-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RMuGpcDh3Df5vDHW1rEmuFaOsO1fH1cEicMUxk8g0yfsuCJKCyjonJoc5LYYAaZG tmstaC1exnu6NiozRLUJ0g== 0000811596-99-000015.txt : 19990510 0000811596-99-000015.hdr.sgml : 19990510 ACCESSION NUMBER: 0000811596-99-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KAISER ALUMINUM CORP CENTRAL INDEX KEY: 0000811596 STANDARD INDUSTRIAL CLASSIFICATION: PRIMARY PRODUCTION OF ALUMINUM [3334] IRS NUMBER: 943030279 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09447 FILM NUMBER: 99613376 BUSINESS ADDRESS: STREET 1: 5847 SAN FELIPE STE 2600 CITY: HOUSTON STATE: TX ZIP: 77057 BUSINESS PHONE: 7132673777 MAIL ADDRESS: STREET 1: 5847 SAN FELIPE STE 2600 STREET 2: PO 572887 CITY: HOUSTON STATE: TX ZIP: 77057 FORMER COMPANY: FORMER CONFORMED NAME: KAISERTECH LTD DATE OF NAME CHANGE: 19901122 10-Q 1 KAC FIRST QUARTER 10-Q =========================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 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 2600, HOUSTON, TEXAS 77057-3010 (Address of principal executive offices) (Zip Code) (713) 267-3777 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ----- ------- At April 30, 1999, the registrant had 79,397,413 shares of Common Stock outstanding. =========================================================================== KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS -------------------- CONSOLIDATED BALANCE SHEETS (In millions of dollars)
March 31, December 31, 1999 1998 ------------------------------ ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 10.8 $ 98.3 Receivables 275.8 282.7 Inventories 528.7 543.5 Prepaid expenses and other current assets 116.1 105.5 ------------------------------ Total current assets 931.4 1,030.0 Investments in and advances to unconsolidated affiliates 129.9 128.3 Property, plant, and equipment - net 1,098.6 1,108.7 Deferred income taxes 396.0 377.9 Other assets 377.7 346.0 ------------------------------ Total $ 2,933.6 $ 2,990.9 ============================== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 151.7 $ 173.3 Accrued interest 24.7 37.3 Accrued salaries, wages, and related expenses 66.4 73.8 Accrued postretirement medical benefit obligation - current portion 48.2 48.2 Other accrued liabilities 178.8 148.3 Payable to affiliates 81.5 77.1 Long-term debt - current portion .4 .4 ------------------------------ Total current liabilities 551.7 558.4 Long-term liabilities 531.0 532.9 Accrued postretirement medical benefit obligation 690.9 694.3 Long-term debt 962.3 962.6 Minority interests 116.7 123.5 Commitments and contingencies Stockholders' equity: Common stock .8 .8 Additional capital 535.4 535.4 Accumulated deficit (455.2) (417.0) ------------------------------ Total stockholders' equity 81.0 119.2 ------------------------------ Total $ 2,933.6 $ 2,990.9 ==============================
The accompanying notes to interim consolidated financial statements are an integral part of these statements. KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES STATEMENTS OF CONSOLIDATED INCOME (LOSS) (Unaudited) (In millions of dollars, except share amounts)
Quarter Ended March 31, ------------------------------ 1999 1998 ------------------------------ Net sales $ 479.4 $ 597.0 ------------------------------ Costs and expenses: Cost of products sold 459.9 497.1 Depreciation and amortization 24.4 25.4 Selling, administrative, research and development, and general 28.1 29.7 ------------------------------ Total costs and expenses 512.4 552.2 ------------------------------ Operating income (loss) (33.0) 44.8 Other income (expense): Interest expense (27.7) (28.0) Other - net 1.3 .8 ------------------------------ Income (loss) before income taxes and minority interests (59.4) 17.6 Benefit (provision) for income taxes 20.2 (6.2) Minority interests 1.0 .6 ------------------------------ Net income (loss) $ (38.2) $ 12.0 ============================== Earnings (loss) per share: Basic $ (.48) $ .15 Diluted $ (.48) $ .15 Weighted average shares outstanding (000): Basic 79,154 79,008 Diluted 79,154 79,086
The accompanying notes to interim consolidated financial statements are an integral part of these statements. KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES STATEMENTS OF CONSOLIDATED CASH FLOWS (Unaudited) (In millions of dollars)
Quarter Ended March 31, ------------------------------ 1999 1998 ------------------------------ Cash flows from operating activities: Net income (loss) $ (38.2) $ 12.0 Adjustments to reconcile net income (loss) to net cash (used) provided by operating activities: Depreciation and amortization (including deferred financing costs) 25.4 26.7 Equity in (income) loss of unconsolidated affiliates, net of distributions (4.4) (3.7) Minority interests (1.1) (.6) Decrease in receivables 6.9 21.0 Decrease in inventories 14.8 40.2 Increase in prepaid expenses and other current assets (11.7) (1.2) Decrease in accounts payable and accrued interest (34.2) (38.6) Increase (decrease) in payable to affiliates and other accrued liabilities 26.4 (24.6) Decrease in accrued and deferred income taxes (20.5) (1.1) Decrease in net long-term assets and liabilities (31.0) (8.1) Other .1 1.6 ------------------------------ Net cash (used) provided by operating activities (67.5) 23.6 ------------------------------ Cash flows from investing activities: Capital expenditures (16.5) (13.7) Other (2.7) (3.2) ------------------------------ Net cash used by investing activities (19.2) (16.9) ------------------------------ Cash flows from financing activities: Borrowings under revolving credit facility, net - - Repayments of long-term debt (.3) (.9) Decrease in restricted cash, net .8 .6 Redemption of minority interests' preference stock (1.3) (1.1) ------------------------------ Net cash used by financing activities (.8) (1.4) ------------------------------ Net (decrease) increase in cash and cash equivalents during the period (87.5) 5.3 Cash and cash equivalents at beginning of period 98.3 15.8 ------------------------------ Cash and cash equivalents at end of period $ 10.8 $ 21.1 ============================== Supplemental disclosure of cash flow information: Interest paid, net of capitalized interest $ 39.3 $ 39.4 Income taxes paid .5 6.4
The accompanying notes to interim consolidated financial statements are an integral part of these statements. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (In millions of dollars, except prices and per share amounts) 1. GENERAL Kaiser Aluminum Corporation (the "Company") is a subsidiary of MAXXAM Inc. ("MAXXAM"). MAXXAM and one of its wholly owned subsidiaries together own approximately 63% of the Company's Common Stock with the remaining approximately 37% publicly held. The Company operates through its subsidiary, Kaiser Aluminum & Chemical Corporation ("KACC"). The foregoing unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 1998. In the opinion of management, the unaudited interim consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented. 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 operations. Operating results for the quarter ended March 31, 1999, are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. Certain reclassifications of prior-year information were made to conform to the current presentation. LABOR RELATED COSTS The Company is currently operating five of its U.S. facilities with salaried employees and other workers as a result of the September 30, 1998, strike by the United Steelworkers of America ("USWA") and the subsequent "lock-out" by the Company in January 1999. For purposes of computing the costs and liabilities related to pension and other postretirement medical plans reflected in the accompanying interim consolidated financial statements for the quarter ended March 31, 1999, the Company based its accruals on the terms of the previously existing (expired) USWA contract. Any differences between the amounts accrued and the amounts ultimately agreed to during the collective bargaining process will be reflected in future results during the term of any new contract. RECENT ACCOUNTING PRONOUNCEMENTS Statement of Financial Accounting Standards 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. SFAS No. 133 must be adopted by the Company no later than January 1, 2000, although earlier application is permitted. Under SFAS No. 133, the Company will be required to "mark-to-market" its hedging positions at each period end in advance of reflecting the physical transactions to which the hedges relate. Changes in the fair value of the Company's open hedging positions will be reflected as an increase or reduction in stockholders' equity through comprehensive income. The impact of the changes in fair value of the Company's hedging positions will reverse out of comprehensive income (net of any fluctuations in other "open" positions) and will be reflected in traditional net income when the subsequent physical transactions occur. Currently, the dollar amount of the Company's comprehensive income adjustments is not significant so there is not a significant difference between "traditional" net income and comprehensive income. However, differences between comprehensive income and traditional net income may become significant in future periods as SFAS No. 133 will result in fluctuations in 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. The amount of such fluctuations could be significant. 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. The Company is currently evaluating how and when to implement SFAS No. 133. 2. EARNINGS (LOSS) PER SHARE Basic - Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of Common Stock outstanding during the period including the weighted average impact of the shares of Common Stock issued during the year from the date(s) of issuance. Diluted - Diluted earnings (loss) per share for the quarter ended March 31, 1998, includes the dilutive effect of outstanding stock options of 78,000 shares. The impact of outstanding stock options was excluded from the computation for the quarter ended March 31, 1999, as its effect would have been antidilutive. 3. INVENTORIES The classification of inventories is as follows:
March 31, December 31, 1999 1998 ------------------------------ Finished fabricated aluminum products $ 121.9 $ 112.4 Primary aluminum and work in process 168.0 205.6 Bauxite and alumina 120.2 109.5 Operating supplies and repair and maintenance parts 118.6 116.0 ------------------------------ Total $ 528.7 $ 543.5 ==============================
Substantially all product inventories are stated at last-in, first-out (LIFO) cost, not in excess of market. Replacement cost is not in excess of LIFO cost. 4. CONTINGENCIES ENVIRONMENTAL CONTINGENCIES The Company and KACC are subject to a number of environmental laws, to fines or penalties assessed for alleged breaches of such environmental laws, and to claims and litigation based upon such laws. KACC currently is subject to a number of claims under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments Reauthorization Act of 1986 ("CERCLA"), and, along with certain other entities, has been named as a potentially responsible party for remedial costs at certain third-party sites listed on the National Priorities List under CERCLA. Based on the Company's evaluation of these and other environmental matters, the Company has established environmental accruals primarily related to potential solid waste disposal and soil and groundwater remediation matters. At March 31, 1999, the balance of such accruals, which are primarily included in Long-term liabilities, was $50.5. 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 actions 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 $3.0 to $8.0 for the years 1999 through 2003 and an aggregate of approximately $29.0 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. 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 it has insurance coverage available to recover certain incurred and future environmental costs and is actively pursuing claims in this regard. No assurances can be given that the Company will be successful in attempts to recover incurred or future costs from insurers or that the amount of recoveries received will ultimately be adequate to cover costs incurred. 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 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 sold for at least 20 years. At March 31, 1999, the number of such claims pending was approximately 91,300, as compared with 86,400 at December 31, 1998. In 1998, approximately 22,900 of such claims were received and 13,900 were settled or dismissed. During the quarter ended March 31, 1999, approximately 9,300 of such claims were received and 4,400 of such claims were settled or dismissed. However, the foregoing claim and settlement figures as of and for the quarter ended March 31, 1999, do not reflect the fact that as of March 31, 1999, KACC has reached agreements under which it will settle approximately 26,000 of the pending asbestos-related claims over an extended period. Based on past experience and reasonably anticipated future activity, the Company has established an accrual for estimated asbestos-related costs for claims filed and estimated to be filed through 2008. There are inherent uncertainties involved in estimating asbestos-related costs, and the Company's actual costs could exceed these estimates. The Company's accrual was calculated based on the current and anticipated number of asbestos-related claims, the prior timing and amounts of asbestos-related payments, and the advice of Wharton Levin Ehrmantraut Klein & Nash, P.A., with respect to the current state of the law related to asbestos claims. Accordingly, an estimated asbestos-related cost accrual of $187.7, before consideration of insurance recoveries, is included primarily in Long-term liabilities at March 31, 1999. While the Company does not presently believe there is a reasonable basis for estimating such costs beyond 2008 and, accordingly, no accrual has been recorded for such costs which may be incurred beyond 2008, there is a reasonable possibility that such costs may continue beyond 2008, and such costs may be substantial. The Company estimates that annual future cash payments in connection with such litigation will be approximately $17.0 to $28.0 for each of the years 1999 through 2003, and an aggregate of approximately $79.0 thereafter. 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. The timing and amount of future recoveries from these insurance carriers will depend on the pace of claims review and processing by such carriers and on the resolution of any disputes regarding coverage under such policies. The Company believes, that substantial recoveries from the insurance carriers are probable. 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 with respect to applicable insurance coverage law relating to the terms and conditions of those policies. Accordingly, an estimated aggregate insurance recovery of $157.3, determined on the same basis as the asbestos- related cost accrual, is recorded primarily in Other assets at March 31, 1999. 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. While uncertainties are inherent in the final outcome of these asbestos matters and it is presently impossible to determine the actual costs that ultimately may be incurred and insurance recoveries that will be received, management currently believes that, based on the factors discussed in the preceding paragraphs, the resolution of asbestos-related uncertainties and the incurrence of asbestos-related costs net of related insurance recoveries should not have a material adverse effect on the Company's consolidated financial position, results of operations, or liquidity. LABOR MATTERS In connection with the USWA strike and subsequent lock-out by KACC, certain allegations of unfair labor practices ("ULPs") have been filed with the National Labor Relations Board by the USWA. KACC is responding to all such allegations and believes that they are without merit. If the allegations were sustained, KACC could be required to make locked-out employees whole for back wages from the date of the lock-out in January 1999. While uncertainties are inherent in the final outcome of such matters, the Company believes that the resolution of the alleged ULPs should not result in a material adverse effect on the Company's consolidated financial position, results of operations, or liquidity. OTHER CONTINGENCIES The Company or KACC is involved in various other claims, lawsuits, and other proceedings relating to a wide variety of matters. 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. See Note 9 of Notes to Consolidated Financial Statements for the year ended December 31, 1998. 5. DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING PROGRAMS At March 31, 1999, the net unrealized gain on KACC's position in aluminum forward sales and option contracts, energy forward purchase and option contracts, and forward foreign exchange contracts, was approximately $28.9 (based on comparisons to applicable quarter-end published market prices). 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 these hedging activities will generally be offset by losses or gains, respectively, on the transactions being hedged. ALUMINA AND ALUMINUM The Company's earnings 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 price 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 but generally lag behind primary aluminum price changes by up to three months. Since 1993, the Average Midwest United States transaction price for primary aluminum has ranged from approximately $.50 to $1.00 per pound. From time to time in the ordinary course of business, KACC enters into hedging transactions to provide price risk management in respect of the net exposure of earnings and cash flows 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. Forward sales contracts are used by KACC to effectively fix the price that KACC will receive for its shipments. KACC also uses option contracts (i) to establish a minimum price for its product shipments, (ii) to establish a "collar" or range of prices for KACC's anticipated sales, and/or (iii) to permit KACC to realize possible upside price movements. As of March 31, 1999, KACC had sold forward, at fixed prices, approximately 18,000 tons of primary aluminum with respect to 1999. As of March 31, 1999, KACC had also entered into option contracts that established a price range for an additional 144,000 and 323,000 tons of primary aluminum for 1999 and 2000, respectively. Additionally, through March 31, 1999, KACC had also entered a series of transactions with a counterparty that will provide KACC with a premium over the forward market prices at the date of the transaction for 4,000 tons of primary aluminum per month during the period July 1999 through June 2001. KACC also contracted with the counterparty to receive certain fixed prices (also above the forward market prices at the date of the transaction) on 8,000 tons of primary aluminum per month over a three year period commencing October 2001, unless market prices during certain periods decline below a stipulated "floor" price, in which case, the fixed price sales portion of the transactions terminate. The price at which the October 2001 and later transactions terminate is well below current market prices. While the Company believes that the October 2001 and later transactions are consistent with its stated hedging objectives, these positions do not qualify for treatment as a "hedge" under current accounting guidelines. Accordingly, these positions will be "marked to market" each period. For the quarter ended March 31, 1999, the Company recorded a mark-to-market charge of $0.5 in Other income (expense) associated with the above transactions. As of March 31, 1999, KACC had sold forward virtually all of the alumina available to it in excess of its projected internal smelting requirements for 1999, 2000 and 2001 at prices indexed to future prices of primary aluminum. ENERGY KACC is exposed to energy price risk from fluctuating prices for fuel oil and natural gas consumed in the production process. Accordingly, 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. As of March 31, 1999, KACC had a combination of fixed price purchase and option contracts for the purchase of approximately 32,700 MMBtu of natural gas per day during the remainder of 1999. As of March 31, 1999, KACC also held a combination of fixed price purchase and option contracts for an average of 246,000 and 179,000 barrels per month of fuel oil and diesel fuel for 1999 and 2000, respectively. FOREIGN CURRENCY KACC enters into forward exchange contracts to hedge material cash commitments to foreign subsidiaries or affiliates. At March 31, 1999, KACC had net forward foreign exchange contracts totaling approximately $132.3 for the purchase of 198.6 Australian dollars from April 1999 through December 2000, in respect of its commitments for the remainder of 1999 through 2000 expenditures denominated in Australian dollars. See Note 10 of the Notes to Consolidated Financial Statements for the year ended December 31, 1998. 