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                       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 SEPTEMBER 30, 2003


                          Commission file number 1-9447




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




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


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


                                 (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  /  /

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

      At October 31, 2003, the registrant had 80,048,307 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
                                   (Unaudited)
                            (In millions of dollars)


                                                                                    September 30,    December 31,
                                                                                        2003             2002
                                                                                   --------------   ---------------
                                     ASSETS
Current assets:
   Cash and cash equivalents                                                       $        50.2    $         78.7
   Receivables:
      Trade, less allowance for doubtful receivables of $10.2 and $11.0                    117.2             103.1
      Other                                                                                 33.6              46.4
   Inventories                                                                             227.7             254.9
   Prepaid expenses and other current assets                                                36.4              33.5
                                                                                   --------------   ---------------
      Total current assets                                                                 465.1             516.6

Investments in and advances to unconsolidated affiliates                                    75.9              69.7
Property, plant, and equipment - net                                                       970.8           1,009.9
Other assets                                                                               534.6             629.2
                                                                                   --------------   ---------------

      Total                                                                        $     2,046.4    $      2,225.4
                                                                                   ==============   ===============
                  LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities not subject to compromise -
   Current liabilities:
      Accounts payable                                                             $       142.1    $        130.6
      Accrued interest                                                                       4.4               2.9
      Accrued salaries, wages, and related expenses                                         40.6              46.7
      Accrued postretirement medical benefit obligation - current portion                   60.2              60.2
      Other accrued liabilities                                                             45.8              64.2
      Payable to affiliates                                                                 49.2              28.1
      Long-term debt - current portion                                                       1.2                .9
                                                                                   --------------   ---------------
        Total current liabilities                                                          343.5             333.6

   Long-term liabilities                                                                    85.3              86.9
   Long-term debt                                                                           42.3              42.7
                                                                                   --------------   ---------------
                                                                                           471.1             463.2

Liabilities subject to compromise                                                        2,755.6           2,726.0

Minority interests                                                                         123.0             121.8
Commitments and contingencies
Stockholders' equity (deficit):
   Common stock                                                                               .8                .8
   Additional capital                                                                      539.3             539.9
   Accumulated deficit                                                                  (1,597.5)         (1,382.4)
   Accumulated other comprehensive income (loss)                                          (245.9)           (243.9)
                                                                                   --------------   ---------------
      Total stockholders' equity (deficit)                                              (1,303.3)         (1,085.6)
                                                                                   --------------   ---------------
        Total                                                                      $     2,046.4    $      2,225.4
                                                                                   ==============   ===============



   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 and per share amounts)


                                                                      Quarter Ended             Nine Months Ended
                                                                      September 30,               September 30,
                                                                ------------------------    ------------------------
                                                                   2003         2002           2003         2002
                                                                -----------  -----------    ----------  ------------

Net sales                                                       $    327.1   $    348.0     $ 1,024.9   $   1,104.9
                                                                -----------  -----------    ----------  ------------

Costs and expenses:
   Cost of products sold                                             343.3        337.6       1,063.2       1,040.3
   Depreciation and amortization                                      18.0         22.6          55.4          67.6
   Selling, administrative, research and development, and
      general                                                         25.8         27.1          77.8          97.6
   Other operating charges, net                                       15.0         25.3          15.6          34.4
                                                                -----------  -----------    ----------  ------------
      Total costs and expenses                                       402.1        412.6       1,212.0       1,239.9
                                                                -----------  -----------    ----------  ------------

Operating loss                                                       (75.0)       (64.6)       (187.1)       (135.0)

Other income (expense):
   Interest expense (excluding unrecorded contractual
      interest expense of $23.8
      for both quarters and $71.2 and $60.3
      for the nine-month periods, respectively)                       (2.9)        (2.2)         (8.2)        (18.2)
   Reorganization items                                               (5.4)        (8.5)        (20.2)        (24.6)
   Other - net                                                        (6.7)        (1.5)         (8.4)          1.0
                                                                -----------  -----------    ----------  ------------

Loss from continuing operations before income taxes,
   minority interests and discontinued operations                    (90.0)       (76.8)       (223.9)       (176.8)

Provision for income taxes                                             (.5)        (7.0)         (4.9)        (21.4)

Minority interests                                                     1.9          1.4           5.8           4.3
                                                                -----------  -----------    ----------  ------------

Loss from continuing operations                                      (88.6)       (82.4)       (223.0)       (193.9)
                                                                -----------  -----------    ----------  ------------

