KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES (Debtor-in-Possession) STATEMENTS OF CONSOLIDATED INCOME (LOSS) (Unaudited) (In millions of dollars, except share and per share amounts) Quarter Ended Year Ended December 31, December 31, ----------------- ------------------- 2003 2002 2003 2002 -------- -------- --------- --------- Net sales $340.4 $364.7 $1,365.3 $1,469.6 -------- -------- --------- --------- Costs and expenses: Cost of products sold 358.6 363.8 1,423.4 1,408.2 Depreciation and amortization 17.8 23.9 73.2 91.5 Selling, administrative, research and development, and general 19.0 27.1 96.8 124.7 Other operating charges, net(1) 504.9 216.8 511.0 251.2 -------- -------- --------- --------- Total costs and expenses 900.3 631.6 2,104.4 1,875.6 -------- -------- --------- --------- Operating loss (559.9) (266.9) (739.1) (406.0) Other income (expense): Interest expense (excluding unrecorded contractual interest expense of $23.8 for both quarters and $95.0 and $84.0 for the years, respectively) (2.5) (2.5) (10.7) (20.7) Reorganization items (6.8) (8.7) (27.0) (33.3) Other - net(2) 1.9 (.7) (6.5) .4 -------- -------- --------- --------- Loss before income taxes and minority interests (567.3) (278.8) (783.3) (459.6) (Provision) benefit for income taxes(3) (9.3) 6.5 (14.2) (14.9) Minority interests 3.4 1.5 9.2 5.8 -------- -------- --------- --------- Net loss $(573.2) $(270.8) $(788.3) $(468.7) ======== ======== ========= ========= Loss per share:(4) Basic/Diluted $(7.16) $(3.37) $(9.83) $(5.82) ======== ======== ========= ========= Weighted average shares outstanding (000)(4): Basic/Diluted 80,043 80,426 80,175 80,578 Notes follow (1) Operating loss for the quarters and years ended December 31, 2003 and 2002, included the following items. The business unit to which the items are applicable is indicated: Quarter Ended Year Ended December 31, December 31, ----------------- ----------------- 2003 2002 2003 2002 -------- -------- -------- -------- Pension charge related to salaried employees pension plan - Corporate $(121.2) $- $(121.2) $- Impairment charges - Interests in Gramercy/KJBC - Bauxite & Alumina (368.0) - (368.0) - Washington smelters, including contractual labor costs - Primary Aluminum - (216.2) - (219.6) Office complex - Corporate - - - (20.0) Restructuring charges - Bauxite & Alumina - (.1) (.1) (2.0) Primary Aluminum - - (1.3) (2.7) Fabricated Products - (2.5) - (7.9) Restructured transmission service agreement - Primary Aluminum - - (3.2) - Environmental multi-site agreement - Corporate - - (15.7) - Hearing loss claims - Corporate (15.8) - (15.8) - Gain on sale of Tacoma facility - Primary aluminum - - 9.5 - Gain on sale of equipment, net - Fabricated Products - - 3.9 - Sale of Oxnard facility - Fabricated Products - 1.1 - (.2) Product line exit charges - Fabricated Products - - - (1.6) Eliminations - Intersegment profit elimination on Primary Aluminum inventory charge - .9 - 2.8 Other .1 - .9 - -------- -------- -------- -------- $(504.9) $(216.8) $(511.0) $(251.2) ======== ======== ======== ======== (2) Other income (expense) for the year ended December 31, 2003, included charges related to incremental accruals for environmental matters totalling approximately $7.5. (3) The income tax (provision) benefit for the quarters and years ended December 31, 2003 and 2002, relate primarily to foreign income taxes. As a result of the Cases, for the quarters and years ended December 31, 2003 and 2002, the Company did not recognize any U.S. income tax benefits for the losses incurred from its domestic operations (including temporary differences) or any U.S. tax benefit for foreign income taxes. Instead, the increases in federal and state deferred tax assets as a result of additional net operating losses and foreign tax credits generated in 2003 and 2002 were fully offset by increases in valuation allowances. (4) Loss per share may not be meaningful, because as a part of a plan of reorganization, it is likely the interests of the Company's existing stockholders will be cancelled without consideration. See Note 2 of Notes to Consolidated Financial Statements in the Company's Form 10-K for the year ended December 31, 2003. KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES (Debtor-in-Possession) SELECTED OPERATIONAL AND FINANCIAL INFORMATION (Unaudited) (In millions of dollars, except shipments and prices) Quarter Ended Year Ended December 31, December 31, ----------------- ------------------- 2003 2002 2003 2002 -------- -------- --------- --------- Fabricated Products: Shipments (000 metric tons) 43.8 38.5 168.9 170.7 Net Sales $154.4 $134.6 $597.8 $608.6 Operating Loss $(13.3) $(11.1) $(25.7) $(22.2) ---------------------------------------------------------------------- Commodities, Corporate and Other: Shipment (000 metric tons) - Alumina Third Party 708.6 786.9 2,929.0 2,626.6 Intersegment 87.9 103.8 176.6 343.9 -------- -------- --------- --------- Total Alumina 796.5 890.7 3,105.6 2,970.5 -------- -------- --------- --------- Primary Aluminum Third Party 17.6 47.6 89.7 194.8 Intersegment - - - 1.7 -------- -------- --------- --------- Total Primary Aluminum 17.6 47.6 89.7 