6. SIGNIFICANT ACQUISITIONS AND DISPOSITIONS In February 1999, KACC, through a subsidiary, completed the acquisition of its joint venture partner's 45% interest in Kaiser LaRoche Hydrate Partners ("KLHP") for a cash purchase price of approximately $10.0. As KACC already owned 55% of KLHP, the results of KLHP were already included in the Company's consolidated financial statements. On April 1, 1999, KACC completed the previously announced sale of its 50% interest in AKW L.P. ("AKW"), an aluminum wheels joint venture, to its partner, Accuride Corporation. The sale will result in the Company recognizing a net pre-tax gain of approximately $50 million in the second quarter of 1999. The Company's equity in income of AKW was $2.5 and $1.1 for the quarters ended March 31, 1999 and 1998, respectively. 7. INTERIM OPERATING SEGMENT INFORMATION The Company uses a portion of its bauxite, alumina and primary aluminum production for additional processing at its downstream facilities. Transfers between business units are made at estimated market prices. The accounting policies of the segments are the same as those described in Note 1 of Notes to Consolidated Financial Statements for the year ended December 31, 1998. Business unit results are evaluated internally by management before any allocation of corporate overhead and without any charge for income taxes or interest expense. See Note 11 of Notes to Consolidated Financial Statements for the year ended December 31, 1998. Financial information by operating segment for the quarters ended March 31, 1999 and 1998 is as follows:
Quarter Ended March 31, ------------------------------ 1999 1998 - ------------------------------------------------------------------------------------------ Net Sales: Bauxite and Alumina: Net sales to unaffiliated customers $ 89.7 $ 93.3 Intersegment sales 23.0 42.2 -------------- -------------- 112.7 135.5 -------------- -------------- Primary Aluminum: Net sales to unaffiliated customers 89.1 126.2 Intersegment sales 49.1 66.8 -------------- -------------- 138.2 193.0 -------------- -------------- Flat-Rolled Products 148.3 194.3 Engineered Products 133.5 162.6 Minority interests 18.8 20.6 Eliminations (72.1) (109.0) -------------- -------------- $ 479.4 $ 597.0 ============== ============== Operating income (loss): Bauxite and Alumina $ (7.8) $ 11.6 Primary Aluminum (22.1) 20.1 Flat-Rolled Products 7.4 16.3 Engineered Products 6.9 16.3 Micromill (3.3) (5.2) Eliminations 3.6 3.1 Corporate and Other (17.7) (17.4) -------------- -------------- $ (33.0) $ 44.8 ============== ============== Depreciation and amortization: Bauxite and Alumina $ 8.9 $ 9.6 Primary Aluminum 7.3 7.5 Flat-Rolled Products 4.1 4.1 Engineered Products 2.7 2.7 Micromill .7 .7 Corporate and Other .7 .8 -------------- -------------- $ 24.4 $ 25.4 ============== ==============
Excluding the February 1999 purchase of the remaining interest in KLHP, which affected the Bauxite and Alumina segment, and the April 1999 sale of KACC's interest in AKW, which affected the Engineered Products segment, there were no material changes in segment assets since December 31, 1998. Capital expenditures made during the first quarter of 1999 (other than the KLHP acquisition) were incurred on a relatively ratable basis among KACC's four primary operating business segments. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- This section should be read in conjunction with the response to Item 1, Part I, of this Report. This section contains statements which constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this section (see, for example, "Recent Events and Developments," "Results of Operations," and "Liquidity and Capital Resources"). Such statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "estimates," "will," "should," "plans" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of various factors. These factors include the effectiveness of management's strategies and decisions, general economic and business conditions, developments in technology, year 2000 technology issues, new or modified statutory or regulatory requirements, and changing prices and market conditions. This section and the Company's Annual Report on Form 10-K for the year ended December 31, 1998, each identify other factors that could cause such differences. 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. RECENT EVENTS AND DEVELOPMENTS LABOR MATTERS Substantially all of KACC's hourly workforce at its Gramercy, Louisiana, alumina refinery, Mead and Tacoma, Washington, aluminum smelters, Trentwood, Washington, rolling mill, and Newark, Ohio, extrusion facility were covered by a master labor agreement with the United Steelworkers of America (the "USWA") which expired on September 30, 1998. The parties did not reach an agreement prior to the expiration of the master agreement and the USWA chose to strike. As previously announced, in January 1999 KACC declined an offer by the USWA to have the striking workers return to work at the five plants without a new agreement. KACC imposed a lock-out to support its bargaining position and continues to operate the plants with salaried employees and other workers as it has since the strike began. Based on operating results to date, the Company believes that a significant business interruption will not occur. KACC and the USWA continue to communicate; however, no formal schedule for bargaining sessions has been developed at this time. The objective of the Company has been, and continues to be, to negotiate a fair labor contract that is consistent with its business strategy and the commercial realities of the marketplace. As a result of the USWA strike, the Company temporarily curtailed three out of a total of eleven potlines at its Mead and Tacoma, Washington, aluminum smelters at September 30, 1998 (representing approximately 70,000 tons of annual production capacity out of a total combined production capacity of 273,000 tons per year at the facilities.) As previously announced, in February 1999, KACC began restarting the two curtailed potlines at its Mead smelter representing approximately 50,000 tons of the previously idle capacity. The first of the two Mead potlines was restarted in March 1999. The second of the two Mead potlines is currently expected to commence restart activity during the second quarter of 1999, although it may not be fully operational until the third quarter of the year. KACC has also announced that it has completed preparations to restart the 20,000 tons of idle capacity at its Tacoma smelter. However, the timing for any restart of the Tacoma potline has yet to be determined and will depend upon market conditions and other factors. While the Company initially experienced an adverse strike-related impact on its profitability, the Company currently believes that KACC's operations at the affected facilities have been substantially stabilized and will be able to run at, or near, full capacity, and that the effect of the incremental costs associated with operating the affected plants during the dispute were eliminated or substantially reduced as of January 1999 (excluding the impacts of the restart costs discussed above and the effect of market factors such as the continued market-related curtailment at the Tacoma smelter). However, no assurances can be given that KACC's efforts to run the plants on a sustained basis, without a significant business interruption or material adverse impact on the Company's operating results, will be successful. STRATEGIC INITIATIVES The Company has previously disclosed that it believes that it had met, and exceeded, its goal of achieving $120.0 million of pre-tax cost reductions and other profit improvements, independent of metal price changes, measured against 1996 results prior to the end of the third quarter of 1998, when the impact of such items as smelter operating levels, the USWA strike and changes in foreign currency exchange rates are excluded from the analysis. The Company remains committed to sustaining the full $120.0 million improvement and to generating additional profit improvements in future years; however, no assurances can be given that the Company will be successful in this regard. In addition to working to improve the performance of the Company's existing assets, the Company has devoted significant efforts analyzing its existing asset portfolio with the intent of focusing its efforts and capital in sectors of the industry that are considered most attractive, and in which the Company believes it is well positioned to capture value. The initial steps of this process resulted in the June 1997 acquisition of the Bellwood extrusion facility, the May 1997 formation of AKW L.P. ("AKW"), the rationalization of certain of the Company's Engineered Products operations, the Company's investment to expand its production capacity for heat treat flat-rolled products at its Trentwood, Washington, rolling