Discontinued operations:
   Loss from operations of curtailed Tacoma facility                    -          (1.0)         (1.6)         (4.0)
   Gain from sale of Tacoma facility                                    -            -            9.5            -
                                                                -----------  -----------    ----------  ------------
Income (loss) from discontinued operations                              -          (1.0)          7.9          (4.0)
                                                                -----------  -----------    ----------  ------------

Net loss                                                        $    (88.6)  $    (83.4)    $  (215.1)  $    (197.9)
                                                                ===========  ===========    ==========  ============

Earnings (loss) per share - Basic/Diluted:
   Loss from continuing operations                              $    (1.11)  $    (1.02)    $   (2.78)  $     (2.40)
                                                                ===========  ===========    ==========  ============
   Income (loss) from discontinued operations                   $       -    $     (.02)    $     .10   $      (.05)
                                                                ===========  ===========    ==========  ============
   Net loss                                                     $    (1.11)  $    (1.04)    $   (2.68)  $     (2.45)
                                                                ===========  ===========    ==========  ============

Weighted average shares outstanding (000):
   Basic/Diluted                                                    80,165       80,561        80,220        80,629

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


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

                  For the Nine Months Ended September 30, 2003

                                                                                         Accumulated
                                                                                            Other
                                               Common     Additional     Accumulated    Comprehensive
                                                Stock       Capital        Deficit      Income (Loss)       Total
                                             ----------- ------------  -------------- ----------------- ------------
BALANCE, December 31, 2002                   $       .8  $     539.9   $    (1,382.4) $         (243.9) $  (1,085.6)

   Net loss                                          -            -           (215.1)            -           (215.1)
   Unrealized net decrease in value of
      derivative instruments arising during
      the period (including net decrease in
      value of $1.9 for the quarter ended
      September 30, 2003)                            -            -              -                (1.3)        (1.3)
   Reclassification adjustment
      for net realized gains on
      derivative instruments included in
      net loss (including net realized gains
      of $.2 for the quarter ended
      September 30, 2003)                            -            -              -                 (.7)         (.7)
                                                                                                        ------------
   Comprehensive income (loss)                       -            -              -               -           (217.1)

   Restricted stock cancellations                    -           (.9)            -               -              (.9)
   Restricted stock accretion                        -            .3             -               -               .3
                                             ----------- ------------  -------------- ----------------- ------------
BALANCE, September 30, 2003                  $       .8  $     539.3   $    (1,597.5) $         (245.9) $  (1,303.3)
                                             =========== ============  ============== ================= ============

                  For the Nine Months Ended September 30, 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 loss                                          -            -           (197.9)            -           (197.9)
   Unrealized net decrease in value of
      derivative instruments arising
      during the period prior to
      settlement                                     -            -              -               (12.1)       (12.1)
   Reclassification adjustment for
      net realized gains on derivative
      instruments included in net loss
      (including net realized gains of
      $6.3 for the quarter ended September
      30, 2002)                                      -            -              -               (21.2)       (21.2)
                                                                                                        ------------
   Comprehensive income (loss)                                                                               (231.2)

   Incentive plan and restricted stock
      accretion                                      -            .7             -               -               .7
                                             ----------- ------------  -------------- ----------------- ------------
BALANCE, September 30, 2002                  $       .8  $     539.8   $    (1,111.6) $         (100.6) $    (671.6)
                                             =========== ============  ============== ================= ============

   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)


                                                                                               Nine Months Ended
                                                                                                 September 30,
                                                                                            -----------------------
                                                                                               2003         2002
                                                                                            -----------  ----------
Cash flows from operating activities:
   Net loss                                                                                 $   (215.1)  $  (197.9)
   Adjustments to reconcile net loss to net cash (used) provided by operating
      activities:
      Depreciation and amortization (including deferred financing costs of $3.8 and $2.7,
        respectively)                                                                             59.2        70.3
      Non-cash charges for restructuring charges in 2003; restructuring charges and
        reorganization items in 2002                                                               1.9        37.2
      Gain on sale of Tacoma facility in 2003 and real estate in 2002                            (14.5)       (4.0)
      Equity in earnings of unconsolidated affiliates, net of distributions                       (7.2)       (6.7)
      Minority interests                                                                          (5.8)       (4.3)
      (Increase) decrease in trade and other receivables                                          (1.3)       43.0
      Decrease in inventories                                                                     27.2         8.3
      (Increase) decrease in prepaid expenses and other current assets                            (4.4)       42.4
      Increase in accounts payable and accrued interest                                           17.0        31.3
      Increase (decrease) in other accrued liabilities                                             3.0       (36.4)
      Increase (decrease) in payable to affiliates                                                21.1       (20.3)
      Decrease in accrued and deferred income taxes                                              (39.0)      (11.2)
      Net cash impact of changes in long-term assets and liabilities                              69.6        14.5
      Other                                                                                        7.9        (9.1)
                                                                                            -----------  ----------
        Net cash used by operating activities                                                    (80.4)      (42.9)
                                                                                            -----------  ----------

