KAC 2002 10-K
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                                    FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 For the fiscal year ended December 31, 2002 Commission file number 1-9447



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

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


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

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

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.01 par value

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, and (2) has been subject to such filing requirements
for the past 90 days. Yes /X/ No / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/

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

As of February 28, 2003, there were 80,271,570 shares of the Common Stock of the
registrant outstanding. As of February 28, 2003, the aggregate market value of
the registrant's Common Stock held by non-affiliates, based upon the average bid
and asked price of the Common Stock as reported by the OTC Bulletin Board
maintained by the National Association of Securities Dealers, Inc., for June 30,
2002 (which was the last day of the registrant's most recently completed second
fiscal quarter) was $2.5 million. However, the market value of the registrant's
Common Stock may not be meaningful, because as part of a plan of reorganization,
it is possible that the interests of the Company's existing stockholders could
be diluted or cancelled.

                       Documents Incorporated By Reference
                                      None

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                                      NOTE

Kaiser Aluminum Corporation's Report on Form 10-K filed with the Securities and
Exchange Commission includes all exhibits required to be filed with the Report.
Copies of this Report on Form 10-K, including only Exhibit 21 of the exhibits
listed on pages 97 - 102 of this Report, are available without charge upon
written request. The registrant will furnish copies of the other exhibits to
this Report on Form 10-K upon payment of a fee of 25 cents per page. Please
contact the office set forth below to request copies of this Report on Form 10-K
and for information as to the number of pages contained in each of the exhibits
and to request copies of such exhibits:



                                     Corporate Secretary
                                     Kaiser Aluminum Corporation
                                     5847 San Felipe, Suite 2500
                                     Houston, Texas 77057-3268
                                     (713) 267-3777


                                TABLE OF CONTENTS


PART I


     ITEM 1.      BUSINESS


     ITEM 2.      PROPERTIES


     ITEM 3.      LEGAL PROCEEDINGS


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


PART II


     ITEM 5.      MARKET FOR REGISTRANT'S COMMON EQUITY AND
                    RELATED STOCKHOLDER MATTERS


     ITEM 6.      SELECTED FINANCIAL DATA


     ITEM 7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS


     ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


     ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


     ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                    ACCOUNTING AND FINANCIAL DISCLOSURE


PART III


     ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


     ITEM 11.     EXECUTIVE COMPENSATION


     ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                    AND MANAGEMENT


     ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


PART IV


     ITEM 14.     CONTROLS AND PROCEDURES


     ITEM 15.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                    REPORTS ON FORM 8-K

SCHEDULE I


SIGNATURES

INDEX OF EXHIBITS

EXHIBIT 21        SUBSIDIARIES



PART I


ITEM 1.       BUSINESS

This Annual Report on Form 10-K (the "Report") 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 Report (including, but not limited to, Item 1. "Business -
Business Operations," " - Competition," " - Environmental Matters," and " -
Factors Affecting Future Performance," Item 3. "Legal Proceedings," and Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations"). 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. Certain sections of
this Report identify other factors that could cause differences between such
forward-looking statements and actual results (for example, see Item 1.
"Business - Factors Affecting Future Performance"). 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.

GENERAL

Kaiser Aluminum Corporation (the "Company" or "Kaiser"), a Delaware corporation
organized in 1987, 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,
through its wholly owned subsidiary, Kaiser Aluminum & Chemical Corporation
("KACC") and its subsidiaries, operates in all principal aspects of the aluminum
industry - the mining of bauxite, the refining of bauxite into alumina, the
production of primary aluminum from alumina, and the manufacture of fabricated
(including semi-fabricated) aluminum products.

REORGANIZATION PROCEEDINGS

The Company and 25 of its 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 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.

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. 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 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.

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 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 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 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.

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 following table sets forth certain financial information for
the Debtors and non-Debtors as of and for the year ended December 31, 2002.


                                                                                             Consolidation/
                                               Original       Additional                       Elimination
                                                Debtors         Debtors       Non-Debtors        Entries      Consolidated
                                           ---------------- ---------------  -------------   --------------  --------------

Net sales                                  $       1,323.6  $         47.6   $      209.7    $      (111.3)  $     1,469.6
Operating income                                    (420.8)           33.1          (18.3)             -            (406.0)
Net income (loss)                                   (468.7)           22.6          (12.8)            (9.8)         (468.7)

Total assets                               $       1,947.3  $      1,219.4   $      608.6    $    (1,549.9)  $     2,225.4
Liabilities not subject to compromise                306.2            28.6          130.4             (2.0)          463.2
Liabilities subject to compromise                  2,726.0            -               -                -           2,726.0
Minority interests                                      .7            -             102.3             18.8           121.8
Total stockholders' equity (deficit)              (1,085.6)        1,190.8          375.9         (1,566.7)       (1,085.6)

The Debtors' objective is to achieve the highest possible recoveries for all
creditors and stockholders, consistent with the Debtors' abilities to pay, and
the continuation 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.

Under the Code, the rights 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 Filing Date 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 extensions of the exclusivity period for all
Debtors through April 30, 2003. 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
number 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. The Company's strategic vision, which is
subject to continuing review in consultation with the Company's stakeholders,
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.

SUMMARY OF OPERATIONS

KACC sells significant amounts of alumina and primary aluminum in domestic and
international markets. The following table sets forth production and third party
purchases of bauxite, alumina and primary aluminum and third party shipments and
intersegment transfers of bauxite, alumina, primary aluminum and fabricated
products for the years ended December 31, 2002, 2001 and 2000:


                                                         Sources(1)                             Uses(1)
                                            ------------------------------------  ----------------------------------
                                                                   Third Party       Third Party      Intersegment
                                               Production(2)        Purchases       Shipments(2)        Transfers
                                            ------------------  ----------------  -----------------  ---------------
                                                                     (in thousands of tons*)
       Bauxite -
              2002                                     6,289.7           1,582.5            1,568.1          4,493.5
              2001                                     5,628.3           1,916.3            1,512.2          4,355.4
              2000                                     4,305.0           2,290.0            2,007.0          2,342.0
       Alumina -
              2002                                     2,848.5             258.9            2,626.6            343.9
              2001                                     2,813.9(3)          115.0            2,582.7            422.8
              2000                                     2,042.9             322.0            1,927.1            751.9
       Primary Aluminum  -
              2002                                       187.4               6.1              194.8              1.7
              2001                                       214.3              27.3              244.7              2.3
              2000                                       411.4              56.1              345.5            148.9
       Fabricated Aluminum Products(4) -
              2002                                         -               164.7              170.7              -
              2001                                         -               187.1              192.5              -
              2000                                         -               155.4              326.9              -

(1)  Sources and uses will not equal due to the impact of intrasegment
     consumption, inventory changes and alumina and primary aluminum swaps.
(2)  Production and third party shipments include Kaiser's share of consolidated
     joint venture activities.
(3)  During September 2001, KACC sold an 8.3% interest in Queensland Alumina 
     Limited ("QAL"). See "Business Operations--Bauxite and Alumina Business 
     Unit--QAL" below for a discussion of effects of the sale on alumina 
     production.
(4)  Fabricated aluminum products activity is reported in equivalent tons of 
     primary aluminum. Third party purchases represent purchases of primary 
     aluminum, including scrap.

---------------------------
*    All references to tons in this Report refer to metric tons of 2,204.6 
     pounds.

BUSINESS OPERATIONS

KACC conducts its business through its five main business units (Bauxite and
alumina, Primary aluminum, Commodities marketing, Flat-rolled products and
Engineered products), each of which is discussed below.

-   Bauxite and Alumina Business Unit
The following table lists KACC's bauxite mining and alumina refining facilities
as of December 31, 2002:

                                                                                                Annual
                                                                                             Production              Total
                                                                                               Capacity             Annual
                                                                            Company        Available to         Production
Activity                                 Facility        Location         Ownership         the Company           Capacity
------------------                   ------------  --------------  ----------------   -----------------   ----------------
                                                                                                 (tons)             (tons)

Bauxite Mining                       KJBC          Jamaica                    49.0%           4,500,000          4,500,000
                                     Alpart(1)     Jamaica                    65.0%           2,275,000          3,500,000
                                                                                      -----------------   ----------------
                                                                                              6,775,000          8,000,000
                                                                                      =================   ================

Alumina Refining                     Gramercy      Louisiana                 100.0%           1,250,000          1,250,000
                                     Alpart        Jamaica                    65.0%             942,500          1,450,000
                                     QAL           Australia                  20.0%             730,000          3,650,000
                                                                                      -----------------   ----------------
                                                                                              2,922,500          6,350,000
                                                                                      =================   ================
------------
(1)    Alumina Partners of Jamaica ("Alpart") bauxite is refined into alumina at
       the Alpart refinery.

KACC is a major producer of alumina and sells significant amounts of its alumina
production in domestic and international markets. KACC's strategy is to sell a
substantial portion of the alumina available to it in excess of its internal
smelting requirements under multi-year sales contracts with prices linked to the
price of primary aluminum. See "- Competition" and "- Commodity Marketing" in
this Report. During 2002, KACC sold alumina to approximately 14 customers, the
largest and top five of which accounted for approximately 20% and 73%,
respectively, of the business unit's third-party net sales. All of KACC's
third-party sales of bauxite in 2002 were made to one customer, which sales
represent approximately 6% of the business unit's third-party net sales. KACC's
principal customers for bauxite and alumina consist of other aluminum producers,
trading intermediaries, and users of chemical grade alumina. Marketing and sales
efforts are conducted by personnel located in Baton Rouge, Louisiana.

KJBC. The Government of Jamaica has granted KACC a mining lease for the mining
of bauxite which will, at a minimum, satisfy the bauxite requirements of KACC's
Gramercy, Louisiana, alumina refinery so that it will be able to produce at its
current rated capacity until 2020. Kaiser Jamaica Bauxite Company ("KJBC") mines
bauxite from land which is subject to the mining lease as an agent for KACC.
KACC holds its interest in KJBC through a wholly owned subsidiary (Kaiser
Bauxite Company) which was one of KACC's subsidiaries that filed a petition for
reorganization under the Code in January 2003. KJBC did not file a petition for
reorganization. KACC and Kaiser Bauxite Company have the authority from the
Court to fund KJBC's cash requirements in the ordinary course of business.
Although KACC (through Kaiser Bauxite Company) owns 49% of KJBC, it is entitled
to, and generally takes, all of its bauxite output. A substantial majority of
the bauxite mined by KJBC is refined into alumina at the Gramercy facility and
the remainder is sold. KJBC's operations were impacted by the Gramercy incident
(see Gramercy below). The Government of Jamaica, which owns 51% of KJBC, has
agreed to grant KACC an additional bauxite mining lease. The new mining lease
will be effective upon the expiration of the current lease in 2020 and will
enable the Gramercy facility to produce at its rated capacity for an additional
ten year period.

Gramercy. Alumina produced by the Gramercy refinery is primarily sold to third
parties. The Gramercy refinery produces two products: smelter grade alumina and
chemical grade alumina (e.g. hydrate). Smelter grade alumina is sold under
long-term contracts typically linked to London Metal Exchange prices ("LME
prices") for primary aluminum. Chemical grade alumina is sold at a premium price
over smelter grade alumina. Production at the plant was curtailed from July 1999
until December 2000 (at which time partial production commenced) as a result of
an explosion in the digestion area of the plant. Construction at the facility
was substantially completed in the third quarter of 2001. During the first nine
months of 2001, the plant operated at approximately 68% of its newly-rated
estimated annual capacity of 1,250,000 tons. During the fourth quarter of 2001,
the plant operated at approximately 90% of its newly-rated capacity. Since the
end of February 2002, the plant has, except for normal operating variations,
generally operated at approximately 100% of its newly-rated capacity. During
2001, abnormal Gramercy-related start-up costs and litigation costs totaled
approximately $64.9 million and $6.5 million, respectively. These incremental
costs for 2001 were offset by approximately $36.6 million of additional
insurance benefit (recorded as a reduction of Bauxite and alumina business
unit's cost of products sold). The abnormal start-up costs in 2001 resulted from
operating the plant in an interim mode pending completion of construction at
well less than the expected production rate or full efficiency. During 2002,
because the plant was operating at near full capacity, the amount of start-up
costs was substantially reduced as compared to prior periods. Such costs were
approximately $3.0 million during the first quarter of 2002 and were
substantially eliminated during the balance of 2002. The facility is now
focusing its efforts on achieving its full operating efficiency. While
production was curtailed, KACC purchased alumina from third parties, in excess
of the amounts of alumina available from other KACC-owned facilities, to supply
major customers' needs as well as to meet intersegment requirements.

Alpart. KACC owns a 65% interest in Alpart, and Hydro Aluminium a.s ("Hydro")
owns the remaining 35% interest. KACC holds its interests in Alpart through two
wholly owned subsidiaries (Kaiser Jamaica Corporation and Alpart Jamaica Inc.),
which were two of KACC's subsidiaries that filed petitions for reorganization
under the Code in January 2003. Alpart did not file a petition for
reorganization. The Debtors have the authority from the Court to fund Alpart's
cash requirements in the ordinary course of business. Alpart holds bauxite
reserves and owns a 1,450,000 ton per year alumina plant located in Jamaica.
KACC has management responsibility for the facility on a fee basis. KACC and
Hydro are responsible for their proportionate shares of Alpart's costs and
expenses. The Government of Jamaica has granted Alpart a mining lease and has
entered into other agreements with Alpart designed to assure that sufficient
reserves of bauxite will be available to Alpart to operate its refinery, as it
may be expanded up to a capacity of 2,000,000 tons per year, through the year
2024. Alpart and JAMALCO, a joint venture between affiliates of Alcoa Inc. and
the Government of Jamaica, have been operating a bauxite mining operation joint
venture that consolidated their bauxite mining operations in Jamaica since the
first half of 2000. The joint venture agreement also grants Alpart certain
rights to acquire bauxite mined from JAMALCO's reserves with the objective to
optimize mining operations and capital costs. As part of the Company's
initiatives launched in 2001, Alpart's annual production capacity is expected to
increase to 1,650,000 tons per year during 2003, which would equate to an
increase in KACC's share of annual production by over 100,000 tons per year.

QAL. KACC owns a 20% interest in QAL, after selling an approximate 8.3% interest
in September 2001. KACC holds its interest in QAL through a wholly owned
subsidiary (Kaiser Alumina Australia Corporation ("KAAC")) which is one of
KACC's subsidiaries that filed a petition for reorganization under the Code in
2002. The Debtors have the authority from the Court to fund QAL's cash
requirements in the ordinary course of business. QAL, which is located in
Queensland, Australia, owns one of the largest and most competitive alumina
refineries in the world. QAL refines bauxite into alumina, essentially on a cost
basis, for the account of its shareholders under long-term tolling contracts.
The shareholders, including KAAC, purchase bauxite from another QAL shareholder
under long-term supply contracts. KAAC has contracted with QAL to take
approximately 600,000 tons per year of alumina or pay standby charges. KAAC is
unconditionally obligated to pay amounts calculated to service its share ($49.0
million at December 31, 2002) of certain debt of QAL, as well as other QAL costs
and expenses, including bauxite shipping costs. Historically, KACC has sold
about half of its share of QAL's production to third parties and has used the
remainder to supply its Mead and Tacoma smelters, which have been curtailed
since the last half of 2000. The reduction in KACC's alumina supply associated
with its sale of a portion of its QAL interest has been substantially offset by
the return of its Gramercy alumina refinery to full operations during the first
quarter of 2002 at a higher capacity, by reduced internal requirements due to
production curtailments of primary aluminum facilities and by the previously
noted planned increase in capacity in 2003 at its Alpart alumina refinery in
Jamaica. Accordingly, the sale of a portion of the Company's QAL interest did
not have an adverse impact on KACC's ability to satisfy existing third-party
customer contracts.

-   Primary Aluminum Business Unit
The following table lists KACC's primary aluminum smelting facilities as of
December 31, 2002:


                                                                            Annual Rated            Total            2002
                                                                                Capacity           Annual         Average
                                                           Company         Available to             Rated       Operating
Location                                 Facility        Ownership           the Company         Capacity            Rate
-----------------                      ----------     ------------      ----------------      -----------    ------------
                                                                                  (tons)           (tons)
Ghana                                  Valco                   90%               180,000          200,000            66%
Wales, United Kingdom                  Anglesey                49%                66,150          135,000           103%
Washington, United States              Mead                   100%               200,000          200,000             -(1)
                                                                        ----------------      -----------
              Total                                                              446,150          535,000
                                                                        ================      ===========

--------------
(1)  Production was completely curtailed during 2002. In January 2003, the
     Company announced the indefinite curtailment of the Mead facility - see
     below.

KACC uses proprietary retrofit and control technology in all of its smelters.
This technology - which includes the redesign of the cathodes, anodes and bus
that conduct electricity through reduction cells, improved feed systems that add
alumina to the cells, computerized process control and energy management
systems, and furnace technology for baking of anode carbon - has significantly
contributed to increased and more efficient production of primary aluminum and
enhanced KACC's ability to compete more effectively with the industry's newer
smelters.

KACC's principal primary aluminum customers consist of large trading
intermediaries and metal brokers. In 2002, KACC sold its primary aluminum
production to approximately 37 customers, the largest and top five of which
accounted for approximately 52% and 99%, respectively, of the business unit's
third-party net sales. See "-Competition" in this Report. Marketing and sales
efforts are conducted by personnel located in Baton Rouge, Louisiana.

Electric power represents an important production input for KACC at its aluminum
smelters and its cost can significantly affect the Business Unit's
profitability.

Valco. KACC manages, and directly owns a 90% interest in, the Volta Aluminium
Company Limited ("Valco") aluminum smelter in Ghana. The Valco smelter uses
pre-bake technology and processes alumina supplied by KACC and the other
participant into primary aluminum under tolling contracts which provide for
proportionate payments by the participants. KACC's share of the primary aluminum
is sold to third parties.

Valco's operating level has been subject to fluctuations resulting from the
amount of power it is allocated by the Volta River Authority ("VRA"). The
operating level over the last five years has ranged from one to four out of a
total of five potlines. During 2002 and 2001, Valco operated an average of three
and four potlines, respectively. The amount of power made available to Valco by
the 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.
As of February 28, 2003, the lake level was at a ten-year low. 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. As of February 28,
2003, Valco was operating one of its five potlines. However, no assurances can
be given that Valco will continue to receive sufficient power to operate the one
remaining operating potline. 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 or to the likelihood of Valco receiving any
compensation from the VRA or GoG.

Valco did not file a petition for reorganization. KACC does not expect Valco's
operations to be adversely affected as a result of the Cases as the Debtors have
received the authority from the Court to fund Valco's cash requirements in the
ordinary course of business. The Company and the PBGC have entered into a
stipulation, which was approved by the Court, that extends the automatic stay in
bankruptcy to Valco to prevent statutory liens from arising against Valco in
respect of certain pension obligations related to KACC's U.S. pension plans (see
Note 10 of Notes to Consolidated Financial Statements). The stipulation
currently expires on December 31, 2003. It can be extended beyond that date
either through agreement of the parties or involuntarily by order of the Court.
The Company is unable to assess at this time whether an extension of the
stipulation might be necessary or whether, if sought, an extension might be
obtained. If the stipulation were not extended, a PBGC lien could arise against
Valco that could have material consequences. The Company is unable to state at
this time whether a lien, if one arose, would be enforceable in Ghana against
Valco.

Anglesey. KACC also owns a 49% interest in the Anglesey Aluminium Limited
("Anglesey") aluminum smelter at Holyhead, Wales. The Anglesey smelter uses
pre-bake technology. KACC supplies 49% of Anglesey's alumina requirements and
purchases 49% of Anglesey's aluminum output. KACC sells its share of Anglesey's
output to third parties. Anglesey operates under a power agreement that provides
sufficient power to sustain its operations at full capacity through September
2009.

Anglesey did not file a petition for reorganization. KACC does not expect
Anglesey's operations to be adversely affected as a result of the Cases as the
Debtors have received the authority from the Court to fund Anglesey's cash
requirements in the ordinary course of business.

Mead and Tacoma. The Mead facility uses pre-bake technology. Through 2000, the
Bonneville Power Administration ("BPA") was supplying approximately half of the
electric power for the Mead and Tacoma smelters, with the balance coming from
other suppliers. In response to the unprecedented high market prices for power
in the Pacific Northwest, KACC curtailed primary aluminum production at the Mead
and Tacoma, Washington, smelters during the last half of 2000 and all of 2001
and 2002. During this same period, as permitted under the BPA contract, KACC
remarketed to the BPA the available power that it had under contract through
September 30, 2001. As a result of the curtailments, KACC avoided the need to
purchase power on a variable market price basis and received cash proceeds
sufficient to more than offset the cash impact of the potline curtailments over
the period for which the power was sold. Both smelters remained completely
curtailed during 2001 and 2002.

During October 2000, KACC signed a new power contract with the 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 approximately 40 megawatts), as well as
approximately 40% of the combined capacity of KACC's Mead and Tacoma aluminum
smelting operations. However, the October 2000 contract was less favorable than
the prior contract and contained several clauses that had adverse consequences
for KACC. 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.
See Note 3 of Notes to Consolidated Financial Statements for a discussion of the
Company's rejection of the BPA contract.

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. 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 and cost inefficiencies such that operating results
would, at best, be breakeven to modestly negative at long-term primary aluminum
prices.

In January 2003, the Court approved the sale of the Tacoma smelter to the Port
of Tacoma. The sale closed in February 2003. See Note 15 of Notes to
Consolidated Financial Statements for additional discussion on the sale of the
Tacoma smelter.

-   Commodities Marketing Business Unit
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. Primary
aluminum prices have historically been subject to significant cyclical
fluctuations. Alumina prices, as well as fabricated aluminum product prices
(which vary considerably among products), are significantly influenced by
changes in the price of primary aluminum and generally lag behind primary
aluminum prices by up to three months. From time to time in the ordinary course
of business, KACC enters into hedging transactions to provide risk management in
respect of its net exposure of earnings and cash flow related to primary
aluminum price changes. Given the significance of primary aluminum hedging
activities to the Company and KACC, the Company reports its primary
aluminum-related hedging activities as a separate segment. Primary
aluminum-related hedging activities are managed centrally on behalf of all of
KACC's business segments to minimize transaction costs, to monitor consolidated
net exposures and to allow for increased responsiveness to changes in market
factors.

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 those positions in
advance of the initial Filing Date. The net gain associated with those
liquidated positions was deferred and is being recognized as income through
December 31, 2003 (the period during which the underlying transactions are
expected to occur). During December 2002 and the first quarter of 2003, the
Company, with Court approval, reinstituted its hedging program when it entered
into hedging transactions with respect to a portion of its 2003 fuel oil
requirements consumed in its production process. The Company anticipates that,
subject to the 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.

Hedging activities conducted in respect of the Company's cost exposure to energy
prices and foreign exchange rates are not considered a part of the Commodity
marketing segment. Rather, such activities are included in the results of the
business unit to which they relate.

-   Flat-Rolled Products Business Unit
The Flat-rolled products business unit operates the Trentwood, Washington,
rolling mill. During recent years, the business unit has sold to the aerospace,
transportation and industrial ("ATI") markets (producing heat-treat sheet and
plate products), both directly and through distributors.

During 2000, KACC shifted the product mix of its Trentwood rolling mill toward
higher value-added product lines, exited beverage can body stock, wheel and
common alloy products in 2001 and exited the can lid and tab stock and brazing
sheet products in 2002 in an effort to enhance its profitability.

In 2002, the business unit sold to approximately 82 customers in the ATI
markets, most of which represented heat-treat product shipments to distributors
who sell to a variety of industrial end-users. The largest and top five
customers in the ATI markets for flat-rolled products accounted for
approximately 16% and 41%, respectively, of the business unit's third-party net
sales. See "- Competition" in this Report. Sales are made directly to end-use
customers and distributors by KACC sales representatives located in the United
States and Europe, and by independent sales agents in Asia.

-   Engineered Products Business Unit
The Engineered products business unit operates soft-alloy and hard-alloy
extrusion facilities and engineered component (forgings) facilities in the
United States and Canada. Major markets for extruded products are in the ground
transportation industry, to which the business unit sells extrusions for
automobiles, light-duty vehicles, heavy duty trucks and trailers, and shipping
containers, and in the distribution, durable goods, defense, ordnance and
electrical markets.

Soft-alloy extrusion facilities are located in Los Angeles, California; Sherman,
Texas; Tulsa, Oklahoma; Richmond, Virginia; and London, Ontario, Canada.
Products manufactured at these facilities include rod, bar, tube, shapes and
billet. Hard-alloy extrusion facilities are located in Newark, Ohio, and
Jackson, Tennessee, and produce rod, bar, screw machine stock, redraw rod,
forging stock and billet. The business unit also extrudes seamless tubing in
both hard- and soft-alloys at a facility in Richland, Washington and produces
drawn tube in both hard- and soft-alloys at its operations in Chandler, Arizona,
that it purchased in May 2000. Soft-alloy extruded seamless and drawn tubing is
also produced at the Richmond, Virginia facility.

The business unit sells forged parts to customers in the automotive, heavy-duty
truck, general aviation, rail, machinery and equipment, and ordnance markets.
The high strength-to-weight properties of forged aluminum make it particularly
well-suited for automotive applications. KACC's remaining forging facility is
located in Greenwood, South Carolina. Another forging facility located in
Oxnard, California was sold in December 2002. Through its sales and engineering
office in Southfield, Michigan, the business unit staff works with automobile
makers and other customers and plant personnel to create new automotive
component designs and to improve existing products.

KACC's London, Ontario facility is owned by a wholly owned subsidiary (Kaiser
Aluminum & Chemical of Canada Limited ("KACCL")) which was one of KACC's
subsidiaries that filed a petition for reorganization under the Code in January
2003. The Company does not believe KACCL's operations will be adversely affected
by the Cases.

In 2002, the Engineered products business unit had approximately 600 customers,
the largest and top five of which accounted for approximately 10% and 25%,
respectively, of the business unit's third-party net sales. See "- Competition"
below. Sales are made directly to end-use customers and distributors by KACC
sales representatives located across the United States.

COMPETITION

KACC competes globally with producers of bauxite, alumina, primary aluminum, and
fabricated aluminum products. Many of KACC's competitors have greater financial
resources than KACC. Primary aluminum and, to some degree, alumina are
commodities with generally standard qualities, and competition in the sale of
these commodities is based primarily upon price, quality and availability.
Aluminum competes in many markets with steel, copper, glass, plastic, and other
materials. KACC competes with numerous domestic and international fabricators in
the sale of fabricated aluminum products. KACC markets fabricated aluminum
products it manufactures in the United States and abroad. Sales are made
directly and through distributors to a large number of customers. Competition in
the sale of fabricated products is based upon quality, availability, price and
service, including delivery performance. KACC concentrates its fabricating
operations on selected products in which it believes it has production
expertise, high-quality capability, and geographic and other competitive
advantages. The Company believes that, assuming the current relationship between
worldwide supply and demand for alumina and primary aluminum does not change
materially, the loss of any one of KACC's customers, including intermediaries,
would not have a material adverse effect on the Company's financial condition or
results of operations.

RESEARCH AND DEVELOPMENT

Net expenditures for research and development activities were $1.8 million in
2002, $4.0 million in 2001, and $5.6 million in 2000. KACC estimates that
research and development net expenditures will be in the range of $2.0 million
to $3.0 million in 2003.

EMPLOYEES

At December 31, 2002, KACC employed approximately 5,200 persons, of which
approximately 3,400 were employed by the Debtors and 1,800 were employed by
non-Debtors. At December 31, 2001, KACC employed approximately 5,800 persons.

The labor agreements with the employees at the Valco smelter in Ghana and the
employees at the Alpart refinery in Jamaica were renewed in 2002 and with the
employees at the London, Ontario facility in February 2003.

ENVIRONMENTAL MATTERS

The Company and KACC are subject to a wide variety of international, federal,
state and local environmental laws and regulations. For a discussion of this
subject, see "Factors Affecting Future Performance - KACC's current or past
operations subject it to environmental compliance, clean-up and damage claims
that may be costly" below. During the pendency of the Cases, substantially all
pending litigation, except certain environmental claims and litigation, against
the Debtors is stayed.

FACTORS AFFECTING FUTURE PERFORMANCE

This section discusses certain factors that could cause actual results to vary,
perhaps materially, from the results described in forward-looking statements
made in this Report. Forward-looking statements in this Report are not
guarantees of future performance and involve significant risks and
uncertainties. In addition to the factors identified below, actual results may
vary materially from those in such forward-looking statements as a result of a
variety of other factors including 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 Report also identifies other factors that
could cause such differences. No assurance can be given that these factors are
all of the factors that could cause actual results to vary materially from the
forward-looking statements.

-  The Cases and any plan of reorganization may have adverse consequences on the
   Company and its stakeholders and/or our reorganization from the Cases may not
   be successful
Our objective is to achieve the highest possible recoveries for all creditors
and stockholders, consistent with our ability to pay and the continuation of our
businesses. However, there can be no assurance that we will be able to attain
these objectives or achieve a successful reorganization and remain a going
concern. 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 Debtors 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,

       1.     If the Debtors 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.

       2.     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 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.

       3.     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 consolidated financial statements.

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.

Additionally, while the Debtors operate their businesses as
debtors-in-possession pursuant to the Code during the pendency of the Cases, the
Debtors will be required to obtain the approval of the Court prior to engaging
in any transaction outside the ordinary course of business. In connection with
any such approval, creditors and other parties in interest may raise objections
to such approval and may appear and be heard at any hearing with respect to any
such approval. Accordingly, the Debtors may be prevented from engaging in
transactions that might otherwise be considered beneficial to the Company. The
Court also has the authority to oversee and exert control over the Debtors'
ordinary course operations.

-   We may not operate profitably in the future
We reported a net loss of $468.7 million for the year ended December 31, 2002,
which included a number of significant special items and non-cash charges. Even
if such items were excluded from the results for 2002, results for the year
ended December 31, 2002 would have been a net loss. There can be no assurance
that we will generate a profit from recurring operations or that we will operate
profitably in future periods. 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 our normal recurring operations including: (a) asbestos-related
insurance recoveries of $23.3 million; (b) approximately $30.0 million of
funding to 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 operations ($34.9 million)
resulted from a combination of adverse market factors in the business segments
in which the Company operates including (a) primary aluminum prices 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.

To date, despite the foregoing adverse consequences, the Company's liquidity
(cash and cash equivalents plus unused availability under the DIP Facility) has
remained strong, averaging between $200.0 million and $250.0 million during the
fourth quarter of 2002. The completed sales of the Tacoma facility and the
Company's interests in an office building during the first quarter of 2003 are
expected to further bolster the Company's liquidity. However, no assurances can
be given that the Company's liquidity will not erode if the adverse market
factors continue for an extended period or for other reasons.

-  Our earnings are sensitive to a number of variables
Our operating earnings are sensitive to a number of variables over which we have
no direct control. Key variables in this regard include prices for primary
aluminum and energy and general economic conditions.

The price of primary aluminum significantly affects our financial results.
Primary aluminum prices historically have been subject to significant cyclical
price fluctuations. The Company believes the timing of changes in the market
price of aluminum are largely unpredictable. Since 1993, the average LME
transaction price has ranged from approximately $.50 to $1.00 per pound.

Electric power represents an important production input for us at our aluminum
smelters and its cost can significantly affect our profitability. Power
contracts for our smelters have varying contractual terms. See
"Business--Primary Aluminum Business Unit." Our earnings, particularly in our
Bauxite and Alumina business unit, are also sensitive to changes in the prices
for natural gas, fuel oil and diesel oil which are used in our production
processes, and to foreign exchange rates in respect of our cash commitments to
our foreign subsidiaries and affiliates.

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, and aerospace markets. Such changes in
demand can directly affect our 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 alumina and primary aluminum.

-  The indefinite curtailment of the Mead facility may have adverse impacts on 
   the Company
The Mead facility is expected to remain curtailed indefinitely unless/until an
appropriate combination of reduced power prices, higher primary aluminum prices
and other factors occurs. Until then, the Company will incur certain costs to
safely maintain the property. While other costs are being reduced to a minimum,
these costs may range from $3.0 million to $5.0 million per year and will reduce
KACC's otherwise available liquidity. However, at some point in the future, the
Company may decide, due to economic conditions and foreign competition and other
factors, to sell the facility. If, in connection with such a 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 the proceeds of such a disposition
might offset such costs, no assurances can be provided that such amounts would
fully or substantially offset the environmental remediation costs.

-  We may not have electric power in sufficient amounts and/or at affordable
   costs available for our smelting operations
Electric power represents an important production input at our aluminum smelters
and its cost can significantly affect our profitability. Power contracts for our
smelters have varying contractual terms. In March 2002, the GoG reduced the
power allocation for our 90% owned Valco smelter forcing Valco to curtail one of
its four operating potlines. In January 2003, Valco's power allocation was
further reduced forcing the curtailment of two additional operating potlines. As
of February 28, 2003, Valco was operating only one of its five potlines. See
"Business--Primary Aluminum Business Unit--Valco." We cannot provide assurance
that electric power will be available in the future, at affordable prices, for
our smelters.

-  KACC's current or past operations subject it to environmental compliance,
   clean-up and damage claims that have been and continue to be costly
The operations of KACC's facilities are regulated by a wide variety of
international, federal, state and local environmental laws. These environmental
laws regulate, among other things, air and water emissions and discharges; the
generation, storage, treatment, transportation and disposal of solid and
hazardous waste; and the release of hazardous or toxic substances, pollutants
and contaminants into the environment. Compliance with these environmental laws
is costly. While legislative, regulatory and economic uncertainties make it
difficult for us to project future spending for these purposes, we currently
anticipate that in the 2003 - 2004 period, KACC's environmental capital spending
will be approximately $1.3 million per year and that KACC's operating costs will
include pollution control costs totaling approximately $14.8 million per year.
However, subsequent changes in environmental laws may change the way KACC must
operate and may force KACC to spend more than we currently project.

Additionally, KACC's current and former operations can subject it to fines or
penalties for alleged breaches of environmental laws and to other actions
seeking clean-up or other remedies under these environmental laws. KACC also may
be subject to damages related to alleged injuries to health or to the
environment, including claims with respect to certain waste disposal sites and
the clean-up of sites currently or formerly used by KACC.

Currently, KACC is subject to certain lawsuits under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"). KACC, along
with certain other companies, has been named as a Potentially Responsible Party
for clean-up costs at certain third-party sites listed on the National
Priorities List under CERCLA. As a result, KACC may be exposed not only to its
assessed share of clean-up but also to the costs of others if they are unable to
pay. Additionally, KACC's Mead, Washington, facility has been listed on the
National Priorities List under CERCLA. KACC and the regulatory authorities
agreed to a plan of remediation in respect of the Mead facility in January 2000.

In response to environmental concerns, we have established environmental
accruals representing our estimate of the costs we reasonably expect KACC to
incur in connection with these matters. At December 31, 2002, the balance of our
accruals, which are primarily included in our long-term liabilities, was $59.1
million. We estimate that the annual costs charged to these environmental
accruals will be approximately $.6 million to $12.3 million per year for the
years 2003 through 2007 and an aggregate of approximately $33.3 million
thereafter. However, we cannot assure you that KACC's actual costs will not
exceed our current estimates. We believe 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 $30.0 million.
See Note 12 of Notes to Consolidated Financial Statements for additional
information.

-  The settlement of the asbestos-related matters may have a major impact on our
   plan of reorganization
KACC has been one of many defendants in numerous lawsuits in which the
plaintiffs allege that they have injuries caused by 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 sold more than 20 years ago. Due to the Cases, existing
lawsuits are stayed and new lawsuits cannot be commenced against us or KACC.

Our December 31, 2002, balance sheet includes a liability for estimated
asbestos-related costs of $610.1 million. In determining the amount of the
liability, we have included estimates only for the costs of claims through 2011
because we do not have a reasonable basis for estimating costs beyond that
period. However, the plan of reorganization process will require an estimation
of KACC's entire asbestos-related liability, which may go beyond 2011.
Additional asbestos-related claims are likely to be filed against KACC 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 periodically continue
to 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.

We believe KACC has insurance coverage for a substantial portion of such
asbestos-related costs. Accordingly, our December 31, 2002 balance sheet
includes a long-term receivable for estimated insurance recoveries of $484.0
million. We believe that recovery of this amount is probable and additional
amounts may be recoverable in the future if additional claims are received.
However, we cannot assure you that all such amounts will be collected. The
timing and amount of future recoveries from KACC's insurance carriers will
depend on the pendency of the Cases and on the resolution of disputes regarding
coverage under the applicable insurance policies. 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 our
estimates of current and future asbestos-related insurance recoveries. The trial
court is scheduled to decide certain policy interpretation issues in Spring 2003
and 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 KACC's insurers is critical to a successful plan
of reorganization and our long-term liquidity.

-  The outcome of the unfair labor practices ("ULPs") action filed by the United
   Steelworkers of America ("USWA") could adversely affect us
In connection with the strike by the USWA and the subsequent lock-out by KACC,
the USWA filed twenty-four allegations of ULPs. Twenty-two of the allegations
were dismissed. A trial before an administrative law judge on 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 National Labor Relations Board ("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 the proposed award and is not self-executing. The USWA has filed a
proof of claim of approximately $240.0 million 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 million, including interest of $18.0 million. 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 NLRB general counsel and 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. 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 likely only be paid upon or after the Company's emergence
from the Cases.

-  Our profits and cash flows may be adversely impacted by the results of KACC's 
   hedging programs
From time to time in the ordinary course of business, KACC enters into hedging
transactions 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 primary aluminum prices, (2) 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. To the extent
that the prices for primary aluminum exceed the fixed or ceiling prices
established by KACC's hedging transactions or that energy costs or foreign
exchange rates are below the fixed prices, our profits and cash flow would be
lower than they otherwise would have been.

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 those positions in
advance of the Filing Date. During December 2002 and the first quarter of 2003,
the Company, with Court approval, reinstituted its hedging program when it
entered into hedging transactions with respect to a portion of its 2003 fuel oil
requirements. 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.

-   We operate in a highly competitive industry
The production of alumina, primary aluminum and fabricated aluminum products is
highly competitive. There are numerous companies who operate in the aluminum
industry. Certain of our competitors are substantially larger, have greater
financial resources than we do and may have other strategic advantages.

-  KACC is subject to political and regulatory risks in a number of countries
KACC operates facilities in the United States and in a number of other
countries, including Australia, Canada, Ghana, Jamaica, and the United Kingdom.
While we believe KACC's relationships in the countries in which it operates are
generally satisfactory, we cannot assure you that future developments or
governmental actions in these countries will not adversely affect KACC's
operations particularly or the aluminum industry generally. Among the risks
inherent in KACC's operations are unexpected changes in regulatory requirements,
unfavorable legal rulings, new or increased taxes and levies, and new or
increased import or export restrictions. KACC's operations outside of the United
States are subject to a number of additional risks, including but not limited to
currency exchange rate fluctuations, currency restrictions, and nationalization
of assets.


I
TEM 2.       PROPERTIES

The locations and general character of the principal plants, mines, and other
materially important physical properties relating to KACC's operations are
described in Item 1 "- Business Operations" and those descriptions are
incorporated herein by reference. KACC owns in fee or leases all the real estate
and facilities used in connection with its business. Plants and equipment and
other facilities are generally in good condition and suitable for their intended
uses. However, 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.

KACC's obligations under the DIP Facility are secured by, among other things,
mortgages on KACC's major domestic plants. See Note 7 of Notes to Consolidated
Financial Statements for further discussion.


ITEM 3.       LEGAL PROCEEDINGS

This section contains statements which constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. See

Item 1 of this Report for cautionary information with respect to such
forward-looking statements.

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.
See Item 1. "Business - Reorganization Proceedings" for a discussion of the
reorganization proceedings. Such discussion is incorporated herein by reference.

ASBESTOS-RELATED LITIGATION

KACC is a defendant 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 manufactured for more than 20 years. The lawsuits are currently
stayed by the Cases. The portion of Note 12 of Notes to Consolidated Financial
Statements under the heading "Asbestos Contingencies" is incorporated herein by
reference.

LABOR MATTERS

In connection with the USWA strike and subsequent lock-out by KACC, certain
allegations of ULPs were filed by the USWA with the NLRB. Twenty-two of the
twenty-four allegations of ULPs brought against KACC by the USWA were dismissed.
A trial on the remaining two allegations before an administrative law judge
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 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 NLRB
general counsel 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. This matter is not currently stayed by the Cases. 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. The portion of Note 12 of Notes to Consolidated
Financial Statements under the heading "Labor Matters" is incorporated herein by
reference.

GRAMERCY LITIGATION

On July 5, 1999, KACC's Gramercy, Louisiana, alumina refinery was extensively
damaged by an explosion in the digestion area of the plant. A number of
employees were injured in the incident, several of them severely. The incident
resulted in a significant number of individual and class action lawsuits being
filed against KACC and others alleging, among other things, property damage,
business interruption losses by other businesses and personal injury. During
2002, all of these matters were settled for amounts which, after the application
of insurance, were not material to KACC.

OTHER MATTERS

Various other lawsuits and claims are pending against KACC. 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
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.

See Note 12 of Notes to Consolidated Financial Statements for discussion of
additional litigation.


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

No matter was submitted to a vote of security holders of the Company during the
fourth quarter of 2002.


PART II


ITEM 5.       MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
              MATTERS

Through April 2, 2002, the Company's Common Stock was traded on the New York
Stock Exchange under the symbol "KLU." However, on April 2, 2002, the New York
Stock Exchange announced that it was suspending trading of the Company's Common
Stock because the price of the Common Stock had fallen below the New York Stock
Exchange's continued listing standard regarding the average closing price of a
security for a consecutive 30 trading day period. As of April 3, 2002, the
Company's Common Stock began trading on the OTC Bulletin Board under the symbol
"KLUCQ." The number of record holders of the Company's Common Stock at February
28, 2003, was 467. The high and low sales prices for the Company's Common Stock
for each quarterly period of 2002, 2001 and 2000, as reported on the OTC
Bulletin Board and the New York Stock Exchange is set forth in the Quarterly
Financial Data on page 68 in this Report and is incorporated herein by
reference. It is possible that, as a part of a plan of reorganization, the
interests of the Company's existing stockholders could be diluted or cancelled.

The Company has not paid any dividends on its Common Stock during the two most
recent fiscal years. In accordance with the Code and the DIP Facility, the
Company is not permitted to pay any dividends or purchase any of its stock.

The Company's non-qualified stock option plans, which are the Company's only
stock option plans, have been approved by the Company's stockholders. The number
of shares of Common Stock to be issued upon exercise of outstanding options, the
weighted average price per share of the outstanding options and the number of
shares of Common Stock available for future issuance under the Company's
non-qualified stock option plans at December 31, 2002, included under the
heading "Incentive Plans" in Note 10 of Notes to Consolidated Financial
Statements is incorporated herein by reference.

See Note 7 of Notes to Consolidated Financial Statements under the heading "Debt
Covenants and Restrictions" and the " Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources
- Capital Structure" for additional information, which information is
incorporated herein.


ITEM 6.       SELECTED FINANCIAL DATA

Selected financial data for the Company is incorporated herein by reference to
the table at page 4 of this Report, to the table at page 17 of Management's
Discussion and Analysis of Financial Condition and Results of Operations, to
Note 2 of Notes to Consolidated Financial Statements, and to the Five-Year
Financial Data on pages 69 - 70 in this Report.


ITEM 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
              RESULTS OF OPERATIONS

REORGANIZATION PROCEEDINGS

The Company and 25 of its subsidiaries have filed separate voluntary petitions
with the Court for reorganization under Chapter 11 of 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 entitles 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 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 extensions of the exclusivity period for all
Debtors through April 30, 2003. 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. The Company's strategic vision, which is
subject to continuing review in consultation with the Company's stakeholders,
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.

OVERVIEW

The Company, through its wholly owned subsidiary, KACC, operates in the
following business segments: Bauxite and alumina, Primary aluminum, Flat-rolled
products, Engineered products and Commodities marketing. The Company uses a
portion of its bauxite, alumina, and primary aluminum production for additional
processing at certain of its downstream facilities. The table below provides
selected operational and financial information on a consolidated basis with
respect to the Company for the years ended December 31, 2002, 2001 and 2000. The
following data should be read in conjunction with the Company's consolidated
financial statements and the notes thereto contained elsewhere herein. See Note
16 of Notes to Consolidated Financial Statements for further information
regarding segments. (All references to tons refer to metric tons of 2,204.6
pounds.) Intersegment transfers are valued at estimated market prices.


                                                                           Year Ended December 31,
                                                               -----------------------------------------------
(In millions of dollars, except shipments and prices)                   2002             2001             2000
-------------------------------------------------------------- -------------  ---------------   --------------
Shipments: (000 tons)
   Alumina
      Third Party                                                   2,626.6          2,582.7          1,927.1
      Intersegment                                                    343.9            422.8            751.9
                                                               -------------  ---------------   --------------
        Total Alumina                                               2,970.5          3,005.5          2,679.0
                                                               -------------  ---------------   --------------
   Primary Aluminum(1)
      Third Party                                                     194.8            244.7            345.5
      Intersegment                                                      1.7              2.3            148.9
                                                               -------------  ---------------   --------------
        Total Primary Aluminum                                        196.5            247.0            494.4
                                                               -------------  ---------------   --------------
   Flat-Rolled Products                                                46.3             74.4            162.3
                                                               -------------  ---------------   --------------
   Engineered Products                                                124.4            118.1            164.6
                                                               -------------  ---------------   --------------
Average Realized Third Party Sales Price:(2)
   Alumina (per ton)                                           $        165   $          186    $         209
   Primary Aluminum (per pound)                                $        .62   $          .67    $         .74
Net Sales:
   Bauxite and Alumina
      Third Party (includes net sales of bauxite)              $      458.1   $        508.3    $       442.2
      Intersegment                                                     58.6             77.9            148.3
                                                               -------------  ---------------   --------------
        Total Bauxite & Alumina                                       516.7            586.2            590.5
                                                               -------------  ---------------   --------------
   Primary Aluminum(1)
      Third Party                                                     265.3            358.9            563.7
      Intersegment                                                      2.5              3.8            242.3
                                                               -------------  ---------------   --------------
        Total Primary Aluminum                                        267.8            362.7            806.0
                                                               -------------  ---------------   --------------
   Flat-Rolled Products                                               183.6            308.0            521.0
   Engineered Products                                                425.0            429.5            564.9
   Commodities Marketing(3)                                            39.1             22.9            (25.4)
   Minority Interests                                                  98.5            105.1            103.4
   Eliminations                                                       (61.1)           (81.7)          (390.6)
                                                               -------------  ---------------   --------------
        Total Net Sales                                        $    1,469.6   $      1,732.7    $     2,169.8
                                                               =============  ===============   ==============
Operating Income (Loss):
   Bauxite & Alumina (4)                                       $      (48.5)  $        (46.9)   $        57.2
   Primary Aluminum(5)                                                (23.1)             5.1            100.1
   Flat-Rolled Products(5)(6)                                         (30.7)              .4             16.6
   Engineered Products(5)(6)                                            8.5              4.6             34.1
   Commodities Marketing                                               36.2              5.6            (48.7)
   Eliminations                                                         1.7              1.0               .1
   Corporate and Other(7)                                             (98.9)           (68.5)           (61.4)
   Non-Recurring Operating (Charges) Benefits, Net(8)                (251.2)           163.6             41.3
                                                               -------------  ---------------   --------------
        Total Operating Income (Loss)                          $     (406.0)  $         64.9    $       139.3
                                                               =============  ===============   ==============
Net Income (Loss)                                              $     (468.7)  $       (459.4)   $        16.8
                                                               =============  ===============   ==============
Capital Expenditures                                           $       47.6   $        148.7    $       296.5
                                                               =============  ===============   ==============

(1)   Beginning in the first quarter of 2001, as a result of the continuing
      curtailment of KACC's Northwest smelters, the Flat-rolled products
      business unit began purchasing its own primary aluminum rather than
      relying on the Primary aluminum business unit to supply its aluminum
      requirements through production or third party purchases. The Engineered
      products business unit was already responsible for purchasing the majority
      of its primary aluminum requirements.
(2)   Average realized prices for the Company's Flat-rolled products and 
      Engineered products segments are not presented as such prices are
      subject to fluctuations due to changes in product mix.
(3)   Net sales in 2002 primarily represent partial recognition of deferred
      gains from hedges closed prior to the commencement of the Cases. Net sales
      in 2001 and 2000 represent net settlements with counterparties for
      maturing derivative positions.
(4)   Operating results for 2002 include $4.4 of charges resulting from an
      increase in the allowance for doubtful receivables and a LIFO inventory
      charge of $.5. Operating results for 2001 include abnormal
      Gramercy-related start-up costs and litigation costs, net of business
      interruption-related insurance accruals, of $34.8 and a LIFO inventory
      charge of $3.7.
(5)   Operating results for 2002 include LIFO inventory charges of:  Primary 
      aluminum - $2.1, Flat-Rolled Products - $2.0 and Engineered Products - 
      $1.5.
(6)   Operating results for 2001 include LIFO inventory charges of:  Flat-Rolled 
      Products - $3.0 and Engineered Products - $1.5.
(7)   Operating results for 2002 include special pension charges of $24.1 and 
      key employee retention program charges of $5.1.
(8)   See Note 6 of Notes to Consolidated Financial Statements for a detailed
      summary of the components of non-recurring operating (charges) benefits,
      net and the business segment to which the items relate.

This Report 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 "Overview,"
"Results of Operations," "Liquidity and Capital Resources" and "Other Matters").
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. See Item 1. "Business - Factors Affecting Future
Performance." 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.

SIGNIFICANT ITEMS

Market-related Factors. 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 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 13 of
Notes to 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, and packaging 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 2002, the average LME price per pound for primary aluminum was $.61.
During 2001, the LME price began the year at $.71 per pound and then began a
steady decrease ending 2001 at $.61 per pound. During 2000, the average LME
price was $.70 per pound. At February 28, 2003, the LME price was approximately
$.66 per pound.

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. As a result of the indefinite
curtailment, in December 2002, the Company recorded non-cash non-recurring
charges of: (a) $138.5 million to write-down the Washington smelter assets to
their estimated fair value; (b) a net charge of $18.6 million to write-down
certain aluminum and alumina inventories at the Northwest smelters to their net
realizable values based on the Company's intent to sell (rather than use) such
inventories; and (c) a LIFO inventory charge of $.9 million which resulted from
the write-down of the aluminum and alumina inventories. Additionally, during
December 2002, the Company accrued approximately $58.8 million of pension,
postretirement benefit and related obligations for the hourly employees who had
been on a laid-off status and under the terms of their labor contract became
eligible to elect early retirement because of the indefinite curtailment. See
Note 5 of Notes to Consolidated Financial Statements for additional discussion
of the Mead curtailment.

Approximately $1.5 million of charges associated with salaried workforce
reductions at the Mead facility will be recorded in the first quarter of 2003
because the recognition requirements under generally accepted accounting
principles for such charges were not met at December 31, 2002.

Liquidity/Negative Cash Flow. 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 our normal recurring operations including: (a) asbestos-related
insurance recoveries of $23.3 million; (b) approximately $30.0 million of
funding to 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 equivalent used in operations ($34.9 million)
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 availability under the DIP Facility) has remained strong, averaging
between $200.0 million and $250.0 million during the fourth quarter of 2002.
Recent improvements in primary aluminum prices, fabricated product demand,
particularly aerospace products, and the sale of the Tacoma facility and the
Company's interests in an office building in the first quarter of 2003 are
expected to further bolster the Company's liquidity. However, no assurances can
be given that the recent primary aluminum price increase and fabricated product
market demand improvement will be sustained or that the Company's liquidity will
not erode for other reasons.

Pension Plan Matters. The assets of the Company-sponsored pension plans, like
numerous other companies' plans, are, to a substantial degree, invested in the
capital markets and managed by a third party. Given the performance of the stock
market during 2002, and the resulting decline in the value of the assets held by
the Company pension plans, the Company was required to reflect additional
minimum pension liabilities of $133.1 million in its 2002 financial statements.
Additionally, 2003 operating results are expected to be adversely impacted by
higher pension costs resulting from the decline in the value of the pension
plans' assets and increased liabilities due to lower interest rates,
restructuring activities and the incurrence of additional full early retirement
obligations in respect of KACC's Washington smelters. However, the Company does
not currently intend to fund the remaining required pension contributions due in
2003 as it believes that virtually all of such amounts are pre-Filing Date
obligations. As previously announced, the Company has met on several occasions
with the PBGC to discuss alternative solutions to the pension funding issue that
would assist the Company in assessing its alternatives for a plan of
reorganization. These options include extended amortization periods for payments
of unfunded liabilities or the potential termination of the plans.

Also, during 2002, the Company recorded charges of $24.1 million for additional
pension expense. See Note 10 of Notes to Consolidated Financial Statements for
additional discussion of the additional pension expense.

Valco Operating Level. The amount of power made available to Valco by the 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. As of February
28, 2003, the lake level was at a ten-year low.

During late 2000, Valco, the 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 resulting in the
curtailment of two additional operating potlines in January 2003. In connection
with such curtailments, $5.5 million of end-of-service benefits were paid
resulting in a $3.2 million charge to earnings in January 2003. Additional
curtailments and end-of-service payments/charges are possible. As of February
28, 2003, Valco was operating only one of its five potlines.

No assurance can be given that Valco will continue to receive sufficient power
to operate the one remaining operating potline. 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.

RESULTS OF OPERATIONS

Summary. The Company reported a net loss of $468.7 million, $5.82 of basic loss
per common share for 2002, compared to a net loss of $459.4 million, $5.73 of
basic loss per common share for 2001 and net income of $16.8 million, or $.21 of
basic income per common share, for 2000.

Net sales in 2002 totaled $1,469.6 million compared to $1,732.7 million in 2001
and $2,169.8 million in 2000.

2002 AS COMPARED TO 2001

Bauxite and Alumina. Third party net sales of alumina for 2002 decreased 10% as
compared to 2001, primarily due to an 11% decrease in third party average
realized prices. The decrease in average realized prices was due to a decrease
in primary aluminum market prices to which the Company's third party alumina
sales contracts are linked. Third party shipments were up modestly primarily due
to the curtailment of one of Valco's operating potlines in March 2002 discussed
below.

Intersegment net sales for 2002 decreased 25% as compared to 2001 as the result
of a 19% decrease in the intersegment shipments and a 7% decrease in
intersegment average realized prices. The decrease in shipments was due to
reduced shipments to the Primary alumina business unit primarily due to the
curtailment of one of Valco's operating potlines in March 2002. The decrease in
intersegment average realized prices is the result of a decrease in primary
aluminum prices from period to period as intersegment transfers are made on the
basis of primary aluminum market prices on a lagged basis of one month.

Segment operating results (excluding non-recurring items) for 2002 were modestly
worse than 2001. The decrease was primarily due to the decrease in the average
realized price discussed above and the reduction in alumina shipments associated
with the sale of a portion of our interest in QAL offset by the decrease in
abnormal Gramercy related net start-up costs, favorable caustic prices at QAL
and the return to a more normal cost performance at KJBC resulting in part from
increased production volume (due to the Gramercy restart). Results for 2002 also
included an increase of $4.4 million in the allowance for doubtful accounts and
a LIFO charge of $.5 million. Operating results for 2001 included: (1) abnormal
Gramercy-related start-up costs and litigation costs of $64.9 million and $6.5
million, respectively, offset by business interruption-related insurance
accruals of $36.6 million; and (2) a LIFO inventory charge of $3.7 million.

Segment operating results for 2002, discussed above, exclude non-recurring costs
of $2.0 million incurred in connection with cost reduction initiatives. Segment
operating results for 2001 exclude non-recurring costs of $15.8 million also
incurred in connection with cost reduction initiatives.

Because of the January 2003 curtailment of two additional potlines at Valco (see
"Valco Operating Level" above), it is anticipated that 2003 intersegment
shipments will decline but will be substantially offset by an increase in
third-party sales of alumina.

Primary Aluminum. Third party net sales of primary aluminum decreased 26% for
2002 as compared to 2001 as a result of a 20% decrease in third party shipments
and a 7% decrease in third party average realized prices. The decrease in
shipments was primarily due to the curtailment of one of Valco's operating
potlines in March 2002 and the curtailment of the rod operations at the Tacoma
facility in the second quarter of 2001. The decrease in the average realized
prices was primarily due to the decrease in primary aluminum market prices.

Since the beginning of 2001, the Northwest smelters have been completely
curtailed. The Mead facility is expected to remain curtailed indefinitely unless
and until an appropriate combination of reduced power prices and higher primary
aluminum prices occurs. The Tacoma facility was sold in February 2003. As a
result, intersegment net sales of primary aluminum for 2002 and 2001 have been
minimal. Beginning in the first quarter of 2001, the Flat-rolled products
business unit began purchasing its own primary aluminum rather than relying on
the Primary aluminum business unit to supply its aluminum requirements through
production or third party purchases. The Engineered products business unit was
already responsible for purchasing the majority of its primary aluminum
requirements.

Segment operating results (before non-recurring items) for 2002 were
substantially worse than 2001. The primary reasons for the decrease were the
decreases in the average realized prices and net shipments discussed above and
Valco potline shutdown and pension costs, offset by lower alumina metal prices
and reductions in overhead costs. Results for 2002 also included a LIFO
inventory charge of $2.1 million.

Segment operating results for 2002, discussed above, exclude a non-cash charge
of approximately $138.5 million related to the write-down of the Washington
smelter assets to their estimated fair value, a non-cash charge of approximately
$21.4 million related to a write-down of certain aluminum and alumina
inventories, an $.8 million LIFO inventory charge which resulted in connection
with the write-down of the aluminum and alumina inventories and non-recurring
costs of $2.7 million incurred in connection with cost reduction initiatives.
Segment operating results for 2002 also exclude approximately $58.8 million of
pension and postretirement benefits and related obligations for the hourly
employees who had been on a laid-off status and under the terms of their labor
contract are eligible for early retirement because of the indefinite curtailment
of the Mead facility. Segment operating results for 2001 excluded non-recurring
net power sales gains of $229.2 million. These gains were offset by costs of
$7.5 million also incurred in connection with cost reduction initiatives and
contractual labor costs related to the Washington smelter impairment of $12.7
million.

Because of the January 2003 curtailment of two additional potlines at Valco (see
"Valco Operating Level" above), it is anticipated that 2003 primary aluminum
shipments will decline substantially.

Flat-Rolled Products. Net sales of flat-rolled products decreased 40% in 2002 as
compared to 2001 primarily due to a 38% decrease in product shipments and a 4%
decrease in realized prices. Shipments in 2002 were lower than 2001 primarily
due to a continuation of soft aerospace products demand and by the second
quarter of 2002 exit of the can lid and tab stock and brazing sheet products
offset modestly by an increase in general engineering plate demand. The decrease
in average realized prices was due to the impact of weaker demand.

Segment operating results (before non-recurring items) for 2002 were worse than
2001 primarily due to the decrease in shipments and product prices discussed
above. Operating results for 2002 were also adversely impacted by a LIFO
inventory charge of $2.0 million. Partially offsetting these adverse impacts
were reductions in overhead and other costs as a result of cost cutting
initiatives. Operating results for 2001 included a LIFO inventory charge of $3.0
million.

Segment operating results for 2002 exclude non-recurring costs of $7.9 million
incurred in connection with cost reduction initiatives and product line exit.
Segment operating results for 2002 also exclude a $1.6 million non-cash LIFO
inventory charge associated with the product line exits. Segment operating
results for 2001 excludes a non-cash impairment charge of $17.7 million
associated with certain equipment that the Company planned to sell or idle as a
result of the planned 2002 exit from the brazing heat-treat and tab stock
product lines and non-recurring costs of $10.7 million also incurred in
connection with cost reduction initiatives.

Engineered Products. Net sales of engineered products decreased modestly during
2002 as compared to 2001, as a 6% decrease in average realized prices was
substantially offset by a 5% increase in product shipments. The decrease in
average realized prices was due to lower metal prices as well as some erosion in
overall product prices resulting from continuing weak overall market conditions.
The increase in product shipments was the result of increased ground
transportation markets offset in part by reduced general aviation market
shipments.

Segment operating results (before non-recurring items) for 2002 improved as
compared to 2001. Such increase was primarily attributable to improved cost
performance, higher shipment volumes and reductions in energy and overhead
costs, offset in part by the net effect of the lower product prices factor
described above and a LIFO inventory charge of $1.5 million. Operating results
for 2001 included a LIFO inventory charge of $1.5 million.

Commodities Marketing. In 2002, net sales for this segment primarily represents
recognition of deferred gains from hedges closed prior to the commencement of
the Cases. See Note 13 of Notes to Consolidated Financial Statements. Gains or
losses associated with these liquidated positions are initially deferred in
Other comprehensive income and are subsequently recognized over the original
hedging periods as the underlying purchases/sales occur. In 2001, net sales for
this segment represented net settlements with third party brokers for maturing
derivative positions.

Segment operating results for 2002 increased compared to the comparable periods
in 2001 due to the higher prices implicit in the liquidation of the positions in
January 2002 versus the prevailing market prices during 2001.

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. Eliminations for 2002 include a
benefit of $2.8 million of deferred intersegment profit offsetting the $21.4
million inventory write-down in the Primary aluminum business segment discussed
above.

Corporate and Other. Corporate operating expenses represent corporate general
and administrative expenses which are not allocated to the Company's business
segments. The increase in corporate operating expenses (excluding non-recurring
items) in 2002 as compared to 2001 was due largely to higher medical and pension
cost accruals for active and retired employees and non-cash pension charges of
$19.9 million (see Note 10 of Notes to Consolidated Financial Statements),
charges of $5.1 million related to the Company's key employee retention program
(see Note 14 of Notes to Consolidated Financial Statements) and payments in
January 2002 of approximately $4.2 million to a trust in respect of certain
management compensation agreements (see Note 10 of Notes to Consolidated
Financial Statements) offset in part primarily by reduced salary and litigation
expenses.

Corporate operating results for 2002, discussed above, exclude a non-cash
impairment charge of approximately $20.0 million related to the Kaiser Center
office complex, one of the Company's non-operating properties. Corporate
operating results for 2001, discussed above, exclude non-recurring costs of $1.2
million incurred in connection with the Company's cost reduction initiatives.

2001 AS COMPARED TO 2000

Bauxite and Alumina. Third-party net sales of alumina in 2001 were 15% higher
than in 2000 as a 34% increase in third-party shipments was only partially
offset by an 11% decrease in third-party average realized prices. The increase
in period-over-period shipments resulted primarily from (1) higher third-party
sales due to reduced internal alumina requirements as a result of the
curtailment of the Washington smelters, (2) the restart of production at the
Gramercy refinery in December 2000 and (3) the timing of shipments. The decrease
in average realized prices was due to a decrease in primary aluminum market
prices to which our third-party alumina sales contracts are linked, typically on
a lagged basis of three months.

Intersegment net sales for 2001, decreased 47% as compared to 2000. The decrease
was due to a 44% decrease in the intersegment shipments and a 7% decrease in
intersegment average realized prices. The decrease in shipments was primarily
due to the curtailments of the Company's Washington smelters. The decrease in
the intersegment average realized prices was the result of the decrease in
primary aluminum prices from period to period as intersegment transfers are made
on the basis of primary aluminum market prices on a lagged basis of one month.

Segment operating results (excluding non-recurring items) for 2001 were down
significantly from 2000. Increased net shipments only partially offset the
decrease in the average realized sales prices. Additionally, operating income
for 2001 was adversely affected by abnormal Gramercy related start-up costs and
litigation costs of approximately $71.4 million, less than satisfactory bauxite
mining cost performance at KJBC and a LIFO inventory charge of $3.7 million.
These charges were offset in part by $36.6 million of additional insurance
benefits related to the Gramercy incident.

Segment operating income for 2001 discussed above, excludes non-recurring costs
of $15.8 million incurred in connection with the performance improvements
initiative program. Segment operating income for 2000 excludes labor settlement
charges of $2.1 million and three Gramercy-related items: a $7.0 million
non-cash LIFO inventory charge, incremental maintenance spending of $11.5
million and an $.8 million non-cash restructuring charge.

Primary Aluminum. Third party sales of primary aluminum for 2001 decreased
approximately 36% from 2000, reflecting a 29% decrease in third-party shipments
and a 9% decrease in third-party average realized prices. The decrease in
shipments was primarily due to the complete curtailment of the Washington
smelters during 2001, as compared to 2000 when these smelters operated during a
significant portion of the year. The decrease in the average realized prices was
primarily due to the decrease in primary aluminum market prices. Intersegment
net sales of primary aluminum for 2001 decreased significantly compared to 2000
primarily as a result of a substantial decrease in intersegment shipments. This
change resulted primarily from a change in the Company's methodology for
handling aluminum supply logistics for the Flat-rolled products business unit as
a result of the continuing curtailment of the Northwest smelters. Beginning in
the first quarter of 2001, the Flat-rolled products business unit began
purchasing its own primary aluminum rather than relying on the Primary aluminum
business unit to supply its aluminum requirements through production or third
party purchases. The Engineered products business unit was already responsible
for purchasing the majority of its primary aluminum requirements. The
intersegment average realized price for 2001 was approximately the same as 2000
because substantially all of the intersegment shipments occurred in the first
quarter of 2001 when the intersegment average realized price approximated the
2000 intersegment average realized price.

Segment operating income (excluding non-recurring items) for 2001 decreased
significantly versus 2000. The primary reasons for the decrease were the
decreases in the average realized prices and shipments discussed above as well
as overhead and other fixed costs associated with the curtailed Northwest
smelting operations, which totaled approximately $30.0 million during 2001. The
Company believes that approximately half of such costs incurred are "excess" to
the run rate that can be achieved during a prolonged curtailment period. During
the third quarter of 2001, management took actions to minimize the excess
outflows associated with the curtailed operations. These actions resulted in the
elimination of most of the excess cost in 2002. Period-over-period results were
also unfavorably impacted by higher energy costs at the Anglesey aluminum
smelter, resulting from a new power contract entered into by Anglesey at the end
of the first quarter of 2000.

Segment operating income for 2001, discussed above, excludes non-recurring net
power sale gains of $229.2 million. These gains were offset by costs of $7.5
million incurred in connection with the Company's performance improvement
initiative program and contractual labor costs related to the Northwest smelter
curtailment of $12.7 million. Segment operating income for 2000 excludes net
power sale gains of $159.5 million. These gains were offset by a non-cash
smelter impairment charge of $33.0 million, labor settlement charges of $15.9
million and costs related to staff reduction initiatives of $3.1 million.

Flat-Rolled Products. Net sales of flat-rolled products for 2001 decreased by
approximately 41% as compared to 2000 as a 54% decrease in shipments was
partially offset by a 29% increase in average realized prices. The decrease in
shipments was primarily due to reduced shipments of can body stock, as a part of
the planned exit from this product line. Current period shipments were also
adversely affected by the reduced demand for general engineering heat-treat
products and can lid and tab stock, due to a weak market. These decreases were
only modestly offset by a strong aerospace demand during the first nine months
of 2001. However, after the events of September 11, 2001, aerospace demand and
the price for aerospace products declined substantially. The increase in average
realized prices primarily reflects the change in product mix from can body stock
to heat-treat products.