mill, and the Company's fourth quarter 1998 decision to seek a strategic partner for further development and deployment of KACC's Micromill(TM) technology. This process has continued in 1999. In February 1999, KACC completed the acquisition of the remaining 45% interest in Kaiser LaRoche Hydrate Partners ("KLHP"), an alumina marketing venture, from its joint venture partner for a cash purchase price of approximately $10.0 million. Additionally, in April 1999, KACC sold its 50% interest in AKW to its joint venture partner for approximately $70 million in cash proceeds. The transaction will result in the Company recognizing a pre-tax gain of approximately $50 million in the second quarter of 1999. See Note 6 of Notes to Interim Consolidated Financial Statements. Another area of emphasis has been a continuing focus on managing the Company's legacy liabilities, including the Company's active pursuit of claims in respect of insurance coverage for certain incurred and future environmental costs, as evidenced by the Company's fourth quarter 1998, receipt of recoveries totaling approximately $35.0 million related to current and future claims against certain of its insurers. See Note 9 of Notes to Consolidated Financial Statements for the year ended December 31, 1998. Additional portfolio analysis and initiatives are continuing. VALCO OPERATING LEVEL The Company's 90%-owned Volta Aluminium Company Limited ("Valco") smelter in Ghana operated only one of its five potlines during most of 1998, although, on average, two potlines were operated during most of the first quarter of 1998. Each of Valco's potlines is capable of producing approximately 40,000 tons of primary aluminum per year. Valco earned compensation in 1998 (in the form of energy credits to be utilized over the last half of 1998 and during 1999) from the Volta River Authority ("VRA") in lieu of the power necessary to run two of the potlines that were curtailed during 1998. The compensation substantially mitigated the financial impact in 1998 of the curtailment of such lines. Valco did not receive any compensation from the VRA for one additional potline which was curtailed in January 1998. Valco currently expects to operate an average of three lines during 1999. As of April 30, 1999, two of the previously curtailed potlines had been restarted. Valco has notified the VRA that it believes it had the contractual rights at the beginning of 1998 and 1999 to sufficient energy to run four and one-half potlines for the balance of both years. Valco continues to seek compensation from the VRA with respect to the 1998 and 1999 reductions in its power allocation. Valco and the VRA also are in continuing discussions concerning other matters, including steps that might be taken to reduce the likelihood of power curtailments in the future. No assurances can be given as to the success of these discussions. RESULTS OF OPERATIONS As an integrated aluminum producer, the Company uses a portion of its bauxite, alumina, and primary aluminum production for additional processing at certain of its downstream facilities. Intersegment transfers are valued at estimated market prices. The following table provides selected operational and financial information on a consolidated basis with respect to the Company for the quarters ended March 31, 1999 and 1998. The following data should be read in conjunction with the Company's interim consolidated financial statements and the notes thereto, contained elsewhere herein. See Note 11 of Notes to Consolidated Financial Statements for the year ended December 31, 1998, for further information regarding segments. Interim results are not necessarily indicative of those for a full year. SELECTED OPERATIONAL AND FINANCIAL INFORMATION (Unaudited) (In millions of dollars, except shipments and prices)
Quarter Ended March 31, ------------------------------ 1999 1998 - ------------------------------------------------------------------------------------------ Shipments: (000 tons) Alumina Third Party 487.0 424.6 Intersegment 150.3 215.8 -------------- -------------- Total Alumina 637.3 640.4 -------------- -------------- Primary Aluminum Third Party 62.9 80.5 Intersegment 39.5 43.6 -------------- -------------- Total Primary Aluminum 102.4 124.1 ------------- ------------- Flat-Rolled Products 52.5 59.7 -------------- -------------- Engineered Products 41.4 45.8 -------------- -------------- Average Realized Third Party Sales Price: (1) Alumina (per ton) $ 172 $ 201 Primary Aluminum (per pound) $ .64 $ .71 Net Sales: Bauxite and Alumina Third Party (includes net sales of bauxite) $ 89.7 $ 93.3 Intersegment 23.0 42.2 -------------- -------------- Total Bauxite & Alumina 112.7 135.5 -------------- -------------- Primary Aluminum Third Party 89.1 126.2 Intersegment 49.1 66.8 -------------- -------------- Total Primary Aluminum 138.2 193.0 -------------- -------------- Flat-Rolled Products 148.3 194.3 Engineered Products 133.5 162.6 Minority Interests 18.8 20.6 Eliminations (72.1) (109.0) -------------- -------------- Total Net Sales $ 479.4 $ 597.0 ============== ============== Operating Income (Loss): Bauxite & Alumina $ (7.8) $ 11.6 Primary Aluminum (2) (22.1) 20.1 Flat-Rolled Products 7.4 16.3 Engineered Products 6.9 16.3 Micromill(TM) (3.3) (5.2) Eliminations 3.6 3.1 Corporate (17.7) (17.4) -------------- -------------- Total Operating Income (Loss) $ (33.0) $ 44.8 ============== ============== Net Income (Loss) $ (38.2) $ 12.0 ============== ============== Capital Expenditures $ 16.5 $ 13.7 ============== ==============
(1) 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. Average realized third party sales prices for alumina and primary aluminum include the impact of hedging activities. (2) First quarter 1999 results for the Primary aluminum segment include potline restart costs of $7.1. OVERVIEW The Company's operating results are sensitive to changes in prices of alumina, primary aluminum, and fabricated aluminum products, and also depend to a significant degree on the volume and mix of all products sold and on KACC's hedging strategies. Primary aluminum prices have historically been subject to significant cyclical price fluctuations. See Note 5 of Notes to Interim Consolidated Financial Statements for a discussion of KACC's hedging activities. During 1998, the Average Midwest United States transaction price ("AMT Price") per pound of primary aluminum experienced a steady decline during the year, beginning the year in the $.70 to $.75 range and ending the year in the low $.60 range. During the first quarter of 1999, the AMT Price for primary aluminum was in the $.57 to $.59 per pound range most of the quarter, but increased in March 1999 and ended the quarter at approximately $.62. The AMT Price for primary aluminum for the week ended April 23, 1999, was approximately $.64 per pound. QUARTER ENDED MARCH 31, 1999, COMPARED TO QUARTER ENDED MARCH 31, 1998 SUMMARY The Company reported a net loss of $38.2 million, or $.48 of basic loss per share, for the first quarter of 1999, compared to a net income of $12.0 million, or $.15 of basic earnings per share, for the same period of 1998. Net sales in the first quarter of 1999 totaled $479.4 million compared to $597.0 million in the first quarter of 1998. BAUXITE AND ALUMINA Third party net sales of alumina were down 2% for the quarter ended March 31, 1999, as compared to the same period in 1998 as a 15% increase in third party shipments was more than offset by a decline in average realized price. The increase in 1999 third party shipments (and offsetting decrease in 1999 intersegment shipments) resulted from reduced shipments to Valco, due to the production curtailment more fully discussed above and the fourth quarter strike-related curtailment of three potlines at the Company's Washington smelters. The average realized price for third party alumina sales was down as the allocated net gains from the Company's hedging activities only partially offset the decline in market prices related to the Company's primary aluminum-linked customer sales contracts. In addition to being impacted by the reduced shipments to Valco and the Washington smelters as discussed above, intersegment sales were adversely affected by a substantial market-related decline in intersegment average sales prices. Segment operating income declined significantly between years due to the decline in market related prices discussed above. The impact of increased third party shipments of alumina was substantially offset by a corresponding decline in intersegment shipments. PRIMARY ALUMINUM First quarter 1999 third party net sales of primary aluminum were down 29% as compared to the comparable period in 1998 primarily as a result of a 22% reduction in shipments, caused by the 1998 potline curtailments at Valco and the Washington smelters. Reduced average realized third party sales prices between first quarter 1999 and 1998 (reflecting lower market prices offset, in part, by allocated net gains from KACC's hedging activities) also adversely impacted third party net sales. Intersegment net sales were down approximately 27% between first quarter 1999 and 1998. Intersegment shipments were down 9% from the prior year comparable period and average realized prices dropped by 18% reflecting lower market prices for primary aluminum. Segment operating income in first quarter 1999 was down significantly from first quarter 1998. The primary reason for the decline was the significant reduction in shipments and average realized prices, discussed above. However, first quarter 1999 results also reflect the adverse impact of the Valco and Washington smelter potline curtailments, the lack of any compensation from the VRA in 1999 related to the Valco potline curtailments, and costs of approximately $7.1 million associated with preparing and restarting potlines at Valco and the Washington smelters. FLAT-ROLLED PRODUCTS Net sales of flat-rolled products decreased by 24% during first quarter 1999 as compared to 1998 as a result of a 12% reduction