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




                       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, 2002

                          Commission file number 1-9447




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




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


             5847 SAN FELIPE, SUITE 2600, HOUSTON, TEXAS 77057-3268
               (Address of principal executive offices) (Zip Code)


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



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


     At April 30, 2002, the registrant had 80,606,241 shares of Common Stock
outstanding.


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


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

                         PART I - FINANCIAL INFORMATION


ITEM 1.   FINANCIAL STATEMENTS

                                            CONSOLIDATED BALANCE SHEETS
                                             (In millions of dollars)


                                                                                       March 31,       December 31,
                                                                                            2002               2001
                                                                                -----------------------------------
                                     ASSETS                                        (Unaudited)
Current assets:
   Cash and cash equivalents                                                    $         148.9     $        153.3
   Receivables:
      Trade, net                                                                          131.6              124.1
      Other                                                                                69.8               82.3
   Inventories                                                                            299.8              313.3
   Prepaid expenses and other current assets                                               29.4               86.2
                                                                                -----------------------------------
      Total current assets                                                                679.5              759.2

Investments in and advances to unconsolidated affiliates                                   64.2               63.0
Property, plant, and equipment - net                                                    1,201.6            1,215.4
Other assets                                                                              716.7              706.1
                                                                                -----------------------------------

      Total                                                                     $       2,662.0     $      2,743.7
                                                                                ===================================
                       LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities not subject to compromise - Current liabilities:
      Accounts payable                                                          $         137.3     $        167.4
      Accrued interest                                                                      2.3               35.4
      Accrued salaries, wages, and related expenses                                        76.4               88.9
      Accrued postretirement medical benefit obligation - current portion                  62.0               62.0
      Other accrued liabilities                                                            33.8              223.3
      Payable to affiliates                                                                56.2               52.9
      Long-term debt - current portion                                                       .6              173.5
                                                                                -----------------------------------
        Total current liabilities                                                         368.6              803.4

   Long-term liabilities                                                                  102.1              919.9
   Accrued postretirement medical benefit obligation                                       -                 642.2
   Long-term debt                                                                          43.1              700.8
                                                                                -----------------------------------
                                                                                          513.8            3,066.3

Liabilities subject to compromise                                                       2,554.9               -

Minority interests                                                                        118.7              118.5
Commitments and contingencies
Stockholders' equity:
   Common stock                                                                              .8                 .8
   Additional capital                                                                     539.4              539.1
   Accumulated deficit                                                                   (977.8)            (913.7)
   Accumulated other comprehensive income (loss)                                          (87.8)             (67.3)
                                                                                -----------------------------------
        Total stockholders' equity                                                       (525.4)            (441.1)
                                                                                -----------------------------------
             Total                                                              $       2,662.0     $      2,743.7
                                                                                ===================================


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


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


                                                                                          Quarter Ended
                                                                                            March 31,
                                                                                  ----------------------------
                                                                                            2002          2001
                                                                                  ----------------------------

Net sales                                                                         $       370.6  $      480.3
                                                                                  ----------------------------

Costs and expenses:
   Cost of products sold                                                                  342.0         444.5
   Depreciation and amortization                                                           22.5          21.3
   Selling, administrative, research and development, and general                          41.2          27.3
   Non-recurring operating charges (benefits), net                                          1.6        (228.2)
                                                                                  ----------------------------
        Total costs and expenses                                                          407.3         264.9
                                                                                  ----------------------------

Operating income (loss)                                                                   (36.7)        215.4

Other income (expense):
   Interest expense (excluding unrecorded contractual interest expense of
      $12.8 in 2002)                                                                      (13.5)        (27.9)
   Reorganization items                                                                    (9.6)          -
   Other - net                                                                              2.2           7.3
                                                                                  ----------------------------

Income (loss) before income taxes and minority interests                                  (57.6)        194.8

Provision for income taxes                                                                 (8.0)        (76.0)

Minority interests                                                                          1.5            .8
                                                                                  ----------------------------

Net income (loss)                                                                 $       (64.1) $      119.6
                                                                                  ============================

Earnings (loss) per share:
   Basic/Diluted                                                                  $        (.79) $       1.50
                                                                                  ============================

Weighted average shares outstanding (000):
   Basic                                                                                  80,723       79,610
   Diluted                                                                                80,723       79,610





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

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

                      For the Quarter Ended March 31, 2002


                                                                                                    Accumulated
                                                                                                          Other
                                                    Common       Additional     Accumulated       Comprehensive
                                                     Stock          Capital         Deficit       Income (Loss)       Total
                                            -------------------------------------------------------------------------------

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

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

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


                                       For the Quarter Ended March 31, 2001


                                                                                                    Accumulated
                                                                                                          Other
                                                    Common       Additional     Accumulated       Comprehensive
                                                     Stock          Capital         Deficit       Income (Loss)       Total
                                            -------------------------------------------------------------------------------
BALANCE, December  31, 2000                 $          .8   $        537.5   $      (454.3)   $           (1.8) $     82.2

   Net income                                         -               -              119.6               -           119.6
   Cumulative effect of accounting
      change, net of income tax
      provision of $.5                                -               -                -                   1.8         1.8
   Net unrealized losses on derivative
      instruments arising during the
      period, net of income tax benefit
      of $1.9                                         -               -                -                  (3.2)       (3.2)
   Less reclassification adjustment
      for net realized gains on
      derivative instruments included in
      net income, net of income tax
      provision of $6.7                               -               -                -                 (11.4)      (11.4)
                                                                                                                -----------
   Comprehensive income                               -               -                -                 -           106.8

   Incentive plan accretion                           -                 .1             -                 -              .1
                                            --------------  ---------------  --------------   ----------------- -----------
BALANCE, March 31, 2001                     $          .8   $        537.6   $      (334.7)   $          (14.6) $    189.1
                                            ==============  ===============  ==============   ================= ===========


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


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

                                                                                                      Quarter Ended
                                                                                                       March 31,
                                                                                                 -----------------------
                                                                                                       2002         2001
                                                                                                 -----------------------
Cash flows from operating activities:
   Net income (loss)                                                                             $   (64.1)   $   119.6
   Adjustments to reconcile net income (loss) to net cash provided by operating activities:
      Depreciation and amortization (including deferred financing costs of $.7 and $1.9)              23.2         23.2
      Non-cash reorganization items                                                                    5.5            -
      Gain on sale of real estate                                                                     (4.0)           -
      Equity in (earnings) loss of unconsolidated affiliates, net of distributions                    (1.5)         5.0
      Minority interests                                                                              (1.5)         (.8)
      Decrease (increase) in trade and other receivables                                               5.0        (11.8)
      Decrease in inventories                                                                         13.5          8.5
      Decrease (increase) in prepaid expenses and other current assets                                51.1         (3.3)
      Increase (decrease) in accounts payable (associated with operating activities)
        and accrued interest                                                                          41.6         (3.4)
      Decrease in payable to affiliates and other accrued liabilities                                (35.9)       (36.1)
      (Decrease) increase in accrued and deferred income taxes                                        (1.5)        64.7
      Net cash impact of changes in long-term assets and liabilities                                 (22.4)       (19.5)
      Other                                                                                           (1.3)        (1.1)
                                                                                                 -----------------------
        Net cash provided by operating activities                                                      7.7        145.0
                                                                                                 -----------------------

Cash flows from investing activities:
   Capital expenditures (including $36.1 related to Gramercy facility in 2001)                        (9.5)       (44.0)
   Decrease in accounts payable - Gramercy-related capital expenditures                                  -        (21.2)
   Net proceeds from disposition of property and investments and other                                 4.7           .1
                                                                                                 -----------------------
        Net cash used by investing activities                                                         (4.8)       (65.1)
                                                                                                 -----------------------

Cash flows from financing activities:
   Incurrence of financing costs                                                                      (7.3)           -
   Repayments under revolving credit facility, net                                                       -        (30.4)
   Repayments of long-term debt                                                                          -        (23.2)
   Redemption of minority interests' preference stock                                                    -         (5.5)
                                                                                                 -----------------------
        Net cash used by financing activities                                                         (7.3)       (59.1)
                                                                                                 -----------------------

Net increase (decrease) in cash and cash equivalents during the period                                (4.4)        20.8
Cash and cash equivalents at beginning of period                                                     153.3         23.4
                                                                                                 -----------------------
Cash and cash equivalents at end of period                                                       $   148.9    $    44.2
                                                                                                 =======================

Supplemental disclosure of cash flow information:
   Interest paid, net of capitalized interest of $.3 and $2.1                                    $     1.9    $    38.5
   Income taxes paid                                                                                   9.1         10.9


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


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

1.    REORGANIZATION PROCEEDINGS

General. On February 12, 2002, Kaiser Aluminum Corporation ("Kaiser" or the
"Company"), its wholly owned subsidiary, Kaiser Aluminum & Chemical
Corporation ("KACC"), and 13 of KACC's wholly owned subsidiaries filed separate
voluntary petitions in the United States Bankruptcy Court for the District of
Delaware (the "Court") for reorganization under Chapter 11 of the United States
Bankruptcy Code (the "Code"). On March 15, 2002, two additional wholly owned
subsidiaries of KACC filed petitions. The Company, KACC and the 15 subsidiaries
of KACC that have filed petitions are collectively referred to herein as the
"Debtors" and the Chapter 11 proceedings of these entities are collectively
referred to herein as the "Cases." For purposes of these financial statements,
the term "Filing Date" shall mean, with respect to any particular Debtor, the
date on which such Debtor filed its Case. The wholly owned subsidiaries of KACC
included in the Cases are: Kaiser Bellwood Corporation, Kaiser Aluminium
International, Inc., Kaiser Aluminum Technical Services, Inc., Kaiser Alumina
Australia Corporation (and its wholly owned subsidiary, Kaiser Finance
Corporation) and ten other entities with limited balances or activities. None of
KACC's non-U.S. affiliates were included in the Cases. The Cases are being
jointly administered with the Debtors managing their businesses in the ordinary
course as debtors-in-possession subject to the control and supervision of the
Court.