Segment operating income (excluding non-recurring items) for 2001 was down
significantly from 2000. The primary reasons for the decrease were the
substantial decrease in shipments and weakened pricing for heat treat products
as a result of the weaker U.S. economy which were worsened after September 11,
2001 to the point that fourth quarter operating results were a loss. Operating
results were also adversely impacted by increased operating costs, mainly due to
a lag in the ability to scale back costs to reflect the revised product mix and
the substantial volume decline caused by weakened demand. Operating results for
2001 also included a LIFO inventory charge of $3.0 million and higher metal
sourcing costs due to plant curtailments.

Segment operating income for 2001, discussed above, excludes a non-cash
impairment charge of $17.7 million associated with certain equipment that the
Company plans to sell or idle as the result of a planned 2002 exit from the
brazing heat-treat and lid and tab stock for the beverage container market and
non-recurring costs of $10.7 million incurred in connection with the performance
improvement program. Segment operating income for 2000 excludes labor settlement
charges of $18.2 million, an $11.1 million non-cash LIFO inventory charge and
non-cash impairment charges associated with a product line exit of $1.5 million.

Engineered Products. Net sales of engineered products for 2001 decreased by
approximately 24% as a 28% decrease in product shipments was offset by a 6%
increase in average realized prices. The decrease in product shipments was the
result of reduced transportation and electrical product shipments due to weak
U.S. market demand. The increase in average realized prices reflects a shift in
product mix to higher value-added products.

Segment operating income (excluding non-recurring items) for 2001 decreased as
compared to 2000 primarily due to the volume and price factors described above.
The segment's operating results were also adversely impacted by a LIFO inventory
charge of $1.5 million and because cost reduction lagged the substantial volume
decline.

Segment operating income for 2000, discussed above, excludes a non-recurring
non-cash impairment charge associated with product line exit of $5.6 million and
a labor settlement charge of $2.3 million.

Commodities Marketing. Net sales for this segment represent net settlements with
third-party brokers for maturing derivative positions. Operating income
represents the combined effect of such net settlements, any net premium costs
associated with maturing options, as well as net results of internal hedging
activities with our fabricated products segments. The minimum (and maximum)
price of the hedges in any given period is primarily the result of the timing of
the execution of the hedging contracts.

Segment operating income for 2001 increased compared to the comparable period in
2000. This is primarily the result of 2001 hedging positions having higher
minimum prices than the positions in 2000, combined with the fact that 2000
market prices were higher than those experienced in 2001.

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 (excluding non-recurring
items) represent corporate general and administrative expenses which are not
allocated to the Company's business segments. The increase in corporate
operating expenses in 2001, as compared to 2000 was primarily due to higher
medical and pension costs accruals for active and retired employees.

Corporate operating results for 2001, discussed above, exclude costs of $1.2
million incurred in connection with the Company's performance improvement
program. Corporate operating results for 2000 exclude costs related to staff
reduction and efficiency initiatives of $5.5 million.

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 their
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 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. In 2002, operating activities used $49.6 million of cash.
This amount compares with 2001 when operating activities provided cash of $249.8
million and 2000 when operating activities provided cash of $83.1 million. The
major reason for the decrease in cash between 2002 and 2001 is due to the
non-recurring nature of the 2001 power sales. The increase in cash flows from
operating activities between 2001 and 2000 resulted primarily from the impact of
power sales and a decline in Gramercy-related receivables. The $49.6 million of
cash and cash equivalents used in operations in 2002 included several items not
typically considered part of our normal recurring operations including: (a)
asbestos-related insurance recoveries of $23.3 million; (b) approximately $30.0
million of funding to 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 operations ($34.9 million)
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.

Investing Activities. Total consolidated capital expenditures were $47.6, $148.7
and $296.5 million in 2002, 2001 and 2000, respectively (of which $9.6, $10.4
and $5.4 million were funded by the minority partners in certain foreign joint
ventures). Capital expenditures in 2001 and 2000 included $78.6 and $239.1
million spent with respect to rebuilding the Gramercy facility. Capital
expenditures in 2000 also included $13.3 million spent with respect to the
purchase of the non-working capital assets of the Chandler, Arizona drawn tube
aluminum fabricating operation. The capital expenditures in 2002 and the
remaining capital expenditures in 2001 and 2000 were made primarily to improve
production efficiency, reduce operating costs and expand capacity at existing
facilities. Total consolidated capital expenditures are currently expected to be
between $50.0 and $80.0 million per year in each of 2003 and 2004 (of which
approximately 15% is expected to be funded by the Company's minority partners in
certain foreign joint ventures). Management continues to evaluate numerous
projects, all of which would require substantial capital, both in the United
States and overseas. 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, KACC'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, 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 is of limited duration and
will lapse on June 29, 2003 unless otherwise incorporated into a formal
amendment. The Company is working with the lenders to complete such an amendment
that would incorporate the limited waiver and also modify the financial covenant
for periods subsequent to December 31, 2002. The Company believes that such an
amendment will be agreed with the DIP Facility lenders not later than May 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 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. As a part of this amendment, the Company also plans to request that
the lenders extend the DIP Facility past its current February 2004 expiration.

The Company and KACC currently believe that the cash and cash equivalents of
$78.7 million at December 31, 2002, 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 February 28, 2003, there were no
outstanding borrowings under the revolving credit facility and there were
outstanding letters of credit of approximately $49.3 million. As of February 28,
2003, $146.0 million (of which $75.7 million could be used for additional
letters of credit) was available to the Company under the DIP Facility.

Capital Structure. 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
possible that all or a portion of MAXXAM's interests may be diluted or cancelled
as a part of a plan of reorganization.

Commitments and Contingencies. During the pendency of the Cases, substantially
all pending litigation against the Debtors, except that relating to certain
environmental matters, is stayed. Generally, claims against a Debtor arising
from actions or omissions prior to its Filing Date will be satisfied as part of
a plan of reorganization.

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. Based on the Company's evaluation of these
and other environmental matters, the Company has established environmental
accruals of $59.1 million at December 31, 2002. However, the Company believes
that it is reasonably possible that changes in various factors could cause costs
associated with these environmental matters to exceed current accruals by
amounts that could range, in the aggregate, up to an estimated $30.0 million.

KACC is also a defendant in a number of asbestos-related lawsuits that generally
relate to products KACC has not sold for more than 20 years. The lawsuits are
currently stayed by the Cases. Based on past experience and reasonably
anticipated future activity, the Company has established a $610.1 million
accrual at December 31, 2002, for estimated asbestos-related costs for claims
filed and estimated to be filed through 2011, before consideration of insurance
recoveries. However, the Company believes that substantial recoveries from
insurance carriers are probable. The Company reached this conclusion based on
prior insurance-related recoveries in respect of asbestos-related claims,
existing insurance policies and the advice of outside counsel with respect to
applicable insurance coverage law relating to the terms and conditions of these
policies. Accordingly, the Company has recorded an estimated aggregate insurance
recovery of $484.0 million (determined on the same basis as the asbestos-related
cost accrual) at December 31, 2002. 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 its insurance carriers will
depend on the pendency of the Cases and on the resolution of disputes regarding
coverage under the applicable insurance policies.

In connection with the USWA strike and subsequent lock-out by KACC which was
settled in September 2000, certain allegations of ULPs have been filed with the
NLRB by the USWA. KACC believes that all such allegations are without merit.
Twenty-two of twenty-four allegations of ULPs previously brought against it 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, an
administrative law judge of the NLRB 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 the
proposed award and is not self-executing. The USWA has filed a proof of claim
for $240.0 million 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 million,
including interest of approximately $18.0 million. 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 NLRB general counsel 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. 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
likely only be paid upon or after the Company's emergence from the Cases.

While uncertainties are inherent in the final outcome of these matters and it is
presently impossible to determine the actual costs that ultimately may be
incurred and insurance recoveries that ultimately may be received, management
currently believes that the resolution of these uncertainties and the incurrence
of related costs, net of any related insurance recoveries, should not have a
material adverse effect on the Company's consolidated financial position or
liquidity. However, amounts paid, if any, in satisfaction of these matters could
be significant to the results of the period in which they are recorded. See Note
12 of Notes to Consolidated Financial Statements for a more detailed discussion
of these contingencies and the factors affecting management's beliefs.

OTHER MATTERS

Income Tax Matters. In light of the Cases, the Company has provided valuation
allowances for all of its net deferred income tax assets as the Company no
longer believes that the "more likely than not" recognition criteria were
appropriate. See Note 9 of Notes to Consolidated Financial Statements for a
discussion of these and other income tax matters.

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
      year ending) December 31, 2002 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 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 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 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 USWA's ULP claim, and (b) the net obligation in respect of
      asbestos-related matters. Both of these matters are discussed in Note 12
      of Notes to Consolidated Financial Statements and it is important that you
      read this note.

      As more fully discussed in Note 12, we have not accrued any amount in our
      December 31, 2002 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 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 12, 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 December
      31, 2002, KACC had recorded an obligation for approximately $610.0 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 during the ten-year period 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 December 31, 2002, KACC had recorded a receivable for
      approximately $484.0 million in respect of expected insurance recoveries
      related to existing claims and the estimate future claims over a ten-year
      period. 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 12 of Notes to 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 for
      information regarding the Company's pension and post-retirement
      obligations. Actual results may differ from the assumptions made in
      computing the estimated December 31, 2002 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.


I
TEM 7A.     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 13 of Notes to 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 purchased
option contracts which cap the price that KACC would have to pay for 2.4 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.

Based on an average January 2003 fuel oil price (per barrel) of approximately
$30.0, the Company estimates the hedges would result in a net aggregate pre-tax
increase to operating income of approximately $1.4 million in the first quarter
of 2003.


ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   Independent Auditors' Report

   Copy of Report of Independent Public Accountants

   Consolidated Balance Sheets

   Statements of Consolidated Income (Loss)

   Statements of Consolidated Stockholders' Equity (Deficit) and Comprehensive 
      Income (Loss)

   Statements of Consolidated Cash Flows

   Notes to Consolidated Financial Statements

   Quarterly Financial Data (Unaudited)

   Five-Year Financial Data



Independent Auditors' Report
--------------------------------------------------------------------------------

To the Stockholders and the Board of Directors of Kaiser Aluminum Corporation:

We have audited the accompanying consolidated balance sheet of Kaiser Aluminum
Corporation (Debtor-In-Possession) and subsidiaries as of December 31, 2002, and
the related consolidated statements of income (loss), stockholders' equity
(deficit) and comprehensive income (loss) and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The consolidated financial statements of Kaiser
Aluminum Corporation as of December 31, 2001 and for the years ended December
31, 2001 and 2000 were audited by other auditors who have ceased operations. In
their report, dated April 10, 2002, those auditors expressed an unqualified
opinion on those consolidated financial statements with an explanatory paragraph
as to the Company's ability to continue as a going concern.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Kaiser Aluminum Corporation and
subsidiaries as of December 31, 2002, and the results of their operations and
their cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.

As discussed in Note 1, the Company, its wholly owned subsidiary, Kaiser
Aluminum & Chemical Corporation ("KACC") and certain of KACC's subsidiaries have
filed for reorganization under Chapter 11 of the Federal Bankruptcy Code. The
accompanying consolidated financial statements do not purport to reflect or
provide for the consequences of the bankruptcy proceedings. In particular, such
financial statements do not purport to show (a) as to assets, their realizable
value on a liquidation basis or their availability to satisfy liabilities; (b)
as to pre-petition liabilities, the amounts that may be allowed for claims or
contingencies, or the status and priority thereof; (c) as to stockholder
accounts, the effect of any changes that may be made in the capitalization of
the Company; or (d) as to operations, the effect of any changes that may be made
in its business.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Notes 1 and
2, the action of filing for reorganization under Chapter 11 of the Federal
Bankruptcy Code, losses from operations and stockholders' capital deficiency
raise substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also discussed in Note 1. The
financial statements do not include adjustments that might result from the
outcome of this uncertainty.



DELOITTE & TOUCHE




Houston, Texas
March 28, 2003




COPY OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------


Kaiser Aluminum Corporation dismissed Arthur Andersen on April 30, 2002 and
subsequently engaged Deloitte & Touche LLP as its independent auditors. The
predecessor auditors' report appearing below is a copy of Arthur Andersen's
previously issued opinion dated April 10, 2002. Since Kaiser Aluminum
Corporation is unable to obtain a manually signed audit report, a copy of Arthur
Andersen's most recent signed and dated report has been included to satisfy
filing requirements, as permitted under Rule 2-02(e) of Regulation S-X.

To the Stockholders and the Board of Directors of Kaiser Aluminum Corporation:

We have audited the accompanying consolidated balance sheets of Kaiser Aluminum
Corporation (a Delaware corporation) and subsidiaries as of December 31, 2001
and 2000, and the related statements of consolidated income (loss),
stockholders' equity and comprehensive income (loss) and cash flows for each of
the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kaiser Aluminum Corporation and
subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles applicable to a going
concern which contemplate among other things, realization of assets and payment
of liabilities in the normal course of business. As discussed in Note 1 to the
consolidated financial statements, on February 12, 2002, the Company, its wholly
owned subsidiary, Kaiser Aluminum & Chemical Corporation ("KACC") and certain of
KACC's subsidiaries filed for reorganization under Chapter 11 of the United
States Bankruptcy Code. This action raises substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amount and classification of liabilities or the
effects on existing stockholders' equity that may result from any plans,
arrangements or other actions arising from the aforementioned proceedings, or
the possible inability of the Company to continue in existence.





ARTHUR ANDERSEN LLP




Houston, Texas
April 10, 2002



CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------



                                                                                          December 31,
                                                                                   --------------------------
(In millions of dollars, except share amounts)                                             2002          2001
-------------------------------------------------------------------------------    ------------   -----------

ASSETS
Current assets:
   Cash and cash equivalents                                                       $      78.7    $    153.3
   Receivables:
     Trade, less allowance for doubtful receivables of $11.0 and $7.0                    103.1         124.1
     Other                                                                                46.4          82.3
   Inventories                                                                           254.9         313.3
   Prepaid expenses and other current assets                                              33.5          86.2
                                                                                   ------------   -----------

     Total current assets                                                                516.6         759.2

Investments in and advances to unconsolidated affiliates                                  69.7          63.0
Property, plant, and equipment - net                                                   1,009.9       1,215.4
Other assets                                                                             629.2         706.1
                                                                                   ------------   -----------

     Total                                                                         $   2,225.4    $  2,743.7
                                                                                   ============   ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities not subject to compromise -
   Current liabilities
     Accounts payable                                                              $     130.6    $    167.4
     Accrued interest                                                                      2.9          35.4
     Accrued salaries, wages, and related expenses                                        46.7          88.9
     Accrued postretirement medical benefit obligation - current portion                  60.2          62.0
     Other accrued liabilities                                                            64.2         223.3
     Payable to affiliates                                                                28.1          52.9
     Long-term debt - current portion                                                       .9         173.5
                                                                                   ------------   -----------

     Total current liabilities                                                           333.6         803.4

   Long-term liabilities                                                                  86.9         919.9
   Accrued postretirement medical benefit obligation                                        -          642.2
   Long-term debt                                                                         42.7         700.8
                                                                                   ------------   -----------
                                                                                         463.2       3,066.3

Liabilities subject to compromise                                                      2,726.0            -
Minority interests                                                                       121.8         118.5
Commitments and contingencies
Stockholders' equity (deficit):
   Common stock, par value $.01, authorized 125,000,000 shares; issued
     and outstanding 80,386,563 and 80,698,066 shares                                       .8            .8
   Additional capital                                                                    539.9         539.1
   Accumulated deficit                                                                (1,382.4)       (913.7)
   Accumulated other comprehensive income (loss)                                        (243.9)        (67.3)
                                                                                   ------------   -----------

     Total stockholders' equity (deficit)                                             (1,085.6)       (441.1)
                                                                                   ------------   -----------

     Total                                                                         $   2,225.4    $  2,743.7
                                                                                   ============   ===========


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

STATEMENTS OF CONSOLIDATED INCOME (LOSS)
--------------------------------------------------------------------------------



                                                                                    Year Ended December 31,
                                                                            ---------------------------------------
(In millions of dollars, except share and per share amounts)                       2002          2001          2000
-------------------------------------------------------------------------   -----------   -----------   -----------

Net sales                                                                   $  1,469.6    $   1,732.7   $  2,169.8
                                                                            -----------   -----------   -----------

Costs and expenses:
   Cost of products sold                                                       1,408.2       1,638.4       1,891.4
   Depreciation and amortization                                                  91.5          90.2          76.9
   Selling, administrative, research and development, and general                124.7         102.8         104.1
   Non-recurring operating charges (benefits), net                               251.2        (163.6)        (41.9)
                                                                            -----------   -----------   -----------

     Total costs and expenses                                                  1,875.6       1,667.8       2,030.5
                                                                            -----------   -----------   -----------

Operating income (loss)                                                         (406.0)         64.9         139.3

Other income (expense):
   Interest expense (excluding unrecorded contractual interest
     expense of $84.0 in 2002)                                                   (20.7)       (109.0)       (109.6)
   Reorganization items                                                          (33.3)           -             -
   Gain on sale of interest in QAL                                                  -          163.6            -
   Other - net                                                                      .4         (32.8)         (4.3)
                                                                            -----------   -----------   -----------

Income (loss) before income taxes and minority interests                        (459.6)         86.7          25.4

Provision for income taxes                                                       (14.9)       (550.2)        (11.6)

Minority interests                                                                 5.8           4.1           3.0
                                                                            -----------   -----------   -----------

Net income (loss)                                                           $   (468.7)   $   (459.4)   $     16.8
                                                                            ===========   ===========   ===========

Earnings (loss) per share:
   Basic/Diluted                                                            $    (5.82)   $    (5.73)   $      .21
                                                                            ===========   ===========   ===========
Weighted average shares outstanding (000):
   Basic                                                                        80,578        80,235        79,520
                                                                            ===========   ===========   ===========

   Diluted                                                                      80,578        80,235        79,523
                                                                            ===========   ===========   ===========



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

STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (DEFICIT) AND COMPREHENSIVE 
INCOME (LOSS)
--------------------------------------------------------------------------------

(In millions of dollars)
--------------------------------------------------------------------------------


                                                                                                    Accumulated
                                                                                                          Other
                                                      Common        Additional     Accumulated    Comprehensive
                                                       Stock           Capital         Deficit    Income (Loss)       Total
                                            ----------------  ----------------  -------------- ---------------- -----------
BALANCE, December 31, 1999                  $            .8   $         536.8   $      (471.1) $          (1.2) $     65.3

   Net income                                         -                 -                16.8            -            16.8
   Minimum pension liability adjustment,
     net of income tax benefit of $.4                 -                 -                -                 (.6)        (.6)
                                                                                                                -----------
     Comprehensive income                             -                 -                -               -            16.2
   Incentive plan accretion                           -                    .7            -               -              .7
                                            ----------------  ----------------  -------------- ---------------- -----------

BALANCE, December 31, 2000                               .8             537.5          (454.3)            (1.8)       82.2

   Net loss                                           -                 -              (459.4)           -          (459.4)
   Minimum pension liability
     adjustment, net of income tax
     benefit of $38.0                                 -               -                -                 (64.5)      (64.5)
   Adjustment of valuation allowances for
     net deferred income tax assets provided
     in respect of items reflected in Other
     comprehensive income (loss)                       -                 -                -              (25.0)      (25.0)
   Unrealized net gain in value of derivative
     instruments arising during the
     year, net of income tax
     provision of $19.4                                -                 -                -               33.1        33.1
   Reclassification adjustment for
     net realized gains on derivative
     instruments included in net
     loss, net of income tax
     benefit of $5.8                                   -                 -                -              (10.9)      (10.9)
   Cumulative effect of accounting
     change, net of income tax
     provision of $.5                                  -                 -                -                1.8         1.8
                                                                                                                -----------
   Comprehensive income (loss)                                                                                      (524.9)
   Incentive plan and restricted stock
     accretion                                         -                  1.6             -               -            1.6
                                            ----------------  ----------------  -------------- ---------------- -----------

BALANCE, December 31, 2001                               .8             539.1          (913.7)           (67.3)     (441.1)

   Net loss                                            -                 -             (468.7)            -         (468.7)
   Minimum pension liability adjustment                -                 -                -             (136.6)     (136.6)
   Unrealized net decrease in value of
     derivative instruments arising during
     the year prior to settlement                      -                 -                -              (12.1)      (12.1)
   Reclassification adjustment for net
     realized gains on derivative instruments
     included in net loss, net                         -                 -                -              (27.9)      (27.9)
                                                                                                                -----------
   Comprehensive income (loss)                         -                 -                -               -         (645.3)
   Incentive plan accretion                            -                   .8             -               -             .8
                                            ----------------  ----------------  -------------- ---------------- -----------
BALANCE, December 31, 2002                  $           .8    $         539.9   $    (1,382.4) $        (243.9) $ (1,085.6)
                                            ================  ================  ============== ================ ===========

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

STATEMENTS OF CONSOLIDATED CASH FLOWS
--------------------------------------------------------------------------------

                                                                                               Year Ended December 31,
                                                                                   -----------------------------------------------
(In millions of dollars)                                                                     2002              2001           2000
---------------------------------------------------------------------------------  --------------    --------------   ------------

Cash flows from operating activities:
   Net income (loss)                                                               $      (468.7)    $      (459.4)   $      16.8
   Adjustments to reconcile net income (loss) to net cash (used) provided by 
     operating activities:
       Depreciation and amortization (including deferred financing costs of 
         $3.9, $5.1 and $4.4, respectively)                                                 95.4              95.3           81.3
       Non-cash charges for reorganization items, non-recurring operating items 
         and other                                                                         257.0              41.7           63.3
       Gains - sale of real estate and miscellaneous equipment in 2002, sale of QAL
         interest and real estate in 2001 and real estate in 2000                           (3.8)           (173.6)         (39.0)
       Equity in (income) loss of unconsolidated affiliates, net of distributions           (8.0)              1.1           13.1
       Minority interests                                                                   (5.8)             (4.1)          (3.0)
       Decrease (increase) in trade and other receivables                                   58.0             226.0         (168.8)
       Decrease in inventories, excluding LIFO adjustments and non-recurring
         items                                                                              31.1              66.7          125.8
       Decrease in prepaid expenses and other current assets                                46.5              23.2           20.8
       Increase (decrease) in accounts payable (associated with operating activities) 
         and accrued interest                                                               20.5             (39.1)         (29.7)
       (Decrease) increase in payable to affiliates and other accrued liabilities          (67.8)            (48.5)          68.9
       (Decrease) increase in accrued and deferred income taxes                            (24.4)            521.8          (10.2)
       Net cash impact of changes in long-term assets and liabilities                       32.4             (12.5)         (69.4)
       Other                                                                               (12.0)             11.2           13.2
                                                                                   --------------    --------------   ------------

         Net cash (used) provided by operating activities                                  (49.6)            249.8           83.1
                                                                                   --------------    --------------   ------------

Cash flows from investing activities:
   Capital expenditures (including $78.6 and $239.1 in 2001 and 2000,
respectively,
     related to the Gramercy facility)                                                     (47.6)           (148.7)        (296.5)
   (Decrease) increase in accounts payable - Gramercy-related capital expenditures           -               (34.6)          34.6
   Gramercy-related property damage insurance recoveries                                     -                 -            100.0
   Net proceeds from dispositions:  Oxnard facility, equipment and other in 2002, QAL
     interest and real estate in 2001 and various real estate in 2000                       31.4             171.6           66.9
   Other                                                                                     -                 2.4             .2
                                                                                   --------------    --------------   ------------
         Net cash used by investing activities                                             (16.2)             (9.3)         (94.8)
                                                                                   --------------    --------------   ------------
Cash flows from financing activities:
   Incurrence of financing costs                                                            (8.8)              -              (.4)
   (Repayments) borrowings under credit agreement, net                                       -               (30.4)          20.0
   Repayments of other debt                                                                  -               (74.7)          (2.9)
   Redemption of minority interests' preference stocks                                       -                (5.5)          (2.8)
                                                                                   --------------    --------------   ------------
         Net cash (used) provided by financing activities                                   (8.8)           (110.6)          13.9
                                                                                   --------------    --------------   ------------

Net (decrease) increase in cash and cash equivalents during the year                       (74.6)            129.9            2.2
Cash and cash equivalents at beginning of year                                             153.3              23.4           21.2
                                                                                   --------------    --------------   ------------
Cash and cash equivalents at end of year                                           $        78.7     $       153.3    $      23.4
                                                                                   ==============    ==============   ============
Supplemental disclosure of cash flow information:
   Interest paid, net of capitalized interest of $1.2, $3.5 and $6.5               $         5.4     $       106.0    $     105.3
   Income taxes paid                                                                        37.5              52.1           19.6



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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(In millions of dollars, except 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 12) and growing
legacy obligations for retiree medical and pension costs (see Note 10). 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 the Cases 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). 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 extensions of the exclusivity period for all
Debtors through April 30, 2003. 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.

Financial Statement Presentation. The accompanying consolidated financial
statements have been prepared in accordance with 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
                                DECEMBER 31, 2002

                                                                                           Consolidation/
                                            Original        Additional                       Elimination
                                             Debtors          Debtors       Non-Debtors        Entries        Consolidated
                                         --------------   ---------------  -------------  ----------------   --------------

Current assets                           $       359.6    $         42.3   $      114.7   $          -       $       516.6
Investments in subsidiaries and
   affiliates                                  1,429.7             189.8             .1          (1,549.9)            69.7
Intercompany receivables (payables)             (991.1)            884.7          106.4              -                 -
Property and equipment, net                      610.7              20.2          379.0              -             1,009.9
Deferred income taxes                            (81.9)             81.9            -                -                 -
Other assets                                     620.3                .5            8.4              -               629.2
                                         --------------   ---------------  -------------  ----------------   --------------
                                         $     1,947.3    $      1,219.4   $      608.6   $      (1,549.9)   $     2,225.4
                                         ==============   ===============  =============  ================   ==============

Liabilities not subject to compromise -
     Current liabilities                 $       233.4    $         12.3   $       89.9   $          (2.0)   $       333.6
     Long-term liabilities                        72.8              16.3           40.5              -               129.6
Liabilities subject to compromise              2,726.0              -               -                -             2,726.0
Minority interests                                  .7              -             102.3              18.8            121.8
Stockholders' equity                          (1,085.6)          1,190.8          375.9          (1,566.7)        (1,085.6)
                                         --------------   ------------------------------  ----------------   --------------
                                         $     1,947.3    $      1,219.4   $      608.6   $      (1,549.9)   $     2,225.4
                                         ==============   ===============  =============  ================   ==============

               CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS)
                      FOR THE YEAR ENDED DECEMBER 31, 2002


                                                                                           Consolidation/
                                            Original        Additional                       Elimination
                                             Debtors          Debtors       Non-Debtors        Entries        Consolidated
                                         --------------   ---------------  -------------  ----------------   --------------

Net sales                                $     1,323.6    $         47.6   $      209.7   $        (111.3)   $     1,469.6
                                         --------------   ---------------  -------------  ----------------   --------------
Costs and expenses -
     Non-recurring operating charges
         (benefits), net (Note 6)                250.2              -               1.0              -               251.2
     All other                                 1,494.2              14.5          227.0            (111.3)         1,624.4
                                         --------------   ---------------  -------------  ----------------   --------------
                                               1,744.4              14.5          228.0            (111.3)         1,875.6
                                         --------------   ---------------  -------------  ----------------   --------------
Operating income (loss)                         (420.8)             33.1          (18.3)             -              (406.0)
Interest expense                                 (19.4)             -              (1.3)             -               (20.7)
All other income (expense), net                  (31.8)            (11.6)            .2              10.3            (32.9)
Provision for income tax and minority
     interests                                   (16.8)              1.1            6.6              -                (9.1)
Equity in income of subsidiaries                  20.1              -               -               (20.1)             -
                                         --------------   ---------------  -------------  ----------------   --------------
Net income (loss)                        $      (468.7)   $         22.6   $      (12.8)  $          (9.8)   $      (468.7)
                                         ==============   ===============  =============  ================   ==============



                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 2002


                                                                                           Consolidation/
                                           Original         Additional                       Elimination
                                            Debtors           Debtors       Non-Debtors        Entries        Consolidated
                                       ----------------   --------------  --------------  ----------------   --------------
Net cash provided (used) by:
     Operating activities              $         (85.4)   $          .7   $        35.1   $          -       $       (49.6)
     Investing activities                         18.1              -             (34.3)             -               (16.2)
     Financing activities                         (8.8)             -               -                -                (8.8)
                                       ----------------   --------------  --------------  ----------------   --------------
Net (decrease) increase in cash and 
     cash equivalents                            (76.1)              .7              .8              -               (74.6)
Cash and cash equivalents at beginning
     of period                                   151.6              1.4              .3              -               153.3
                                       ----------------   --------------  --------------  ----------------   --------------
Cash and cash equivalents at end of
     period                            $          75.5    $         2.1   $         1.1   $          -       $        78.7
                                       ================   ==============  ==============  ================   ==============

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 December 31, 2002 consisted of the
following items:


Items, absent the Cases, that would have been considered current:
   Accounts payable                                                                    $      47.6
   Accrued interest                                                                           44.0
   Accrued salaries, wages and related expenses(1)                                            59.0
   Other accrued liabilities (including asbestos liability of $130.0 - Note 12)              150.6
Items, absent the Cases, that would have been considered long-term:
   Accrued postretirement medical obligation                                                 672.4
   Long-term liabilities(2)                                                                  922.2
   Debt (Note 7)                                                                             830.2
                                                                                       ------------
                                                                                       $   2,726.0
                                                                                       ============



(1)  Accrued salaries, wages and related expenses represents estimated minimum
     pension contributions for the year ended December 31, 2003. However, the
     Company does not currently expect to make any pension contributions in
     respect of its domestic pension plans. See Note 10.
(2)  Long-term liabilities include pension liabilities of $362.7 (Note 10),
     environmental liabilities of $21.7 (Note 12) and asbestos liabilities of
     $480.1 (Note 12).

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 year ended December 31,
2002, reorganization items were as follows:


Professional fees                                                      $        28.8
Accelerated amortization of certain deferred financing costs                     4.5
Interest income                                                                 (1.8)
Other                                                                            1.8
                                                                       --------------
                                                                       $        33.3
                                                                       ==============

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.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going Concern. The 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 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 be made in connection with the Debtors'
capitalizations or operations 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 consolidated financial statements include the
statements of the Company and its majority owned subsidiaries. The Company is a
subsidiary of MAXXAM Inc. ("MAXXAM") and conducts its operations through its
wholly owned subsidiary, KACC. KACC operates in all principal aspects of the
aluminum industry-the mining of bauxite (the major aluminum bearing ore), the
refining of bauxite into alumina (the intermediate material), the production of
primary aluminum, and the manufacture of fabricated and semi-fabricated aluminum
products. Kaiser's production levels of alumina and primary aluminum allows it
to be a major seller of alumina and primary aluminum to domestic and
international third parties (see Note 16).

The preparation of financial statements in accordance with generally accepted
accounting principles 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
operation.

Investments in 50%-or-less-owned entities are accounted for primarily by the
equity method. Intercompany balances and transactions are eliminated.

Recognition of Sales. Sales are recognized when title, ownership and risk of
loss pass to the buyer.

Earnings per Share. Basic earnings per share is computed by dividing the
weighted average number of common shares 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 per share may
not be meaningful, because as a part of a plan of reorganization, it is possible
that the interests of the Company's existing stockholders could be diluted or
cancelled.

Diluted earnings per share for the year ended December 31, 2000 included the
dilutive effect of outstanding stock options (3,000 shares). The impact of
outstanding stock options was excluded from the computation of diluted loss per
share for the year ended December 31, 2001, as their effect would have been
antidilutive.

Cash and Cash Equivalents. The Company considers only those short-term, highly
liquid investments with original maturities of 90 days or less to be cash
equivalents.

Inventories. Substantially all product inventories are stated at last-in,
first-out ("LIFO") cost, not in excess of market value. Replacement cost is not
in excess of LIFO cost. Other inventories, principally operating supplies and
repair and maintenance parts, are stated at the lower of average cost or market.
Inventory costs consist of material, labor, and manufacturing overhead,
including depreciation. Inventories consist of the following:

                                                                                  December 31,
                                                                          ----------------------------
                                                                                  2002            2001
---------------------------------------------------------------------     ------------   -------------
Finished fabricated products                                              $      28.1    $       30.4
Primary aluminum and work in process                                             71.2           108.3
Bauxite and alumina                                                              72.9            77.7
Operating supplies and repair and maintenance parts                              82.7            96.9
                                                                          ------------   -------------
                                                                          $     254.9    $      313.3
                                                                          ============   =============

Inventories were reduced by the following charges during the years ended
December 31, 2002, 2001 and 2000:


                                                                                        2002           2001            2000
---------------------------------------------------------------------------   --------------   ------------   -------------
Included in cost of products sold:
   LIFO inventory charges                                                     $         6.1    $       8.2    $         .6
Included in non-recurring operating charges (benefit), net (see Note 6):
   Net realizable value charges -
      Northwest smelters impairment (Primary Aluminum), net of
        intersegment profit elimination on Primary Aluminum impairment
        charges of $2.8                                                                18.6             -              -
      Operating supplies and repair and maintenance parts (Bauxite &
        Alumina - $5.0 and Primary Aluminum - $.6)                                      -              5.6             -
   LIFO inventory charges associated with permanent inventory reductions -
      Northwest smelters impairment (Primary Aluminum)                                   .9             -              4.5
      Product line exit (Flat-Rolled Products)                                          1.6             -             11.1
      Product line exit (Engineered Products)                                           -               -               .9
   LIFO inventory charge related to Gramercy facility delayed restart
      (Bauxite & Alumina)                                                               -               -              7.0
                                                                              --------------   ------------   -------------
                                                                              $        27.2    $      13.8    $       24.1
                                                                              ==============   ============   =============

The LIFO inventory charges resulted from reductions in inventory volumes that
were in inventory layers with higher costs than current market prices.

Depreciation. Depreciation is computed principally by the straight-line method
at rates based on the estimated useful lives of the various classes of assets.
The principal estimated useful lives of land improvements, buildings, and
machinery and equipment are 8 to 25 years, 15 to 45 years, and 10 to 22 years,
respectively.

Stock-Based Compensation. The Company applies the intrinsic value method to
account for a stock-based compensation plan whereby compensation cost is
recognized only to the extent that the quoted market price of the stock at the
measurement date exceeds the amount an employee must pay to acquire the stock.
No compensation cost has been recognized for this plan as the exercise price of
the stock options granted in 2001 and 2000 were at or above the market price. No
stock options were granted in 2002. The pro forma after-tax effect of the
estimated fair value of the grants would be to increase the net loss in 2002 and
2001 by $.6 and $.3, respectively, and reduce net income in 2000 by $2.2. While
the pro forma after tax effect of the estimated fair value of the grants would
have resulted in no change in the basic/diluted loss per share for 2002 and
2001, basic/diluted earnings per share for 2000 would have been reduced to $.18.
The fair value of the 2001 and 2000 stock option grants were estimated using a
Black-Scholes option pricing model.

The pro forma effect of the estimated value of stock options may not be
meaningful, because as a part of a plan of reorganization, it is possible the
interests of the holders of outstanding options could be diluted or cancelled.

Other Income (Expense). Amounts included in Other income (expense) in 2002, 2001
and 2000, other than interest expense, reorganization items and gain on sale of
QAL interest, included the following pre-tax gains (losses):


                                                                                    Year Ended December 31,
                                                                          -------------------------------------------
                                                                                   2002          2001            2000
--------------------------------------------------------------------      -------------  ------------  --------------
Gains on sale of real estate and miscellaneous equipment (Note 5)         $        3.8   $       6.9   $        22.0
Mark-to-market gains (losses) (Note 13)                                            (.4)         35.6            11.0
Asbestos-related charges (Note 12)                                                 -           (57.2)          (43.0)
Adjustment to environmental liabilities (Note 12)                                  -           (13.5)
Investment write-off (Note 4)                                                      -            (2.8)            -
Lease obligation adjustment (Note 12)                                              -              -             17.0
                                                                          -------------  ------------  --------------
   Special items, net                                                              3.4         (31.0)            7.0
All other, net                                                                    (3.0)         (1.8)          (11.3)
                                                                          -------------  ------------  --------------
                                                                          $         .4   $     (32.8)  $        (4.3)
                                                                          =============  ============  ==============

Deferred Financing Costs. Costs incurred to obtain debt financing are deferred
and amortized over the estimated term of the related borrowing. Such
amortization is included in Interest expense. As a result of the Cases, the
amortization of the deferred financing costs related to the Debtors' unsecured
debt was discontinued on the Filing Date.

Goodwill. Through the year ended December 31, 2001, the goodwill associated with
the acquisition of the Chandler, Arizona facility (see Note 5) was being
amortized on a straight-line basis over 20 years. Beginning with the first
quarter of 2002, the Company discontinued the amortization of goodwill
consistent with Statement of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets ("SFAS No. 142"). However, the discontinuance of
amortization of goodwill did not have a material effect on the Company's results
of operations or financial condition (the amount of amortization in 2001 was
less than $.8). In accordance with SFAS No. 142, the Company reviews goodwill
for impairment at least annually. As of December 31, 2002, unamortized goodwill
was approximately $11.4 and was included in Other assets in the accompanying
consolidated balance sheets.

Foreign Currency. The Company uses the United States dollar as the functional
currency for its foreign operations.

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 changes 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 exposures and allow for increased responsiveness to
changes in market factors.

Pre-2001 Accounting. Accounting guidelines in place through December 31, 2000,
provided that any interim fluctuations in option prices prior to the settlement
date were deferred until the settlement date of the underlying hedged
transaction, at which time they were recorded in Net sales or Cost of products
sold (as applicable) together with the related premium cost. No accounting
recognition was accorded to interim fluctuations in prices of forward sales
contracts. Hedge (deferral) accounting would have been terminated (resulting in
the applicable derivative positions being marked-to-market) if the level of
underlying physical transactions ever fell below the net exposure hedged. This
did not occur in 2000.

Current Accounting. Effective January 1, 2001, the Company began reporting
derivative activities pursuant to Statement of Financial Accounting Standards
("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities.
SFAS No. 133 requires companies to recognize all derivative instruments as
assets or liabilities in the balance sheet and to measure those instruments at
fair value by "marking-to-market" all of their hedging positions at each
period-end (see Note 13). This contrasts with pre-2001 accounting principles,
which generally only required certain "non-qualifying" hedging positions to be
marked-to-market. Changes in the market value of the Company's open hedging
positions resulting from the mark-to-market process represent unrealized gains
or losses. Such unrealized gains or losses will fluctuate, based on prevailing
market prices at each subsequent balance sheet date, until the transaction date
occurs. Under SFAS No. 133, these changes are recorded as an increase or
reduction in stockholders' equity through either other comprehensive income or
net income, depending on the facts and circumstances with respect to the hedge
and its documentation. To the extent that changes in market values of the
Company's hedging positions are initially recorded in other comprehensive
income, such changes reverse out of Other comprehensive income (offset by any
fluctuations in other "open" positions) and are recorded in net income (included
in Net sales or Cost of products sold, as applicable) when the subsequent
physical transactions occur. Additionally, under SFAS No. 133, if the level of
physical transactions ever falls below the net exposure hedged, "hedge"
accounting must be terminated for such "excess" hedges. In such an instance, the
mark-to-market changes on such excess hedges would be recorded in the income
statement rather than in Other comprehensive income. This did not occur during
2001 or 2002.

Differences between Other comprehensive income and Net income, which have
historically been small, may become significant in future periods as a result of
SFAS No. 133. In general, SFAS No. 133 will result in material fluctuations in
Other comprehensive income and Stockholders' equity in periods of price
volatility, despite the fact that the Company's cash flow and earnings will be
"fixed" to the extent hedged. This result is contrary to the intent of the
Company's hedging program, which is to "lock-in" a price (or range of prices)
for products sold/used so that earnings and cash flows are subject to reduced
risk of volatility.

SFAS No. 133 requires that, as of the date of the initial adoption, the
difference between the market value of derivative instruments recorded on the
Company's consolidated balance sheet and the previous carrying amount of those
derivatives be reported in net income or Other comprehensive income, as
appropriate, as the cumulative effect of a change in accounting principle. Based
on authoritative accounting literature issued during the first quarter of 2001,
it was determined that all of the cumulative impact of adopting SFAS No. 133
should be recorded in Other comprehensive income. The cumulative effect amount
was reclassified to earnings during 2001.

Fair Value of Financial Instruments. Given the fact that the fair value of
substantially all of the Company's outstanding indebtedness will be determined
as part of the plan of reorganization, it is impracticable and inappropriate to
estimate the fair value of these financial instruments at December 31, 2002 and
2001.

New Accounting Pronouncements. Statement of Financial Accounting Standards No.
143, Accounting for Asset Retirement Obligations ("SFAS No. 143") was issued in
June 2001. In general terms, SFAS No. 143 requires the recognition of a
liability resulting from anticipated retirement obligations, offset by an
increase in the value of the associated productive asset for such anticipated
costs. Over the life of the asset, depreciation expense is to include the
ratable expensing of the retirement cost included with the asset value. The
statement applies to all legal obligations associated with the retirement of a
tangible long-lived asset that results from the acquisition, construction, or
development and (or) the normal operation of a long-lived asset, except for
certain lease obligations. Excluded from this statement are obligations arising
solely from a plan to dispose of a long-lived asset and obligations that result
from the improper operation of an asset (i.e. the type of environmental
obligations discussed in Note 12).

The Company's consolidated financial statements already reflect reclamation
obligations by its bauxite mining operations in accordance with accounting
policies consistent with SFAS No. 143. SFAS No. 143 was first applied to the
Company's consolidated financial statements beginning January 1, 2003. The
adoption of SFAS No. 143 did not have a material impact on the Company's
financial statements.

Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets ("SFAS No. 144") was issued in
August 2001. In general terms, SFAS No. 144 establishes a single accounting
model for impairment or disposal of long-lived assets, and supersedes prior
rules in this regard. SFAS No. 144 retains the existing accounting requirements
for recognizing impairments on long-lived assets that are to be held and used.
However, it provides additional guidelines such as a "probability-weighted cash
flow estimation" approach to deal with situations where alternative and
undecided courses of action exist. Under SFAS No. 144, long-lived assets to be
disposed of by sale are to be recorded at the lower of their carrying amount or
fair value less cost to sell. SFAS No. 144 was applied to the Company's
consolidated financial statements beginning January 1, 2002. The adoption of
SFAS No. 144 did not have a material impact on the Company's financial
statements.

Statement of Financial Accounting Standards No. 146, Accounting for Costs
Associated with Exit or Disposal Activities ("SFAS No. 146) was issued in June
2002 and must be first applied to the Company's consolidated financial
statements beginning January 1, 2003. SFAS No. 146 requires that a liability for
the cost associated with an exit or disposal activity be recognized and measured
initially at its fair value in the period in which the liability is incurred.
This contrasts with current accounting principles where a liability for an exit
cost was recognized at the date an entity announced commitment to an exit plan.
The adoption of SFAS No. 146 did not have a material impact on the Company's
financial statements.

Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure ("SFAS No. 148") was issued in December
2002. SFAS No. 148 amends Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation ("SFAS No. 123") to provide alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure provisions of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. SFAS No. 148 was first applied to the Company's 2002
year-end financial statements. The adoption of SFAS No. 148 did not have a
material impact on the Company's financial statements.

3. 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.

Rates under the BPA contract during the period October 2001 through September
2002 were approximately 46% higher than power costs under the prior contract and
such rates were subject to changes in future periods. The contract also included
a take-or-pay requirement and clauses under which KACC's power allocation could
be curtailed, or its costs increased, in certain instances. Under the contract,
KACC could only remarket its power allocation to reduce or eliminate take-or-pay
obligations. KACC was not entitled to receive any profits from any such
remarketing efforts in contrast to KACC's prior contract with the BPA that
expired in September 2001. However, under the BPA contract, KACC would have
again been liable for take-or-pay costs beginning in October 2002. Given market
power prices during 2002, the Company estimated that such take-or-pay charges
could have been in the range of up to $1.0 to $2.0 per month through September
2006. The actual amount of any such obligation would be dependent upon the then
prevailing prices of electricity during the contract period.

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.
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 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
short-term contract (pending the completion of a longer term arrangement) with
an alternate supplier to provide the power necessary to operate its Trentwood
facility.

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 would operate more than a portion of its 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 for a discussion of the Northwest smelters fourth quarter of 2002
impairment charge.

Power Remarketing. In response to the unprecedented high market prices for power
in the Pacific Northwest, KACC (first partially and then fully) curtailed the
primary aluminum production at the Tacoma and Mead, Washington smelters during
the last half of 2000 and all of 2001 and 2002. As a result of the curtailments,
as permitted under the BPA contract, the Company remarketed the power that it
had under contract through September 30, 2001 (the end of the prior contract
period). In connection with such power remarketing, the Company recorded net
pre-tax gains of approximately $229.2 in 2001 and $159.5 in 2000. Gross proceeds
were offset by employee-related expenses, a non-cash LIFO inventory charge and
other fixed commitments. The resulting net gains have been reflected as
Non-recurring operating charges (benefits), net (see Note 6). The net gain
amounts were composed of gross proceeds of $259.5 in 2001 and $207.8 in 2000, of
which $347.5 was received in 2001 and $119.8 was received in 2000 (although a
portion of such proceeds represent a replacement of the profit that would have
otherwise been generated through operations).

4. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

Summary of combined financial information is provided below for unconsolidated
aluminum investments, most of which supply and process raw materials. The
investees are Queensland Alumina Limited ("QAL") (20.0% owned), Anglesey
Aluminium Limited ("Anglesey") (49.0% owned) and Kaiser Jamaica Bauxite Company
(49.0% owned). The Company's equity in income (loss) before income taxes of such
operations is treated as a reduction (increase) in Cost of products sold. At
December 31, 2002 and 2001, KACC's net receivables from these affiliates were
not material.

In September 2001, KACC sold an approximate 8.3% interest in QAL and recorded a
pre-tax gain of approximately $163.6 (included in Other income/(expense) in the
accompanying consolidated statements of income (loss)). As a result of the
transaction, KACC now owns a 20% interest in QAL. The total value of the
transaction was approximately $189.0, consisting of a cash payment of
approximately $159.0 plus the purchaser's assumption of approximately $30.0 of
off-balance sheet QAL indebtedness guaranteed by KACC prior to the sale. KACC's
share of QAL's production for the first eight months of 2001 and for the year
ended December 31, 2000 was approximately 668,000 tons and 1,064,000 tons,
respectively. Had the sale of the QAL interest been effective as of the
beginning of 2000, KACC's share of QAL's production for 2001 and 2000 would have
been reduced by approximately 196,000 tons and 312,000 tons, respectively.
Historically, KACC has sold about half of its share of QAL's production to third
parties and has used the remainder to supply its Northwest smelters, which have
been curtailed since the last half of 2000 (see Note 3). The reduction in KACC's
alumina supply associated with this transaction is expected to be substantially
offset by the return of its Gramercy alumina refinery to full operations during
the first quarter of 2002 at a higher capacity, by reduced internal requirements
due to curtailments of the primary aluminum facilities and by planned increases
during 2003 in capacity at its Alpart alumina refinery in Jamaica. Accordingly,
the QAL transaction has not had an adverse impact on KACC's ability to satisfy
existing third-party alumina customer contracts.

In June 2001, KACC wrote-off its investment of $2.8 in MetalSpectrum, LLC, a
start-up, e-commerce entity in which KACC was a founding partner (in 2000).
MetalSpectrum ceased operations during the second quarter of 2001.

Summary of Combined Financial Position

                                                                                        December 31,
                                                                                 ---------------------------
                                                                                        2002            2001
---------------------------------------------------------------------------      -----------     -----------

Current assets                                                                   $    199.1      $     362.4
Non-current assets (primarily property, plant, and equipment, net)                    409.5            345.7
                                                                                 -----------     -----------
   Total assets                                                                  $    608.6      $     708.1
                                                                                 ===========     ===========

Current liabilities                                                              $    239.3      $     237.6
Long-term liabilities (primarily long-term debt)                                      119.3            271.2
Stockholders' equity                                                                  250.0            199.3
                                                                                 -----------     -----------
   Total liabilities and stockholders' equity                                    $    608.6      $     708.1
                                                                                 ===========     ===========

Summary of Combined Operations

                                                                             Year Ended December 31,
                                                                       -----------------------------------
                                                                           2002          2001         2000
-------------------------------------------------------------------    --------      --------     --------
Net sales                                                              $ 584.3       $ 633.5      $ 602.9
Costs and expenses                                                      (518.4)       (621.5)      (617.1)
Provision for income taxes                                                (3.0)         (3.9)        (4.5)
                                                                       --------      --------     --------
Net income (loss)                                                      $  62.9       $   8.1      $ (18.7)
                                                                       ========      ========     ========

Company's equity in income (loss)                                      $  14.0       $   1.7      $  (4.8)
                                                                       ========      ========     ========

Dividends received                                                     $   6.0       $   2.8      $   8.3
                                                                       ========      ========     ========

The Company's equity in income (loss) differs from the summary net income (loss)
due to varying percentage ownerships in the entities and equity method
accounting adjustments. Prior to December 31, 2000, KACC's investment in its
unconsolidated affiliates exceeded its equity in their net assets and such
excess was being amortized to Depreciation and amortization. At December 31,
2000, the excess investment had been fully amortized. Such amortization was
approximately $10.0 for the year ended December 31, 2000.

The Company and its affiliates have interrelated operations. KACC provides some
of its affiliates with services such as management and engineering. Significant
activities with affiliates include the acquisition and processing of bauxite,
alumina, and primary aluminum. Purchases from these affiliates were $223.4,
$266.0 and $235.7, in the years ended December 31, 2002, 2001 and 2000,
respectively.

5. PROPERTY, PLANT, AND EQUIPMENT

The major classes of property, plant, and equipment are as follows:

                                                                   December 31,
                                                            --------------------------
                                                                  2002            2001
-------------------------------------------------------     ----------      ----------

Land and improvements                                       $   129.7       $   130.9
Buildings                                                       183.3           207.0
Machinery and equipment                                       1,735.2         1,881.3
Construction in progress                                         48.4            46.4
                                                            ----------      ----------
                                                              2,096.6         2,265.6
Accumulated depreciation                                     (1,086.7)       (1,050.2)
                                                            ----------      ----------
     Property, plant, and equipment, net                    $ 1,009.9       $ 1,215.4
                                                            ==========      ==========

During the period from 2000 to 2002, the Company completed several acquisitions
and dispositions and, based on changes in circumstances, recorded impairment
charges as discussed below:


2002 -

-     As previously disclosed, the Company was evaluating its options for
      minimizing the near-term negative cash flow at its Mead and Tacoma
      facilities and how to optimize the use and/or value of the facilities in
      connection with the development of a plan of reorganization. The Company
      conducted a study of the long-term competitive position of the Mead and
      Tacoma facilities and potential options for these facilities. Once the
      Company received the preliminary results of the study in the fourth
      quarter of 2002, 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 indefinitely curtail the Mead
      facility in January 2003. 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. As a
      result of indefinite curtailment, KACC evaluated the recoverability of the
      December 31, 2002 carrying value of its Northwest smelters. The Company
      determined that the expected future undiscounted cash flows of the
      smelters was below their carrying value. Accordingly, KACC adjusted the
      carrying value of its Northwest smelting assets to their estimated fair
      value, which resulted in a fourth quarter 2002 non-cash impairment charge
      of approximately $138.5 (which amount was reflected in Non-recurring
      operating charges (benefits), net - see Note 6). The estimated fair value
      was based on anticipated future cash flows discounted at a rate
      commensurate with the risk involved. Additionally, during December 2002,
      the Company accrued approximately $58.8 of pension, postretirement benefit
      and related obligations for the hourly employees who had been on a
      laid-off status and under the terms of their labor contract are eligible
      for early retirement because of the indefinite curtailment (which amount
      was reflected in Non-recurring operating charges (benefits), net - see
      Note 6). The indefinite curtailment of the Mead facility also resulted in
      a $18.6 net realizable value charge and a $.9 LIFO inventory charge for
      certain of the inventories at the facility (see Notes 2 and 6).

-     In December 2002, with Court approval, KACC sold its Oxnard, California
      aluminum forging facility because the Company had determined that the
      facility was not necessary for a successful operation and reorganization
      of its business. Net proceeds from the sale were approximately $7.4. The
      sale resulted in a net of loss of $.2 (included in Non-recurring operating
      charges (benefits) net - see Note 6) which included $1.1 of employee
      benefits and related costs associated with approximately 60 employees that
      were terminated in December 2002.

-     In June 2002, with Court approval, the Company sold certain of the
      Trentwood facility equipment, previously associated with the lid and tab
      stock product lines discussed below, for total proceeds of $15.8, which
      amount approximated its previously estimated fair value. As a result, the
      sale did not have a material impact on the Company's operating results for
      the year ended December 31, 2002.

-     In the ordinary course of business, KACC sold non-operating real estate
      and certain miscellaneous equipment for total proceeds of approximately
      $7.5 ($3.0 in the fourth quarter). These transactions resulted in pre-tax
      gains of $3.8 (included in Other income (expense) - see Note 2).

2001 -

-     During 2001, as part of its ongoing initiatives to generate cash benefits,
      KACC sold certain non-operating real estate for net proceeds totaling
      approximately $7.9, resulting in a pre-tax gain of $6.9 (included in Other
      income (expense) - see Note 2).

-     In the latter part of 2001, the Company concluded that the profitability
      of its Trentwood facility could be enhanced by further focusing resources
      on its core, heat-treat business and by exiting lid and tab stock product
      lines used in the beverage container market and brazing sheet for the
      automotive market. As a result of this decision, the Company concluded it
      would sell or idle several pieces of equipment resulting in an impairment
      charge of approximately $17.7 at December 31, 2001 (which amount was
      reflected in Non-recurring operating charges (benefits), net - see Note
      6).

2000 -

-     KACC sold (a) its Pleasanton, California office complex, because the
      complex had become surplus to the Company's needs, for net proceeds of
      approximately $51.6, which resulted in a net pre-tax gain of $22.0
      (included in Other income (expense) - see Note 2); (b) certain
      non-operating properties, in the ordinary course of business, for total
      proceeds of approximately $12.0; and (c) the Micromill assets and
      technology for a nominal payment at closing and possible future payments
      based on subsequent performance and profitability of the Micromill
      technology. The sale of the non-operating properties and Micromill assets
      did not have a material impact on the Company's 2000 operating results.

-     KACC evaluated the recoverability of the approximate $200.0 carrying value
      of its Northwest smelters, as a result of the change in the economic
      environment of the Pacific Northwest associated with the reduced power
      availability and higher power costs for KACC's Northwest smelters under
      the terms of the contract with the BPA starting in October 2001 (see Note
      3). The Company determined that the expected future undiscounted cash
      flows of the Washington smelters were below their carrying value.
      Accordingly, KACC adjusted the carrying value of its Washington smelting
      assets to their estimated fair value, which resulted in a non-cash
      impairment charge of approximately $33.0 (which amount was reflected in
      Non-recurring operating charges (benefits), net - see Note 6). The
      estimated fair value was based on anticipated future cash flows discounted
      at a rate commensurate with the risk involved.

-     KACC acquired the assets of a drawn tube aluminum fabricating operation in
      Chandler, Arizona. Total consideration for the acquisition was $16.1 ($1.1
      of property, plant and equipment $2.8 of accounts receivables, inventory
      and prepaid expenses and $12.2 of goodwill).

6.   NON-RECURRING OPERATING CHARGES (BENEFITS), NET

The income (loss) impact associated with Non-recurring operating (charges)
benefits, net for 2002, 2001 and 2000, was as follows:


                                                                            Year Ended December 31,
                                                                ----------------------------------------------
                                                                          2002            2001            2000
-------------------------------------------------------------   --------------   -------------  --------------
Washington smelter impairment charges, including contractual 
     labor costs (Primary Aluminum) (Notes 2 and 5)             $      (219.6)   $      (12.7)  $       (33.0)
Eliminations - Intersegment profit elimination on Primary
     Aluminum inventory charge (Note 2)                                   2.8             -               -
Net gains from power sales (Primary Aluminum)
     (Note 3)                                                             -             229.2           159.5
Restructuring charges:
     Bauxite & Alumina                                                   (2.0)          (10.8)            (.8)
     Primary Aluminum                                                    (2.7)           (6.9)           (3.1)
     Flat-Rolled Products                                                (7.9)          (10.7)            -
     Corporate                                                            -              (1.2)           (5.5)
Inventory and net realizable value charges -
     Product line exit charges                                           (1.6)            -             (18.2)
     Bauxite & Alumina - Gramercy related LIFO
          charge (Note 2)                                                 -               -              (7.0)
     Operating supplies and repairs
            and maintenance parts (Note 2)                                -              (5.6)            -
Impairment and similar charges -
     Corporate - Kaiser Center office complex (Note 12)                 (20.0)            -               -
     Flat-Rolled Products - equipment (Note 5)                            -             (17.7)            -
     Net loss on sale of Oxnard facility (Note 5)                         (.2)            -               -
Labor settlement charge - See below                                       -               -             (38.5)
Incremental maintenance - Bauxite & Alumina                               -               -             (11.5)
                                                                --------------   -------------  --------------
                                                                $      (251.2)   $      163.6   $        41.9
                                                                ==============   =============  ==============

2002. The product line exit charge in 2002 relates to a $1.6 LIFO inventory
charge which resulted from the Flat-rolled products segment's exit from the lid
and tab stock and brazing sheet product lines (see Note 2).

Restructuring charges result from the Company's initiatives to increase cash
flow, generate cash and improve the Company's financial flexibility.
Restructuring charges for 2002 consist of $10.1 of employee benefit and related
costs associated with 140 job eliminations (all of which had been eliminated
prior to December 31, 2002) and $2.5 of third party costs associated with cost
reduction initiatives.

2001 and 2000. The contractual labor costs related to smelter curtailments in
2001 consisted of certain compensation costs associated with laid-off USWA
workers that KACC estimated would be required to operate the Northwest smelters
at up to a 40% operating rate. The costs had been accrued through early 2003
because KACC did not expect to restart the Northwest smelters prior to that
date.

Restructuring charges for 2001 consist of $17.9 of employee benefit and related
costs associated with 355 job eliminations (all of which have been eliminated)
and $11.7 of third party costs associated with cost reduction initiatives. The
2000 restructuring charges were associated with the Primary aluminum and
Corporate segments' ongoing cost reduction initiatives. During 2000, these
initiatives resulted in restructuring charges for employee benefit and other
costs for approximately 50 job eliminations at the Company's Tacoma facility and
approximately 50 employee eliminations due to consolidation or elimination of
certain corporate staff functions. All job eliminations associated with these
initiatives have occurred.

The Washington smelters impairment charge in 2000 included a charge of $33.0 to
write-down the Washington smelting assets to their estimated fair value (see
Note 5).

Product line exit charges in 2000 included (a) a $12.6 impairment charge
reflected by the Flat-rolled products segment which included a $11.1 LIFO
inventory charge (see Note 2) and a $1.5 charge to reduce the carrying value of
certain assets to their net realizable value as a result of the segment's
decision to exit the can body stock product line; and (b) a $5.6 impairment
charge recorded by the Engineered products segment which included a $.9 LIFO
inventory charge (see Note 2) and a $4.7 charge to reduce the carrying value of
certain machining facilities and assets, which were no longer required as a
result of the segment's decision to exit a marginal product line, to their
estimated net realizable value.

From September 1998 through September 2000, KACC and the United Steelworkers of
America ("USWA") were involved in a labor dispute as a result of the September
1998 USWA strike and the subsequent "lock-out" by KACC in February 1999. The
labor dispute was settled in September 2000. Under the terms of the settlement,
USWA members generally returned to the affected plants during October 2000. The
Company recorded a one-time pre-tax charge of $38.5 in 2000 to reflect the
incremental, non-recurring impacts of the labor settlement, including severance
and other contractual obligations for non-returning workers. The allocation of
the labor settlement charge to the business units was: Bauxite and alumina -
$2.1, Primary aluminum - $15.9, Flat-rolled products - $18.2 and Engineered
products - $2.3. At December 31, 2002, substantially all of such costs had been
paid.

The incremental maintenance charge in 2000 consisted of normal recurring
maintenance expenditures for the Gramercy facility that otherwise would have
been incurred in the ordinary course of business over a one to three year
period. The Company chose to incur the expenditures prior to the restart of the
facility to avoid normal operational outages that otherwise would have occurred
once the facility resumed production.

7.   LONG-TERM DEBT

Long-term debt and its maturity schedule are as follows:

                                                                                               December 31,
                                                                                     --------------------------------
                                                                                               2002              2001
----------------------------------------------------------------------------------   --------------    --------------
Secured:
     Post-Petition Credit Agreement                                                  $         -       $         -
     Alpart CARIFA Loans - (fixed and variable rates) due 2007, 2008                          22.0              22.0
     7.6% Solid Waste Disposal Revenue Bonds due 2027                                         19.0              19.0
     Other borrowings (fixed rate)                                                             2.6               2.7
Unsecured:
     9 7/8% Senior Notes due 2002, net                                                       172.8             172.8
     10 7/8% Senior Notes due 2006, net                                                      225.0             225.4
     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             874.3

Less  - Current portion                                                                         .9             173.5
           Pre-Filing Date claims included in subject to compromise (i.e. 
               unsecured debt) (Note 1)                                                      830.2               -
                                                                                     --------------    --------------
Long-term debt                                                                       $        42.7     $       700.8
                                                                                     ==============    ==============

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, 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 December 31, 2002, $147.0 was available to the Company under the
DIP Facility (of which $79.2 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 is of limited duration and will lapse on June 29,
2003 unless otherwise incorporated into a formal amendment. The Company is
working with the lenders to complete such amendment that would incorporate the
limited waiver and also modify the financial covenant for periods subsequent to
December 31, 2002. The Company believes that such an amendment will be agreed
with the DIP Facility lenders not later than May 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 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. As part of
this amendment, the Company also plans to request that the lenders extend the
DIP Facility past its current February 2004 expiration.

Credit Agreement. Prior to the February 12, 2002 Filing Date, the Company and
KACC had a credit agreement, as amended (the "Credit Agreement"), which provided
a secured, revolving line of credit. The Credit Agreement terminated on the
Filing Date and was replaced by the DIP Facility discussed above. As of the
Filing Date, outstanding letters of credit were approximately $43.3 (which were
replaced by letters of credit under the DIP Facility) and there were no
borrowings outstanding under the Credit Agreement.

Alpart CARIFA Loans. In December 1991, Alumina Partners of Jamaica ("Alpart")
entered into a loan agreement with the Caribbean Basin Projects Financing
Authority ("CARIFA"). As of December 31, 2002, Alpart's obligations under the
loan agreement were secured by two letters of credit aggregating $23.5. KACC was
a party to one of the two letters of credit in the amount of $15.3 in respect of
its 65% ownership interest in Alpart. Alpart has also agreed to indemnify
bondholders of CARIFA for certain tax payments that could result from events, as
defined, that adversely affect the tax treatment of the interest income on the
bonds.

7.6% Solid Waste Disposal Revenue Bonds. The solid waste disposal revenue bonds
are secured by a first mortgage on certain machinery at KACC's Mead smelter and
a second lien on certain real property and improvements at such facility.

9 7/8% Notes, 10 7/8% Notes and 12 3/4% Notes. The obligations of KACC with
respect to its 9 7/8% Senior Notes due 2002 (the "9 7/8% Notes"), its 10 7/8%
Senior Notes due 2006 (the "10 7/8% Notes") and its 12 3/4% Senior Subordinated
Notes due 2003 (the "12 3/4% Notes") are guaranteed, jointly and severally, by
certain subsidiaries of KACC. During 2001, prior to concluding that, as a result
of the events outlined in Note 1, the Company should file the Cases, KACC had
purchased $52.2 of the 9 7/8% Notes. The net gain from the purchase of the notes
was less than $1.1 and has been included in Other income (expense) in the
accompanying statements of consolidated income (loss).

Debt Covenants and Restrictions. 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. The DIP Facility is secured by,
among other things, (i) mortgages on KACC's major domestic plants; (ii) subject
to certain exceptions, liens on the accounts receivable, inventory, equipment,
domestic patents and trademarks, and substantially all other personal property
of KACC and certain of its subsidiaries; (iii) a pledge of all the stock of KACC
owned by the Company; and (iv) pledges of all of the stock of a number of KACC's
wholly owned domestic subsidiaries, pledges of a portion of the stock of certain
foreign subsidiaries, and pledges of a portion of the stock of certain partially
owned foreign affiliates.

The indentures governing the 9 7/8% Notes, the 10 7/8% Notes and the 12 3/4%
Notes (collectively, the "Indentures") restrict, among other things, KACC's
ability to incur debt, undertake transactions with affiliates, and pay
dividends. Further, the Indentures provide that KACC must offer to purchase the
9 7/8% Notes, the 10 7/8% Notes and the 12 3/4% Notes, respectively, upon the
occurrence of a Change of Control (as defined therein).

8.   INCIDENT AT GRAMERCY FACILITY

General. From July 1999 until December 2000, KACC's Gramercy, Louisiana alumina
refinery was completely curtailed as a result of extensive damage from an
explosion in the digestion area of the plant. Construction on the damaged part
of the facility began during the first quarter of 2000. However, construction
was not substantially completed until the third quarter of 2001. During the
first nine months of 2001, the plant operated at approximately 68% of its
newly-rated estimated capacity of 1,250,000 tons. During the fourth quarter of
2001, the plant operated at approximately 90% of its newly-rated capacity. Since
the end of February 2002, the plant has, except for normal operating variations,
generally operated at approximately 100% of its newly-rated capacity. The
facility is now focusing its efforts on achieving its full operating efficiency.
During 2001, abnormal Gramercy-related start-up costs and litigation costs
totaled approximately $64.9 and $6.5, respectively. These incremental costs for
2001 were offset by approximately $36.6 of additional insurance benefit
(recorded as a reduction of Bauxite and alumina business unit's cost of products
sold). The abnormal start-up costs in 2001 resulted from operating the plant in
an interim mode pending completion of construction at well less than the
expected production rate or full efficiency. During 2002, because the plant was
operating at near full capacity, the amount of start-up costs was substantially
reduced compared to prior periods. Such costs were approximately $3.0 during the
first quarter of 2002 and were substantially eliminated during the balance of
2002.

Property Damage. KACC's insurance policies provided that KACC would be
reimbursed for the costs of repairing or rebuilding the damaged portion of the
facility using new materials of like kind and quality with no deduction for
depreciation. As a result of discussions with the insurance carriers, the
Company received a reimbursement of $100.0 for property damage in 2000.

Contingencies. The Gramercy incident resulted in a significant number of claims
and individual and class action lawsuits being filed against KACC and others
alleging, among other things, property damage, business interruption losses by
other businesses and personal injury. KACC ultimately was able to settle all of
these matters for amounts which, after the application of insurance, were not
material to KACC.

9.   INCOME TAXES

Income (loss) before income taxes and minority interests by geographic area is
as follows:

                                                                       Year Ended December 31,
                                                             -------------------------------------------
                                                                   2002             2001            2000
-------------------------------------------------------      ----------      -----------      ----------
Domestic                                                     $  (481.1)      $   (126.5)      $   (96.6)
Foreign                                                           21.5            213.2           122.0
                                                             ----------      -----------      ----------

     Total                                                   $  (459.6)      $     86.7       $    25.4
                                                             ==========      ===========      ==========

Income taxes are classified as either domestic or foreign, based on whether
payment is made or due to the United States or a foreign country. Certain income
classified as foreign is also subject to domestic income taxes.