Cash flows from investing activities:
   Net proceeds from dispositions:  primarily Tacoma facility and interests in office
      building complex in 2003; equipment and miscellaneous real estate in 2002                   83.2        20.8
   Capital expenditures                                                                          (27.3)      (29.2)
                                                                                            -----------  ----------
        Net cash provided (used) by investing activities                                          55.9        (8.4)
                                                                                            -----------  ----------

Cash flows from financing activities:
   Financing costs, primarily DIP Facility related                                                (4.0)       (8.1)
                                                                                            -----------  ----------
        Net cash used by financing activities                                                     (4.0)       (8.1)
                                                                                            -----------  ----------

Net decrease in cash and cash equivalents during the period                                      (28.5)      (59.4)
Cash and cash equivalents at beginning of period                                                  78.7       153.3
                                                                                            -----------  ----------
Cash and cash equivalents at end of period                                                  $     50.2   $    93.9
                                                                                            ===========  ==========

Supplemental disclosure of cash flow information:
   Interest paid, net of capitalized interest of $1.0 and $.9, respectively                 $      2.5   $     4.4
   Income taxes paid                                                                              44.7        31.3




   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

Kaiser Aluminum Corporation ("Kaiser" or the "Company"), its wholly owned
subsidiary, Kaiser Aluminum & Chemical Corporation ("KACC"), and 24 of KACC's
subsidiaries have filed separate voluntary petitions in the United States
Bankruptcy Court for the District of Delaware (the "Court") for reorganization
under Chapter 11 of the United States Bankruptcy Code (the "Code"); the Company,
KACC and 15 of KACC's subsidiaries (the "Original Debtors") filed in the first
quarter of 2002 and nine additional KACC subsidiaries (the "Additional Debtors")
filed in the first quarter of 2003. The Original Debtors and Additional Debtors
are collectively referred to herein as the "Debtors" and the Chapter 11
proceedings of these entities are collectively referred to herein as the
"Cases." For purposes of this Report, the term "Filing Date" shall mean, with
respect to any particular Debtor, the date on which such Debtor filed its Case.
None of KACC's non-U.S. joint ventures are included in the Cases. The Cases are
being jointly administered. The Debtors are managing their businesses in the
ordinary course as debtors-in-possession subject to the control and
administration of the Court.

Original Debtors. During the first quarter of 2002, the Original Debtors filed
separate voluntary petitions for reorganization. The wholly owned subsidiaries
of KACC included in such filings were: Kaiser Bellwood Corporation, Kaiser
Aluminium International, Inc., Kaiser Aluminum Technical Services, Inc., Kaiser
Alumina Australia Corporation (and its wholly owned subsidiary, Kaiser Finance
Corporation) and ten other entities with limited balances or activities.

The necessity for filing the Cases by the Original Debtors was attributable to
the liquidity and cash flow problems of the Company and its subsidiaries arising
in late 2001 and early 2002. The Company was facing significant near-term debt
maturities at a time of unusually weak aluminum industry business conditions,
depressed aluminum prices and a broad economic slowdown that was further
exacerbated by the events of September 11, 2001. In addition, the Company had
become increasingly burdened by asbestos litigation 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
flows, resulting in lower credit ratings and an inability to access the capital
markets.