The necessity for filing the Cases was attributable to the liquidity and cash
flow problems of the Company arising in late 2001 and early 2002. The Company
was facing significant near-term debt maturities at a time of unusually weak
aluminum industry business conditions, depressed aluminum prices and a broad
economic slowdown that was further exacerbated by the events of September 11. In
addition, the Company had become increasingly burdened by asbestos litigation
(see Note 8) and growing legacy obligations for retiree medical and pension
costs. The confluence of these factors created the prospect of continuing
operating losses and negative cash flow, resulting in lower credit ratings and
an inability to access the capital markets.

The outstanding principal of, and accrued interest on, all long-term debt of the
Debtors became immediately due and payable as a result of the commencement of
the Cases. However, the vast majority of the claims in existence at the Filing
Date (including claims for principal and accrued interest and substantially all
legal proceedings) are stayed (deferred) while the Company and KACC continue to
manage the businesses. The Court has, upon motion by the Debtors, permitted the
Debtors to pay or otherwise honor certain unsecured pre-Filing Date claims,
including employee wages and benefits and customer claims in the ordinary course
of business, subject to certain limitations, and to fund, on an interim basis
pending a final determination of the issue by the Court, its joint ventures in
the ordinary course of business. The Debtors also have the right to assume or
reject executory contracts, subject to Court approval and certain other
limitations. In this context, "assumption" means that the Debtors agree to
perform their obligations and cure certain existing defaults under an executory
contract and "rejection" means that the Debtors are relieved from their
obligations to perform further under an executory contract and are subject only
to a claim for damages for the breach thereof. Any claim for damages resulting
from the rejection of an executory contract is treated as a general unsecured
claim in the Cases.

Generally, pre-Filing Date claims against the Debtors will fall into two
categories: secured and unsecured, including certain contingent or unliquidated
claims. Under the Code, a creditor's claim is treated as secured only to the
extent of the value of the collateral securing such claim, with the balance of
such claim being treated as unsecured. Unsecured and partially secured claims do
not accrue interest after the Filing Date. A fully secured claim, however, does
accrue interest after the Filing Date until the amount due and owing to the
secured creditor, including interest accrued after the Filing Date, is equal to
the value of the collateral securing such claim. The amount and validity of
pre-Filing Date contingent or unliquidated claims, although presently unknown,
ultimately may be established by the Court or by agreement of the parties. As a
result of the Cases, additional pre-Filing Date claims and liabilities may be
asserted, some of which may be significant. No provision has been included in
the accompanying financial statements for such potential claims and additional
liabilities that may be filed on or before a date to be fixed by the Court as
the last day to file proofs of claim.

The Company's and KACC's objective is to achieve the highest possible recoveries
for all creditors and stockholders, consistent with the Debtors' abilities to
pay and to continue the operation of their businesses. However, there can be no
assurance that the Debtors will be able to attain these objectives or to achieve
a successful reorganization. Further, there can be no assurance that the
liabilities of the Debtors will not be found in the Cases to exceed the fair
value of their assets. This could result in claims being paid at less than 100%
of their face value and the equity of the Company's stockholders being diluted
or cancelled.

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

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

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

As provided by the Code, the Debtors have the exclusive right to propose a plan
of reorganization for 120 days following the Filing Date. Due to the size and
complexity of the Cases, the Debtors intend to seek an extension of that 120-day
exclusive period. If the Debtors fail to file a plan of reorganization during
such exclusive period or any extension thereof, or if such plan is not accepted
by the requisite numbers of creditors and equity holders entitled to vote on the
plan, other parties in interest in the Cases may be permitted to propose their
own plan(s) of reorganization for the Debtors.

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

Financial Information. The following tables set forth certain condensed
financial information as of and for the three months ended March 31, 2002 for
the Debtors and non-Debtors:

                     CONDENSED CONSOLIDATING BALANCE SHEETS
                                 MARCH 31, 2002


                                                                                           Consolidation/
                                                                                             Elimination
                                                           Debtors         Non-Debtors         Entries        Consolidated
                                                      ----------------   ---------------  ----------------   --------------
Current assets                                        $         532.2    $        147.3   $          -       $       679.5
Investments in subsidiaries and affiliates                    1,394.1              33.5          (1,363.4)            64.2
Intercompany receivables (payables)                            (998.9)            998.9              -                 -
Property and equipment, net                                     810.9             390.7              -             1,201.6
Deferred income taxes                                           (66.6)             66.6              -                 -
Other assets                                                    707.2               9.5              -               716.7
                                                      ----------------   ---------------  ----------------   --------------
                                                      $       2,378.9    $      1,646.5   $      (1,363.4)   $     2,662.0
                                                      ================   ===============  ================   ==============

Liabilities not subject to compromise -
      Current liabilities                             $         275.1    $         93.5   $          -       $       368.6
      Other long-term liabilities                                52.5              49.6              -               102.1
      Long-term debt                                             21.1              22.0              -                43.1
Liabilities subject to compromise                             2,554.9              -                 -             2,554.9
Minority interests                                                 .7              99.2              18.8            118.7
Stockholders' equity                                           (525.4)          1,382.2          (1,382.2)          (525.4)
                                                      ----------------   ---------------  ----------------   --------------
                                                      $       2,378.9    $      1,646.5   $      (1,363.4)   $     2,662.0
                                                      ================   ===============  ================   ==============

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


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

Net sales                                             $         335.8    $        136.4   $        (101.6)   $       370.6
Costs and expenses                                              378.6             130.3            (101.6)           407.3
                                                      ----------------   ---------------  ----------------   --------------
Operating income (loss)                                         (42.8)              6.1              -               (36.7)
Interest expense                                                (13.1)              (.4)             -               (13.5)
Other income (expense), net                                       2.3               (.1)             -                 2.2
Reorganization items                                             (9.6)             -                                  (9.6)
Provision for income tax                                         (2.8)             (5.2)             -                (8.0)
Minority interests                                               -                  1.5              -                 1.5
Equity in income of subsidiaries                                  1.9              -                 (1.9)             -
                                                      ----------------   ---------------  ----------------   --------------
Net income (loss)                                     $         (64.1)   $          1.9   $          (1.9)   $       (64.1)
                                                      ================   ===============  ================   ==============

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


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

Net cash provided (used) by:
      Operating activities                            $          (1.8)   $          9.5   $          -       $         7.7
      Investing activities                                        2.2              (7.0)             -                (4.8)
      Financing activities                                       (7.3)             -                 -                (7.3)
                                                      ----------------   ---------------  ----------------   --------------
Net increase (decrease) in cash and cash
      equivalents during the period                              (6.9)              2.5              -                (4.4)
Cash and cash equivalents at beginning of period                151.6               1.7              -               153.3
                                                      ----------------   ---------------  ----------------   --------------
Cash and cash equivalents at end of period            $         144.7    $          4.2   $          -       $       148.9
                                                      ================   ===============  ================   ==============


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

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

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


Items considered current at December 31, 2001:
   Accounts payable                                                                $       60.7
   Accrued interest                                                                        44.1
   Other accrued liabilities (including asbestos liability of $130.0 - Note 8)            165.0
Items considered long-term at December 31, 2001:
   Accrued postretirement medical obligation                                              642.6
   Long-term liabilities(1)                                                               812.3
   Debt (Note 5)                                                                          830.2
                                                                                   -------------
                                                                                   $    2,554.9
                                                                                   =============

(1)   Long-term liabilities include pension liabilities of $211.1, environmental
      liability of $21.7 (Note 8) and asbestos liability of $472.0 (Note 8).

The classification of liabilities "not subject to compromise" versus liabilities
"subject to compromise" is based on currently available information and
analysis. As the Cases proceed and additional information and analysis is
completed or, as the Court rules on relevant matters, the classification of
amounts between these two categories may change. The amount of any such changes
could be significant.

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


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

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

2.    GENERAL

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

The foregoing unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the rules and regulations of the Securities and
Exchange Commission. Accordingly, these financial statements do not include all
of the disclosures required by 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, 2001. 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, 2002, are not necessarily
indicative of the results that may be expected for the year ending December 31,
2002.

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

The impact of outstanding stock options was excluded from the computation of
diluted earnings per share for the quarters ended March 31, 2002 and 2001, as
its effect would have been antidilutive.

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

Effective January 1, 2001, the Company began reporting derivative activities
pursuant to Statement of Financial Accounting Standards ("SFAS") No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
requires companies to recognize all derivative instruments as assets or
liabilities in the balance sheet and to measure those instruments at fair value
by "marking-to-market" all of their hedging positions at each period-end (see
Note 9). This contrasts with pre-2001 accounting principles, which generally
only required certain "non-qualifying" hedging positions to be marked-to-market.
Changes in the market value of the Company's open hedging positions resulting
from the mark-to-market process represent unrealized gains or losses. Such
unrealized gains or losses will fluctuate, based on prevailing market prices at
each subsequent balance sheet date, until the transaction date occurs. Under
SFAS No. 133, these changes are recorded as an increase or reduction in
stockholders' equity through either other comprehensive income or net income,
depending on the facts and circumstances with respect to the hedge and its
documentation. To the extent that changes in market values of the Company's
hedging positions are initially recorded in other comprehensive income, such
changes reverse out of other comprehensive income (offset by any fluctuations in
other "open" positions) and are recorded in net income (included in net sales or
cost of products sold, as applicable) when the subsequent physical transactions
occur. Additionally, under SFAS No. 133, if the level of physical transactions
ever falls below the net exposure hedged, "hedge" accounting must be terminated
for such "excess" hedges. In such an instance, the mark-to-market changes on
such excess hedges would be recorded in the income statement rather than in
other comprehensive income.