The (provision) benefit for income taxes on income (loss) before income taxes
and minority interests consists of:


                                                     Federal           Foreign           State          Total
------------------------------------------      ------------      ------------     -----------     ----------
2002     Current                                $       (.2)      $     (31.7)     $      (.3)     $   (32.2)
         Deferred                                       3.2              14.5             (.4)          17.3
                                                ------------      ------------     -----------     ----------
              Total                             $       3.0       $     (17.2)     $      (.7)     $   (14.9)
                                                ============      ============     ===========     ==========

2001     Current                                $      (1.1)      $     (40.6)     $       -       $   (41.7)
         Deferred                                    (484.3)               .5           (24.7)        (508.5)
                                                ------------      ------------     -----------     ----------
              Total                             $    (485.4)      $     (40.1)     $    (24.7)     $  (550.2)
                                                ============      ============     ===========     ==========

2000     Current                                $      (1.9)      $     (35.3)     $      (.3)     $   (37.5)
         Deferred                                      35.5              (8.9)            (.7)          25.9
                                                ------------      ------------     -----------     ----------
              Total                             $      33.6       $     (44.2)     $     (1.0)     $   (11.6)
                                                ============      ============     ===========     ==========

A reconciliation between the (provision) benefit for income taxes and the amount
computed by applying the federal statutory income tax rate to income (loss)
before income taxes and minority interests is as follows:


                                                                                            Year Ended December 31,
                                                                                    ---------------------------------------
                                                                                            2002          2001         2000
----------------------------------------------------------------------------------  ------------  ------------  -----------
Amount of federal income tax (provision) benefit based on the statutory rate        $     160.9   $     (30.3)  $     (8.9)
Increase in valuation allowances and revision of prior years' tax estimates              (151.6)       (513.9)        (1.8)
Percentage depletion                                                                        7.6           4.9          3.0
Foreign taxes, net of federal tax benefit in 2000                                         (28.9)         (9.6)        (3.2)
Other                                                                                      (2.9)         (1.3)         (.7)
                                                                                    ------------  ------------  -----------
Provision for income taxes                                                          $     (14.9)  $    (550.2)  $    (11.6)
                                                                                    ============  ============  ===========


Included in increase in valuation allowances and revision of prior years' tax
estimates for 2002 shown above include a benefit of $14.3 for revisions to prior
years' estimates. Of this amount, approximately $8.8 relates to the resolution
of certain prior year income tax matters.

Deferred Income Taxes. The components of the Company's net deferred income tax
assets are as follows:

                                                                               December 31,
                                                                       -----------------------------
                                                                               2002             2001
-------------------------------------------------------------------    ------------      -----------
Deferred income tax assets:
   Postretirement benefits other than pensions                         $     274.6       $    264.0
   Loss and credit carryforwards                                             278.0            150.0
   Other liabilities                                                         288.8            192.7
   Other                                                                     121.7            170.5
   Valuation allowances                                                     (861.8)          (652.7)
                                                                       ------------      -----------
     Total deferred income tax assets-net                                    101.3            124.5
                                                                       ------------      -----------

Deferred income tax liabilities:
   Property, plant, and equipment                                            (94.3)          (122.3)
   Other                                                                     (22.5)           (41.6)
                                                                       ------------      -----------
     Total deferred income tax liabilities                                  (116.8)          (163.9)
                                                                       ------------      -----------

Net deferred income tax assets (liabilities)(1)                        $     (15.5)      $    (39.4)
                                                                       ============      ===========


(1)  Net deferred income tax liabilities of $15.5 and $39.4 are included in the
     Consolidated Balance Sheets as of December 31, 2002 and 2001, respectively,
     in the caption entitled Long-term liabilities.

2002. For the year ended December 31, 2002, as a result of the Cases, the
Company did not recognize U.S. income tax benefits for the losses incurred from
its domestic operations (including temporary differences) or any U.S. income tax
benefits 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 2002 were fully offset by increases in valuation
allowances.

2001 and 2000. Prior to 2001, the principal component of the Company's deferred
income tax assets was the tax benefit associated with the accrued liability for
postretirement benefits other than pensions. The future tax deductions with
respect to the turnaround of that accrual will occur over a 30-to-40-year
period. If such deductions were to create or increase a net operating loss, the
Company had the ability to carry forward such loss for 20 taxable years.
Accordingly, prior to the Cases, the Company believed that a long-term view of
profitability was appropriate and had concluded that a substantial majority of
the net deferred income tax asset would more likely than not be realized.

However, as a result of the Cases, the Company provided additional valuation
allowances of $530.4 in 2001 of which $505.4 was recorded in Provision for
income taxes in the accompanying statements of consolidated income (loss) and
$25.0 was recorded in Other comprehensive income (loss) in the accompanying
consolidated balance sheet. The additional valuation allowances were provided as
the Company no longer believed that the "more likely than not" recognition
criteria were appropriate given a combination of factors including: (a) the
expiration date of the loss and credit carryforwards; (b) the possibility that
all or a substantial portion of the loss and credit carryforwards and tax bases
of assets could be reduced to the extent of cancellation of indebtedness
occurring as a part of a reorganization plan; (c) the possibility that all or a
substantial portion of the loss and credit carryforwards could become limited if
a change of ownership occurs as a result of the Debtors reorganization; and (d)
due to updated near-term expectations regarding near-term taxable income. The
valuation allowances adjustment had no impact on the Company's or KACC's
liquidity, operations or loan compliance and was not intended, in any way, to be
indicative of their long-term prospects or ability to successfully reorganize.

Tax Attributes. At December 31, 2002, the Company had certain tax attributes
available to offset regular federal income tax requirements, subject to certain
limitations, including net operating loss and general business credit
carryforwards of $297.7 and $.7, respectively, which expire periodically through
2022 and 2011, respectively, FTC carryforwards of $133.2, which expire primarily
from 2004 through 2007, and alternative minimum tax ("AMT") credit carryforwards
of $27.1, which have an indefinite life. The Company also has AMT net operating
loss and FTC carryforwards of $212.4 and $139.6, respectively, available,
subject to certain limitations, to offset future alternative minimum taxable
income, which expire periodically through 2022 and 2007, respectively.

The Company and its domestic subsidiaries file consolidated federal income tax
returns. During the period from October 28, 1988, through June 30, 1993, the
Company and its domestic subsidiaries were included in the consolidated federal
income tax returns of MAXXAM. The tax allocation agreements of the Company and
KACC with MAXXAM terminated pursuant to their terms, effective for taxable
periods beginning after June 30, 1993. Due to the resolution during the fourth
quarter of 2002 of all remaining tax matters relating to the taxable periods
covered by the tax allocation agreements, no further payments or refunds are
required under such agreements.

See Note 12 concerning commitments and contingencies.

10.  EMPLOYEE BENEFIT AND INCENTIVE PLANS

Pension and Other Postretirement Benefit Plans. Retirement plans are generally
non-contributory for salaried and hourly employees and generally provide for
benefits based on formulas which consider such items as length of service and
earnings during years of service. Through December 31, 2002, the Company's
funding policies met or exceeded all regulatory requirements. However, as more
fully discussed below, the Company failed to meet certain minimum funding
requirements in early 2003. The Company does not currently intend to make any
further contributions to its domestic retirement plans as it believes that
virtually all of such 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.

The Company and its subsidiaries provide postretirement health care and life
insurance benefits to eligible retired employees and their dependents.
Substantially all employees may become eligible for those benefits if they reach
retirement age while still working for the Company or its subsidiaries. The
Company has not funded the liability for these benefits, which are expected to
be paid out of cash generated by operations. The Company reserves the right,
subject to applicable collective bargaining agreements, to amend or terminate
these benefits.

Assumptions used to value obligations at year-end and to determine the net
periodic benefit cost in the subsequent year are:


                                                               Pension Benefits                  Medical/Life Benefits
                                                       ---------------------------------   --------------------------------
                                                             2002        2001       2000         2002       2001       2000
                                                       ---------- ----------- ----------   ---------- ---------- ----------

Weighted-average assumptions as of December 31,
Discount rate                                               6.75%       7.25%      7.75%        6.75%      7.25%      7.75%
Expected return on plan assets                              9.00%       9.50%      9.50%           -         -          -
Rate of compensation increase                               4.00%       4.00%      4.00%        4.00%      4.00%      4.00%

In 2002, the average annual assumed rate of increase in the per capita cost of
covered benefits (i.e., health care cost trend rate) is 8.5% for all
participants. The assumed rate of increase is assumed to decline gradually to
5.0% in 2010 for all participants and remain at that level thereafter.

The following table presents the funded status of the Company's pension and
other postretirement benefit plans as of December 31, 2002 and 2001, and the
corresponding amounts that are included in the Company's Consolidated Balance
Sheets.


                                                               Pension Benefits                  Medical/Life Benefits
                                                       --------------------------------    --------------------------------
                                                                 2002              2001              2002              2001
                                                       --------------    --------------    --------------     -------------
Change in Benefit Obligation:
   Obligation at beginning of year                     $       915.6     $       871.4     $       868.2      $      658.2
   Service cost                                                 48.6              38.6              37.8              12.1
   Interest cost                                                62.0              63.6              56.2              48.7
   Currency exchange rate change                                (2.1)             (1.4)              -                -
   Plan participants contributions                               1.8               2.0               -                -
   Curtailments, settlements and amendments                    (87.2)               .3             (94.2)            (13.3)
   Actuarial (gain) loss                                        42.9              33.5             (22.4)            219.3
   Benefits paid                                               (68.2)            (92.4)            (55.5)            (56.8)
                                                       --------------    --------------    --------------     -------------
     Obligation at end of year                                 913.4             915.6             790.1             868.2
                                                       --------------    --------------    --------------     -------------

Change in Plan Assets:
   FMV of plan assets at beginning of year                     670.8             791.1               -                 -
   Actual return on assets                                     (57.0)            (48.5)              -                 -
   Currency exchange rate change                                (1.9)             (1.1)              -                -
   Employer contributions                                        9.8              21.7              55.5              56.8
   Benefits paid (including lump sum payments of $87.4
     in 2002)                                                 (155.6)            (92.4)            (55.5)            (56.8)
                                                       --------------    --------------    --------------     -------------
   FMV of plan assets at end of year                           466.1             670.8               -                 -
                                                       --------------    --------------    --------------     -------------

   Obligation in excess of plan assets                         447.3             244.8             790.1             868.2
   Unrecognized net actuarial loss                            (257.7)           (128.4)           (205.3)           (240.5)
   Unrecognized prior service costs                            (36.9)            (39.9)            147.7              76.5
   Adjustment required to recognize minimum liability          242.1             105.5               -                 -
   Intangible asset and other                                   36.8              40.3               -                 -
                                                       --------------    --------------    --------------     -------------
     Accrued benefit liability                         $       431.6     $       222.3     $       732.5      $      704.2
                                                       ==============    ==============    ==============     =============

(1)  The aggregate accumulated benefit obligation and fair value of plan assets
     for pension plans with accumulated benefit obligation in excess of plan
     assets were $854.7 and $424.6, respectively, as of December 31, 2002 and
     $856.1 and $634.7, respectively, as of December 31, 2001.

The assets of the Company-sponsored pension plans, like numerous other
companies' plans, are, to a substantial degree, invested in the capital markets
and managed by a third party. Given: (1) the performance of the stock market
during 2002 and the resulting declines in the value of the assets held by the
Company's pension plans and (2) the declining interests rates, which cause the
discounted value of the projected liabilities to increase, the Company was
required to reflect an increase in its additional minimum pension liabilities of
$133.1 in its December 31, 2002 balance sheet. Similar circumstances had
resulted in a $64.5 (net of income tax benefit of $38.0) increase in additional
minimum pension liabilities in its December 31, 2001 balance sheet. Minimum
pension liability adjustments are non-cash adjustments that are reflected as an
increase in pension liability and an offsetting charge to stockholders' equity
through Other comprehensive income (rather than Net income). Additionally, 2003
operating results are expected to be adversely impacted by higher pension costs
resulting from the decline in the value of the pension plans' assets and
increased liabilities due to lower interest rates, restructuring activities and
the incurrence of additional full early retirement obligations in respect of
KACC's Washington smelters.

                                                              Pension Benefits(1)              Medical/Life Benefits(2)
                                                       ---------------------------------   --------------------------------
                                                             2002        2001       2000         2002       2001       2000
                                                       ---------- ----------- ----------   ---------- ---------- ----------
Components of Net Periodic Benefit Costs:
   Service cost                                        $    47.9  $     38.6  $    20.6    $    37.8  $    12.1  $     5.3
   Interest cost                                            62.0        63.6       63.4         56.2       48.7       45.0
   Expected return on assets                               (58.0)      (70.9)     (80.8)           -          -          -
   Amortization of prior service cost                        3.8         5.5        3.9        (23.0)     (15.1)     (12.8)
   Recognized net actuarial (gain) loss                      6.5         (.5)      (1.9)        11.8          -          -
                                                       ---------- ----------- ----------   ---------- ---------- ----------
   Net periodic benefit cost                                62.2        36.3        5.2         82.8       45.7       37.5
   Curtailments, settlements, etc.                          26.4          -          .1            -          -          -
                                                       ---------- ----------- ----------   ---------- ---------- ----------
     Adjusted net periodic benefit costs(1)            $    88.6  $     36.3  $     5.3    $    82.8  $    45.7  $    37.5
                                                       ========== =========== ==========   ========== ========== ==========

(1)  Approximately $60.9 of the $88.6 adjusted net periodic benefit costs in
     2002, $24.5 of the $36.3 adjusted net periodic benefit costs in 2001 and
     $6.1 of the $5.3 adjusted net periodic benefit costs in 2000 related to
     pension benefit accruals that were provided in respect of non-recurring
     items and/or restructuring activities (see Note 3 and 6).
(2)  Approximately $30.7 of the $82.8 adjusted net periodic benefit costs in
     2002 related to medical/life benefit accruals that were provided in respect
     of non-recurring restructuring activities (see Notes 3 and 6).

Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plan. A one-percentage-point change in assumed
health care cost trend rates would have the following effects:


                                                                             1% Increase        1% Decrease
                                                                           -------------      -------------

Increase (decrease) to total of service and interest cost                  $        8.6       $       (6.3)
Increase (decrease) to the postretirement benefit obligation                       86.4              (61.5)

Changes Impacting Existing Plans. The foregoing medical benefit liability and
cost data reflects the fact that in February 2002, KACC notified its salaried
retirees that, given the significant escalation in medical costs and the
increased burden it was creating, KACC was going to require such retirees to
fund a portion of their medical costs beginning May 1, 2002. The impact of such
charges reduced the estimated cash payments by the Company by approximately
$10.0 per year. The financial statement benefits of this change will, however,
be reflected over the remaining employment period of the Company's employees in
accordance with generally accepted accounting principles.

During 2002, approximately 230 salaried employees retired. These retirements
resulted in lump sum payments which triggered a special provision under the
Employee Retirement Income Security Act ("ERISA") that required the Company to
make a $17.0 accelerated contribution to its salaried employee pension plan on
January 15, 2003. However, because substantially all of the amount would have
been classified as a pre-Filing Date obligation requiring Court approval before
payment and represented a small portion of the legacy liabilities that must be
addressed in the Company's reorganization, the Company did not make the payment.
Since the Company did not make the payment, it is no longer in compliance with
ERISA's minimum funding requirements and, in turn, is prohibited by ERISA from
making lump-sum distributions from the salaried employee pension plan to
employees who retire after December 31, 2002.

Special Charges in 2002. During 2002, the Company's Corporate segment recorded
charges of $24.1 ($9.5 in the fourth quarter - included in Corporate selling,
administrative, research and development, and general expense), for additional
pension expense. The charges were recorded because:

     (1) The lump sum payments from the assets of KACC's salaried employee
         pension plan exceeded a stipulated level prescribed by GAAP.
         Accordingly, a partial "settlement," as defined by GAAP, was deemed to
         have occurred. Under GAAP, if a partial "settlement" occurs, a charge
         must be recorded for a portion of any unrecognized net actuarial losses
         not reflected in the consolidated balance sheet. The portion of the
         total unrecognized actuarial losses of the plan ($75.0 at December 31,
         2001) that had to be recorded as a charge was the relative percentage
         of the total projected benefit obligation of the plan ($300.0 at
         December 31, 2001) settled by the lump sum payments totaling $75.0 in
         2002; and

     (2) During the first quarter of 2002, KACC also paid $4.2 into a trust fund
         in respect of certain obligations attributable to certain non-qualified
         pension benefits under management compensation agreements. These
         payments also represented a "settlement" and resulted in a charge of
         $4.2.

In addition to the foregoing, during the fourth quarter of 2002, the Primary
aluminum segment reflected approximately $58.8 of charges for pension,
postretirement medical benefits and related obligations in respect of the
indefinite curtailment of the Mead facility. This amount consisted of
approximately $29.0 of incremental pension charges and $29.8 of incremental
postretirement medical and related charges.

Postemployment Benefits. The Company provides certain benefits to former or
inactive employees after employment but before retirement.

Restricted Common Stock. The Company has a restricted stock plan, which is one
of its stock incentive compensation plans, for its officers and other employees.
During January 2002, approximately 95,000 restricted shares of the Company's
Common Stock were issued to officers and other employees. The fair value of the
restricted shares issued is being amortized to expense over the terms of the
applicable restriction periods. The restricted shares issued in 2001 included an
exchange with certain employees who held stock options to purchase the Company's
Common Stock whereby a total of approximately 3,617,000 options were exchanged
(on a fair value basis) for approximately 1,086,000 restricted shares. During
2002, approximately 406,000 of the restricted shares, all of which had not been
vested, were cancelled, including approximately 338,000 restricted shares that
were voluntarily forfeited by certain employees.

Incentive Plans. The Company has an unfunded incentive compensation program,
which provides incentive compensation based on performance against annual plans
and over rolling three-year periods. In addition, the Company has a
"nonqualified" stock option plan and KACC has a defined contribution plan for
salaried employees which provides for matching contributions by the Company at
the discretion of the board of directors. Given the challenging business
environment encountered during 2002 and the disappointing results of operations
for the year, only modest incentive payments were made and no matching
contribution awarded in respect of 2002. The Company's expense for all of these
plans was $1.0, $4.5 and $5.7 for the years ended December 31, 2002, 2001 and
2000, respectively.

Up to 8,000,000 shares of the Company's Common Stock were initially reserved for
issuance under its stock incentive compensation plans. At December 31, 2002,
3,295,156 shares of Common Stock remained available for issuance under those
plans. Stock options granted pursuant to the Company's nonqualified stock option
program are to be granted at or above the prevailing market price, generally
vest at a rate of 20 - 33% per year, and have a five or ten year term.
Information concerning nonqualified stock option plan activity is shown below.
The weighted average price per share for each year is shown parenthetically.


                                                                                     2002              2001            2000
------------------------------------------------------------------------    -------------    --------------   -------------

Outstanding at beginning of year ($8.37, $10.24 and $10.24,
   respectively)                                                               1,560,707         4,375,947       4,239,210
Granted ($2.89 and $10.23 in 2001 and 2000, respectively)                            -             874,280         757,335
Expired or forfeited ($5.71, $10.39 and $11.08, respectively)                   (105,846)       (3,689,520)       (620,598)
                                                                            -------------    --------------   -------------

Outstanding at end of year ($5.63, $8.37 and $10.24, respectively)             1,454,861         1,560,707       4,375,947
                                                                            =============    ==============   =============

Exercisable at end of year ($6.84, $9.09 and $10.18, respectively)               987,306           695,183       2,380,491
                                                                            =============    ==============   =============

Options exercisable at December 31, 2002 had exercisable prices ranging from
$1.72 to $12.75 and a weighted average remaining contractual life of 3.8 years.
Given that the average sales price of the Company's Common Stock is currently in
the $.05 per share range, the Company believes it is unlikely any of the stock
options will be exercised. Further, as a part of a plan of reorganization, it is
possible that the interests of the holders of outstanding options could be
diluted or cancelled.

11.  MINORITY INTERESTS

Minority Interests in Consolidated Affiliates. The Company owns a 90% interest
in Volta Aluminium Company Limited ("Valco") and a 65% interest in Alpart. These
companies' financial statements are fully consolidated into the Company's
consolidated financial statements because they are majority-owned.

KACC Preference Stock. KACC has four series of $100 par value Cumulative
Convertible Preference Stock ("$100 Preference Stock") outstanding with annual
dividend requirements of between 4 1/8% and 4 3/4% included in "Other" in 2000
in the table above. KACC has the option to redeem the $100 Preference Stock at
par value plus accrued dividends. KACC does not intend to issue any additional
shares of the $100 Preference Stock. By its terms, the $100 Preference Stock can
be exchanged for per share cash amounts between $69 - $80. KACC records the $100
Preference Stock at their exchange amounts for financial statement presentation
and the Company includes such amounts in minority interests. At December 31,
2002 and 2001, outstanding shares of $100 Preference Stock were 8,669 and 8,969,
respectively. In accordance with the Code and DIP Facility, KACC is not
permitted to repurchase any of its stock. Further, as a part of a plan of
reorganization, it is likely that the interests of the holders of the $100
Preference Stock will be diluted or cancelled.

In 1985, KACC issued certain of its Redeemable Preference Stock with a par value
of $1 per share and a liquidation and redemption value of $50 per share plus
accrued dividends, if any. In connection with the USWA settlement agreement in
September 2000, KACC redeemed all of the remaining Redeemable Preference Stock
(350,872 shares outstanding at December 31, 2000) during March 2001. The net
cash impact of the redemption on KACC was only approximately $5.5 because
approximately $12.0 of the total redemption amount of $17.5 had previously been
funded into redemption funds.

12.  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 13), 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 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, is $49.0
which matures as follows: $32.0 in 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 over the past three years. KACC also has agreements to supply alumina to
and to purchase aluminum from Anglesey.

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 has a long-term liability, net of estimated subleases income (included in
Long-term liabilities), on the Kaiser Center office complex in Oakland,
California, in which KACC has not maintained offices for a number of years, but
for which it is responsible for lease payments as master tenant through 2008
under a sale-and-leaseback agreement. During 2000, KACC reduced its net lease
obligation by $17.0 (see Note 2) to reflect new third-party sublease agreements
which resulted in occupancy and lease rates above those previously projected. 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 (included in Other assets), the Company recorded a non-cash impairment
charge in 2002 of approximately $20.0 (which amount was reflected in
Non-recurring operating charges (benefits), net - see Note 6). The sale was
approved by the Court in February 2003 and closed in March 2003. Net cash
proceeds were approximately $61.0.

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. During the
year ended December 31, 2001, KACC's ongoing assessment process resulted in KACC
recording charges of $13.5 included in Other income (expense) - see Note 2) to
increase its environmental accrual. Additionally, KACC's environmental accruals
were increased during the year ended December 31, 2001, by approximately $6.0 in
connection with purchase of certain property. The following table presents the
changes in such accruals, which are primarily included in Long-term liabilities,
for the years ended December 31, 2002, 2001 and 2000:


                                                         2002        2001       2000
----------------------------------------------        -------     -------    -------

Balance at beginning of period                        $ 61.2      $ 46.1     $ 48.9
Additional accruals                                      1.5        23.1        2.6
Less expenditures                                       (3.6)       (8.0)      (5.4)
                                                      -------     -------    -------

Balance at end of period(1)                           $ 59.1      $ 61.2     $ 46.1
                                                      =======     =======    =======

(1)  As of December 31, 2002, $21.7 of the environmental accrual was included in
     Liabilities subject to compromise (see Note 1) and the balance was included
     in Long-term liabilities. As of December 31, 2001 and 2000, the
     environmental accrual was primarily included in Long-term liabilities.

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 $30.0. 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. The lawsuits are currently stayed by the Cases.

The following table presents the changes in number of such claims pending for
the years ended December 31, 2002 (through the initial Filing Date), 2001 and
2000.



                                                                                  January 1, 2002          Year Ended
                                                                                          through         December 31,
                                                                                     February 12,    ----------------------
                                                                                             2002         2001         2000
--------------------------------------------------------------------------    -------------------    ---------     --------
Number of claims at beginning of period                                                  112,800      110,800       100,000
Claims received                                                                            5,300       34,000        30,600
Claims settled or dismissed                                                               (6,100)     (32,000)      (19,800)
                                                                              -------------------    ---------     --------
Number of claims at end of period                                                        112,000      112,800       110,800
                                                                              ===================    =========     ========

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 maintains a liability for estimated asbestos-related costs for
claims filed to date and an estimate of claims to be filed through 2011. At
December 31, 2002, 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 each balance sheet date, 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 is scheduled to
decide certain policy interpretation issues in Spring 2003 and 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:


                                                                              December 31,
                                                                    --------------------------------
                                                                              2002              2001
--------------------------------------------------------------      --------------    --------------
Liability (current portion of $130.0 in 2001)                       $       610.1     $       621.3
Receivable (included in Other assets)(1)                                    484.0             501.2
                                                                    --------------    --------------

                                                                    $       126.1     $       120.1
                                                                    ==============    ==============

(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 December 31, 2002 and 2001, $24.7 and $33.0, 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.


                                                                         Year Ended December 31,                  Inception
                                                               -------------------------------------------
                                                                       2002          2001             2000          To Date
                                                               ------------  ------------    -------------  ---------------
Payments made, including related legal costs                   $      17.1   $     118.1     $       99.5   $        355.7
Insurance recoveries                                                  23.3          90.3             62.8            244.9
                                                               ------------  ------------    -------------  ---------------
                                                               $      (6.2)  $      27.8     $       36.7   $        110.8
                                                               ============  ============    =============  ===============

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. This process resulted in the Company
reflecting charges of $57.2 and $43.0 (included in Other income(expense) - see
Note 2) in the years ended December 31, 2001 and 2000, respectively, for
asbestos-related claims, net of expected insurance recoveries, based on recent
cost and other trends experienced by KACC and other companies. 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 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 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.

Dispute with MAXXAM. In March 2002, MAXXAM filed a declaratory action with the
Court asking the Court to find that it had no further obligations to Debtors
under certain tax allocation agreements discussed in Note 9. At December 31,
2001, the Company had a receivable from MAXXAM of $35.0 (included in Other
Assets) outstanding under the tax allocation agreement in respect to various tax
contingencies in an equal amount (reflected in Long-term liabilities). As this
matter to which the MAXXAM receivable has now been resolved with no amounts
coming due from MAXXAM, both the receivable and the equal and offsetting payable
were reversed in December 2002. The resolution between MAXXAM and KACC was
approved by the Court in February 2003.

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.

13.   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.

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
December 31, 2002, the remaining unamortized amount was approximately a net loss
of $1.3.

During December 2002 and the first quarter of 2003, the Company entered into
hedging transactions (included in Prepaid expenses and other current assets)
with respect to a portion of its 2003 fuel oil requirements. As of January 31,
2003, KACC held option contracts which cap the price that KACC would have to pay
for 1.8 million barrels of fuel oil in 2003. This amount of fuel oil represents
substantially all of KACC's exposure to fuel oil requirements in the second half
of 2003 and 40% of KACC's exposure to fuel oil requirements in the first half of
2003. The carrying/market value of the option contracts was $.9 at December 31,
2002.

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 December 31, 2002, KACC had sold forward substantially all of the alumina
available to it in excess of its projected internal smelting requirements for
2003 and 2004, respectively, at prices indexed to future prices of primary
aluminum.

2001 and 2000. During the first quarter of 2001, the Company recorded a
mark-to-market benefit of $6.8 (included in Other income (expense)) related to
the application of SFAS No. 133. However, starting in the second quarter of
2001, the income statement impact of mark-to-market changes was essentially
eliminated as unrealized gains or losses resulting from changes in the value of
these hedges began being recorded in Other comprehensive income (see Note 2)
based on changes in SFAS No. 133 enacted in April 2001.

During late 1999 and early 2000, KACC entered into certain aluminum contracts
with a counterparty. While the Company believed that the transactions were
consistent with its stated hedging objectives, these positions did not qualify
for treatment as a "hedge" under accounting guidelines. Accordingly, the
positions were marked-to-market each period. A recap of mark-to-market pre-tax
gains (losses) for these positions, together with the amount discussed in the
paragraph above, is provided in Note 2. During the fourth quarter of 2001, KACC
liquidated all of the remaining positions. This resulted in the recognition of
approximately $3.3 of additional mark-to-market income during 2001.

14.  KEY EMPLOYEE RETENTION PROGRAM

In June 2002, the Company adopted a key employee retention program (the "KERP"),
which was approved by the Court in September 2002. The KERP is a comprehensive
program that is designed to provide financial incentives sufficient to retain
certain key employees during the Cases. The KERP includes six key elements: a
retention plan, a severance plan, a change in control plan, a completion
incentive plan, the continuation for certain participants of an existing
supplemental employee retirement plan ("SERP") and a long-term incentive plan.
The retention plan is expected to have a total cost of up to approximately $7.3
per year. The total cost of the KERP will vary depending on the level of
continuing participation in each period. Under the KERP, retention payments
commenced in September 2002 and will be paid every six months through March 31,
2004, except that 50% of the amounts payable to certain senior officers will be
withheld until the Debtors emerge from the Cases or as otherwise agreed pursuant
to the KERP. The severance and change in control plans, which are similar to the
provisions of previous arrangements that existed for certain key employees,
generally provide for severance payments of between six months and three years
of salary and certain benefits, depending on the facts and circumstances and the
level of employee involved. The completion incentive plan generally provides for
payments of up to an aggregate of approximately $1.2 to certain senior officers
provided that the Debtors emerge from the Cases in 30 months or less from the
initial Filing Date. If the Debtors emerge from the Cases after 30 months from
the initial Filing Date, the amount of the payments will be reduced accordingly.
The SERP generally provides additional non-qualified pension benefits for
certain active employees at the time that the KERP was approved, who would
suffer a loss of benefits based on Internal Revenue Code limitations, so long as
such employees are not subsequently terminated for cause or voluntarily
terminate prior to reaching their retirement age. The long-term incentive plan
generally provides for incentive awards to key employees based on an annual cost
reduction target. Payment of such awards generally will be made: (a) 50% when
the Debtors emerge from the Cases and (b) 50% one year from the date the Debtors
emerge from the Cases. During 2002, the Company has recorded charges of $5.1, of
which $1.5 were recorded in the fourth quarter of 2002 (included in Selling,
administrative, research and development, and general), related to the KERP.

15.  SUBSEQUENT EVENTS

In January 2003, the Court approved the sale of the Tacoma facility to the Port
of Tacoma (the "Port") for $12.1 and the assumption by the Port of all
environmental remediation obligations. The sale closed in February 2003. An
additional $4.0 of proceeds are being held in escrow pending the resolution of
certain environmental and other issues.

In accordance with Statement of Financial Accounting Standards No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"),
the operations of the Tacoma facility will be reported in discontinued
operations in the Company's future financial statements. Income statement
information for the Tacoma facility for the years ended December 31, 2002, 2001
and 2000 were as follows:

                                                               (Unaudited)
                                                       ----------------------------
                                                 2002          2001            2000
-------------------------------------   -------------  ------------  --------------
Net sales                               $         .1   $      33.3   $       106.6
Operating loss                                  (5.8)        (26.5)          (48.4)
Loss before income tax benefit                  (5.8)        (26.4)          (48.4)

During January 2003, as a result of reduced power availability from the Volta
River Authority ("VRA"), the Company's 90% owned Volta Aluminum Company Limited
("Valco") curtailed two of its three operating potlines. In connection with such
curtailments, $5.5 of end-of-service benefits were paid resulting in a $3.2
charge to earnings in January 2003. Additional curtailments and end-of-service
payments and charges are possible.

During March 2003, the Company paid approximately $22.0 in settlement of certain
foreign tax matters in respect of a number of prior periods. Also, as more fully
discussed in Note 12, during March 2003, the Company completed the sale of its
interests in an office building complex in Oakland, California, netting
approximately $61.0 in sale proceeds.

16.  SEGMENT AND GEOGRAPHICAL AREA INFORMATION

The Company's operations are located in many foreign countries, including
Australia, Canada, Ghana, Jamaica, and the United Kingdom. Foreign operations in
general may be more vulnerable than domestic operations due to a variety of
political and other risks. Sales and transfers among geographic areas are made
on a basis intended to reflect the market value of products.

The Company's operations are organized and managed by product type. The Company
operations include four operating segments of the aluminum industry and its
commodities marketing and corporate segments. The aluminum industry segments
include: Alumina and bauxite, Primary aluminum, Flat-rolled products and
Engineered products. The Alumina and bauxite business unit's principal products
are smelter grade alumina and chemical grade alumina hydrate, a value-added
product, for which the Company receives a premium over smelter grade market
prices. The Primary aluminum business unit produces commodity grade products as
well as value-added products such as rod and billet, for which the Company
receives a premium over normal commodity market prices. The Flat-rolled products
group sells value-added products such as heat treat aluminum sheet and plate
which are used in the aerospace and general engineering markets. The Engineered
products business unit serves a wide range of industrial segments including the
automotive, distribution, aerospace and general engineering markets. 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 Commodities marketing segment
includes the results of KACC's alumina and aluminum hedging activities (see Note
13). The accounting policies of the segments are the same as those described in
Note 2. Business unit results are evaluated internally by management before any
allocation of corporate overhead and without any charge for income taxes,
interest expense or non-recurring charges.

Financial information by operating segment at December 31, 2001, 2000 and 1999
is as follows:

                                                                              Year Ended December 31,
                                                                     -----------------------------------------
                                                                            2002           2001           2000
--------------------------------------------------------------       -----------    -----------    -----------
Net Sales:
   Bauxite and Alumina:
     Net sales to unaffiliated customers                             $    458.1     $    508.3     $    442.2
     Intersegment sales                                                    58.6           77.9          148.3
                                                                     -----------    -----------    -----------
                                                                          516.7          586.2          590.5
                                                                     -----------    -----------    -----------
   Primary Aluminum:(1)
     Net sales to unaffiliated customers                                  265.3          358.9          563.7
     Intersegment sales                                                     2.5            3.8          242.3
                                                                     -----------    -----------    -----------
                                                                          267.8          362.7          806.0
                                                                     -----------    -----------    -----------
   Flat-Rolled Products                                                   183.6          308.0          521.0
   Engineered Products                                                    425.0          429.5          564.9
   Commodities Marketing(2)                                                39.1           22.9          (25.4)
   Minority Interests                                                      98.5          105.1          103.4
   Eliminations                                                           (61.1)         (81.7)        (390.6)
                                                                     -----------    -----------    -----------
                                                                     $  1,469.6     $  1,732.7     $  2,169.8
                                                                     ===========    ===========    ===========
Equity in income (loss) of unconsolidated affiliates:
   Bauxite and Alumina                                               $     10.4     $     (2.3)    $     (8.4)
   Primary Aluminum                                                         3.6            4.0            3.6
                                                                     -----------    -----------    -----------
                                                                     $     14.0     $      1.7     $     (4.8)
                                                                     ===========    ===========    ===========
Operating income (loss):
   Bauxite and Alumina(3)                                            $    (48.5)    $    (46.9)    $     57.2
   Primary Aluminum(4)                                                    (23.1)           5.1          100.1
   Flat-Rolled Products(4)(5)                                             (30.7)            .4           16.6
   Engineered Products(4)(5)                                                8.5            4.6           34.1
   Commodities Marketing                                                   36.2            5.6          (48.7)
   Eliminations                                                             1.7            1.0             .1
   Corporate and Other(6)                                                 (98.9)         (68.5)         (61.4)
   Non-Recurring Operating (Charges) Benefits, Net - Note 6              (251.2)         163.6           41.3
                                                                     -----------    -----------    -----------
                                                                     $   (406.0)    $     64.9     $    139.3
                                                                     ===========    ===========    ===========

(1)  Beginning in the first quarter of 2001, as a result of the continuing
     curtailment of KACC's Northwest smelters, the Flat-rolled products business
     unit began purchasing its own primary aluminum rather than relying on the
     Primary aluminum business unit to supply its aluminum requirements through
     production or third party purchases. The Engineered products business unit
     was already responsible for purchasing the majority of its primary aluminum
     requirements.
(2)  Net sales in 2002 primarily represent partial recognition of deferred gains
     from hedges closed prior to the commencement of the Cases (see Note 13).
     Net sales in 2001 and 2000 represent net settlements with counterparties
     for maturing derivative positions.
(3)  Operating results for 2002 include $4.4 of charges resulting from an
     increase in the allowance for doubtful receivables and a LIFO inventory
     charge of $.5. Operating results for 2001 include abnormal Gramercy-related
     start-up and litigation costs, net of business interruption-related
     insurance accruals, of $34.8 and a LIFO inventory charge of $3.7.
(4)  Operating results for 2002 include LIFO inventory charges of: Primary
     Aluminum - $2.1, Flat-Rolled Products - $2.0 and Engineered Products -
     $1.5.
(5)  Operating results for 2001 include LIFO inventory charges of: Flat-Rolled
     Products - $3.0 and Engineered Products - $1.5.
(6)  Operating results for 2002 include special pension charges of $24.1 and key 
     employee retention program charges of $5.1.

                                                                   Year Ended December 31,
                                                          -----------------------------------------
                                                                 2002           2001           2000
---------------------------------------------------       -----------    -----------    -----------
Depreciation and amortization:
   Bauxite and Alumina                                    $     39.2     $     37.8     $     22.2
   Primary Aluminum                                             21.6           21.6           24.8
   Flat-Rolled Products                                         15.0           16.9           16.7
   Engineered Products                                          12.0           12.8           11.5
   Corporate and Other                                           3.7            1.1            1.7
                                                          -----------    -----------    -----------
                                                          $     91.5     $     90.2     $     76.9
                                                          ===========    ===========    ===========
Capital expenditures:
   Bauxite and Alumina                                    $     28.3     $    117.8     $    254.6
   Primary Aluminum                                              8.4            8.7            9.6
   Flat-Rolled Products                                          5.1            1.5            7.6
   Engineered Products                                           5.1           19.9           23.6
   Corporate and Other                                            .7             .8            1.1
                                                          -----------    -----------    -----------
                                                          $     47.6     $    148.7     $    296.5
                                                          ===========    ===========    ===========



                                                                                 December 31,
                                                                       --------------------------------
                                                                                 2002              2001
-------------------------------------------------------------------    --------------    --------------
Investments in and advances to unconsolidated affiliates:
   Bauxite and Alumina                                                 $        54.3     $        43.9
   Primary Aluminum                                                             15.1              18.8
   Corporate and Other                                                            .3                .3
                                                                       --------------    --------------

                                                                       $        69.7     $        63.0
                                                                       ==============    ==============
Segment assets:
   Bauxite and Alumina                                                 $       887.1     $       922.5
   Primary Aluminum - Note 5                                                   271.0             467.0
   Flat-Rolled Products                                                        202.0             261.5
   Engineered Products                                                         222.9             233.8
   Commodities Marketing                                                        (3.3)             48.4
   Corporate and Other                                                         645.7             810.5
                                                                       --------------    --------------

                                                                       $     2,225.4     $     2,743.7
                                                                       ==============    ==============

Geographical information for net sales, based on country of origin, and
long-lived assets follows:


                                                                        Year Ended December 31,
                                                             ---------------------------------------------
                                                                     2002             2001            2000
--------------------------------------------------------     ------------    -------------    ------------
Net sales to unaffiliated customers:
     United  States                                          $     828.1     $    1,017.3     $    1,350.1
     Jamaica                                                       189.7            219.4            298.5
     Ghana                                                         171.7            221.3            237.5
     Other Foreign                                                 280.1            274.7            283.7
                                                             ------------    -------------    ------------
                                                             $   1,469.6     $    1,732.7     $    2,169.8
                                                             ============    =============    ============


                                                           December 31,
                                                   -----------------------------
                                                           2002             2001
--------------------------------------------       ------------    -------------
Long-lived assets: (1)
     United States - Note 5                        $     616.9     $      832.5
     Jamaica                                             313.4            303.8
     Ghana                                                84.7             83.3
     Other Foreign                                        64.6             58.8
                                                   ------------    -------------
                                                   $   1,079.6     $    1,278.4
                                                   ============    =============

(1)  Long-lived assets include Property, plant, and equipment, net and
     Investments in and advances to unconsolidated affiliates. Prepared on a
     going-concern basis - see Note 2.

The aggregate foreign currency gain included in determining net income was
immaterial for the years ended December 31, 2002, 2001 and 2000. No single
customer accounted for sales in excess of 10% of total revenue in 2002, 2001 and
2000. Export sales were less than 10% of total revenue during the years ended
December 31, 2002, 2001 and 2000.

QUARTERLY FINANCIAL DATA (UNAUDITED)
--------------------------------------------------------------------------------


                                                                                    Quarter Ended
                                                            -------------------------------------------------------------
(In millions of dollars, except share amounts)                   March 31,     June 30,    September 30,     December 31,
--------------------------------------------------------    --------------   ----------   --------------   --------------
                                                                  (1)            (1)            (1)
2002
   Net sales                                                $       370.6    $   386.3          $ 348.0          $ 364.7
   Operating income (loss)                                          (36.7)       (36.7)           (65.7)          (266.9)
   Net income (loss)                                                (64.1)       (50.4)           (83.4)          (270.8)(2)
   Basic/Diluted Earnings (loss) per share(5)                        (.79)        (.63)           (1.04)           (3.37)(2)
   Common stock market price:(5)
      High                                                           1.76          .34              .11              .09
      Low                                                             .21          .04              .03              .06
2001
   Net sales                                                $       480.3    $   446.8          $ 430.3          $ 375.3
   Operating income (loss)                                          215.4        (27.6)           (36.1)           (86.8)
   Net income (loss)                                                119.6        (64.1)            68.4           (583.3)(3)
   Basic/Diluted Earnings per share(5)                               1.50         (.80)             .85            (7.23)(3)
   Common stock market price:(5)
      High                                                           4.44         4.90             4.45             3.34
      Low                                                            3.23         3.25             2.57             1.56
2000
   Net sales                                                $       575.7    $   552.8          $ 545.2          $ 496.1
   Operating income                                                  36.9         51.5              2.8             48.1
   Net income (loss)                                                 11.7         11.0            (16.8)            10.9 (4)
   Basic/Diluted Earnings (loss) per share(5)                         .15          .14             (.21)             .14 (4)
   Common stock market price:(5)
      High                                                           8.88         5.13             6.06             5.94
      Low                                                            4.13         2.94             3.50             3.50


(1)     Quarterly results include a number of non-recurring and unusual items
        that may cause an individual quarter's results not to be indicative of
        the underlying operating performance. See the applicable quarterly
        report on Form 10-Q for a recap of such items.
(2)     Includes the following pre-tax items: non-recurring impairment charges
        of $215.4, non-recurring restructuring charges of $2.6 and LIFO
        inventory charges of $3.1 (see Notes 2 and 6 of Notes to Consolidated
        Financial Statements). Excluding these charges, results would have been
        a basic loss per share of approximately $.62.
(3)     Includes increase in valuation allowances for net deferred income tax
        assets of $505.4 and the following pre-tax items: charges for
        restructuring of $8.2, abnormal Gramercy start-up and other costs of
        $16.5, contract labor costs related to smelter curtailment of $9.4,
        impairment charges related to Trentwood equipment of $17.7 and certain
        other net non-recurring charges totaling $9.6 (see Notes 2 and 6 of
        Notes to Consolidated Financial Statements). Excluding these items,
        results would have been basic loss per share of approximately $.43.
(4)     Includes the following pre-tax items: a gain of $103.2 from the sale of
        power offset by a non-cash impairment loss of approximately $33.0, a
        charge of $26.2 for operating profit foregone as a result of power sales
        and certain other net non-operating charges totaling $10.9 (see Notes 2
        and 6 of Notes to Consolidated Financial Statements). Excluding these
        items, but giving effect to operating profit foregone as a result of
        these power sales, results would have been basic loss per share of
        approximately $.19.
(5)     Earnings (loss) per share and market price may not be meaningful
        because, as part of a plan of reorganization, it is likely that the
        interests of the Company's existing stockholders will be diluted or
        cancelled.

FIVE-YEAR FINANCIAL DATA
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

                                                                                       December 31,
                                                               ------------------------------------------------------------
(In millions of dollars)                                              2002        2001        2000         1999        1998
-----------------------------------------------------------    ----------- -----------  ----------  -----------  ----------
ASSETS                                                             (1)
Current assets:
   Cash and cash equivalents                                   $     78.7  $    153.3   $    23.4   $     21.2   $    98.3
   Receivables                                                      149.5       206.4       429.8        261.0       282.7
   Inventories                                                      254.9       313.3       396.2        546.1       543.5
   Prepaid expenses and other current assets                         33.5        86.2       162.7        145.6       105.5
                                                               ----------- -----------  ----------  -----------  ----------
      Total current assets                                          516.6       759.2     1,012.1        973.9     1,030.0

Investments in and advances to unconsolidated affiliates             69.7        63.0        77.8         96.9       128.3
Property, plant, and equipment - net                              1,009.9     1,215.4     1,176.1      1,053.7     1,108.7
Deferred income taxes                                                  -           -        454.2        440.0       377.9
Other assets                                                        629.2       706.1       622.9        634.3       346.0
                                                               ----------- -----------  ----------  -----------  ----------
      Total                                                    $  2,225.4  $  2,743.7   $ 3,343.1   $  3,198.8   $ 2,990.9
                                                               =========== ===========  ==========  ===========  ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities not subject to compromise -
   Current liabilities:
      Accounts payable and accruals                            $    244.4  $    515.0   $   673.5   $    500.3   $   432.7
      Accrued postretirement medical benefit obligation -
        current portion                                              60.2        62.0        58.0         51.5        48.2
      Payable to affiliates                                          28.1        52.9        78.3         85.8        77.1
      Long-term debt - current portion                                 .9       173.5        31.6           .3          .4
                                                               ----------- -----------  ----------  -----------  ----------
        Total current liabilities                                   333.6       803.4       841.4        637.9       558.4

   Long-term liabilities                                             86.9       919.9       703.7        727.1       532.9
   Accrued postretirement medical benefit obligation                   -        642.2       656.9        678.3       694.3
   Long-term debt                                                    42.7       700.8       957.8        972.5       962.6
                                                               ----------- -----------  ----------  -----------  ----------
                                                                    463.2     3,066.3     3,159.8      3,015.8     2,748.2
Liabilities subject to compromise                                 2,726.0          -            -           -            -
Minority interests                                                  121.8       118.5       101.1        117.7       123.5

Stockholders' equity:
   Common stock                                                        .8          .8          .8           .8          .8
   Additional capital                                               539.9       539.1       537.5        536.8       535.4
   Retained earnings (accumulated deficit)                       (1,382.4)     (913.7)     (454.3)      (471.1)     (417.0)
   Accumulated other comprehensive income (loss)                   (243.9)      (67.3)       (1.8)        (1.2)         -
                                                               ----------- -----------  ----------  -----------  ----------
      Total stockholders' equity                                 (1,085.6)     (441.1)       82.2         65.3       119.2
                                                               ----------- -----------  ----------  -----------  ----------
      Total                                                    $  2,225.4  $  2,743.7   $ 3,343.1   $  3,198.8   $ 2,990.9
                                                               =========== ===========  ==========  ===========  ==========


(1)   Prepared on a "going concern" basis.  See Notes 1 and 2 of Notes to Consolidated Financial Statements for a discussion of the possible
      impact of the Cases.


FIVE-YEAR FINANCIAL DATA
STATEMENTS OF CONSOLIDATED INCOME (LOSS)
--------------------------------------------------------------------------------

                                                                            Year Ended December 31,
                                                       -----------------------------------------------------------------
(In millions of dollars, except share amounts)                 2002          2001         2000         1999         1998
-----------------------------------------------------  ------------   -----------  -----------  -----------  -----------
                                                            (1)

Net sales                                              $   1,469.6    $  1,732.7   $  2,169.8   $  2,083.6   $  2,302.4
                                                       ------------   -----------  -----------  -----------  -----------

Costs and expenses:
   Cost of products sold                                   1,408.2       1,638.4      1,891.4      1,893.5      1,892.2
   Depreciation and amortization                              91.5          90.2         76.9         89.5         99.1
   Selling, administrative, research and development,
     and general                                             124.7         102.8        104.1        105.4        115.5
   Non-recurring operating charges (benefits), net           251.2        (163.6)       (41.9)        24.1        105.0
                                                       ------------   -----------  -----------  -----------  -----------
     Total costs and expenses                              1,875.6       1,667.8      2,030.5      2,112.5      2,211.8
                                                       ------------   -----------  -----------  -----------  -----------

Operating income (loss)                                     (406.0)         64.9        139.3        (28.9)        90.6

Other income (expense):
   Interest expense (excluding unrecorded contractual
     interest expense of $84.0 in 2002)                      (20.7)       (109.0)      (109.6)      (110.1)      (110.0)
   Reorganization items                                      (33.3)           -           -            -            -
   Gain on sale of interest in QAL                              -          163.6          -            -            -
   Gain on involuntary conversion at Gramercy facility          -             -           -           85.0          -
   Other - net                                                  .4         (32.8)        (4.3)       (35.9)         3.5
                                                       ------------   -----------  -----------  -----------  -----------

Income (loss) before income taxes, minority interests       (459.6)         86.7         25.4        (89.9)       (15.9)

(Provision) benefit for income taxes                         (14.9)       (550.2)       (11.6)        32.7         16.4

Minority interests                                             5.8           4.1          3.0          3.1           .1
                                                       ------------   -----------  -----------  -----------  -----------
Net income (loss)                                      $    (468.7)   $   (459.4)  $     16.8   $    (54.1)  $       .6
                                                       ============   ===========  ===========  ===========  ===========

Earnings (loss) per share(2):
   Basic/Diluted                                       $     (5.82)   $    (5.73)  $      .21   $     (.68)  $      .01
                                                       ============   ===========  ===========  ===========  ===========
Dividends per common share                             $        -     $       -    $       -    $       -    $       -
                                                       ============   ===========  ===========  ===========  ===========
Weighted average shares outstanding (000):
   Basic                                                    80,578        80,235       79,520       79,336       79,115

   Diluted                                                  80,578        80,235       79,523       79,336       79,156

(1)  Prepared on a "going concern" basis. See Notes 1 and 2 of Notes to
     Consolidated Financial Statements for a discussion of the possible impact
     of the Cases.
(2)  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.


I
TEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
              FINANCIAL DISCLOSURE

None.


PART III


ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information, as of March 28, 2003, with
respect to the executive officers and directors of the Company and KACC. All
officers and directors hold office until their respective successors are elected
and qualified or until their earlier death, resignation or removal.


               NAME                                    POSITIONS AND OFFICES WITH THE COMPANY AND KACC*
-----------------------------------        ------------------------------------------------------------------------
Jack A. Hockema                            President, Chief Executive Officer and Director
Joseph A. Bonn                             Executive Vice President, Corporate Development
John T. La Duc                             Executive Vice President and Chief Financial Officer
John Barneson                              Senior Vice President and Chief Administrative Officer
Kris S. Vasan                              Senior Vice President, Strategic Risk Management
Edward F. Houff                            Vice President, Secretary and General Counsel
Edward A. Kaplan                           Vice President of Taxes
W. Scott Lamb                              Vice President, Investor Relations and Corporate Communications
Daniel D. Maddox                           Vice President and Controller
Daniel J. Rinkenberger                     Vice President of Economic Analysis and Planning
Kerry A. Shiba                             Vice President and Treasurer
Robert J. Cruikshank                       Director
James T. Hackett                           Director
George T. Haymaker, Jr.                    Chairman of the Board and Director
Charles E. Hurwitz                         Director
Ezra G. Levin                              Director
John D. Roach                              Director

---------------------------
*    All named individuals hold the same positions and offices with both the
     Company and KACC.

Jack A. Hockema. Mr. Hockema, age 56, was elected to the position of President
and Chief Executive Officer and as a director of the Company and KACC in October
2001. He previously served as Executive Vice President and President of Kaiser
Fabricated Products of KACC from January 2000 until October 2001, and Executive
Vice President of the Company from May 2000 until October 2001. He served as
Vice President of the Company from May 1997 until May 2000. Mr. Hockema was Vice
President of KACC and President of Kaiser Engineered Products from March 1997
until January 2000. He served as President of Kaiser Extruded Products and
Engineered Components from September 1996 to March 1997. Mr. Hockema served as a
consultant to KACC and acting President of Kaiser Engineered Components from
September 1995 until September 1996. Mr. Hockema was an employee of KACC from
1977 to 1982, working at KACC's Trentwood facility, and serving as plant manager
of its former Union City, California, can plant and as operations manager for
Kaiser Extruded Products. In 1982, Mr. Hockema left KACC to become Vice
President and General Manager of Bohn Extruded Products, a division of
Gulf+Western, and later served as Group Vice President of American Brass
Specialty Products until June 1992. From June 1992 until September 1996, Mr.
Hockema provided consulting and investment advisory services to individuals and
companies in the metals industry.

Joseph A. Bonn. Mr. Bonn, age 59, was elected to the position of Executive Vice
President, Corporate Development of the Company and KACC effective August 2001.
He previously served as Vice President, Commodities Marketing, Corporate
Planning and Development of the Company from May 2000 through August 2001, and
of KACC from September 1999 through August 2001. He served as Vice President,
Planning and Development of KACC from March 1997 through September 1999, and as
Vice President of the Company from May 1997 through May 2000. He served as Vice
President, Planning and Administration of the Company from February 1992 through
May 1997, and of KACC from July 1989 through July 1997. Mr. Bonn was first
elected a Vice President of KACC in April 1987. He served as Senior Vice
President--Administration of MAXXAM from September 1991 through December 1992.
He was also KACC's Director of Strategic Planning from April 1987 until July
1989. From September 1982 to April 1987, Mr. Bonn served as General Manager of
various aluminum fabricating divisions of KACC.

John T. La Duc. Mr. La Duc, age 60, was elected Executive Vice President and
Chief Financial Officer of the Company effective September 1998, and of KACC
effective July 1998. Mr. La Duc served as Vice President and Chief Financial
Officer of the Company from June 1989 and May 1990, and was Treasurer of the
Company from August 1995 until February 1996 and from January 1993 until April
1993. He also was Treasurer of KACC from June 1995 until February 1996, and
served as Vice President and Chief Financial Officer of KACC from June 1989 and
January 1990, respectively. He previously served as Senior Vice President of
MAXXAM from September 1990 through December 2001. Prior to December 2001, Mr. La
Duc also served as a Vice President and a director of MAXXAM Group Holdings
Inc., a wholly owned subsidiary of MAXXAM and parent of MAXXAM's forest products
operations ("MGHI"), as a Vice President and manager on the Board of Managers of
Scotia Pacific Company LLC ("Scopac LLC"), a wholly owned subsidiary of MAXXAM
engaged in forest product operations and successor by merger in July 1998 to
Scotia Pacific Holding Company, and as a director and Vice President of The
Pacific Lumber Company, the parent of Scopac LLC ("Pacific Lumber").

John Barneson. Mr. Barneson, age 52, was elected to the position of Senior Vice
President and Chief Administrative Officer of the Company and KACC effective
August 2001. He previously served as Vice President and Chief Administrative
Officer of the Company and KACC from December 1999 through August 2001. He
served as Engineered Products Vice President of Business Development and
Planning from September 1997 until December 1999. Mr. Barneson served as
Flat-Rolled Products Vice President of Business Development and Planning from
April 1996 until September 1997. Mr. Barneson has been an employee of KACC since
September 1975 and has held a number of staff and operation management positions
within the Flat-Rolled and Engineered Products business units.

Kris S. Vasan. Mr. Vasan, age 53, was elected to the position of Senior Vice
President, Strategic Risk Management of the Company and KACC effective August
2001. In March 2002, he also was appointed Senior Vice President of Strategic
Planning, Energy and Hedging of KACC's Commodities business unit. Mr. Vasan
previously served as Vice President, Strategic Risk Management of KACC from June
2000 through August 2001, and of the Company from August 2000 through August
2001. He served as Vice President, Financial Risk Management of KACC from June
1995 through June 2000. Mr. Vasan served as Treasurer of the Company from April
1993 until August 1995, and as Treasurer of KACC from April 1993 until June
1995. Prior to that, Mr. Vasan served the Company and KACC as Corporate Director
of Financial Planning and Analysis from June 1990 until April 1993. From October
1987 until June 1990, he served as Associate Director of Financial Planning and
Analysis.

Edward F. Houff. Mr. Houff, age 56, was elected to the position of Vice
President and General Counsel of the Company and KACC effective April 2002. He
was elected Secretary of the Company and KACC effective October 15, 2002. He
served as Acting General Counsel of the Company and KACC from February 2002
until April 2002, and Deputy General Counsel for Litigation of the Company and
KACC from October 2001 until February 2002. Mr. Houff was President and Managing
Shareholder of the law firm Church & Houff, P.A. in Baltimore, Maryland from
April 1989 through September 2001.

Edward A. Kaplan. Mr. Kaplan, age 44, was elected to the position of Vice
President of Taxes of the Company and KACC effective March 2001. Mr. Kaplan
previously served as Director of Taxes of the Company and KACC from October 1999
through February 2001. From July 1997 to September 1999, he served as Director
of Tax Planning of the Company and KACC, and from January 1995 through June
1997, he served as Associate Director of Tax Planning of the Company and KACC.

W. Scott Lamb. Mr. Lamb, age 48, was elected Vice President, Investor Relations
and Corporate Communications of the Company effective September 1998, and of
KACC effective July 1998. Mr. Lamb previously served as Director of Investor
Relations and Corporate Communications of the Company and KACC from June 1997
through July 1998. From July 1995 through June 1997, he served as Director of
Investor Relations of the Company and KACC, and from January 1995 through July
1995, he served as Director of Public Relations of the Company and KACC.

Daniel D. Maddox. Mr. Maddox, age 43, was elected to the position of Vice
President and Controller of the Company effective September 1998, and of KACC
effective July 1998. He served as Controller, Corporate Consolidation and
Reporting of the Company and KACC from October 1997 through September 1998 and
July 1998, respectively. Mr. Maddox previously served as Assistant Corporate
Controller of the Company from May 1997 to September 1997, and of KACC from June
1997 to September 1997, and Director--External Reporting of KACC from June 1996
to May 1997. Mr. Maddox was with Arthur Andersen LLP from 1982 until joining
KACC in June 1996.

Daniel J. Rinkenberger. Mr. Rinkenberger, age 44, was elected to the position of
Vice President of Economic Analysis and Planning of the Company and KACC
effective February 2002. Mr. Rinkenberger previously served as Vice President,
Planning and Business Development of Kaiser Fabricated Products of KACC from
June 2000 through February 2002. Prior to that, he served as Vice President,
Finance and Business Planning of Kaiser Flat-Rolled Products of KACC from
February 1998 to February 2000, and as Assistant Treasurer of the Company and
KACC from January 1995 through February 1998.

Kerry A. Shiba. Mr. Shiba, age 48, was elected to the position of Vice President
and Treasurer of the Company and KACC effective February 2002. Mr. Shiba
previously served as Vice President, Controller and Information Technology of
Kaiser Fabricated Products of KACC from January 2000 to February 2002, and as
Vice President and Controller of Kaiser Engineered Products of KACC from June
1998 through January 2000. Prior to joining the Company, Mr. Shiba was with the
BF Goodrich Company for 16 years, holding various financial positions.

Robert J. Cruikshank. Mr. Cruikshank, age 72, has served as a director of the
Company and KACC since January 1994. In addition, Mr. Cruikshank has been a
director of MAXXAM since May 1993. Mr. Cruikshank was a Senior Partner in the
international public accounting firm of Deloitte & Touche from December 1989
until his retirement in March 1993. Mr. Cruikshank served on the board of
directors of Deloitte Haskins & Sells from 1981 to 1985 and as Managing
Partner of the Houston office from June 1974 until its merger with Touche Ross
& Co. in December 1989. Mr. Cruikshank also serves as a director of
CenterPoint Energy, Inc. (formerly Reliant Energy Incorporated), a public
utility holding company with interests in electric and natural gas utilities,
coal and transportation businesses; a director of Texas Biotechnology
Incorporated; a trust manager of Weingarten Realty Investors; and as advisory
director of Compass Bank--Houston.

James T. Hackett. Mr. Hackett, age 49, has been a director of the Company since
May 2000, and of KACC since June 2000. Since January 2000, Mr. Hackett has been
Chairman, President and Chief Executive Officer of Ocean Energy, Inc., a company
engaged in oil and natural gas exploration and production worldwide. From 1990
through 1995, Mr. Hackett worked for NGC Corporation, now known as Dynegy, Inc.,
serving as Senior Vice President and President of the Trident Division in 1995.
From January 1996 until June 1997, Mr. Hackett served as Executive Vice
President of PanEnergy Corporation and was responsible for integrated
international energy development, domestic power operations, and various
corporate staff functions. PanEnergy Corporation merged with Duke Energy
Corporation in June 1997. From June 1997 until September 1998, Mr. Hackett
served as President-Energy Services Group of Duke Energy Corporation, and was
responsible for the non-regulated operations of Duke Energy, including energy
trading, risk management, and international midstream energy infrastructure
development and engineering services. From September 1998 through December 1998,
Mr. Hackett was Chief Executive Officer of Seagull Energy Corporation, which was
engaged primarily in exploration and production of oil and natural gas. From
January 1999 through March 1999, Mr. Hackett assumed the additional title of
Chairman of Seagull Energy Corporation, and when Seagull Energy Corporation
merged with Ocean Energy, Inc. in March 1999, he was appointed President and
Chief Executive Officer of Ocean Energy, Inc. Mr. Hackett also serves as a
director of Fluor Corporation, a worldwide engineering services company; New
Jersey Resources Corporation, a holding company engaged in retail and wholesale
energy services; and Temple Inland Inc., a holding company engaged in wood,
pulp, paper and fiber products, and financial services.

George T. Haymaker, Jr. Mr. Haymaker, age 65, has been a director of the Company
since May 1993, and of KACC since June 1993. He was named as non-executive
Chairman of the Board of the Company and KACC effective October 2001. Mr.
Haymaker served as Chairman of the Board and Chief Executive Officer of the
Company and KACC from January 1994 until January 2000, and as non-executive
Chairman of the Board of the Company and KACC from January 2000 through May
2001. He served as President of the Company from May 1996 through July 1997, and
of KACC from June 1996 through July 1997. From May 1993 to December 1993, Mr.
Haymaker served as President and Chief Operating Officer of the Company and
KACC. Mr. Haymaker also is a director of 360networks Corporation, a provider of
broadband network services; Flowserve Corporation, a provider of valves, pumps
and seals; a director of CII Carbon, LLC., a producer of calcined coke; and
non-executive Chairman of the Board of Directors of Safelite Glass Corp., a
provider of automotive replacement glass. Since July 1987, Mr. Haymaker has been
a director, and from February 1992 through March 1993 was President, of
Mid-America Holdings, Ltd. (formerly Metalmark Corporation), which is in the
business of semi-fabrication of aluminum extrusions.

Charles E. Hurwitz. Mr. Hurwitz, age 62, has served as a director of the Company
since October 1988, and of KACC since November 1988. From December 1994 until
April 2002, he served as Vice Chairman of KACC. Mr. Hurwitz also has served as a
member of the Board of Directors and the Executive Committee of MAXXAM since
August 1978 and was elected Chairman of the Board and Chief Executive Officer of
MAXXAM in March 1980. From January 1993 to January 1998, he also served MAXXAM
as President. Mr. Hurwitz was Chairman of the Board and Chief Executive Officer
of Federated Development Company, a Texas corporation, from January 1974 until
its merger in February 2002 into Federated Development, LLC ("FDLLC"), a wholly
owned subsidiary of Giddeon Holdings, Inc. ("Giddeon Holdings"). Mr. Hurwitz is
the President and Director of Giddeon Holdings, a principal stockholder of
MAXXAM, which is primarily engaged in the management of investments. Mr. Hurwitz
also has been, since its formation in November 1996, Chairman of the Board,
President and Chief Executive Officer of MGHI.

Ezra G. Levin. Mr. Levin, age 69, has been a director of the Company since July
1991. He has been a director of KACC since November 1988, and a director of
MAXXAM since May 1978. Mr. Levin also served as a director of the Company from
April 1988 to May 1990. Mr. Levin has served as a director of Pacific Lumber
since February 1993, and as a manager on the Board of Managers of Scopac LLC
since June 1998. Mr. Levin is a member of the law firm of Kramer Levin Naftalis
& Frankel LLP. He has held leadership roles in various legal and
philanthropic capacities and also has served as visiting professor at the
University of Wisconsin Law School and Columbia College.

John D. Roach. Mr. Roach, age 59, has been a director of the Company and KACC
since April 30, 2002. Since August 2001, Mr. Roach has been the Chairman and
Chief Executive Officer of Stonegate International, Inc., a private investment
and advisory services firm. From March 1998 to September 2001, Mr. Roach was the
Chairman, President and Chief Executive Officer of Builders FirstSource, Inc., a
distributor of building products to production homebuilders. From July 1991 to
July 1997, Mr. Roach served as Chairman, President and Chief Executive Officer
of Fibreboard Corporation. From 1988 to July 1991, he was Executive Vice
President of Manville Corporation. Mr. Roach also serves as a director of
Material Sciences Corp., a provider of materials-based solutions; PMI Group,
Inc., a provider of credit enhancement products and lender services; and URS
Corporation, an engineering firm. He also is a director of the Dallas Symphony
Association.

             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based solely upon a review of the copies of the Forms 3, 4 and 5 and amendments
thereto furnished to the Company with respect to its most recent fiscal year,
and written representations from reporting persons that no other Forms 5 were
required, the Company believes that all filing requirements that were applicable
to its officers, directors and greater than 10% beneficial owners were complied
with.


ITEM 11.      EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

Although certain plans or programs in which executive officers of the Company
participate are jointly sponsored by the Company and KACC, executive officers of
the Company generally are directly employed and compensated by KACC. The
following table sets forth compensation information, cash and non-cash, for each
of the Company's last three completed fiscal years with respect to the Company's
Chief Executive Officer during 2002 and the four most highly compensated
executive officers other than the Chief Executive Officer for the year 2002
(collectively referred to as the "Named Executive Officers").