in product shipments and 13% decline in average realized prices. The reduction in quarterly shipments reflects reduced aerospace demand for heat treat products as compared to the first quarter of 1998 as well as customer deferrals of can stock purchases into the second quarter of 1999. The decline in average realized prices reflects lower market prices for primary aluminum as well as the price impact of the changes in product mix discussed above. Segment operating income decreased significantly in first quarter 1999 primarily as a result of the price, volume and product mix factors discussed above. ENGINEERED PRODUCTS Net sales of engineered products were down approximately 18% year to year, reflecting a 10% decrease in product shipments and 9% decline in average realized prices. The reduction in shipments primarily resulted from seasonality and softening demand primarily in aerospace market sectors. These factors were somewhat offset by strong demand for soft alloy extrusions. The change in average realized prices reflects lower market prices for primary aluminum as well as the price impact of changes in product mix. Segment operating income declined significantly in the first quarter of 1999 as compared to the first quarter of 1998 primarily as a result of the price, volume, and product mix factors discussed above. ELIMINATIONS Eliminations of intersegment profit vary from period to period depending on fluctuations in market prices as well as the amount and timing of the affected segments' production and sales. CORPORATE AND OTHER Corporate operating expenses represent corporate general and administrative expenses which are not allocated to the Company's business segments. LIQUIDITY AND CAPITAL RESOURCES OPERATING ACTIVITIES At March 31, 1999, the Company had working capital of $379.7 million, compared with working capital of $471.6 million at December 31, 1998. The decrease in working capital primarily resulted from a decrease in Cash and cash equivalents. INVESTING ACTIVITIES Capital expenditures during the quarter ended March 31, 1999, were $16.5 million consisting primarily of the purchase of the remaining 45% interest in KLHP, discussed above. The remainder of the first quarter 1999 capital expenditures were used to improve production efficiency and reduce operating costs. Total consolidated capital expenditures (of which approximately 8% is expected to be funded by the Company's minority partners in certain foreign joint ventures) are expected to be between $70 and $90 million per annum in each of 1999 through 2001. 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 At March 31, 1999, the Company had long-term debt of $962.7 million, compared with $963.0 million at December 31, 1998. At March 31, 1999, $273.4 million (of which $73.4 million could have been used for letters of credit) was available to KACC under the Credit Agreement and no amounts were outstanding under the revolving credit facility. Loans under the Credit Agreement bear interest at a spread (which varies based on the results of a financial test) over either a base rate or LIBOR at the Company's option. Management believes that the Company's existing cash resources, together with cash flows from operations and borrowings under the Credit Agreement, will be sufficient to meet its working capital and capital expenditure requirements for the next year. Additionally, with respect to long-term liquidity, management believes that operating cash flow, together with the ability to obtain both short and long-term financing, should provide sufficient funds to meet the Company's working capital and capital expenditure requirements. CAPITAL STRUCTURE MAXXAM Inc. ("MAXXAM") and one of its wholly owned subsidiaries collectively own approximately 63% of the Company's Common Stock, with the remaining approximately 37% of the Company's Common Stock being publicly held. Certain of the shares of the Company's Common Stock beneficially owned by MAXXAM are subject to certain pledge agreements by MAXXAM and its subsidiary. The Company has an effective "shelf" registration statement covering the offering from time to time of up to $150.0 million of equity securities. Any such offering will only be made by means of a prospectus. The Company also has an effective "shelf" registration statement covering the offering of up to 10,000,000 shares of the Company's Common Stock that are owned by MAXXAM. The Company will not receive any of the net proceeds from any transaction initiated by MAXXAM pursuant to this registration statement. The Credit Agreement does not permit the Company or KACC to pay any dividends on their common stock. OTHER MATTERS YEAR 2000 READINESS DISCLOSURE The Company utilizes software and related technologies throughout its business that will be affected by the date change to the year 2000. There may also be technology embedded in certain of the equipment owned or used by the Company that is susceptible to the year 2000 date change as well. The Company has implemented a company-wide program to coordinate the year 2000 efforts of its individual business units and to track their progress. The intent of the program is to make sure that critical items are identified on a sufficiently timely basis to assure that the necessary resources can be committed to address any material risk areas that could prevent the Company's systems and assets from being able to meet the Company's business needs and objectives. Year 2000 progress and readiness has also been the subject of the Company's normal, recurring internal audit function. Each of the Company's business units has developed year 2000 plans specifically tailored to their individual situations. A wide range of solutions is being implemented, including modifying existing systems and, in limited cases where it is cost effective, purchasing new systems. Total spending related to these projects, which began in 1997 and is expected to continue through 1999, is currently estimated to be in the $10-15 million range. As of April 30, 1999, the Company estimates that approximately $4-6 million of year 2000 expenditures are yet to be incurred. Such remaining amounts are expected to be incurred over the balance of 1999, primarily in the second and third quarters of the year. System modification costs are being expensed as incurred. Costs associated with new systems are being capitalized and will be amortized over the life of the system. The Company has established an internal goal of having all necessary system changes in place and tested by mid-year 1999. Substantially all facilities and systems are expected to meet this goal. However, a limited number of systems and pieces of equipment will not be completely remediated and tested until sometime in the third quarter of the year. The Company plans to commit the necessary resources for all remediation efforts. In addition to addressing the Company's internal systems, the company- wide program involves identification of key suppliers, customers, and other third-party relationships that could be impacted by year 2000 issues. A general survey has been conducted of the Company's supplier and customer base. Direct contact has been made, or is in progress, with parties which are deemed to be particularly critical including financial institutions, power suppliers, and customers, with which the Company has a material relationship. Each business unit, including the corporate group, is developing a contingency plan covering the steps that would be taken if a year 2000 problem were to occur despite the Company's best efforts to identify and remediate all critical at-risk items. Each contingency plan will address, among other things, matters such as alternative suppliers for critical inputs, incremental standby labor requirements at the millennium to address any problems as they occur, and backup processing capabilities for critical equipment or processes. The goal of the contingency plans will be to minimize any business interruptions and the associated financial implications. While the Company believes that its program is sufficient to identify the critical issues and associated costs necessary to address possible year 2000 problems in a timely manner, there can be no assurances that the program, or underlying steps implemented, will be successful in resolving all such issues by the Company's mid-1999 goal or prior to the year 2000. If the steps taken by the Company (or critical third parties) are not made in a timely manner, or are not successful in identifying and remediating all significant year 2000 issues, business interruptions or delays could occur and could have a material adverse impact on the Company's results and financial condition. However, based on the information the Company has gathered to date and the Company's expectations of its ability to remediate problems encountered, the Company currently believes that significant business interruptions that would have a material impact on the Company's results or financial condition will not be encountered. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ---------------------------------------------------------- See Part I, Item 7A. "QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK" in the Company's Form 10-K for the year ended December 31, 1998. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS ----------------- 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 portion of Note 4 of Notes to Interim Consolidated Financial Statements contained in this report under the heading "Asbestos Contingencies" is incorporated herein by reference. See Part I, Item 3. "LEGAL PROCEEDINGS - Asbestos-related Litigation" in the Company's Form 10-K for the year ended December 31, 1998. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- (a) Exhibits. Exhibit No. Exhibit ---------- ------- 3.1 Restated Certificate of Incorporation of Kaiser Aluminum Corporation (the "Company" or "KAC"), dated February 21, 1991 (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to the Registration Statement on Form S-1, dated June 11, 1991, filed by KAC, Registration No. 33-37895). 