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

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

3.    INVENTORIES

The classification of inventories is as follows:

                                                                    March 31,   December  31,
                                                                         2002            2001
                                                               ------------------------------
Finished fabricated aluminum products                          $        29.1   $        30.4
Primary aluminum and work in process                                   100.0           108.3
Bauxite and alumina                                                     72.3            77.7
Operating supplies and repair and maintenance parts                     98.4            96.9
                                                               ------------------------------
      Total                                                    $       299.8   $       313.3
                                                               ==============================

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

4.    PACIFIC NORTHWEST OPERATING LEVEL

Future Power Supply and its Impact on Future Operating Rate. During October
2000, KACC signed a new power contract with the Bonneville Power Administration
("BPA") under which the BPA, starting October 1, 2001, was to provide KACC's
operations in the State of Washington with approximately 290 megawatts of power
through September 2006. The contract provides KACC with sufficient power to
fully operate KACC's Trentwood facility (which requires up to an approximate 40
megawatts) as well as approximately 40% of the combined capacity of KACC's Mead
and Tacoma aluminum smelting operations. The BPA has announced that it currently
intends to set rates under the contract in six month increments. The rate for
the initial period (from October 1, 2001 through March 31, 2002) was
approximately 46% higher than power costs under the prior contract. Power prices
for the April 2002 through September 2002 period are essentially unchanged from
the prior six-month rate. KACC cannot predict what rates will be charged in
future periods. Such rates will be dependent on such factors as the availability
of and demand for electrical power, which are largely dependent on weather, the
price for alternative fuels, particularly natural gas, as well as general and
regional economic and ecological factors. The contract also includes a
take-or-pay requirement and clauses under which KACC's power allocation could be
curtailed, or its costs increased, in certain instances. Under the contract,
KACC can only remarket its power allocation to reduce or eliminate take-or-pay
obligations. KACC is not entitled to receive any profits from any such
remarketing efforts. During October 2001, KACC and the BPA reached an agreement
whereby: (a) KACC would not be obligated to pay for potential take-or-pay
obligations in the first year of the contract; and (b) KACC retained its rights
to restart its smelter operations at any time. In return for the foregoing, KACC
granted the BPA certain limited power interruption rights in the first year of
the contract if KACC is operating its Northwest smelters. The Department of
Energy acknowledged that capital spending in respect of the Gramercy refinery
was consistent with the contractual provisions of the prior contract with
respect to the use of power sale proceeds. Beginning October 2002, unless there
is a further amendment to KACC's obligations, KACC could be liable for
take-or-pay costs under the BPA contract, and such amounts could be significant.
KACC is reviewing its rights and obligations in respect of the BPA contract in
light of Chapter 11 filings.

Subject to the limited interruption rights granted to the BPA (described above),
which expire September 30, 2002, or any impact resulting from the Cases, KACC
has sufficient power under contract, and retains the ability, to restart up to
40% (4.75 potlines) of its Northwest smelting capacity. Were KACC to want to
restart additional capacity (in excess of 4.75 potlines), it would have to
purchase additional power from the BPA or other suppliers. For KACC to make such
a decision, it would have to be able to purchase such power at a reasonable
price in relation to current and expected market conditions for a sufficient
term to justify its restart costs, which could be significant depending on the
number of lines restarted and the length of time between the shutdown and
restart. Given recent primary aluminum prices and the forward price of power in
the Northwest, it is unlikely that KACC would operate more than a portion of its
Northwest smelter capacity in the near future. Were KACC to restart all or a
portion of its Northwest smelting capacity, it would take between three to six
months to reach the full operating rate for such operations, depending upon the
number of lines restarted. Even after achieving the full operating rate,
operating only a portion of the Northwest capacity would result in
production/cost inefficiencies such that operating results would, at best, be
breakeven to modestly negative at long-term primary aluminum prices. However,
operating at such a reduced rate could, depending on prevailing economics,
result in improved cash flows as opposed to remaining curtailed and incurring
the Company's fixed and continuing labor and other costs. This is because KACC
is contractually liable for certain severance, supplemental unemployment
benefits and early retirement benefits for laid-off workers under KACC's
contract with the United Steelworkers of America ("USWA") during periods of
curtailment. As of March 31, 2002, all such contractual compensation costs have
been accrued for all USWA workers in excess of those expected to be required to
run the Northwest smelters at a rate up to the above stated 40% smelter
operating rate. These costs are expected to be incurred periodically through
September 2002. Costs associated with the USWA workers that KACC estimates would
be required to operate the smelters at an operating rate of up to 40% have been
accrued through early 2003, as KACC does not currently expect to restart the
Northwest smelters prior to that date. If such workers are not recalled prior to
the end of the first quarter of 2003, KACC could become liable for additional
early retirement costs. Such costs could be significant and could adversely
impact the Company's operating results and liquidity. The present value of such
costs could be in the $50.0 to $60.0 range. However, such costs would likely be
paid out over an extended period.

Power Sales. In response to the unprecedented high market prices for power in
the Pacific Northwest, KACC (first partially and then fully) curtailed the
primary aluminum production at the Tacoma and Mead, Washington smelters during
the last half of 2000, all of 2001 and the first quarter of 2002. As a result of
the curtailments, as permitted under the BPA contract, the Company sold the
power that it had under contract through September 30, 2001 (the end of the
prior contract period). In connection with such power sales in the first quarter
of 2001, the Company recorded net pre-tax gains of approximately $228.2. Gross
proceeds were offset by employee-related expenses and other fixed commitments.
The resulting net gain was reflected as Non-recurring operating charges
(benefits), net (see Note 12).

5.    DEBT

Debt consists of the following:

                                                                                        March 31,      December 31,
                                                                                             2002              2001
--------------------------------------------------------------------------------  ---------------  ----------------
Secured:
      Post-Petition Credit Agreement                                              $         -                N/A
      Credit Agreement                                                                     N/A     $          -
      Alpart CARIFA Loans - (fixed and variable rates) due 2007, 2008                       22.0              22.0
      7.6% Solid Waste Disposal Revenue Bonds due 2027                                      19.0              19.0
      Other non-Debtor borrowings (fixed rate)                                               2.7               2.7
Unsecured (reflected as Liabilities Subject to Compromise):
      9 7/8% Senior Notes due 2002, net                                                    172.8             172.8
      10 7/8% Senior Notes due 2006, net                                                   225.0             225.4
      12 3/4% Senior Subordinated Notes due 20                                             400.0             400.0
      Other borrowings (fixed and variable rates)                                           32.4              32.4
                                                                                  ---------------  ----------------
Total                                                                                      873.9             874.3

Less - Current portion                                                                        .6             173.5
        Pre-Filing Date claims included in liabilities subject to
            compromise (Note 1)                                                            830.2              -
                                                                                  ---------------  ----------------
Long-term debt                                                                    $         43.1   $         700.8
                                                                                  ===============  ================


DIP Facility. On February 12, 2002, the Company and KACC entered into a
post-petition credit agreement with a group of lenders for debtor-in-possession
financing (the "DIP Facility") which provides for a secured, revolving line of
credit through the earlier of February 12, 2004, the effective date of a plan of
reorganization or voluntary termination by the Company. KACC is able to borrow
under the DIP Facility by means of revolving credit advances and letters of
credit (up to $125.0) in an aggregate amount equal to the lesser of $300.0 or a
borrowing base relating to eligible accounts receivable, eligible inventory and
eligible fixed assets reduced by certain reserves, as defined in the DIP
Facility agreement. The DIP Facility is guaranteed by the Company, the Debtor
subsidiaries and two wholly owned non-Debtor subsidiaries, Kaiser Jamaica
Corporation and Alpart Jamaica Inc. Interest on any outstanding balances will
bear a spread over either a base rate or LIBOR, at KACC's option. The Court
signed a final order approving the DIP Facility on March 19, 2002. At April 30,
2002, $152.7 (of which $83.9 could be used for additional letters of credit) was
available to the Company under the DIP Facility and no amounts were outstanding
under the revolving credit facility. The Company expects that the borrowing base
amount will increase by approximately $50.0 once certain appraisal information
is provided to the lenders.

The Company believes that the ruling by the National Labor Relations Board
("NLRB") administrative law judge (see Note 8) should not have an adverse impact
on the DIP Facility or availability thereunder because this is a pre-petition
contingent liability and, to the extent that back pay or related amounts are
ultimately awarded, such amounts are not expected to be paid during the term of
the DIP Facility. While access to the DIP Facility is important to the
Company's continuing operations, in the short-term, the Company believes KACC's
existing cash resources (approximately $140.0 as of April 30, 2002) should be
more than adequate to meet its near-term liquidity requirements until any
uncertainties with respect to the DIP Facility are resolved.  However, no
assurance can be given in this regard.

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

6.    INCOME TAXES

The income tax provision of $8.0 for the three months ended March 31, 2002
relates to foreign income taxes. For the three months ended March 31, 2002, as a
result of the Cases, the Company did not recognize an income tax benefit for the
loss incurred from its domestic operations or any U.S. tax benefit for foreign
income taxes. Instead, the increase in federal and state deferred tax assets as
a result of the loss was offset by an equal increase in valuation allowances.
See Note 9 of Notes to Consolidated Financial Statements in the Company's Form
10-K for the year ended December 31, 2001 for additional information regarding
the Deferred Tax Assets and Valuation Allowances.

