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

                                                  March 31,

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

                                             2005           2004

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

 

Net sales                                       $281.4        $210.2

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

 

Costs and expenses:

  Cost of products sold                          242.2         194.2

  Depreciation and amortization                    4.9           5.5

  Selling, administrative, research and

   development, and general                       17.7          20.8

  Other operating charges(1)                       6.2            --

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

    Total costs and expenses                     271.0         220.5

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

 

Operating income (loss)                           10.4         (10.3)

 

Other income (expense):

  Interest expense (excluding unrecorded

   contractual interest expense of $23.7

   for both quarters)                             (2.1)         (2.0)

  Reorganization items                            (7.8)         (8.6)

  Other - net                                      (.4)          (.2)

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

 

Income (loss) before income taxes  and

 discontinued operations                            .1         (21.1)

Provision for income taxes(2)                     (2.4)         (1.5)

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

 

Loss from continuing operations                   (2.3)        (22.6)

Income (loss) from discontinued

 operations, net of income taxes,

 including minority interests(3)                  10.6         (41.4)

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

Net income (loss)                                 $8.3        $(64.0)

                                        =============== =============

 

Income (loss) per share--Basic/

 Diluted:(4)

  Loss from continuing operations                $(.03)        $(.28)

                                        =============== =============

  Income (loss) from discontinued

   operations                                     $.13         $(.52)

                                        =============== =============

  Net income (loss)                               $.10         $(.80)

                                        =============== =============

Weighted average shares outstanding

 (000):(4)

  Basic/Diluted                                 79,681        79,934

 

 

(1) Other operating charges for the quarter ended March 31, 2005

    included a charge totaling $5.6 associated with the implementation

    of new employee savings plans (Fabricated products business unit:

    $5.2 and Corporate: $.4) and a $.6 charge related to the

    previously announced move of the Corporate Headquarters from

    Houston, Texas to Foothill Ranch, California. See Note 11 of Notes

    to Interim Consolidated Financial Statements in the Company's

    Quarterly Report on Form 10-Q for the quarter ended March 31,

    2005.

 

(2) The income tax provision for the quarters ended March 31, 2005 and

    2004, relates primarily to foreign income taxes. For the quarters

    ended March 31, 2005 and 2004, as a result of the Cases, the

    Company did not recognize any U.S. income or any 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 the additional net operating losses and

    foreign tax credits generated in 2005 and 2004 were fully offset

    by increases in the valuation allowances.

 

(3) The Company has sold its interests in and related to Alpart,

    Gramercy/KJBC, Valco and the Mead Facility. The Company completed

    the sale of its interests in and related to QAL in April 2005. In

    accordance with Generally Accepted Accounting Principles, the

    operating results of these interests are reported as Discontinued

    operations. Additional information with regard to Discontinued

    operations is included in Note 4 of Notes to Interim Consolidated

    Financial Statements in the Company's Quarterly Report on Form

    10-Q for the quarter ended March 31, 2005. Results for

    discontinued operations during the quarter ended March 31, 2004

    included an approximate $33.0 impairment charge in respect of the

    Company's interests in and related to Valco.

 

(4) Income (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 Interim Consolidated

    Financial Statements in the Company's Quarterly Report on Form

    10-Q for the quarter ended March 31, 2005.

 

 

         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

                                                  March 31,

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

                                             2005           2004

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

Shipments (mm lbs)

  Fabricated Products                           126.4          108.5

  Primary Aluminum                               38.4           38.8

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

                                                164.8          147.3

                                        ============== ==============

 

Average Realized Third-Party Sales Price

 (per pound):

  Fabricated Products(1)                        $1.93          $1.65

  Primary Aluminum(2)                            $.95           $.81

 

Net Sales:

  Fabricated Products                          $244.4         $178.7

  Primary Aluminum                               37.0           31.5

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

  Total Net Sales                              $281.4         $210.2

                                        ============== ==============

 

Segment Operating Income (Loss) - (3)