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 Amended and Restated Bylaws 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 Fourth Supplemental Indenture, dated as of March 31, 1999, to the Indenture, dated as of February 1, 1993, regarding KACC's 12-3/4% Senior Subordinated Notes due 2003. *4.2 Third Supplemental Indenture, dated as of March 31, 1999, to the Indenture, dated as of February 17, 1994, regarding KACC's 9-7/8% Senior Notes due 2002. *4.3 Second Supplemental Indenture, dated as of March 31, 1999, to the Indenture, dated as of October 23, 1996, regarding KACC's 10-7/8% Series B Senior Notes due 2006. *4.4 Second Supplemental Indenture, dated as of March 31, 1999, to the Indenture, dated as of December 23, 1996, regarding KACC's 10-7/8% Series D Senior Notes due 2006. *27 Financial Data Schedule. (b) Reports on Form 8-K. No Report on Form 8-K was filed by the Company during the quarter ended March 31, 1999. - --------------- * Filed herewith SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, who have signed this report on behalf of the registrant as the principal financial officer and principal accounting officer of the registrant, respectively. KAISER ALUMINUM CORPORATION /s/ John T. La Duc By:----------------------------- John T. La Duc Executive Vice President and Chief Financial Officer (Principal Financial Officer) /s/ Daniel D. Maddox By:----------------------------- Daniel D. Maddox Vice President and Controller (Principal Accounting Officer) Dated: May 7, 1999 EX-4 2 4.1 FOURTH SUPP IND 399 - --------------------------------------------------------------------------- KAISER ALUMINUM & CHEMICAL CORPORATION, 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 SIERRA MICROMILLS, LLC, KAISER TEXAS MICROMILL HOLDINGS, LLC, KAISER BELLWOOD CORPORATION, and KAISER TRANSACTION CORP., as Subsidiary Guarantors and STATE STREET BANK AND TRUST COMPANY, as Trustee FOURTH SUPPLEMENTAL INDENTURE Dated as of March 31, 1999 to INDENTURE Dated as of February 1, 1993 12-3/4% Senior Subordinated Notes due 2003 - --------------------------------------------------------------------------- FOURTH SUPPLEMENTAL INDENTURE, dated as of March 31, 1999, among KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware corporation (the "Company"), as Issuer, KAISER ALUMINA AUSTRALIA CORPORATION, a Delaware corporation ("KAAC"), ALPART JAMAICA INC., a Delaware corporation ("AJI"), KAISER JAMAICA CORPORATION, a Delaware corporation ("KJC"), KAISER FINANCE CORPORATION, a Delaware corporation ("Kaiser Finance"), KAISER MICROMILL HOLDINGS, LLC, a Delaware limited liability company ("KMH"), KAISER SIERRA MICROMILLS, LLC, a Delaware limited liability company ("KSM"), KAISER TEXAS SIERRA MICROMILLS, LLC, a Texas limited liability company ("Texas Sierra"), KAISER TEXAS MICROMILL HOLDINGS, LLC, a Texas limited liability company ("Texas Holdings"), KAISER BELLWOOD CORPORATION, a Delaware corporation ("Kaiser Bellwood"), and KAISER TRANSACTION CORP., a Delaware corporation ("Kaiser Transaction"), as Subsidiary Guarantors, and State Street Bank and Trust Company (as successor to The First National Bank of Boston), a Massachusetts trust company, as Trustee (the "Trustee"). WHEREAS, the Company, KAAC, AJI, KJC and The First National Bank of Boston executed an Indenture, dated as of February 1, 1993 (the "Original Indenture"), in respect of $400,000,000 aggregate principal amount of the Company's 12-3/4% Senior Subordinated Notes due 2003 (the "Securities"), and the Original Indenture was amended by a First Supplemental Indenture, dated as of May 1, 1993, by a Second Supplemental Indenture, dated as of February 1, 1996, and by a Third Supplemental Indenture, dated as of July 15, 1997 (the Original Indenture, as amended by such First Supplemental Indenture, Second Supplemental Indenture, and Third Supplemental Indenture being hereinafter referred to as the "Indenture"); and WHEREAS, State Street Bank and Trust Company is the successor to The First National Bank of Boston, as Trustee under the Indenture; and WHEREAS, Section 5.12 of the Indenture requires, under circumstances specified in Section 5.12, that the Company shall cause certain Subsidiaries of the Company to execute and deliver to the Trustee a supplemental indenture in form and substance satisfactory to the Trustee pursuant to which such Subsidiaries of the Company shall be named as additional Subsidiary Guarantors; and WHEREAS, all conditions and requirements necessary to make this Fourth Supplemental Indenture a valid, binding and legal instrument in accordance with its terms have been performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized; NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other and for the equal and ratable benefit of the Holders of the Securities, as follows: ARTICLE I AMENDMENTS Section 1. The Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, Kaiser Transaction and the Trustee hereby amend the Indenture and agree that Kaiser Transaction shall be a Subsidiary Guarantor for all purposes under the Indenture and the term "Subsidiary Guarantor" shall for all purposes under the Indenture specifically include Kaiser Transaction. ARTICLE II MISCELLANEOUS PROVISIONS Section 2.1. Terms Defined. For all purposes of this Fourth Supplemental Indenture, except as otherwise defined or unless the context otherwise requires, terms used in capitalized form in this Fourth Supplemental Indenture and defined in the Indenture have the meanings specified in the Indenture. Section 2.2. Indenture. Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all their terms shall remain in full force and effect. Section 2.3. Governing Law. This Fourth Supplemental Indenture shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be governed by and construed in accordance with the laws of said state without regard to the principles of the conflict of laws provisions thereof. Section 2.4. Successors and Assigns. All agreements of the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction in this Fourth Supplemental Indenture and the Securities shall bind its successors and assigns. Section 2.5. Multiple Counterparts. This Fourth Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. Section 2.6. Effectiveness. The provisions of this Fourth Supplemental Indenture shall become effective immediately upon its execution and delivery by the Trustee in accordance with the provisions of Article Eleven of the Indenture. Section 2.7. Trustee Disclaimer. The Trustee accepts the amendment of the Indenture effected by this Fourth Supplemental Indenture and agrees to execute the trust created by the Indenture as hereby amended, but only upon the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee, which terms and provisions shall in like manner define and limit its liabilities and responsibilities in the performance of the trust created by the Indenture as hereby amended, and, without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction, or for or with respect to (i) the validity, efficacy or sufficiency of this Fourth Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction by corporate action or limited liability company action or otherwise, (iii) the due execution hereof by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction, or (iv) the consequences (direct or indirect and whether deliberate or inadvertent) of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters. SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed, all as of the date first written above. KAISER ALUMINUM & CHEMICAL CORPORATION, as Issuer By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER ALUMINA AUSTRALIA CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary ALPART JAMAICA INC., as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER JAMAICA CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER FINANCE CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER MICROMILL HOLDINGS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER SIERRA MICROMILLS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER TEXAS SIERRA MICROMILLS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER TEXAS MICROMILL HOLDINGS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER BELLWOOD CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A.Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER TRANSACTION CORP., as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary STATE STREET BANK AND TRUST COMPANY, as Trustee By: ----------------------------------- Name: ----------------------------------- Title: ----------------------------------- Dated: March 31, 1999 Attest: ------------------------------ Name: ------------------------- Title: ------------------------- EX-4 3 4.2 THIRD SUPP IND 399 - --------------------------------------------------------------------------- KAISER ALUMINUM & CHEMICAL CORPORATION, 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 SIERRA MICROMILLS, LLC, KAISER TEXAS MICROMILL HOLDINGS, LLC, KAISER BELLWOOD CORPORATION, and KAISER TRANSACTION CORP., as Subsidiary Guarantors and U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee THIRD SUPPLEMENTAL INDENTURE Dated as of March 31, 1999 to INDENTURE Dated as of February 17, 1994 9-7/8% Senior Notes due 2002 - --------------------------------------------------------------------------- THIRD SUPPLEMENTAL INDENTURE, dated as of March 31, 1999, among KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware corporation (the "Company"), as Issuer, KAISER ALUMINA AUSTRALIA CORPORATION, a Delaware corporation ("KAAC"), ALPART JAMAICA INC., a Delaware corporation ("AJI"), KAISER JAMAICA CORPORATION, a Delaware corporation ("KJC"), KAISER FINANCE CORPORATION, a Delaware corporation ("Kaiser Finance"), KAISER MICROMILL HOLDINGS, LLC, a Delaware limited liability company ("KMH"), KAISER SIERRA MICROMILLS, LLC, a Delaware limited liability company ("KSM"), KAISER TEXAS SIERRA MICROMILLS, LLC, a Texas limited