7.    INCIDENT AT GRAMERCY FACILITY

General. In July 1999, KACC's Gramercy, Louisiana alumina refinery was
extensively damaged by an explosion in the digestion area of the plant. A number
of employees were injured in the incident, several of them severely. As a result
of the incident, alumina production at the facility was completely curtailed.
Construction on the damaged part of the facility began during the first quarter
of 2000. Initial production at the plant commenced during the middle of December
2000. However, construction was not substantially completed until the third
quarter of 2001. During the first nine months of 2001, the plant operated at
approximately 68% of its newly-rated estimated annual capacity of 1,250,000
tons. During the fourth quarter of 2001, the plant operated at approximately 90%
of its newly-rated capacity. By the end of February 2002, the plant was
operating at just below 100% of its newly-rated capacity. The facility is now
focusing its efforts on achieving its full operating efficiency. During the
quarters ended March 31, 2002 and 2001, abnormal Gramercy-related start-up costs
totaled approximately $3.0 and $19.0, respectively. The abnormal costs in 2001
resulted from operating the plant in an interim mode pending completion of
construction at well less than the expected production rate or full efficiency.
During the first quarter of 2002, since the plant was operating at near full
capacity, the amount of start-up costs was substantially reduced as compared to
prior periods.

Contingencies. The Gramercy incident resulted in a significant number of
individual and class action lawsuits being filed against KACC and others
alleging, among other things, property damage, business interruption losses by
other businesses and personal injury. After these matters were consolidated, the
individual claims against KACC were settled for amounts which, after the
application of insurance, were not material to KACC. Further, an agreement has
been reached with the class plaintiffs for an amount which, after the
application of insurance, is not material to KACC. While the class settlement
remains subject to court approval and while certain plaintiffs may opt out of
the settlement, the Company does not currently believe that this presents any
material risk to KACC. Finally, KACC faces new claims from certain parties to
the litigation regarding the interpretation of and alleged claims concerning
certain settlement and other agreements made during the course of the
litigation. The aggregate amount of damages threatened in these claims could, in
certain circumstances, be substantial. However, KACC does not currently believe
these claims will result in any material liability to the Company.

KACC currently believes that any amount from unsettled workers' compensation
claims from the Gramercy incident in excess of the coverage limitations will not
have a material effect on the Company's consolidated financial position or
liquidity. However, while unlikely, it is possible that as additional facts
become available, additional charges may be required and such charges could be
material to the period in which they are recorded.

See Note 3 of Notes to Consolidated Financial Statements in the Company's Form
10-K for the year ended December 31, 2001 for additional information regarding
the Gramercy incident.

8.    COMMITMENTS AND CONTINGENCIES

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

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

Based on the Company's evaluation of these and other environmental matters, the
Company has established environmental accruals, primarily related to potential
solid waste disposal and soil and groundwater remediation matters. At March 31,
2002, the balance of such accruals was $61.0 (of which $21.7 were included in
Liabilities subject to compromise - see Note 1). As of December 31, 2001, the
accruals were primarily included in Long-term liabilities. These environmental
accruals represent the Company's estimate of costs reasonably expected to be
incurred based on presently enacted laws and regulations, currently available
facts, existing technology, and the Company's assessment of the likely
remediation action to be taken. The Company expects that these remediation
actions will be taken over the next several years and estimates that annual
expenditures to be charged to these environmental accruals will be approximately
$1.3 to $12.2 for the years 2002 through 2006 and an aggregate of approximately
$24.8 thereafter.

As additional facts are developed and definitive remediation plans and necessary
regulatory approvals for implementation of remediation are established or
alternative technologies are developed, changes in these and other factors may
result in actual costs exceeding the current environmental accruals. The Company
believes that it is reasonably possible that costs associated with these
environmental matters may exceed current accruals by amounts that could range,
in the aggregate, up to an estimated $24.0. As the resolution of these matters
is subject to further regulatory review and approval, no specific assurance can
be given as to when the factors upon which a substantial portion of this
estimate is based can be expected to be resolved. However, the Company is
currently working to resolve certain of these matters.

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

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

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

The following table presents the changes in number of such claims pending for
the three months ended March 31, 2002 and the year ended December 31, 2001.


                                                                                Year Ended
                                                          Quarter Ended      December  31,
                                                         March 31, 2002               2001
----------------------------------------------------  -----------------  -----------------
Number of claims at beginning of period                        112,800            110,800
Claims received                                                  5,300             34,000
Claims settled or dismissed                                     (6,100)           (32,000)
                                                      -----------------  -----------------

Number of claims at end of period                              112,000            112,800
                                                      =================  =================

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

The Company maintains a liability for estimated asbestos-related costs for
claims filed to date and an estimate of claims to be filed over a 10 year period
(i.e., through 2012). At March 31, 2002, the balance of such accrual was $602.0,
all of which was included in Liabilities subject to compromise (see Note 1). As
of December 31, 2001, this accrual of $621.3 was included in Other accrued
liabilities ($130.0) and Long-term liabilities ($491.3). The Company's estimate
is based on the Company's view, at each balance sheet date, of the current and
anticipated number of asbestos-related claims, the timing and amounts of
asbestos-related payments, the status of ongoing litigation and settlement
initiatives, and the advice of Wharton Levin Ehrmantraut & Klein, P.A., with
respect to the current state of the law related to asbestos claims. However,
there are inherent uncertainties involved in estimating asbestos-related costs
and the Company's actual costs could exceed the Company's estimates due to
changes in facts and circumstances after the date of each estimate. Further,
while the Company does not presently believe there is a reasonable basis for
estimating asbestos-related costs beyond 2012 and, accordingly, no accrual has
been recorded for any costs which may be incurred beyond 2012, the Company
expects that the plan of reorganization process may require an estimation of
KACC's entire asbestos-related liability, which may go beyond 2012, and that
such costs could be substantial.

The Company believes that KACC has insurance coverage available to recover a
substantial portion of its asbestos-related costs. Although the Company has
settled asbestos-related coverage matters with certain of its insurance
carriers, other carriers have not yet agreed to settlements and disputes with
certain carriers exist. The timing and amount of future recoveries from these
and other insurance carriers will depend on the pendency of the Cases and on the
resolution of any disputes regarding coverage under the applicable insurance
policies. The Company believes that substantial recoveries from the insurance
carriers are probable and additional amounts may be recoverable in the future if
additional claims are added. The Company reached this conclusion after
considering its prior insurance-related recoveries in respect of
asbestos-related claims, existing insurance policies, and the advice of Heller
Ehrman White & McAuliffe LLP with respect to applicable insurance coverage
law relating to the terms and conditions of those policies. During 2000, KACC
filed suit against a group of its insurers, after negotiations with certain of
the insurers regarding an agreement covering both reimbursement amounts and the
timing of reimbursement payments were unsuccessful. During October 2001, the
court ruled favorably on a number of issues, and during February 2002, an
intermediate appellate court also ruled favorably on an issue involving
coverage. The rulings did not result in any changes to the Company's estimates
of its current or future asbestos-related insurance recoveries. Other courts may
hear additional issues from time to time. Moreover, KACC expects to amend its
lawsuit during the second quarter of 2002 to add additional insurers who may
have responsibility to respond for asbestos-related costs. Given the expected
significance of probable future asbestos-related payments, the receipt of timely
and appropriate payments from such insurers is critical to a successful plan of
reorganization and KACC's long-term liquidity.

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


                                                                     March 31,      December  31,
                                                                          2002               2001
----------------------------------------------------------    ----------------  -----------------
Liability (current portion of $130.0 in 2001)                 $         610.1   $          621.3
Receivable (included in Other assets)(1)                                505.3              501.2
                                                              ----------------  -----------------

                                                              $         104.8   $          120.1
                                                              ================  =================

(1)   The asbestos-related receivable was determined on the same basis as the
      asbestos-related cost accrual. However, no assurances can be given that
      KACC will be able to project similar recovery percentages for future
      asbestos-related claims in excess of those accrued or that the amounts
      related to future asbestos-related claims will not exceed KACC's aggregate
      insurance coverage. As of March 31, 2002 and December 31, 2001, $46.0 and
      $33.0, respectively, of the receivable amounts relate to costs paid. The
      remaining receivable amounts relate to costs that are expected to be paid
      by KACC in the future.


                                                           Quarter Ended      Inception
                                                           March 31, 2002       To Date
                                                           --------------  --------------
Payments made, including related legal costs............   $        17.1   $       355.7
Insurance recoveries....................................             2.0           223.6
                                                           --------------  --------------
                                                           $        15.1   $       132.1
                                                           ==============  ==============

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

Management continues to monitor claims activity, the status of lawsuits
(including settlement initiatives), legislative developments, and costs incurred
in order to ascertain whether an adjustment to the existing accruals should be
made to the extent that historical experience may differ significantly from the
Company's underlying assumptions. This process resulted in the Company recording
charges of $7.5 (included in Other income (expense) - see Note 12) in the first
quarter of 2001, for asbestos claims, net of expected insurance recoveries,
based on recent cost and other trends experienced by KACC and other companies.
Additional asbestos-related claims are likely to be filed against KACC as a part
of the Chapter 11 process. Management cannot reasonably predict the ultimate
number of such claims or the amount of the associated liability. However, it is
likely that such amounts could exceed, perhaps significantly, the liability
amounts reflected in the Company's consolidated financial statements, which (as
previously stated) is only reflective of an estimate of claims over a ten-year
period. KACC's obligations in respect of the currently pending and future
asbestos-related claims will ultimately be determined (and resolved) as a part
of the overall Chapter 11 proceedings. It is anticipated that resolution of
these matters will be a lengthy process. Management will continue to
periodically reassess its asbestos-related liabilities and estimated insurance
recoveries as the Cases proceed. However, absent unanticipated developments such
as asbestos-related legislation, material developments in other asbestos-related
proceedings or in the Company's or KACC's Chapter 11 proceedings, it is not
anticipated that the Company will have sufficient information to reevaluate its
asbestos-related obligations and estimated insurance recoveries until much later
in the Cases. Any adjustments ultimately deemed to be required as a result of
the reevaluation of KACC's asbestos-related liabilities or estimated insurance
recoveries could have a material impact on the Company's future financial
statements.