The outstanding principal of, and accrued interest on, all debt of the Original
Debtors became immediately due and payable upon commencement of the Cases.
However, the vast majority of the claims in existence at the Filing Date
(including claims for principal and accrued interest and substantially all legal
proceedings) are stayed (deferred) during the pendency of the Cases. In
connection with the filing of the Original Debtors' Cases, the Court, upon
motion by the Original Debtors, authorized the Original Debtors to pay or
otherwise honor certain unsecured pre-Filing Date claims, including employee
wages and benefits and customer claims in the ordinary course of business,
subject to certain limitations. In July 2002, the Court also issued a final
order authorizing the Company to fund the cash requirements of its foreign joint
ventures in the ordinary course of business and to continue using the Company's
existing cash management systems. The Original Debtors also have the right to
assume or reject executory contracts existing prior to the Filing Date, subject
to Court approval and certain other limitations. In this context, "assumption"
means that the Original Debtors agree to perform their obligations and cure
certain existing defaults under an executory contract and "rejection" means that
the Original Debtors are relieved from their obligations to perform further
under an executory contract and are subject only to a claim for damages for the
breach thereof. Any claim for damages resulting from the rejection of a
pre-Filing Date executory contract is treated as a general unsecured claim in
the Cases.

Generally, pre-Filing Date claims, including certain contingent or unliquidated
claims, against the Original Debtors will fall into two categories: secured and
unsecured. Under the Code, a creditor's claim is treated as secured only to the
extent of the value of the collateral securing such claim, with the balance of
such claim being treated as unsecured. Unsecured and partially secured claims do
not accrue interest after the Filing Date. A fully secured claim, however, does
accrue interest after the Filing Date until the amount due and owing to the
secured creditor, including interest accrued after the Filing Date, is equal to
the value of the collateral securing such claim. The amount and validity of
pre-Filing Date contingent or unliquidated claims, although presently unknown,
ultimately may be established by the Court or by agreement of the parties. As a
result of the Cases, additional pre-Filing Date claims and liabilities may be
asserted, some of which may be significant.

The Court set January 31, 2003 as the last date by which holders of pre-Filing
Date claims against the Original Debtors (other than asbestos-related personal
injury claims and certain hearing loss claims) could file their claims. Any
holder of a claim that was required to file a claim by such date and did not do
so may be barred from asserting such claim against any of the Original Debtors
and, accordingly, may not be able to participate in any distribution in any of
the Cases on account of such claim. The Company has not yet completed its
analysis of all of the proofs of claim to determine their validity. However,
during the course of the Cases, certain matters in respect of the claims have
been resolved. All material provisions in respect of claim settlements are
included in the accompanying financial statements and are fully disclosed
elsewhere herein. The January 31, 2003 bar date does not apply to
asbestos-related personal injury claims, for which the Original Debtors reserve
the right to establish a separate bar date at a later time. A separate bar date
for certain hearing loss claims, which was originally set for June 30, 2003, has
been extended to December 31, 2003.

Additional Debtors. On January 14, 2003, the Additional Debtors filed separate
voluntary petitions for reorganization. The wholly owned subsidiaries included
in such filings were: Kaiser Bauxite Company, Kaiser Jamaica Corporation, Alpart
Jamaica Inc., Kaiser Aluminum & Chemical of Canada Limited and five other
entities with limited balances or activities.

The Cases filed by the Additional Debtors were commenced, among other reasons,
to protect the assets held by these Debtors against possible statutory liens
that may arise and be enforced by the Pension Benefit Guaranty Corporation
("PBGC") primarily as a result of the Company's failure to meet a $17.0
accelerated funding requirement to its salaried employee retirement plan in
January 2003 (see Note 10 of Notes to Consolidated Financial Statements in the
Company's Form 10-K for the year ended December 31, 2002 for additional
information regarding the accelerated funding requirement). From an operating
perspective, the filing of the Cases by the Additional Debtors had no impact on
the Company's day-to-day operations.

In connection with the Additional Debtors' filings, the Court authorized the
Additional Debtors to continue to make payments in the normal course of business
(including payments of certain pre-Filing Date amounts), including payments of
wages and benefits, payments for items such as materials, supplies and freight
and payments of taxes. The Court also approved the continuation of the Company's
existing cash management systems and routine intercompany transactions
involving, among other transactions, the transfer of materials and supplies
among subsidiaries and affiliates.

In March 2003, the Court set May 15, 2003 as the last date by which holders of
pre-Filing Date claims against the Additional Debtors (other than
asbestos-related personal injury claims and certain hearing loss claims) could
file their claims. Any holder of a claim that was required to file a claim by
such date and did not do so may be barred from asserting such claim against any
of the Additional Debtors and, accordingly, may not be able to participate in
any distribution in any of the Cases on account of such claim. The Company has
not yet completed its analysis of all of the proofs of claim to determine their
validity. However, during the course of the Cases, certain matters in respect of
the claims have been resolved. All material provisions in respect of claim
settlements are included in the accompanying financial statements and are fully
disclosed elsewhere herein.