  Fabricated Products                           $24.2           $1.3

  Primary Aluminum                                4.8            4.1

  Corporate and Other                           (12.4)         (15.7)

  Other Operating Charges(4)                     (6.2)            --

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

 Total Operating Income (Loss)                  $10.4         $(10.3)

                                        ============== ==============

Discontinued operations                         $10.6         $(41.4)

                                        ============== ==============

Net Income (Loss)                                $8.3         $(64.0)

                                        ============== ==============

Capital expenditures (excluding

 discontinued operations)                        $3.8           $1.6

                                        ============== ==============

 

 

(1) Average realized prices for the Company's Fabricated products

    business unit are subject to fluctuations due to changes in

    product mix as well as underlying primary aluminum prices and are

    not necessarily indicative of changes in underlying profitability.

 

(2) Average realized prices for the Company's Primary aluminum

    business unit exclude hedging revenues.

 

(3) The Company changed its segment presentation in 2004 to eliminate

    the "Eliminations" segment as the primary purpose for such segment

    was to eliminate the intercompany profit on sales by the Primary

    aluminum and Bauxite and alumina business units, substantially all

    of which are now considered Discontinued operations. Eliminations

    not representing Discontinued operations are now included in

    segment results. See Note 14 of Notes to Interim Consolidated

    Financial Statements in the Company's Quarterly Report on Form

    10-Q for the quarterly period ended March 31, 2005 for additional

    information with regard to segment information.

 

(4) See Note 11 of Notes to Interim Consolidated Financial Statements

    in the Company's Quarterly Report on Form 10-Q for the quarterly

    period ended March 31, 2005, for information regarding Other

    operating charges.

 

 

         KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

                        (Debtor-in-Possession)

 

                CONDENSED CONSOLIDATED BALANCE SHEETS

                             (Unaudited)

                       (In millions of dollars)

 

                                          March 31,     December 31,

                                            2005           2004

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

             Assets(1) (2)

 

Current assets(3)                              $272.3         $291.3

Discontinued operations' current

 assets(2)                                       40.3           30.6

Investment in and advances to

 unconsolidated affiliate                        15.7           16.7

Property, plant, and equipment - net            213.4          214.6

Restricted proceeds from sale of

 commodity interests                            281.3          280.8

Personal injury-related insurance

 recoveries receivable                          967.0          967.0

Other assets                                     43.6           42.5

Discontinued operations' long-term

 assets(2)                                       42.9           38.9

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

  Total                                      $1,876.5       $1,882.4

                                        ============== ==============

 

  Liabilities & Stockholders' Equity

            (Deficit)(1) (2)

 

Liabilities not subject to compromise -

  Current liabilities(4)                       $185.3         $191.2

  Discontinued operations' current

   liabilities(2)                                53.1           57.7

  Long-term liabilities                          33.3           32.9

  Long-term debt                                  2.8            2.8

  Discontinued operations' long-term

   liabilities(2)                                26.4           26.4

Liabilities subject to compromise             3,952.9        3,954.9

Minority interests                                 .7             .7

Commitments and contingencies

Stockholders' equity (deficit)               (2,378.0)      (2,384.2)

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

  Total                                      $1,876.5       $1,882.4

                                        ============== ==============

 

(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 March 31, 2005, 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 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 Interim Consolidated Financial Statements

    of the Company's Quarterly Report on Form 10-Q for the quarterly

    period ended March 31, 2005 for additional information regarding

    the Company's Chapter 11 proceedings.

 

(2) Information with regard to Discontinued operations is included in

    Note 4 of Notes to Interim Consolidated Statements in the

    Company's Quarterly Report on Form 10-Q for the quarterly period

    ended March 31, 2005.

 

(3) Includes Cash and cash equivalents of $24.5 and $55.4 at March 31,

    2005 and December 31, 2004, respectively.

 

(4) Includes Current portion of long-term debt of $1.2 at March 31,

    2005 and December 31, 2004.