                                                                          
                                                                          
                                             ANNUAL COMPENSATION          
                                   -------------------------------------- 
           (A)              (B)       (C)         (D)            (E)      
                                                                          
                                                                OTHER     
                                                                ANNUAL    
         NAME AND                    SALARY       BONUS      COMPENSATION 
    PRINCIPAL POSITION      YEAR      ($)          ($)         ($)(1)     
-------------------------- ------  --------- -------------- ------------- 
Jack A. Hockema             2002    730,000             -0-       -       
President and Chief         2001    455,390         159,135       -       
Executive Officer           2000    315,000         250,000       -       
                            
                            
Edward F. Houff(7)          2002    400,000         125,000       -       
Vice President, Secretary   2001    100,000          62,500       -       
and General Counsel


John T. La Duc              2002    400,592             -0-       -       
Executive Vice President    2001    387,393         171,000       -       
and Chief Financial         2000    372,493         435,000       -       
Officer                     
                            

Harvey L. Perry(7)          2002    375,000             -0-       -       
Former Executive Vice       2001    137,500          87,500       -       
President and President     
Global Commodities


Joseph A. Bonn              2002    333,333             -0-       -       
Executive Vice President,   2001    322,350         126,464       -       
Corporate Development       2000    296,250         290,716       -       
                            
                            



                                      LONG-TERM COMPENSATION                                         
                                -----------------------------------                                  
                                        AWARDS            PAYOUTS                                    
                                ----------------------- -----------                                  
           (A)                       (F)            (G)         (H)             (I)                        
                                                SECURITIES                                             
                                  RESTRICTED     UNDERLYING                                            
                                     STOCK       OPTIONS/       LTIP          ALL OTHER                    
         NAME AND                  AWARD(S)        SARS        PAYOUTS      COMPENSATION                   
    PRINCIPAL POSITION                ($)            #         ($)(2)            ($)                       
--------------------------      ------------     ----------   -----------   ---------------                
Jack A. Hockema                      116,495(3)        -0-      236,200(4)      346,750(5)(6)           
President and Chief                  467,104(3)    375,770      887,600(4)       22,770(6)              
Executive Officer                        -0-        28,184      235,600(4)       15,750(6)              
                                                                                                     
                                                                                                     
Edward F. Houff(7)                       -0-          -0-          -0-          168,909(5)(6)(8)         
Vice President, Secretary            524,573(9)   222,772          -0-            2,865(8)               
and General Counsel                                                                                  
                                                                                                     
                                                                                                      
John T. La Duc                           -0-          -0-          -0-          189,958(5)(6)            
Executive Vice President                 -0-(10)      -0-        4,628(11)       19,370(6)               
and Chief Financial                      -0-          -0-       59,065(12)       18,625(6)               
Officer                                                                                              
                                                                                                     
                                                                                                     
Harvey L. Perry(7)                       -0-          -0-          -0-          184,849(5)(6)(8)         
Former Executive Vice                 89,867(9)    31,809          -0-              -0-                  
President and President                                                                              
Global Commodities                                                                                   
                                                                                                     
                                                                                                     
Joseph A. Bonn                           -0-          -0-          -0-          158,060(5)(6)            
Executive Vice President,                -0-(10)      -0-      148,829(11)       16,118(6)               
Corporate Development                    -0-          -0-       44,747(12)      164,813(6)(8)            
                                

------------------------------------

(1)   Excludes perquisites and other personal benefits, which in the aggregate
      amount do not exceed the lesser of either $50,000 or 10% of the total of
      annual salary and bonus reported for the Named Executive Officer.
(2)   Amounts reflect the value of payments actually received during the year
      indicated in connection with awards under the Company's long-term
      incentive plan. The value of shares included in column (h) was determined
      by multiplying the number of shares paid by the average of the high and
      low market price of a share of Company Common Stock on the New York Stock
      Exchange on the date of payment.
(3)   As part of his annual long-term incentive, effective as of June 28, 2001,
      Mr. Hockema was granted 53,552 restricted shares of Company Common Stock,
      vesting at the rate of 33 1/3% per year, beginning on December 31, 2001.
      In connection with Mr. Hockema's promotion to President and Chief
      Executive Officer, he also was granted 146,448 restricted shares of
      Company Common Stock effective as of October 31, 2001, and 95,488
      restricted shares of Company Common Stock effective as of January 25,
      2002, each such grant vesting at the rate of 33 1/3% per year, beginning
      October 11, 2002. The restrictions on 33 1/3% of the shares granted to Mr.
      Hockema in June 2001 lapsed and the shares vested on December 31, 2001.
      Prior to the scheduled vesting dates, Mr. Hockema elected to cancel all of
      his restricted shares of Company Common Stock otherwise scheduled to vest
      during 2002. Vesting of Mr. Hockema's remaining restricted shares is
      subject to his being an employee of the Company, KACC or an affiliate or
      subsidiary of the Company or KACC as of the applicable vesting date.
      Vesting may be accelerated under certain circumstances. Any dividends
      payable on the shares prior to the lapse of the restrictions are payable
      to Mr. Hockema. The above table includes, for the respective year, the
      value of the restricted shares granted to Mr. Hockema in 2001 and 2002, in
      each case determined by multiplying the number of shares in the grant by
      the closing market price of a share of Company Common Stock on the New
      York Stock Exchange on the effective date of the grant. As of December 31,
      2002, Mr. Hockema owned 196,991 restricted shares of Company Common Stock
      valued at $11,425, based on the closing price on the OTC Bulletin Board of
      $0.058 per share.
(4)   Amounts reflect the cash awards actually received by Mr. Hockema during
      the year indicated under the Company's long-term incentive plan for the
      rolling three-year performance periods 1997-1999, 1998-2000, and
      1999-2001. In each case, such awards were paid in the year immediately
      following the end of the applicable three-year performance period. Mr.
      Hockema's award for the performance period 1997-1999 was paid in cash
      during 2000 pursuant to the terms of his employment agreement. Mr.
      Hockema's 1998-2000 award includes a special "growing the business" bonus
      for the period 1999-2000 in the amount of $601,200.
(5)   Includes retention payments made during 2002 under KACC's key employee
      retention plans in the amount of $346,750 for Mr. Hockema, $160,000 for
      Mr. Houff, $189,958 for Mr. La Duc, $178,125 for Mr. Perry, and $158,060
      for Mr. Bonn. In addition to such retention amounts, Messrs. Hockema,
      Houff, La Duc and Bonn may in the future receive up to $273,750, $150,000,
      $152,063 and $126,525, respectively, of additional retention payments with
      respect to the year 2002, which pursuant to the terms of the Kaiser
      Aluminum & Chemical Corporation Key Employee Retention Plan, have been
      withheld by KACC and for which payment is subject to, among other
      conditions, KACC's emergence from chapter 11 and the timing thereof. For
      additional information, see discussion under "Employment Contracts,
      Retention Plan and Agreements and Termination of Employment and
      Change-in-Control Arrangements - Kaiser Retention Plan and Agreements"
      below.
(6)   Includes contributions by KACC of $22,770 and $15,750 for Mr. Hockema,
      $19,370 and $18,625 for Mr. La Duc, and $16,118 and $14,813 for Mr. Bonn
      under KACC's Supplemental Savings and Retirement Plan and Supplemental
      Benefits Plan for 2001 and 2000, respectively. KACC did not contribute any
      amounts under such plans for the Named Executive Officers for 2002.
(7)   Messrs. Houff and Perry became employees of KACC during 2001. Accordingly,
      no compensation is reflected for either of them in the Summary
      Compensation Table for the year 2000. Mr. Perry voluntarily terminated his
      employment with KACC as of January 31, 2003.
(8)   Includes moving-related items of $8,909 and $2,685 for Mr. Houff for 2002 
      and 2001, respectively, $6,724  for Mr. Perry for 2002, and $150,000 for 
      Mr. Bonn for 2000.
(9)   Effective as of October 9, 2001, Mr. Houff was granted 171,429 restricted
      shares of Company Common Stock, vesting at the rate of 33 1/3% per year,
      beginning on October 1, 2002. Effective as of August 27, 2001, Mr. Perry
      was granted 24,621 restricted shares of Company Common Stock, vesting at
      the rate of 33 1/3% per year, beginning on August 1, 2002. Prior to the
      scheduled vesting dates, Messrs. Houff and Perry each elected to cancel
      all of their respective restricted shares of Company Common Stock
      otherwise scheduled to vest during 2002. In accordance with the terms of
      Mr. Perry's Restricted Stock Agreement, the balance of his restricted
      shares were cancelled as of January 31, 2003, in connection with his
      resignation. Vesting of Mr. Houff's remaining restricted shares is subject
      to his being an employee of the Company, KACC or an affiliate or
      subsidiary of the Company or KACC as of the applicable vesting dates.
      Vesting may be accelerated under certain circumstances. Any dividends
      payable on the shares prior to the lapse of the restrictions are payable
      to Mr. Houff. The above table includes for the year 2001 the value of the
      restricted shares granted to Messrs. Houff and Perry, in each case
      determined by multiplying the number of shares in the grant by the closing
      market price of a share of Company Common Stock on the New York Stock
      Exchange on the effective date of the grant. As of December 31, 2002,
      Messrs. Houff and Perry owned 114,286 and 16,414 restricted shares of
      Company Common Stock, respectively, valued at $6,629 and $952,
      respectively, based on the closing price on the OTC Bulletin Board of
      $0.058 per share.
(10)  In April 2001, the Company and KACC made an offer to current employees and
      directors to exchange their outstanding options to acquire shares of the
      Company's Common Stock for restricted shares of Company Common Stock (the
      "Exchange Offer"), vesting at the rate of 33 1/3% per year beginning March
      5, 2002. Pursuant to the Exchange Offer, Mr. La Duc exchanged
      approximately 51% (i.e., options to purchase 243,575 shares) of his then
      outstanding options to acquire Company Common Stock for 34,511 restricted
      shares of Company Common Stock, and Mr. Bonn exchanged all of his then
      outstanding options (i.e., options to purchase 171,690 shares) to acquire
      Company Common Stock for 91,133 restricted shares of Company Common Stock.
      Prior to the March 2002 and March 2003 vesting dates, Messrs. La Duc and
      Bonn elected to cancel all of their respective restricted shares otherwise
      scheduled to vest on such dates. Vesting of Messrs. La Duc's and Bonn's
      respective remaining restricted shares is subject to their being an
      employee of the Company, KACC or an affiliate or subsidiary of the Company
      or KACC as of the applicable vesting dates. Vesting may be accelerated
      under certain circumstances. Any dividends payable on the shares prior to
      the lapse of the restrictions are payable to Messrs. La Duc and Bonn. The
      restricted shares issued to Messrs. La Duc and Bonn in connection with the
      Exchange Offer are not reflected in the above table. As of December 31,
      2002, Messrs. La Duc and Bonn owned 158,822 and 84,703 restricted shares
      of Company Common Stock, respectively, valued at $9,212 and $4,913,
      respectively, based on the closing price on the OTC Bulletin Board of
      $0.058 per share.
(11)  Amounts reflect the value of shares of Company Common Stock actually
      received in 2001 under the Company's long-term incentive plan for the
      rolling three-year performance period 1997-1999. For Mr. Bonn, the amount
      also reflects the cash award actually received by him in 2001for the
      rolling three-year performance period 1998-2000. The awards for the
      1997-1999 performance period generally were paid in two equal
      installments, with the first during the year following the end of the
      three-year performance period and the second during the next following
      year. Such awards generally were made entirely in shares of Company Common
      Stock (based on the average closing price of the Company's Common Stock
      during the last December of such performance period for one-half of the
      award and on a target price of $15.00 per share for the other half).
(12)  Amounts reflect the value of payments actually received in 2000 under the
      Company's long-term incentive plan for the rolling three-year performance
      periods 1996-1998 and 1997-1999. The awards for the 1996-1998 period
      generally were paid in two equal installments, with the first paid during
      the year following the end of the three-year performance period and the
      second during the next following year. Such awards generally were made 57%
      in shares of Company Common Stock (based on the average closing price of
      the Company's Common Stock during the last December of each performance
      period) and 43% in cash. See Note 11 above for information with respect to
      the awards for the 1997-1999 performance period.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

The Company did not issue any stock options or SARs during the year 2002.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END 
OPTION/SAR VALUES

The table below provides information on an aggregated basis concerning each
exercise of stock options during the fiscal year ended December 31, 2002, by
each of the Company's Named Executive Officers, and the 2002 fiscal year-end
value of unexercised options. During 2002, the Company did not have any SARs
outstanding.


             (A)                    (B)            (C)                      (D)                               (E)
                                                                                                     VALUE OF UNEXERCISED
                                                               NUMBER OF SECURITIES UNDERLYING           IN-THE-MONEY
                                                                 UNEXERCISED OPTIONS/SARS                OPTIONS/SARS
                                                                  AT FISCAL YEAR END (#)            AT FISCAL YEAR-END ($)
                                                               -----------------------------   --------------------------------
                                   SHARES
                                 ACQUIRED ON      VALUE
            NAME                EXERCISE (#)   REALIZED ($)     EXERCISABLE    UNEXERCISABLE      EXERCISABLE    UNEXERCISABLE
-----------------------------  -------------- --------------   -------------  --------------    --------------   --------------
Jack A. Hockema                     -0-            -0-               148,473(1)      255,481(1)           --(2)          --(2)
Edward F. Houff                     -0-            -0-                74,258(1)      148,514(1)           --(2)          --(2)
John T. La Duc                      -0-            -0-               234,375(1)          -0-              --(2)         -0-
Harvey L. Perry                     -0-            -0-                10,103(1)       21,206(1)           --(2)          --(2)

------------------------------------
(1)   Represents shares of Company Common Stock underlying stock options.
(2)   No value is shown because the exercise price is higher than the closing 
      price of $0.058 per share of the Company's Common Stock on the OTC 
      Bulletin Board on December 31, 2002.

LONG-TERM INCENTIVE PLAN AWARDS TABLE

During 2002, the Company adopted, and the Court approved as part of the Kaiser
Employee Retention Program discussed below, a new cash-based long-term incentive
program under which participants became eligible to receive an award based on
the attainment by the Company of sustained cost reductions above a stipulated
threshold for the period 2002 through emergence from chapter 11. The following
table and accompanying footnotes further describe the awards made in 2002 to the
Named Executive Officers under such program.


                                                                                    ESTIMATED FUTURE PAYOUTS
                                                                                UNDER NON-STOCK PRICE-BASED PLANS
                                                                         -----------------------------------------------
              (A)                      (B)                  (C)               (D)             (E)              (F)

                                 PERFORMANCE OR
                                     NUMBER OF       OTHER PERIODS UNTIL
                                 SHARES, UNITS OR        MATURATION
             NAME                  OTHER RIGHTS           OR PAYOUT        THRESHOLD         TARGET          MAXIMUM
------------------------------  -------------------  ------------------  --------------  ---------------  --------------
Jack A. Hockema                         N/A                  (1)               (2)        $1,500,000(2)         (2)
Edward F. Houff                         N/A                  (1)               (2)         300,000(2)           (2)
John T. La Duc                          N/A                  (1)               (2)         523,000(2)           (2)
Harvey L. Perry                         N/A                  (1)               (2)         575,000(2)           (2)
Joseph A. Bonn                          N/A                  (1)               (2)         338,000(2)           (2)

------------------------------------
(1)   Any awards earned under the program shall be payable in two equal
      installments - the first on the date that the Company emerges from
      bankruptcy and the second on the one year anniversary of such date. Any
      awards earned under the program are forfeited if the participant
      voluntarily terminates his or her employment (other than at normal
      retirement) or is terminated for cause prior to the scheduled payment
      date.
(2)   The amount, if any, that may be paid under the program shall not be
      determinable until the end of the performance period. Based on performance
      during 2002, assuming that (i) the cost reductions made in 2002 are
      maintained, (ii) no additional cost savings are attained during the
      balance of the performance period, and (iii) there are no changes to the
      participants in the program or in the amount of any participant's award
      based on individual performance, Messrs. Hockema, Houff, La Duc and Bonn
      would receive a total of approximately $300,000, $60,000, $104,600, and
      $67,600, respectively under the program, subject to the conditions of
      payment described in Note 2 above. Because Mr. Perry voluntarily
      terminated his employment with the Company in January 2003, he will not be
      entitled to any payment under the program. The maximum award that may be
      earned by any participant will not exceed three times his or her target.

DEFINED BENEFIT PLANS

Kaiser Retirement Plan. KACC maintains a qualified, defined-benefit retirement
plan (the "Kaiser Retirement Plan") for salaried employees of KACC and
co-sponsoring subsidiaries who meet certain eligibility requirements. The table
below shows estimated annual retirement benefits payable under the terms of the
Kaiser Retirement Plan to participants with the indicated years of credited
service. These benefits are reflected without reduction for the limitations
imposed by the Internal Revenue Code of 1986, as amended (the "Tax Code") on
qualified plans and before adjustment for the Social Security offset, thereby
reflecting aggregate benefits to be received, subject to Social Security
offsets, under the Kaiser Retirement Plan and the Kaiser Supplemental Benefits
Plan (as defined below).


                
                                                      YEARS OF SERVICE
  AVERAGE ANNUAL    ------------------------------------------------------------------------------------
   REMUNERATION          15               20                25                30               35
------------------  -------------   ---------------  ----------------  ----------------  ---------------

    $  250,000        $ 56,250         $ 75,000          $ 93,750         $ 112,500        $ 131,250
       350,000          78,750          105,000           131,250           157,500          183,750
       450,000         101,250          135,000           168,750           202,500          236,250
       550,000         123,750          165,000           206,250           247,500          288,750
       650,000         146,250          195,000           243,750           292,500          341,250
       750,000         168,750          225,000           281,250           337,500          393,750
       850,000         191,250          255,000           318,750           382,500          446,250
       950,000         213,750          285,000           356,250           427,500          498,750
     1,050,000         236,250          315,000           393,750           472,500          551,250

The estimated annual retirement benefits shown are based upon the assumptions
that current Kaiser Retirement Plan and Kaiser Supplemental Benefits Plan
provisions remain in effect, that the participant retires at age 65, and that
the retiree receives payments based on a straight-life annuity for his lifetime.
Messrs. Hockema, Houff, La Duc, Perry and Bonn had 10.9, 1.25, 33.3, 1.42 and
35.5 years of credited service, respectively, on December 31, 2002. Monthly
retirement benefits, except for certain minimum benefits, are determined by
multiplying years of credited service (not in excess of 40) by the difference
between 1.50% of average monthly compensation for the highest base period (of
36, 48 or 60 consecutive months, depending upon compensation level) in the last
10 years of employment and 1.25% of monthly primary Social Security benefits.
Pension compensation covered by the Kaiser Retirement Plan and the Kaiser
Supplemental Benefits Plan consists of salary and bonus amounts set forth in the
Summary Compensation Table (column (c) plus column (d) thereof).

Participants are entitled to retire and receive pension benefits, unreduced for
age, upon reaching age 62 or after 30 years of credited service. Full early
pension benefits (without adjustment for Social Security offset prior to age 62)
are payable to participants who are at least 55 years of age and have completed
10 or more years of pension service (or whose age and years of pension service
total 70) and who have been terminated by KACC or an affiliate for reasons of
job elimination or partial disability. Participants electing to retire prior to
age 62 who are at least 55 years of age and who have completed 10 or more years
of pension service (or whose age and years of pension service total at least 70)
may receive pension benefits, unreduced for age, payable at age 62 or reduced
benefits payable earlier. Participants who terminate their employment after five
years or more of pension service, or after age 55 but prior to age 62, are
entitled to pension benefits, unreduced for age, commencing at age 62 or, if
they have completed 10 or more years of pension service, actuarially reduced
benefits payable earlier. For participants with five or more years of pension
service or who have reached age 55 and who die, the Kaiser Retirement Plan
provides a pension to their eligible surviving spouses. Upon retirement,
participants may elect among several payment alternatives including, for most
types of retirement, a lump-sum payment. Because of a liquidity shortfall under
the funding provisions of the Tax Code, lump-sum payments for retirements after
2002 have been suspended.

Kaiser Supplemental Benefits Plan. KACC maintains an unfunded, non-qualified
Supplemental Benefits Plan (the "Kaiser Supplemental Benefits Plan"), the
purpose of which is to restore benefits that would otherwise be paid from the
Kaiser Retirement Plan or the Supplemental Savings and Retirement Plan, a
qualified Section 401(k) plan (the "Kaiser Savings Plan"), were it not for the
Section 401(a)(17) and Section 415 limitations imposed by the Tax Code.
Participation in the Kaiser Supplemental Benefits Plan includes all employees of
KACC and its subsidiaries whose benefits under the Kaiser Retirement Plan and
Kaiser Savings Plan are likely to be affected by such limitations imposed by the
Tax Code. Eligible participants are entitled to receive the equivalent of the
Kaiser Retirement Plan and Kaiser Savings Plan benefits that they may be
prevented from receiving under those plans because of such Tax Code limitations.

Pursuant to the Kaiser Key Employee Retention Program discussed below, payments
under the Kaiser Supplemental Benefits Plan may be made only to participants
(including Messrs. Hockema and Houff) whose voluntary termination of employment
with KACC does not occur until after KACC emerges from bankruptcy (other than
normal retirement at age 62), and Messrs. Bonn and La Duc if their retirement
occurs on or after February 12, 2004. See "Employment Contracts, Retention Plan
and Agreements and Termination of Employment and Change-in-Control Arrangements
- Kaiser Retention Plan and Agreements" below for a discussion of the trust
created and funded by the Company and KACC to pay Messrs. Bonn and La Duc their
benefits under the Kaiser Supplemental Benefits Plan under certain conditions.
Any claims by participants with respect to amounts not paid under the Kaiser
Supplemental Benefits Plan will be resolved in the overall context of a plan of
reorganization.

Kaiser Termination Payment Policy. Most full-time salaried employees of KACC are
eligible for benefits under an unfunded termination policy if their employment
is involuntarily terminated, subject to a number of exclusions. The policy
provides for lump-sum payments after termination ranging from one-half month's
salary for less than one year of service graduating to eight months' salary for
30 or more years of service. As a result of the filing of the Cases, payments
under the policy in respect of periods prior to the Filing Date generally cannot
be made by KACC. Any claims for such pre-petition amounts will be resolved in
the overall context of a plan of reorganization. The Named Executive Officers
and certain other participants in the Kaiser Key Employee Retention Plan waived
their rights to any payments under the termination policy in connection with
their participation in the Kaiser Key Employee Retention Plan.

DIRECTOR COMPENSATION

Each of the directors who is not an employee of the Company or KACC generally
receives an annual base fee for services as a director. The base fee for the
year 2002 was $50,000. Prior to May 2002, a portion of such fee was payable in
the form of options to purchase Company Common Stock. Effective as of May 2002,
the base fee was made payable entirely in cash. During 2002, in respect of base
compensation, Messrs. Cruikshank, Hackett and Levin each received $43,334; Mr.
Roach, who was elected to the Board of Directors in April 2002, received
$33,334; and Mr. Hurwitz, who began receiving compensation as a director as of
October 1, 2002, received $12,500. Mr. Haymaker's compensation for 2002 was
covered by a separate agreement with the Company and KACC, which is discussed
below.

For the year 2002, non-employee directors of the Company and KACC who were
directors of MAXXAM, also received director or committee fees from MAXXAM. In
addition, the non-employee Chairman of each of the Company's and KACC's
committees was paid a fee of $3,000 per year for services as Chairman. Effective
as of February 2003, such fee was increased to $10,000 per year for the Chairman
of the Audit Committees. All non-employee directors also generally received a
fee of $1,500 per day per Board meeting attended in person, $1,500 per day per
committee meeting held in person on a date other than a Board meeting, and $500
(increased to $1,500 effective as of May 2002) per formal telephonic meeting of
the Board or a committee. In respect of 2002, Messrs. Cruikshank, Hackett,
Hurwitz, Levin and Roach received an aggregate of $32,000, $30,000, $4,500,
$35,500, and $20,500, respectively, in such fees from the Company and KACC in
the form of cash payments. Each of Messrs. Cruikshank, Hackett and Levin also
have a pre-petition claim against the Company and KACC for $500 with respect to
2002 meeting attendance fees.

Non-employee directors are eligible to participate in the Kaiser 1997 Omnibus
Stock Incentive Plan (the "1997 Omnibus Plan"). During 2002, no awards were made
to non-employee directors under such plan.

Directors are reimbursed for travel and other disbursements relating to Board
and committee meetings, and non-employee directors are provided accident
insurance in respect of Company-related business travel. Subject to the approval
of the Chairman of the Board, directors also generally may be paid ad hoc fees
in the amount of $750 per one-half day or $1,500 per day for services other than
attending Board and committee meetings that require travel in excess of 100
miles. During 2002, Mr. Roach received $9,750 in such fees with respect to his
services as Chairman of the Audit Committees and attendance at strategic
planning meetings.

Effective January 2002, the Boards of Directors of the Company and KACC approved
a supplemental compensation arrangement with Mr. Levin for certain advisory
services to be provided to the President and the Boards of the Company and KACC.
Any such supplemental compensation is payable at Mr. Levin's usual hourly rate
as a member of Kramer Levin Naftalis & Frankel LLP, and would be in addition to
amounts otherwise payable to Mr. Levin as a member of the Executive Committees
of the Boards. No amounts were paid to Mr. Levin under this arrangement during
2002.

The Company and KACC have a deferred compensation program in which all
non-employee directors are eligible to participate. By executing a deferred fee
agreement, a non-employee director may defer all or part of the fees from the
Company and KACC for services in such capacity for any calendar year. The
deferred fees are credited to a book account and are deemed "invested," in 25%
increments, in two investment choices: in phantom shares of Company Common Stock
and/or in an account bearing interest calculated using one-twelfth of the sum of
the prime rate plus 2% on the first day of each month. If deferred, fees,
including all earnings credited to the book account, are paid in cash to the
director or beneficiary as soon as practicable following the date the director
ceases for any reason to be a member of the Board, either in a lump sum or in a
specified number of annual installments not to exceed ten, at the director's
election. With the exception of Mr. Haymaker, who deferred his fees in 2000 and
2001, no deferral elections have been made under this program. Mr. Haymaker
revoked his deferral election effective January 1, 2002, for services rendered
on or after that date.

Fees to directors who also are employees of KACC are deemed to be included in
their salary. Directors of the Company were also directors of KACC and received
the foregoing compensation for acting in both capacities.

On October 11, 2001, Mr. Haymaker, the Company and KACC entered into an
agreement concerning the terms upon which he would serves as a director and
non-executive Chairman of the Boards of the Company and KACC through December
31, 2002. Under the agreement, Mr. Haymaker provided consulting services to the
Company and KACC, in addition to acting as a director. For the year 2002, Mr.
Haymaker received base compensation under the agreement in the amount of $27,115
for services as a director, and $365,000 for services as non-executive Chairman
of the Boards of the Company and KACC, inclusive of any Board and committee fees
otherwise payable. Mr. Haymaker also has a pre-petition claim against the
Company and KACC for an additional $2,885 with respect to 2002 base director
compensation. No options to purchase shares of Company Common Stock were granted
to Mr. Haymaker during 2002. Under the agreement, Mr. Haymaker would have been
entitled to an incentive bonus of $105,000 upon the achievement of certain
goals. Because of the chapter 11 filings by the Company and KACC, such goals
were not attained and the incentive bonus was not paid.

On November 4, 2002, Mr. Haymaker, the Company and KACC entered into a new
agreement concerning the terms upon which Mr. Haymaker would continue to serve
as a director and non-executive Chairman of the Boards of the Company and KACC
through December 31, 2003. For the year 2003, Mr. Haymaker's base compensation
under the agreement will be $50,000 for services as a director and $73,000 for
services as non-executive Chairman of the Boards of the Company and KACC,
inclusive of any Board and committee fees otherwise payable. All compensation
under the agreement is payable in cash. Mr. Haymaker may elect to defer receipt
of the Director fee portion of the compensation in accordance with the deferred
compensation program discussed above.

EMPLOYMENT CONTRACTS, RETENTION PLAN AND AGREEMENTS AND TERMINATION OF 
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS

Jack A. Hockema. Effective January 24, 2000, in connection with Mr. Hockema's
election as Executive Vice President, and President of Kaiser Fabricated
Products, the Section 162(m) Compensation Committee of the Board approved
compensation arrangements for Mr. Hockema for 2000 and 2001 comprised of three
components: base pay, short-term incentive and long-term incentive. The
long-term incentive covered the period 2000-2002 and had two components. The
first component had a target amount of $200,000, with any award under such
component to be made based on that target amount and on the performance of the
Engineered Products business unit for the period 2000-2002. The second
component, which was valued at the time of grant at $135,000, was made during
2000 in the form of a grant of a stock option to purchase 28,184 shares of the
Company's Common Stock at $6.0938 per share. The options generally were
scheduled to vest at the rate of 33 1/3% per year, beginning on February 3,
2001, with an additional 33 1/3% vesting each February 3 thereafter until fully
vested, provided that as of any such vesting date the Company's Common Stock had
traded at $10.00 or more per share for at least 20 consecutive trading days
during the option period. Such condition not having occurred, the options are
scheduled to vest on the date such condition has been met or February 3, 2009,
whichever is earlier. Vesting may be accelerated in certain circumstances. Mr.
Hockema also would have qualified for a cash bonus of $500,000 in the event of
the sale of a specified portion of the business units under his management on or
before July 1, 2002. Such transaction did not occur and such bonus was not paid.

Effective October 9, 2001, in connection with Mr. Hockema's election as
President and Chief Executive Officer, Mr. Hockema and KACC entered into an
employment agreement for the period October 9, 2001 through December 31, 2002.
Under the terms of the agreement, Mr. Hockema's compensation continued to be
comprised of base pay, short-term incentive and long-term incentive. His base
pay for 2002 was $730,000. His short-term incentive target for 2002 was
$500,000, with payment to be from 50% to 300% of target based upon attainment of
objectives established by the Board of Directors. Mr. Hockema did not receive
any short-term incentive payment for 2002.

Mr. Hockema's long-term incentive bonus for the term of the agreement was valued
at the time of grant at $1,500,000 and was composed one-half in the form of
241,936 restricted shares of Company Common Stock and one-half in the form of
options to purchase 306,122 shares of Company Common Stock at $3.10 per share.
The options were granted as of October 11, 2001 and generally vest at the rate
of 33 1/3% per year, beginning on October 11, 2002, with an additional 33 1/3%
vesting on each October 11 thereafter until fully vested. Vesting of the options
may be accelerated under certain circumstances. The restricted stock was granted
in two awards, one for 146,448 shares issued effective October 31, 2001, and the
second for 95,488 shares issued effective January 25, 2002. See Note 3 to the
Summary Compensation Table above for additional information with respect to Mr.
Hockema's restricted shares.

John T. La Duc. Effective January 1, 1998, Mr. La Duc and KACC entered into a
five-year employment agreement, which expired December 31, 2002. Pursuant to the
terms of the agreement, Mr. La Duc's base salary for 2002 was $400,592. During
the term of the agreement, the amount was reviewed annually to evaluate Mr. La
Duc's performance and to reflect adjustments for inflation consistent with the
general program of increases for other executives and management employees. Mr.
La Duc's agreement established an annual target bonus of $200,000 (subject to
adjustment for inflation) payable upon KACC's achieving short-term objectives
under its executive bonus plan, which were to be agreed upon annually and
otherwise be consistent with KACC's business plan. Mr. La Duc did not receive
any short-term incentive payment for 2002.

Pursuant to the terms of the agreement, in 1998 Mr. La Duc received a grant
under the 1997 Omnibus Plan of options to purchase 468,750 shares of the
Company's Common Stock at an exercise price of $9.3125 per share. This grant was
intended to have a value at the date of grant equivalent to a value of five
times Mr. La Duc's annual long-term incentive target of $465,000 and to be in
lieu of any payment of long-term incentive compensation under KACC's executive
bonus plan for the five-year period beginning January 1, 1998, although Mr. La
Duc remained eligible for additional option grants. One-half of the options
granted to Mr. La Duc under this agreement were among those exchanged by him for
restricted shares of Company Common Stock in connection with the Exchange Offer.
See Note 10 to the Summary Compensation Table above for additional information
with respect to the Exchange Offer and Mr. La Duc's restricted shares.

Mr. La Duc's agreement provided that if his employment were to be terminated for
any reason other than termination for cause, his acceptance of any offer of
employment with an affiliate of KACC, or a voluntary termination by Mr. La Duc
for other than good reason, or if Mr. La Duc's employment terminated by the
expiration of the employment period under the agreement without an offer for
continued employment by KACC for a position of responsibility comparable to that
held by Mr. La Duc at the beginning of the employment period and on
substantially the same or improved terms and conditions, then Mr. La Duc would
be entitled to receive the following benefits: (A) an early retirement lump sum
payment equal to the excess, if any, of the sum of (i) the lump sum benefit from
the Kaiser Retirement Plan that Mr. La Duc would have been entitled to as of the
date of his actual termination based upon the terms of the Kaiser Retirement
Plan as in effect on January 1, 1998, and as if he qualified for a full early
retirement pension, and (ii) the lump sum benefit from the Kaiser Supplemental
Benefits Plan based upon the terms of that Plan as in effect on January 1, 1998,
and as if he qualified for a Kaiser Retirement Plan full early retirement
pension, over (iii) an amount equal to the lump sum actuarial equivalent of Mr.
La Duc's actual benefit payable from the Kaiser Retirement Plan on account of
his actual termination, plus the actual benefit payable from the Kaiser
Supplemental Benefits Plan on account of his actual termination; (B) full health
benefits as if Mr. La Duc had qualified for an early retirement pension; (C) a
lump sum equal to Mr. La Duc's base salary as of the date of his termination for
a period equal to the greater of (x) the number of months remaining in the
employment period, or (y) two years, plus an amount equal to Mr. La Duc's target
annual bonus for the year of termination (but no less than $200,000); and (D)
all unvested stock options held by Mr. La Duc on the date of such termination
that would have vested during his employment period would immediately vest and
become exercisable in full for the remaining portion of the period of five years
from the date of grant. The agreement also provided that in the event of a
change in control, the terms and conditions of Mr. La Duc's agreement would
continue in full force and effect during the period that he would continue to
provide services; provided, in the event of a termination of his employment by
KACC other than for cause, or in the event Mr. La Duc would terminate his
employment for any reason within twelve (12) months following a change in
control, the foregoing benefits would become due and payable.

Edward F. Houff. Effective October 1, 2001, Mr. Houff and KACC entered into an
employment agreement for the period October 1, 2001 through September 30, 2004.
Under the terms of the agreement,. Mr. Houff's annual salary is $400,000. The
agreement also provides for a guaranteed cash bonus of $125,000, plus an annual
incentive bonus of up to $125,000.

Pursuant to the agreement, in 2001 Mr. Houff received a grant under the 1997
Omnibus Plan of options, valued at the time of grant at $450,000, to purchase
222,772 shares of Company Common Stock at an exercise price of $2.625 per share,
plus 171,429 restricted shares of Company Common Stock, also valued at $450,000
at the time of grant. The options generally vest at the rate of 33 1/3% per
year, beginning October 1, 2002, with an additional 33 1/3% vesting on each of
October 2, 2003 and September 30, 2004. Vesting of the options may be
accelerated under certain circumstances. See Note 9 to the Summary Compensation
Table above for additional information with respect to Mr. Houff's restricted
shares.

Mr. Houff's agreement provides that if his employment is terminated by KACC for
any reason other than cause, death or disability, he shall be entitled to
receive all of the remaining base salary and guaranteed bonus to the end of the
term of the agreement, but in no event less than six month's base salary. The
agreement also provides that if Mr. Houff's employment is not retained beyond
the term of the agreement, he shall be entitled to six months' base salary as
severance and up to $25,000 in relocation expenses. If Mr. Houff terminates his
employment as a result of a breach by KACC of its contractual duties or KACC's
material and unilateral alteration of his duties, the agreement provides that he
shall be paid his base salary and guaranteed bonus for the balance of the
agreement. If Mr. Houff's employment terminates as a result of death or
disability, the agreement also provides that he or his estate, as applicable,
shall receive any base salary, guaranteed bonus and unpaid vacation accrued
through the date of death or disability and any other benefits payable under
KACC's then existing benefit plans and policies. The foregoing severance
arrangements are superseded by the terms of Mr. Houff's severance agreements
discussed below.

Pursuant to the Code, as debtor-in-possession, KACC may have the right, subject
to Court approval, to assume or reject Mr. Houff's employment agreement. See
"Business--Reorganization Proceedings" for a discussion of assumption or
rejection of executory contracts.

Kaiser Key Employee Retention Program. On September 3, 2002, the Court approved
a Key Employee Retention Program, consisting of the long-term incentive program
discussed above and the Kaiser Retention Plan, the Kaiser Severance Plan, and
the Kaiser Change in Control Severance Program discussed below.

Kaiser Retention Plan and Agreements. Effective September 3, 2002, KACC adopted
the Kaiser Aluminum & Chemical Corporation Key Employee Retention Plan (the
"Retention Plan") and in connection therewith entered into retention agreements
with certain key employees, including each of the Named Executive Officers. The
Retention Plan replaced the Kaiser Aluminum & Chemical Corporation Retention
Plan adopted on January 15, 2002 (the "Prior Plan"). As described below, each of
Messrs. Hockema, Houff, La Duc, Bonn and Perry received a basic award under the
Retention Plan and Messrs. La Duc and Bonn also received a special award under
the Retention Plan.

Basic awards under the Retention Plan generally vest on September 30, 2002,
March 31, 2003, September 30, 2003 and March 31, 2004, provided that if a
participant's employment is terminated within 90 days following the payment of
any award for any reason other than death, disability, retirement on or after
age 62, or termination without cause (as defined in the Retention Plan), the
participant must return such payment to KACC. For each of Messrs. Hockema,
Houff, La Duc and Bonn (and prior to his resignation, Mr. Perry), the amount
earned on each vesting date is equal to 62.5% of his base salary at the time of
grant. If the Named Executive Officer is employed by KACC on a vesting date, 40%
of the amount earned on such date is paid to him in a lump sum on such date. The
remaining 60% of such amount (the "Withheld Amount") is paid to the Named
Executive Officer as follows: (i) 33 1/3% of each Withheld Amount is paid to the
Named Executive Officer in a lump sum on the date of KACC's emergence from
bankruptcy if the Named Executive Officer is employed by KACC on that date, (ii)
33 1/3% of each Withheld Amount is paid to the Named Executive Officer in a lump
sum on the first anniversary of the date of KACC's emergence from bankruptcy if
the Named Executive Officer is employed by KACC on that date, and (iii) 33 1/3%
of the remaining portion of each Withheld Amount (the "Emergence Amount") is
only payable as follows: (A) 100% of the Emergence Amount is paid on the date of
KACC's emergence from bankruptcy if the emergence occurs on or prior to August
12, 2004 and the Named Executive Officer is employed by KACC on that date, (B)
50% of the Emergence Amount is paid on the date of KACC's emergence from
bankruptcy if the emergence occurs on or prior to August 12, 2005 but after
August 12, 2004, and the Named Executive Officer is employed by KACC on that
date (the remaining 50% of the Emergence Amount is forfeited by the Named
Executive Officer to KACC), and (C) 100% of the Emergence Amount is forfeited by
the Named Executive Officer to KACC if the date of KACC's emergence from
bankruptcy occurs after August 12, 2005.

In general, if a Named Executive Officer's employment with KACC is terminated
prior to any vesting date for any reason, the portion of the basic award that
would have become vested and payable on such vesting date, all subsequent
portions of the award, if any, that would have become payable following such
vesting date and any Withheld Amounts are forfeited by the Named Executive
Officer. However, if the Named Executive Officer's employment with KACC is
terminated as a result of the Named Executive Officer's death, disability,
retirement from KACC on or after age 62 or KACC's termination of the Named
Executive Officer's employment without cause, the Named Executive Officer is
entitled to receive (a) a prorated portion of the amount due on the vesting date
immediately following the termination of employment, (b) all Withheld Amounts,
and (c) the Emergence Amount, if such amount is earned based on the date of
KACC's emergence from bankruptcy, as described above.

A portion of the basic awards under the Retention Plan vested and was paid on
September 30, 2002. The amount paid pursuant to awards under the Retention Plan
on September 30, 2002 to Messrs. Hockema, Houff, La Duc, Bonn and Perry was
$182,500, $100,000, $101,375, $84,350, and $93,750, respectively. Mr. Perry
resigned on January 31, 2003 and therefore will not be eligible for further
payments under the Retention Plan. Assuming KACC's emergence from bankruptcy
prior to August 12, 2004, the maximum amount that may be received in the future
pursuant to the Retention Plan by Messrs. Hockema, Houff, La Duc and Bonn would
be $1,642,500, $900,000, $912,375, and $759,150, respectively. In addition,
awards under the Prior Plan were paid on January 15, 2002. The total amount paid
to Messrs. Hockema, Houff, La Duc, Bonn and Perry under the Prior Plan was
$164,250, $60,000, $88,583, $73,710, and $84,375, respectively.

In addition to the basic awards described above, Messrs. La Duc and Bonn
received a special award under the Retention Plan. Because Messrs. La Duc and
Bonn received this special award, neither is eligible to participate in the
Kaiser Aluminum & Chemical Corporation Severance Plan and neither was eligible
to enter into a Kaiser Aluminum & Chemical Corporation Change in Control
Severance Agreement, as discussed below. Messrs. La Duc and Bonn also agreed to
forego any claims under the Enhanced Severance Protection and Change in Control
Benefits Program adopted in 2000, as discussed below. The special award entitles
each of Messrs. La Duc and Bonn to a lump sum payment upon his termination of
employment with KACC if his employment is terminated as a result of death,
disability, retirement on or after February 12, 2004, or is terminated without
cause. For each of Messrs. La Duc and Bonn, the amount of the special award is
equal to his benefit under the Kaiser Supplemental Benefits Plan, discussed
above. If Messr. La Duc's or Bonn's employment is terminated by KACC prior to
February 14, 2004 for any reason other than death, disability, retirement or
termination without cause, he will forfeit any benefit available under the
Kaiser Supplemental Benefits Plan. In connection with the establishment of the
Prior Plan, the Company and KACC created and funded an irrevocable grantor trust
for the purpose of paying the special awards to Messrs. La Duc and Bonn when
due.

Kaiser Severance Plan and Agreements. Effective September 3, 2002, KACC adopted
the Kaiser Aluminum & Chemical Corporation Severance Plan (the "Severance Plan")
in order to provide selected executive officers, including Messrs. Hockema and
Houff (and prior to his resignation, Mr. Perry), and other key employees of KACC
with appropriate protection in the event of certain terminations of employment.
The Severance Plan, along with the Kaiser Aluminum & Chemical Corporation Change
in Control Severance Agreements described below, replaced for participants in
such plans, the Enhanced Severance Protection and Change in Control Benefits
Program implemented in 2000. The Severance Plan terminates on the first
anniversary of the date KACC emerges from bankruptcy.

The Severance Plan provides for payment of a severance benefit and continuation
of welfare benefits in the event of certain terminations of employment.
Participants are eligible for the severance payment and continuation of benefits
in the event the participant's employment is terminated without cause (as
defined in the Severance Plan) or the participant terminates employment with
good reason (as defined in the Severance Plan). The severance payment and
continuation of benefits are not available if (i) the participant receives
severance compensation or benefit continuation pursuant to a Kaiser Aluminum &
Chemical Corporation Change in Control Severance Agreement (as described below),
(ii) the participant's employment is terminated other than without cause or by
the participant for good reason, or (iii) the participant declines to sign, or
subsequently revokes, a designated form of release. In addition, in
consideration for the severance payment and continuation of benefits, a
participant will be subject to noncompetition, nonsolicitation and
confidentiality restrictions following the participant's termination of
employment with KACC.

The severance payment payable under the Severance Plan to each of Messrs.
Hockema and Houff consists of a lump sum cash payment equal to two times his
base salary. Each of Messrs. Hockema and Houff also will be entitled to
continued medical, dental, vision, life insurance and disability benefits for a
period of two years following termination of employment. Due to his resignation,
Mr. Perry no longer participates in the Severance Plan and did not receive any
benefits under it upon his resignation. Severance payments payable under the
Severance Plan are in lieu of any severance or other termination payments
provided for under any plan of KACC or any other agreement between the
participant and KACC.

Kaiser Change in Control Severance Program. In 2002, KACC entered into Kaiser
Aluminum & Chemical Corporation Change in Control Severance Agreements (the
"Change in Control Agreements") with certain key executives, including Messrs.
Hockema and Houff (and prior to his resignation, Mr. Perry), in order to provide
them with appropriate protection in the event of a termination of employment in
connection with a change in control (as defined in the Change in Control
Agreements) of KACC. In connection with the Severance Plan, these Change in
Control Agreements replaced the Enhanced Severance Protection and Change in
Control Benefits Program implemented in 2000. The Change in Control Agreements
terminate on the second anniversary of a change in control of KACC.

The Change in Control Agreements provide for severance payments and continuation
of benefits in the event of certain terminations of employment. The participants
are eligible for severance benefits if their employment terminates or
constructively terminates due to a change in control during a period that
commences ninety (90) days prior to the change in control and ends on the second
anniversary of the change in control. These benefits are not available if (i)
the participant voluntarily resigns or retires, other than for good reason (as
defined in the Change in Control Agreements), (ii) the participant is discharged
for cause (as defined in the Change in Control Agreements), (iii) the
participant's employment terminates as the result of death or disability, (iv)
the participant declines to sign, or subsequently revokes, a designated form of
release, or (v) the participant receives severance compensation or benefit
continuation pursuant to the Kaiser Aluminum & Chemical Corporation Severance
Plan or any other prior agreement. In addition, in consideration for the
severance payment and continuation of benefits, a participant will be subject to
noncompetition, nonsolicitation and confidentiality restrictions following his
or her termination of employment with KACC.

Upon a qualifying termination of employment, each of Messrs. Hockema and Houff
are entitled to receive the following: (i) three times the sum of his base pay
and most recent short-term incentive target, (ii) a pro-rated portion of his
short-term incentive target for the year of termination, and (iii) a pro-rated
portion of his long-term incentive target in effect for the year of his
termination, provided that such target was achieved. Each of Messrs. Hockema and
Houff also are entitled to continued medical, dental, life insurance, disability
benefits and perquisites for a period of three years after termination of
employment with KACC. Each of Messrs. Hockema and Houff are also entitled to a
payment in an amount sufficient, after the payment of taxes, to pay any excise
tax due by him under Section 4999 of the Tax Code or any similar state or local
tax. Mr. Perry's Change in Control Agreement terminated immediately upon his
resignation and no payments were made thereunder.

Severance payments payable under the Change in Control Agreements are in lieu of
any severance or other termination payments provided for under any plan of KACC
or any other agreement between the Named Executive Officer and KACC.

Except as otherwise noted, there are no employment contracts between the Company
or any of its subsidiaries and any of the Company's Named Executive Officers.
Similarly, except as otherwise noted, there are not any compensatory plans or
arrangements that include payments from the Company or any of its subsidiaries
to any of the Company's Named Executive Officers in the event of any such
officer's resignation, retirement or any other termination of employment with
the Company and its subsidiaries or from a change in control of the Company or a
change in the Named Executive Officer's responsibilities following a change in
control.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member of the Compensation Policy Committee or the Section 162(m)
Compensation Committee of the Board was, during the 2002 fiscal year, an officer
or employee of the Company or any of its subsidiaries, or was formerly an
officer of the Company or any of its subsidiaries or, other than Mr. Levin, had
any relationships requiring disclosure by the Company under Item 404 of
Regulation S-K. Mr. Levin served on the Company's Compensation Policy Committee
and Board of Directors during 2002 and is also a member of the law firm of
Kramer Levin Naftalis & Frankel LLP, which provided legal services to the
Company and its subsidiaries during 2002.

During the Company's 2002 fiscal year, no executive officer of the Company
served as (i) a member of the compensation committee (or other board committee
performing equivalent functions) of another entity, one of whose executive
officers served on the Compensation Policy Committee or Section 162(m)
Compensation Committee of the Company, (ii) a director of another entity, one of
whose executive officers served on any of such committees, or (iii) a member of
the compensation committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served as a
director of the Company.


ITEM 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

OWNERSHIP OF THE COMPANY

The following table sets forth, as of March 28, 2003, unless otherwise
indicated, the beneficial ownership of the Company's Common Stock by (i) those
persons known by the Company to own beneficially more than 5% of the shares of
the Company's Common Stock then outstanding, (ii) each of the directors of the
Company, (iii) each of the Named Executive Officers, and (iv) all directors and
executive officers of the Company and KACC as a group.


                        NAME OF
                   BENEFICIAL OWNER                        TITLE OF CLASS            # OF SHARES(1)              % OF CLASS
------------------------------------------------------ -----------------------   -----------------------      -------------
MAXXAM Inc.                                                 Common Stock                      50,000,000(2)            62.4
Dimensional Fund Advisors Inc.                              Common Stock                       4,069,015(3)             5.1
Joseph A. Bonn                                              Common Stock                          54,325(4)(5)            *
Robert J. Cruikshank                                        Common Stock                          16,808(5)(6)            *
James T. Hackett                                            Common Stock                          13,676(5)(6)            *
George T. Haymaker, Jr.                                     Common Stock                          57,059(5)(6)            *
Jack A. Hockema                                             Common Stock                         345,464(5)(6)            *
Edward F. Houff                                             Common Stock                         188,544(5)(6)            *
Charles E. Hurwitz                                          Common Stock                          17,490(5)(7)            *
John T. La Duc                                              Common Stock                         381,693(5)(6)            *
Ezra G. Levin                                               Common Stock                          14,808(5)(6)            *
Harvey L. Perry                                             Common Stock                          10,603(6)               *
John D. Roach                                               Common Stock                             -0-                  *
All directors and executive officers of the Company         Common Stock                       1,259,587(4)(8)          1.6
   as a group (17 persons)

------------------------------------
*     Less than 1%.
(1)   Unless otherwise indicated, the beneficial owners have sole voting and
      investment power with respect to the shares listed in the table. Also
      includes options exercisable within 60 days of March 28, 2003, to acquire
      such shares.
(2)   Includes 27,938,250 shares beneficially owned by MGHI.  The address of 
      MAXXAM is 5847 San Felipe, Suite 2600, Houston, Texas 77057.
(3)   Information is based solely on a Schedule 13G filed with the SEC dated
      February 3, 2003, by Dimensional Fund Advisors Inc. ("DFA"), a registered
      investment advisor, reporting its ownership interest in the Company's
      shares at December 31, 2002. The Schedule 13G indicates that DFA has sole
      voting and sole dispositive value as to all of such shares, that all such
      shares are owned by advisory clients and that DFA disclaims beneficial
      ownership to all such shares. DFA's address is 1299 Ocean Avenue, 11th
      Floor, Santa Monica, California 90401.
(4)   Includes 23,948 shares of Company Common Stock held in trust with respect 
      to which Mr. Bonn possesses shared voting and investment power with his 
      spouse.
(5)   Includes restricted shares of Company Common Stock owned as follows: Mr.
      Bonn - 30,377; Mr. Cruikshank - 1,799; Mr. Hackett - 667; Mr. Haymaker -
      47,374; Mr. Hockema - 179,140; Mr. Houff - 114,286; Mr. Hurwitz - 17,490;
      Mr. La Duc - 11,504, and Mr. Levin - 1,799.
(6)   Includes options exercisable within 60 days of March 28, 2003 to acquire
      shares of Company Common Stock as follows: Mr. Cruikshank - 13,009; Mr.
      Hackett - 13,009; Mr. Haymaker - 7,143; Mr. Hockema - 148,473; Mr. Houff -
      74,258; Mr. La Duc - 234,375; Mr. Levin - 13,009; and Mr. Perry - 10,603.
(7)   Excludes shares owned by MAXXAM.  Mr. Hurwitz may be deemed to hold 
      beneficial ownership in the Company as a result of his beneficial 
      ownership in MAXXAM.
(8)   Excludes shares beneficially owned by Mr. Perry, who was not an executive
      officer of the Company or KACC as of March 28, 2003. Includes 450,155
      restricted shares of Company Common Stock. Also includes options
      exercisable within 60 days of March 28, 2003, to acquire 584,469 shares of
      Company Common Stock.

OWNERSHIP OF MAXXAM

As of March 28, 2003, MAXXAM owned, directly and indirectly, approximately 62.4%
of the issued and outstanding Common Stock of the Company. The following table
sets forth, as of March 28, 2003, unless otherwise indicated, the beneficial
ownership of the common stock and Class A $.05 Non-Cumulative Participating
Convertible Preferred Stock ("MAXXAM Preferred Stock") of MAXXAM by the
directors of the Company, each of the Named Executive Officers, and by the
directors and the executive officers of the Company and KACC as a group:


                  NAME OF                                                                  %        % OF COMBINED
             BENEFICIAL OWNER             TITLE OF CLASS        # OF SHARES(1)         OF CLASS   VOTING POWER (2)
-------------------------------------  --------------------  ---------------------    ----------  -----------------
Charles E. Hurwitz                         Common Stock             3,061,104(3)(4)        45.6           74.0
                                         Preferred Stock              752,441(4)(5)(6)    (99.2)
Robert J. Cruikshank                       Common Stock                 4,800(7)             *               *
Ezra G. Levin                              Common Stock                 4,800(7)             *               *
All directors and executive officers       Common Stock             3,074,144(3)(4)(8)     45.6           74.0
  as a group (17 persons)                Preferred Stock              752,441(4)(5)(6)     99.2
                                         

------------------------------------
*     Less than 1%.
(1)   Unless otherwise indicated, beneficial owners have sole voting and
      investment power with respect to the shares listed in the table. Includes
      the number of shares such persons would have received on March 28, 2003,
      if any, for their exercisable SARs (excluding SARs payable in cash only)
      exercisable within 60 days of such date if such rights had been paid
      solely in shares of MAXXAM common stock.
(2)   MAXXAM Preferred Stock is generally entitled to ten votes per share on
      matters presented to a vote of MAXXAM's stockholders.
(3)   Includes 1,669,451 shares of MAXXAM common stock owned by Gilda 
      Investments, LLC ("Gilda"), a wholly owned subsidiary of Giddeon Holdings, 
      as to which Mr. Hurwitz indirectly possesses voting and investment power. 
      Mr. Hurwitz serves as the sole director of Giddeon Holdings, and together 
      with members of his immediate family and trusts for the benefit thereof, 
      owns all of the voting shares of Giddeon Holdings.  Also includes (a) 
      78,784 shares of MAXXAM common stock separately owned by Mr. Hurwitz's 
      spouse and as to which Mr. Hurwitz disclaims beneficial ownership, (b) 
      46,500 shares of MAXXAM common stock owned by the Hurwitz Investment 
      Partnership L.P., a limited partnership controlled by Mr. Hurwitz and his 
      spouse, 23,250 of which shares were separately owned by Mr. Hurwitz's 
      spouse prior to their transfer to such limited partnership and as to which 
      Mr. Hurwitz disclaims beneficial ownership, (c) 4,049 shares of MAXXAM 
      common stock owned by the 1992 Hurwitz Investment Partnership L.P., of 
      which 2,025 shares are owned by Mr. Hurwitz's spouse as separate property 
      and as to which Mr. Hurwitz disclaims beneficial ownership, (d) 1,001,391 
      shares of MAXXAM common stock held directly by Mr. Hurwitz, including 
      256,808 shares of MAXXAM common stock with respect to which Mr. Hurwitz 
      possesses sole voting power and which have certain transfer and other 
      restrictions that generally lapse in December 2014, (e) 60,000 shares of 
      MAXXAM common stock owned by Giddeon Portfolio, LLC, which is owned 79% by 
      Gilda and 21% by Mr. Hurwitz, and of which Gilda is the managing member 
      ("Giddeon Portfolio"), (f) options to purchase 21,029 shares of MAXXAM 
      common stock held by Gilda, and (g) options held by Mr. Hurwitz to 
      purchase 179,900 shares of MAXXAM common stock exercisable within 60 days 
      of March 28, 2003.
(4)   Gilda, Giddeon Holdings, Giddeon Portfolio, the Hurwitz Investment
      Partnership L.P., the 1992 Hurwitz Investment Partnership L.P. and Mr.
      Hurwitz may be deemed a "group" (the "Stockholder Group") within the
      meaning of Section 13(d) of the Securities Exchange Act of 1934, as
      amended. As of March 28, 2003, in the aggregate, the members of the
      Stockholder Group owned 3,061,104 shares of MAXXAM common stock and
      752,441 shares of MAXXAM Preferred Stock, aggregating approximately 74.0%
      of the total voting power of MAXXAM. By reason of his relationship with
      the members of the Stockholder Group, Mr. Hurwitz may be deemed to possess
      shared voting and investment power with respect to the shares held by the
      Stockholder Group. The address of Gilda is 5847 San Felipe, Suite 2600,
      Houston, Texas 77057. The address of the Stockholder Group is c/o Timothy
      J. Neumann, Esq., Giddeon Holdings, Inc., 5847 San Felipe, Suite 2600,
      Houston, Texas 77057.
(5)   Includes 661,377 shares of MAXXAM Preferred Stock owned by Gilda as to
      which Mr. Hurwitz possesses voting and investment power and 1,064 shares
      of MAXXAM Preferred Stock held directly.
(6)   Includes options exercisable by Mr. Hurwitz within 60 days of March 28,
      2003, to acquire 90,000 shares of MAXXAM Preferred Stock.
(7)   Includes options exercisable within 60 days of March 28, 2003, to acquire 
      3,800 shares of MAXXAM common stock. 
(8)   Includes options exercisable within 60 days of March 28, 2003, to acquire 
      9,040 shares of MAXXAM common stock, held by directors and executive 
      officers not in the Stockholder Group.

EQUITY COMPENSATION PLAN INFORMATION


          PLAN CATEGORY             NUMBER OF SECURITIES TO BE      WEIGHTED-AVERAGE EXERCISE       NUMBER OF SECURITIES
                                      ISSUED UPON EXERCISE OF      PRICE OF OUTSTANDING OPTION    REMAINING AVAILABLE FOR FUTURE
                                       OUTSTANDING OPTIONS,            WARRANTS AND RIGHTS          ISSUANCE UNDER EQUITY
                                         WARRANTS, RIGHTS                                            COMPENSATION PLANS
                                                                                                    (EXCLUDING SECURITIES
                                                                                                  REFLECTED IN COLUMN (A))
          PLAN CATEGORY                         (A)                            (B)                           (C)
--------------------------------   -----------------------------   ---------------------------   --------------------------
EQUITY COMPENSATION PLANS
   APPROVED BY SECURITY HOLDERS            1,454,861(1)                       $5.63                               3,295,156(2)
EQUITY COMPENSATION PLANS NOT
   APPROVED BY SECURITY HOLDERS                  -                              -                             -
      Total                                  1,454,861                        $5.63                               3,295,156

---------------------------
(1)  Represents shares of Company Common Stock underlying outstanding stock
     options.
(2)  Shares are issuable under the 1997 Omnibus Plan. Stock-based awards made
     under the 1997 Omnibus Plan may be in the form of stock options, stock
     appreciation rights, restricted stock, performance shares or performance
     units.


ITEM 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the period from October 28, 1988 through June 30, 1993, the Company and
its domestic subsidiaries were included in the federal consolidated income tax
returns of MAXXAM. The tax allocation agreements of the Company and KACC with
MAXXAM terminated pursuant to their terms, effective for taxable periods
beginning after June 30, 1993. At December 31, 2001, the Company had a
receivable from MAXXAM of $35,000,000 under the tax allocation agreements in
respect of various tax contingencies in an equal amount. In March 2002, MAXXAM
filed a declaratory action with the Court asking the Court to find that MAXXAM
had no further obligations to the Company or the other Debtors under the tax
allocation agreements. During the fourth quarter of 2002, the Company and MAXXAM
resolved their dispute with respect to the receivable from MAXXAM, with no
amounts coming due from MAXXAM, and agreed that no further payments or refunds
are required under the tax allocation agreements. The Court approved such
resolution in February 2003.

KACC and MAXXAM have an arrangement pursuant to which they reimburse each other
for certain allocable costs associated with the performance of services by their
respective employees. KACC paid MAXXAM $153,440 under the shared services
arrangement during 2002. Additionally, as of December 31, 2002, KACC owed MAXXAM
$376,660, and MAXXAM owed KACC $572,811 under the arrangement. KACC and MAXXAM
generally have endeavored to minimize the need for reimbursement by ensuring
that employees are employed by the entity to which the majority of their
services are rendered. The vast majority of intercompany services between KACC
and MAXXAM have now been terminated and therefore charges for such services in
the future should be modest.

Mr. Levin, a director of the Company and KACC, is a member of the law firm of
Kramer Levin Naftalis & Frankel LLP, which provides legal services to the
Company and its subsidiaries, including KACC.


PART IV


ITEM 14.        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 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.


ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)           INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

              1.  Financial Statements

                  Independent Auditors' Report

                  Copy of Report of Independent Public Accountants

                  Consolidated Balance Sheets

                  Statements of Consolidated Income (Loss)

                  Statements of Consolidated Stockholders' Equity (Deficit) and
                       Comprehensive Income (Loss)

                  Statements of Consolidated Cash Flows


                  Notes to Consolidated Financial Statements

                  Quarterly Financial Data (Unaudited)

                  Five-Year Financial Data


              2.  Financial Statement Schedules

                  Independent Auditors' Report

                  Copy of Report of Independent Public Accountants

 
                 Schedule I     -   Condensed Balance Sheets - Parent Company,
                                     Condensed Statements of Income - Parent
                                          Company,
                                     Condensed Statements of Cash Flows - Parent 
                                          Company, and
                                     Notes to Condensed Financial Statements - 
                                          Parent Company

                  All other schedules are inapplicable or the required
                  information is included in the Consolidated Financial
                  Statements or the Notes thereto.

              3.  Exhibits

                  Reference is made to the Index of Exhibits immediately
                  preceding the exhibits hereto (beginning on page 97), which
                  index is incorporated herein by reference.

(b)           REPORTS ON FORM 8-K

              On October 24, 2002, under Item 5. "Other Events" of Form 8-K, the
              Company filed a Current Report on Form 8-K reporting the Company
              intended to seek discussions with the Pension Benefit Guaranty
              Corporation regarding alternatives to minimum pension funding
              requirements.

              On December 19, 2002, under Item 5, "Other Events" of Form 8-K,
              the Company filed a Current Report on Form 8-K reporting that the
              Company had determined that recent lump-sum distributions from the
              Kaiser Salaried Employee Retirement Plan had triggered a special
              provision under ERISA (Employee Retirement Income Security Act)
              that required the Company to make a pension contribution by
              January 15, 2003. However, since most of the payment would be
              classified as a pre-bankruptcy obligation, represented only a
              small percentage of KACC's legacy liabilities that must be
              addressed in the Company's reorganization, and since the
              Bankruptcy Code generally does not permit payment of pre-petition
              obligations without Court approval, the Company did not plan to
              seek such approval.

              No other reports on Form 8-K were filed by the Company during the
              last quarter of the period covered by this Report, however, 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. Also, 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.

(c)           EXHIBITS

              Reference is made to the Index of Exhibits immediately preceding
              the exhibits hereto (beginning on page 97), which index is
              incorporated herein by reference.



                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of Kaiser Aluminum Corporation:


We have audited the consolidated financial statements of Kaiser Aluminum
Corporation (Debtor-in-Possession) and subsidiaries as of December 31, 2002 and
for the year then ended, and have issued our report thereon dated March 28,
2003, which report includes an explanatory paragraph as to the bankruptcy
proceedings and an explanatory paragraph as to the uncertainty about the
Company's ability to continue as a going concern; such financial statements and
report are included elsewhere in this 10-K. Our audit also included the 2002
financial statement schedule of Kaiser Aluminum Corporation. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audit. In our opinion, the
2002 financial statement schedule, when considered in relation to the 2002 basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein. The financial statement
schedule for the years ended December 31, 2001 and 2000 was audited by other
auditors who have ceased operations. In their report, dated April 10, 2002,
those auditors expressed an opinion that such 2001 and 2000 financial statement
schedule, when considered in relation to the 2001 and 2000 basic consolidated
financial statements taken as a whole, presented fairly, in all material
respects, the information set forth therein.




DELOITTE & TOUCHE LLP

Houston, Texas
March 28, 2003



                COPY OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


Kaiser Aluminum Corporation dismissed Arthur Andersen on April 30, 2002 and
subsequently engaged Deloitte & Touche LLP as its independent auditors. The
predecessor auditors' report appearing below is a copy of Arthur Andersen's
previously issued opinion dated April 10, 2002. Since Kaiser Aluminum
Corporation is unable to obtain a manually signed audit report, a copy of Arthur
Andersen's most recent signed and dated report has been included to satisfy
filing requirements, as permitted under Rule 2-02(e) of Regulation S-X.

To the Stockholders and Board of Directors of Kaiser Aluminum Corporation:

We have audited in accordance with auditing standards generally accepted in the
United States, the financial statements included in Kaiser Aluminum Corporation
and Subsidiary Companies' annual report to shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated April 10,
2002. Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule I listed in the index at Item
14(a)2. above is the responsibility of the Company's management and is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not a required part of the basic financial statements. This schedule has
been subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.

Schedule I has been prepared in accordance with generally accepted accounting
principles applicable to a going concern which contemplate among other things,
realization of assets and payment of liabilities in the normal course of
business. As discussed in Note 1 to Schedule I, on February 12, 2002, the
Company, its wholly owned subsidiary, Kaiser Aluminum & Chemical Corporation
("KACC") and certain of KACC's subsidiaries filed for reorganization under
Chapter 11 of the United States Bankruptcy Code. This action raises substantial
doubt about the Company's ability to continue as a going concern. Schedule I
does not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amount and classification of
liabilities or the effects on existing stockholders' equity that may result from
any plans, arrangements or other actions arising from the aforementioned
proceedings, or the possible inability of the Company to continue in existence.




ARTHUR ANDERSEN LLP




Houston, Texas
April 10, 2002


                                   SCHEDULE I
                    CONDENSED BALANCE SHEETS - PARENT COMPANY

                 (In millions of dollars, except share amounts)



                                                                                           December 31,
                                                                                     -------------------------
                                                                                            2002          2001
                                                                                     -----------    ----------
ASSETS
Investment in KACC                                                                   $  1,106.1     $ 1,734.0
                                                                                     -----------    ----------

        Total                                                                        $  1,106.1     $ 1,734.0
                                                                                     ===========    ==========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities                                                                  $       -      $     -

Intercompany note payable to KACC, including accrued interest (Note 3)                  2,191.7       2,175.1

Stockholders' equity (deficit):
   Common stock, par value $.01, authorized 125,000,000 shares; issued and
      outstanding 80,386,563 and 80,698,066 shares                                           .8            .8
   Additional capital                                                                     539.9         539.1
   Accumulated deficit                                                                 (1,382.4)       (913.7)
   Accumulated other comprehensive income (loss)                                         (243.9)        (67.3)
                                                                                     -----------    ----------

        Total stockholders' equity                                                     (1,085.6)       (441.1)
                                                                                     -----------    ----------

        Total                                                                        $  1,106.1     $ 1,734.0
                                                                                     ===========    ==========


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


                                   SCHEDULE I
             CONDENSED STATEMENTS OF INCOME (LOSS) - PARENT COMPANY

                            (In millions of dollars)



                                                                                                December 31,
                                                                                  -----------------------------------------
                                                                                       2002            2001            2000
                                                                                  ---------       ---------       ---------

Equity in (loss) income of KACC                                                   $ (452.1)       $ (324.0)       $  144.3
Administrative and general expense                                                     (.1)            (.3)            (.4)
Interest expense on intercompany note (excluding unrecorded contractual 
   interest expense of $127.6 in 2002 - Note 3)                                      (16.5)         (135.1)         (127.1)
                                                                                  ---------       ---------       ---------
Net income (loss)                                                                 $ (468.7)       $ (459.4)       $   16.8
                                                                                  =========       =========       =========




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

                                   SCHEDULE I
               CONDENSED STATEMENTS OF CASH FLOWS - PARENT COMPANY

                            (In millions of dollars)


                                                                                                December 31,
                                                                                 ------------------------------------------
                                                                                        2002            2001           2000
                                                                                 -----------     -----------     ----------
Cash flows from operating activities:
   Net income (loss)                                                             $   (468.7)     $   (459.4)     $    16.8
   Adjustments to reconcile net income to net cash used for operating
        activities:
        Equity in loss (income) of KACC                                               452.1           324.0         (144.3)
        Accrued interest on intercompany note payable to KACC                          16.5           135.1          127.1
                                                                                 -----------     -----------     ----------
           Net cash used by operating activities                                        (.1)            (.3)           (.4)
                                                                                 -----------     -----------     ----------
Cash flows from investing activities:
   Investment in KACC                                                                    -             -               -
                                                                                 -----------     -----------     ----------
           Net cash used by investing activities                                         -             -               -
                                                                                 -----------     -----------     ----------
Cash flows from financing activities:
   Capital stock issued                                                                                                -
   Operating cost advances from KACC                                                     .1              .3            .4
                                                                                 -----------     -----------     ----------
           Net cash provided by financing activities                                     .1              .3            .4
                                                                                 -----------     -----------     ----------

Net (decrease) increase in cash and cash equivalents during the year                     -             -               -
Cash and cash equivalents at beginning of year                                           -             -               -
                                                                                 -----------     -----------     ----------
Cash and cash equivalents at end of year                                         $       -       $     -         $     -
                                                                                 ===========     ===========     ==========

Supplemental disclosure of non-cash investing activities:
   Non-cash (decrease) increase in investment in KACC                            $       -       $     -         $     -



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


                                   SCHEDULE I
            NOTES TO CONDENSED FINANCIAL STATEMENTS - PARENT COMPANY

1. REORGANIZATION PROCEEDINGS

The Company and 25 of its 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 and 16 subsidiaries (the "Original Debtors") filed in the
first quarter of 2002 and nine additional 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.

