certain products which it sells or
consumes in its production process and to mitigate KACC's exposure to changes in
foreign currency exchange rates. However, because the agreements underlying
KACC's hedging positions provided that the counterparties to the hedging
contracts could liquidate KACC's hedging positions if KACC filed for
reorganization, KACC chose to liquidate these positions in advance of the
initial Filing Date. KACC has only completed limited hedging activities since
the Filing Date (see below). The Company anticipates that, subject to prevailing
economic conditions, it may enter into additional hedging transactions with
respect to primary aluminum prices, natural gas and fuel oil prices and foreign
currency values to protect the interests of its constituents. However, no
assurance can be given as to when or if the Company will enter into such
additional hedging activities.

SENSITIVITY

Alumina and Primary Aluminum. Alumina and primary aluminum production in excess
of internal requirements is sold in domestic and international markets, exposing
the Company to commodity price opportunities and risks. KACC's hedging
transactions are intended to provide price risk management in respect of the net
exposure of earnings resulting from (i) anticipated sales of alumina, primary
aluminum and fabricated aluminum products, less (ii) expected purchases of
certain items, such as aluminum scrap, rolling ingot, and bauxite, whose prices
fluctuate with the price of primary aluminum. On average, before consideration
of hedging activities, any fixed price contracts with fabricated aluminum
products customers, variations in production and shipment levels, and timing
issues related to price changes, the Company estimates that during 2003 each
$.01 increase (decrease) in the market price per price-equivalent pound of
primary aluminum increases (decreases) the Company's annual pre-tax earnings by
approximately $5.0 million, based on recent operating levels. This decrease in
pre-tax earnings from prior periods of approximately $10.0 million per each $.01
change in market price per price-equivalent is due to the Valco potline
curtailments.

Foreign Currency. KACC enters into forward exchange contracts to hedge material
cash commitments for foreign currencies. KACC's primary foreign exchange
exposure is related to KACC's Australian Dollar (A$) commitments in respect of
activities associated with its 20.0%-owned affiliate, QAL. The Company estimates
that, before consideration of any hedging activities, a US $0.01 increase
(decrease) in the value of the A$ results in an approximate $1.5 million
(decrease) increase in the Company's annual pre-tax operating income.

Energy. KACC is exposed to energy price risk from fluctuating prices for natural
gas, fuel oil and diesel oil consumed in the production process. The Company
estimates that each $1.00 change in natural gas prices (per mcf) impacts the
Company's annual pre-tax operating results by approximately $20.0 million.
Further, the Company estimates that each $1.00 change in fuel oil prices (per
barrel) impacts the Company's pre-tax operating results by approximately $3.0
million.

KACC from time to time in the ordinary course of business enters into hedging
transactions with major suppliers of energy and energy related financial
instruments. During December 2002 and the first quarter of 2003, KACC entered
into hedging transactions with respect to a portion of its 2003 fuel oil and
natural gas requirements. As of March 31, 2003, KACC held option contracts which
cap the price that KACC would have to pay for 2.0 million barrels of fuel oil in
2003. This amount of fuel oil represents substantially all of KACC's exposure to
fuel oil requirements for the second through fourth quarter of 2003. In
addition, as of March 31, 2003, KACC held option contracts hedging substantially
all of its May 2003 and June 2003 natural gas requirements.

Based on an average April 2003 fuel oil price (per barrel) of approximately
$19.59, the Company estimates the fuel oil hedges will have a modest adverse
impact on pre-tax operating income in the second quarter of 2003.

Based on an average April 2003 natural gas settlement price (per mcf) of
approximately $5.12, the natural gas hedges will have a modest adverse impact on
pretax operating income for May and June 2003.


ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. An evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures was performed within 90 days of the filing date of this Report
under the supervision and with the participation of the Company's management,
including the Chief Executive Officer and Chief Financial Officer. Based on that
evaluation, the Company's management, including the Chief Executive Officer and
Chief Financial Officer, concluded that the Company's disclosure controls and
procedures were effective.

Changes in Internal Control. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
internal controls subsequent to the date of their evaluation.


                           PART II - OTHER INFORMATION


ITEM 1.    LEGAL PROCEEDINGS

Reference is made to Part I, Item 3. "LEGAL PROCEEDINGS" in the Company's Form
10-K for the year ended December 31, 2002 for information concerning material
legal proceedings with respect to the Company.


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

   (a)  Exhibits.

        *4.1    Waiver Letter with Respect to Post-Petition Credit Agreement,
                dated March 24, 2003, among Kaiser Aluminum & Chemical
                Corporation , Kaiser Aluminum Corporation, the financial
                institutions party to the Post-Petition Credit Agreement, dated
                as of February 12, 2002, as amended, and Bank of America, N.A.,
                as Agent.

        *99.1   Certification of Jack A. Hockema pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.

        *99.2   Certification of John T. La Duc pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.

   (b) Reports on Form 8-K.