All Debtors. Two creditors' committees, one representing the unsecured creditors
(the "UCC") and the other representing the asbestos claimants (the "ACC"), have
been appointed as official committees in the Cases and, in accordance with the
provisions of the Code, will have the right to be heard on all matters that come
before the Court. In August 2003, the Court approved the appointment of a
committee of salaried retirees (the "1114 Committee" and, together with the UCC
and the ACC, the "Committees") with whom the Debtors are discussing necessary
changes, including the modification or termination, of certain retiree benefits
(such as medical and insurance) under Section 1114 of the Code. The Debtors
expect that the Committees, together with the legal representative for potential
future asbestos claimants (the "Futures' Representative") that has been
appointed in the Cases, will play important roles in the Cases and the
negotiation of the terms of any plan or plans of reorganization. The Debtors are
required to bear certain costs and expenses for the Committees and the Futures'
Representative, including those of their counsel and other advisors.

As provided by the Code, the Original Debtors had the exclusive right to propose
a plan of reorganization for 120 days following the initial Filing Date. The
Court has subsequently approved several extensions of the exclusivity period for
all Debtors, the most recent of which was set to expire October 31, 2003. A
motion to extend the exclusivity period through February 29, 2004, was filed by
the Debtors in October 2003. By filing the motion to extend the exclusivity
period, the period is automatically extended until the December 15, 2003 Court
hearing date. As the Debtors' motion to extend the exclusivity period through
February 29, 2004 was agreed to by the UCC, the ACC and the Futures'
Representative in advance of the filing, the Debtors expect the motion to be
approved by the Court. Additional extensions are likely to be sought. However,
no assurance can be given that such future extension requests will be granted by
the Court. If the Debtors fail to file a plan of reorganization during the
exclusivity period, or if such plan is not accepted by the requisite numbers of
creditors and equity holders entitled to vote on the plan, other parties in
interest in the Cases may be permitted to propose their own plan(s) of
reorganization for the Debtors.

The Debtors anticipate that substantially all liabilities of the Debtors as of
the date of the Filing will be settled under one or more plans of reorganization
to be proposed and voted on 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 as to whether such plan or plans will be confirmed by the Court and
consummated. At this time, it is not possible to predict the outcome of the
Cases, in general, or the effect any such outcome may have on the businesses of
the Debtors.

In working toward a plan of reorganization, the Debtors have been, and continue
to be, engaged in discussions with each of their key constituencies, including
the Committees, the Futures' Representative, the PBGC, and the appropriate union
representatives. The treatment of individual groups of creditors in any such
plan of reorganization cannot be determined definitively at this time. The
ultimate treatment of and recoveries to individual creditors is dependent on,
among other things, the total amount of claims against the Debtors as ultimately
determined by the Court, the priority of the applicable claim, the outcome of
ongoing discussions with the key constituencies, the amount of value available
for distribution in respect of claims and the completion of the plan
confirmation process consistent with applicable bankruptcy law.

The Debtors' objective is to achieve the highest possible recoveries for all
stakeholders, consistent with the Debtors' abilities to pay, and to continue the
operations of their businesses. However, there can be no assurance that the
Debtors will be able to attain these objectives or achieve a successful
reorganization. While valuation of the Debtors' assets and estimation of
pre-Filing Date claims at this stage of the Cases are subject to inherent
uncertainties, the Debtors currently believe that it is likely that their
liabilities will be found to exceed the fair value of their assets. Therefore,
the Debtors currently believe that it is likely that substantially all
pre-Filing Date claims will be settled at less than 100% of their face value and
the equity of the Company's stockholders will be cancelled without
consideration. Further, the Debtors believe that it is likely that: (a) the
claims of pre-petition creditors that are given certain priorities by statute or
have the benefit of guarantees or other contractual or structural seniority will
likely receive substantially greater recoveries than pre-petition creditors that
have no such priorities or seniority; and (b) all pending and future
asbestos-related personal injury claims are likely to be resolved through the
formation, pursuant to a plan of reorganization, of a statutory trust to which
all claims would be directed by a channeling injunction that would permanently
remove all asbestos liability from the Debtors. The trust would be funded
according to statutory requirements, using the Debtors' insurance assets and
certain other consideration that has yet to be agreed. No assurances can be
provided that the foregoing will ultimately be included in any plan(s) of
reorganization the Debtors may file. Further, while the Debtors believe it is
possible to successfully reorganize their operations and emerge from Chapter 11
in 2004, their ability to do so is subject to inherent market-related risks as
well as successful negotiation and Court approval for the treatment of creditors
consistent with the applicable bankruptcy law.