The necessity for filing the Cases by the Original Debtors was attributable to
the liquidity and cash flow problems of the Company 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 the asbestos litigation and growing legacy obligations for retiree medical
and pension costs. The confluence of these factors has 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 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 PBGC as a result of the Company's failure
to make an 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 was a non-event and had no impact on the Company's
day-to-day operations.

The Debtors' objective is to achieve the highest possible recoveries for all
creditors and stockholders, consistent with the Debtors' abilities to pay and
the continuation 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.

For additional information on the reorganization proceedings, see Note 1 of
Kaiser's Consolidated Financial Statements.

2. BASIS OF PRESENTATION

The Company is a holding company and conducts its operations through its wholly
owned subsidiary, KACC, which is reported herein using the equity method of
accounting. The accompanying parent company condensed financial statements of
the Company should be read in conjunction with Kaiser's 2002 Consolidated
Financial Statements.

The accompanying parent company condensed financial statements 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 condensed financial statements do not present: (a) the
realizable value of assets on a liquidation basis or the availability of such
assets to satisfy liability, (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 be made in connection with the Debtors'
capitalizations or operations as a result of a plan of reorganization. Because
of the ongoing nature of the Cases, the parent company condensed financial
statements are subject to material uncertainties.

3. INTERCOMPANY NOTE PAYABLE

The Intercompany Note to KACC, as amended, provides for a fixed interest rate of
6 5/8% and matures on December 21, 2020. However, since the Intercompany Note is
unsecured, the accrual of interest was discontinued as of the Filing Date. The
payment of the Intercompany Note and accrued interest, which are liabilities
subject to compromise, will be resolved in connection with the Cases.

4. RESTRICTED NET ASSETS

The obligations of KACC in respect of the credit facilities under the DIP
Facility are guaranteed by the Company and certain significant subsidiaries of
KACC. See Note 7 of Notes to Kaiser's Consolidated Financial Statements.


                                   SIGNATURES

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



                                     KAISER ALUMINUM CORPORATION

Date:  March 28, 2003            By    /s/ Jack A. Hockema
                                           Jack A. Hockema
                                     President and Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


Date:  March 28, 2003                  /s/ Jack A. Hockema
                                           Jack A. Hockema
                                     President, Chief Executive Officer and
                                                   Director
                                        (Principal Executive Officer)

Date:  March 28, 2003                  /s/ John T. La Duc
                                          John T. La Duc
                                      Executive Vice President and
                                        Chief Financial Officer
                                     (Principal Financial Officer)

Date:  March 28, 2003                  /s/ Daniel D. Maddox
                                           Daniel D. Maddox
                                      Vice President and Controller
                                     (Principal Accounting Officer)

Date:  March 28, 2003                  /s/ George T. Haymaker, Jr.
                                           George T. Haymaker, Jr.
                                      Chairman of the Board and Director

Date:  March 28, 2003                  /s/ Robert J. Cruikshank
                                           Robert J. Cruikshank
                                                Director

Date:  March 28, 2003                  /s/ James T. Hackett
                                           James T. Hackett
                                                Director

Date:  March 28, 2003                  /s/ Charles E. Hurwitz
                                           Charles E. Hurwitz
                                                Director

Date:  March 28, 2003                  /s/ Ezra G. Levin
                                           Ezra G. Levin
                                                Director

Date:  March 28, 2003                  /s/ John D. Roach
                                           John D. Roach
                                                Director



                                 CERTIFICATIONS

      I, Jack A. Hockema, certify that:

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

      2. Based on my knowledge, this annual 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 annual
report;

      3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 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
                annual 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 annual report (the "Evaluation Date"); and

           c)   presented in this annual 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
annual 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:   March 28, 2003                               /s/ Jack A. Hockema
                                                         Jack A. Hockema
                                                     Chief Executive Officer




      I, John T. La Duc, certify that:

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

      2. Based on my knowledge, this annual 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 annual
report;

      3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 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
                annual 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 annual report (the "Evaluation Date"); and

           c)   presented in this annual 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
annual 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:  March 28, 2003                                /s/ John T. La Duc
                                                         John T. La Duc
                                                     Chief Financial Officer


                                INDEX OF EXHIBITS

Exhibit
Number                                          Description

 3.1            Restated Certificate of Incorporation of Kaiser Aluminum
                Corporation ("KAC"), dated February 18, 2000 (incorporated by 
                reference to Exhibit 3.1 to the Report on Form 10-K for the 
                period ended December 31, 1999, filed by KAC, File No. 1-9447).

 3.2            Certificate of Retirement of KAC, dated October 24, 1995 
                (incorporated by reference to Exhibit 3.2 to the Report on Form 
                10-K for the period ended December 31, 1995, filed by KAC, File 
                No. 1-9447).

 3.3            Certificate of Retirement of KAC, dated February 12, 1998 
                (incorporated by reference to Exhibit 3.3 to the Report on Form 
                10-K for the period ended December 31, 1997, filed by KAC, File 
                No. 1-9447).

 3.4            Certificate of Elimination of KAC, dated July 1, 1998 
                (incorporated by reference to Exhibit 3.4 to the Report on Form 
                10-Q for the quarterly period ended June 30, 1999, filed by KAC, 
                File No. 1-9447).

 3.5            Certificate of Amendment of the Restated Certificate of 
                Incorporation of KAC, dated January 10, 2000 (incorporated by 
                reference to Exhibit 3.5 to the Report on Form 10-K for the 
                period ended December 31, 1999, filed by KAC, File No. 1-9447).

 3.6            Amended and Restated By-Laws of KAC, dated October 1, 1997
                (incorporated by reference to Exhibit 3.3 to the Report on Form
                10-Q for the quarterly period ended September 30, 1997, filed by
                KAC, File No. 1-9447).

 4.1            Indenture, dated as of February 1, 1993, among Kaiser Aluminum &
                Chemical Corporation ("KACC"), as Issuer, Kaiser Alumina
                Australia Corporation, Alpart Jamaica Inc., and Kaiser Jamaica
                Corporation, as Subsidiary Guarantors, and The First National
                Bank of Boston, as Trustee, regarding KACC's 12 3/4% Senior
                Subordinated Notes Due 2003 (incorporated by reference to

                Exhibit 4.1 to the Report on Form 10-K for the period ended
                December 31, 1992, filed by KACC, File No. 1-3605).

 4.2            First Supplemental Indenture, dated as of May 1, 1993, to the 
                Indenture, dated as of February 1, 1993 (incorporated by 
                reference to Exhibit 4.2 to the Report on Form 10-Q for the 
                quarterly period ended June 30, 1993, filed by KACC, File No. 
                1-3605).

 4.3            Second Supplemental Indenture, dated as of February 1, 1996, to 
                the Indenture, dated as of February 1, 1993 (incorporated by 
                reference to Exhibit 4.3 to the Report on Form 10-K for the 
                period ended December 31, 1995, filed by KAC, File No. 1-9447).

 4.4            Third Supplemental Indenture, dated as of July 15, 1997, to the 
                Indenture, dated as of February 1, 1993 (incorporated by 
                reference to Exhibit 4.1 to the Report on Form 10-Q for the 
                quarterly period ended June 30, 1997, filed by KAC, File No. 
                1-9447).

 4.5            Fourth Supplemental Indenture, dated as of March 31, 1999, to 
                the Indenture, dated as of February 1, 1993, (incorporated by 
                reference to Exhibit 4.1 to the Report on Form 10-Q for the 
                quarterly period ended March 31, 1999, filed by KAC, File No. 
                1-9447).

 4.6            Indenture, dated as of February 17, 1994, among KACC, as Issuer,
                Kaiser Alumina Australia Corporation, Alpart Jamaica Inc.,
                Kaiser Jamaica Corporation, and Kaiser Finance Corporation, as
                Subsidiary Guarantors, and First Trust National Association, as
                Trustee, regarding KACC's 9 7/8% Senior Notes Due 2002
                (incorporated by reference to Exhibit 4.3 to the Report on Form
                10-K for the period ended December 31, 1993, filed by KAC, File
                No. 1-9447).

 4.7            First Supplemental Indenture, dated as of February 1, 1996, to 
                the Indenture, dated as of February 17, 1994 (incorporated by 
                reference to Exhibit 4.5 to the Report on Form 10-K for the 
                period ended December 31, 1995, filed by KAC, File No. 1-9447).

 4.8            Second Supplemental Indenture, dated as of July 15, 1997, to the 
                Indenture, dated as of February 17, 1994 (incorporated by 
                reference to Exhibit 4.2 to the Report on Form 10-Q for the 
                quarterly period ended June 30, 1997, filed by KAC, File No. 
                1-9447).

 4.9            Third Supplemental Indenture, dated as of March 31, 1999, to the 
                Indenture, dated as of February 17, 1994 (incorporated by 
                reference to Exhibit 4.2 to the Report on Form 10-Q for the 
                quarterly period ended March 31, 1999, filed by KAC, File No. 
                1-9447).

 4.10           Indenture, dated as of October 23, 1996, among KACC, as Issuer,
                Kaiser Alumina Australia Corporation, Alpart Jamaica Inc.,
                Kaiser Jamaica Corporation, Kaiser Finance Corporation, Kaiser
                Micromill Holdings, LLC, Kaiser Sierra Micromills, LLC, Kaiser
                Texas Micromill Holdings, LLC and Kaiser Texas Sierra
                Micromills, LLC, as Subsidiary Guarantors, and First Trust
                National Association, as Trustee, regarding KACC's 10 7/8%
                Series B Senior Notes Due 2006 (incorporated by reference to

                Exhibit 4.2 to the Report on Form 10-Q for the quarterly period
                ended September 30, 1996, filed by KAC, File No. 1-9447).

 4.11           First Supplemental Indenture, dated as of July 15, 1997, to the 
                Indenture, dated as of October 23, 1996 (incorporated by 
                reference to Exhibit 4.3 to the Report on Form 10-Q for the 
                quarterly period ended June 30, 1997, filed by KAC, File No. 
                1-9447).

 4.12           Second Supplemental Indenture, dated as of March 31, 1999, to 
                the Indenture, dated as of October 23, 1996 (incorporated by 
                reference to Exhibit 4.3 to the Report on Form 10-Q for the 
                quarterly period ended March 31, 1999, filed by KAC, File No. 
                1-9447).

 4.13           Indenture, dated as of December 23, 1996, among KACC, as Issuer,
                Kaiser Alumina Australia Corporation, Alpart Jamaica Inc.,
                Kaiser Jamaica Corporation, Kaiser Finance Corporation, Kaiser
                Micromill Holdings, LLC, Kaiser Sierra Micromills, LLC, Kaiser
                Texas Micromill Holdings, LLC, and Kaiser Texas Sierra
                Micromills, LLC, as Subsidiary Guarantors, and First Trust
                National Association, as Trustee, regarding KACC's 10 7/8%
                Series D Senior Notes due 2006 (incorporated by reference to

                Exhibit 4.4 to the Registration Statement on Form S-4, dated
                January 2, 1997, filed by KACC, Registration No. 333-19143).

 4.14           First Supplemental Indenture, dated as of July 15, 1997, to the
                Indenture, dated as of December 23, 1996 (incorporated by
                reference to Exhibit 4.4 to the Report on Form 10-Q for the
                quarterly period ended June 30, 1997, filed by KAC, File No.
                1-9447).

 4.15           Second Supplemental Indenture, dated as of March 31, 1999, to
                the Indenture, dated as of December 23, 1996 (incorporated by
                reference to Exhibit 4.4 to the Report on Form 10-Q for the
                quarterly period ended March 31, 1999, filed by KAC, File No.
                1-9447).

 4.16           Post-Petition Credit Agreement, dated as of February 12, 2002,
                among KACC, KAC, certain financial institutions and Bank of
                America, N.A., as Agent (incorporated by reference to Exhibit
                4.44 to the Report on Form 10-K for the year ended December 31,
                2001, filed by KAC, File No. 1-9447).

 4.17           First Amendment to Post-Petition Credit Agreement and
                Post-Petition Pledge and Security Agreement and Consent of
                Guarantors, dated as of March 21, 2002, amending the
                Post-Petition Credit Agreement dated as of February 12, 2002,
                among KACC, KAC, certain financial institutions and Bank of
                America, N.A., as Agent, and amending a Post-Petition Pledge and
                Security Agreement dated as of February 12, 2002, among KACC,
                KAC, certain subsidiaries of KAC and KACC, and Bank of America,
                N.A., as Agent (incorporated by reference to Exhibit 4.45 to the
                Report on Form 10-K for the year ended December 31, 2001, filed
                by KAC, File No. 1-9447).

 4.18           Second Amendment to Post-Petition Credit Agreement and Consent
                of Guarantors, dated as of March 21, 2002, amending the
                Post-Petition Credit Agreement dated as of February 12, 2002,
                among KACC, KAC, certain financial institutions and Bank of
                America, N.A., as Agent (incorporated by reference to Exhibit
                4.46 to the Report on Form 10-K for the year ended December 31,
                2001, filed by KAC, File No. 1-9447).

*4.19           Third Amendment to Post-Petition Credit Agreement, Second
                Amendment to Post-Petition Pledge and Security Agreement and
                Consent of Guarantors, dated as of December 19, 2002, amending
                the Post-Petition Credit Agreement dated as of February 12,
                2002, among KACC, KAC, certain financial institutions and Bank
                of America, N.A., as Agent.

*4.20           Fourth Amendment to Post-Petition Credit Agreement and Consent
                of Guarantors, dated as of March 17, 2003, amending the
                Post-Petition Credit Agreement dated as of February 12, 2002,
                among KACC, KAC, certain financial institutions and Bank of
                America, N.A., as Agent.

*4.21           Waiver and Consent with Respect to Post-Petition Credit
                Agreement, dated October 9, 2002, among KAC, KACC, 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.

*4.22           Second Waiver and Consent with respect to Post-Petition Credit
                Agreement, dated January 13, 2003, among KACC, KACC, 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.

 4.23           Intercompany Note between KAC and KACC (incorporated by
                reference to Exhibit 10.10 to the Report on Form 10-K for the
                period ended December 31, 1996, filed by MAXXAM Inc. ("MAXXAM"),
                File No. 1-3924).

 4.24           Confirmation of Amendment of Non-Negotiable Intercompany Note,
                dated as of October 6, 1993, between KAC and KACC (incorporated
                by reference to Exhibit 10.11 to the Report on Form 10-K for the
                period ended December 31, 1996, filed by MAXXAM, File No.
                1-3924).

 4.25           Amendment to Non-Negotiable Intercompany Note, dated as of
                December 11, 2000, between KAC and KACC (incorporated by
                reference to Exhibit 4.41 to the Report on Form 10-K for the
                period ended December 31, 2000, filed by KAC, File No. 1-9447).

 4.26           Senior Subordinated Intercompany Note between KAC and KACC dated
                February 15, 1994 (incorporated by reference to Exhibit 4.22 to
                the Report on Form 10-K for the period ended December 31, 1993,
                filed by KAC, File No. 1-9447).

 4.27           Senior Subordinated Intercompany Note between KAC and KACC dated
                March 17, 1994 (incorporated by reference to Exhibit 4.23 to the
                Report on Form 10-K for the period ended December 31, 1993,
                filed by KAC, File No. 1-9447).

                KAC has not filed certain long-term debt instruments not being
                registered with the Securities and Exchange Commission where the
                total amount of indebtedness authorized under any such
                instrument does not exceed 10% of the total assets of KAC and
                its subsidiaries on a consolidated basis. KAC agrees and
                undertakes to furnish a copy of any such instrument to the
                Securities and Exchange Commission upon its request.

 10.1           Form of indemnification agreement with officers and directors
                (incorporated by reference to Exhibit (10)(b) to the
                Registration Statement of KAC on Form S-4, File No. 33-12836).

 10.2           Tax Allocation Agreement, dated as of December 21, 1989, between
                MAXXAM and KACC (incorporated by reference to Exhibit 10.21 to
                Amendment No. 6 to the Registration Statement on Form S-1, dated
                December 14, 1989, filed by KACC, Registration No. 33-30645).

 10.3           Amendment of Tax Allocation Agreement, dated as of March 12,
                2001, between MAXXAM and KACC, amending the Tax Allocation
                Agreement dated as of December 21, 1989 (incorporated by
                reference to Exhibit 10.3 to the Report on Form 10-K for the
                period ended December 31, 2000, filed by KAC, File No. 1-9447).

 10.4           Tax Allocation Agreement, dated as of February 26, 1991, between
                KAC and MAXXAM (incorporated by reference to Exhibit 10.23 to
                Amendment No. 2 to the Registration Statement on Form S-1, dated
                June 11, 1991, filed by KAC, Registration No. 33-37895).

 10.5           Tax Allocation Agreement, dated as of June 30, 1993, between
                KACC and KAC (incorporated by reference to Exhibit 10.3 to the
                Report on Form 10-Q for the quarterly period ended June 30,
                1993, filed by KACC, File No. 1-3605).

                  Executive Compensation Plans and Arrangements
                       [Exhibits 10.6 - 10.33, inclusive]

 10.6           Kaiser 1993 Omnibus Stock Incentive Plan (incorporated by
                reference to Exhibit 10.1 to the Report on Form 10-Q for the
                quarterly period ended June 30, 1993, filed by KACC, File No.
                1-3605).

 10.7           Kaiser 1997 Omnibus Stock Incentive Plan (incorporated by
                reference to Appendix A to the Proxy Statement, dated April 29,
                1997, filed by KAC, File No. 1-9447).

 10.8           Employment Agreement between KACC and John T. La Duc made
                effective for the period from January 1, 1998, to December 31,
                2002 (incorporated by reference to Exhibit 10.5 to the Report on
                Form 10-Q for the quarterly period ended September 30, 1998,
                filed by KAC, File No. 1-9447).

 10.9           Time-Based Stock Option Grant pursuant to the Kaiser 1997
                Omnibus Stock Incentive Plan to John T. La Duc, effective July
                10, 1998 (incorporated by reference to Exhibit 10.6 to the
                Report on Form 10-Q for the quarterly period ended September 30,
                1998, filed by KAC, File No. 1-9447).

 10.10          Chief Executive Officer Agreement made and entered into as of
                October 11, 2001, by and between KACC and Jack A. Hockema
                (incorporated by reference to Exhibit 10.24 to the Report on
                Form 10-K for the period ended December 31, 2001, filed by KAC,
                File No. 1-9447).

 10.11          Non-Executive Chairman of the Boards Agreement, dated October
                11, 2001, among KAC, KACC and George T. Haymaker, Jr.
                (incorporated by reference to Exhibit 10.25 to the Report on
                Form 10-K for the period ended December 31, 2001, filed by KAC,
                File No. 1-9447).

*10.12          Non-Executive Chairman of the Boards Agreement, dated November
                4, 2002, among KAC, KACC and George T. Haymaker, Jr.

*10.13          Employment Agreement, dated October 1, 2001, between KACC and
                Edward F. Houff.

 10.14          Description of compensation arrangements among KACC, KAC, and
                Jack A. Hockema (incorporated by reference to Exhibit 10.27 to
                the Report on Form 10-K for the period ended December 31, 1999,
                filed by KAC, File No. 1-9447).

 10.15          Stock Option Grant pursuant to the Kaiser 1997 Omnibus Stock
                Incentive Plan to Jack A. Hockema (incorporated by reference to

                Exhibit 10.1 to the Report on Form 10-Q for the quarterly period
                ended September 30, 2000, filed by KAC, File No. 1-9447).

 10.16          Form of letter agreement with persons granted stock options
                under the Kaiser 1993 Omnibus Stock Incentive Plan to acquire
                shares of KAC Common Stock (incorporated by reference to Exhibit
                10.18 to the Report on Form 10-K for the period ended December
                31, 1994, filed by KAC, File No. 1-9447).

 10.17          Form of Enhanced Severance Agreement between KACC and key
                executive personnel (incorporated by reference to Exhibit 10.3
                to the Report on Form 10-Q for the quarterly period ended
                September 30, 2000, filed by KAC, File No. 1-9447).

 10.18          Form of Deferred Fee Agreement between KAC, KACC, and directors
                of KAC and KACC (incorporated by reference to Exhibit 10 to the
                Report on Form 10-Q for the quarterly period ended March 31,
                1998, filed by KAC, File No. 1-9447).

 10.19          Form of Non-Employee Director Stock Option Grant for options
                issued commencing January 1, 2001 under the 1997 Kaiser Omnibus
                Stock Incentive Plan (incorporated by reference to Exhibit 10.1
                to the Report on Form 10-Q for the quarterly period ended June
                30, 2001, filed by KAC, File No. 1-9447).

 10.20          Form of Stock Option Grant for options issued commencing January
                1, 2001 under the 1997 Kaiser Omnibus Stock Incentive Plan
                (incorporated by reference to Exhibit 10.2 to the Report on Form
                10-Q for the quarterly period ended June 30, 2001, filed by KAC,
                File No. 1-9447).

 10.21          Form of Restricted Stock Agreement for restricted shares issued
                commencing January 1, 2001 under the 1997 Kaiser Omnibus Stock
                Incentive Plan (incorporated by reference to Exhibit 10.3 to the
                Report on Form 10-Q for the quarterly period ended June 30,
                2001, filed by KAC, File No. 1-9447).

 10.22          The Kaiser Aluminum & Chemical Corporation Retention Plan, dated
                January 15, 2002 (the "January 2002 Retention Plan")
                (incorporated by reference to Exhibit 10.35 to the Report on
                Form 10-K for the year ended December 31, 2001, filed by KAC,
                File No. 1-9447).

 10.23          Form of Retention Agreement for the Kaiser Aluminum & Chemical
                Corporation Retention Plan (incorporated by reference to Exhibit
                10.36 to the Report on Form 10-K for the year ended December 31,
                2001, filed by KAC, File No. 1-9447).

 10.24          Retention Agreement for the January 2002 Retention Plan, dated
                January 15, 2002, between KACC and Joseph A. Bonn (incorporated
                by reference to Exhibit 10.37 to the Report on Form 10-K for the
                year ended December 31, 2001, filed by KAC, File No. 1-9447).

 10.25          Retention Agreement for the January 2002 Retention Plan, dated
                January 15, 2002, between KACC and John T. La Duc (incorporated
                by reference to Exhibit 10.38 to the Report on Form 10-K for the
                year ended December 31, 2001, filed by KAC, File No. 1-9447).

*10.26          The Kaiser Aluminum & Chemical Corporation Key Employee
                Retention Plan (effective September 3, 2002).

*10.27          Form of Retention Agreement for the Kaiser Aluminum &
                Chemical Corporation Key Employee Retention Plan (effective
                September 3, 2002) for Jack A. Hockema, Edward F. Houff, Harvey
                L. Perry and one other Executive Officer.

*10.28          Form of Retention Agreement for the Kaiser Aluminum &
                Chemical Corporation Key Employee Retention Plan (effective
                September 3, 2002) for Joseph A. Bonn and John T. La Duc.

*10.29          Form of Retention Agreement for the Kaiser Aluminum &
                Chemical Corporation Key Employee Retention Plan (effective
                September 3, 2002) for Certain Executive Officers.

*10.30          Kaiser Aluminum & Chemical Corporation Severance Plan
                (effective September 3, 2002).

*10.31          Form of Severance Agreement for the Kaiser Aluminum &
                Chemical Corporation Severance Plan (effective September 3,
                2002) for Jack A. Hockema, Edward F. Houff, Harvey L. Perry and
                Certain Other Executive Officers.

*10.32          Form of Kaiser Aluminum & Chemical Corporation Change in
                Control Severance Agreement for Jack A. Hockema, Edward F. Houff
                and one other Executive Officer.

*10.33          Form of Kaiser Aluminum & Chemical Corporation Change in
                Control Severance Agreement for Harvey L. Perry and Certain
                Other Executive Officers.

*21             Significant Subsidiaries of KAC.

*23.1           Independent Auditors' Consent.

*23.2           Consent of Wharton Levin Ehrmantraut & Klein, P.A.

*23.3           Consent of Heller Ehrman White & McAuliffe LLP.

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

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

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


Principal       Arizona
Domestic          Chandler
Operations          Engineered Products
and             California
                ----------
Administrative    Laguna Niguel
Offices             Administrative Offices
(Partial List)    Los Angeles (City of Commerce)
                    Engineered Products
                Louisiana
                  Baton Rouge
                    Alumina Business Unit Offices
                  Gramercy
                    Alumina
                Michigan
                  Detroit (Southfield)
                    Automotive Product Development and
                    Sales
                Ohio
                  Newark
                    Engineered Products
                Oklahoma
                  Tulsa
                    Engineered Products

        South Carolina
          Greenwood
            Engineered Products
        Tennessee
          Jackson
            Engineered Products
        Texas
          Houston
            Corporate Headquarters
          Sherman
            Engineered Products
        Virginia
          Richmond
            Engineered Products
        Washington
          Mead
            Primary Aluminum
          Richland
            Engineered Products
          Trentwood
            Flat-Rolled Products



Principal       Australia
Worldwide         Queensland Alumina Limited (20%)
Operations          Alumina
(Partial List)  Canada
                  Kaiser Aluminum & Chemical of
                  Canada Limited (100%)
                    Engineered Products
                Ghana
                  Volta Aluminium Company Limited (90%)
                    Primary Aluminum
        Jamaica
          Alumina Partners of Jamaica (65%)
            Bauxite, Alumina
          Kaiser Jamaica Bauxite Company (49%)
            Bauxite
        Wales, United Kingdom
          Anglesey Aluminium Limited (49%)
            Primary Aluminum

Exhibit 4.19 to 2002 10-K
                                                                    Exhibit 4.19

                                                                [EXECUTION COPY]

                               THIRD AMENDMENT TO
                     POST-PETITION CREDIT AGREEMENT, SECOND
            AMENDMENT TO POST-PETITION PLEDGE AND SECURITY AGREEMENT
                            AND CONSENT OF GUARANTORS



      This THIRD AMENDMENT TO POST-PETITION CREDIT AGREEMENT, SECOND AMENDMENT
TO POST-PETITION PLEDGE AND SECURITY AGREEMENT AND CONSENT OF GUARANTORS (this
"Amendment") is dated as of December 19, 2002 and entered into by and among
KAISER ALUMINUM CORPORATION, a Delaware corporation, as debtor and
debtor-in-possession (the "Parent Guarantor"), KAISER ALUMINUM & CHEMICAL
CORPORATION, a Delaware corporation, as debtor and debtor-in-possession (the
"Company"), the banks and other financial institutions signatory hereto that are
parties as Lenders to the Credit Agreement referred to below (the "Lenders"),
BANK OF AMERICA, N.A., as administrative agent and collateral agent (in such
capacity, the "Agent") for the Lenders, GENERAL ELECTRIC CAPITAL CORPORATION
("GE Capital") as Documentation Agent, THE CIT GROUP/BUSINESS CREDIT, INC.
("CIT"), as Co-Syndication Agent, and FOOTHILL CAPITAL CORPORATION ("Foothill"),
as Co-Syndication Agent (GE Capital, CIT and Foothill, collectively, the
"Co-Agents").

                                    RECITALS

         WHEREAS, the Parent Guarantor, the Company,
 the Lenders, and the Agent
have entered into that certain Post-Petition Credit Agreement dated as of
February 12, 2002, as amended by that certain First Amendment to Post-Petition
Credit Agreement and Post-Petition Pledge and Security Agreement and Consent of
Guarantors dated as of March 21, 2002 (the "First Amendment") and that certain
Second Amendment to Post-Petition Credit Agreement and Consent of Guarantors
dated as of March 21, 2002 and as further modified by that certain Waiver and
Consent with Respect to Post-Petition Credit Agreement dated as of October 9,
2002 (as so amended and modified, the "Credit Agreement"; capitalized terms used
in this Amendment without definition shall have the meanings given such terms in
the Credit Agreement); and

         WHEREAS, the Parent Guarantor, the Company, certain Subsidiaries of the
Company and the Agent have entered into that certain Post-Petition Pledge and
Security Agreement dated as of February 12, 2002, as amended by the First
Amendment (as so amended, the "Security Agreement"); and

         WHEREAS, the Company has requested that the Lenders agree to amend
certain provisions of the Credit Agreement and the Security Agreement and the
Lenders signatory to this Amendment are willing to agree to such amendments on
the terms and conditions set forth herein;

         NOW THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the Parent Guarantor, the Company, the Lenders, and
the Agent agree as follows:

         1.       AMENDMENTS TO CREDIT AGREEMENT. Subject to the conditions and 
upon the terms set forth in this Amendment, the Credit Agreement is hereby 
amended as follows:

         1.1      AMENDMENTS TO SECTION 1.1 (DEFINITIONS).

         (a)   The definition of "Adjusted Net Earnings from Operations" is 
amended to (i) delete the word "and" preceding clause (i); (ii) change the 
period at the end of such definition to a semicolon; and (iii) add the following 
new clauses (j), (k) and (l):

               "(j) the Mead Charges; (k) non-cash LIFO inventory valuation 
    charges in aggregate amounts not to exceed $20,000,000; and (l) non-cash 
    charges incurred as a result of any Permitted Asset Disposition of the 
    Kaiser Center Assets in aggregate amounts not to exceed $25,000,000."

         (b)   The definition of "Borrowing Base" is amended to delete clause 
(c) in its entirety and replace it with the following:

               "(c) the lesser of (i) $100,000,000, reducing each month 
    commencing in February 2003 on a seven year straight line amortization; 
    provided, that such amount shall be reduced by (x) an amount equal to 50% of 
    the Net Disposition Proceeds of a Permitted Asset Disposition of the Kaiser 
    Center Assets, (y) an amount equal to 50% of the Net Disposition Proceeds in 
    excess of $20,000,000 of a Permitted Asset Disposition of the Tacoma Plant, 
    and (z) an amount equal to 50% of the Net Disposition Proceeds in excess of 
    $10,000,000 of a Permitted Asset Disposition of the Oxnard Plant, and 
    following each such reduction, the remaining amount shall amortize on a 
    straight line basis over the remaining portion of the seven-year 
    amortization period; and (ii) 50% of the OLV In-Place Value of Eligible 
    Fixed Assets (such lesser number, the "PPE Subcomponent");"

         (c)   The definition of "EBITDA" is amended by deleting the number 
"$10,000,000" clause (A)(ii) and replacing it with the number "$30,000,000."

         (d)   The definition of "Eligible Account" is amended to delete clause
(h) in its entirety and to replace it with the following:

               "(h) if the aggregate dollar amount of all Accounts owed by the 
    Account Debtor thereon exceeds 5% ( 15% in respect of (i) Accounts owed by 
    the Account Debtors identified in Item 11 ("Major Account Debtors") of the 
    Disclosure Schedule, as such Item may be amended from time to time by the 
    Agent, in its commercially reasonable judgment, after consultation with 
    the Company, to add or delete Account Debtors and (ii) Accounts owed by 
    any other Account Debtor which are secured or payable by a letter of 
    credit acceptable to the Agent and issued by a financial institution 
    acceptable to the Agent) of the aggregate amount of all Accounts at such 
    time, but only to the extent of such excess;"

         (e)   The following definitions of "Kaiser Center Assets," "Mead 
Charges," "Oxnard Plant," "Permitted Asset Dispositions," "Permitted QAL 
Investment Amount," and "Tacoma Plant," are added in proper alphabetical order:

         "Kaiser Center Assets" means the real property, building, leases,
    contracts, licenses, personal property, notes, security interests and other 
    interests of the Company and its Subsidiaries with respect to that certain 
    property located in Oakland, California known as the Kaiser Center, and more 
    particularly described on Exhibit F attached hereto.

         "Mead Charges" means the following charges incurred by the Company in 
    connection with the curtailment of operations or shutdown of the Company's 
    facility in Mead, Washington: (i) a non-cash impairment charge of up to 
    $145,000,000 associated with the fixed assets at such facility; (ii) 
    accounting charges for future retiree medical, pension, and other benefits 
    of up to $65,000,000 representing amounts that would be paid over an 
    extended period of time (primarily after the expiration of the term of this 
    Agreement); and (iii) other accounting charges (e.g. inventory writedowns, 
    salaried work force restructuring, etc.) which are non-cash or have limited 
    cash impacts during the term of this Agreement of up to $20,000,000; 
    provided that, for purposes of calculating Adjusted Net Earnings from 
    Operations, the aggregate amount of Mead Charges which may be excluded shall 
    not exceed $230,000,000; and the aggregate amount of cash charges, including 
    cash charges for future retiree medical, pension and other benefits 
    allocated by the Company in good faith to employees at the Mead facility, 
    which may be excluded shall not exceed $10,000,000.

         "Oxnard Plant" means the real property, buildings, equipment, 
    inventory, leases, contracts, licenses and intangible assets used 
    exclusively in the Company's fabricated products plant in Oxnard, California 
    as more particularly described in that certain Asset Purchase and Sale 
    Agreement dated as of September 12, 2002 between the Company and Aluminum 
    Precision Products, Inc. and that certain Standard Offer, Agreement and 
    Escrow Instructions for Purchase of Real Property dated September 12, 2002 
    between the Company and Aluminum Precision Products, Inc., copies of which 
    agreements have been filed with the Bankruptcy Court.

         "Permitted Asset Dispositions" means any Asset Disposition of (i) the 
    Kaiser Center Assets for which the Company and/or any of its Subsidiaries 
    receive Net Disposition Proceeds in an amount satisfactory to the Required 
    Lenders; provided that 50% of such Net Disposition Proceeds are applied to 
    the Obligations in accordance with Section 3.3.4 and to permanently reduce 
    the PPE Subcomponent in accordance with the definition of such term; (ii) 
    the Tacoma Plant; provided, that 50% of all Net Disposition Proceeds of such 
    Asset Disposition in excess of $20,000,000 are applied to the Obligations 
    in accordance with Section 3.3.4 and to permanently reduce the PPE 
    Subcomponent in accordance with the definition of such term; and (iii) the 
    Oxnard Plant; provided that 50% of all Net Disposition Proceeds of such 
    Asset Disposition in excess of $10,000,000 are applied to the Obligations in 
    accordance with Section 3.3.4 and to permanently reduce the PPE Subcomponent 
    in accordance with the definition of such term. After application of the
    Net Disposition Proceeds to the Obligations as required by the foregoing, if 
    no Event of Cash Dominion has occurred and is continuing and the provisions 
    of Section 5.7 are not applicable, the remaining portion of such Net 
    Disposition Proceeds after such application shall be disbursed to the 
    Company.

         "Permitted QAL Investment Amount" means an aggregate amount during the 
    2002 and 2003 Fiscal Years of $87,000,000, which may consist of any 
    combination of cash Investments in, and/or Contingent Liabilities incurred 
    in respect of Indebtedness of, QAL by the Company and/or any Guarantor; 
    provided that all such cash Investments in, or Contingent Liabilities 
    incurred in respect of Indebtedness of, QAL shall be made on a ratable basis 
    with those of the other joint venture participants in QAL, based on the 
    amount of such Persons' ownership interests in QAL.

         "Tacoma Plant" means the real property, buildings and Equipment used 
    exclusively in connection with the Company's primary aluminum smelter 
    located at 3400 Taylor Way, Tacoma, Washington.


         1.2   AMENDMENT TO SECTION 5.7 (MANDATORY PAYMENT TO AGENT OF LETTER OF
CREDIT OUTSTANDINGS). Section 5.7 of the Credit Agreement is amended to add the
following sentence immediately after the first sentence of that Section:

         "In addition, the Company agrees that, on the Stated Maturity Date or 
    any earlier date on which all Commitments are terminated, it will either pay 
    to the Agent in Dollars and in immediately available funds for deposit in 
    the L/C Collateral Account an amount equal to the then aggregate Letter of 
    Credit Outstandings or provide to the Agent one or more letters of credit, 
    in form and substance satisfactory to the Agent and from an issuer
    satisfactory to the Agent, in an aggregate amount equal to the then 
    aggregate Letter of Credit Outstandings, which letters of credit may be 
    drawn by the Agent and the proceeds applied to the Letter of Credit 
    Outstandings to the extent that any Letter of Credit which is outstanding on 
    such termination date is drawn.

         1.3   AMENDMENT TO SECTION 7.4.1 (COMPLIANCE WITH WARRANTIES, NO 
DEFAULT, ETC.).  Section 7.4.1 of the Credit Agreement is amended to add the 
following new, unlettered paragraph at the end thereof:

         "For purposes of the conditions set forth in Sections 7.4.1(a), 
    7.4.1(b)(ii) and 7.4.1(c), and the representations and warranties set forth 
    in Sections 8.6(b) and 8.7(b), the adverse decision of the Administrative 
    Law Judge rendered in May 2002 in connection with allegations of unfair 
    labor practices in connection with the United Steelworkers of America strike 
    and subsequent lockout, and any affirmation of such decision on appeal, 
    shall not be deemed to reasonably be expected to have a Materially Adverse 
    Effect or have a reasonable possibility of having a Materially Adverse 
    Effect so long as such decision is subject to further appeal, any judgment 
    which has been entered is stayed and no amounts are paid by any Obligor 
    during the term of this Agreement."

         1.4   AMENDMENT TO SECTION 9.1.1 (FINANCIAL INFORMATION, REPORTS, 
NOTICES, ETC.)  Section 9.1.1 of the Credit Agreement is amended to add the 
following new subsection (m):

         "(m) No later than 5 Business Days prior to filing any
    application or motion with the Bankruptcy Court with respect to any 
    Permitted Asset Disposition or any other proposed Asset Disposition not 
    permitted under Section 9.2.11 of this Agreement, a written description of 
    the proposed Asset Disposition, together with a copy of the purchase and 
    sale agreements and all other material agreements related thereto."

         1.5   AMENDMENT TO SECTION 9.2.4 (MINIMUM EBITDA).  Section 9.2.4 of 
the Credit Agreement is deleted in its entirety and replaced with the following:

         (a) The Company and its Subsidiaries, on a consolidated basis, shall 
    have a minimum EBITDA of not less than the following amounts, measured as of 
    the last day of each Fiscal Quarter for the periods specified below:

                            Period                         EBITDA

         Petition Date to 6/30/02                           $(45,000,000)
         Petition Date to 9/30/02                            (48,000,000)
         Petition Date to 12/31/02                           (82,000,000)
         4 Fiscal Quarters ending 3/31/03                    (98,000,000)
         4 Fiscal Quarters ending 6/30/03                    (86,000,000)
         4 Fiscal Quarters ending 9/30/03                    (45,000,000)
         4 Fiscal Quarters ending 12/31/03                    10,000,000

         (b) If at any time during any month for a period of three (3) 
    consecutive Business Days (i) the Revolving Credit Outstandings exceed 
    $100,000,000 or (ii) Revolving Commitment Availability is less than 
    $75,000,000 (each condition in clause (i) and (ii), a "Trigger Event") then 
    for that month and each month thereafter in which a Trigger Event occurs, 
    the Company and its Subsidiaries, on a consolidated basis, shall have a 
    minimum EBITDA of not less than the following amounts, measured as of the 
    last day of each month for the period specified below:

                            Period
         Petition Date to 06/30/02                        (45,000,000)
         Petition Date to 07/31/02                        (48,000,000)
         Petition Date to 08/30/02                        (48,000,000)
         Petition Date to 09/30/02                        (48,000,000)
         Petition Date to 10/31/02                        (82,000,000)
         Petition Date to 11/30/02                        (82,000,000)
         Petition Date to 12/31/02                        (82,000,000)
         Petition Date to 01/31/03                        (98,000,000)
         Petition Date to 02/28/03                        (98,000,000)
         12 months ending 03/31/03                        (98,000,000)
         12 months ending 04/30/03                        (94,000,000)
         12 months ending 05/31/03                        (90,000,000)
         12 months ending 06/30/03                        (86,000,000)
         12 months ending 07/31/03                        (72,000,000)
         12 months ending 08/31/03                        (58,000,000)
         12 months ending 09/30/03                        (45,000,000)
         12 months ending 10/31/03                        (27,000,000)
         12 months ending 11/30/03                         (9,000,000)
         12 months ending 12/31/03                         10,000,000
         12 months ending 01/31/04                         10,000,000
         12 months ending 02/28/04                         10,000,000


         1.6   AMENDMENT TO SECTION 9.2.11 (ASSET DISPOSITIONS). Section 9.2.11
of the Credit Agreement is amended to (i) delete the parenthetical phrases "(or 
apply to the Bankruptcy Court to do so)" and "(or permit any of its Subsidiaries 
to apply to the Bankruptcy Court to)", (ii) delete the phrase "$25,000,000 in 
any Fiscal Year" in clause (i) and replace it with "$30,000,000 in the 2002 
Fiscal Year or $25,000,000 in any other Fiscal Year;" and (iii) to add a new 
clause (j) to read as follows:

         "(j)  Permitted Asset Dispositions;"

         1.7   AMENDMENT TO SECTION 9.2.20 (ADDITIONAL INVESTMENTS IN PERSONS 
OTHER THAN DEBTORS). Section 9.2.20 of the Credit Agreement is deleted in its 
entirety and replaced with the following:

               SECTION 9.2.20. ADDITIONAL INVESTMENTS IN PERSONS OTHER THAN 
    DEBTORS. Notwithstanding anything to the contrary contained in Sections 
    9.2.2, 9.2.5 and 9.2.18 hereof, after the date hereof the Company and the 
    Parent Guarantor shall not (or apply to the Bankruptcy Court to do so), and 
    will not permit any Guarantor to (or permit any Guarantor to apply to the 
    Bankruptcy Court to), make any cash Investments in, or incur any Contingent 
    Liabilities to pay the Indebtedness of, any Person other than a Debtor 
    except (i) Investments and Contingent Liabilities to the extent reflected in 
    the Financial Forecast; provided that solely with respect to Investments in, 
    or Contingent Liabilities with respect to the Indebtedness of, QAL the
    Financial Forecast shall be amended to permit the Company and KAAC to make 
    cash Investments in, and to incur Contingent Liabilities in respect of the 
    Indebtedness of, QAL in accordance with the definition of and in aggregate 
    amount for all such cash Investments and Contingent Liabilities not to 
    exceed the Permitted QAL Investment Amount, (ii) other Investments made in, 
    or Contingent Liabilities incurred on behalf of, QAL, ALPART, Anglesey or 
    VALCO in an amount not to exceed $10,000,000 per annum (so long as, after 
    giving effect to any Investment made or Contingent Liability incurred 
    pursuant to this clause (ii), an Event of Cash Dominion shall not have 
    occurred and be continuing by reason thereof), and (iii) Investments in or 
    Contingent Liabilities in respect of Kaiser Aluminum and Chemical of Canada
    Limited for the purpose of Capital Expenditures not to exceed $5,000,000 per 
    annum, in each case to the extent permitted under Section 9.2.7.

         1.8   AMENDMENT TO EXHIBIT D-2 (COMPLIANCE CERTIFICATE) The form of 
Compliance Certificate attached to the Credit Agreement as Exhibit D-2 is 
amended to delete the penultimate paragraph in its entirety and to replace it 
with the following:

         "The Company hereby also represents and warrants to the Agent, for the 
    benefit of the Agent and the Lenders, that, except as may have been 
    previously disclosed to the Agent in writing pursuant to clause (d) of 
    Section 9.1.1, no Default has occurred and is continuing."

         1.9   ADDITION OF NEW EXHIBIT F (KAISER CENTER ASSETS).  The Credit 
Agreement is amended to add Exhibit F in the form attached to this Amendment as 
Exhibit 1.

         1.10  AMENDMENT TO SCHEDULE XI OF THE CREDIT AGREEMENT (SUBSIDIARIES 
HAVING TOTAL ASSETS GREATER THAN $1 MILLION). Schedule XI of the Credit 
Agreement is amended to delete the words "set forth on Schedule III, IV or VII" 
in the introductory text and to replace them with "that are Guarantors."

         1.11  AMENDMENT TO ITEM 4 OF DISCLOSURE SCHEDULE (ONGOING 
INDEBTEDNESS). Item 4 of the Disclosure Schedule to the Credit Agreement is 
amended to add the following Indebtedness:

Holders of three promissory notes issued by      $41,205,849 (as of 11/01/2002)
Newkirk Kalan, LLP (formerly known as Kalan 
Associates Limited Partnership) in connection 
with the August 1983 sale and leaseback 
transaction of the Kaiser Center and certain 
related assets, which promissory notes are 
secured on a non-recourse basis by liens on 
certain assets of Kaiser Center, Inc. 
described in Item 5 of the Disclosure 
Schedule

         1.12  AMENDMENT TO ITEM 5 OF DISCLOSURE SCHEDULE (ONGOING LIENS).  Item 
5 of the Disclosure Schedule to the Credit Agreement is amended to add the 
following Liens:

         "5. The Liens granted by Kaiser Center, Inc. to secure payment of three 
    promissory notes (and certain related obligations) issued by Newkirk Kalan 
    LLP (formerly known as Kalan Associates Limited Partnership) in connection 
    with the August 1983 sale and leaseback transaction of the Kaiser Center and 
    certain related assets. As of November 1, 2002, two of such promissory notes 
    were held by MLP Holdings, LLC and had an aggregate outstanding principal 
    balance of $10,929,977. As of November 1, 2002, the third of such promissory 
    notes was held by the Company and had an outstanding principal balance of
    $30,275,872.

         6. The Liens granted by Alwis of its rights, as lessor, under its 
    sublease of the Kaiser Center and certain related assets to the Company. 
    The Liens secure payment and performance by Alwis, as lessee, of its 
    obligations under a master lease with Newkirk Kalan LLP for the Kaiser 
    Center and certain related assets."

         2.    AMENDMENTS TO SECURITY AGREEMENT. Subject to the conditions and 
upon the terms set forth in this Amendment, the Security Agreement is hereby 
amended as follows:

         2.1   AMENDMENT TO SECTION 5.(O). Section 5.(o) of the Security 
Agreement is amended to delete clause (i) in its entirety and replace it with 
the following:

         "(i) 100% of the issued and outstanding shares of all classes of 
    capital stock of each Obligor and each Significant Subsidiary which is a 
    Domestic Subsidiary of the applicable Obligor, other than the capital stock 
    of the Parent Guarantor, KAAC, AJI and KJC and the securities of the Company 
    referred to in clause (i) to Section 9.2.6(a) of the Credit Agreement."

         2.2   ADDITION OF SCHEDULES VIII (PLEDGED NOTES) AND IX (PLEDGED
SHARES). The Security Agreement is amended to add Schedules VIII and IX in the
forms attached hereto as Schedules VIII and IX.

         3.    REPRESENTATIONS AND WARRANTIES OF PARENT GUARANTOR AND THE 
COMPANY. Each of the Parent Guarantor and the Company represents and warrants to 
each Lender and the Agent that the following statements are true, correct and 
complete:

         3.1   POWER AND AUTHORITY. Each of the Parent Guarantor, the Company 
and each other Obligor has all corporate or other organizational power and 
authority to enter into this Amendment and, as applicable, the Consent of 
Guarantors attached hereto (the "Consent"), and to carry out the transactions 
contemplated by, and to perform its obligations under or in respect of, the 
Credit Agreement, as amended hereby.

         3.2   DUE AUTHORIZATION, NON-CONTRAVENTION. The execution, delivery and
performance by the applicable Obligor of this Amendment and the Consent and the
performance of the obligations of each Obligor under or in respect of the Credit
Agreement as amended hereby have been duly authorized by all necessary corporate
or other organizational action, and do not (a) contravene such Obligor's Organic
Documents, (b) contravene any contractual restriction entered into after the
Petition Date where such a contravention has a reasonable possibility of having
a Materially Adverse Effect, or contravene any law or governmental regulation or
court order binding on or affecting such Obligor, or (c) result in, or require
the creation or imposition of, any Lien on any of such Obligor's properties.

         3.3   EXECUTION, DELIVERY AND ENFORCEABILITY. This Amendment and the 
Consent have been duly executed and delivered by each Obligor which is a party 
thereto and constitute the legal, valid and binding obligations of such Obligor, 
enforceable in accordance with their terms.

         3.4   NO DEFAULT OR EVENT OF DEFAULT. After giving effect to this 
Amendment, no event has occurred and is continuing or will result from the 
execution and delivery of this Amendment or the Consent that would constitute a 
Default or an Event of Default.

         3.5   REPRESENTATIONS AND WARRANTIES, ETC. All of the conditions set 
forth in Section 7.4, giving effect to this Amendment, have been met on and as 
of the date hereof and as of the effective date of this Amendment.

         4.    CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT. This Amendment 
shall be effective only if and when (a) this Amendment has been signed by, and 
when counterparts hereof shall have been delivered to the Agent (by hand 
delivery, mail or telecopy) by, the Parent Guarantor, the Company and the 
Required Lenders, and counterparts of the Consent have been delivered to the 
Agent by the Parent Guarantor and each Subsidiary Guarantor; (b) this Amendment 
has been approved by the Bankruptcy Court in the Chapter 11 Cases and the Agent 
has received a copy of the order entered by the Bankruptcy Court; and (c) the
Company has paid to the Agent, for the ratable benefit of the Lenders an
amendment fee equal to $750,000.

         5.    EFFECT OF AMENDMENT; RATIFICATION. This Amendment is a Loan 
Document. From and after the date on which this Amendment becomes effective, all 
references in the Loan Documents to the Credit Agreement and the Security 
Agreement shall mean the Credit Agreement and the Security Agreement, as 
applicable, as amended hereby. Except as expressly amended 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. Each of the Parent Guarantor and the Company 
confirms that as amended hereby, each of the Loan Documents is in full force and 
effect.

         6.    APPLICABLE LAW. THE VALIDITY, INTERPRETATIONS AND ENFORCEMENT OF 
THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS 
AMENDMENT, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE 
GOVERNED BY THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK; PROVIDED 
THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL 
LAW.

         7.    COMPLETE AGREEMENT. This Amendment sets forth the complete 
agreement of the parties in respect of any amendment to any of the provisions of 
any Loan Document. The execution, delivery and effectiveness of this Amendment 
do not constitute a waiver of any Default or Event of Default, amend or modify 
any provision of any Loan Document except as expressly set forth herein or
constitute a course of dealing or any other basis for altering the Obligations
of any Obligor.

         8.    CAPTIONS; COUNTERPARTS. The catchlines and captions herein are 
intended solely for convenience of reference and shall not be used to interpret 
or construe the provisions hereof. This Amendment may be executed by one or more 
of the parties to this Amendment on any number of separate counterparts 
(including by telecopy), all of which taken together shall constitute but one 
and the same instrument.

               IN WITNESS WHEREOF, each of the undersigned has duly executed
this Third Amendment to Post-Petition Credit Agreement, Second Amendment to
Post-Petition Pledge and Security Agreement and Consent of Guarantors as of the
date set forth above.

"PARENT GUARANTOR"                           KAISER ALUMINUM CORPORATION




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

"THE COMPANY"                                KAISER ALUMINUM & CHEMICAL
                                             CORPORATION


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

                       [Signatures Continued on Next Page]

                                             BANK OF AMERICA, N.A.,
                                             as the Agent and a Lender


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





                                             GENERAL ELECTRIC CAPITAL
                                             CORPORATION, as a Lender


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




                                             FOOTHILL CAPITAL CORPORATION,
                                             as a Lender


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





                                             THE CIT GROUP/BUSINESS CREDIT, INC.,
                                              as a Lender


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

                                             MERRILL LYNCH BUSINESS FINANCIAL 
                                             SERVICES INC., as a Lender


                                             By:   /s/ Michele Kovatchis
                                             Name:     Michele Kovatchis
                                             Title:    Director


                                             PNC BANK, NATIONAL ASSOCIATION,
                                             as a Lender


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


                                             GMAC BUSINESS CREDIT, LLC,
                                             as a Lender


                                             By:   /s/ Joel Richards
                                             Name:     Joel Richards
                                             Title:    Director


                                             THE PROVIDENT BANK,
                                             as a Lender


                                             By:   /s/ Mary Sue Wolfer
                                             Name:     Mary Sue Wolfer
                                             Title:    Director


                              CONSENT OF GUARANTORS


Each of the undersigned is a Guarantor of the Obligations of the Company under
the Credit Agreement and each other Loan Document and hereby (a) consents to the
foregoing Amendment, (b) acknowledges that notwithstanding the execution and
delivery of the foregoing Amendment, the obligations of each of the undersigned
Guarantors are not impaired or affected and the Parent Guaranty and the
Subsidiary Guaranty continue in full force and effect, and (c) ratifies the
Parent Guaranty or the Subsidiary Guaranty, as applicable, and each of the Loan
Documents to which it is a party and further ratifies the Security Interests
granted by it to the Agent for its benefit and the benefit of the Secured
Parties.


               IN WITNESS WHEREOF, each of the undersigned has executed and 
delivered this CONSENT OF GUARANTORS as of the date first set forth above.

                                        AKRON HOLDING CORPORATION



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



                                        ALPART JAMAICA INC.



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



                                        KAISER ALUMINA AUSTRALIA CORPORATION



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



                                        KAISER BELLWOOD CORPORATION



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




                                        KAISER ALUMINUM & CHEMICAL INVESTMENT, INC.


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



                                        KAISER ALUMINIUM INTERNATIONAL, INC.



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




                                        KAISER ALUMINUM PROPERTIES, INC.



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



                                        KAISER ALUMINUM TECHNICAL
                                            SERVICES, INC.



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




                                        KAISER FINANCE CORPORATION



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



                                        KAISER JAMAICA CORPORATION



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



                                        KAISER MICROMILL HOLDINGS, LLC



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



                                        KAISER SIERRA MICROMILLS, LLC



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



                                        KAISER TEXAS SIERRA MICROMILLS, LLC



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



                                        KAISER TEXAS MICROMILL HOLDINGS, LLC




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


                                        OXNARD FORGE DIE COMPANY, INC.



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

                                        KAISER ALUMINUM CORPORATION



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



              EXHIBIT 1 TO THIRD AMENDMENT TO POST-PETITION CREDIT
        AGREEMENT, SECOND AMENDMENT TO POST-PETITION PLEDGE AND SECURITY
                      AGREEMENT AND CONSENT OF GUARANTORS


                                                                       EXHIBIT F

                       DESCRIPTION OF KAISER CENTER ASSETS



                  (a) The land (the "Land") lying beneath the Kaiser Center
office building, garage and mall (the "Building") generally located at 300
Lakeside Drive, Webster Street and 21st Street, Oakland, California;


                  (b) The mall portion of the Building (the "Mall Building")
generally located at Webster Street and 21st Street, Oakland, California;

                  (c) The real property used as a surface parking lot located at
21st Street and 22nd Street, Oakland, California (the "Parking Lot"), subject to
a Parking Lease, dated December 30, 1983, as amended, between Kaiser Center
Properties, a California partnership, as landlord, the Company and Prentiss
Properties Acquisitions Partners, L.P., or, if elected by the buyer, a one
hundred percent ownership interest in the entity that holds fee simple title to
the Parking Lot;


                  (d) The rights of Kaiser Center, Inc. ("KCI") as landlord
under that certain Ground Lease entered into by and between KCI and Kalan
Associates Limited Partnership ("Kalan") as tenant, dated as of August 15, 1983
(the "Ground Lease");


                  (e) The rights of Alwis as tenant under that certain Master
Lease, entered into by and between Kalan as landlord and Alwis Leasing Corp.
(subsequently merged into Alwis) as tenant, dated as of August 15, 1983 and
pertaining to the Land and the Building (the "Master Lease");


                  (f) All interests of the Company and Alwis under that certain
Sublease Agreement entered into by and between Alwis as landlord and the Company
as tenant, dated as of August 15, 1983, and pertaining to the Building (the
"Sublease");


                  (g) All interests of the Company in and to leases of space in
the Building and in any guaranties, security deposits, letters of credit or
other security held by the Company in connection therewith;


                  (h) That certain Promissory Note made by Kalan in the original
amount of three million two hundred thirty-seven thousand four hundred
eighty-five dollars ($3,237,485), dated as of August 15, 1983 (the "Third Note")
made to and for the benefit of Zenith Insurance Company ("Zenith"), the Third
Note having been acquired by the Company from Zenith;


                  (i) The Deed of Trust made by Kalan and joined in by KCI to
secure the Third Note;

                  (j) That certain Assignment of Leases and Agreement made by
Kalan for the benefit of Zenith on August 15, 1983 as additional security for
payment of the Third Note and other obligations of Kalan to Zenith (the "Third
Lease Assignment"), all rights of Zenith thereunder having been assigned to the
Company in connection with endorsement of the Third Note to the Company;


                  (k) UCC Financing Statement made by Kalan and KCI to Zenith to
secure the Third Note;


                  (1) That certain agreement made by Kalan obligating itself to
pay the original sum of seventeen million one hundred twenty thousand dollars
($17,120,000) dated as of August 15, 1983 for the benefit of Resources Property
Development Corp. (referred to herein as the "Fourth Note"), the Fourth Note
having been acquired by the Company by assignment;


                  (m) The Deed of Trust made by Kalan to secure the Fourth Note
for the benefit of Resources Property Development Corp. (the "Fourth Deed of
Trust"), the beneficial interest in the Fourth Deed of Trust having been
assigned to the Company;


                  (n) All security interests, collateral assignments, pledges,
guaranties and other security held by the Company, KCI or Alwis to secure or
with respect to any of the interests referred to in (g) through (1) above and
all certificates, resolutions and other proofs of authority with respect
thereto;


                  (o) All permits, entitlements and other licenses and rights
held by the Company, KCI or Alwis with respect to the real property and
improvements that constitute the Kaiser Center (the "Property") or other
property interests pertaining the Property;


                  (p) Various contracts, contract rights, warranties and service
agreements held by the Company, KCI or Alwis with respect to any of the
Property; and


                  (q) All personal property owned and used by the Company, KCI
or Alwis exclusively in connection with the management and operation of the
Building.


                                  SCHEDULE VII

                                  PLEDGED NOTES


1. Subordinated Note, dated April 30, 1985, as amended, for the original
principal amount of $8,000,000, and a balance at October 31, 2002, of
$4,275,000, payable to Kaiser Aluminum & Chemical Corporation, or order, by
National Refractories & Minerals Corporation.


2. Standby Revolving Credit Note, dated September 20, 1990, for the original
amount of $2,500,000, and a balance at October 31, 2002, of $2,500,000, payable
to Kaiser Aluminum & Chemical Corporation, or order, by National
Refractories & Minerals Corporation.


3. Non-Negotiable Intercompany Note, dated December 21, 1989, as amended
effective as of July 1, 1993 and December 11, 2000, payable to Kaiser Aluminum &
Chemical Corporation, or order, by KaiserTech Limited (now named Kaiser Aluminum
Corporation)(the "KT Note").

4. Promissory Note, dated August 15, 1983, for the original principal amount of
$3,237,485 and a balance at October 31, 2002, of $30,275,872, payable to Kaiser
Aluminum & Chemical Corporation by Kalan Associates Limited Partnership)(now
named Newkirk Kalan, LLP).

5. Intercompany Demand Note, dated February 15, 1994, issued by Kaiser Aluminum
& Chemical Corporation and made payable to the order of Akron Holding
Corporation.

6. Intercompany Demand Note, dated February 15, 1994, issued by Kaiser Aluminum
& Chemical Corporation and made payable to the order of Kaiser Aluminum &
Chemical Investment, Inc.

7. Intercompany Demand Note, dated February 15, 1994, issued by Kaiser Aluminum
& Chemical Corporation and made payable to the order of Kaiser Aluminum
Properties, Inc.

8. Intercompany Demand Note, dated February 15, 1994, issued by Kaiser Aluminum
& Chemical Corporation and made payable to the order of Kaiser Aluminum
Technical Services, Inc.

9. Intercompany Demand Note, dated February 15, 1994, issued by Kaiser Aluminum
& Chemical Corporation and made payable to the order of Oxnard Forge Die
Company, Inc.

10. Intercompany Demand Note, dated February 15, 1994, issued by Kaiser Aluminum
& Chemical Corporation and made payable to the order of Kaiser Aluminum
International, Inc.

11. Intercompany Demand Note, dated February 15, 1994, issued by Kaiser Aluminum
& Chemical Corporation and made payable to the order of Kaiser Finance
Corporation.

12. Intercompany Demand Note, dated February 15, 1994, issued by Kaiser Alumina
Australia Corporation and made payable to the order of Kaiser Finance
Corporation.

13. Intercompany Demand Note, dated February 15, 1994, issued by Kaiser Jamaica
Corporation and made payable to the order of Kaiser Finance Corporation.

14. Intercompany Demand Note, dated February 15, 1994, issued by Alpart Jamaica
Inc. and made payable to the order of Kaiser Finance Corporation.

15. Intercompany Demand Note, dated February 15, 1994, issued by Kaiser Aluminum
& Chemical Corporation and made payable to the order of Kaiser Alumina
Australia Corporation.

16. Intercompany Demand Note, dated February 15, 1994, issued by Kaiser Finance
Corporation and made payable to the order of Kaiser Alumina Australia
Corporation.

17. Intercompany Demand Note, dated June 30, 1997, issued by Kaiser Bellwood
Corporation and made payable to the order of Kaiser Finance Corporation.

                                   SCHEDULE IX

                                 PLEDGED SHARES

                                                         JURISDICTION
                                                              OF                        CERTIFICATE     NUMBER OF          PERCENTAGE
       GRANTOR                     ISSUER                ORGANIZATION        CLASS         NO.(S)         SHARES            OF CLASS

Kaiser Aluminum &           Akron Holding             Ohio                common             2            100               100%
Chemical Corporation        Corporation
Kaiser Aluminum &           Anglesey Aluminum         United Kingdom                        23         12,862,500            49%
Chemical Corporation        Limited
Kaiser Aluminum &           Kaiser Aluminum           Delaware            common             4            100               100%
Chemical Corporation        International, Inc.
Kaiser Aluminum &           Kaiser Aluminum &         Ontario             common            C-1          40,426              65%
Chemical Corporation        Chemical Canada
                            Investment Limited
Kaiser Aluminum &           Kaiser Aluminum &         Ontario             preferred        NP-6          34,356              40%
Chemical Investment, Inc.   Chemical Canada
                            Investment Limited
Kaiser Aluminum &           Kaiser Aluminum &         Delaware            common             1             10               100%
Chemical Corporation        Chemical Investment,
                            Inc.
Kaiser Aluminum &           Kaiser Aluminum &         Ontario             common            C-2        1,806,841           17.4%
Chemical Investment, Inc.   Chemical of Canada
                            Limited
Kaiser Aluminum &           Kaiser Aluminum           Delaware            common             2             10               100%
Chemical Corporation        Properties, Inc.
Kaiser Aluminum &           Kaiser Aluminum           California          common             1           2,500              100%
Chemical Corporation        Technical Services, Inc.
Kaiser Aluminum &           Kaiser Bauxite Company    Nevada              common             1           10,000             100%
Chemical Corporation                                                                         2          140,000
Kaiser Aluminum &           Kaiser Bellwood           Delaware            common             1           1,000              100%
Chemical Corporation        Corporation
Kaiser Alumina Australia    Kaiser Finance            Delaware            common             1           1,000              100%
Corporation                 Corporation
Kaiser Aluminum &           Oxnard Forge Die          California          common             1           1,000              100%
Chemical Corporation        Company, Inc.
Kaiser Aluminum &           Trochus Insurance         Bermuda                               32           78,000              65%
Chemical Corporation        Company, Ltd.                                                   42          325,000
Kaiser Aluminum &           Volta Aluminum Company    Ghana                                 85         2,357,146             55%
Chemical Corporation        Limited
Kaiser Aluminum             Kaiser Aluminum &         Delaware            common         CNB 81285     44,898,914           100%
Corporation                 Chemical Corporation                                         CNB 81286     1,272,045
                                                                                         CNB 81288        406


Exhibit 4.20 to 2002 10-K
                                                                    Exhibit 4.20

                                                                  EXECUTION COPY
                               FOURTH AMENDMENT TO
                         POST-PETITION CREDIT AGREEMENT
                            AND CONSENT OF GUARANTORS



                  This FOURTH AMENDMENT TO POST-PETITION CREDIT AGREEMENT AND
CONSENT OF GUARANTORS (this "Amendment") is dated as of March 17, 2003 and
entered into by and among KAISER ALUMINUM CORPORATION, a Delaware corporation,
as debtor and debtor-in-possession (the "Parent Guarantor"), KAISER ALUMINUM &
CHEMICAL CORPORATION, a Delaware corporation, as debtor and debtor-in-possession
(the "Company"), the banks and other financial institutions signatory hereto
that are parties as Lenders to the Credit Agreement referred to below (the
"Lenders"), BANK OF AMERICA, N.A., as administrative agent and collateral agent
(in such capacity, the "Agent") for the Lenders, GENERAL ELECTRIC CAPITAL
CORPORATION ("GE Capital") as Documentation Agent, THE CIT GROUP/BUSINESS
CREDIT, INC. ("CIT"), as Co-Syndication Agent, and FOOTHILL CAPITAL CORPORATION
("Foothill"), as Co-Syndication Agent (GE Capital, CIT and Foothill,
collectively, the "Co-Agents").