liability company ("Texas Sierra"), KAISER TEXAS MICROMILL HOLDINGS, LLC, a Texas limited liability company ("Texas Holdings"), KAISER BELLWOOD CORPORATION, a Delaware corporation ("Kaiser Bellwood"), and KAISER TRANSACTION CORP., a Delaware corporation ("Kaiser Transaction"), as Subsidiary Guarantors, and U.S. Bank Trust National Association (formerly known as First Trust National Association), a national banking association, as Trustee (the "Trustee"). WHEREAS, the Company, KAAC, AJI, KJC, Kaiser Finance, and the Trustee executed an Indenture, dated as of February 17, 1994 (the "Original Indenture"), in respect of $225,000,000 aggregate principal amount of the Company's 9-7/8% Senior Notes due 2002 (the "Securities"), and the Original Indenture was amended by a First Supplemental Indenture, dated as of February 1, 1996, and by a Second Supplemental Indenture, dated as of July 15, 1997 (the Original Indenture, as amended by such First Supplemental Indenture and Second Supplemental Indenture being hereinafter referred to as the "Indenture"); and WHEREAS, Section 4.12 of the Indenture requires, under circumstances specified in Section 4.12, that the Company shall cause certain Subsidiaries of the Company to execute and deliver to the Trustee a supplemental indenture in form and substance satisfactory to the Trustee pursuant to which such Subsidiaries of the Company shall be named as additional Subsidiary Guarantors; and WHEREAS, all conditions and requirements necessary to make this Third Supplemental Indenture a valid, binding and legal instrument in accordance with its terms have been performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized; NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other and for the equal and ratable benefit of the Holders of the Securities, as follows: ARTICLE I AMENDMENTS Section 1. The Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, Kaiser Transaction and the Trustee hereby amend the Indenture and agree that Kaiser Transaction shall be a Subsidiary Guarantor for all purposes under the Indenture and the term "Subsidiary Guarantor" shall for all purposes under the Indenture specifically include Kaiser Transaction. ARTICLE II MISCELLANEOUS PROVISIONS Section 2.1. Terms Defined. For all purposes of this Third Supplemental Indenture, except as otherwise defined or unless the context otherwise requires, terms used in capitalized form in this Third Supplemental Indenture and defined in the Indenture have the meanings specified in the Indenture. Section 2.2. Indenture. Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all their terms shall remain in full force and effect. Section 2.3. Governing Law. This Third Supplemental Indenture shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be governed by and construed in accordance with the laws of said state without regard to the principles of the conflict of laws provisions thereof. Section 2.4. Successors and Assigns. All agreements of the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction in this Third Supplemental Indenture and the Securities shall bind its successors and assigns. Section 2.5. Multiple Counterparts. This Third Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. Section 2.6. Effectiveness. The provisions of this Third Supplemental Indenture shall become effective immediately upon its execution and delivery by the Trustee in accordance with the provisions of Article Ten of the Indenture. Section 2.7. Trustee Disclaimer. The Trustee accepts the amendment of the Indenture effected by this Third Supplemental Indenture and agrees to execute the trust created by the Indenture as hereby amended, but only upon the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee, which terms and provisions shall in like manner define and limit its liabilities and responsibilities in the performance of the trust created by the Indenture as hereby amended, and, without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction or for or with respect to (i) the validity, efficacy or sufficiency of this Third Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction by corporate action or limited liability company action or otherwise, (iii) the due execution hereof by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction, or (iv) the consequences (direct or indirect and whether deliberate or inadvertent) of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters. SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, all as of the date first written above. KAISER ALUMINUM & CHEMICAL CORPORATION, as Issuer By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER ALUMINA AUSTRALIA CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary ALPART JAMAICA INC., as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER JAMAICA CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER FINANCE CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER MICROMILL HOLDINGS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER SIERRA MICROMILLS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER TEXAS SIERRA MICROMILLS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER TEXAS MICROMILL HOLDINGS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER BELLWOOD CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ---------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER TRANSACTION CORP., as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: ------------------------------ Name: ------------------------------ Title: ------------------------------ Dated: March 31, 1999 Attest: ----------------------------------- Name: ------------------------- Title: ------------------------- EX-4 4 4.3 SECOND SUPP INDB 399 - --------------------------------------------------------------------------- KAISER ALUMINUM & CHEMICAL CORPORATION, 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 SIERRA MICROMILLS, LLC, KAISER TEXAS MICROMILL HOLDINGS, LLC, KAISER BELLWOOD CORPORATION, and KAISER TRANSACTION CORP., as Subsidiary Guarantors and U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee SECOND SUPPLEMENTAL INDENTURE Dated as of March 31, 1999 to INDENTURE Dated as of October 23, 1996 10-7/8% Series B Senior Notes due 2006 - --------------------------------------------------------------------------- SECOND SUPPLEMENTAL INDENTURE, dated as of March 31, 1999, among KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware corporation (the "Company"), as Issuer, KAISER ALUMINA AUSTRALIA CORPORATION, a Delaware corporation ("KAAC"), ALPART JAMAICA INC., a Delaware corporation ("AJI"), KAISER JAMAICA CORPORATION, a Delaware corporation ("KJC"), KAISER FINANCE CORPORATION, a Delaware corporation ("Kaiser Finance"), KAISER MICROMILL HOLDINGS, LLC, a Delaware limited liability company ("KMH"), KAISER SIERRA MICROMILLS, LLC, a Delaware limited liability company ("KSM"), KAISER TEXAS SIERRA MICROMILLS, LLC, a Texas limited liability company ("Texas Sierra"), KAISER TEXAS MICROMILL HOLDINGS, LLC, a Texas limited liability company ("Texas Holdings"), KAISER BELLWOOD CORPORATION, a Delaware corporation ("Kaiser Bellwood"), and KAISER TRANSACTION CORP., a Delaware corporation ("Kaiser Transaction"), as Subsidiary Guarantors, and U.S. Bank Trust National Association (formerly known as First Trust National Association), a national banking association, as Trustee (the "Trustee"). WHEREAS, the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, and the Trustee executed an Indenture, dated as of October 23, 1996 (the "Original Indenture"), in respect of $175,000,000 aggregate principal amount of the Company's 10-7/8% Series B Senior Notes due 2006 (the "Securities"), and the Original Indenture was amended by a First Supplemental Indenture, dated as of July 15, 1997 (the Original Indenture, as amended by such First Supplemental Indenture hereinafter referred to as the "Indenture"); and WHEREAS, Section 4.12 of the Indenture requires, under circumstances specified in Section 4.12, that the Company shall cause certain Subsidiaries of the Company to execute and deliver to the Trustee a supplemental indenture in form and substance satisfactory to the Trustee pursuant to which such Subsidiaries of the Company shall be named as additional Subsidiary Guarantors; and WHEREAS, all conditions and requirements necessary to make this Second Supplemental Indenture a valid, binding and legal instrument in accordance with its terms have been performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized; NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other and for the equal and ratable benefit of the Holders of the Securities, as follows: ARTICLE I AMENDMENTS Section 1. The Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, Kaiser Transaction, and the Trustee hereby amend the Indenture and agree that Kaiser Transaction shall be a Subsidiary Guarantor for all purposes under the Indenture and the term "Subsidiary Guarantor" shall for all purposes under the Indenture specifically include Kaiser Transaction. ARTICLE II MISCELLANEOUS PROVISIONS Section 2.1. Terms Defined. For all purposes of this Second Supplemental Indenture, except as otherwise defined or unless the context otherwise requires, terms used in capitalized form in this Second Supplemental Indenture and defined in the Indenture have the meanings specified in the Indenture. Section 2.2. Indenture. Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all their terms shall remain in full force and effect. Section 2.3. Governing Law. This Second Supplemental Indenture shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be governed by and construed in accordance with the laws of said state without regard to the principles of the conflict of laws provisions thereof. Section 2.4. Successors and Assigns. All agreements of the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction in this Second Supplemental Indenture and the Securities shall bind its successors and assigns. Section 2.5. Multiple Counterparts. This Second Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. Section 2.6. Effectiveness. The provisions of this Second Supplemental Indenture shall become effective immediately upon its execution and delivery by the Trustee in accordance with the provisions of Article Ten of the Indenture. Section 2.7. Trustee Disclaimer. The Trustee accepts the amendment of the Indenture effected by this Second Supplemental Indenture and agrees to execute the trust created by the Indenture as hereby amended, but only upon the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee, which terms and provisions shall in like manner define and limit its liabilities and responsibilities in the performance of the trust created by the Indenture as hereby amended, and, without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction, or for or with respect to (i) the validity, efficacy or sufficiency of this Second Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction by corporate action or limited liability company action or otherwise, (iii) the due execution hereof by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction, or (iv) the consequences (direct or indirect and whether deliberate or inadvertent) of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters. SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, all as of the date first written above. KAISER ALUMINUM & CHEMICAL CORPORATION, as Issuer By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER ALUMINA AUSTRALIA CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary ALPART JAMAICA INC., as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER JAMAICA CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER FINANCE CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER MICROMILL HOLDINGS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER SIERRA MICROMILLS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER TEXAS SIERRA MICROMILLS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER TEXAS MICROMILL HOLDINGS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER BELLWOOD CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER TRANSACTION CORP., as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: ----------------------------------- Name: ----------------------------------- Title: ----------------------------------- Dated: March 31, 1999 Attest: ------------------------------ Name: ------------------------- Title: ------------------------- EX-4 5 4.4 SECOND SUPP INDD 399 - --------------------------------------------------------------------------- KAISER ALUMINUM & CHEMICAL CORPORATION, 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 SIERRA MICROMILLS, LLC, KAISER TEXAS MICROMILL HOLDINGS, LLC, KAISER BELLWOOD CORPORATION, and KAISER TRANSACTION CORP., as Subsidiary Guarantors and U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee SECOND SUPPLEMENTAL INDENTURE Dated as of March 31, 1999 to INDENTURE Dated as of December 23, 1996 10-7/8% Series D Senior Notes due 2006 - --------------------------------------------------------------------------- SECOND SUPPLEMENTAL INDENTURE, dated as of March 31, 1999, among KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware corporation (the "Company"), as Issuer, KAISER ALUMINA AUSTRALIA CORPORATION, a Delaware corporation ("KAAC"), ALPART JAMAICA INC., a Delaware corporation ("AJI"), KAISER JAMAICA CORPORATION, a Delaware corporation ("KJC"), KAISER FINANCE CORPORATION, a Delaware corporation ("Kaiser Finance"), KAISER MICROMILL HOLDINGS, LLC, a Delaware limited liability company ("KMH"), KAISER SIERRA MICROMILLS, LLC, a Delaware limited liability company ("KSM"), KAISER TEXAS SIERRA MICROMILLS, LLC, a Texas limited liability company ("Texas Sierra"), KAISER TEXAS MICROMILL HOLDINGS, LLC, a Texas limited liability company ("Texas Holdings"), KAISER BELLWOOD CORPORATION, a Delaware corporation ("Kaiser Bellwood"), and KAISER TRANSACTION CORP., a Delaware corporation ("Kaiser Transaction"), as Subsidiary Guarantors, and U.S. Bank Trust National Association (formerly known as First Trust National Association), a national banking association, as Trustee (the "Trustee"). WHEREAS, the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, and the Trustee executed an Indenture, dated as of December 23, 1996 (the "Original Indenture"), in respect of $50,000,000 aggregate principal amount of the Company's 10-7/8% Series D Senior Notes due 2006 (the "Securities"), and the Original Indenture was amended by a First Supplemental Indenture, dated as of July 15, 1997 (the Original Indenture, as amended by such First Supplemental Indenture hereinafter referred to as the "Indenture"); and WHEREAS, Section 4.12 of the Indenture requires, under circumstances specified in Section 4.12, that the Company shall cause certain Subsidiaries of the Company to execute and deliver to the Trustee a supplemental indenture in form and substance satisfactory to the Trustee pursuant to which such Subsidiaries of the Company shall be named as additional Subsidiary Guarantors; and WHEREAS, all conditions and requirements necessary to make this Second Supplemental Indenture a valid, binding and legal instrument in accordance with its terms have been performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized; NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other and for the equal and ratable benefit of the Holders of the Securities, as follows: ARTICLE I AMENDMENTS Section 1. The Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, Kaiser Transaction, and the Trustee hereby amend the Indenture and agree that Kaiser Transaction shall be a Subsidiary Guarantor for all purposes under the Indenture and the term "Subsidiary Guarantor" shall for all purposes under the Indenture specifically include Kaiser Transaction. ARTICLE II MISCELLANEOUS PROVISIONS Section 2.1. Terms Defined. For all purposes of this Second Supplemental Indenture, except as otherwise defined or unless the context otherwise requires, terms used in capitalized form in this Second Supplemental Indenture and defined in the Indenture have the meanings specified in the Indenture. Section 2.2. Indenture. Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all their terms shall remain in full force and effect. Section 2.3. Governing Law. This Second Supplemental Indenture shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be governed by and construed in accordance with the laws of said state without regard to the principles of the conflict of laws provisions thereof. Section 2.4. Successors and Assigns. All agreements of the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction in this Second Supplemental Indenture and the Securities shall bind its successors and assigns. Section 2.5. Multiple Counterparts. This Second Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. Section 2.6. Effectiveness. The provisions of this Second Supplemental Indenture shall become effective immediately upon its execution and delivery by the Trustee in accordance with the provisions of Article Ten of the Indenture. Section 2.7. Trustee Disclaimer. The Trustee accepts the amendment of the Indenture effected by this Second Supplemental Indenture and agrees to execute the trust created by the Indenture as hereby amended, but only upon the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee, which terms and provisions shall in like manner define and limit its liabilities and responsibilities in the performance of the trust created by the Indenture as hereby amended, and, without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction, or for or with respect to (i) the validity, efficacy or sufficiency of this Second Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction by corporate action or limited liability company action or otherwise, (iii) the due execution hereof by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood, and Kaiser Transaction, or (iv) the consequences (direct or indirect and whether deliberate or inadvertent) of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters. SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, all as of the date first written above. KAISER ALUMINUM & CHEMICAL CORPORATION, as Issuer By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER ALUMINA AUSTRALIA CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary ALPART JAMAICA INC., as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER JAMAICA CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER FINANCE CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Neimand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER MICROMILL HOLDINGS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER SIERRA MICROMILLS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER TEXAS SIERRA MICROMILLS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER TEXAS MICROMILL HOLDINGS, LLC, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER BELLWOOD CORPORATION, as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary KAISER TRANSACTION CORP., as a Subsidiary Guarantor By: /s/ Karen A. Twitchell ----------------------------------- Name: Karen A. Twitchell Title: Treasurer Dated: March 31, 1999 Attest: /s/ John Wm. Niemand II ----------------------------- Name: John Wm. Niemand II Title: Secretary U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: ----------------------------------- Name: ----------------------------------- Title: ----------------------------------- Dated: March 31, 1999 Attest: ------------------------------ Name: ------------------------- Title: ------------------------- EX-27 6 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the consolidated financial statements of the Company for the three months ended March 31, 1999, and is qualified in its entirety by reference to such financial statements. 0000811596 KAISER ALUMINUM CORPORATION 1,000,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 11 0 282 6 529 931 1,999 900 2,934 552 963 0 0 1 80 2,934 479 479 460 460 24 0 28 (58) (20) (38) 0 0 0 (38) (.48) (.48)
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