Labor Matters. In connection with the USWA strike and subsequent lock-out by
KACC, which was settled in September 2000, certain allegations of unfair labor
practices ("ULPs") were filed with the NLRB by the USWA. As previously
disclosed, KACC responded to all such allegations and believes that the
allegations are without merit. Twenty-two of twenty-four allegations of ULPs
previously brought against KACC by the USWA were dismissed. A trial before an
administrative law judge for the two remaining allegations concluded in
September 2001. In May 2002, the administrative law judge ruled against KACC in
respect of the two remaining ULP allegations and recommended that the NLRB award
back wages, plus interest, less any earnings of the workers during the period of
the lockout. The administrative law judge's ruling did not contain any specific
amount of proposed award and is not self-executing. The USWA has publicly stated
that any such amount could be in the $180.0 - $200.0 range. The NLRB had
previously notified the Court that, if the USWA ultimately were to prevail, the
value of the claim could be in excess of $100.0. Depending on the ultimate
amount of any interest due and amount of offsetting employee earnings and other
factors, were the USWA ultimately to prevail it is possible that the amount of
the award could exceed $100.0. It is also possible that the Company may
ultimately prevail on appeal and that no loss will occur.

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

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

Dispute with MAXXAM. In March 2002, MAXXAM filed a declaratory action with the
Court asking the Court to find that it has no further obligations to the Debtors
under certain tax allocation agreements. See Note 9 of Notes to Consolidated
Financial Statements in the Company's Form 10-K for additional information
regarding the tax allocation agreements. MAXXAM asserts that the agreements are
personal contracts and financial accommodations which cannot be assumed under
the Code. At March 31, 2002, KACC had a receivable from MAXXAM of $35.0
(included in Other assets) outstanding under the tax allocation agreement in
respect of various tax contingencies in an equal amount (reflected in Long-term
liabilities). The Company believes that MAXXAM's position is without merit and
that MAXXAM will be required to satisfy its obligations under the tax allocation
agreements.

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

9. DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING PROGRAMS

In conducting its business, KACC uses various instruments, including forward
contracts and options, to manage the risks arising from fluctuations in aluminum
prices, energy prices and exchange rates. KACC enters into hedging transactions
from time to time to limit its exposure resulting from (1) its anticipated sales
of alumina, primary aluminum, and fabricated aluminum products, net of expected
purchase costs for items that fluctuate with aluminum prices, (2) the energy
price risk from fluctuating prices for natural gas, fuel oil and diesel oil used
in its production process, and (3) foreign currency requirements with respect to
its cash commitments with foreign subsidiaries and affiliates.

Because the agreements underlying KACC's hedging positions provided that the
counterparties to the hedging contracts could liquidate KACC's hedging positions
if KACC filed for reorganization, KACC chose to liquidate these positions in
advance of the Filing Date. Proceeds from the liquidation totaled approximately
$42.2. Gains or losses associated with these liquidated positions have been
deferred and are being recognized over the original hedging periods as the
underlying purchases/sales are still expected to occur. The amount of
gains/losses deferred are as follows: gains of $30.2 for aluminum contracts,
losses of $5.0 for Australian dollars and losses of $1.9 for energy contracts.
As of March 31, 2002, the unamortized net gain was approximately $17.8.

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

During late 1999 and early 2000, the Company entered into certain aluminum
contracts with a counterparty. While the Company believed that the transactions
were consistent with its stated hedging objectives, these positions did not
qualify for treatment as a "hedge" under accounting guidelines. Accordingly, the
positions were marked-to-market each period. The mark-to-market pre-tax gains of
$8.5 associated for these positions during the first quarter of 2001, together
with the amount discussed in the paragraph above, were recorded in Other income
(expense) (see Note 12). During the fourth quarter of 2001, the Company
liquidated all of the remaining positions.

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

The Company anticipates that, subject to the approval of the Court and
prevailing economic conditions, it may reinstitute an active hedging program to
protect the interests of its constituents. However, no assurance can be given as
to when or if the appropriate Court approval will be obtained or when or if such
hedging activities will restart.

10.   TRUST FUNDS

In the first quarter of 2002, KACC paid an aggregate of $10.0 into two separate
trusts funds in respect of (a) potential directors and officers liability
obligations and (b) certain obligations attributable to certain management
compensation agreements. These payments resulted in an approximate $5.0 increase
in Other assets and an approximate $5.0 charge to Corporate selling,
administrative, research and development, and general expenses in the first
quarter of 2002.

11.   SETTLEMENT CHARGE

During the first quarter of 2002, the Company recorded a $6.4 non-cash charge
(included in Corporate selling, administrative, research and development, and
general expense) for additional pension expense. The charge was recorded because
the lump sum payments from the assets of KACC's salaried employee pension plan
exceeded a stipulated level prescribed by Generally Accepted Accounting
Standards ("GAAP"). Accordingly, a partial "settlement," as defined by GAAP, was
deemed to have occurred. Under GAAP, if a partial "settlement" occurs, a charge
must be recorded for a portion of any unrecognized net actuarial losses not
reflected in the consolidated balance sheet. The portion of the total
unrecognized actuarial losses of the plan ($75.0) that must be recorded as a
charge is the relative percentage of the total projected benefit obligation of
the plan ($300.0) settled by the lump sum payments ($25.0). To the extent that
additional retirements occur over the balance of 2002 and the salaried retirees
exercise their lump sum payment option under the salaried employees pension
plan, additional charges to earnings will occur. The amount of such charges
could be significant.

12.   OTHER NON-RECURRING ITEMS

Non-Recurring Operating Charges (Benefits), Net. The income (loss) impact
associated with non-recurring operating charges (benefits), net for the three
months ended March 31, 2002 and 2001, was as follows:


                                                                       Quarter Ended
                                                                         March 31,
                                                                  ----------------------
                                                                        2002        2001
                                                                  ----------------------
Net gains on power sales (Primary Aluminum segment) (Note 4)      $       -   $   228.2
Restructuring charges (Bauxite & Alumina segment)                  (1.6)          -
                                                                  ----------  ----------
                                                                  $    (1.6)  $   228.2
                                                                  ==========  ==========

The first quarter 2002 restructuring charges were part of the Company's
performance improvement initiative ("program") which was launched in 2001 and
was designed to increase operating cash flow, generate benefits and improve the
Company's financial flexibility. The charges consisted primarily of third-party
costs. Additional cash and non-cash charges may be required in the future as the
program continues. Such additional charges could be material.

Other Income (Expense). Amounts included in other income (expense), other than
interest expense, for the quarters ended March 31, 2002 and 2001, included the
following pre-tax gains (losses):



                                                           2002        2001
                                                     ----------------------
Gain on sale of real estate                          $     4.0   $       -
Mark-to-market gains (losses) (Note 9)                     (.4)       15.3
Asbestos-related charge (Note 8)                             -        (7.5)
                                                     ----------  ----------
Special items, net                                         3.6         7.8
All other, net                                            (1.4)        (.5)
                                                     ----------  ----------
                                                     $     2.2   $     7.3
                                                     ==========  ==========

During January 2002, KACC, in the ordinary course of business, sold certain
non-operating property for total proceeds of approximately $4.5.

13.   INTERIM OPERATING SEGMENT INFORMATION

The Company uses a portion of its bauxite, alumina and primary aluminum
production for additional processing at its downstream facilities. Transfers
between business units are made at estimated market prices. The accounting
policies of the segments are the same as those described in Note 2 of Notes to
Consolidated Financial Statements in the Company's Form 10-K for the year ended
December 31, 2001. 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 15 of Notes to Consolidated Financial
Statements in the Company's Form 10-K for the year ended December 31, 2001.

Financial information by operating segment for the quarters ended March 31, 2002
and 2001 is as follows:

                                                               2002         2001
                                                         -----------------------
Net Sales:
   Bauxite and Alumina:
      Net sales to unaffiliated customers                $   113.6    $   137.6
      Intersegment sales                                      23.2         36.0
                                                         ----------   ----------
                                                             136.8        173.6
                                                         ----------   ----------
   Primary Aluminum:
      Net sales to unaffiliated customers                     71.0        103.0
      Intersegment sales                                       1.7          2.5
                                                         ----------   ----------
                                                              72.7        105.5
                                                         ----------   ----------
   Flat-Rolled Products                                       48.3         95.9
   Engineered Products                                       103.8        120.6
   Commodities Marketing(1)                                   11.0         (2.6)
   Minority Interests                                         22.9         25.8
   Eliminations                                              (24.9)       (38.5)
                                                         ----------   ----------
                                                         $   370.6    $   480.3
                                                         ==========   ==========
Operating income (loss):
   Bauxite and Alumina                                   $    (3.2)   $    (6.8)
   Primary Aluminum                                           (3.2)         4.5
   Flat-Rolled Products                                       (9.9)         3.2
   Engineered Products                                         3.3          2.7
   Commodities Marketing                                      10.7         (2.0)
   Eliminations                                                 .5          3.8
   Corporate and Other (Notes 10 and 11)                     (33.3)       (18.2)
   Non-Recurring Operating (Charges) Benefits,
      Net (Note 12)                                           (1.6)       228.2
                                                         ----------   ----------
                                                         $   (36.7)   $   215.4
                                                         ==========   ==========
Depreciation and amortization:
   Bauxite and Alumina                                   $     9.8    $     8.5
   Primary Aluminum                                            5.3          5.3
   Flat-Rolled Products                                        3.9          4.1
   Engineered Products                                         3.2          3.1
   Corporate and Other                                          .3           .3
                                                         ----------   ----------
                                                         $    22.5    $    21.3
                                                         ==========   ==========

(1)   Net sales in 2002 primarily represent partial recognition of deferred
      gains from hedges closed prior to the commencement of the Cases. Net sales
      in 2001 represent net settlements with third-party brokers for maturing
      derivative positions.