                                    RECITALS

                  WHEREAS, the Parent Guarantor, the Company, the Lenders, and
the Agent have entered into that certain Post-Petition Credit Agreement dated as
of February 12, 2002, as amended by that
 certain First Amendment to
Post-Petition Credit Agreement and Post-Petition Pledge and Security Agreement
and Consent of Guarantors dated as of March 21, 2002, that certain Second
Amendment to Post-Petition Credit Agreement and Consent of Guarantors dated as
of March 21, 2002, that certain Third Amendment to Post-Petition Credit
Agreement, Second Amendment to Post-Petition Pledge and Security Agreement and
Consent of Guarantors dated as of December 19, 2002 and as further modified by
that certain Waiver and Consent With Respect to Post-Petition Credit Agreement
dated as of October 9, 2002 and that certain Second Waiver and Consent With
Respect to Post-Petition Credit Agreement dated as of January 13, 2003 (the
"Second Waiver") (as so amended and modified, the "Credit Agreement";
capitalized terms used in this Amendment without definition shall have the
meanings given such terms in the Credit Agreement);

                  WHEREAS, the members of the Controlled Group had an obligation
to make a special liquidity contribution to the trust established under the
Kaiser Aluminum Salaried Employees Retirement Plan in the amount of
approximately $17,000,000 on January 15, 2003 (the "January Liquidity
Contribution") and failed to make such payment;

                  WHEREAS, as a result of the failure to make the January
Liquidity Contribution when due, a Lien in favor of the PBGC would, unless
stayed under the Bankruptcy Code or other applicable law, be imposed under ERISA
and the Code on all of the assets of the members of the Controlled Group;

                  WHEREAS, on April 15, 2003, and on certain quarterly
contribution dates thereafter, the members of the Controlled Group may have
further obligations to make certain Future Minimum Funding and Liquidity
Contributions (as hereinafter defined) and failure to make such Future Minimum
Funding and Liquidity Contributions would also result in the imposition under
ERISA and the Code of a Lien on all of the assets of the members of the
Controlled Group, unless such Lien were stayed under the Bankruptcy Code or
other applicable law;

                  WHEREAS, failure to make the January Liquidity Contribution
and the Future Minimum Funding and Liquidity Contributions may result in the
imposition of certain taxes, and failure to pay such taxes would also result in
the creation of a Lien on the assets of the members of the Controlled Group,
unless such Lien were stayed under the Bankruptcy Code or other applicable law;

                  WHEREAS, since February 12, 2002, and prior to the date the
January Liquidity Contribution was due, certain additional Subsidiaries have
become debtors in cases filed under Chapter 11 of the Bankruptcy Code, which
have been administratively consolidated with the Chapter 11 cases of the Debtors
(the "New Debtors");

                  WHEREAS, as a result of the automatic stay under section 362
of the Bankruptcy Code, the imposition and perfection of the Liens resulting
from the failure to make the January Liquidity Contribution and the Future
Minimum Funding and Liquidity Contributions and/or to pay the taxes associated
therewith are stayed as to the Debtors and New Debtors;

                  WHEREAS, pursuant to that certain Stipulation and Order
Extending Automatic Stay to Certain Nondebtor Subsidiaries entered in the
Bankruptcy Cases on January 27, 2003 (the "Stipulation"), the imposition and
perfection of such Liens are also stayed as to Trochus and VALCO through
December 31, 2003;

                  WHEREAS, the imposition and perfection of such Liens are not
stayed as to members of the Controlled Group that are not Debtors or New Debtors
(with the exception of VALCO and Trochus); and

                  WHEREAS, as contemplated by the Second Waiver, the parties
hereto wish to amend the Credit Agreement to incorporate certain modifications
to the Credit Agreement contained in the Second Waiver and to make the other
modifications contained herein;

                  NOW THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the Parent Guarantor, the Company, the Lenders, and
the Agent agree as follows:

                  1. AMENDMENTS TO CREDIT AGREEMENT. Subject to the conditions 
and upon the terms set forth in this Amendment, the Credit Agreement is hereby 
amended as follows:

                  1.1      AMENDMENTS TO SECTION 1.1 (DEFINITIONS).

                  (a)   The definitions of "AJI", "Alwis", "KBC", "KEC", "KJC", 
and "Kaiser Canada" are amended to add the following at the end of each such 
definition: " as debtor and debtor-in-possession under Chapter 11 of the 
Bankruptcy Code."

                  (b)   The definition of "Bankruptcy Case(s)" is amended to add 
at the end thereof "and the Chapter 11 cases filed by the New Domestic Debtors 
and the New Canadian Debtors."

                  (c)   The definition of "Debtor" is deleted in its entirety 
and replaced with the following:

                  "Debtor" means each of the Company, each Secured Guarantor,
                  each New Domestic Debtor and each New Canadian Debtor, and
                  "Debtors" means all of them collectively.

                  (d)   The definition of "Petition Date" is deleted in its 
entirety and replaced with the following:

                  "Petition Date" means as to any Debtor or any Bankruptcy Case,
                  the date on which the applicable Bankruptcy Case was commenced
                  with the Bankruptcy Court.

                  (e)   The definition of "Subsidiary Guaranty" is deleted in 
its entirety and replaced with the following:

                  "Subsidiary Guaranty" means the guaranty executed and
                  delivered by any Subsidiary of the Company on the Effective
                  Date, or by the New Domestic Debtors pursuant to the Fourth
                  Amendment, or by any other Subsidiary pursuant to Section
                  9.1.10, as amended, supplemented, restated, or otherwise
                  modified from time to time in accordance with the provisions
                  hereof or thereof.

                  (f)   The definition of "Unsecured Guarantor" is deleted in 
its entirety and replaced with the following:

                  "Unsecured Guarantor" means each of the New Domestic Debtors
                  and "Unsecured Guarantors" means all them collectively.

                  (g)   The following definitions are added in the proper 
alphabetical order:

                  "Fourth Amendment" means the Fourth Amendment to Post-Petition
                  Credit Agreement and Consent of Guarantors dated as of March
                  17, 2003 among the Parent Guarantor, the Company, the Lenders
                  and the Agent.

                  "January Liquidity Contribution" means the special liquidity
                  contribution required to be made by the members of the
                  Controlled Group under the Salaried Pension Plan in the amount
                  of approximately $17,000,000 on January 15, 2003.

                  "Future Minimum Funding and Liquidity Contributions" means the
                  minimum funding and additional liquidity contributions which
                  may be required to be made after January 15, 2003 by the
                  members of the Controlled Group under ERISA to the trust
                  established under the Salaried Pension Plan and other defined
                  benefit plans of the Controlled Group.

                   "Kaiser Center Properties" means Kaiser Center Properties, a
                  California partnership, as debtor and debtor-in-possession
                  under Chapter 11 of the Bankruptcy Code.

                  "KAE Trading" means KAE Trading, Inc., a Delaware corporation,
                  as debtor and debtor-in-possession under Chapter 11 of the
                  Bankruptcy Code.

                  "Kaiser Canada Investment Limited" means Kaiser Aluminum &
                  Chemical Canada Investment Limited, an Ontario corporation, as
                  debtor and debtor-in-possession under Chapter 11 of the
                  Bankruptcy Code.

                  "KCI" means Kaiser Center, Inc., a California corporation, as
                  debtor and debtor-in-possession under Chapter 11 of the
                  Bankruptcy Code.

                  "New Canadian Debtor" means each of Kaiser Canada, Kaiser
                  Canada Investment Limited and Texada Mines, and "New Canadian
                  Debtors" means all of them collectively.

                  "New Domestic Debtor" means, each of AJI, Alwis, KAE Trading,
                  Kaiser Center Properties, KBC, KCI, KEC, and KJC and "New
                  Domestic Debtors" means all of them collectively.

                  "Permitted PBGC Liens" means (a) unperfected Liens, if any,
                  imposed under ERISA and the Code on assets of the Debtors,
                  Trochus or VALCO as a result of (x) the failure to make the
                  January Liquidity Contribution and the Future Minimum Funding
                  and Liquidity Contributions on or before the dates when due or
                  the failure to pay any taxes imposed in connection therewith
                  or (y) the termination of any Pension Plan; and (b) perfected
                  or unperfected Liens imposed under ERISA and the Code on
                  assets of members of the Controlled Group other than any
                  Debtor, Trochus or VALCO as a result of (x) the failure to
                  make the January Liquidity Contribution and the Future Minimum
                  Funding and Liquidity Contributions on or before the dates
                  when due or the failure to pay any taxes imposed in connection
                  therewith or (y) the termination of any Pension Plan.

                  "Salaried Pension Plan" means the Kaiser Aluminum Salaried
                  Employees Retirement Plan.

                  "Second Waiver" means that certain Second Waiver and Consent
                  with Respect to Post-Petition Credit Agreement dated as of
                  January 13, 2003 among the Company, the Parent Guarantor, the
                  Lenders and the Agent.

                  "Texada Mines" means Texada Mines Ltd., a British Columbia
                  corporation, as debtor and debtor-in-possession under Chapter
                  11 of the Bankruptcy Code.

                  1.2      AMENDMENT TO SECTION 8.12 (PENSION AND WELFARE 
PLANS).  Section 8.12 of the Credit Agreement is deleted in its entirety and 
replaced by the following:

                  "SECTION 8.12 PENSION AND WELFARE PLANS. During the
                  twelve-consecutive-month period prior to the date of the
                  execution and delivery of this Agreement and prior to the date
                  of each Credit Extension hereunder, (a) no actions have been
                  taken by the Parent Guarantor, the Company, any member of
                  their Controlled Groups, or any other Person (with the
                  requisite authority to act) to terminate any Pension Plan that
                  has insufficient assets to satisfy all benefit liabilities
                  thereunder (within the meaning of section 4001(a)(16) of
                  ERISA), which termination is sufficient to give rise to a Lien
                  on assets of any Controlled Group member under section 4068 of
                  ERISA and (b) no contribution failure has occurred with
                  respect to any Pension Plan sponsored or maintained by any
                  Controlled Group member sufficient to give rise to a Lien on
                  assets of any Controlled Group member under Section 302(f) of
                  ERISA, other than, with respect to the foregoing clauses (a)
                  and (b), Permitted PBGC Liens, which failure has not been
                  cured within 30 days of the applicable due date. Item 7
                  ("Employee Benefit Plans") of the Disclosure Schedule lists
                  all Welfare Plans of the Parent Guarantor, the Company, or any
                  of their Domestic Subsidiaries."

                  1.3   AMENDMENT TO SECTION 9.2.3 (LIENS). Section 9.2.3 of the 
Credit Agreement is amended to (a) delete the reference in the first sentence 
thereof to "clauses (a), (b), (e) and (h)" and replace it with "clauses (a), 
(b), (e), (h) and (y)" and (b) add the following clause (y) at the end of such 
Section:

                  "(y) the Permitted PBGC Liens."

                  1.4   AMENDMENT TO SECTION 9.2.22 (CHAPTER 11 CLAIMS). Section 
9.2.22 is amended to delete the two references to "Secured Guarantors" and to 
replace them with "other Debtors".

                  1.5   AMENDMENT TO SECTION 10.1.8 (PENSION PLANS).  Section 
10.1.8 is deleted in its entirety and replaced with the following:

                  SECTION 10.1.8. PENSION PLANS. A contribution failure occurs
                  with respect to any Pension Plan sufficient to give rise to a
                  Lien (other than the Permitted PBGC Liens) against any assets
                  of any Controlled Group member under section 302(f) of ERISA
                  in an amount in excess of $1,000,000, which failure has not
                  been completely cured within 30 days of the applicable due
                  date.

                  1.5 AMENDMENT TO SECTION 12.9(C). Section 12.9(c) is amended
to change the name of the agent for service of process to "Jones Day, 222 East
41st Street, New York, New York 10017 (Attention: Michael R. Bassett)".

                  2.  REPRESENTATIONS AND WARRANTIES OF PARENT GUARANTOR AND THE 
COMPANY. Each of the Parent Guarantor and the Company represents and warrants to 
each Lender and the Agent that the following statements are true, correct and 
complete:

                  2.1 POWER AND AUTHORITY. Each of the Parent Guarantor, the 
Company and each other Obligor has all corporate or other organizational power 
and authority to enter into this Amendment and, as applicable, the Consent of 
Guarantors attached hereto (the "Consent"), and to carry out the transactions 
contemplated by, and to perform its obligations under or in respect of, the 
Credit Agreement, as amended hereby.

                  2.2 DUE AUTHORIZATION, NON-CONTRAVENTION. The execution, 
delivery and performance by the applicable Obligor of this Amendment and the 
Consent and the performance of the obligations of each Obligor under or in 
respect of the Credit Agreement as amended hereby have been duly authorized by 
all necessary corporate or other organizational action, and do not (a) 
contravene such Obligor's Organic Documents, (b) contravene any contractual 
restriction entered into after the Petition Date where such a contravention has 
a reasonable possibility of having a Materially Adverse Effect, or contravene 
any law or governmental regulation or court order binding on or affecting such 
Obligor, or (c) result in, or require the creation or imposition of, any Lien on 
any of such Obligor's properties.

                  2.3 EXECUTION, DELIVERY AND ENFORCEABILITY. This Amendment and 
the Consent have been duly executed and delivered by each Obligor which is a 
party thereto and constitute the legal, valid and binding obligations of such 
Obligor, enforceable in accordance with their terms.

                  2.4 NO DEFAULT OR EVENT OF DEFAULT. After giving effect to 
this Amendment, no event has occurred and is continuing or will result from the 
execution and delivery of this Amendment or the Consent that would constitute a 
Default or an Event of Default.

                  2.5 REPRESENTATIONS AND WARRANTIES, ETC. All of the conditions 
set forth in Section 7.4, giving effect to this Amendment, have been met on and 
as of the date hereof and as of the effective date of this Amendment.

                  3.  CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT. This 
Amendment shall be effective only if and when (a) this Amendment has been signed 
by, and when counterparts hereof shall have been delivered to the Agent (by hand 
delivery, mail or telecopy) by, the Parent Guarantor, the Company and the 
Required Lenders, and counterparts of the Consent have been delivered to the 
Agent by the Guarantors (including each New Domestic Debtor); (b) each New 
Domestic Debtor shall have executed and delivered to the Agent, for its benefit 
and the benefit of the Lenders, a Subsidiary Guaranty, in form and substance 
satisfactory to the Agent (the "New Domestic Debtor Guaranties"); and (c) this 
Amendment and the New Domestic Debtor Guaranties, and the granting to the Agent 
and the Lenders, of Superpriority Claims against the New Domestic Debtors under 
section 364(c)(1) of the Bankruptcy Code, subject only to the Carve Out, shall 
have been approved by the Bankruptcy Court in the Chapter 11 Cases, pursuant to 
an order in form and substance satisfactory to the Agent and its counsel and on 
notice satisfactory to them, and the Agent shall have received a copy of that 
order entered by the Bankruptcy Court.

                  4. EFFECT OF AMENDMENT; RATIFICATION. This Amendment is a Loan 
Document. From and after the date on which this Amendment becomes effective, all 
references in the Loan Documents to the Credit Agreement shall mean the Credit 
Agreement, as amended hereby. Except as expressly amended 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. Each of the Parent Guarantor and the Company 
confirms that as amended hereby, each of the Loan Documents is in full force and 
effect.

                  5. APPLICABLE LAW. THE VALIDITY, INTERPRETATIONS AND 
ENFORCEMENT OF THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION 
WITH THIS AMENDMENT, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, 
SHALL BE GOVERNED BY THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK; 
PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER 
FEDERAL LAW.

                  6. COMPLETE AGREEMENT. This Amendment sets forth the complete 
agreement of the parties in respect of any amendment to any of the provisions of 
any Loan Document. The execution, delivery and effectiveness of this Amendment 
do not constitute a waiver of any Default or Event of Default, amend or modify 
any provision of any Loan Document except as expressly set forth herein or
constitute a course of dealing or any other basis for altering the Obligations
of any Obligor.

                  7. CAPTIONS; COUNTERPARTS. The catchlines and captions herein 
are intended solely for convenience of reference and shall not be used to 
interpret or construe the provisions hereof. This Amendment may be executed by 
one or more of the parties to this Amendment on any number of separate 
counterparts (including by telecopy), all of which taken together shall 
constitute but one and the same instrument.

                  IN WITNESS WHEREOF, each of the undersigned has duly executed
this Fourth Amendment to Post-Petition Credit Agreement and Consent of
Guarantors as of the date set forth above.

"PARENT GUARANTOR"                          KAISER ALUMINUM CORPORATION




                                            By:   /s/ Kerry A. Shiba
                                            Name:     Kerry A. Shiba
                                            Title:    Vice President and
                                                      Treasurer

"THE COMPANY"                               KAISER ALUMINUM & CHEMICAL
                                            CORPORATION


                                            By:   /s/ Kerry A. Shiba
                                            Name:     Kerry A. Shiba
                                            Title:    Vice President and
                                                      Treasurer


                                            BANK OF AMERICA, N.A.,
                                            as the Agent and a Lender


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


                                            GENERAL ELECTRIC CAPITAL
                                            CORPORATION, as a Lender


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


                                            FOOTHILL CAPITAL CORPORATION,
                                            as a Lender


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


                                            THE CIT GROUP/BUSINESS CREDIT, INC.,
                                             as a Lender


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


                                            MERRILL LYNCH BUSINESS FINANCIAL 
                                            SERVICES INC., as a Lender


                                            By:   /s/ Michele Kovatchis
                                            Name:     Michele Kovatchis
                                            Title:    Director


                                            PNC BANK, NATIONAL ASSOCIATION,
                                            as a Lender


                                            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
                                            as a Lender


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


                                            THE PROVIDENT BANK,
                                            as a Lender


                                            By:   /s/ Mary Sue Wolfer
                                            Name:     Mary Sue Wolfer
                                            Title:    Credit Officer


                              CONSENT OF GUARANTORS


Each of the undersigned is a Guarantor of the Obligations of the Company under
the Credit Agreement and each other Loan Document and hereby (a) consents to the
foregoing Amendment, (b) acknowledges that notwithstanding the execution and
delivery of the foregoing Amendment, the obligations of each of the undersigned
Guarantors are not impaired or affected and the Parent Guaranty and the
Subsidiary Guaranty continue in full force and effect, and (c) ratifies the
Parent Guaranty or the Subsidiary Guaranty, as applicable, and each of the Loan
Documents to which it is a party and further ratifies the Security Interests
granted by it to the Agent for its benefit and the benefit of the Secured
Parties.



                  IN WITNESS WHEREOF, each of the undersigned has executed and 
delivered this CONSENT OF GUARANTORS as of the date first set forth above.

                                            AKRON HOLDING CORPORATION



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            ALPART JAMAICA INC.



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER ALUMINA AUSTRALIA CORPORATION



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER BELLWOOD CORPORATION



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer


                                            KAISER ALUMINUM & CHEMICAL 
                                            INVESTMENT,  INC.


                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER ALUMINIUM INTERNATIONAL, INC.



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER ALUMINUM PROPERTIES, INC.



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER ALUMINUM TECHNICAL
                                            SERVICES, INC.


                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER FINANCE CORPORATION



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER JAMAICA CORPORATION



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER MICROMILL HOLDINGS, LLC



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER SIERRA MICROMILLS, LLC



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER TEXAS SIERRA MICROMILLS, LLC



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER TEXAS MICROMILL HOLDINGS, LLC



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            OXNARD FORGE DIE COMPANY, INC.



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER ALUMINUM CORPORATION



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            ALWIS LEASING LLC



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER BAUXITE COMPANY



                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER CENTER, INC.


                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer



                                            KAISER CENTER PROPERTIES


                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer


                                            KAE TRADING, INC.


                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer


                                            KAISER EXPORT COMPANY


                                            By   /s/ Kerry A. Shiba
                                            Name:    Kerry A. Shiba
                                            Title:   Vice President and
                                                     Treasurer

Exhibit 4.21 to 2002 10-K
                                                                    Exhibit 4.21

                       WAIVER AND CONSENT WITH RESPECT TO
                         POST-PETITION CREDIT AGREEMENT


         This WAIVER AND CONSENT WITH RESPECT TO POST-PETITION CREDIT AGREEMENT
(this "Waiver") is dated as of October 9, 2002 and entered into by and among
KAISER ALUMINUM CORPORATION, a Delaware corporation, as debtor and
debtor-in-possession (the "Parent Guarantor"), KAISER ALUMINUM & CHEMICAL
CORPORATION, a Delaware corporation, as debtor and debtor-in-possession (the
"Borrower"), the banks and other financial institutions signatory hereto that
are parties as Lenders to the Credit Agreement referred to below (the
"Lenders"), and BANK OF AMERICA, N.A., as administrative agent and collateral
agent (in such capacity, the "Agent") for the Lenders.

                                    RECITALS

         WHEREAS, the Parent Guarantor, the Borrower, the Lenders, and the Agent
have entered into that certain Post-Petition Credit Agreement dated as of
February 12, 2002 (as amended to date, the "Credit Agreement"; capitalized terms
used in this Waiver without definition shall have the meanings given such terms
in the Credit Agreement); and

         WHEREAS, pursuant to Section 9.2.4 of the Credit Agreement, the
Borrower has covenanted that it and its Subsidiaries, on a consolidated basis,
will maintain
 a minimum EBITDA of not less than a specified amount for each
period specified therein during the term of the Credit Agreement (the "Minimum
EBITDA Test"); and

         WHEREAS, the Borrower is considering shutting down, or ceasing
operations indefinitely at, its Mead, Washington facility (the "Mead Shutdown");
and

         WHEREAS, as a result of the Mead Shutdown, the Borrower and its
Subsidiaries could incur certain charges aggregating up to $230,000,000 as
follows: (i) a non-cash impairment charge of up to $145,000,000 associated with
the fixed assets at the Mead facility; (ii) a charge for retiree medical,
pension, and other benefits of up to $65,000,000, representing amounts that
would be paid over an extended period of time (primarily after the expiration of
the term of the Credit Agreement); and (iii) other non-cash charges (e.g. LIFO
charges) of up to $20,000,000 (collectively, the "Mead Shutdown Charges"); and

         WHEREAS, the incurrence of the Mead Shutdown Charges would result in
noncompliance by the Borrower and its Subsidiaries with the Minimum EBITDA Test
for the test periods in which such charges would be included in EBITDA; and

         WHEREAS, the Borrower has requested that the Agent and Lenders waive
any noncompliance with the Minimum EBITDA Test for the test periods ending
September 30, 2002 and December 31, 2002 and, if applicable, the test periods
ending October 31, 2002 and November 30, 2002, but only to the extent that
noncompliance therewith is attributable solely to the incurrence of the Mead
Shutdown Charges; and

         WHEREAS, the Borrower expects that QAL will either (i) make additional
drawdowns under the existing Series X Bank Loan Agreements to which QAL is a
party in an aggregate amount of up to $70,000,000 (the "Additional Series X
Financing") and borrow under one or more proposed Series Z Bank Loan Agreements
to which QAL may become a party in an aggregate amount of up to $145,000,000
(the "Proposed Series Z Financing") or (ii) if such Additional Series X
Financing is not drawn and/or the Proposed Series Z Financing is not obtained,
obtain additional cash Investments from each of the QAL joint venture
participants, such cash Investments being on a pro rata basis based on each
joint venture participant's ownership interest in QAL (such ratio being referred
to as the "Pro Rata Share" or the "Pro Rata Basis," as appropriate), in an
aggregate amount of up to $215,000,000, of which the Borrower's Pro Rata Share
would be $43,000,000 (the "QAL Advances"), in lieu of the aforementioned
third-party financings; and

         WHEREAS, pursuant to Section 9.2.20 of the Credit Agreement, the
Borrower, the Parent Guarantor and the Guarantors are prohibited from making
cash Investments in, or incurring Contingent Liabilities on behalf of, QAL,
except as reflected in the Financial Forecast or as otherwise permitted by the
Credit Agreement; and

         WHEREAS, the Credit Agreement and the Financial Forecast permit (i)
cash Investments in QAL of $27,000,000 and $46,000,000 in fiscal years 2002 and
2003, respectively, (ii) Contingent Liabilities of $14,000,000 in fiscal year
2002 in respect of QAL's Additional Series X Financing and (iii) subject to
certain limitations, $10,000,000 per annum in cash Investments or Contingent
Liabilities permitted under Section 9.2.20(ii) of the Credit Agreement; and

         WHEREAS, QAL has not yet made additional drawdowns under the Additional
Series X Financing and, as a result, during the fiscal year 2002, the Borrower
has made cash Investments in QAL in an amount equal to approximately
$33,000,000, of which $14,000,000 constitutes QAL Advances made in lieu of a
drawdown under the Additional Series X Financing, as assumed in the Financial
Forecast; and

         WHEREAS, the Borrower has informed the Agent and the Lenders that,
after taking into consideration the $10,000,000 per annum in cash Investments
permitted under Section 9.2.20(ii) of the Credit Agreement, the Borrower is in
compliance with the Credit Agreement; and

         WHEREAS, the Borrower has informed the Agent and the Lenders that (i)
QAL may draw down the Additional Series X Financing and $75,000,000 of the
Proposed Series Z Financing in fiscal year 2002 and (ii) any such draws will
directly reduce the Borrower's and Guarantors' future cash Investments in QAL;
and

         WHEREAS, the Borrower has requested that, notwithstanding Section
9.2.20(i) of the Credit Agreement, the Agent and the Lenders consent to either
(i) the Borrower's or any Guarantor's incurrence of Contingent Liabilities by
guaranteeing the QAL Indebtedness proposed to be incurred pursuant to the
Proposed Series Z Financing or (ii) if QAL does not draw down the Additional
Series X Financing and/or obtain the Proposed Series Z Financing, the Borrower's
or any Guarantor's making cash Investments in QAL pursuant to the QAL Advances;
provided that, the Borrower's and Guarantors' cash Investments in, and
Contingent Liabilities incurred on behalf of, QAL shall not exceed (a)
$56,000,000 (excluding amounts permitted under Section 9.2.20(ii) of the Credit
Agreement) made or incurred in fiscal year 2002, (b) $46,000,000 (excluding
amounts permitted under Section 9.2.20(ii) of the Credit Agreement) made or
incurred in fiscal year 2003 and (c) an aggregate of $87,000,000 (excluding
amounts permitted under Section 9.2.20(ii) of the Credit Agreement) made or
incurred in fiscal years 2002 and 2003; provided further that, any cash
Investments in, or Contingent Liabilities incurred on behalf of, QAL shall be on
a Pro Rata Basis; and

         WHEREAS, the Agent and the Lenders have agreed to the aforementioned
requested waiver and consent, subject to the terms and conditions herein; and

         WHEREAS, the Borrower, the Agent and the Lenders contemplate that an
amendment to the Credit Agreement will be entered into by the parties thereto in
the near future in order to incorporate the modifications effected hereby on a
more permanent basis in the Credit Agreement (provided, however, that nothing
set forth herein shall in any way be deemed an agreement by the Agent or the
Lenders to enter into any such amendment or waive any of Borrower's or any other
Obligor's obligations, covenants or agreements under the Credit Agreement or any
other Loan Document except for the period and on the terms and conditions
expressly set forth herein);

         NOW THEREFORE, in consideration of the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:

         Section 1 WAIVER OF NONCOMPLIANCE WITH MINIMUM EBITDA TEST.
Noncompliance with the Minimum EBITDA Test for the test periods ending September
30, 2002 and December 31, 2002 and, if applicable, the test periods ending
October 31, 2002 and November 30, 2002, is hereby waived to the extent such
noncompliance is attributable solely to the incurrence of the Mead Shutdown
Charges, provided that (i) the Mead Shutdown Charges shall not exceed
$230,000,000 in the aggregate during the test periods ending September 30, 2002
and December 31, 2002, and, if applicable, the test periods ending October 31,
2002 and November 30, 2002, and (ii) the Borrower and its Subsidiaries shall
maintain the minimum EBITDA set forth in Section 9.2.4 of the Credit Agreement
for the test periods ending September 30, 2002 and December 31, 2002, and, if
applicable, the test periods ending October 31, 2002 and November 30, 2002,
after excluding all Mead Shutdown Charges for the respective test periods.

         Section 2 CONSENT TO QAL CASH INVESTMENTS/CONTINGENT LIABILITIES.
Notwithstanding Section 9.2.20(i) of the Credit Agreement, the Agent and the
Lenders hereby consent to either (i) the Borrower's or any Guarantor's
incurrence of Contingent Liabilities by guaranteeing the QAL Indebtedness
proposed to be incurred pursuant to the Proposed Series Z Financing or (ii) if
QAL does not draw down the Additional Series X Financing and/or obtain the
Proposed Series Z Financing, the Borrower's or any Guarantor's making cash
Investments in QAL pursuant to the QAL Advances; provided that, the Borrower's
and Guarantors' cash Investments in, and Contingent Liabilities incurred on
behalf of, QAL shall not exceed (a) $56,000,000 (excluding amounts permitted
under Section 9.2.20(ii) of the Credit Agreement) made or incurred in fiscal
year 2002, (b) $46,000,000 (excluding amounts permitted under Section 9.2.20(ii)
of the Credit Agreement) made or incurred in fiscal year 2003 and (c) an
aggregate of $87,000,000 (excluding amounts permitted under Section 9.2.20(ii)
of the Credit Agreement) made or incurred in fiscal years 2002 and 2003;
provided further that, any cash Investments in, or Contingent Liabilities
incurred on behalf of, QAL shall be on a Pro Rata Basis.

         Section 3 COSTS AND EXPENSES. As provided in Section 12.3 of the Credit
Agreement, the Borrower agrees to reimburse the Agent for all fees, costs and
expenses, including the reasonable fees and out-of-pocket expenses of counsel or
other advisors for advice, assistance, or other representation incurred in
connection with this Waiver and Consent.

         Section 4 REPRESENTATIONS AND WARRANTIES OF PARENT GUARANTOR AND THE
BORROWER. Each of the Parent Guarantor and the Borrower represents and warrants
to each Lender and the Agent that the following statements are true, correct and
complete:

         A. POWER AND AUTHORITY. Each of the Parent Guarantor, Borrower and each
other Obligor has all corporate or other organizational power and authority to
enter into this Waiver and Consent and, as applicable, the Consent of Guarantors
attached hereto (the "Guarantor Consent"), and to carry out the transactions
contemplated by, and to perform its obligations under or in respect of, the
Credit Agreement, after giving effect to this Waiver and Consent.

         B. DUE AUTHORIZATION, NON-CONTRAVENTION. The execution, delivery and
performance by the applicable Obligor of this Waiver and Consent and the
Guarantor Consent and the performance of the obligations of each Obligor under
or in respect of the Credit Agreement (after giving effect to this Waiver and
Consent and the Guarantor Consent) have been duly authorized by all necessary
corporate or other organizational action, and do not (a) contravene such
Obligor's Organic Documents, (b) contravene any contractual restriction entered
into after the Petition Date where such a contravention has a reasonable
possibility of having a Materially Adverse Effect, or contravene any law or
governmental regulation or court order binding on or affecting such Obligor, or
(c) result in, or require the creation or imposition of, any Lien on any of such
Obligor's properties.

         C. EXECUTION, DELIVERY AND ENFORCEABILITY. This Waiver and Consent and
the Guarantor Consent have been duly executed and delivered by each Obligor
which is a party hereto or thereto and each constitutes the legal, valid and
binding obligation of such Obligor, enforceable in accordance with its
respective terms.

         D. NO DEFAULT OR EVENT OF DEFAULT. After giving effect to this Waiver
and Consent and the Guarantor Consent, no event has occurred and is continuing
or will result from the execution and delivery of this Waiver and Consent and
the Guarantor Consent that would constitute a Default or an Event of Default.

         E. REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties contained in the Loan Documents is and will be true and correct in
all material respects on and as of the date hereof and as of the effective date
of this Waiver and Consent, except to the extent that such representations and
warranties specifically relate to an earlier date, in which case they were true,
correct and complete in all material respects as of such earlier date.

         Section 5 CONDITIONS TO EFFECTIVENESS OF THIS WAIVER AND CONSENT. This
Waiver and Consent 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 Parent Guarantor, the Borrower and the Required
Lenders, and counterparts of the Guarantor Consent have been delivered to the
Agent by the Parent Guarantor and each Subsidiary Guarantor.

         Section 6 EFFECT OF WAIVER; RATIFICATION. This Waiver and Consent is a
Loan Document. From and after the date on which this Waiver and Consent becomes
effective, all references in the Loan Documents to the Credit Agreement shall
mean the Credit Agreement after giving effect to this Waiver and Consent.
Failure of the Borrower to comply with the covenants and agreements in Sections
1, and 2 hereof shall constitute an Event of Default under the Credit Agreement.
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. Each of the Parent Guarantor and the Borrower confirms that, after
giving effect to this Waiver and Consent, each of the Loan Documents is in full
force and effect.

         Section 7 APPLICABLE LAW. THE VALIDITY, INTERPRETATIONS AND ENFORCEMENT
OF THIS WAIVER AND CONSENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH
THIS WAIVER, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
GOVERNED BY THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK; PROVIDED
THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW.

         Section 8 COMPLETE AGREEMENT. This Waiver and Consent sets forth the
complete agreement of the parties in respect of any waiver to any of the
provisions of any Loan Document. Except as expressly set forth in Sections 1 and
2 above, the execution, delivery and effectiveness of this Waiver and Consent do
not constitute a waiver of any 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.

         Section 9 CAPTIONS; COUNTERPARTS. The catchlines and captions herein
are intended solely for convenience of reference and shall not be used to
interpret or construe the provisions hereof. This Waiver and Consent may be
executed by one or more of the parties to this Waiver and Consent on any number
of separate counterparts (including by telecopy), all of which taken together
shall constitute but one and the same instrument.

         IN WITNESS WHEREOF, each of the undersigned has duly executed this
Waiver and Consent with Respect to Post-Petition Credit Agreement as of the date
set forth above.

"PARENT GUARANTOR"                   KAISER ALUMINUM CORPORATION



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




"BORROWER"                           KAISER ALUMINUM & CHEMICAL CORPORATION


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


                                     BANK OF AMERICA, N.A.,
                                     as the Agent and a Lender


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


                                     GENERAL ELECTRIC CAPITAL
                                     CORPORATION, as a Lender


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


                                     FOOTHILL CAPITAL CORPORATION,
                                     as a Lender


                                     By:   /s/ E Kim
                                     Name:     Eunnie Kim
                                     Title:    Assistant Vice President


                                     THE CIT GROUP/BUSINESS CREDIT, INC.,
                                     as a Lender


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


                                     MERRILL LYNCH BUSINESS FINANCIAL SERVICES
                                     INC., as a Lender


                                     By:   /s/ Michele Kovatchis
                                     Name:     Michele Kovatchis
                                     Title:    Director


                                     PNC BANK, NATIONAL ASSOCIATION,
                                     as a Lender


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


                                     GMAC BUSINESS CREDIT, LLC,
                                     as a Lender


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


                                     THE PROVIDENT BANK,
                                     as a Lender


                                     By:   /s/ Mary Sue Wolfer
                                     Name:     Mary Sue Wolfer
                                     Title:    Credit Officer


                              CONSENT OF GUARANTORS

Each of the undersigned is a Guarantor of the Obligations of the Borrower under
the Credit Agreement and each other Loan Document and hereby (a) consents to the
foregoing Waiver and Consent, (b) acknowledges that notwithstanding the
execution and delivery of the foregoing Waiver and Consent, the obligations of
each of the undersigned Guarantors are not impaired or affected and the Parent
Guaranty and the Subsidiary Guaranty continue in full force and effect, and (c)
ratifies the Parent Guaranty or the Subsidiary Guaranty, as applicable, and each
of the Loan Documents to which it is a party and further ratifies the Security
Interests granted by it to the Agent for its benefit and the benefit of the
Secured Parties.

         IN WITNESS WHEREOF, each of the undersigned has executed and delivered
this CONSENT OF GUARANTORS as of the date first set forth above.

                                     AKRON HOLDING CORPORATION


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



                                     ALPART JAMAICA INC.


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



                                     KAISER ALUMINA AUSTRALIA CORPORATION


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



                                     KAISER BELLWOOD CORPORATION


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




                                     KAISER ALUMINUM & CHEMICAL INVESTMENT,  INC.


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



                                     KAISER ALUMINIUM INTERNATIONAL, INC.


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



                                     KAISER ALUMINUM PROPERTIES, INC.


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



                                     KAISER ALUMINUM TECHNICAL
                                     SERVICES, INC.


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



                                     KAISER FINANCE CORPORATION


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



                                     KAISER JAMAICA CORPORATION


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



                                     KAISER MICROMILL HOLDINGS, LLC


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



                                     KAISER SIERRA MICROMILLS, LLC


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



                                     KAISER TEXAS SIERRA MICROMILLS, LLC


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



                                     KAISER TEXAS MICROMILL HOLDINGS, LLC


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



                                     OXNARD FORGE DIE COMPANY, INC.


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



                                     KAISER ALUMINUM CORPORATION


                                     By    /s/ David A. Cheadle
                                               David A. Cheadle
                                     Title:    Assistant Treasurer
Exhibit 4.22 to 2002 10-K
                                                                    Exhibit 4.22

                    SECOND WAIVER AND CONSENT WITH RESPECT TO
                         POST-PETITION CREDIT AGREEMENT


         This SECOND WAIVER AND CONSENT WITH RESPECT TO POST-PETITION CREDIT
AGREEMENT (this "Waiver") is dated as of January 13, 2003 and entered into by
and among KAISER ALUMINUM CORPORATION, a Delaware corporation, as debtor and
debtor-in-possession (the "Parent Guarantor"), KAISER ALUMINUM & CHEMICAL
CORPORATION, a Delaware corporation, as debtor and debtor-in-possession (the
"Borrower"), the banks and other financial institutions signatory hereto that
are parties as Lenders to the Credit Agreement referred to below (the
"Lenders"), and BANK OF AMERICA, N.A., as administrative agent and collateral
agent (in such capacity, the "Agent") for the Lenders.

                                    RECITALS

         WHEREAS, the Parent Guarantor, the Borrower, the Lenders, and the Agent
have entered into that certain Post-Petition Credit Agreement dated as of
February 12, 2002 (as amended to date, the "Credit Agreement"; capitalized terms
used in this Waiver without definition shall have the meanings given such terms
in the Credit Agreement); and

         WHEREAS, the Borrower has an obligation to make a special liquidity
contribution under the Kaiser Aluminum Salaried Retirement
 Plan in the amount of
approximately $15,000,000 on January 15, 2003 (the "Liquidity Contribution");

         WHEREAS, the Borrower has informed the Agent that the Borrower does not
intend to pay the Liquidity Contribution when due, which non-payment will lead
to the automatic imposition of an unperfected Lien on all of the Controlled
Group members' assets, unless such Lien is stayed or otherwise enjoined or is
not enforceable pursuant to the laws of any jurisdiction (the "PBGC Lien");

         WHEREAS, pursuant to Sections 7.4.1(a) and 8.12 of the Credit
Agreement, the Borrower represents and warrants from time to time in connection
with Credit Extensions that no contribution failure has occurred sufficient to
give rise to a Lien on assets of any Controlled Group member under section
302(e) of ERISA;

         WHEREAS, pursuant to Section 9.2.3 of the Credit Agreement, the Parent
Guarantor, the Borrower and the Borrower's Subsidiaries are all prohibited from
creating, incurring, assuming or suffering to exist any Lien upon their assets
subject to certain exceptions;

         WHEREAS, pursuant to Section 10.1.2 of the Credit Agreement, the
failure of any representation or warranty to be correct in any material respect
when made constitutes an Event of Default;

         WHEREAS, pursuant to Section 10.1.4(a) of the Credit Agreement, a
breach of Section 9.2.3 of the Credit Agreement constitutes an Event of Default;

         WHEREAS, pursuant to Section 10.1.8 of the Credit Agreement, a
contribution failure with respect to any Pension Plan sufficient to give rise to
a Lien against assets of any Controlled Group member under Section 302(f) of
ERISA in excess of $1,000,000 constitutes an Event of Default;

         WHEREAS, the failure of the Borrower to make the Liquidity Contribution
and the resulting PBGC Lien will constitute (a) an Event of Default under
Section 10.1.2 as a result of the failure of the representation and warranty
contained in Section 8.12 of the Credit Agreement to be true when deemed made in
connection with any future Credit Extension, (b) after the applicable cure
period, an Event of Default under Section 10.1.4(a) of the Credit Agreement as a
result of the breach of Section 9.2.3 of the Credit Agreement and (c) after the
applicable cure period, an Event of Default under Section 10.1.8 of the Credit
Agreement (the "PBGC Events of Default");

         WHEREAS, the Borrower has requested that the Agent and the Lenders
waive the PBGC Events of Default;

         WHEREAS, the Agent and the Lenders have agreed to the aforementioned
requested waiver, subject to the terms and conditions herein; and

         WHEREAS, the Borrower, the Agent and the Lenders contemplate that an
amendment to the Credit Agreement will be entered into by the parties thereto in
the near future in order to incorporate the modifications effected hereby on a
more permanent basis in the Credit Agreement (provided, however, that nothing
set forth herein shall in any way be deemed an agreement by the Agent or the
Lenders to enter into any such amendment or waive any of Borrower's or any other
Obligor's obligations, covenants or agreements under the Credit Agreement or any
other Loan Document except for the period and on the terms and conditions
expressly set forth herein);

         NOW THEREFORE, in consideration of the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:

         Section 1 WAIVER. The Agent and the Lenders waive the PBGC Events of
Default, but only with respect to the failure to make the Liquidity Contribution
on January 15, 2003 and the PBGC Lien arising as a result of the failure to make
such payment and not with respect to the failure to make any other contribution
or any Lien on assets of any Controlled Group member under Section 302(f) of
ERISA or otherwise arising from the failure of Borrower or any member of the
Controlled Group to make any other contribution; provided, however, that (a)
Kaiser Jamaica Corporation, Alpart Jamaica Inc., Kaiser Bauxite Corporation,
Kaiser Center Properties, KAE Trading, Inc. and Kaiser Export Company (the
"Proposed New Domestic Debtors"), and Kaiser Aluminum & Chemical of Canada
Limited, Kaiser Aluminum & Chemical Canada Investment Limited and Texada
Mines, Ltd. (the "Proposed New Canadian Debtors") shall have all filed chapter
11 cases on or prior to January 14, 2003, (b) as of the Petition Date, there
shall not have existed in favor of the PBGC or the IRS any perfected Liens or
other Liens that may be perfected on or after the Petition Date against any of
the assets of any of the Debtors, and (c) as of January 14, 2003, there shall
not exist in favor of the PBGC or the IRS any perfected Liens or other Liens
that may be perfected on or after January 14, 2003 against any of the assets of
any of the Proposed New Domestic Debtors or Proposed New Canadian Debtors. The
foregoing waiver shall be null and void and an Event of Default shall be deemed
to immediately occur on March 31, 2003 unless, on or prior to such date, all of
the Proposed New Domestic Debtors shall have become unsecured guarantors of the
Obligations and, to the extent such superpriority claims do not already exist in
favor of the Agent and the Lenders, the Bankruptcy Court shall have entered an
order granting Agent and the Lenders superpriority claims against the Proposed
New Domestic Debtors under section 364(c)(1) of the Bankruptcy Code, subject
only to the Carve Out.

         Section 2 COSTS AND EXPENSES. As provided in Section 12.3 of the Credit
Agreement, the Borrower agrees to reimburse the Agent for all fees, costs and
expenses, including the reasonable fees and out-of-pocket expenses of counsel or
other advisors for advice, assistance, or other representation incurred in
connection with this Waiver.

         Section 3 REPRESENTATIONS AND WARRANTIES OF PARENT GUARANTOR AND THE
BORROWER. Each of the Parent Guarantor and the Borrower represents and warrants
to each Lender and the Agent that the following statements are true, correct and
complete:

         A. POWER AND AUTHORITY. Each of the Parent Guarantor, Borrower and each
other Obligor has all corporate or other organizational power and authority to
enter into this Waiver and, as applicable, the Consent of Guarantors attached
hereto (the "Guarantor Consent"), and to carry out the transactions contemplated
by, and to perform its obligations under or in respect of, the Credit Agreement,
after giving effect to this Waiver.

         B. DUE AUTHORIZATION, NON-CONTRAVENTION. The execution, delivery and
performance by the applicable Obligor of this Waiver and the Guarantor Consent
and the performance of the obligations of each Obligor under or in respect of
the Credit Agreement (after giving effect to this Waiver and the Guarantor
Consent) have been duly authorized by all necessary corporate or other
organizational action, and do not (a) contravene such Obligor's Organic
Documents, (b) contravene any contractual restriction entered into after the
Petition Date where such a contravention has a reasonable possibility of having
a Materially Adverse Effect, or contravene any law or governmental regulation or
court order binding on or affecting such Obligor, or (c) result in, or require
the creation or imposition of, any Lien on any of such Obligor's properties.

         C. EXECUTION, DELIVERY AND ENFORCEABILITY. This Waiver and the
Guarantor Consent have been duly executed and delivered by each Obligor which is
a party hereto or thereto and each constitutes the legal, valid and binding
obligation of such Obligor, enforceable in accordance with its respective terms.

         D. NO DEFAULT OR EVENT OF DEFAULT. After giving effect to this Waiver
and the Guarantor Consent, no event has occurred and is continuing or will
result from the execution and delivery of this Waiver and the Guarantor Consent
that would constitute a Default or an Event of Default.

         E. REPRESENTATIONS AND WARRANTIES. After giving effect to this Waiver
and the Guarantor Consent, each of the representations and warranties contained
in the Loan Documents is and will be true and correct in all material respects
on and as of the date hereof and as of the effective date of this Waiver, except
to the extent that such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all material
respects as of such earlier date.

         Section 4 CONDITIONS TO EFFECTIVENESS OF THIS WAIVER. This 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 Parent
Guarantor, the Borrower and the Required Lenders, and counterparts of the
Guarantor Consent have been delivered to the Agent by the Parent Guarantor and
each Subsidiary Guarantor.

         Section 5 EFFECT OF WAIVER; RATIFICATION. This Waiver is a Loan
Document. From and after the date on which this Waiver becomes effective, all
references in the Loan Documents to the Credit Agreement shall mean the Credit
Agreement after giving effect to this Waiver. Failure of the Borrower to comply
with the covenants and agreements in Section 1 hereof shall constitute an Event
of Default under the Credit Agreement. 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. Each of the Parent Guarantor and the
Borrower confirms that, after giving effect to this Waiver, each of the Loan
Documents is in full force and effect.

         Section 6 APPLICABLE LAW. THE VALIDITY, INTERPRETATIONS AND ENFORCEMENT
OF THIS WAIVER AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS WAIVER,
WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY
THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK; PROVIDED THAT THE
AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

         Section 7 COMPLETE AGREEMENT. This Waiver sets forth the complete
agreement of the parties in respect of any waiver to any of the provisions of
any Loan Document. Except as expressly set forth in Section 1 above, the
execution, delivery and effectiveness of this Waiver does not constitute a
waiver of any 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.

         Section 8 CAPTIONS; COUNTERPARTS. The catchlines and captions herein
are intended solely for convenience of reference and shall not be used to
interpret or construe the provisions hereof. This Waiver may be executed by one
or more of the parties to this Waiver on any number of separate counterparts
(including by telecopy), all of which taken together shall constitute but one
and the same instrument.

         IN WITNESS WHEREOF, each of the undersigned has duly executed this
Second Waiver with Respect to Post-Petition Credit Agreement as of the date set
forth above.

"PARENT GUARANTOR"                   KAISER ALUMINUM CORPORATION



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




"BORROWER"                           KAISER ALUMINUM & CHEMICAL CORPORATION


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


                                     BANK OF AMERICA, N.A.,
                                     as the Agent and a Lender


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


                                     GENERAL ELECTRIC CAPITAL
                                     CORPORATION, as a Lender


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


                                     FOOTHILL CAPITAL CORPORATION,
                                     as a Lender


                                     By:   /s/ E Kim
                                     Name:     Eunnie Kim
                                     Title:    Assistant Vice President


                                     THE CIT GROUP/BUSINESS CREDIT, INC.,
                                     as a Lender


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


                                     MERRILL LYNCH BUSINESS FINANCIAL SERVICES
                                     INC., as a Lender


                                     By:   /s/ Michele Kovatchis
                                     Name:     Michele Kovatchis
                                     Title:    Director


                                     PNC BANK, NATIONAL ASSOCIATION,
                                     as a Lender


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


                                     GMAC BUSINESS CREDIT, LLC,
                                     as a Lender


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


                                     THE PROVIDENT BANK,
                                     as a Lender


                                     By:   /s/ Mary Sue Wolfer
                                     Name:     Mary Sue Wolfer
                                     Title:    Credit Officer


                              CONSENT OF GUARANTORS

Each of the undersigned is a Guarantor of the Obligations of the Borrower under
the Credit Agreement and each other Loan Document and hereby (a) consents to the
foregoing Waiver, (b) acknowledges that notwithstanding the execution and
delivery of the foregoing Waiver, the obligations of each of the undersigned
Guarantors are not impaired or affected and the Parent Guaranty and the
Subsidiary Guaranty continue in full force and effect, and (c) ratifies the
Parent Guaranty or the Subsidiary Guaranty, as applicable, and each of the Loan
Documents to which it is a party and further ratifies the Security Interests
granted by it to the Agent for its benefit and the benefit of the Secured
Parties.

         IN WITNESS WHEREOF, each of the undersigned has executed and delivered
this CONSENT OF GUARANTORS as of the date first set forth above.

                                     AKRON HOLDING CORPORATION


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



                                     ALPART JAMAICA INC.


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



                                     KAISER ALUMINA AUSTRALIA CORPORATION


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



                                     KAISER BELLWOOD CORPORATION


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




                                     KAISER ALUMINUM & CHEMICAL INVESTMENT,  INC.


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



                                     KAISER ALUMINIUM INTERNATIONAL, INC.


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



                                     KAISER ALUMINUM PROPERTIES, INC.


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



                                     KAISER ALUMINUM TECHNICAL
                                     SERVICES, INC.


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



                                     KAISER FINANCE CORPORATION


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



                                     KAISER JAMAICA CORPORATION


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



                                     KAISER MICROMILL HOLDINGS, LLC


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



                                     KAISER SIERRA MICROMILLS, LLC


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



                                     KAISER TEXAS SIERRA MICROMILLS, LLC


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



                                     KAISER TEXAS MICROMILL HOLDINGS, LLC


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



                                     OXNARD FORGE DIE COMPANY, INC.


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



                                     KAISER ALUMINUM CORPORATION


                                     By    /s/ David A. Cheadle
                                               David A. Cheadle
                                     Title:    Assistant Treasurer
Exhibit 10.12 to 2002 10-K
                                                                   Exhibit 10.12

                                November 4, 2002

Mr. George T. Haymaker, Jr.
Kaiser Aluminum & Chemical Corporation
5847 San Felipe, Suite 3000
Houston, Texas 77057

         Re:      Non-Executive Chairman of the Boards Agreement

Dear George:

         On behalf of the Boards of Directors (the "Boards") of Kaiser Aluminum
Corporation ("KAC") and Kaiser Aluminum & Chemical Corporation ("KACC") this
letter agreement confirms the terms of our offer to you to continue as the
non-executive Chairman of the Boards of KAC and KACC.

         The terms of our offer are as follows:

         1. POSITION: The Boards offer to, and upon your acceptance of this
agreement do hereby, continue your engagement in the position of non-executive
Chairman of the Boards of KAC and KACC. Including your duties as a Director of
the Boards, you are committed to make available up to an average of sixteen (16)
hours each calendar month for devotion to the affairs of KAC and KACC as
directed by the Chief Executive Officer or by the Boards, with particular focus
on assisting with development and implementation of the strategic plan and plan
of reorganization for KAC and KACC.

         2. TERM: The term of this agreement is for the period January 1, 2003,
through December 31, 2003. The parties have no obligation
 to renew this
agreement at the end of the term. This agreement may be terminated earlier (i)
at the sole discretion of the Boards, (ii) by your death or disability (as
defined in KAC's Long Term Disability Plan that covers executives and directors
of KAC, (iii) for cause (as defined below), (iv) the mutual agreement of the
parties hereto, or (v) by you, with sixty days notice to the Boards unless
shorter notice is agreed in the sole discretion of the Boards.

         For purposes of this letter agreement, the term "cause" shall mean:

         (a)      Your conviction for, or plea of nolo contendere to, a felony;
                  or

         (b)      Your commission of an act involving fraud or intentional
                  dishonesty,  which act is intended to result in substantial
                  personal enrichment at the expense of KAC or any of its
                  subsidiaries; or

         (c)      Your breach of any material provision of this letter agreement
                  which remains uncorrected for 30 days after written notice
                  from the Boards or the Chief Executive Officer and an
                  opportunity to correct; or

         (d)      Your knowing and willful misconduct in the performance of your
                  duties, which continues for 30 days after written notice from
                  the Boards or the Chief Executive Officer and which results in
                  material injury to the reputation, business or operation of
                  KAC or any of its subsidiaries.

The existence of "cause" shall be determined by an affirmative vote of not less
than two-thirds of the members of each of the Boards.  If the requisite
affirmative vote by two-thirds of the members of each of the Boards is not
obtained, this letter agreement may not be terminated for cause.

         3.  COMPENSATION:

         (a)      Your annual base compensation as a Director of $50,000 shall
                  continue unmodified. Some or all of such compensation may be
                  deferred at your option into a "phantom stock" and/or
                  interest-bearing account to the same extent as other Directors
                  of KAC and KACC are permitted an election to do so pursuant to
                  the Deferred Fee Agreement. Amounts which otherwise would be
                  payable to you during the term of this letter agreement under
                  KAC's and KACC's Directors' compensation policies for
                  attendance at meetings of the Boards and committees thereof
                  and for service as Chairman or a member of such committees
                  shall be deemed to be included in the compensation payable
                  under Paragraph 3.(b) of this letter agreement.

         (b)      Your base compensation for services as non-executive Chairman
                  of both Boards will be computed at the rate of $73,000 per
                  year, which shall be payable in cash, quarterly in arrears, in
                  the first week of the first month following the completion of
                  each calendar quarter in which such compensation is earned.
                  The amount earned each quarter is $18,250.00.

         You shall be solely liable and responsible for complying with all laws,
rules and regulations regarding timely payment of applicable taxes including,
without limitation, federal and state income, self-employment and/or disability
taxes that may apply to such compensation.

         4. INDEPENDENT CONTRACTOR: The relationship between the parties shall
be that of independent contracting parties and shall not constitute or be deemed
for any purpose to be that of employer and employee. The Boards and KAC and KACC
expressly acknowledge and agree that neither shall have the right to direct you
with respect to the means or manner in which you fulfill your obligations and
responsibilities under his letter agreement.  The Boards and KAC and KACC are
solely interested in the results obtained by you in connection with your
performance of services required hereunder.

         5. TERMINATION: Although your engagement as non-executive Chairman of
the Boards is terminable at the sole discretion of the Boards, if your
engagement as non-executive Chairman of the Boards is terminated by KAC and KACC
without cause (as defined above), you will continue to receive the compensation
specified under Paragraph 3.(b) of this agreement for the balance of the term of
the agreement.  However, if your engagement as non-executive Chairman of the
Boards is terminated for cause (as defined above) then you will have no right to
any compensation under Paragraph 3.(b) of this agreement with respect to any
period of time after the date of such termination.  You will continue to receive
the fees paid for service as a Director of KAC and KACC so long as you remain
such a Director.

         6. AMENDMENT; BENEFIT: This letter agreement may not be amended,
modified, or supplemented in any respect except by a subsequent written
agreement between all of the parties hereto.  This letter agreement shall be
binding upon, and shall inure to the benefit of, KAC and its successors and
assigns, KACC and its successors and assigns, and you and your heirs, executors,
administrators, and personal representatives.

         7. GOVERNING LAW: This letter agreement shall be governed and construed
in accordance with the laws of the State of Texas, without regard to principles
of choice of law.

         George, the Boards are very pleased that you are willing to continue
the duties of non-executive Chairman of the Boards. We look forward to
continuing to work with you.

         If the terms of this offer are acceptable, please sign in the space
provided below and return this letter agreement to me.

                                            Very truly yours,

                                            /s/ John Barneson
                                            John Barneson
                                            Senior Vice President and
                                            Chief Administrative Officer


The foregoing is agreed to and accepted
effective as of November 4, 2002



/s/ George T. Haymaker, Jr.
George T. Haymaker, Jr.

Exhibit 10.13 to 2002 10-K
                                                                   Exhibit 10.13

                              EMPLOYMENT AGREEMENT


         This Agreement (the "Agreement") is made effective for the period from
October 1, 2001 to September 30, 2004 (such term being hereinafter referred to
as the "Employment Period") between Kaiser Aluminum & Chemical Corporation, a
Delaware corporation ("Company"), and Edward F. Houff ("Executive").

         WHEREAS, the Company desires to secure the services of Executive as
Deputy General Counsel, and Executive desires to perform such services for the
Company, on the terms and conditions as set forth herein;

         NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements set forth below, it is mutually agreed as follows:

         1. Effective Date, Term and Duties. The term of employment of Executive
by the Company hereunder shall be deemed to have commenced on October 1, 2001
and end on September 30, 2004, (the "Employment Period") unless earlier
terminated pursuant to Section 4.

         Executive shall have such duties as the Company may from time to time
prescribe consistent with his position as Deputy General Counsel of the Company
(the "Services"). Executive shall report directly to the Senior Vice President
and General Counsel. Executive shall devote his full time, attention,
 energies
and best efforts to the business of the Company. The Company shall maintain an
office for Executive in Houston, Texas.

         2.   Compensation. The Company shall pay and Executive shall accept as
full consideration for the Services compensation consisting of the following:

              2.1  Base Salary. Effective October 1, 2001, $400,000 per year
base salary, payable in installments in accordance with the Company's normal
payroll practices, less such deductions or withholdings required by law.

              2.2  Annual Bonus. A guaranteed annual cash bonus of $125,000,
plus an annual incentive bonus of up to $125,000 shall be payable for each year
during the term of employment. Each of the two components (guarantee and annual
incentive) will be pro-rated for partial years in 2001 and 2004. The guaranteed
bonus is paid quarterly, and the fourth quarter 2001 amount will be paid on or
before December 31, 2001. The annual incentive bonus will be paid at the same
time that all executive annual incentive bonus amounts are paid and will be
based 50% on a formula resulting from Company performance similar to other
executive incentives, and 50% based on management discretion, for each such
year.

              2.3  Long-Term Compensation. Effective on October 1, 2001 (date
of grant), Executive shall receive a stock option grant valued at $450,000 and a
restricted stock grant valued at $450,000 under the Kaiser 1997 Omnibus Stock
Incentive Plan. The number of options and the number of restricted shares will
be determined based on assumptions as described in Schedule A. The options will
have an exercise period of ten years from date of grant. The options and the
restricted shares shall vest at the rate of one third on October 1, 2002, one
third on October 1, 2003 and one third on September 30, 2004. Refer to Schedule
A for other stock option and restricted stock agreement provisions.

         3.   Benefits and other Perquisites during Employment Period. Executive
will be eligible to participate in the Company's employee benefit plans of
general application, including, without limitation, those plans covering
pension, 401(k) savings, medical, disability, sick leave and life insurance in 
accordance with the rules established for individual participation in any such 
plan and under applicable law. Executive will be eligible for vacation as 
follows: 7 days in 2001, 15 days in 2002, 20 days in 2003 and thereafter unless 
company vacation policy is greater. Executive will receive the following other 
perquisites: Company car or equivalent cash allowance; wireless telephone and 
PDA equipment and service; laptop computer for business and personal use; 
business class accommodations for overseas flights; reimbursement of monthly 
club membership dues; reserved parking space and payment of parking costs. 
Executive will receive such other benefits as the Company generally provides to 
its other employees of comparable position and experience.

         4.   Benefits Upon Termination. If Executive's employment is terminated
during the Employment Period for any reason other than termination by the
Company for "Cause" (as defined in Subsection 4.1) or "Death or Disability" (as
defined in Subsection 4.2), then Executive will be entitled to receive all
remaining base salary and guaranteed bonus from date of termination to the end
of the term of this agreement, but in no event less than six (6) months base
salary. If Executive's employment is not retained beyond the expiration of the
Employment Period Kaiser will pay Executive six (6) months' base salary as
severance and up to $25,000.00 in relocation expenses. These severance payments
will be in lieu of any other severance or termination payments provided in
Company's policies.

         If Executive terminates his employment due to Company's breach of
contractual duties or material and unilateral alteration of duties, the parties
agree Executive will be paid his base salary and guaranteed bonus to the end of
the Employment Period.

              4.1  Circumstances Under Which Termination Benefits Would Not
Be Paid. The Company shall not be obligated to pay Executive the termination
benefits pursuant to Section 4 if the Executive's employment is terminated for
Cause. For purposes of this Agreement, "Cause" shall be limited to Executive's
dereliction of duties, malfeasance, abuse of authority or conviction of a crime
of moral turpitude.

              4.3  Termination by Reason of Death or Disability. The
Executive's employment shall terminate automatically upon Executive's death
during the Employment Period. In the event of Executive's death or disability
(see below) during the Employment Period, the Company shall pay to Executive or
Executive's estate any base salary, pro-rated guaranteed bonus and unpaid
vacation accrued as of the date of Executive's death or disability and any other
benefits payable under the Company's then existing benefit plans and policies in
accordance with such plans and policies in effect on the date of death or
disability and in accordance with applicable law. In the event that during the
term of this Agreement, Executive is unable to perform his job due to disability
(as determined under the Company's long-term disability insurance program) for 6
months in any 12 month period, the Company may, at its discretion, terminate
Executive's employment with the Company and Executive shall be entitled to
receive the benefits set forth in this Section 4.3.

         5.   Change in Control.

              Company and MAXXAM agree that regardless of changes in
management or sale of Company to a third party, the terms of this Agreement will
survive and that both Company and MAXXAM will take steps necessary to ensure
payment of the base salary and guaranteed bonus for the period of the Employment
Term.

         6.   Dispute Resolution. The Company and Executive agree that any dispute
regarding the interpretation or enforcement of this Agreement shall be decided
by confidential, final and binding arbitration conducted by Judicial Arbitration 
and Mediation Services ("JAMS") under the then-existing JAMS rules, rather than 
by litigation in court, trial by jury, administrative proceeding, or in any 
other forum.

         7.   Cooperation with the Company After Termination of the Employment
Period. Following termination of the Employment Period by Executive, Executive
shall fully cooperate with the Company in all matters relating to the winding up
of his pending work on behalf of the Company and the orderly transfer of any
such pending work to other employees of the Company as may be designated by the
Company.

         8.   Confidentiality, Return of Property. Executive acknowledges that the
Employee Invention and Confidential Information Agreement executed by Executive
attached hereto as Exhibit A shall continue in effect.

         9.   General.

              9.1  Waiver. Neither party shall, by mere lapse of time,
without giving notice or taking action hereunder, be deemed to have waived any
breach by the other party of any of the provisions of this Agreement. Further,
the waiver by either party of a particular breach of this Agreement by the other
shall neither be construed as, nor constitute a, continuing waiver of such
breach or of other breaches by the same or any other provision of this
Agreement.

              9.2  Severability. If for any reason a court of competent
jurisdiction or arbitrator finds any provision of this Agreement to be
unenforceable, the provision shall be deemed amended as necessary to conform to
applicable laws or regulations, or if it cannot be so amended without materially
altering the intention of the parties, the remainder of the Agreement shall
continue in full force and effect as if the offending provision were not
contained herein.

              9.3  No Mitigation. Executive shall have no duty to mitigate
the Company's obligation with respect to the termination payments set forth in
Sections 4 or 5 by seeking other employment following termination of his
employment, nor shall such termination payments be subject to offset or
reductions by reason of any compensation received by Executive from such other
employment. The Company's obligations to make payments under Sections 4 or 5
shall not terminate in the event Executive accepts other full time employment.

              9.4  Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
considered effective upon personal service or upon depositing such notice in the
U.S. Mail, postage prepaid, return receipt requested and addressed to the
Chairman of the Board of the Company as its principal corporate address, and to
Executive at his most recent address shown on the Company's corporate records,
or at any other address which he may specify in any appropriate notice to the
Company.

              9.5  Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original and all of which
taken together constitutes one and the same instrument and in making proof
hereof it shall not be necessary to produce or account for more than one such
counterpart.

              9.6  Entire Agreement. The parties hereto acknowledge that each
has read this Agreement, understands it, and agrees to be bound by its terms.
The parties further agree that this Agreement (combined with the stock option
and restricted stock agreement) constitute the complete and exclusive statement
of the agreement between the parties and supersedes all proposals (oral or
written), understandings, representations, conditions, covenants, and all other
communications between the parties relating to the subject matter hereof.

              9.7  Governing Law.  This Agreement shall be governed by the law
of the State of Texas.

              9.8  Assignment and Successors. The Company shall have the
right to assign its rights and obligations under this Agreement to an entity
which acquires substantially all of the assets of the Company. The rights and
obligation of the Company under this Agreement shall inure to the benefit and
shall be binding upon the successors and assigns of the Company.

         IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.

KAISER ALUMINUM & CHEMICAL                  EXECUTIVE
CORPORATION

By:    /s/ J. Kent Friedman                     By:     /s/ Edward F. Houff
         J. Kent Friedman                                Edward F. Houff
         Senior Vice President and
         General Counsel


           SCHEDULE A - AGREEMENT BETWEEN COMPANY AND EDWARD F. HOUFF
          ASSUMPTIONS FOR DETERMINATION OF NUMBER OF STOCK OPTIONS AND
                        RESTRICTED SHARES (SECTION 2.3)


Value of Stock Option Grant:                $450,000
Value of Restricted Stock Grant:            $450,000


Determination of Stock option shares:       Based on Black-Scholes methodology
Stock Option Exercise Price:                Fair market value date of grant
                                            (average high and low price)
Risk free rate (Black-Scholes valuation):   10 year Treasury strip rate
Volatility (Black-Scholes valuation):       Based on 3 years of weekly closing
                                            prices of KAC stock
Annual dividend:                            $0.00

Determination of # of restricted shares:    Based on fair market value date of 
                                            grant

TERMINATION PROVISIONS - STOCK OPTION AGREEMENT
1.       Termination for cause: All options terminate immediately upon 
         termination of employment.
2.       Involuntary termination by Company other than for cause: All options 
         remain in effect and continue to vest until the earlier of the 
         expiration of the original option term or one year from the date 
         employment terminates. Any options that either remain unexercised or 
         that have not vested at the end of that period terminate at that time.
3.       Death: All options vested at the time of death remain in effect until
         the earlier of the expiration of the original option term or three
         years from the date of death; all unvested options terminate
         immediately upon death. In all cases, any options that remain
         unexercised at the expiration of the earlier of the original option
         term or three years from the date of death terminate at that time.
4.       Retirement: All options remain in effect and continue to vest until the
         earlier of the expiration of the original option term or three years
         from the date of retirement. Any options that remain unexercised or
         that have not vested at the end of that period terminate at that time.
5.       Termination other than by the Company, death or retirement: All vested
         options remain in effect until the earlier of the expiration of the
         original option period or three months from the date employment
         terminates; all unvested options terminate immediately upon termination
         of employment. Any options that remain unexercised at the end of the
         earlier of the expiration of the original option period or three months
         from termination of employment terminate at that time.
6.       Change in Control: All options immediately vest and remain in effect
         until the earlier of the expiration of the original option period or
         one year from the date of the Change in Control. Any options that
         remain unexercised at the end of that period terminate at that time.

TERMINATION PROVISIONS - RESTRICTED SHARES
1.       Death, disability, or Change in Control: All restricted shares 
         immediately vest and restrictions lapse.
2.       Termination for any reason other than death, disability or Change in 
         Control: All unvested restricted shares terminate immediately.

Other terms - refer to stock option and restricted stock agreement.
Exhibit 10.26 to 2002 10-K
                                                                   Exhibit 10.26

                     KAISER ALUMINUM & CHEMICAL CORPORATION
                           KEY EMPLOYEE RETENTION PLAN
                          (EFFECTIVE SEPTEMBER 3, 2002)

            I.       Purpose

         The purpose of the Plan is to establish a retention program for
designated key employees of the Company. The Plan provides retention incentives
to certain key salaried employees who are expected to make substantial
contributions to the success of the ongoing business and/or the restructuring
effort and thereby provides for stability and continuity of operations. The Plan
has been approved by the Compensation Committee of the Company and the Boards of
Directors of the Company and the Corporation. The Plan shall supercede and
replace the Prior Plan in its entirety.