        On January 14, 2003, under Item 5, "Other Events" of Form 8-K, the
        Company filed a Current Report on Form 8-K reporting that its Mead,
        Washington, aluminum smelter had been indefinitely curtailed.

        On January 14, 2003, under Item 5, "Other Events" of Form 8-K, the
        Company filed a Current Report on Form 8-K reporting that nine
        additional wholly owned subsidiaries of KACC had filed voluntary
        petitions with the U.S. Bankruptcy Court for the District of Delaware
        under Chapter 11 of the Federal Bankruptcy Code.

        No other Reports on Form 8-K were filed by the Company during the
        quarter ended March 31, 2003.

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


                                    SIGNATURE

      Pursuant to the requirements 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, who have signed this report on behalf of
the registrant as the principal financial officer and principal accounting
officer of the registrant, respectively.


                              KAISER ALUMINUM CORPORATION

                              By:   /s/ John T. La Duc
                                       John T. La Duc
                                Executive Vice President and
                                   Chief Financial Officer
                                (Principal Financial Officer)

                              KAISER ALUMINUM CORPORATION

                              By:   /s/ Daniel D. Maddox
                                      Daniel D. Maddox
                                Vice President and Controller
                               (Principal Accounting Officer)

Dated:  May 14, 2003



                                 CERTIFICATIONS

      I, Jack A. Hockema, certify that:

      1. I have reviewed this quarterly report on Form 10-Q of Kaiser Aluminum
Corporation;

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

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

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

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

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

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

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

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

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

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

Date:   May 14, 2003                        /s/ Jack A. Hockema
                                                Jack A. Hockema
                                                Chief Executive Officer
   

      I, John T. La Duc, certify that:

      1. I have reviewed this quarterly report on Form 10-Q of Kaiser Aluminum
Corporation;

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

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

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

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

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

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

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

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

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

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


Date:  May 14, 2003                             /s/ John T. La Duc
                                                    John T. La Duc
                                                    Chief Financial Officer

Exhibit 4.1 to 1st Quarter 2003 10-Q
                                                                     Exhibit 4.1

March 24, 2003


Kaiser Aluminum & Chemical Corporation
5847 San Felipe, Suite 2500
Houston, Texas  77057
Attention:  Treasurer

         Re:      Kaiser Aluminum & Chemical Corporation
                  $300,000,000 Post-Petition Credit Agreement


Dear Mr. Shiba:

         Reference is made to that certain $300,000,000 Post-Petition Credit
Agreement, dated as of February 12, 2002 (as amended to date, the "Credit
Agreement") among Kaiser Aluminum & Chemical Corporation, Kaiser Aluminum
Corporation, Bank of America, N.A. and the other lenders that are or may from
time to time becomes parties to the Credit Agreement. Unless otherwise defined
herein, capitalized terms used herein shall have the meanings given to such
terms in the Credit Agreement.

         Agent and Lenders hereby waive noncompliance with the minimum EBITDA
test in Section 9.2.4 of the Credit Agreement (the "Minimum EBITDA Test") for
the measurement period ending March 31, 2003 (the "Measurement Period");
provided, however, that (i) the Company and its Subsidiaries shall meet the
Minimum EBITDA Test for the Measurement Period after excluding all non-cash
pension expenses incurred beginning January 1, 2003, (ii) the Company and its
Subsidiaries shall maintain a minimum
 EBITDA (inclusive of non-cash pension
expenses incurred beginning January 1, 2003) of not less than ($120,000,000) for
the Measurement Period and (iii) such limited waiver shall be effective through
June 29, 2003.

         This limited waiver shall be limited precisely as written and shall not
be deemed or otherwise construed to constitute a waiver of any other Default or
Event of Default, amend or modify any provision of any Loan Document or
constitute a course of dealing or any other basis for altering the Obligations
of any Obligor. Except as expressly waived hereby, the Credit Agreement and the
other Loan Documents, including the Liens granted thereunder, shall remain in
full force and effect, and all terms and provisions thereof are hereby ratified
and confirmed.

         The signatories hereto contemplate that an amendment to the Credit
Agreement will be entered into by the parties thereto in the near future to,
among other things, effect a more comprehensive and permanent modification of
the Minimum EBITDA Test.

         This limited waiver shall be effective only if and when signed by, and
when counterparts hereof shall have been delivered to the Agent (by hand
delivery, mail or telecopy) by, the Company, the Parent Guarantor, each
Subsidiary Guarantor and the Required Lenders. This limited waiver may be
executed by one or more of the parties on any number of separate counterparts 
(including by telecopy), all of which taken together shall constitute but one 
and the same instrument.

         If you have any questions about this letter, please contact me at the
number above.

                                    Sincerely,

                                    Bank of America, N.A., as Agent

                                    /s/ Robert M. Dalton

cc:      Kaiser - General Counsel


AGREED AND CONSENTED TO
as of this 24th day of March, 2003


BANK OF AMERICA, N.A.