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

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

This section contains statements which constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements appear in a number of places in this section (see, for example,
"Recent' Events and Developments," "Results of Operations," and "Liquidity and
Capital Resources"). Such statements can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "estimates,"
"will," "should," "plans" or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of strategy.
Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may vary materially from those in the
forward-looking statements as a result of various factors. These factors include
the effectiveness of management's strategies and decisions, general economic and
business conditions, developments in technology, new or modified statutory or
regulatory requirements, and changing prices and market conditions. This section
and Part I, Item 1. "Business - Factors Affecting Future Performance" in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001, each
identify other factors that could cause actual results to vary. No assurance can
be given that these are all of the factors that could cause actual results to
vary materially from the forward-looking statements.

REORGANIZATION PROCEEDINGS

On February 12, 2002, the Company, its wholly owned subsidiary, Kaiser Aluminum
& Chemical Corporation ("KACC"), and 13 of KACC's wholly owned subsidiaries,
filed separate voluntary petitions in the United States Bankruptcy Court for the
District of Delaware (the "Court") for reorganization under Chapter 11 of the
United States Bankruptcy Code. (the "Code") On March 15, 2002, two additional
wholly owned subsidiaries of KACC filed petitions. The Company, KACC and the 15
subsidiaries of KACC that have filed petitions are collectively referred to
herein as the "Debtors" and the Chapter 11 proceedings of these entities are
collectively referred to herein as the "Cases." For purposes of this report, the
term "Filing Date" shall mean with respect to any particular Debtor, the date on
which such Debtor filed its Case. The wholly owned subsidiaries of KACC included
in the Cases are: Kaiser Bellwood Corporation, Kaiser Aluminium International,
Inc., Kaiser Aluminum Technical Services, Inc., Kaiser Alumina Australia
Corporation (and its wholly owned subsidiary, Kaiser Finance Corporation) and
ten other entities with limited balances or activities. None of KACC's non-U.S.
affiliates were included in the Cases. The Cases are being jointly administered
with the Debtors managing their businesses in the ordinary course as
debtors-in-possession subject to the control and supervision of the Court.

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

The Company's and KACC's objective is to achieve the highest possible recoveries
for all creditors and stockholders, consistent with the Debtors' abilities to
pay and to continue the operation of their businesses. However, there can be no
assurance that the Debtors will be able to attain these objectives or to achieve
a successful reorganization. Further, there can be no assurance that the
liabilities of the Debtors will not be found in the Cases to exceed the fair
value of their assets. This could result in claims being paid at less than 100%
of their face value and the equity of the Company's stockholders being diluted
or cancelled. At this time, it is not possible to predict the outcome of the
Cases, in general, or the effect of the Cases on the businesses of the Debtors
or on the interests of creditors and stockholders.

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

RECENT EVENTS AND DEVELOPMENTS

Pacific Northwest Power Sales and Operating Level. During 2001, KACC kept its
Northwest smelters curtailed and sold the remaining power available that it had
under contract through September 2001. KACC has the right to purchase sufficient
power from the BPA to operate its Trentwood facility as well as approximately
40% of the capacity of its Northwest aluminum smelting operations. Given recent
primary aluminum prices and the forward price of power in the Northwest, it is
unlikely that KACC would operate more than a portion of its Northwest smelting
capacity in the near future. Operating only a portion of the Northwest capacity
would result in production/cost inefficiencies such that operating results
would, at best be breakeven to modestly negative at long-term primary aluminum
prices. However, operating at such a reduced rate could, depending on prevailing
economics, result in improved cash flows as opposed to remaining curtailed and
incurring the Company's fixed and continuing labor and other costs. This is
because KACC is liable for certain severance, supplemental unemployment and
early retirement benefits for the USWA workers at the curtailed smelters. A
substantial portion of such costs has been accrued through early 2003. However,
additional accruals may be required depending on when the USWA workers are
recalled and when the smelting operations are restarted. Such amounts could be
material with a present value in the $50.0 to $60.0 million range. However, most
of such costs would be related to pension and post-retirement medical benefits
and would likely be paid out over an extended period. Additionally, beginning
October 2002, KACC could be liable for certain take-or-pay obligations under the
BPA contract and such amounts could be significant. See Note 4 of Notes to
Interim Consolidated Financial Statements for additional information on KACC's
contract rights and obligations and additional detail regarding possible
incremental liabilities with respect to the USWA workers.

Valco Operating Level. During late 2000, the Company's 90%-owned Volta Aluminium
Company Limited ("Valco"), the Government of Ghana ("GoG") and the Volta River
Authority ("VRA") reached an agreement, subject to Parliamentary approval, that
would provide sufficient power for Valco to operate at least three and one-half
of its five potlines through 2017. However, Parliamentary approval has not been
received and, effective March 3, 2002, the GoG reduced Valco's power allocation
forcing Valco to curtail one of its four operating potlines. Valco has objected
to the power curtailment and expects to seek remedies from the GoG. Valco has
met with the GoG and the VRA and anticipates such discussions will continue in
respect of the current and future power situation. Valco currently expects to
operate approximately three potlines during the remainder of 2002. However, no
assurances can be provided that Valco will continue to receive sufficient power
to operate three potlines for the balance of 2002 or thereafter.

Strategic Initiatives. KACC's strategy is to improve its financial results by:
increasing the competitiveness of its existing plants; continuing its cost
reduction initiatives; adding assets to businesses it expects to grow; pursuing
divestitures of its non-core businesses; and strengthening its financial
position by divesting of part or all of its interests in certain operating
assets.

In May 2001, the Company announced that it had launched a performance
improvement initiative (the "program") designed to increase operating cash flow,
generate cash from inventory reduction and improve the Company's financial
flexibility.

The program aims to achieve the following five specific objectives:

   -  Significant and systemic reductions in unit production costs through the
      expanded use of lean manufacturing initiatives at Company-managed
      facilities. The Company expects to see the biggest incremental
      improvements at the Alpart alumina refinery in Jamaica and the Valco
      primary aluminum smelter in Ghana;

   -  Additional efficiencies at the Gramercy facility that are incremental to
      those efficiencies already included in the Company's adjusted first
      quarter 2001 annual operating cash flow run rate;

   -  Increased production at the Alpart alumina refinery through improved
      efficiency and de-bottlenecking. Alpart's production is expected to reach
      an annualized run rate of more than 1.7 million tons during 2003, up from
      the facility's current annual rated capacity of 1.45 million tons. As a
      result, KACC's share of Alpart's annual production would increase by more
      than 160,000 tons. This would substantially offset the impact of the
      September 2001 sale of an 8.3% interest in QAL on alumina available to
      KACC for internal use or third party sales;

   -  A sustained reduction in annualized overhead-related expenses or related
      cash outflows at the Corporate office and in the commodities businesses
      through redesign of work and consolidation of functions primarily in the
      Corporate office; and

   -  A one-time cash benefit from reduction in inventories, primarily at the
      Company's majority-owned, non-U.S. commodity operations, and through
      disposition of non-operating properties and equipment.

During the first quarter of 2002, the Company recorded charges of $1.6 million
(see Note 11 of Notes to Interim Consolidated Financial Statements) in
connection with the program. Additional cash and non-cash charges may be
required in the future as the program continues. Such additional charges could
be material.

Start-up Related Costs at Gramercy Facility. Initial production at KACC's
Gramercy, Louisiana, alumina refinery, which had been curtailed since July 1999
as a result of an explosion in the digestion area of the plant, commenced during
the middle of December 2000. Construction at the facility was substantially
completed during the third quarter of 2001. During the first nine months of
2001, the plant operated at approximately 68% of its newly-rated estimated
annual capacity of 1,250,000 tons. During the fourth quarter of 2001, the plant
operated at approximately 90% of its newly-rated capacity. By the end of
February 2002, the plant was operating at just below 100% of its newly-rated
capacity. The facility is now focusing its efforts on achieving its full
operating efficiency. During the quarters ended March 31, 2002 and 2001,
abnormal Gramercy-related start-up costs totaled approximately $3.0 million and
$19.0 million, respectively. The abnormal costs in 2001 resulted from operating
the plant in an interim mode pending completion of construction at well less
than the expected production rate or full efficiency. During the first quarter
of 2002, since the plant was operating at near full capacity, the amount of
start-up costs was substantially reduced compared to prior periods.