            II.      Definitions

         "Award" means a retention award granted to a Participant pursuant to a
related Retention Agreement. Awards made under the Plan shall be limited to
those Awards pursuant to the budget for the Plan approved by the Bankruptcy
Court on September 3, 2002 and any Awards made pursuant to Section VII.

         "Bankruptcy Committees" means the committees consisting of a statutory
committee of unsecured creditors ("UCC") and a statutory committee of asbestos
claimants ("ACC") , each appointed by the
 United States trustee for the District
of Delaware on February 25, 2002, pursuant to section 1102 of the Bankruptcy
Code, 11 U.S.C. ss.ss. 101-1330.

         "Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware presiding over the Company's proceeding commenced on
February 12, 2002 under Chapter 11 of the Bankruptcy Code (11 U.S.C. ss. 1101,
et seq.).

         "Base Salary" means, as of the date of grant of any Award under this
Plan, a Participant's annual base salary at a rate not less than his or her
annual fixed or base compensation as in effect immediately prior to such date.

         "Board" means the Board of Directors of the Company and/or the
Corporation.

         "Cause" shall have the meaning set forth in a Retention Agreement.

         "CEO" means the Chief Executive Officer of the Company.

         "Committee" means the Compensation Committee of the Board of the
Company. The Committee may delegate any of its powers, duties and
responsibilities and any of its discretionary authorities under the Plan to any
Officer.

         "Company" means Kaiser Aluminum & Chemical Corporation.

         "Corporation" means Kaiser Aluminum Corporation.

         "Designated Beneficiary" means the beneficiary or beneficiaries
designated in accordance with Section XII hereof to receive the amount, if any,
payable under the Plan upon the Participant's death.

         "Disability" or "Disabled" means permanent and total disability as a
result of bodily injury, disease or mental disorder which results in the
Participant's entitlement to long term disability benefits under the Kaiser
Aluminum Self-Insured Welfare Plan or the Kaiser Aluminum Salaried Employees
Retirement Plan.

         "Officer" means an officer of the Company.

         "Participant" means any key employee of the Company designated by the
Committee or the CEO to participate in the Plan.

         "Plan" means the Kaiser Aluminum & Chemical Corporation Key Employee
Retention Plan.

         "Prior Plan" means the Kaiser Aluminum & Chemical Corporation Employee
Retention Program (Effective January 15, 2002) and any other agreement, policy
or program of the Corporation, the Company or otherwise providing the same or
the similar type of benefits available hereunder.

         "Prorating Event" means, except as otherwise set forth in a Retention
Agreement, a Participant's termination of employment due to the Participant's
death, Disability or retirement on or after age 62, or the Company's termination
of the Participant's employment without Cause.

         "Retention Agreement" means an agreement entered into between the
Company and a Participant providing for participation in the Plan.

         "Vesting Date" means each of September 30, 2002, March 31, 2003,
September 30, 2003 and March 31, 2004, which dates constitute the date or dates
on which a Participant will become vested in all or a portion of his or her
Award, except as otherwise provided in a Retention Agreement.

            III.     Eligibility

         Subject to Section VII, Participants in the Plan will be selected from
those key employees of the Company whose efforts are expected to contribute
materially to the efforts and success of the Company. No employee will be a
Participant until he or she has executed a Retention Agreement. No employee will
at any time have the right to be selected as a Participant. Awards made under
the Plan are not in lieu of any other benefits a Participant may be entitled to
receive from the Company; provided, however, that the Plan supercedes and
replaces the Prior Plan in its entirety; and provided, further, that any
Retention Agreement may provide for other offsets under the Plan or any other
plan, program or agreement of or with the Corporation or the Company in which a
Participant participates or to which he or she is a party.

            IV.      Administration

         The Plan will be administered by the Committee. Subject to Section VII,
and except as otherwise expressly provided herein, full power and authority to
construe, interpret, and administer the Plan will be vested in the Committee,
including the power to amend or terminate the Plan with the Bankruptcy Court's
approval as further described in Section XV.

            V.       Awards; Vesting

         The Company and each Participant will execute a Retention Agreement
that sets forth the terms and timing of the grant, vesting and payment of an
Award. Subject to the terms of the Retention Agreement, an Award will be earned
by and vested in a Participant based upon continued employment on each Vesting
Date. Awards will not be considered compensation for purposes of the Company's
pension and welfare benefit plans, programs and arrangements.

            VI.      Payment of Awards

         Awards earned and vested will become payable as provided in the
Retention Agreement.

            VII.     Discretionary Fund

         In addition to the payments of the Awards reflected in the budget
approved by the Bankruptcy Court on September 3, 2002, a Discretionary Fund in
the amount of $1,000,000 is established under the Plan to be available to
provide, if the CEO so decides, additional Awards hereunder, on a case-by-case
basis, to employees of the Company under circumstances that may arise and that
are not otherwise addressed herein. Such payments shall be made in the sole
discretion of the CEO to address specific retention issues and may be used for
new employees, employees not otherwise covered under the Plan and Participants
viewed by the CEO as having a high departure risk. Notwithstanding the foregoing
provisions of this Section, if the CEO proposes to use more than $50,000 from
the Discretionary Fund to provide an Award to an employee who is a Participant,
such Award shall not be made without first obtaining approval of such Award from
the Bankruptcy Committees.

            VIII. Termination of Employment

            (a)   Except as otherwise set forth in a Retention Agreement with
      respect to a Prorating Event, a Participant will be eligible to receive
      payment of his or her Award only if the Participant is employed by the 
      Company on the Vesting Date. In the event of a Participant's termination 
      of employment with the Company for any reason other than a Prorating
      Event, any Award or portion thereof not yet vested will be immediately
      forfeited.

            (b)   If within ninety (90) days following the payment of any Award, 
      a Participant's employment with the Company is terminated for any reason
      other than as a result of a Prorating Event, the Participant must
      immediately return such payment to the Company.

            IX.   Non-Alienation of Benefits

         A Participant may not assign, sell, encumber, transfer or otherwise
dispose of any rights or interests under the Plan except by will or the laws of
descent and distribution. Any attempted disposition in contravention of the
preceding sentence will be null and void.

            X.       No Claim or Right to Plan Participation

         No employee or other person will have any claim or right to be selected
as a Participant under the Plan. Neither the Plan nor any action taken pursuant
to the Plan will be construed as giving any employee any right to be retained in
the employ of the Company.

            XI.      Taxes

         The Company will deduct from all amounts paid under the Plan all
federal, state, local and other taxes required by law to be withheld with
respect to such payments.

            XII.     Designation and Change of Beneficiary

         Each Participant may designate one or more persons as the Designated
Beneficiary who will be entitled to receive the amount, if any, payable under
the Plan upon the death of the Participant. Such designation will be in writing
to the Committee. A Participant may, from time to time, revoke or change his or
her Designated Beneficiary without the consent of any prior Designated
Beneficiary by filing a written designation with the Committee. The last such
designation received by the Committee will be controlling; provided, however,
that no designation, or change or revocation thereof, will be effective unless
received by the Committee prior to the Participant's death, and in no event will
it be effective as of a date prior to such receipt.

            XIII.    Payments to Persons Other Than the Participant

         If the Committee finds that any person to whom any amount is payable
under the Plan is unable to care for his or her affairs because of illness or
accident, or is a minor, or has died, then any payment due to such person or his
or her estate (unless a prior claim therefor has been made by a duly appointed
legal representative) may, if the Committee so directs, be paid to his or her
spouse, a child, a relative, an institution maintaining or having custody of
such person, or any other person deemed by the Committee, in its sole
discretion, to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment will be a complete discharge of the liability of
the Company therefor.

            XIV.     No Liability of Board or Committee Members or Officers

         No member of the Board or the Committee, any Officer, any employee or
the CEO will be personally liable by reason of any contract or other instrument
related to the Plan executed by such Officer, such employee, the CEO or by such
member or on his or her behalf in his or her capacity as a member of the Board
or the Committee, nor for any mistake of judgment made in good faith, and the
Company will indemnify and hold harmless each employee, Officer, the CEO or a
director of the Company to whom any duty or power relating to the administration
or interpretation of the Plan may be allocated or delegated, against any cost or
expense (including legal fees, disbursements and other related charges) or
liability (including any sum paid in settlement of a claim with the approval of
the Board of Directors) arising out of any act or omission to act in connection
with the Plan unless arising out of such person's own fraud or bad faith.

            XV.      Termination or Amendment of the Plan

         The Plan may only be amended, suspended or terminated upon approval of
the Bankruptcy Court. Without limiting the preceding sentence, the Plan may not
be amended in any way to reduce the benefits payable hereunder to a Participant
or otherwise to impair his or her ability to receive any amount due hereunder,
without the prior written consent of the Participant. The Plan will
automatically terminate when all benefits payable hereunder have been paid.
Notwithstanding any other provision of this Plan, no new Awards shall be granted
after March 31, 2004, including, without limitation, pursuant to Section VII of
this Plan.

            XVI.     Establishment of Trust

         A portion of the Company's obligations under the Plan has been secured
by the establishment of a trust for the benefit of two Participants, Messrs.
LaDuc and Bonn. Such Participants may be paid the Awards from the trust, but if
the trust has insufficient funds, then the balance of the Awards will be paid by
the Company.

         The Plan is not intended to be subject to the Employee Retirement
Income Security Act of 1974, as amended.

            XVII.    Governing Law

         The terms of the Plan and all rights thereunder will be governed by and
construed in accordance with the laws of the State of Texas, without reference
to principles of conflict of laws.

            XVIII.   Effective Date

         The effective date of the Plan is September 3, 2002.



                                        Kaiser Aluminum & Chemical Corporation


                                        By:  /s/ James E. McAuliffe, Jr.
                                        Name:   James E. McAuliffe, Jr.
                                        Title:  Vice President, Human Resources
Exhibit 10.27 to 2002 10-K
                                                                   Exhibit 10.27

                  RETENTION AGREEMENT FOR THE KAISER ALUMINUM &
                CHEMICAL CORPORATION KEY EMPLOYEE RETENTION PLAN
                          (EFFECTIVE SEPTEMBER 3, 2002)

         THIS AGREEMENT (the "Agreement") is made, effective as of the ____ day
of ____________, 2002, between Kaiser Aluminum & Chemical Corporation, a
Delaware corporation (the "Company"), and _______________________________
(hereinafter called the "Participant").

                                R E C I T A L S:

         WHEREAS, the Company has adopted the Kaiser Aluminum & Chemical
Corporation Key Employee Retention Plan (Effective September 3, 2002) (the
"Plan"), which Plan is incorporated herein by reference and made a part of this
Agreement. Capitalized terms not otherwise defined herein will have the same
meanings as in the Plan; and

         WHEREAS, the Committee has determined that it would be in the best
interests of the Company to grant the retention award provided for herein (the
"Award") to the Participant pursuant to the Plan and the terms set forth herein.

         NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:

         1.  Grant of the Award. Subject to the terms and conditions of the Plan
and the additional terms and conditions set forth in this Agreement, the Company
hereby grants to the Participant an Award.
 Pursuant to the terms of the Award,
the Participant shall earn the right to receive a payment (a "Retention
Payment") on each Vesting Date (as defined below), except as provided below.
Each Retention Payment shall be equal to 62.5% of the Participant's Base Salary,
and shall be payable as described below such that the aggregate Retention
Payments that could be payable to the Participant are equal to 250% of his/her
Base Salary. Upon execution of this Agreement, the Participant hereby waives the
right to receive any payments or awards under the Prior Plan and the Prior Plan
shall be superseded by this Agreement and shall be of no further force or
effect.

         2.  Vesting. Subject to the Participant's continued employment with the
Company, the Participant will earn the right to receive a Retention Payment on
each of September 30, 2002, March 31, 2003, September 30, 2003 and March 31,
2004 (each, a "Vesting Date"), except as provided below.

         3.  Payment. Retention Payments that vest in accordance with Section 2
shall be paid to the Participant as follows:

         (a) 40% of each Retention Payment (i.e., 25% of the Participant's Base
Salary) will be paid in a lump sum on each applicable Vesting Date; and

         (b) The remaining 60% of each Retention Payment (i.e., 37.5% of the
Participant's Base Salary) (with respect to each Retention Payment, a "Withheld
Amount") will be paid to the Participant as follows:

             (i)   33-1/3% of each Withheld Amount shall be paid to the
      Participant in a lump sum on the date of the Company's emergence from
      bankruptcy (the "Emergence Date"); provided, that, the Participant is then 
      employed by the Company or the Corporation, as the case may be (other than
      as a result of a Prorating Event as described in Section 4);

             (ii)  33-1/3% of each Withheld Amount shall be paid to the
      Participant in a lump sum on the first anniversary of the Emergence 
      Date"); provided, that, the Participant is then employed by the Company or 
      the Corporation, as the case may be (other than as a result of a Prorating
      Event as described in Section 4); and

             (iii) 33-1/3% of the remaining portion of each Withheld Amount (the
      "Emergence Amount") shall only be payable as follows and provided that
      the Participant is still employed by the Company or the Corporation, as
      the case may be, as of the relevant date:

                   (A) 100% of each Emergence Amount shall be payable if the
              Emergence Date is on or prior to the 30 month anniversary of
              February 12, 2002.

                   (B) 50% of each Emergence Amount shall be payable if the
              Emergence Date is on or prior to the 42 month anniversary of
              February 12, 2002, but after the 30 month anniversary of February
              12, 2002 and the remaining 50% of each Emergence Amount shall be
              forfeited by the Participant to the Company.

                   (C) 100% of the Emergence Amount shall be forfeited by the
              Participant to the Company if the Emergence Date occurs after the 
              42 month anniversary of February 12, 2002.

                   (D) The Emergence Amount, if any, shall be paid in a lump sum 
              on the Emergence Date.

         (c) Amounts that become payable on any date that is not a date on which
banks are generally open shall be paid on the next succeeding date on which
banks are generally open.

         4.  Termination.

         (a) If the Participant's employment with the Company is terminated
prior to any Vesting Date for any reason, other than as a result of (i) the 
Participant's death, (ii) the Participant's Disability, (iii) the Participant's 
retirement from the Company on or after the Participant attains age 62 or (iv) 
the Company's termination of the Participant's employment without "Cause" (as 
defined below) (each, a "Prorating Event"), the portion of the Award that would 
have become vested and payable on such Vesting Date and all subsequent portions 
of the Award, if any, that would have become payable following such Vesting 
Date, along with any Withheld Amount, will be forfeited by the Participant
without consideration.

         (b) If the Participant's employment with the Company is terminated on
account of a Prorating Event:

             (i)  the Participant shall be entitled to receive a payment on the
      earlier of (A) 30 days following the Prorating Event or (B) the Vesting 
      Date immediately following the Prorating Event, in an amount equal to the
      product of (x) the amount that would have been payable to the Participant 
      on the Vesting Date immediately following the Prorating Event, multiplied 
      by (y) a fraction, the numerator of which is the number of days which have 
      elapsed between the Vesting Date immediately preceding such Prorating
      Event (or, if no Vesting Date has occurred at the time of such Prorating 
      Event, April 1, 2002) (the "Measurement Date") and the date of such 
      Prorating Event, and the denominator of which is the number of total days 
      in the period from the Measurement Date to the Vesting Date immediately 
      following the Prorating Event;

             (ii) the Participant shall be entitled to receive, as soon as 
      practicable (but in no event later than 30 days) after the Prorating 
      Event, the Withheld Amounts described in Sections 3(b)(i) and 3(b)(ii) 
      above; and

             (iii) the Participant shall be entitled to receive the Emergence 
      Amount at such times as provided in Section 3(b)(iii) above for payment of 
      such Emergence Amount; provided, that, the Emergence Amount shall be 
      subject to the same conditions to payment as provided above in Section
      3(b)(iii) other than that the Participant remain employed as of the 
      Emergence Date.

             No further retention payments shall be made to the Participant.

         (c) For purposes of this Agreement, "Cause" means (1) the Participant's
engaging in fraud, embezzlement, gross misconduct or any act of gross dishonesty 
with respect to the Company or its affiliates, (2) the Participant's habitual 
drug or alcohol use which impairs the ability of the Participant to perform his 
duties with the Company or its affiliates, (3) the Participant's indictment with
respect to, conviction of, or plea of guilty or no contest to, any felony, or
other comparable crime under applicable local law (except, in any event, for
motor vehicle violations not involving personal injuries to third parties or
driving while intoxicated), or the Participant's incarceration with respect to
any of the foregoing that, in each case, impairs the Participant's ability to
continue to perform his duties with the Company and its affiliates, or (4) the
Participant's material breach of any written employment agreement or other
agreement between the Company and the Participant, or of the Kaiser Aluminum &
Chemical Corporation Code of Business Conduct, or failure by the Participant to
substantially perform his or her duties for the Company which remains
uncorrected or reoccurs after written notice has been delivered to the
Participant demanding substantial performance and the Participant has had a
reasonable opportunity to correct such breach or failure to perform.

         5.  Repayment of Award. If within ninety (90) days following the 
payment of any Award in accordance with Section 3 above, a Participant's 
employment with the Company is terminated for any reason other than as a result 
of a Prorating Event, the Participant must immediately return such payment to 
the Company.

         6.  No Right to Continued Employment. Neither the Plan nor this 
Agreement will be construed as giving the Participant the right to be retained 
in the employ of the Company. Further, the Company may at any time dismiss the 
Participant, free from any liability or any claim under the Plan or this 
Agreement, except as otherwise expressly provided therein or herein.

         7.  Transferability. The Award may not, at any time, be assigned, 
alienated, pledged, attached, sold or otherwise transferred or encumbered by the
Participant and any such purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance will be void and unenforceable against the
Company; provided that the designation of a beneficiary will not constitute an
assignment, alienation, pledge, attachment, sale, transfer or encumbrance. No
such permitted transfer to heirs or legatees of the Participant will be
effective to bind the Company unless the Committee will have been furnished with
written notice thereof and a copy of such evidence as the Committee may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee or transferees of the terms and conditions hereof.

         8.  Withholding. The Company will deduct from each payment all
applicable federal, state, local and other taxes required by law to be withheld 
with respect to such payments.

         9.  Choice of Law. The interpretation, performance and enforcement of 
this Agreement will be governed by the laws of the State of Texas, without 
regard to principles of conflicts of law.

         10. Award Subject to Plan. By entering into this Agreement the 
Participant agrees and acknowledges that the Participant has received and read a 
copy of the Plan. The Award is subject to the Plan. The terms and provisions of 
the Plan as it may be amended from time to time are hereby incorporated herein 
by reference.  In the event of a conflict between any term or provision 
contained herein and a term or provision of the Plan, the applicable terms and 
provisions of the Plan will govern and prevail.

         11. Confidentiality. Except as otherwise required by law or in 
connection with tax and personal planning and family matters, the Participant 
agrees to keep his participation in the Plan and the amount of the Award 
confidential.

         12. Signature in Counterparts. This Agreement may be signed in 
counterparts, each of which will be an original, with the same effect as if the 
signatures thereto and hereto were upon the same instrument.

         13. Complete Agreement. This Agreement embodies the complete agreement 
and understanding between the parties with respect to the subject matter hereof 
and effective as of its date supersedes and preempts any prior understandings,
agreements or representations by or between the parties, written or oral
(including, without limitation, any award or agreement granted under the Kaiser
Aluminum & Chemical Corporation Employee Retention Program (Effective January
15, 2002)), which may have related to the subject matter hereof in any way. The
Company and the Participant hereby agree that upon execution of this Agreement,
any such prior agreements and the Prior Plan shall be superseded by this
Agreement and such prior agreements and the Prior Plan shall be of no further
force or effect.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as 
of the ____ day of ____________, 2002.

                                      Kaiser Aluminum & Chemical Corporation

                                      By:
                                      Name:
                                      Title:

                                      --------------------------------
                                      Participant

Exhibit 10.28 to 2002 10-K
                                                                   Exhibit 10.28

                  RETENTION AGREEMENT FOR THE KAISER ALUMINUM &
                CHEMICAL CORPORATION KEY EMPLOYEE RETENTION PLAN
                          (EFFECTIVE SEPTEMBER 3, 2002)

         THIS AGREEMENT (the "Agreement") is made, effective as of the ____ day
of ____________, 2002, between Kaiser Aluminum & Chemical Corporation, a
Delaware corporation (the "Company"), and _______________________________
(hereinafter called the "Participant").

                                R E C I T A L S:

         WHEREAS, the Company has adopted the Kaiser Aluminum & Chemical
Corporation Key Employee Retention Plan (Effective September 3, 2002) (the
"Plan"), which Plan is incorporated herein by reference and made a part of this
Agreement. Capitalized terms not otherwise defined herein will have the same
meanings as in the Plan; and

         WHEREAS, the Committee has determined that it would be in the best
interests of the Company to grant the retention award provided for herein (the
"Award") to the Participant pursuant to the Plan and the terms set forth herein.

         NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:

         1. Grant of the Award. Subject to the terms and conditions of the Plan
and the additional terms and conditions set forth in this Agreement, the Company
hereby grants to the Participant an Award.
 Pursuant to the terms of the Award,
the Participant shall earn the right to receive a payment (a "Retention
Payment") on each Vesting Date (as defined below), except as provided below.
Each Retention Payment shall be equal to 62.5% of the Participant's Base Salary,
and shall be payable as described below such that the aggregate Retention
Payments that could be payable to the Participant are equal to 250% of his/her
Base Salary. Upon execution of this Agreement, the Participant hereby waives the
right to receive any payments or awards under the Prior Plan and the Prior Plan
shall be superseded by this Agreement and shall be of no further force or
effect.

         2. Vesting. Subject to the Participant's continued employment with the
Company, the Participant will earn the right to receive a Retention Payment on
each of September 30, 2002, March 31, 2003, September 30, 2003 and March 31,
2004 (each, a "Vesting Date"), except as provided below.

         3. Payment. Retention Payments that vest in accordance with Section 2
shall be paid to the Participant as follows:

         (a) 40% of each Retention Payment (i.e., 25% of the Participant's Base
Salary) will be paid in a lump sum on each applicable Vesting Date; and

         (b) The remaining 60% of each Retention Payment (i.e., 37.5% of the
Participant's Base Salary) (with respect to each Retention Payment, a "Withheld
Amount") will be paid to the Participant as follows:

             (i)      33-1/3% of each Withheld Amount shall be paid to the
      Participant in a lump sum on the date of the Company's emergence from 
      bankruptcy (the "Emergence Date"); provided, that, the Participant is then 
      employed by the Company or the Corporation, as the case may be (other than 
      as a result of a Prorating Event as described in Section 4);

            (ii)      33-1/3% of each Withheld Amount shall be paid to the 
      Participant in a lump sum on the first anniversary of the Emergence 
      Date"); provided, that, the Participant is then employed by the Company or 
      the Corporation, as the case may be (other than as a result of a Prorating
      Event as described in Section 4); and

            (iii)     33-1/3% of the remaining portion of each Withheld Amount 
      (the "Emergence Amount") shall only be payable as follows and provided 
      that the Participant is still employed by the Company or the Corporation, 
      as the case may be, as of the relevant date:

                      (A) 100% of each Emergence Amount shall be payable if the 
            Emergence Date is on or prior to the 30 month anniversary of 
            February 12, 2002 after the Emergence Date).

                      (B) 50% of each Emergence Amount shall be payable if the 
            Emergence Date is on or prior to the 42 month anniversary of 
            February 12, 2002, but after the 30 month anniversary of February 
            12, 2002 and the remaining 50% of each Emergence Amount shall be
            forfeited by the Participant to the Company.

                      (C) 100% of the Emergence Amount shall be forfeited by the 
            Participant to the Company if the Emergence Date occurs after the 
            42 month anniversary of February 12, 2002.

                      (D) The Emergence Amount, if any, shall be paid in a lump 
            sum on the Emergence Date.

         (c) Amounts that become payable on any date that is not a date on which
banks are generally open shall be paid on the next succeeding date on which
banks are generally open.

         4. Termination.

         (a) If the Participant's employment with the Company is terminated
prior to any Vesting Date for any reason, other than as a result of (i) the
Participant's death, (ii) the Participant's Disability, (iii) the Participant's
retirement from the Company on or after February 12, 2004 or (iv) the Company's
termination of the Participant's employment without "Cause" (as defined below)
(each, a "Prorating Event"), the portion of the Award that would have become
vested and payable on such Vesting Date and all subsequent portions of the
Award, if any, that would have become payable following such Vesting Date, along
with any Withheld Amount, will be forfeited by the Participant without
consideration.

         (b) If the Participant's employment with the Company is terminated on
account of a Prorating Event:

                  (i)      the Participant shall be entitled to receive a 
      payment on the earlier of (A) 30 days following the Prorating Event or 
      (B) the Vesting Date immediately following the Prorating Event, in an 
      amount equal to the product of (x) the amount that would have been payable 
      to the Participant on the Vesting Date immediately following the Prorating 
      Event, multiplied by (y) a fraction, the numerator of which is the number 
      of days which have elapsed between the Vesting Date immediately preceding 
      such Prorating Event (or, if no Vesting Date has occurred at the time of 
      such Prorating Event, April 1, 2002) (the "Measurement Date") and the date 
      of such Prorating Event, and the denominator of which is the number of
      total days in the period from the Measurement Date to the Vesting Date 
      immediately following the Prorating Event;

                  (ii)     the Participant shall be entitled to receive, as soon 
      as practicable (but in no event later than 30 days) after the Prorating 
      Event, the Withheld Amounts described in Sections 3(b)(i) and 3(b)(ii) 
      above; and

                  (iii)    the Participant shall be entitled to receive the 
      Emergence Amount at such times as provided in Section 3(b)(iii) above for 
      payment of such Emergence Amount; provided, that, the Emergence Amount 
      shall be subject to the same conditions to payment as provided above in 
      Section 3(b)(iii) other than that the Participant remain employed as of 
      the Emergence Date.

         No further retention payments shall be made to the Participant.

         (c) For purposes of this Agreement, "Cause" means (1) the Participant's
engaging in fraud, embezzlement, gross misconduct or any act of gross dishonesty
with respect to the Company or its affiliates, (2) the Participant's habitual
drug or alcohol use which impairs the ability of the Participant to perform his
duties with the Company or its affiliates, (3) the Participant's indictment with
respect to, conviction of, or plea of guilty or no contest to, any felony, or
other comparable crime under applicable local law (except, in any event, for
motor vehicle violations not involving personal injuries to third parties or
driving while intoxicated), or the Participant's incarceration with respect to
any of the foregoing that, in each case, impairs the Participant's ability to
continue to perform his duties with the Company and its affiliates, or (4) the
Participant's material breach of any written employment agreement or other
agreement between the Company and the Participant, or of the Kaiser Aluminum
& Chemical Corporation Code of Business Conduct, or failure by the
Participant to substantially perform his or her duties for the Company which
remains uncorrected or reoccurs after written notice has been delivered to the
Participant demanding substantial performance and the Participant has had a
reasonable opportunity to correct such breach or failure to perform.

         5. Repayment of Award. If within ninety (90) days following the payment
of any Award in accordance with Section 3 above, a Participant's employment with
the Company is terminated for any reason other than as a result of a Prorating
Event, the Participant must immediately return such payment to the Company.

         6. Supplemental Benefits Plan ("SERP").

         (a) If Participant's employment with the Company is terminated prior to
February 12, 2004 for any reason other than as a result of a Prorating Event,
(i) the Participant will forfeit any benefit available under the SERP without
consideration and (ii) the Participant will waive the right to receive any
amounts under the Grantor Trust Agreement made the __ day of February, by and
among the Corporation, the Company and Wachovia Bank, N.A., as trustee.

         (b) If the Participant's employment with the Company is terminated as a
result of a Prorating Event, including retirement on or after February 12, 2004,
the Participant will be entitled to receive the benefit payable under the SERP
in a lump sum payment as soon as practicable, but in no event later than 30 days
following such termination.

         (c) Any payment due under subsection 6(b) above will be offset by any
payment made from the Grantor Trust established February 11, 2002 by and among
the Corporation, the Company, and Wachovia Bank, N.A. to pay the benefits due
under the SERP.

         7. No Right to Continued Employment. Neither the Plan nor this
Agreement will be construed as giving the Participant the right to be retained
in the employ of the Company. Further, the Company may at any time dismiss the
Participant, free from any liability or any claim under the Plan or this
Agreement, except as otherwise expressly provided therein or herein.

         8. Transferability. The Award may not, at any time, be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by the
Participant and any such purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance will be void and unenforceable against the
Company; provided that the designation of a beneficiary will not constitute an
assignment, alienation, pledge, attachment, sale, transfer or encumbrance. No
such permitted transfer to heirs or legatees of the Participant will be
effective to bind the Company unless the Committee will have been furnished with
written notice thereof and a copy of such evidence as the Committee may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee or transferees of the terms and conditions hereof.

         9. Withholding. The Company will deduct from each payment all
applicable federal, state, local and other taxes required by law to be withheld
with respect to such payments.

         10. Choice of Law. The interpretation, performance and enforcement of
this Agreement will be governed by the laws of the State of Texas, without
regard to principles of conflicts of law.

         11. Award Subject to Plan. By entering into this Agreement the
Participant agrees and acknowledges that the Participant has received and read a
copy of the Plan. The Award is subject to the Plan. The terms and provisions of
the Plan as it may be amended from time to time are hereby incorporated herein
by reference. In the event of a conflict between any term or provision contained
herein and a term or provision of the Plan, the applicable terms and provisions
of the Plan will govern and prevail.

         12. Confidentiality. Except as otherwise required by law or in
connection with tax and personal planning and family matters, the Participant
agrees to keep his participation in the Plan and the amount of the Award
confidential.

         13. Signature in Counterparts. This Agreement may be signed in
counterparts, each of which will be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

         14. Complete Agreement. This Agreement embodies the complete agreement
and understanding between the parties with respect to the subject matter hereof
and effective as of its date supersedes and preempts any prior understandings,
agreements or representations by or between the parties, written or oral
(including, without limitation, any award or agreement granted under the Kaiser
Aluminum & Chemical Corporation Employee Retention Program (Effective
January 15, 2002)), which may have related to the subject matter hereof in any
way. The Company and the Participant hereby agree that upon execution of this
Agreement, any such prior agreements and the Prior Plan shall be superseded by
this Agreement and such prior agreements and the Prior Plan shall be of no
further force or effect.

         15. Waiver. In consideration of the Participant's agreement to delay
his retirement until February 12, 2004 or beyond, the Bankruptcy Committees
hereby waive any claims under the Bankruptcy Code to assets in the Grantor Trust
Agreement made February 11, 2002 by and among the Corporation, the Company and
Wachovia Bank, N.A. to pay benefits under the SERP.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the ____ day of ____________, 2002.

                                      Kaiser Aluminum & Chemical Corporation

                                      By:_____________________________
                                      Name:
                                      Title:

                                      --------------------------------
                                      Participant


Agreed this _____ day of              Agreed this _______ day of
____________, 2002.                   ____________, 2002.

Statutory Committee of Unsecured      Statutory Committee of Asbestos Claimants 
Creditors appointed by the            appointed by the Bankruptcy Court on
Bankruptcy Court on February 25,      February 25, 2002
2002


By: ______________________________    By: ______________________________________

Exhibit 10.29 to 2002 10-K
                                                                   Exhibit 10.29

                  RETENTION AGREEMENT FOR THE KAISER ALUMINUM &
                CHEMICAL CORPORATION KEY EMPLOYEE RETENTION PLAN
                          (EFFECTIVE SEPTEMBER 3, 2002) (A)

         THIS AGREEMENT (the "Agreement") is made, effective as of the ____ day
of ____________, 2002, between Kaiser Aluminum & Chemical Corporation, a
Delaware corporation (the "Company"), and _______________________________
(hereinafter called the "Participant").

                                R E C I T A L S:

         WHEREAS, the Company has adopted the Kaiser Aluminum & Chemical
Corporation Key Employee Retention Plan (Effective September 3, 2002) (the
"Plan"), which Plan is incorporated herein by reference and made a part of this
Agreement. Capitalized terms not otherwise defined herein will have the same
meanings as in the Plan; and

         WHEREAS, the Committee has determined that it would be in the best
interests of the Company to grant the retention award provided for herein (the
"Award") to the Participant pursuant to the Plan and the terms set forth herein.

         NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:

              1. Grant of the Award. Subject to the terms and conditions of the
Plan and the additional terms and conditions set forth in this Agreement, the
Company hereby grants to the Participant an Award.
 Pursuant to the terms of the
Award, the Participant shall earn the right to receive a payment (a "Retention
Payment") on each Vesting Date (as defined below). Each Retention Payment shall
be equal to the product of one-half of the Participant's Base Salary, multiplied
by ____, payable as described below. Upon execution of this Agreement, the
Participant hereby waives the right to receive any payments or awards under the
Prior Plan and the Prior Plan shall be superseded by this Agreement and shall be
of no further force or effect.

              2. Vesting. Subject to the Participant's continued employment with
the Company, the Participant will earn the right to receive a Retention Payment
on each of September 30, 2002, March 31, 2003, September 30, 2003 and March 31,
2004 (each, a "Vesting Date").

              3. Payment. Retention Payments that vest in accordance with
Section 2 shall be paid to the Participant in a lump sum on the applicable
Vesting Date.

              4. Termination.

              (a) If the Participant's employment with the Company is terminated
prior to any Vesting Date for any reason, other than as a result of (i) the
Participant's death, (ii) the Participant's Disability, (iii) the Participant's
retirement from the Company on or after the Participant attains age 62 or (iv)
the Company's termination of the Participant's employment without "Cause" (as
defined below) (each, a "Prorating Event"), the portion of the Award that would
have become vested and payable on such Vesting Date and all subsequent portions
of the Award, if any, that would have become payable following such Vesting Date
will be forfeited by the Participant without consideration.

              (b) If the Participant's employment with the Company is terminated
on account of a Prorating Event, the Participant shall be entitled to receive a
payment on the earlier of (i) 30 days following the Prorating Event or (ii) the
Vesting Date immediately following the Prorating Event, in an amount equal to
the product of (A) the amount that would have been payable to the Participant on
the Vesting Date immediately following the Prorating Event, multiplied by (B) a
fraction, the numerator of which is the number of days which have elapsed
between the Vesting Date immediately preceding such Prorating Event (or, if no
Vesting Date has occurred at the time of such Prorating Event, April 1, 2002)
(the "Measurement Date") and the date of such Prorating Event, and the
denominator of which is the number of total days in the period from the
Measurement Date to the Vesting Date immediately following the Prorating Event.
No further retention payments shall be made to the Participant.

              (c) For purposes of this Agreement, "Cause" means (1) the
Participant's engaging in fraud, embezzlement, misconduct or any act of
dishonesty with respect to the Company or its affiliates, (2) the Participant's
habitual drug or alcohol use which impairs the ability of the Participant to
perform his duties with the Company or its affiliates, (3) the Participant's
indictment with respect to, conviction of, or plea of guilty or no contest to,
any felony, or other comparable crime under applicable local law (except, in any
event, for motor vehicle violations not involving personal injuries to third
parties or driving while intoxicated), or the Participant's incarceration with
respect to any of the foregoing that, in each case, impairs the Participant's
ability to continue to perform his duties with the Company and its affiliates,
or (4) the Participant's material breach of any written employment agreement or
other agreement between the Company and the Participant, or of the Kaiser
Aluminum & Chemical Corporation Code of Business Conduct, or failure by the
Participant to substantially perform his or her duties for the Company which
remains uncorrected or reoccurs after written notice has been delivered to the
Participant demanding substantial performance and the Participant has had a
reasonable opportunity to correct such breach or failure to perform.

              5. Repayment of Award. If within ninety (90) days following the
payment of any Award in accordance with Section 3 or Section 4 above, a
Participant's employment with the Company is terminated for any reason other
than as a result of a Prorating Event, the Participant must immediately return
such payment to the Company.

              6. No Right to Continued Employment. Neither the Plan nor this
Agreement will be construed as giving the Participant the right to be retained
in the employ of the Company. Further, the Company may at any time dismiss the
Participant, free from any liability or any claim under the Plan or this
Agreement, except as otherwise expressly provided therein or herein.

              7. Transferability. The Award may not, at any time, be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by the
Participant and any such purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance will be void and unenforceable against the
Company; provided that the designation of a beneficiary will not constitute an
assignment, alienation, pledge, attachment, sale, transfer or encumbrance. No
such permitted transfer to heirs or legatees of the Participant will be
effective to bind the Company unless the Committee will have been furnished with
written notice thereof and a copy of such evidence as the Committee may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee or transferees of the terms and conditions hereof.

              8. Withholding. The Company will deduct from each payment all
applicable federal, state, local and other taxes required by law to be withheld
with respect to such payments.

              9. Choice of Law. The interpretation, performance and enforcement
of this Agreement will be governed by the laws of the State of Texas, without
regard to principles of conflicts of law.

              10. Award Subject to Plan. By entering into this Agreement the
Participant agrees and acknowledges that the Participant has received and read a
copy of the Plan. The Award is subject to the Plan. The terms and provisions of
the Plan as it may be amended from time to time are hereby incorporated herein
by reference. In the event of a conflict between any term or provision contained
herein and a term or provision of the Plan, the applicable terms and provisions
of the Plan will govern and prevail.

              11. Confidentiality. Except as otherwise required by law or in
connection with tax and personal planning and family matters, the Participant
agrees to keep his participation in the Plan and the amount of the Award
confidential.

              12. Signature in Counterparts. This Agreement may be signed in
counterparts, each of which will be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

              13. Complete Agreement. This Agreement embodies the complete
agreement and understanding between the parties with respect to the subject
matter hereof and effective as of its date supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written
or oral (including, without limitation, any award or agreement granted under the
Kaiser Aluminum & Chemical Corporation Employee Retention Program (Effective
January 15, 2002)), which may have related to the subject matter hereof in any
way. The Company and the Participant hereby agree that upon execution of this
Agreement, any such prior agreements and the Prior Plan shall be superseded by
this Agreement and such prior agreements and the Prior Plan shall be of no
further force or effect.

              IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the ____ day of ____________, 2002.

                                      Kaiser Aluminum & Chemical Corporation

                                      By:
                                      Name:
                                      Title:

                                      --------------------------------
                                      Participant

(A)   Form of Retention Agreement entered into as of September 3, 2002 with 
      executive officers of KAC and KACC other than Joseph A. Bonn, Jack A. 
      Hockema, Edward F. Houff, John T. La Duc, Harvey L. Perry and one other 
      executive officer.
Exhibit 10.30 to 2002 10-K
                                                                   Exhibit 10.30

                     KAISER ALUMINUM & CHEMICAL CORPORATION
                                 SEVERANCE PLAN
                          (EFFECTIVE SEPTEMBER 3, 2002)

            I.       Purpose

         The purpose of the Plan is to provide severance protection to certain
key salaried employees who are expected to make substantial contributions to the
success of the ongoing business and/or the restructuring effort and thereby
provides for stability and continuity of operations. The Plan has been approved
by the Bankruptcy Court and the Boards of Directors of the Company and the
Corporation and will remain in effect until the date that is one year after the
Emergence Date. The Plan shall supercede and replace the Prior Plan in its
entirety.

            II.      Definitions

         "Bankruptcy Committees" means the committees consisting of a statutory
committee of unsecured creditors and a statutory committee of asbestos
claimants, each appointed by the United States trustee for the District of
Delaware on February 25, 2002, pursuant to section 1102 of the Bankruptcy Code,
11 U.S.C. ss.ss. 101-1330.

         "Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware presiding over the Company's proceeding commenced on
February 12, 2002 under Chapter 11 of the Bankruptcy
 Code (11 U.S.C. ss. 1101,
et seq.).

         "Base Salary" means a Participant's annual base salary at a rate not
less than his or her annual fixed or base compensation as in effect immediately
prior to a termination of employment or, if higher, the Participant's annual
fixed or base compensation in effect within the six month period preceding the
date on which a Good Reason event occurred, without reductions for contributions
to any qualified or non-qualified employee benefit plan or fringe benefit plan
to the extent authorized by the documents governing such plans.

         "Board" means the Board of Directors of the Company and/or the
Corporation.

         "Cause" shall have the meaning set forth in a Severance Agreement.

         "Committee" means the Compensation Committee of the Board of the
Company. The Committee may delegate any of its powers, duties and
responsibilities and any of its discretionary authorities under the Plan to any
Officer.

         "Company" means Kaiser Aluminum & Chemical Corporation.

         "Corporation" means Kaiser Aluminum Corporation.

         "Emergence Date" means the date that the Company emerges from
bankruptcy.

         "Good Reason" means, without the Participant's consent, the occurrence
of any of the following events which is not cured by the Company within ten (10)
business days following the Participant's written notice to the Company of the
event constituting Good Reason; provided, however, that any such written notice
received by the Company following the thirty (30) day period after the date on
which the Participant first had knowledge of the occurrence of such event giving
rise to Good Reason (or, in the case of multiple events, the latest to occur of
such events) shall not be effective and the Participant shall be deemed to have
waived his/her right to terminate employment for Good Reason with respect to
such event:

                  (1)      Demotion, reduction in title, reduction in position
                           or responsibilities, or change in reporting
                           responsibilities or reporting level that is
                           materially and adversely inconsistent with the
                           Participant's position immediately prior to the
                           Effective Date or the assignment of duties and/or
                           responsibilities materially and adversely
                           inconsistent with such position; provided, however,
                           that the Company no longer being a publicly traded
                           entity or having filed bankruptcy shall not by itself
                           be Good Reason; or

                  (2)      Reduction of greater than 10% in the Participant's
                           Base Salary from the level existing prior to the
                           Effective Date or reduction of greater than 10% in
                           the Executive's target incentive compensation
                           opportunity as provided for in the KERP approved by
                           the Bankruptcy Court on September 3, 2002 or a
                           reduction in the Participant's eligibility for
                           participation in the Company's benefit plans that is
                           not commensurate with a similar reduction among
                           similarly situated employees.

         "Officer" means an officer of the Company.

         "Participant" means any key employee of the Company designated by the
Committee or the CEO to participate in the Plan.

         "Plan" means the Kaiser Aluminum & Chemical Corporation Severance Plan.

         "Prior Plan" means any prior severance plan, agreement, or severance
benefit program of the Company or the Corporation in which the Participant
participated or to which he or she was a party or any other similar agreement or
employment agreement existing on or prior to the Effective Date; provided,
however, that the term "Prior Plan" shall not include a Change in Control
Severance Agreement, if any, entered into between the Company and any
Participant (a "CIC Agreement").

         "Release Agreement" means an agreement pursuant to which the
Participant releases all current or future claims, known or unknown, arising on
or before the date of the release against the Company, its subsidiaries and its
Officers, substantially in a form approved by the Company.

         "Severance Agreement" means an agreement entered into between the
Company and a Participant providing for participation in the Plan.

         "Severance Payment" means the payment made or benefits provided to a
Participant in accordance with the terms of a Severance Agreement. Severance
Payments made under the Plan shall be limited to those payments reflected in the
applicable Severance Agreement.

            III.     Eligibility

         Participants in the Plan will be selected from those key employees of
the Company whose efforts are expected to contribute materially to the efforts
and success of the Company. No employee will be a Participant until he or she
has executed a Severance Agreement. No employee will at any time have the right
to be selected as a Participant. Notwithstanding any other provision of this
Agreement, no Severance Payments will be made and no benefits will be provided
to a Participant under this Plan if the Participant receives any payments or
benefits under a CIC Agreement. Any Severance Payments made to a Participant
under this Plan shall be first used to satisfy any obligations the Company or
the Corporation may have to such Participant under the Worker Adjustment and
Retraining Act of 1988 or similar statutes or regulation of any jurisdiction
relating to any plant closing or mass lay-off or as otherwise required by law.

            IV.      Administration

         The Plan will be administered by the Committee. Except as otherwise
expressly provided herein, full power and authority to construe, interpret, and
administer the Plan will be vested in the Committee, including the power to
amend or terminate the Plan with the Bankruptcy Court's approval as further
described in Section XIV.

            V.       Severance Payments

         The Company and each Participant will execute a Severance Agreement
that sets forth the terms and timing of the Severance Payment. Subject to the
terms of the Severance Agreement, the Severance Payment will be made to a
Participant who has executed a Release Agreement and whose employment with the
Company is terminated by the Company without Cause or by the Participant for
Good Reason. Severance Payments will not be considered compensation for purposes
of the Company's pension and welfare benefit plans, programs and arrangements.

            VI.      Payment of Severance Payments

         Severance Payments will become payable as provided in the Severance
Agreement.

            VII.     Non-Alienation of Benefits

         A Participant may not assign, sell, encumber, transfer or otherwise
dispose of any rights or interests under the Plan except by will or the laws of
descent and distribution. Any attempted disposition in contravention of the
preceding sentence will be null and void.

            VIII.    No Claim or Right to Plan Participation

         No employee or other person will have any claim or right to be selected
as a Participant under the Plan. Neither the Plan nor any action taken pursuant
to the Plan will be construed as giving any employee any right to be retained in
the employ of the Company.

            IX.      Taxes

         The Company will deduct from all amounts paid under the Plan all
federal, state, local and other taxes required by law to be withheld with
respect to such payments.

            X.       Payments to Persons Other Than the Participant

         If the Committee finds that any person to whom any amount is payable
under the Plan is unable to care for his or her affairs because of illness or
accident, or is a minor, or has died, then any payment due to such person or his
or her estate (unless a prior claim therefor has been made by a duly appointed
legal representative) may, if the Committee so directs, be paid to his or her
spouse, a child, a relative, an institution maintaining or having custody of
such person, or any other person deemed by the Committee, in its sole
discretion, to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment will be a complete discharge of the liability of
the Company therefor.

            XI.      No Liability of Board or Committee Members or Officers

         No member of the Board or the Committee or any Officer will be
personally liable by reason of any contract or other instrument related to the
Plan executed by such Officer or by such member or on his or her behalf in his
or her capacity as a member of the Board or the Committee, nor for any mistake
of judgment made in good faith, and the Company will indemnify and hold harmless
each employee, Officer, or director of the Company to whom any duty or power
relating to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including legal fees, disbursements and
other related charges) or liability (including any sum paid in settlement of a
claim with the approval of the Board of Directors) arising out of any act or
omission to act in connection with the Plan unless arising out of such person's
own fraud or bad faith.

            XII.     Termination or Amendment of the Plan

         On or prior to the Emergence Date, the Plan may only be amended,
suspended or terminated upon approval of the Bankruptcy Court and after such
date, by the Board. Without limiting the preceding sentence, the Plan may not be
amended in any way to reduce the benefits that become payable hereunder to a
Participant or otherwise to impair his or her ability to receive any amount due
hereunder, without the prior written consent of the Participant. Unless
terminated by the Board after the Emergence Date, in which case the Plan and all
Severance Agreements entered into thereunder shall cease to have any effect and
the Company shall have no liability to any Participant under the Plan or any
such Severance Agreements following the date of termination, the Plan will
automatically terminate on the earlier of (a) the date on which all benefits
payable hereunder have been paid or (b) the first anniversary of the Emergence
Date.

            XIII.    Governing Law

         The terms of the Plan and all rights thereunder will be governed by and
construed in accordance with the laws of the State of Texas, without reference
to principles of conflict of laws.

            XIV.     Effective Date

         The effective date of the Plan is September 3, 2002.


                                      Kaiser Aluminum & Chemical Corporation


                                      By:   /s/ James E. McAuliffe, Jr.
                                      Name:    James E. McAuliffe, Jr.
                                      Title:  Vice President, Human Resources
Exhibit 10.31 to 2002 10-K
                                                                   Exhibit 10.31

                       SEVERANCE AGREEMENT FOR THE KAISER
                 ALUMINUM & CHEMICAL CORPORATION SEVERANCE PLAN
                          (EFFECTIVE SEPTEMBER 3, 2002) (A)

         THIS AGREEMENT (the "Agreement") is made, effective as of the ____ day
of ____________, 2002, between Kaiser Aluminum & Chemical Corporation, a
Delaware corporation (the "Company"), and _______________________________
(hereinafter called the "Participant").

                                R E C I T A L S:

         WHEREAS, the Company has adopted the Kaiser Aluminum & Chemical
Corporation Severance Plan (Effective September 3, 2002) (the "Plan"), which
Plan is incorporated herein by reference and made a part of this Agreement.
Capitalized terms not otherwise defined herein will have the same meanings as in
the Plan; and

         WHEREAS, the Committee has determined that it would be in the best
interests of the Company to grant the severance benefits provided for herein to
the Participant pursuant to the Plan and the terms set forth herein.

         NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:

              1. Severance Benefits. If the Company terminates the Participant's
employment without "Cause" (as defined below) (and other than as a result of the
Participant's death or disability) or the Participant terminates employment
 with
Good Reason (each, a "Qualifying Termination"), the Company or its successor
shall:

              (a) make a payment to the Participant in an amount equal to the
product of the Participant's Base Salary, multiplied by ___________________(B) 
(the "Severance Amount"), payable as a lump sum as soon as practicable (but in 
no event later than 30 days) after the Qualifying Termination; and

              (b) continue to provide welfare benefits to the Participant under
the Company's medical, dental, vision, life insurance and disability benefit
plans for a period of ____________ (B) following the Participant's
Qualifying Termination; provided, however, that the Participant must continue to
pay the monthly medical and life insurance contributions (if any) paid by active
employees of the Company for this coverage to remain in effect. If the
Participant is unable to continue participating in the Company's benefit plans
due to the provisions of the documents governing such plans or any other reason,
the Company will reimburse the Participant for his expenses in obtaining
comparable benefit coverage. Notwithstanding the foregoing, coverage under any
qualified retirement plan and (except as otherwise required by law) coverage
under any cafeteria plan, dependant care spending account or health care
spending account will cease upon any termination of employment, whether or not a
Qualifying Termination. The Company may satisfy a portion of its obligations by
reimbursing and/or paying the Participant's applicable COBRA premium with
respect to any such plans. The Company may require the health benefit
continuation period required under the continuation coverage requirements of
Section 4980B of the Internal Revenue Code of 1986, as amended, and Part 6 of
Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as
amended, to run concurrently with the benefit continuation period hereunder. The
Company's obligations under this clause (b) shall cease once the Participant is
eligible for comparable coverage from a subsequent employer.

              (c) For purposes of this Agreement, "Cause" means (1) the
Participant's engaging in fraud, embezzlement, misconduct or any act of
dishonesty with respect to the Company or its affiliates, (2) the Participant's
habitual drug or alcohol use which impairs the ability of the Participant to
perform his duties with the Company or its affiliates, (3) the Participant's
indictment with respect to, conviction of, or plea of guilty or no contest to,
any felony, or other comparable crime under applicable local law (except, in any
event, for motor vehicle violations not involving personal injuries to third
parties or driving while intoxicated), or the Participant's incarceration with
respect to any of the foregoing that, in each case, impairs the Participant's
ability to continue to perform his duties with the Company and its affiliates,
or (4) the Participant's material breach of any written employment agreement or
other agreement between the Company and the Participant, or of the Kaiser
Aluminum & Chemical Corporation Code of Business Conduct, or failure by the
Participant to substantially perform his or her duties for the Company which
remains uncorrected or reoccurs after written notice has been delivered to the
Participant demanding substantial performance and the Participant has had a
reasonable opportunity to correct such breach or failure to perform.

              2. Conditions to Receipt of Benefits. Notwithstanding any other
provision of this Agreement:

              (a) The Company shall not be obligated to make any payment or
provide any benefit under Section 1 hereof if either:

              (i) the Participant receives severance compensation or benefit
       continuation pursuant to the Kaiser Aluminum & Chemical Corporation
       Change in Control Severance Plan; or

              (ii) the Participant's employment with the Company is
       terminated for any reason other than a Qualifying Termination.

              (b) The Company shall not be obligated to make any payment or
provide any benefit under Section 1 hereof unless the Participant executes a
Release Agreement, and thereby releases all current or future claims, known or
unknown, arising on or before the date of the release against the Company, its
subsidiaries and its officers, substantially in a form approved by the Company.

              (c) Upon execution of this Agreement, the Participant hereby
waives the right to receive any payments under the Prior Plan and the Prior Plan
shall be superceded by this Agreement and shall be of no further force or
effect.

              3. No Right to Continued Employment. Neither the Plan nor this
Agreement will be construed as giving the Participant the right to be retained
in the employ of the Company. Further, the Company may at any time dismiss the
Participant, free from any liability or any claim under the Plan or this
Agreement, except as otherwise expressly provided therein or herein.

              4. Transferability. The rights of the Participant hereunder may
not, at any time, be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by the Participant and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance will be void and
unenforceable against the Company; provided that the designation of a
beneficiary will not constitute an assignment, alienation, pledge, attachment,
sale, transfer or encumbrance. No such permitted transfer to heirs or legatees
of the Participant will be effective to bind the Company unless the Committee
will have been furnished with written notice thereof and a copy of such evidence
as the Committee may deem necessary to establish the validity of the transfer
and the acceptance by the transferee or transferees of the terms and conditions
hereof.

              5. Withholding. The Company will deduct from each payment all
applicable federal, state, local and other taxes required by law to be withheld
with respect to such payments.

              6. Choice of Law. The interpretation, performance and enforcement
of this Agreement will be governed by the laws of the State of Texas, without
regard to principles of conflicts of law.

              7. Subject to Plan. By entering into this Agreement the
Participant agrees and acknowledges that the Participant has received and read a
copy of the Plan. This Agreement is subject to the Plan. The terms and
provisions of the Plan as it may be amended from time to time are hereby
incorporated herein by reference. In the event of a conflict between any term or
provision contained herein and a term or provision of the Plan, the applicable
terms and provisions of the Plan will govern and prevail.

              8. Confidentiality. Except as otherwise required by law or in
connection with tax and personal planning and family matters, the Participant
agrees to keep his participation in the Plan and the amount of any payments or
benefits hereunder confidential.

              9. Signature in Counterparts. This Agreement may be signed in
counterparts, each of which will be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

              10. Complete Agreement. This Agreement embodies the complete
agreement and understanding between the parties with respect to the subject
matter hereof and effective as of its date supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written
or oral (including, without limitation, any award or agreement granted under the
Prior Plan), which may have related to the subject matter hereof in any way. The
Company and the Participant hereby agree that upon execution of this Agreement,
any such prior agreements shall be superseded by this Agreement and such prior
agreements shall be of no further force or effect.

              11. Restrictive Covenants.

              (a) Noncompetition; Nonsolicitation. For the ____(B) period
following the termination of employment with the Company, the Participant agrees 
that he will not, without the prior written consent of the Company, which shall 
not unreasonably be withheld, directly or indirectly, whether as a principal, 
agent, employee, consultant, contractor, advisor, representative, stockholder 
(other than as a holder of an interest of five percent (5%) or less in the 
equity of any corporation whose stock is traded on a public stock exchange), or 
in any other capacity:

                  (i) provide services, advice or assistance to any business,
person or entity which competes with the Company directly, as a primary focus of
its business, in the United States or in any other location in which the Company
operates, in the manufacture, sale or delivery of any materials, products or
services which constitute more than twenty percent (20%) of the Company's
revenues in the prior twelve month period; or

                  (ii) intentionally entice, induce or solicit, or attempt to
entice, induce or solicit, any individual or entity having a business
relationship with the Company, whether as an employee, consultant, customer or
otherwise, to terminate or cease such relationship.

By entering into this Agreement, the Participant acknowledges that these
prohibitions are reasonable as to time, geographical area and scope of activity
and do not impose a restriction greater than is necessary to protect the
Company's good will, proprietary information and business interests.

              (b) Confidentiality. The Participant shall keep secret and
confidential and shall not disclose to any third party, in any fashion or for
any purpose whatsoever, any information regarding the Company which is (i) not
available to the general public, and/or (ii) not generally known outside the
Company, to which the Participant has or will have had access at any time during
the course of his or her employment by the Company, including, without
limitation, any information relating to: the Company's business or operations;
its plans, strategies, prospects or objectives; its products, technology,
Intellectual Property described in Subsection (g), processes or specifications;
its research and development operations or plans; its customers and customer
lists; its manufacturing, distribution, sales, service, support and marketing
practices and operations; its financial condition and results of operations; its
operational strengths and weaknesses; and, its personnel and compensation
policies and procedures. However, this provision shall not preclude the
Participant from providing truthful information to the extent required by
subpoena, court order, search warrant or other legal process, provided that the
Participant immediately notifies the Company of such request in order to provide
the Company an opportunity to object to such request in the appropriate forum
and to obtain a ruling on such objection.

              (c) Cooperation. Upon termination of employment for any reason,
the Participant shall fully cooperate with the Company in all matters relating
to the winding up of his or her pending work on behalf of the Company and the
orderly transfer of any such pending work to other employees of the Company as
may be designated by the Company.

              (d) Enforcement. Any claim arising out of or relating to this
Agreement or the Participant's employment with the Company or the termination
thereof, other than an action for injunctive relief as provided below, shall be
resolved by confidential, final and binding arbitration conducted by Judicial
Arbitration and Mediation Services ("JAMS") to be held in Houston, Texas, under
the then-existing JAMS rules, rather than by litigation in court, trial by jury,
administrative proceeding, or in any other forum. Judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof. The Company shall promptly pay all costs and expenses, including
without limitation reasonable attorneys' fees, incurred by the Participant or
his/her beneficiaries in resolving any claim hereunder in which the Participant
or his/her beneficiaries shall prevail. In all other cases the parties shall
bear their own costs and expenses, except that the Participant shall pay all
costs and expenses, including, without limitation, reasonable attorney's fees
incurred by the Company in resolving such claim if the arbitrator(s) determine
such claim to have been brought by the Participant (i) in bad faith or (ii)
without any reasonable basis. Notwithstanding the foregoing, the parties agree
that any breach of Subsection (a) or (b) above is likely to cause irreparable
injury to the Company and that damages for any breach of Subsections (a), (b) or
(g) are difficult to calculate. Therefore, upon breach of Subsections (a), (b)
or (g) hereof, the Company shall, at its election, be entitled to injunctive and
other equitable relief from a court or such other relief or remedies, including
damages, to which it may be entitled, and shall not be required to submit the
matter to arbitration.

              (e) Return of Property. Upon termination of the Participant's
employment for any reason, the Participant will return to the Company all
property belonging to it, including without limitation, computer equipment,
computer programs, cellular telephones, beepers or other property belonging to
the Company, and documents, property and data of any nature and in any form,
including electronic or magnetic form, reflecting any confidential information
described in Subsection (b) above.

              (f) Disparagement. The Participant agrees not to make any
derogatory, unfavorable, negative or disparaging statements concerning the
Company and its affiliates, officers, directors, managers, employees or agents,
or its and their business affairs or performance. This provision shall not be
construed to limit the Participant's ability to give non-malicious and truthful
testimony should the Participant be subpoenaed to do so by competent authority
having jurisdiction.

              (g) Intellectual Property. For purposes of this Subsection (g),
the term "Intellectual Property" means all inventions, creations, trade secrets,
patents (utility or design) and other intellectual property relating to any
programming, documentation, technology, material, product, service, idea,
process, plan or strategy concerning the business or interests of the Company
that the Participant conceives, develops or delivers to the Company, in whole or
in part, at any time during his or her employment with the Company including,
without limitation, all copyrights, inventions, discoveries and improvements,
trademarks, designs and all other intellectual property rights. All such
Intellectual Property shall be considered work made for hire by the Participant
and owned by the Company. The Participant agrees to perform, upon the request of
the Company, during or after his or her employment, such acts as may be
necessary or desirable to transfer, perfect and defend the Company's ownership
and any resulting registrations of the Intellectual Property.

              (h) Blue Pencil. If, at any time, the provisions of this Section
11 shall be determined to be invalid or unenforceable under any applicable law,
by reason of being vague or unreasonable as to area, duration or scope of
activity, this Agreement shall be considered divisible and shall become and be
immediately amended to only such area, duration and scope of activity as shall
be determined to be reasonable and enforceable by the court or other body having
jurisdiction over the matter and the Participant and the Company agree that this
Agreement as so amended shall be valid and binding as though any invalid or
unenforceable provision had not been included herein.

              (i) Acknowledgement. PARTICIPANT ACKNOWLEDGES THAT HE HAS
CAREFULLY READ THIS SECTION 11 AND HAS HAD THE OPPORTUNITY TO REVIEW ITS
PROVISIONS WITH ANY ADVISORS AS HE CONSIDERED NECESSARY AND THAT PARTICIPANT
UNDERSTANDS THIS AGREEMENT'S CONTENTS AND SIGNIFIES SUCH UNDERSTANDING AND
AGREEMENT BY SIGNING BELOW.

              IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the ____ day of ____________, 2002.

                                      Kaiser Aluminum & Chemical Corporation

                                      By:
                                      Name:
                                      Title:


                                      Participant



(A)   Form of Severance Agreement entered into as of September 3, 2002 with
      executive officers of KAC and KACC, other than Joseph A. Bonn and John T. 
      La Duc.

(B)   For Jack A. Hockema, Edward F. Houff and Harvey L. Perry, the multiplier 
      in Section 1(a) is two, the period of continued coverage in Section 
      1(b) is two years, and the non-solicitation/non-competition period in
      Section 11(a) is one year.
Exhibit 10.32 to 2002 10-K
                                                                   Exhibit 10.32

                     KAISER ALUMINUM & CHEMICAL CORPORATION
                      CHANGE IN CONTROL SEVERANCE AGREEMENT
                         (EFFECTIVE ____________, 2002)

                  This Change in Control Severance Agreement (the "Agreement")
is entered into by and between Kaiser Aluminum & Chemical Corporation, a
Delaware corporation (the "Corporation"), and Jack A. Hockema ("Executive"),
effective _____________, 2002 (the "Effective Date").

                  WHEREAS, Executive has made, and is expected to continue to
make, major contributions to the short- and long-term profitability, growth and
financial strength of the Corporation;

                  WHEREAS, the Corporation continues to pursue strategies that
will result in a stronger and more profitable Corporation going forward and may
lead to acquisitions, divestitures or other forms of corporate restructuring;

                  WHEREAS, the Corporation previously made available to key
managers of the Corporation, including Executive, an Enhanced Severance
Agreement (together with any other employment or similar agreements which
provide for the payment of severance upon a termination of employment,
collectively referred to as the "Prior Agreement"), in order to ensure that such
managers have appropriate protection in the event of a "Change in Control" of
the Corporation,
 and to permit them to maintain their focus on key goals related
to the Corporation's initiatives;

                  WHEREAS, the Corporation now desires to supercede and replace
the Prior Agreement by entering into Change in Control Severance Agreements with
certain key managers, including Executive, and Executive also desires to enter
into this Agreement and to be bound by the terms thereof:

                  NOW, THEREFORE, the Corporation and Executive agree as
follows:

1.                      TERM OF AGREEMENT.  This Agreement shall be effective as 
      of the Effective Date and, subject to the provisions of Section 3, shall 
      terminate on the second anniversary of a Change in Control.  Upon 
      execution of this Agreement, the Executive hereby waives the right to 
      receive any payments or awards under the Prior Agreement and the Prior 
      Agreement shall be superseded by this Agreement and shall be of no further 
      force or effect.  Any payments made to Executive under this Agreement 
      shall be first used to satisfy any obligations the Company or the 
      Corporation may have to the Executive under the Worker Adjustment and 
      Retraining Act of 1988 or similar statutes or regulation of any 
      jurisdiction relating to any plant closing or mass lay-off or as otherwise 
      required by law.

2.                      DEFINED TERMS. In addition to terms defined elsewhere
      herein, the following terms have the following meanings when used in this 
      Agreement with initial capital letters:

      (a)               "Base Pay" means the Executive's annual base salary rate 
            at a rate not less than his or her annual fixed or base compensation 
            as in effect immediately prior to termination of employment or, if 
            higher, the Executive's annual fixed or base compensation in effect 
            within the six month period preceding a Change in Control, without 
            reduction for contributions to any qualified or non-qualified 
            employee benefit plan or fringe benefit plan.

      (b)               "Bankruptcy Committees" means the committees consisting 
            of a statutory committee of unsecured creditors and a statutory 
            committee of asbestos claimants, each appointed by the United States
            trustee for the District of Delaware on February 25, 2002, pursuant 
            to section 1102 of the Bankruptcy Code, 11 U.S.C. ss.ss. 101-1330.

      (c)               "Cause" means (1) the Executive's engaging in fraud, 
            embezzlement, gross misconduct or any act of gross dishonesty with 
            respect to the Corporation or its affiliates, (2) the Executive's 
            habitual drug or alcohol use which impairs the ability of the 
            Executive to perform his duties with the Corporation or its 
            affiliates, (3) the Executive's indictment with respect to, 
            conviction of, or plea of guilty or no contest to, any felony, or 
            other comparable crime under applicable local law (except, in any 
            event, for motor vehicle violations not involving personal injuries
            to third parties or driving while intoxicated), or the Executive's 
            incarceration with respect to any of the foregoing that, in each 
            case, impairs the Executive's ability to continue to perform his 
            duties with the Corporation and its affiliates, or (4) the 
            Executive's material breach of any written employment agreement or 
            other agreement between the Corporation and the Executive, or of the 
            Kaiser Aluminum & Chemical Corporation Code of Business Conduct, or
            failure by the Executive to substantially perform his or her duties 
            for the Corporation which remains uncorrected or reoccurs after 
            written notice has been delivered to the Executive demanding 
            substantial performance and the Executive has had a reasonable 
            opportunity to correct such breach or failure to perform.

      (d)               "Change in Control" means (at any time on or after the 
            Effective Date):

            (1)               The sale, lease, conveyance or other disposition 
                  of all or substantially all of the Corporation's assets
                  (including the assets and stock of the Corporation's direct 
                  and indirect subsidiaries and affiliates) as an entirety or 
                  substantially as an entirety to any person, entity or group of 
                  persons acting in concert other than in the ordinary course of
                  business; provided, however, that a Change in Control shall 
                  not occur (A) upon any such sale, lease, conveyance or other 
                  disposition to a direct or indirect subsidiary of the 
                  Corporation or (B) if the voting common equity interests of 
                  the ongoing entity are beneficially owned, directly or 
                  indirectly, by the Corporation's shareholders in substantially 
                  the same proportions as such shareholders owned the 
                  Corporation's outstanding voting common equity interests 
                  immediately prior to such event.