196.5 -------- -------- --------- --------- Average Realized Third Party Sales Price: Alumina (per ton) $181 $157 $175 $165 Primary Aluminum (per pound) $.68 $.62 $.65 $.62 Net Sales: Bauxite and Alumina Third Party (includes net sales of bauxite) $134.5 $130.6 $539.5 $458.1 Intersegment 15.5 17.2 30.2 58.6 -------- -------- --------- --------- Total Bauxite and Alumina 150.0 147.8 569.7 516.7 -------- -------- --------- --------- Primary Aluminum Third Party 26.5 65.3 128.1 265.3 Intersegment - - - 2.5 -------- -------- --------- --------- Total Primary Aluminum 26.5 65.3 128.1 267.8 -------- -------- --------- --------- Commodities Marketing 1.5 8.3 7.1 39.1 Minority Interests 23.5 25.9 92.8 98.5 -------- -------- --------- --------- Total Commodities Net Sales $201.5 $247.3 $797.7 $922.1 ======== ======== ========= ========= Operating Income (Loss): Bauxite and Alumina $(12.4) $(18.0) $(80.1) $(48.5) Primary Aluminum (14.1) (6.3) (51.9) (23.1) Commodities Marketing (2.2) 8.1 .2 36.2 Corporate and Other (15.7) (23.1) (74.7) (98.9) -------- -------- --------- --------- Total Commodities, Corporate and Other $(44.4) $(39.3) $(206.5) $(134.3) ======== ======== ========= ========= ---------------------------------------------------------------------- Combined: Net Sales - Fabricated Products $154.4 $134.6 $597.8 $608.6 Commodities 201.5 247.3 797.7 922.1 Eliminations (15.5) (17.2) (30.2) (61.1) -------- -------- --------- --------- Total Net Sales $340.4 $364.7 $1,365.3 $1,469.9 ======== ======== ========= ========= Operating Income (Loss) - Fabricated Products $(13.3) $(11.1) $(25.7) $(22.2) Commodities, Corporate and Other (44.4) (39.3) (206.5) (134.3) Eliminations 2.7 .3 4.1 1.7 Other Operating (Charges) Benefits, Net (504.9) (216.8) (511.0) (251.2) -------- -------- --------- --------- Total Operating Loss $(559.9) $(266.9) $(739.1) $(406.0) ======== ======== ========= ========= Net Loss $(573.2) $(270.8) $(788.3) $(468.7) ======== ======== ========= ========= Capital Expenditures $9.9 $18.4 $37.2 $47.6 ======== ======== ========= ========= KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES (Debtor-in-Possession) CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions of dollars) December 31, December 31, 2003 2002 ------------ ------------ Assets(1) Current assets(2) $426.0 $516.6 Investments in and advances to unconsolidated affiliates 57.0 69.7 Property, plant, and equipment - net 612.6 1,009.9 Other assets 527.9 629.2 ------------ ------------ Total $1,623.5 $2,225.4 ============ ============ Liabilities & Stockholders' Equity (Deficit)(1) Liabilities not subject to compromise - Current liabilities(3) $321.1 $333.6 Long-term liabilities 75.1 86.9 Long-term debt 24.2 42.7 Liabilities subject to compromise 2,820.0 2,726.0 Minority interests 121.8 121.8 Commitments and contingencies Stockholders' equity (deficit) (1,738.7) (1,085.6) ------------ ------------ Total $1,623.5 $2,225.4 ============ ============ (1) The Company and 25 of its subsidiaries have filed petitions for reorganization under Chapter 11 of the United States Federal Code. The balance sheet as of December 31, 2003, has been prepared on a "going concern" basis, which contemplates the realization of assets and liquidation of liabilities in the ordinary course of business; however, as a result of the Chapter 11 filings, such realization of assets and liquidation of liabilities are subject to a significant number of uncertainties. Specifically, but not all inclusive, the balance sheet 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 which may be allowed or (c) the effect of any changes which may be made in connection with the Company's capitalization or operations resulting from a plan of reorganization. Upon emergence from the Chapter 11 proceedings, the Company expects to apply "fresh start" accounting to its consolidated financial statements as required by AICPA Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code. As such, the Company will restate its balance sheet to equal the reorganization value as determined in its plan(s) of reorganization and approved by the Court. Because fresh start accounting will be adopted at emergence, and because of the significance of the pending asset sales and liabilities subject to compromise (that will be relieved upon emergence), comparisons between the current historical financial statements and the financial statements upon emergence may be difficult to make. See Note 1 of Notes to Consolidated Financial Statements of the Company's Form 10-K for the year ending December 31, 2003 for additional information regarding the Company's Chapter 11 proceedings. (2) Includes Cash and cash equivalents of $35.9 and $78.7 at December 31, 2003 and 2002, respectively. (3) Includes Current portion of long-term debt of $1.3 and $.9 at December 31, 2003 and 2002, respectively. As of December 31, 2003, the Company's liquidity was approximately $177.8, consisting of cash and cash equivalents of $35.9 and availability under its post-petition credit agreement (the "DIP Facility") of $141.9. At December 31, 2003, there were no borrowings and $43.3 of letters of credit outstanding under the DIP Facility.