Labor Matters. From September 1998 through September 2000, KACC and the United
Steelworkers of America ("USWA") were involved in a labor dispute as a result of
the September 1998 USWA strike and the subsequent "lock-out" by KACC in February
1999. Although the USWA dispute was settled and the workers returned to the
facilities, two allegations of unfair labor practices ("ULPs") in connection
with the USWA strike and subsequent lock-out by KACC remain to be resolved. In
May 2002, an administrative law judge of the National Labor Relations Board
("NLRB") ruled against KACC in respect of the two remaining ULP allegations and
recommended that the NLRB award back wages, plus interest, less any earnings of
the workers during the period of the lockout. The Company continues to believe
that the allegations are without merit and will vigorously defend its position.
KACC will appeal the ruling of the administrative law judge to the full NLRB.
Any outcome from the NLRB appeal would be subject to additional appeals in a
United States Circuit Court of Appeals by the general counsel of the NLRB, the
USWA or KACC. This process could take several years. Because the Company
believes that it may prevail in the appeals process, the Company has not
recognized a charge in response to the adverse ruling. However, it is possible
that, if the Company's appeal(s) are not ultimately successful, a charge in
respect of this matter may be required in one or more future periods and the
amount of such charge(s) could be significant. Any amounts ultimately determined
by a court to be payable in this matter will be dealt with in the overall
context of the Debtors' plan of reorganization and will be subject to
compromise. Accordingly, any payments that may ultimately be required in respect
of this matter would likely only be paid upon or after the Company's emergence
from the Cases. See Note 8 of Notes to Interim Consolidated Financial Statements
for additional discussions of the ULP charges.

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, 2002 and 2001. 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 15 of Notes to Consolidated
Financial Statements in the Company's Form 10-K for the year ended December 31,
2001, for further information regarding segments.

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


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


                                                                       Quarter Ended
                                                                        March 31,
                                                                 ------------------------
                                                                         2002        2001
                                                                 ------------------------
Shipments: (000 tons)
     Alumina
       Third Party                                                     625.2       664.0
       Intersegment                                                    134.9       182.9
                                                                 ------------ -----------
           Total Alumina                                               760.1       846.9
                                                                 ------------ -----------
     Primary Aluminum
       Third Party                                                      51.3        63.9
       Intersegment                                                      1.1         1.5
                                                                 ------------ -----------
           Total Primary Aluminum                                       52.4        65.4
                                                                 ------------ -----------
     Flat-Rolled Products                                               12.5        25.0
                                                                 ------------ -----------
     Engineered Products                                                29.3        32.9
                                                                 ------------ -----------
Average Realized Third Party Sales Price:
     Alumina (per ton)                                           $       169  $      194
     Primary Aluminum (per pound)                                $       .63  $      .73
Net Sales:
     Bauxite and Alumina
       Third Party (includes net sales of bauxite)               $     113.6  $    137.6
       Intersegment                                                     23.2        36.0
                                                                 ------------ -----------
           Total Bauxite and Alumina                                   136.8       173.6
                                                                 ------------ -----------
     Primary Aluminum
       Third Party                                                      71.0       103.0
       Intersegment                                                      1.7         2.5
                                                                 ------------ -----------
           Total Primary Aluminum                                       72.7       105.5
                                                                 ------------ -----------
     Flat-Rolled Products                                               48.3        95.9
     Engineered Products                                               103.8       120.6
     Commodities Marketing(1)                                           11.0        (2.6)
     Minority Interests                                                 22.9        25.8
     Eliminations                                                      (24.9)      (38.5)
                                                                 ------------ -----------
           Total Net Sales                                       $     370.6  $    480.3
                                                                 ============ ===========

Operating Income (Loss):
     Bauxite and Alumina                                         $      (3.2) $     (6.8)
     Primary Aluminum                                                   (3.2)        4.5
     Flat-Rolled Products                                               (9.9)        3.2
     Engineered Products                                                 3.3         2.7
     Commodities Marketing                                              10.7        (2.0)
     Eliminations                                                         .5         3.8
     Corporate and Other (Notes 10 and 11)                             (33.3)      (18.2)
     Non-Recurring Operating (Charges) Benefits,
       Net (Note 12)                                                    (1.6)      228.2
                                                                 ------------ -----------
           Total Operating Income (Loss)                         $     (36.7) $    215.4
                                                                 ============ ===========
Net Income (Loss)                                                $     (64.1) $    119.6
                                                                 ============ ===========
Capital Expenditures                                             $       9.5  $     44.0
                                                                 ============ ===========

(1)  Net sales in 2002 primarily represent partial recognition of deferred gains
     from hedges closed prior to the commencement of the Cases. Net sales in
     2001 represent net settlements with third-party brokers for maturing
     derivative positions.

OVERVIEW
The Company's operating results are sensitive to changes in prices of alumina,
primary aluminum, and fabricated aluminum products, and also depend to a
significant degree on the volume and mix of all products sold and on KACC's
hedging strategies. Primary aluminum prices have historically been subject to
significant cyclical price fluctuations. See Notes 2 and 9 of Notes to Interim
Consolidated Financial Statements for a discussion of KACC's hedging activities.

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

During the three months ended March 31, 2001, the Average Midwest United States
transaction price ("AMT price") per pound of primary aluminum was $.75 per
pound. During the three months ended March 31, 2002, the average AMT price was
$.66 per pound. The average AMT price for primary aluminum for the week ended
April 27, 2002 was $.67 per pound.

QUARTER ENDED MARCH 31, 2002, COMPARED TO QUARTER ENDED MARCH 31, 2001

SUMMARY
The Company reported a net loss of $64.1 million, or $.79 of basic loss per
common share, for the quarter ended March 31, 2002, compared to net income of
$119.6 million, or $1.50 of basic income per common share, for the same period
of 2001. However, results for the quarters ended March 31, 2002 and 2001
included material special items as summarized below:


                                                                       Quarter Ended
                                                                         March 31,
                                                                  ----------------------
                                                                        2002        2001
                                                                  ----------   ---------
As reported, earnings (loss) per common share                     $    (.79)   $   1.50
Less material special (gains) losses:
     Non-recurring operating charges (income)                           .02       (1.75)
     Other (income) expense - special items, net                       (.04)       (.06)
     Abnormal Gramercy start-up costs                                   .04         .15
     Excess overhead and other fixed costs associated with
         curtailed Northwest smelting operations                          -         .04
                                                                  ----------   ---------
                                                                  $    (.77)   $   (.12)
                                                                  ==========   =========

Net sales in the first quarter of 2002 totaled $370.6 million compared to $480.3
million in the first quarter of 2001.

Bauxite and Alumina. Third party net sales of alumina for the quarter ended
March 31, 2002, decreased 17% as compared to the same period in 2001, due to a
13% decrease in third party average realized prices and a 6% decrease in third
party shipments. The decrease in average realized prices was due to a decrease
in primary aluminum market prices to which the Company's third-party alumina
sales contracts are linked. The decrease in quarter-over-quarter shipments
resulted primarily from the sale of an approximately 8.3% interest in Queensland
Alumina Limited in the third quarter of 2001.

Intersegment net sales of alumina for the quarter ended March 31, 2002 decreased
36% as compared to the same period in 2001 as the result of a 26% decrease in
intersegment shipments and a 13% decrease in intersegment average realized
prices. The decrease in shipments was primarily due to reduced shipments to the
Primary aluminum business unit caused by Valco's curtailment of one of its
operating potlines during the first quarter of 2002 (see "Recent Events and
Developments - Valco Operating Level" above). The decrease in the intersegment
average realized prices is the result of a decrease in primary aluminum prices
from period to period as intersegment transfers are made on the basis of primary
aluminum market prices on a lagged basis of one month.

Despite substantially lower quarter over quarter prices and volumes, segment
operating loss for the quarter ended March 31, 2002 decreased 53% compared to
the comparable period in 2001. This improvement resulted primarily from a
decrease in abnormal Gramercy related start-up costs from approximately $19.0
million in 2001 to approximately $3.0 million in 2002 due to the substantial
improvement in the production rate at the Gramercy facility (see "Recent Events
and Developments - Start-up Related Costs at Gramercy Facility" above).

Primary Aluminum. Third party net sales of primary aluminum decreased 31% for
the first quarter of 2002 as compared to the same period in 2001 as a result of
a 14% decrease in third party average realized prices and a 20% decrease in
third party shipments. The decrease in the average realized prices was primarily
due to the decrease in primary aluminum market prices. The decrease in shipments
was primarily due to the curtailment of the rod operations at the Tacoma
facility in the second quarter of 2001.

Since the beginning of 2001, the Northwest smelters have been completely
curtailed and are expected to remain curtailed at least through early 2003. As a
result, intersegment net sales of primary aluminum for both 2002 and 2001 have
been minimal. Beginning in the first quarter of 2001, the Flat-rolled products
business unit began purchasing its own primary aluminum rather than relying on
the Primary aluminum business unit to supply its aluminum requirements through
production or third-party purchases. The Engineered products business unit was
already responsible for purchasing the majority of its primary aluminum
requirements.

Segment operating loss (before non-recurring items) for the quarter ended March
31, 2002, was worse than the comparable period in 2001. The primary reason for
the decrease was the decreases in the average realized prices and net shipments
discussed above. Segment operating income for the quarter ended March 31, 2001,
discussed above, excludes non-recurring net power sales gains of $228.2 million.

Flat-Rolled Products. Net sales of flat-rolled products decreased significantly
during the first quarter 2002 as compared to 2001 primarily due to a 50%
decrease in shipments. Current period shipments were adversely affected by the
reduced demand for general engineering heat-treat products and can lid and tab
stock, due to a weak market, and a decline in aerospace products demand due to
the continuing effects of the September 11, 2001 events.