            (2)               Any transaction or series of related transactions 
                  (as a result of a tender offer, merger, consolidation or 
                  otherwise) that results in any "person" (as defined in Section 
                  13(h)(8)(E) under the Securities Exchange Act of 1934) 
                  becoming the beneficial owner (as defined in Rule l3d-3 under 
                  the Securities Exchange Act of 1934), directly or indirectly, 
                  of more than 50% of the aggregate voting power of all classes 
                  of common equity of the Corporation, except if such person is 
                  (A) a subsidiary of the Corporation, (B) an employee stock
                  ownership plan or any other tax-qualified benefit plan 
                  maintained by the Corporation or any affiliate thereof , (C) a 
                  corporation or other entity formed to hold the Corporation's 
                  common equity securities and whose shareholders or owners 
                  constituted, at the time such corporation became such holding 
                  company, substantially all the shareholders of the 
                  Corporation, (D) the surviving entity in any transaction if 
                  the shareholders of the Corporation immediately prior to such 
                  transaction continue to own at least 50% of the voting common 
                  equity of such surviving entity immediately following such 
                  transaction, (E) any underwriter temporarily holding 
                  securities pursuant to an offering of such securities, or (F) 
                  Executive or any group of persons including Executive (or any 
                  entity controlled by Executive or any group of persons
                  including Executive).  Notwithstanding the provisions of this 
                  paragraph (2), a Change in Control shall not be deemed to have 
                  occurred solely by virtue of (i) the consummation of a plan of 
                  reorganization of the Corporation under its bankruptcy
                  proceeding commenced February 12, 2002 under the United States 
                  Bankruptcy Code (11 U.S.C.ss.1101, et seq.) ("Bankruptcy 
                  Code") where the ownership of more than 50% of the common 
                  stock of the Corporation is transferred to the creditors of 
                  the Corporation or a channeling trust (the "Emergence Date"), 
                  or (ii) a plan of liquidation or a plan of asset protection is 
                  approved by the Bankruptcy Court in a proceeding under Chapter
                  7 or Chapter 11 of the Bankruptcy Code; provided, however, 
                  that if pursuant to such reorganization, restructuring, 
                  liquidation or asset protection plan, any person (other than a 
                  channeling trust or those set forth in clauses (A) through (F) 
                  above) is or becomes the beneficial owner, directly or 
                  indirectly, of securities of the Corporation representing more 
                  than 50% of the combined voting power of the Corporation's 
                  then outstanding securities, a Change in Control will be 
                  deemed to have occurred.  Notwithstanding the foregoing, a 
                  Change in Control of the Corporation shall not be deemed to 
                  occur solely because any person acquires beneficial ownership 
                  of more than 50% of the Corporation's voting common equity as 
                  a result of the acquisition of such equity by the Corporation 
                  which reduces the number of such equity outstanding.

            (3)         A change in the composition of the Corporation's Board 
                  of Directors over a period of thirty-six (36) consecutive 
                  months or less such that a majority of the then current Board 
                  members ceases to be comprised of individuals who either (a) 
                  have been Board members continuously since the beginning of 
                  such period, or (b) have been elected or nominated for 
                  election as Board members during such period by at least a 
                  majority of the Board members described in clause (a) who were 
                  still in office at the time such election or nomination was 
                  approved by the Board; provided, however, that this paragraph 
                  (3) shall not apply solely by virtue of a change in the 
                  individuals constituting a majority of the Board members (a) 
                  as implemented pursuant to the consummation of a plan of 
                  reorganization of the Corporation in a proceeding under 
                  Chapter 11 of the Bankruptcy Code, or (b) prior to the 
                  Emergence Date as a result of any such change caused by Maxxam
                  Inc.

Notwithstanding the foregoing, prior to the Emergence Date (a) any event
described in paragraphs (1) and (2) above shall only constitute a Change in
Control if such event is approved by the Bankruptcy Court unless the Unsecured
Creditors Committee and the Asbestos Claimants Committee both object to the
approval of such event in its entirety and neither committee withdraws its
objection, and (b) no transaction involving the disposition by Maxxam Inc. of
its voting securities in the Corporation to any person shall constitute a Change
in Control.

For purposes of the definition of a Change in Control, the term "Corporation"
shall mean Kaiser Aluminum Corporation ("KAC") and shall include Kaiser Aluminum
& Chemical Corporation ("KACC") at any time that the voting securities of KACC
are held by any person other than KAC.

      (e)               "Code" means the Internal Revenue Code of 1986, as
            amended from time to time. All references to the Code shall be 
            deemed also to refer to any successor provisions to such sections.

      (f)               "Disability" means total and permanent disability as a 
            result of bodily injury, disease or mental disorder which results in
            the Executive's entitlement to long term disability benefits under 
            the Kaiser Aluminum Self-Insured Welfare Plan or the Kaiser 
            Aluminum Salaried Employees Retirement Plan.

      (g)               "Good Reason" means, without Executive's consent, the 
            occurrence of any of the following events which is not cured by the 
            Corporation within ten (10) business days following Executive's 
            written notice to the Corporation of the event constituting 
            Good Reason; provided, however, that any such written notice 
            received by the Corporation following the thirty (30) day period 
            after the date on which Executive first had knowledge of the 
            occurrence of such event giving rise to Good Reason (or, in the case 
            of multiple events, the latest to occur of such events) shall not be
            effective and Executive shall be deemed to have waived his/her right 
            to terminate employment for Good Reason with respect to such event:

            (1)               Demotion, reduction in title, reduction in
                        position or responsibilities, or change in reporting 
                        responsibilities or reporting level that is materially 
                        and adversely inconsistent with the Executive's position 
                        immediately prior to the Effective Date or the 
                        assignment of duties and/or responsibilities materially 
                        and adversely inconsistent with such position; provided, 
                        however, that the Corporation no longer being a publicly 
                        traded entity or having filed bankruptcy shall not by 
                        itself be Good Reason; or

            (2)               Relocation of the Executive's primary office 
                        location more than fifty (50) miles from the Executive's
                        current office location; or

            (3)               Reduction of greater than 10% in the Executive's 
                        Base Pay from the level existing prior to the Effective 
                        Date or reduction of greater than 10% in the Executive's 
                        long term or short term Incentive compensation 
                        opportunity as provided for in the KERP approved by the 
                        Bankruptcy Court on September 3, 2002 or a reduction in 
                        the Executive's eligibility for participation in the 
                        Corporation's benefit plans that is not commensurate 
                        with a similar reduction among similarly situated 
                        employees.

      (h)                     "Incentive" means Executive's target bonus.

      (i)                     "Release Agreement" means an agreement pursuant to 
            which the Executive releases all current or future claims, known or
            unknown, arising on or before the date of the release against the 
            Corporation, its subsidiaries and its officers, substantially in a 
            form approved by the Corporation.

3.                      SEVERANCE UPON CHANGE IN CONTROL. If the Executive's
      employment is terminated by the Corporation, or any successor to the 
      Corporation, or the Executive terminates his or her employment due to Good 
      Reason, within the period beginning ninety (90) days prior to a Change in 
      Control and ending on the second anniversary of such Change in Control, 
      the Executive will be entitled to receive the severance payments and 
      benefits set forth in Sections 4 and 5 below; provided, however, that no 
      severance payments shall be made, or continuing benefits provided, under 
      the Agreement (and the Agreement shall terminate immediately), if any of 
      the following apply:

      (a)               The Executive voluntarily resigns or retires from 
            employment other than for Good Reason;

      (b)               The Executive is terminated for Cause;

      (c)               The Executive's employment terminates as a result of 
            death or Disability;

      (d)               The Executive declines to sign and return a Release 
            Agreement or revokes such Release Agreement within the time provided
            therein; or

      (e)               The Executive receives severance compensation or benefit
            continuation pursuant to the Kaiser Aluminum & Chemical Corporation 
            Severance Plan or any other Prior Agreement.

4.                      AMOUNT OF SEVERANCE PAYMENTS. If the Executive's 
      employment terminates as described in Section 3 above, and he or she 
      becomes entitled to severance benefits under this Agreement, the 
      Corporation, or any successor to the Corporation, shall pay to the 
      Executive the following:

      (a)               Three (3) times the sum of the Executive's Base Pay plus 
            the Executive's most recent short term Incentive target shall be
            paid to the Executive in a single sum cash payment as soon as
            practicable following the Executive's termination (but in no event 
            later than 30 days after such termination);

      (b)               The prorated short term Incentive program in effect for 
            the year in which the Executive's termination of employment occurs 
            shall be paid to the Executive in a single sum cash payment as soon 
            as practicable following the Executive's termination (but in no 
            event later than 30 days after such termination).  The amount of the 
            prorated short term Incentive program shall be determined by 
            multiplying the Executive's short term Incentive target for the full 
            current year by a fraction, the numerator of which is the number of 
            days from January 1 until the Executive's termination of employment 
            and the denominator of which is 365.  Notwithstanding the foregoing,
            if the Executive is terminated on December 31 of any year, he or she 
            will participate in the actual short term Incentive program for the 
            year, based on applicable performance measure(s), and no proration 
            shall apply; and

      (c)               The prorated long term Incentive program in effect for 
            the year in which the Executive's termination of employment occurs 
            shall be paid to the Executive at the time such long term Incentive 
            program terminates (but in no event later than 30 days after such 
            termination) if the Corporation is determined at that time to have 
            achieved the long term Incentive target under such program.  The 
            amount of the prorated long term Incentive program shall be 
            determined by multiplying the Executive's long term Incentive target 
            for such long term period by a fraction, the numerator of which is 
            the number of days from the inception of the long term program until 
            the Executive's termination of employment and the denominator of 
            which is 365.

5.                      CONTINUATION OF BENEFITS. If the Executive's employment
      terminates as described in Section 3 above, and he or she becomes entitled 
      to severance benefits under this Agreement, the Corporation, or any 
      successor to the Corporation, shall provide to the Executive the following:

      (a)               Continuation of his or her coverage under the 
            Corporation's medical, dental, vision, life insurance and disability 
            benefit plans, as if the Executive had continued in employment with 
            the Corporation uninterrupted for a period of three (3) years 
            following the Executive's termination of employment as described in 
            Section 3 above; provided, however, that the Participant must 
            continue to pay the monthly medical and life insurance contributions 
            (if any) paid by active employees of the Company for this coverage 
            to remain in effect.  If the Executive is unable to continue 
            participating in the Company's benefit plans due to the provisions 
            of the documents governing such plans or any other reason, the 
            Company will reimburse the Executive for his or her expenses in 
            obtaining comparable benefit coverage.  Notwithstanding the 
            foregoing, coverage under any qualified retirement plan and (except 
            as otherwise required by law) coverage under any cafeteria plan, 
            dependant care spending account or health care spending account will
            cease.  The Corporation may satisfy a portion of its obligations by 
            reimbursing and/or paying the Participant's applicable COBRA premium 
            with respect to any such plans.  The Company's obligations under 
            this clause (a) shall cease once the Participant is eligible for 
            comparable coverage from a subsequent employer.  The Corporation may 
            require the health benefit continuation period required under the 
            continuation coverage requirements of Section 4980B of the Internal 
            Revenue Code of 1986, as amended, and Part 6 of Subtitle B of 
            Title I of the Employee Retirement Income Security Act of 1974, 
            as amended, to run concurrently with the benefit continuation period 
            hereunder; and

      (b)               Continuation of all other existing perquisites,
            including, without limitation, the continuation of his or her 
            company car benefit, for a period of three (3) years following the
            Executive's termination of employment as described in Section
            3 above, with the exception of gas reimbursement. The company
            reserves the right to offer a reasonable cash buy-out of the company 
            car benefit.

6.                      GROSS-UP FOR TAX PAYMENTS.  If any payment or 
      distribution by the Corporation or any of its affiliates to or for the 
      benefit of Executive, whether paid or payable or distributed or 
      distributable under this Agreement or under any other agreement, policy, 
      plan, program or arrangement, or the lapse or termination of any 
      restriction under any agreement, policy, plan, program or arrangement (a 
      "Payment"), would be subject to the excise tax imposed by Section 4999 of 
      the Code by reason of being considered contingent on a change in ownership 
      or control of the Corporation, within the meaning of Section 280G of the 
      Code, or to any similar tax imposed by state or local law, or any interest 
      or penalties with respect to such tax (such tax or taxes, together with 
      any such interest and penalties, being hereafter collectively referred to 
      as the "Excise Tax"), then Executive will be entitled to receive an 
      additional payment or payments (collectively, a "Gross-Up Payment"). The 
      Gross-Up Payment will be in an amount such that, after payment by 
      Executive of all taxes (including any interest or penalties imposed with 
      respect to such taxes), including any Excise Tax imposed upon the Gross-Up 
      Payment, Executive retains an amount of the Gross-Up Payment equal to the 
      Excise Tax imposed on the Payment. Notwithstanding the foregoing, if no 
      Excise Tax would apply if the aggregate Payments were reduced by five 
      percent (5%), then the aggregate Payments shall be reduced by the amount 
      necessary to avoid application of the Excise Tax, in such manner as the 
      Executive shall direct, and no Gross-Up Payment will be made. The 
      following provisions shall apply in determining whether a Gross-Up Payment 
      shall apply:

      (a)               Unless the Corporation and Executive otherwise agree in 
            writing, any determination required under this Section 6 shall be 
            made in writing by nationally recognized independent public 
            accountants (the "Accounting Firm"), whose determination shall be 
            conclusive and binding upon Executive and the Corporation for all 
            purposes. For purposes of making the calculations required by this 
            Section 6, the Accounting Firm may make reasonable assumptions and 
            approximations concerning applicable taxes and may rely on 
            reasonable, good faith interpretations concerning the application of
            Sections 280G and 4999 of the Code. The Corporation and Executive 
            shall furnish to the Accounting Firm such information and documents 
            as the Accounting Firm may reasonably request in order to make a 
            determination hereunder. The Corporation shall bear all costs the 
            Accounting Firm may reasonably incur in connection with any 
            calculations contemplated hereunder. The Accounting Firm shall be 
            required to provide its determination within sixty (60) days after 
            the date of the Executive's termination, and the Corporation shall 
            be responsible for any income tax, penalty or interest liability 
            incurred as a result of delay by the Accounting Firm.

      (b)               If the Accounting Firm determines that no Excise Tax is 
            payable by Executive, it will, at the same time as it makes such 
            determination, furnish the Corporation and Executive an opinion that 
            Executive has substantial authority not to report any Excise Tax on 
            his or her federal, state or local income or other tax return. If 
            the Accounting Firm determines that an Excise Tax will (or would, 
            but for reduction in the Payment) be payable by Executive, it will, 
            at the same time as it makes such determination, furnish the 
            Corporation and Executive the detailed basis for such opinion. The 
            Corporation will make the Gross-Up payment within five (5) business 
            days thereafter.

      (c)               If the federal, state and local income or other tax 
            returns filed by Executive are consistent with the determination of 
            the Accounting Firm under paragraph (b) above, and the Internal 
            Revenue Service or any other taxing authority asserts a claim or 
            notice of deficiency (referred to in this Section 6 as a "claim") 
            against the Executive that, if successful, would require the payment 
            by the Corporation of a Gross-Up Payment, the following shall apply. 
            Executive will not pay such claim prior to the earlier of (1) the 
            expiration of the thirty (30) calendar day period following the date 
            on which he or she gives such notice to the Corporation and (2) the
            date that any payment of amount with respect to such claim is due. 
            If the Corporation notifies Executive in writing prior to the 
            expiration of such period that it desires to contest such claim, 
            Executive will:

      (i)                     Provide the Corporation with any written records 
            or documents in his or her possession relating to such claim 
            reasonably requested by the Corporation;

      (ii)                    Take such action in connection with contesting 
            such claim as the Corporation shall reasonably request in writing 
            from time to time, including without limitation accepting legal 
            representation with respect to such claim by an attorney competent 
            in respect of the subject matter and reasonably selected by the 
            Corporation;

      (iii)                   Cooperate with the Corporation in good faith in 
            order effectively to contest such claim, which may include the 
            payment of an amount advanced by the Corporation and assertion of a 
            claim for refund; and

      (iv)                    Permit the Corporation to participate in any 
            proceedings relating to such claim;

provided, however, that the Corporation will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless Executive, on an after-tax basis,
for and against any Excise Tax or income tax, including interest and penalties
with respect thereto, imposed as a result of such contest and any such payments.
If the Corporation directs Executive to pay the tax claimed, or otherwise fails
to contest the claim as described above, the Corporation will immediately pay to
Executive the amount of the required deficiency payment, including any Excise
Tax or income tax, and interest and penalties with respect thereto.

      (d)               As a result of the uncertainty in the application of 
            Section 4999 of the Code at the time of the determination, it is 
            possible that Gross-Up Payments which will not have been made by the
            Corporation should have been made ("Underpayment") or Gross-Up 
            Payments are made by the Corporation which should not have been made 
            ("Overpayment"), consistent with the calculations required to be 
            made hereunder.  In the event that Executive thereafter is required 
            to make payment of any Excise Tax or additional Excise Tax, the 
            Accounting Firm shall determine the amount of the Underpayment that 
            has occurred and any such Underpayment shall be promptly paid by the 
            Corporation to or for the benefit of Executive.  In the event the 
            amount of the Gross-Up Payment exceeds the amount necessary to 
            reimburse Executive for his Excise Tax, the Accounting Firm shall 
            determine the amount of the Overpayment that has been made and any 
            such Overpayment shall be promptly paid by Executive to or for the 
            benefit of the Corporation.

7.                      Restrictive Covenants.

      (a)               Noncompetition; Nonsolicitation. For the one year period 
            following the termination of employment with the Corporation, 
            Executive agrees that he will not, without the prior written consent 
            of the Corporation, which shall not unreasonably be withheld, 
            directly or indirectly, whether as a principal, agent, employee, 
            consultant, contractor, advisor, representative, stockholder (other
            than as a holder of an interest of five percent (5%) or less in the 
            equity of any corporation whose stock is traded on a public stock 
            exchange), or in any other capacity:

                        (i)         provide services, advice or assistance to 
                              any business, person or entity which competes with 
                              the Corporation directly, as a primary focus of 
                              its business, in the United States or in any other 
                              location in which the Corporation operates, in the 
                              manufacture, sale or delivery of any materials, 
                              products or services which constitute more than
                              twenty percent (20%) of the Corporation's revenues 
                              in the prior twelve month period; or

                        (ii)        intentionally entice, induce or solicit, or
                              attempt to entice, induce or solicit, any
                              individual or entity having a business 
                              relationship with the Corporation, whether as an 
                              employee, consultant, customer or otherwise, to 
                              terminate or cease such relationship.

By entering into this Agreement, Executive acknowledges that these prohibitions
are reasonable as to time, geographical area and scope of activity and do not
impose a restriction greater than is necessary to protect the Corporation's good
will, proprietary information and business interests.

      (b)               Confidentiality.  Executive shall keep secret and 
            confidential and shall not disclose to any third party, in any 
            fashion or for any purpose whatsoever, any information regarding the 
            Corporation which is (i) not available to the general public, and/or 
            (ii) not generally known outside the Corporation, to which Executive 
            has or will have had access at any time during the course of his or 
            her employment by the Corporation, including, without limitation, 
            any information relating to: the Corporation's business or 
            operations; its plans, strategies, prospects or objectives; its 
            products, technology, Intellectual Property described in Subsection 
            (g), processes or specifications; its research and development 
            operations or plans; its customers and customer lists; its 
            manufacturing, distribution, sales, service, support and marketing
            practices and operations; its financial condition and results of 
            operations; its operational strengths and weaknesses; and, its 
            personnel and compensation policies and procedures. However, this 
            provision shall not preclude Executive from providing truthful 
            information to the extent required by subpoena, court order, search 
            warrant or other legal process, provided that Executive immediately 
            notifies the Corporation of such request in order to provide the
            Corporation an opportunity to object to such request in the 
            appropriate forum and to obtain a ruling on such objection.

      (c)               Cooperation. Upon termination of employment for any 
            reason, Executive shall fully cooperate with the Corporation in all 
            matters relating to the winding up of his or her pending work on 
            behalf of the Corporation and the orderly transfer of any such 
            pending work to other employees of the Corporation as may be 
            designated by the Corporation.

      (d)               Enforcement.  Any claim arising out of or relating to 
            this Agreement or Executive's employment with the Corporation or the 
            termination thereof, other than an action for injunctive relief as 
            provided below, shall be resolved by confidential, final and binding 
            arbitration conducted by Judicial Arbitration and Mediation Services 
            ("JAMS") to be held in Houston, Texas, under the then-existing JAMS 
            rules, rather than by litigation in court, trial by jury, 
            administrative proceeding, or in any other forum.  Judgment upon the 
            award rendered by the arbitrator(s) may be entered in any court 
            having jurisdiction thereof.  The Corporation shall promptly pay all
            costs and expenses, including without limitation reasonable 
            attorneys' fees, incurred by Executive or his/her beneficiaries in 
            resolving any claim hereunder in which Executive or his/her 
            beneficiaries shall prevail.  In all other cases the parties shall 
            bear their own costs and expenses, except that Executive shall pay 
            all costs and expenses, including, without limitation, reasonable 
            attorney's fees incurred by the Corporation in resolving such claim 
            if the arbitrator(s) determine such claim to have been brought by 
            Executive (i) in bad faith or (ii) without any reasonable basis.  
            Notwithstanding the foregoing, the parties agree that any breach of 
            Subsection (a) or (b) above is likely to cause irreparable injury to 
            the Corporation and that damages for any breach of Subsections (a), 
            (b) or (g) are difficult to calculate.  Therefore, upon breach of 
            Subsections (a), (b) or (g) hereof, the Corporation shall, at its
            election, be entitled to injunctive and other equitable relief from 
            a court or such other relief or remedies, including damages, to 
            which it may be entitled, and shall not be required to submit the 
            matter to arbitration.

      (e)               Return of Property. Upon termination of Executive's 
            employment for any reason, Executive will return to the Corporation 
            all property belonging to it, including without limitation, computer 
            equipment, computer programs, cellular telephones, beepers or other 
            property belonging to the Corporation, and documents, property and 
            data of any nature and in any form, including electronic or magnetic 
            form, reflecting any confidential information described in 
            Subsection (b) above.

      (f)               Disparagement. Executive agrees not to make any 
            derogatory, unfavorable, negative or disparaging statements 
            concerning the Corporation and its affiliates, officers, directors, 
            managers, employees or agents, or its and their business affairs or 
            performance.  This provision shall not be construed to limit 
            Executive's ability to give non-malicious and truthful testimony 
            should Executive be subpoenaed to do so by competent authority 
            having jurisdiction.

      (g)               Intellectual Property.  For purposes of this Subsection 
            (g), the term "Intellectual Property" means all inventions, 
            creations, trade secrets, patents (utility or design) and other 
            intellectual property relating to any programming, documentation, 
            technology, material, product, service, idea, process, plan or 
            strategy concerning the business or interests of the Corporation 
            that Executive conceives, develops or delivers to the Corporation, 
            in whole or in part, at any time during his or her employment with 
            the Corporation including, without limitation, all copyrights, 
            inventions, discoveries and improvements, trademarks, designs and 
            all other intellectual property rights.  All such Intellectual 
            Property shall be considered work made for hire by Executive and 
            owned by the Corporation.  Executive agrees to perform, upon the 
            request of the Corporation, during or after his or her employment, 
            such acts as may be necessary or desirable to transfer, perfect and 
            defend the Corporation's ownership and any resulting registrations 
            of the Intellectual Property.

      (h)               Blue Pencil. If, at any time, the provisions of this 
            Section 7 shall be determined to be invalid or unenforceable under 
            any applicable law, by reason of being vague or unreasonable as to 
            area, duration or scope of activity, this Agreement shall be 
            considered divisible and shall become and be immediately amended to 
            only such area, duration and scope of activity as shall be 
            determined to be reasonable and enforceable by the court or other 
            body having jurisdiction over the matter and Executive and the 
            Corporation agree that this Agreement as so amended shall be valid 
            and binding as though any invalid or unenforceable provision had
            not been included herein.

      (i)               Acknowledgement. EXECUTIVE ACKNOWLEDGES THAT HE HAS 
            CAREFULLY READ THIS SECTION 7 AND HAS HAD THE OPPORTUNITY TO REVIEW 
            ITS PROVISIONS WITH ANY ADVISORS AS HE CONSIDERED NECESSARY AND THAT 
            EXECUTIVE UNDERSTANDS THIS AGREEMENT'S CONTENTS AND SIGNIFIES SUCH 
            UNDERSTANDING AND AGREEMENT BY SIGNING BELOW.

8.                      MISCELLANEOUS.

      (a)               Waiver. Neither party shall, by mere lapse of time, 
            without giving notice or taking other action hereunder be deemed to 
            have waived any breach by the other party of any of the provisions 
            of this Agreement.  Further, the waiver by either party of a 
            particular breach of this Agreement by the other shall neither be 
            construed as, nor constitute, a continuing waiver of such breach or 
            of other breaches by the same or any other provision of this 
            Agreement.

      (b)               Severability. If for any reason a court of competent 
            jurisdiction or arbitrator finds any provision of this Agreement to 
            be unenforceable, the provision shall be deemed amended as necessary 
            to conform to applicable laws or regulations, or if it cannot be so 
            amended without materially altering the intention of the parties, 
            the remainder of the Agreement shall continue in full force and 
            effect as if the offending provision were not contained herein.

      (c)               No Mitigation. Executive shall have no duty to mitigate 
            the Corporation's obligation with respect to the termination 
            payments set forth herein by seeking other employment following 
            termination of his or her employment, nor shall such termination 
            payments be subject to offset or reductions by reason of any 
            compensation received by Executive from such other employment. The 
            Corporation's obligations to make any payments hereunder shall not 
            terminate in the event Executive accepts other full time employment.

      (d)               Notices. All notices and other communications required 
            or permitted to be given under this Agreement shall be in writing 
            and shall be considered effective upon personal service or upon 
            depositing such notice in the U.S. Mail, postage prepaid, return 
            receipt requested and addressed to the Chairman of the Board of the 
            Corporation at its principal corporate address, and to Executive at 
            his most recent address shown on the Corporation's corporate 
            records, or at any other address which he may specify in any 
            appropriate notice to the Corporation.

      (e)               Counterparts. This Agreement may be executed in any 
            number of counterparts, each of which shall be deemed an original 
            and all of which taken together constitutes one and the same 
            instrument and in making proof hereof it shall not be necessary to 
            produce or account for more than one such counterpart.

      (f)               Entire Agreement. The parties hereto acknowledge that 
            each has read this Agreement, understands it, and agrees to be bound 
            by its terms. The parties further agree that this Agreement 
            constitutes the complete and exclusive statement of the agreement 
            between the parties and supersedes all proposals (oral or written), 
            understandings, representations, conditions, covenants, and all 
            other communications between the parties relating to the subject 
            Matter hereof.

      (g)               Governing Law. This Agreement shall be governed by the 
            law of the State of Texas.

      (h)               Assignment and Successors.  This Agreement will be 
            binding upon and inure to the benefit of the Corporation and any 
            successor to the Corporation, including, without limitation, any 
            persons acquiring directly or indirectly all or substantially all of 
            the business or assets of the Corporation whether by purchase, 
            merger, consolidation, reorganization or otherwise (and such
            successor will thereafter be deemed the "Corporation" for the 
            purposes of this Agreement), but will not otherwise be assignable or 
            delegable by the Corporation. The Corporation will require any such 
            successor, by agreement in form and substance identical hereto, 
            expressly to assume and agree to perform this Agreement in the same 
            manner and to the same extent the Corporation would be required to 
            perform if no such succession had taken place. This Agreement will 
            inure to the benefit of and be enforceable by, if then applicable, 
            Executive's personal or legal representatives, executors, 
            administrators, successors, heirs, distributees and legatees, but 
            shall not otherwise be assignable by the Executive, whether by 
            pledge, creation of a security interest or otherwise.

      (i)               No Employment Rights. Nothing expressed or implied in 
            this Agreement will create any right or duty on the part of the 
            Corporation or Executive to have Executive remain in the employment 
            of the Corporation prior to or following a Change in Control.

      (j)               Withholding. Any payments provided for hereunder shall 
            be paid net of any applicable withholding required under federal, 
            state or local law and any additional withholding to which the 
            Executive has agreed.

      (k)               Amendment. This Agreement may not be amended other than 
            by written agreement of the Corporation and the Executive.

9.                      IMPACT ON OTHER AGREEMENTS. This Agreement supercedes 
      and replaces the Prior Agreement. Severance payments under this Agreement 
      shall be in lieu of any severance or other termination payments provided 
      under any other agreement between the Executive and the Corporation.

                        IN WITNESS WHEREOF, the parties have executed this 
Agreement on the date first above written.

                                      Kaiser Aluminum & Chemical Corporation

                                      By:
                                      Name:
                                      Title:

                                      ------------------------------------------
                                      [Executive]
Exhibit 10.33 to 2002 10-K
                                                                   Exhibit 10.33

                     KAISER ALUMINUM & CHEMICAL CORPORATION
                      CHANGE IN CONTROL SEVERANCE AGREEMENT
                         (EFFECTIVE NOVEMBER 18, 2002) (A)

                  This Change in Control Severance Agreement (the "Agreement")
is entered into by and between Kaiser Aluminum & Chemical Corporation, a
Delaware corporation (the "Corporation"), and __________________ ("Executive") ,
effective _____________, 2002 (the "Effective Date")

                  WHEREAS, Executive has made, and is expected to continue to
make, major contributions to the short- and long-term profitability, growth and
financial strength of the Corporation;

                  WHEREAS, the Corporation continues to pursue strategies that
will result in a stronger and more profitable Corporation going forward and may
lead to acquisitions, divestitures or other forms of corporate restructuring;

                  WHEREAS, the Corporation previously made available to key
managers of the Corporation, including Executive, an Enhanced Severance
Agreement (together with any other employment or similar agreements which
provide for the payment of severance upon a termination of employment,
collectively referred to as the "Prior Agreement"), in order to ensure that such
managers have appropriate protection in the event of a "Change in Control" of
the Corporation,
 and to permit them to maintain their focus on key goals related
to the Corporation's initiatives;

                  WHEREAS, the Corporation now desires to supercede and replace
the Prior Agreement by entering into Change in Control Severance Agreements with
certain key managers, including Executive, and Executive also desires to enter
into this Agreement and to be bound by the terms thereof:

                  NOW, THEREFORE, the Corporation and Executive agree as
follows:

1.                TERM OF AGREEMENT.  This Agreement shall be effective as of 
      the Effective Date and, subject to the provisions of Section 3, shall
      terminate on the second anniversary of a Change in Control.  Upon 
      execution of this Agreement, the Executive hereby waives the right to 
      receive any payments or awards under the Prior Agreement and the Prior 
      Agreement shall be superseded by this Agreement and shall be of no further 
      force or effect.  Any payments made to Executive under this Agreement 
      shall be first used to satisfy any obligations the Company or the 
      Corporation may have to the Executive under the Worker Adjustment and 
      Retraining Act of 1988 or similar statutes or regulation of any 
      jurisdiction relating to any plant closing or mass lay-off or as otherwise 
      required by law.

2.                 DEFINED TERMS. In addition to terms defined elsewhere herein, 
      the following terms have the following meanings when used in this 
      Agreement with initial capital letters:

      (a)          "Base Pay" means the Executive's annual base salary
            rate at a rate not less than his or her annual fixed or base 
            compensation as in effect immediately prior to termination of 
            employment or, if higher, the Executive's annual fixed or base 
            compensation in effect within the six month period preceding a 
            Change in Control, without reduction for contributions to any 
            qualified or non-qualified employee benefit plan or fringe benefit 
            plan.

      (b)          "Bankruptcy Committees" means the committees consisting of a 
            statutory committee of unsecured creditors and a statutory committee 
            of asbestos claimants, each appointed by the United States trustee 
            for the District of Delaware on February 25, 2002, pursuant to 
            section 1102 of the Bankruptcy Code 11 U.S.C. ss.ss. 101-1330.

      (c)          "Cause" means (1) the Executive's engaging in fraud, 
            embezzlement, misconduct or any act of dishonesty with respect to 
            the Corporation or its affiliates, (2) the Executive's habitual drug 
            or alcohol use which impairs the ability of the Executive to perform 
            his duties with the Corporation or its affiliates, (3) the 
            Executive's indictment with respect to, conviction of, or plea of 
            guilty or no contest to, any felony, or other comparable crime under 
            applicable local law (except, in any event, for motor vehicle 
            violations not involving personal injuries to third parties or 
            driving while intoxicated), or the Executive's incarceration with 
            respect to any of the foregoing that, in each case, impairs the 
            Executive's ability to continue to perform his duties with the 
            Corporation and its affiliates, or (4) the Executive's material 
            breach of any written employment agreement or other agreement 
            between the Corporation and the Executive, or of the Kaiser Aluminum 
            & Chemical Corporation Code of Business Conduct, or failure by 
            the Executive to substantially perform his or her duties for the 
            Corporation which remains uncorrected or reoccurs after written 
            notice has been delivered to the Executive demanding substantial 
            performance and the Executive has had a reasonable opportunity to 
            correct such breach or failure to perform.

      (d)          "Change in Control" means (at any time on or after the 
            Effective Date):

            (1)          The sale, lease, conveyance or other disposition of all 
                   or substantially all of the Corporation's assets (including 
                   the assets and stock of the Corporation's direct and indirect 
                   subsidiaries and affiliates) as an entirety or substantially 
                   as an entirety to any person, entity or group of persons 
                   acting in concert other than in the ordinary course of 
                   business; provided, however, that a Change in Control shall 
                   not occur (A) upon any such sale, lease, conveyance or other 
                   disposition to a direct or indirect subsidiary of the 
                   Corporation or (B) if the voting common equity interests of 
                   the ongoing entity are beneficially owned, directly or 
                   indirectly, by the Corporation's shareholders in 
                   substantially the same proportions as such shareholders owned 
                   the Corporation's outstanding voting common equity interests 
                   immediately prior to such event.

            (2)          Any transaction or series of related transactions (as a 
                   result of a tender offer, merger, consolidation or otherwise) 
                   that results in any "person" (as defined in Section 13(h)(8)
                   (E) under the Securities Exchange Act of 1934) becoming the 
                   beneficial owner (as defined in Rule l3d-3 under the 
                   Securities Exchange Act of 1934), directly or indirectly, of 
                   more than 50% of the aggregate voting power of all classes of 
                   common equity of the Corporation, except if such person is 
                   (A) a subsidiary of the Corporation, (B) an employee stock 
                   ownership plan or any other tax-qualified benefit plan 
                   maintained by the Corporation or any affiliate thereof , (C) 
                   a corporation or other entity formed to hold the
                   Corporation's common equity securities and whose shareholders 
                   or owners constituted, at the time such corporation became 
                   such holding company, substantially all the shareholders of 
                   the Corporation, (D) the surviving entity in any transaction 
                   if the shareholders of the Corporation immediately prior to 
                   such transaction continue to own at least 50% of the voting 
                   common equity of such surviving entity immediately following 
                   such transaction, (E) any underwriter temporarily holding 
                   securities pursuant to an offering of such securities, or (F) 
                   Executive or any group of persons including Executive (or any 
                   entity controlled by Executive or any group of persons 
                   including Executive).  Notwithstanding the provisions of this 
                   paragraph (2), a Change in Control shall not be deemed to 
                   have occurred solely by virtue of (i) the consummation of a 
                   plan of reorganization of the Corporation under its 
                   bankruptcy proceeding commenced February 12, 2002 under the 
                   United States Bankruptcy Code (11 U.S.C.ss.1101, et seq.) 
                   ("Bankruptcy Code") where the ownership of more than 50% of
                   the common stock of the Corporation is transferred to the 
                   creditors of the Corporation or a channeling trust (the 
                   "Emergence Date"), or (ii) a plan of liquidation or a plan of 
                   asset protection is approved by the Bankruptcy Court in a 
                   proceeding under Chapter 7 or Chapter 11 of the Bankruptcy 
                   Code; provided, however, that if pursuant to such 
                   reorganization, restructuring, liquidation or asset 
                   protection plan, any person (other than a channeling trust or 
                   those set forth in clauses (A) through (F) above) is or 
                   becomes the beneficial owner, directly or indirectly, of 
                   securities of the Corporation representing more than 50% of 
                   the combined voting power of the Corporation's then 
                   outstanding securities, a Change in Control will be deemed to 
                   have occurred.  Notwithstanding the foregoing, a Change in 
                   Control of the Corporation shall not be deemed to occur 
                   solely because any person acquires beneficial ownership of 
                   more than 50% of the Corporation's voting common equity as a 
                   result of the acquisition of such equity by the Corporation 
                   which reduces the number of such equity outstanding.

            (3)          A change in the composition of the Corporation's Board 
                   of Directors over a period of thirty-six (36) consecutive 
                   months or less such that a majority of the then current Board 
                   members ceases to be comprised of individuals who either (a) 
                   have been Board members continuously since the beginning of 
                   such period, or (b) have been elected or nominated for 
                   election as Board members during such period by at least a 
                   majority of the Board members described in clause (a) who 
                   were still in office at the time such election or nomination 
                   was approved by the Board; provided, however, that this 
                   paragraph (3) shall not apply solely by virtue of a change in 
                   the individuals constituting a majority of the Board members 
                   (a) as implemented pursuant to the consummation of a plan of
                   reorganization of the Corporation in a proceeding under 
                   Chapter 11 of the Bankruptcy Code, or (b) prior to the 
                   Emergence Date as a result of any such change caused by 
                   Maxxam Inc.

Notwithstanding the foregoing, prior to the Emergence Date (a) any event
described in paragraphs (1) and (2) above shall only constitute a Change in
Control if such event is approved by the Bankruptcy Court unless the Unsecured
Creditors Committee and the Asbestos Claimants Committee both object to the
approval of such event in its entirety and neither committee withdraws its
objection, and (b) no transaction involving the disposition by Maxxam Inc. of
its voting securities in the Corporation to any person shall constitute a Change
in Control.

For purposes of the definition of a Change in Control, the term "Corporation"
shall mean Kaiser Aluminum Corporation ("KAC") and shall include Kaiser Aluminum
& Chemical Corporation ("KACC") at any time that the voting securities of KACC
are held by any person other than KAC.

      (e)          "Code" means the Internal Revenue Code of 1986, as amended
            from time to time. All references to the Code shall be deemed
            also to refer to any successor provisions to such sections.

      (f)          "Disability" means total and permanent disability as a result
            of bodily injury, disease or mental disorder which results in
            the Executive's entitlement to long term disability benefits
            under the Kaiser Aluminum Self-Insured Welfare Plan or the
            Kaiser Aluminum Salaried Employees Retirement Plan.

      (g)          "Good Reason" means, without Executive's consent, the 
            occurrence of any of the following events which is not cured by the 
            Corporation within ten (10) business days following Executive's 
            written notice to the Corporation of the event constituting Good 
            Reason; provided, however, that any such written notice received by 
            the Corporation following the thirty (30) day period after the date
            on which Executive first had knowledge of the occurrence of such 
            event giving rise to Good Reason (or, in the case of multiple 
            events, the latest to occur of such events) shall not be effective 
            and Executive shall be deemed to have waived his/her right to 
            terminate employment for Good Reason with respect to such event:

            (1)          Demotion, reduction in title, reduction in position or
                   responsibilities, or change in reporting responsibilities or
                   reporting level that is materially and adversely inconsistent
                   with the Executive's position immediately prior to the
                   Effective Date or the assignment of duties and/or
                   responsibilities materially and adversely inconsistent with
                   such position; provided, however, that the Corporation no
                   longer being a publicly traded entity or having filed
                   bankruptcy shall not by itself be Good Reason; or

            (2)          Relocation of the Executive's primary office location
                   more than fifty (50) miles from the Executive's current 
                   office location; or

            (3)          Reduction of greater than 10% in the Executive's Base 
                   Pay from the level existing prior to the Effective Date or 
                   reduction ofgreater than 10% in the Executive's long term or 
                   short term Incentive compensation opportunity as provided for 
                   in the KERP approved by the Bankruptcy Court on September 3, 
                   2002 or a reduction in the Executive's eligibility for 
                   participation in the Corporation's benefit plans that is not 
                   commensurate with a similar reduction among similarly 
                   situated employees.

      (h)          "Incentive" means Executive's target bonus.

      (i)          "Release Agreement" means an agreement pursuant to which the
            Executive releases all current or future claims, known or unknown, 
            arising on or before the date of the release against the 
            Corporation, its subsidiaries and its officers, substantially in a 
            form approved by the Corporation.

      (j)          "Significant Restructuring" means the sale or other
            disposition of one or more business units to which the Executive 
            provides all or substantially all of Executive's services; provided, 
            that, any such sale or other disposition to any entity which is an 
            affiliate of the Corporation shall not be a Significant 
            Restructuring for this purpose.

3.                SEVERANCE UPON CHANGE IN CONTROL. If the Executive's 
      employment is terminated by the Corporation, or any successor to the 
      Corporation, or the Executive terminates his or her employment due to Good 
      Reason, within the period beginning ninety (90) days prior to a Change in 
      Control and ending on the second anniversary of such Change in Control, 
      the Executive will be entitled to receive the severance payments and 
      benefits set forth in Sections 5 and 6 below; provided, however, that no 
      severance payments shall be made, or continuing benefits provided, under 
      the Agreement (and the Agreement shall terminate immediately), if any of 
      the following apply:

      (a)         The Executive voluntarily resigns or retires from employment
            other than for Good Reason;

      (b)         The Executive is terminated for Cause;

      (c)         The Executive's employment terminates as a result of death or
            Disability;

      (d)         The Executive declines to sign and return a Release Agreement
            or revokes such Release Agreement within the time provided therein; 
            or

      (e)         The Executive receives severance compensation or benefit 
            continuation pursuant to the Kaiser Aluminum & Chemical 
            Corporation Severance Plan or any other Prior Agreement.

4.                SEVERANCE DUE TO SIGNIFICANT RESTRUCTURING. If the Executive's
      employment is terminated by the Corporation due to Significant 
      Restructuring, outside of the period beginning ninety (90) days prior to a 
      Change in Control and ending on the second anniversary of such Change in 
      Control, the Executive will be entitled to receive the severance payments 
      and benefits set forth in Sections 5 and 6 below; provided, however, that 
      no severance payments shall be made, or continuing benefits provided, 
      under the Agreement, if any of the following apply:

      (a)          An event described in Section 3(a), (b), (c), (d) or (e)
             applies; or

      (b)          The Corporation or the successor to the Corporation offers 
             the Executive suitable employment in North America in a 
             substantially similar capacity as determined in accordance with 
             Personnel Policy Committee Guidelines and at his or her current 
             level of Base Pay and short term Incentive, regardless of whether 
             the Executive accepts or rejects such employment.

5.                AMOUNT OF SEVERANCE PAYMENTS. If the Executive's employment
      terminates as described in Section 3 or 4 above, and he or she becomes 
      entitled to severance benefits under this Agreement, the Corporation, or 
      any successor to the Corporation, shall pay to the Executive the 
      following:

      (a)          _____(B) times the sum of the Executive's Base Pay plus the
             Executive's most recent short term Incentive target shall be
             paid to the Executive in a single sum cash payment as soon as
             practicable following the Executive's termination (but in no
             event later than 30 days after such termination);

      (b)          The prorated short term Incentive program in effect for the 
             year in which the Executive's termination of employment occurs 
             shall be paid to the Executive in a single sum cash payment as soon 
             as practicable following the Executive's termination (but in no 
             event later than 30 days after such termination).  The amount of 
             the prorated short term Incentive program shall be determined by 
             multiplying the Executive's short term Incentive target for the 
             full current year by a fraction, the numerator of which is the 
             number of days from January 1 until the Executive's termination of 
             employment and the denominator of which is 365.  Notwithstanding 
             the foregoing, if the Executive is terminated on December 31 of any 
             year, he or she will participate in the actual short term Incentive 
             program for the year, based on applicable performance measure(s),
             and no proration shall apply; and

      (c)          The prorated long term Incentive program in effect for the 
             year in which the Executive's termination of employment occurs 
             shall be paid to the Executive at the time such long term Incentive 
             program terminates (but in no event later than 30 days after such 
             termination) if the Corporation is determined at that time to have 
             achieved the long term Incentive target under such program.  The 
             amount of the prorated long term Incentive program shall be 
             determined by multiplying the Executive's long term Incentive 
             target for such long term period by a fraction, the numerator
             of which is the number of days from the inception of the long term 
             program until the Executive's termination of employment and the 
             denominator of which is 365.

6.                 CONTINUATION OF BENEFITS. If the Executive's employment
      terminates as described in Section 3 or 4 above, and he or she becomes 
      entitled to severance benefits under this Agreement, the Corporation, or 
      any successor to the Corporation, shall provide to the Executive the
      following:

      (a)           Continuation of his or her coverage under the Corporation's 
             medical, dental, vision, life insurance and disability benefit 
             plans, as if the Executive had continued in employment with the 
             Corporation uninterrupted for a period of _____(B) years following 
             the Executive's termination of employment as described in Section 3 
             or 4 above; provided, however, that the Participant must continue 
             to pay the monthly medical and life insurance contributions (if 
             any) paid by active employees of the Company for this coverage to 
             remain in effect.  If the Executive is unable to continue
             participating in the Company's benefit plans due to the provisions 
             of the documents governing such plans or any other reason, the 
             Company will reimburse the Executive for his or her expenses in 
             obtaining comparable benefit coverage.  Notwithstanding the 
             foregoing, coverage under any qualified retirement plan and (except 
             as otherwise required by law) coverage under any cafeteria plan, 
             dependant care spending account or health care spending account 
             will cease.  The Corporation may satisfy a portion of its 
             obligations by reimbursing and/or paying the Participant's 
             applicable COBRA premium with respect to any such plans.  The 
             Company's obligations under this clause (a) shall cease once the 
             Participant is eligible for comparable coverage from a subsequent 
             employer.  The Corporation may require the health benefit
             continuation period required under the continuation coverage 
             requirements of Section 4980B of the Internal Revenue Code of 1986, 
             as amended, and Part 6 of Subtitle B of Title I of the Employee 
             Retirement Income Security Act of 1974, as amended, to run 
             concurrently with the benefit continuation period hereunder; and

      (b)          Continuation of all other existing perquisites, including,
             without limitation, the continuation of his or her company car
             benefit, for a period of ____(B) years following the Executive's 
             termination of employment as described in Section 3 or 4 above, 
             with the exception of gas reimbursement. The company reserves the 
             right to offer a reasonable cash buy-out of the company car
             benefit.

7.                 GROSS-UP FOR TAX PAYMENTS.  If any payment or distribution by 
      the Corporation or any of its affiliates to or for the benefit of 
      Executive, whether paid or payable or distributed or distributable under 
      this Agreement or under any other agreement, policy, plan, program or 
      arrangement, or the lapse or termination of any restriction under any 
      agreement, policy, plan, program or arrangement (a "Payment"), would be 
      subject to the excise tax imposed by Section 4999 of the Code by reason of 
      being considered contingent on a change in ownership or control of the 
      Corporation, within the meaning of Section 280G of the Code, or to any 
      similar tax imposed by state or local law, or any interest or penalties 
      with respect to such tax (such tax or taxes, together with any such 
      interest and penalties, being hereafter collectively referred to as the 
      "Excise Tax"), then Executive will be entitled to receive an additional
      payment or payments (collectively, a "Gross-Up Payment"). The Gross-Up 
      Payment will be in an amount such that, after payment by Executive of all 
      taxes (including any interest or penalties imposed with respect to such 
      taxes), including any Excise Tax imposed upon the Gross-Up Payment, 
      Executive retains an amount of the Gross-Up Payment equal to the Excise 
      Tax imposed on the Payment. Notwithstanding the foregoing, if no Excise 
      Tax would apply if the aggregate Payments were reduced by five percent 
      (5%), then the aggregate Payments shall be reduced by the amount necessary 
      to avoid application of the Excise Tax, in such manner as the Executive 
      shall direct, and no Gross-Up Payment will be made. The following 
      provisions shall apply in determining whether a Gross-Up Payment shall 
      apply:

      (a)          Unless the Corporation and Executive otherwise agree in
             writing, any determination required under this Section 7 shall be 
             made in writing by nationally recognized independent public 
             accountants (the "Accounting Firm"), whose determination shall be 
             conclusive and binding upon Executive and the Corporation for all 
             purposes. For purposes of making the calculations required by this 
             Section 7, the Accounting Firm may make reasonable assumptions and 
             approximations concerning applicable taxes and may rely on 
             reasonable, good faith interpretations concerning the application 
             of Sections 280G and 4999 of the Code. The Corporation and 
             Executive shall furnish to the Accounting Firm such information and 
             documents as the Accounting Firm may reasonably request in order to 
             make a determination hereunder. The Corporation shall bear all 
             costs the Accounting Firm may reasonably incur in connection with 
             any calculations contemplated hereunder. The Accounting Firm shall 
             be required to provide its determination within sixty (60) days 
             after the date of the Executive's termination, and the Corporation 
             shall be responsible for any income tax, penalty or interest 
             liability incurred as a result of delay by the Accounting Firm.

      (b)          If the Accounting Firm determines that no Excise Tax is 
             payable by Executive, it will, at the same time as it makes such 
             determination, furnish the Corporation and Executive an opinion 
             that Executive has substantial authority not to report any Excise 
             Tax on his or her federal, state or local income or other tax 
             return. If the Accounting Firm determines that an Excise Tax will 
             (or would, but for reduction in the Payment) be payable by 
             Executive, it will, at the same time as it makes such 
             determination, furnish the Corporation and Executive the detailed 
             basis for such opinion. The Corporation will make the Gross-Up 
             payment within five (5) business days thereafter.

      (c)          If the federal, state and local income or other tax returns 
             filed by Executive are consistent with the determination of the 
             Accounting Firm under paragraph (b) above, and the Internal Revenue
             Service or any other taxing authority asserts a claim or notice of 
             deficiency (referred to in this Section 7 as a "claim") against the 
             Executive that, if successful, would require the payment by the 
             Corporation of a Gross-Up Payment, the following shall apply. 
             Executive will not pay such claim prior to the earlier of (1) the 
             expiration of the thirty (30) calendar day period following the 
             date on which he or she gives such notice to the Corporation and 
             (2) the date that any payment of amount with respect to such claim 
             is due. If the Corporation notifies Executive in writing prior to 
             the expiration of such period that it desires to contest such
             claim, Executive will:

      (i)               Provide the Corporation with any written records or 
             documents in his or her possession relating to such claim 
             reasonably requested by the Corporation;

      (ii)              Take such action in connection with contesting such 
             claim as the Corporation shall reasonably request in writing from 
             time to time, including without limitation accepting legal
             representation with respect to such claim by an attorney competent 
             in respect of the subject matter and reasonably selected by the 
             Corporation;

      (iii)             Cooperate with the Corporation in good faith in order
             effectively to contest such claim, which may include the payment 
             of an amount advanced by the Corporation and assertion of a claim 
             for refund; and

      (iv)              Permit the Corporation to participate in any proceedings
             relating to such claim;

provided, however, that the Corporation will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless Executive, on an after-tax basis,
for and against any Excise Tax or income tax, including interest and penalties
with respect thereto, imposed as a result of such contest and any such payments.
If the Corporation directs Executive to pay the tax claimed, or otherwise fails
to contest the claim as described above, the Corporation will immediately pay to
Executive the amount of the required deficiency payment, including any Excise
Tax or income tax, and interest and penalties with respect thereto.

      (d)          As a result of the uncertainty in the application of Section 
             4999 of the Code at the time of the determination, it is possible 
             that Gross-Up Payments which will not have been made by the
             Corporation should have been made ("Underpayment") or Gross-Up 
             Payments are made by the Corporation which should not have been 
             made ("Overpayment"), consistent with the calculations required to 
             be made hereunder.  In the event that Executive thereafter is 
             required to make payment of any Excise Tax or additional Excise 
             Tax, the Accounting Firm shall determine the amount of the 
             Underpayment that has occurred and any such Underpayment shall be 
             promptly paid by the Corporation to or for the benefit of 
             Executive.  In the event the amount of the Gross-Up Payment exceeds 
             the amount necessary to reimburse Executive for his Excise Tax, the 
             Accounting Firm shall determine the amount of the Overpayment that 
             has been made and any such Overpayment shall be promptly paid by 
             Executive to or for the benefit of the Corporation.

8.                 Restrictive Covenants.

      (a)          Noncompetition; Nonsolicitation. For the one year period 
             following the termination of employment with the Corporation, 
             Executive agrees that he will not, without the prior written 
             consent of the Corporation, which shall not unreasonably be 
             withheld, directly or indirectly, whether as a principal, agent, 
             employee, consultant, contractor, advisor, representative, 
             stockholder (other than as a holder of an interest of five percent 
             (5%) or less in the equity of any corporation whose stock is traded 
             on a public stock exchange), or in any other capacity:

                   (i)   provide services, advice or assistance to
             any business, person or entity which competes with the Corporation 
             directly, as a primary focus of its business, in the United States 
             or in any other location in which the Corporation operates, in the 
             manufacture, sale or delivery of any materials, products or 
             services which constitute more than twenty percent (20%) of the 
             Corporation's revenues in the prior twelve month period; or

                   (ii)  intentionally entice, induce or solicit, or attempt to 
             entice, induce or solicit, any individual or entity having a 
             business relationship with the Corporation, whether as an employee, 
             consultant, customer or otherwise, to terminate or cease such
             relationship.

By entering into this Agreement, Executive acknowledges that these prohibitions
are reasonable as to time, geographical area and scope of activity and do not
impose a restriction greater than is necessary to protect the Corporation's good
will, proprietary information and business interests.

      (b)          Confidentiality.  Executive shall keep secret and 
             confidential and shall not disclose to any third party, in any 
             fashion or for any purpose whatsoever, any information regarding 
             the Corporation which is (i) not available to the general public, 
             and/or (ii) not generally known outside the Corporation, to which 
             Executive has or will have had access at any time during the course 
             of his or her employment by the Corporation, including, without 
             limitation, any information relating to: the Corporation's business 
             or operations; its plans, strategies, prospects or objectives; its 
             products, technology, Intellectual Property described in Subsection 
             (g), processes or specifications; its research and development 
             operations or plans; its customers and customer lists; its 
             manufacturing, distribution, sales, service, support and marketing
             practices and operations; its financial condition and results of 
             operations; its operational strengths and weaknesses; and, its 
             personnel and compensation policies and procedures.  However, this 
             provision shall not preclude Executive from providing truthful 
             information to the extent required by subpoena, court order, search 
             warrant or other legal process, provided that Executive immediately 
             notifies the Corporation of such request in order to provide the 
             Corporation an opportunity to object to such request in the 
             appropriate forum and to obtain a ruling on such objection.

      (c)          Cooperation. Upon termination of employment for any reason, 
             Executive shall fully cooperate with the Corporation in all matters 
             relating to the winding up of his or her pending work on behalf of 
             the Corporation and the orderly transfer of any such pending work 
             to other employees of the Corporation as may be designated by the 
             Corporation.

      (d)          Enforcement.  Any claim arising out of or relating to this 
             Agreement or Executive's employment with the Corporation or the 
             termination thereof, other than an action for injunctive relief as 
             provided below, shall be resolved by confidential, final and 
             binding arbitration conducted by Judicial Arbitration and Mediation 
             Services ("JAMS") to be held in Houston, Texas, under the 
             then-existing JAMS rules, rather than by litigation in court, trial 
             by jury, administrative proceeding, or in any other forum.  
             Judgment upon the award rendered by the arbitrator(s) may be 
             entered in any court having jurisdiction thereof.  The Corporation 
             shall promptly pay all costs and expenses, including without 
             limitation reasonable attorneys' fees, incurred by Executive or 
             his/her beneficiaries in resolving any claim hereunder in which 
             Executive or his/her beneficiaries shall prevail.  In all other 
             cases the parties shall bear their own costs and expenses, except 
             that Executive shall pay all costs and expenses, including, without
             limitation, reasonable attorney's fees incurred by the Corporation 
             in resolving such claim if the arbitrator(s) determine such claim 
             to have been brought by Executive (i) in bad faith or (ii) without 
             any reasonable basis.  Notwithstanding the foregoing, the parties 
             agree that any breach of Subsection (a) or (b) above is likely to 
             cause irreparable injury to the Corporation and that damages for 
             any breach of Subsections (a), (b) or (g) are difficult to 
             calculate.  Therefore, upon breach of Subsections (a), (b) or (g) 
             hereof, the Corporation shall, at its election, be entitled to 
             injunctive and other equitable relief from a court or such other
             relief or remedies, including damages, to which it may be entitled, 
             and shall not be required to submit the matter to arbitration.

      (e)          Return of Property. Upon termination of Executive's 
             employment for any reason, Executive will return to the Corporation 
             all property belonging to it, including without limitation, 
             computer equipment, computer programs, cellular telephones, beepers 
             or other property belonging to the Corporation, and documents, 
             property and data of any nature and in any form, including 
             electronic or magnetic form, reflecting any confidential 
             information described in Subsection (b) above.

      (f)          Disparagement. Executive agrees not to make any derogatory,
             unfavorable, negative or disparaging statements concerning the
             Corporation and its affiliates, officers, directors, managers,
             employees or agents, or its and their business affairs or 
             performance.  This provision shall not be construed to limit 
             Executive's ability to give non-malicious and truthful testimony 
             should Executive be subpoenaed to do so by competent authority 
             having jurisdiction.

      (g)          Intellectual Property.  For purposes of this Subsection (g), 
             the term "Intellectual Property" means all inventions, creations, 
             trade secrets, patents (utility or design) and other intellectual
             property relating to any programming, documentation, technology, 
             material, product, service, idea, process, plan or strategy 
             concerning the business or interests of the Corporation that
             Executive conceives, develops or delivers to the Corporation, in 
             whole or in part, at any time during his or her employment with the 
             Corporation including, without limitation, all copyrights, 
             inventions, discoveries and improvements, trademarks, designs and 
             all other intellectual property rights.  All such Intellectual 
             Property shall be considered work made for hire by Executive and 
             owned by the Corporation.  Executive agrees to perform, upon the 
             request of the Corporation, during or after his or her employment, 
             such acts as may be necessary or desirable to transfer, perfect and 
             defend the Corporation's ownership and any resulting registrations 
             of the Intellectual Property.

      (h)          Blue Pencil. If, at any time, the provisions of this Section 
             8 shall be determined to be invalid or unenforceable under any 
             applicable law, by reason of being vague or unreasonable as to 
             area, duration or scope of activity, this Agreement shall be 
             considered divisible and shall become and be immediately amended to 
             only such area, duration and scope of activity as shall be 
             determined to be reasonable and enforceable by the court or other 
             body having jurisdiction over the matter and Executive and the 
             Corporation agree that this Agreement as so amended shall be
             valid and binding as though any invalid or unenforceable provision 
             had not been included herein.

      (i)          Acknowledgement. EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY 
             READ THIS SECTION 8 AND HAS HAD THE OPPORTUNITY TO REVIEW ITS 
             PROVISIONS WITH ANY ADVISORS AS HE CONSIDERED NECESSARY AND THAT 
             EXECUTIVE UNDERSTANDS THIS AGREEMENT'S CONTENTS AND SIGNIFIES SUCH 
             UNDERSTANDING AND AGREEMENT BY SIGNING BELOW.

9.                 MISCELLANEOUS.

      (a)          Waiver. Neither party shall, by mere lapse of time, without 
             giving notice or taking other action hereunder be deemed to have 
             waived any breach by the other party of any of the provisions of 
             this Agreement. Further, the waiver by either party of a particular 
             breach of this Agreement by the other shall neither be construed 
             as, nor constitute, a continuing waiver of such breach or of other 
             breaches by the same or any other provision of this Agreement.

      (b)          Severability. If for any reason a court of competent 
             jurisdiction or arbitrator finds any provision of this Agreement to 
             be unenforceable, the provision shall be deemed amended as 
             necessary to conform to applicable laws or regulations, or if it 
             cannot be so amended without materially altering the intention of 
             the parties, the remainder of the Agreement shall continue in full 
             force and effect as if the offending provision were not contained 
             herein.

      (c)          No Mitigation. Executive shall have no duty to mitigate the
             Corporation's obligation with respect to the termination payments 
             set forth herein by seeking other employment following termination 
             of his or her employment, nor shall such termination payments be 
             subject to offset or reductions by reason of any compensation 
             received by Executive from such other employment. The Corporation's 
             obligations to make any payments hereunder shall not terminate in 
             the event Executive accepts other full time employment.

      (d)          Notices. All notices and other communications required or
             permitted to be given under this Agreement shall be in writing and 
             shall be considered effective upon personal service or upon 
             depositing such notice in the U.S. Mail, postage prepaid, return 
             receipt requested and addressed to the Chairman of the Board of the 
             Corporation at its principal corporate address, and to Executive at 
             his most recent address shown on the Corporation's corporate 
             records, or at any other address which he may specify in any 
             appropriate notice to the Corporation.

      (e)          Counterparts. This Agreement may be executed in any number of
             counterparts, each of which shall be deemed an original and all of
             which taken together constitutes one and the same instrument and in
             making proof hereof it shall not be necessary to produce or account 
             for more than one such counterpart.

      (f)          Entire Agreement. The parties hereto acknowledge that each 
             has read this Agreement, understands it, and agrees to be bound by 
             its terms.  The parties further agree that this Agreement 
             constitutes the complete and exclusive statement of the agreement 
             between the parties and supersedes all proposals (oral or written), 
             understandings, representations, conditions, covenants, and all 
             other communications between the parties relating to the subject 
             matter hereof.

      (g)          Governing Law. This Agreement shall be governed by the law of 
             the State of Texas.

      (h)          Assignment and Successors.  This Agreement will be binding 
             upon and inure to the benefit of the Corporation and any successor 
             to the Corporation, including, without limitation, any persons 
             acquiring directly or indirectly all or substantially all of the 
             business or assets of the Corporation whether by purchase, merger, 
             consolidation, reorganization or otherwise (and such successor will 
             thereafter be deemed the "Corporation" for the purposes of this 
             Agreement), but will not otherwise be assignable or delegable by 
             the Corporation. The Corporation will require any such successor, 
             by agreement in form and substance identical hereto, expressly to 
             assume and agree to perform this Agreement in the same manner and 
             to the same extent the Corporation would be required to perform if 
             no such succession had taken place. This Agreement will inure
             to the benefit of and be enforceable by, if then applicable, 
             Executive's personal or legal representatives, executors, 
             administrators, successors, heirs, distributees and legatees, but
             shall not otherwise be assignable by the Executive, whether by 
             pledge, creation of a security interest or otherwise.

      (i)          No Employment Rights. Nothing expressed or implied in this 
             Agreement will create any right or duty on the part of the 
             Corporation or Executive to have Executive remain in the employment 
             of the Corporation prior to or following a Change in Control.

      (j)          Withholding. Any payments provided for hereunder shall be 
             paid net of any applicable withholding required under federal, 
             state or local law and any additional withholding to which the 
             Executive has agreed.

      (k)          Amendment. This Agreement may not be amended other than by 
             written agreement of the Corporation and the Executive.

10.                IMPACT ON OTHER AGREEMENTS. This Agreement supercedes and
      replaces the Prior Agreement. Severance payments under this Agreement 
      shall be in lieu of any severance or other termination payments provided 
      under any other agreement between the Executive and the Corporation.

             IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.

                                      Kaiser Aluminum & Chemical Corporation

                                      By:
                                      Name:
                                      Title:


                                      Executive

----------------
(A)   Form of Change in Control Severance Agreement entered into as of November
      18, 2002 with Harvey L. Perry and other executive officers of KAC and 
      KACC, other than Joseph A. Bonn, Jack A. Hockema, Edward F. Houff, John T. 
      La Duc and one other executive officer.

(B)   For Harvey L. Perry, the multiplier in Section 5(a) is three and the 
      period of continued coverage and perquisites in Sections 6(a) and 6(b) is 
      three years.
Exhibit 21 to 2002 10-K
                                                                      Exhibit 21


                                  SUBSIDIARIES

Listed below are the principal subsidiaries and affiliates of Kaiser Aluminum
Corporation, the jurisdiction of their incorporation or organization, and the
names under which such subsidiaries do business. The Company's ownership is
indicated for less than wholly owned affiliates. Certain subsidiaries are
omitted which, considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.


                                                                                           Place of
                                                                                           Incorporation
         Name                                                                              or Organization
         ----                                                                              --------------- 
         Alpart Jamaica Inc.(1) ..............................................             Delaware
         Alumina Partners of Jamaica (partnership) (65%)......................             Delaware
         Anglesey Aluminium Limited (49%).....................................             United Kingdom
         Kaiser Alumina Australia Corporation(1)..............................             Delaware
         Kaiser Aluminium International, Inc.(1)..............................             Delaware
         Kaiser Aluminum & Chemical Corporation(1)............................             Delaware
         Kaiser Aluminum & Chemical of Canada Limited(1)......................             Ontario
         Kaiser Bauxite Company(1)............................................             Nevada
         Kaiser Bellwood Corporation(1).......................................             Delaware
         Kaiser Finance Corporation(1) .......................................             Delaware
         Kaiser Jamaica Bauxite Company (partnership) (49%)...................             Jamaica
         Kaiser Jamaica Corporation(1)........................................             Delaware
         Queensland Alumina Limited (20%).....................................             Queensland
         Volta Aluminium Company Limited (90%)................................             Ghana

---------------------------
(1)      Filed a voluntary petition for reorganization under
 the Code.

Exhibit 23.1 to 2002 10-K
                                                                    Exhibit 23.1

                          INDEPENDENT AUDITORS' CONSENT


      We consent to the incorporation by reference in Registration Statements
No. 333-71 and No. 333-16239 of Kaiser Aluminum Corporation on Form S-3 and
Registration Statements No. 333-36202 and No. 33-49889 of Kaiser Aluminum
Corporation on Form S-8 of our report dated March 28, 2003, relating to the
consolidated financial statements of Kaiser Aluminum Corporation as of and for 
the year ended December 31, 2002 appearing in the Annual Report on Form 10-K of
Kaiser Aluminum Corporation for the year ended December 31, 2002.



DELOITTE & TOUCHE LLP
/S/ Deloitte & Touche LLP
March 28, 2003
Houston, Texas

Exhibit 23.2 to 2001 10-K
                                                                    Exhibit 23.2


         We hereby consent to (i) any references to our firm, or (ii) any
references to advice rendered by our firm contained in Kaiser Aluminum
Corporation's Annual Report on Form 10-K for the year ended December 31, 2002,
which is incorporated into the Company's previously filed Registration
Statements on Form S-3 No.'s 33-16239 and 333-71 and Registration Statements on
Form S-8 No.'s 33-49889 and 333-36202.


                                            WHARTON LEVIN EHRMANTRAUT &
                                                KLEIN, P.A.

                                                /S/ Robert D. Klein

March 28, 2003

Exhibit 23.3 to 2001 10-K
                                                                    Exhibit 23.3



         With respect to the Registration Statements on Form S-3 No.'s 33-16239
and 333-71 and Registration Statements on Form S-8 No.'s 33-49889 and 333-36202 
filed by Kaiser Aluminum Corporation, a Delaware corporation (the "Registration 
Statements"), we hereby consent to the use of our name, and to references to 
advice rendered by our firm, incorporated by reference into the Registration 
Statements from Kaiser Aluminum Corporation's Annual Report on Form 10-K for the 
year ended December 31, 2002, under the headings (i) Management's Discussion and 
Analysis of Financial Condition and Results of Operations - Liquidity and 
Capital Resources - Commitments and Contingencies, and (ii) Note 12 of Notes to 
the Consolidated Financial Statements.


                                    HELLER EHRMAN WHITE & McAULIFFE LLP

                                /S/ Heller Ehrman White & McAuliffe LLP

March 28, 2003
Exhibit 99.1 to 2002 10-K
                                                                    Exhibit 99.1

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

                                 March 28, 2003

      In connection with the Annual Report on Form 10-K by Kaiser Aluminum
Corporation, a Delaware corporation (the "Company"), for the year ending
December 31, 2002 (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 2002 10-K
                                                                    Exhibit 99.2

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

                                 March 28, 2003

      In connection with the Annual Report on Form 10-K by Kaiser Aluminum
Corporation, a Delaware corporation (the "Company"), for the year ending
December 31, 2002 (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.