By:   /s/ Robert M. Dalton
Name:     Robert M. Dalton
Title:    Vice President


GENERAL ELECTRIC CAPITAL CORPORATION

By:   /s/ John L. Dale
Name:     John L. Dale
Title:    Duly Authorized Signatory


FOOTHILL CAPITAL CORPORATION

By:   /s/ E. Kim
Name:     Eunnie Kim
Title:    Asst. Vice President


THE CIT GROUP/BUSINESS CREDIT, INC.

By:   /s/ Grant Weiss
Name:     Grant Weiss
Title:    Vice President


MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.

By:   /s/ M. Kovatchis
Name:     M. Kovatchis
Title:    Director


PNC BANK, NATIONAL ASSOCIATION

By:   /s/ Sandra Sha Kenyon
Name:     Sandra Sha Kenyon
Title:    Vice President


GMAC COMMERCIAL FINANCE LLC, as
successor by merger to GMAC Business Credit, LLC

By:   /s/ Thomas Brent
Name:     Thomas Brent
Title:    Vice President


THE PROVIDENT BANK

By:
Name:
Title:


KAISER ALUMINUM CORPORATION

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER ALUMINUM & CHEMICAL CORPORATION

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


AKRON HOLDING CORPORATION

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


ALPART JAMAICA INC.

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER ALUMINA AUSTRALIA CORPORATION

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER BELLWOOD CORPORATION

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER ALUMINUM & CHEMICAL INVESTMENT, INC.

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER ALUMINIUM INTERNATIONAL, INC.

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER ALUMINUM PROPERTIES, INC.

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER ALUMINUM TECHNICAL SERVICES, INC.

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER FINANCE CORPORATION

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER JAMAICA CORPORATION

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER MICROMILL HOLDINGS, LLC

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER SIERRA MICROMILLS, LLC

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER TEXAS SIERRA MICROMILLS, LLC

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER TEXAS MICROMILL HOLDINGS, LLC

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


OXNARD FORGE DIE COMPANY, INC.

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


ALWIS LEASING LLC

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER BAUXITE COMPANY

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER CENTER, INC.

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER CENTER PROPERTIES

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAE TRADING, INC.

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer


KAISER EXPORT COMPANY

By:   /s/ David A. Cheadle
Name:     David A. Cheadle
Title:    Assistant Treasurer
Exhibit 99.1 to KAC 1st Quarter 2003 10-Q
                                                                    Exhibit 99.1

                            CERTIFICATION PURSUANT TO
                                 18 U.S.C. 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

                                  May 14, 2003

      In connection with the Quarterly Report on Form 10-Q by Kaiser Aluminum
Corporation, a Delaware corporation (the "Company"), for the period ending March
31, 2003 (the "Report"), as filed on the date hereof with the Securities and
Exchange Commission, the undersigned, Jack A. Hockema, Chief Executive Officer
of the Company, does hereby certify, pursuant to 18 U.S.C. 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such
officer's knowledge:

      (1)  The Report fully complies with the requirements of Section 13(a) or
           15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
           78o(d)); and

      (2)  The information contained in the Report fairly presents, in all
           material respects, the financial condition and results of operations
           of the Company as of the dates and for the periods expressed in the
           Report.

      IN WITNESS WHEREOF, the undersigned has executed this certification as of
the date first above written.


                                    /S/ Jack A. Hockema
                                        Jack A. Hockema
                                        Chief Executive Officer


A signed original of this written statement required by Section 906 has been
provided
 to Kaiser Aluminum Corporation and will be retained by Kaiser Aluminum
Corporation and furnished to the Securities and Exchange Commission or its staff
upon request.
Exhibit 99.2 to KAC 1st Quarter 2003 10-Q
                                                                    Exhibit 99.2

                            CERTIFICATION PURSUANT TO
                                 18 U.S.C. 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

                                  May 14, 2003

      In connection with the Quarterly Report on Form 10-Q by Kaiser Aluminum
Corporation, a Delaware corporation (the "Company"), for the period ending March
31, 2003 (the "Report"), as filed on the date hereof with the Securities and
Exchange Commission, the undersigned, John T. La Duc, Chief Financial Officer of
the Company, does hereby certify, pursuant to 18 U.S.C. 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer's
knowledge:

      (1)  The Report fully complies with the requirements of Section 13(a) or
           15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
           78o(d)); and

      (2)  The information contained in the Report fairly presents, in all
           material respects, the financial condition and results of operations
           of the Company as of the dates and for the periods expressed in the
           Report.

      IN WITNESS WHEREOF, the undersigned has executed this certification as of
the date first above written.


                                       /S/ John T. La Duc
                                           John T. La Duc
                                           Chief Financial Officer



A signed original of this written statement required by Section 906 has been
provided to Kaiser
 Aluminum Corporation and will be retained by Kaiser Aluminum
Corporation and furnished to the Securities and Exchange Commission or its staff
upon request.