Segment operating loss for the quarter ended March 31, 2002, was worse than the
comparable period in 2001 primarily due to the decrease in shipments discussed
above.

Engineered Products. Net sales of engineered products decreased by 14% during
the first quarter 2002 as compared to 2001, due to a 11% decrease in product
shipments and a 3% decrease in average realized prices. The decrease in product
shipments was the result of reduced general engineering and general aviation
shipments due to a weak market demand offset by a modest increase in
transportation shipments. The decrease in average realized prices was primarily
due to a decrease in metal prices.

The change in segment operating income for the quarter ended March 31, 2002, as
compared to the comparable period in 2001 was primarily attributable to a
reduction in energy and overhead costs offset in part by the price and volume
factors described above.

Commodities Marketing. In 2002, net sales for this segment primarily represents
recognition of deferred gains from hedges closed prior to the commencement of
the Cases. See Note 9 of Notes to Interim Consolidated Financial Statements.
Gains or losses associated with these liquidated positions have been deferred in
Other comprehensive income and are being recognized as income and costs over the
original hedging periods as the underlying purchases/sales occur. In 2001, net
sales for this segment represented net settlements with third-party brokers for
maturing derivative positions.

Segment operating income for the quarter ended March 31, 2002, increased
compared to the comparable period in 2001 due to the higher prices implicit in
the liquidation of the positions in January 2002 versus the prevailing market
prices during the first quarter of 2001.

The Company anticipates that, subject to the approval of the Court and
prevailing economic conditions, it may reinstitute an active hedging program to
protect the interests of its constituents. However, no assurance can be given as
to when or if the appropriate Court approval will be obtained or when or if such
hedging activities will restart.

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. The increase in corporate operating expenses in the quarter ended
March 31, 2002, as compared to the comparable period in 2001 was due largely to
higher medical and pension cost accruals for active and retired employees,
payments of approximately $5.0 million to a trust in respect of certain
management compensation agreements (see Note 10 of Notes to Interim Consolidated
Financial Statements) and a non-cash pension charge of $6.4 million related to
certain previously unrecognized net actuarial losses (see Note 11 of Notes to
Interim Consolidated Financial Statements).

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

Operating Activities. At March 31, 2002, the Company had working capital of
$310.9 million, compared with a negative working capital of $44.2 million at
December 31, 2001. In addition to normal operating changes, the increase in
working capital primarily resulted from the reclassification of pre-petition
liabilities to be resolved in connection with the Cases (accounts payable,
accrued interest, other accrued liabilities and current portion of long-term
debt) to "Liabilities subject to compromise."

Investing Activities. Capital expenditures during the quarter ended March 31,
2002, were $9.5 million. The 2002 capital expenditures were incurred to improve
production efficiency and reduce operating costs at the Company's facilities.
Total consolidated capital expenditures are expected to be between $40.0 and
$75.0 million per annum in each of 2002 and 2003 (of which approximately 15% is
expected to be funded by the Company's minority partners in certain foreign
joint ventures).

Financing Activities and Liquidity. On February 12, 2002, the Company and KACC
entered into the DIP Facility which provides for a secured, revolving line of
credit through the earlier of February 12, 2004, the effective date of a plan of
reorganization or voluntary termination by the Company. KACC is able to borrow
under the DIP Facility by means of revolving credit advances and letters of
credit (up to $125.0 million) in an aggregate amount equal to the lesser of
$300.0 million or a borrowing base relating to eligible accounts receivable,
eligible inventory and eligible fixed assets reduced by certain reserves, as
defined in the DIP Facility agreement. The DIP Facility is guaranteed by the
Company and certain significant subsidiaries of KACC. Interest on any
outstanding balances will bear a spread over either a base rate or LIBOR, at
KACC's option. The Court signed a final order approving the DIP Facility on
March 19, 2002.

The Company believes that the ruling by the NLRB administrative law judge (See
Note 8 of Notes to Interim Consolidated Financial Statements) should not have an
adverse impact on the DIP Facility or availability thereunder because this is a
pre-petition contingent liability and, to the extent that back pay or related
amounts are ultimately awarded, such amounts are not expected to be paid during
the term of the DIP Facility. While access to the DIP Facility is important to
the Company's continuing operations, in the short-term, the Company believes
KACC's existing cash resources (approximately $140.0 million as of April 30,
2002) should be more than adequate to meet its near term liquidity requirements
until any uncertainties with respect to the DIP are resolved. However, no
assurance can be given in this regard.

The Company and KACC believe that the cash and cash equivalents, cash flows from
operations and cash available from the DIP Facility will provide sufficient
working capital to allow the Company to meet its required obligations during the
pendency of the Cases. At April 30, 2002, cash and cash equivalents were
approximately $140.0 million, there were no outstanding borrowings under the
revolving credit facility and outstanding letters of credit were approximately
$41.1 million. As of April 30, 2002, $152.7 million (of which $83.9 million
could be used for additional letters of credit) was available to the Company
under the DIP Facility. The Company expects the borrowing base amount will
increase by approximately $50.0 million once certain appraisal information is
provided to the lenders.

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

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

CRITICAL ACCOUNTING POLICIES
The critical accounting policies included under Part II, Item 7. "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
Critical Accounting Policies" in the Company's Form 10-K for the year ended
December 31, 2001, is incorporated herein by reference.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information included under Part II, Item 7A. "QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK" in the Company's Form 10-K for the year ended
December 31, 2001, is incorporated herein by reference.


                           PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

Reference is made to Part I, Item 3. "LEGAL PROCEEDINGS" in the Company's Form
10-K for the year ended December 31, 2001 for information concerning material
legal proceedings with respect to the Company.

Labor Matters. In May 2002, an NLRB administrative law judge ruled against KACC
in respect of the two remaining ULP allegations and recommended that the NLRB
award back wages, plus interest, less any earnings of the workers during the
period of the lockout. The administrative law judge's ruling did not contain any
specific amount of proposed award and is not self-executing. The USWA has
publicly stated that any such amount could be in the $180.0 million - $200.0
million range. The Company continues to believe that the allegations are without
merit and will vigorously defend its position. KACC will appeal the ruling of
the administrative law judge to the full NLRB. Any outcome from the NLRB appeal
would be subject to additional appeals in a United States Circuit Court of
Appeals by the general counsel of the NLRB, the USWA or KACC. This process could
take several years. Any amounts ultimately determined by a court to be payable
in this matter will be dealt with in the overall context of the Debtors' plan of
reorganization and will be subject to compromise. Accordingly, any payments that
may ultimately be required in respect of this matter would likely only be paid
upon or after the Company's emergence from the Cases. See Note 8 of Notes to
Interim Consolidated Financial Statements for further information of these
proceedings.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

As a result of the commencement of the Cases, the outstanding principal of and
accrued interest on, all long-term debt of KACC became immediately due and
payable. However, claims against the Debtors for principal and accrued interest
are stayed while the Debtors continue business operations as
debtors-in-possession. See Notes 1 and 5 of Notes to Interim Consolidated
Financial Statements for additional information regarding the effects of the
commencement of the Cases on the Company's long-term debt. Such information is
incorporated herein by reference.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits.

          None

     (b)  Reports on Form 8-K.

          On January 15, 2002, under Item 5 "Other Events" of Form 8-K, the
          Company filed a Current Report on Form 8-K reporting that it would
          begin discussions within the next few weeks with its note holders
          regarding the potential restructuring of its 9 7/8% Senior Notes,
          10 7/8% Senior Notes and 12 3/4% Senior Subordinated Notes.

          On January 31, 2002, under Item 5 "Other Events" of Form 8-K, the
          Company filed a Current Report on Form 8-K reporting that it did not
          intend to make the February 1, 2002 interest payment on its 12 3/4%
          Senior Subordinates Notes and that it was considering restructuring
          alternatives that could result in the February 15, 2002 non-payment of
          principal and interest on its 9 7/8% Senior Notes. The Company also
          reported the signing of a Waiver and Consent Agreement, dated January
          29, 2002, between the Company, KACC and the financial institutions
          that are parties to the Credit Agreement relating to the waiver of any
          default or event of default arising out of the non-payment of interest
          and principal when due of the 12 3/4% Senior Subordinated Notes and
          9 7/8% Senior Notes.

          On February 25, 2002, under Item 3 "Bankruptcy or Receivership" of
          Form 8-K, the Company filed a Current Report on Form 8-K reporting
          that on February 12, 2002, it and certain of its subsidiaries,
          including KACC, had filed voluntary petitions under Chapter 11 of the
          United States Bankruptcy Code in the United States Bankruptcy Court
          for the District of Delaware. The Company also reported that in
          connection with the filings, the Company and KACC had entered into a
          $300 million debtor-in-possession financing agreement.

          No other Reports on Form 8-K were filed by the Company during the
          quarter ended March 31, 2002. However, on April 30, 2002, under Item 4
          "Changes in Registrant's Certifying Accountant" of Form 8-K, the
          Company filed a Current Report on Form 8-K, reporting that on April
          30, 2002, it had dismissed Arthur Andersen LLP as its principal
          independent accountant and had engaged Deloitte & Touche LLP as
          its independent public accountant. The change was effective
          immediately.  Also, on May 15, 2002, under Item 5 "Other Events" of
          Form 8-K, the Company filed a Current Report on Form 8-K, reporting an
          unfavorable ruling it received on May 14, 2002 in respect to certain
          unfair labor practice claims.

                                    SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, who have signed this report on behalf of
the registrant as the principal financial officer and principal accounting
officer of the registrant, respectively.


                                     KAISER ALUMINUM CORPORATION


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



                                     KAISER ALUMINUM CORPORATION


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


Dated:   May 20, 2002