The Company expects that, when the Debtors ultimately file a plan of
reorganization, it is likely to reflect the Company's strategic vision for
emergence from Chapter 11: (a) a standalone going concern with manageable
leverage, improved cost structure and competitive strength; (b) a company
positioned to execute its long-standing vision of market leadership and growth
in fabricated products specifically with a financial structure that provides
financial flexibility, including access to capital markets, for accretive
acquisitions; (c) a company that delivers a broad product offering and
leadership in service and quality for its customers and distributors; and (d) a
company with continued presence in those commodities markets that have the
potential to generate significant cash at steady-state metal prices. While the
Company intends to continue to pursue a standalone fabricated products company
emergence strategy, from time to time the Debtors may also evaluate other
reorganization strategies, consistent with the Debtors' responsibility to
maximize the recoveries for its stakeholders. The Company's advisors have
developed a preliminary timeline that, assuming the current pace of the Cases
continues, could allow the Company to emerge from Chapter 11 in mid-2004.
However, the Debtors' ability to do so is subject to the confirmation of a plan
of reorganization in accordance with the applicable bankruptcy law. Accordingly,
no assurances can be given in this regard.

In light of the Company's stated strategy and to further the Debtors' ultimate
planned emergence from Chapter 11, the Debtors, with the approval of the Board
of Directors and in consultation with the UCC, the ACC and the Futures'
Representative, are exploring the possible sale of one or more of their
commodities businesses. In particular, the Debtors are currently exploring the
possible sale of their interests in and related to: (a) Alumina Partners of
Jamaica ("Alpart"); (b) Anglesey Aluminium Limited ("Anglesey"); and (c) KACC's
alumina refinery located at Gramercy, Louisiana ("Gramercy") and Kaiser Jamaica
Bauxite Company ("KJBC"). The possible sale of the Debtors' interests in respect
of Gramercy and KJBC is being explored jointly given their significant
integration.

In exploring the sale of the commodities businesses, the Debtors, through their
investment advisors, surveyed the potential market and initiated discussions
with numerous parties believed to have an interest in such assets. In addition,
other parties contacted the Debtors and/or their investment advisors to express
an interest in purchasing the assets. The Debtors provided (subject to
confidentiality agreements) information regarding the applicable interests to
these parties, each of which was asked to submit a non-binding expression of
interest regarding the individual assets. After receiving these initial
expressions of interest from potential purchasers, the Debtors determined which
of the expressions of interest received through the date hereof represented
reasonable indications of value ("Qualified Bids"). Potential bidders
("Qualified Bidders") that submitted Qualified Bids were then permitted to
conduct due diligence in respect of the assets for which they submitted a
Qualified Bid and to submit definitive proposals.

The Debtors are currently reviewing the definitive proposals submitted and, in
consultation with the UCC, the ACC and the Futures' Representative, and other
key constituencies, will determine whether to pursue further negotiations with
Qualified Bidders. Although the Company's Board of Directors has authorized the
Debtors to explore the potential divestiture of each of the identified
commodities businesses, the Company's Board of Directors has not, as of this
time, authorized the sale of any of the interests. Any sale that the Debtors
might ultimately choose to pursue would be subject to the approval of the
Company's Board of Directors, the lenders under the Debtors' post-petition
credit agreement (the "DIP Facility" - see Note 5) and the Court. In addition,
the DIP Facility would have to be amended or modified in connection with any
such sales. Moreover, in connection with any sales of the interests in Alpart
and Anglesey, the Debtors would be required to accommodate certain rights of the
other holders in those entities to purchase the Debtors' interests at the price
specified at which such interests are proposed to be sold by the Debtors.

While no commodity asset sales are currently imminent, it is possible that one
or more sales may occur during the first half of 2004. However, no assurances
can be given that acceptable offers will be received for any assets or that any
assets will ultimately be sold. Further, the Company's strategic vision is
subject to continuing review in consultation with the Company's stakeholders and
may also be modified from time to time as the Cases proceed due to such items as
changes in the global markets, changes in the economics of the Company's
facilities or changing financial circumstances.

Continued sales of non-core assets and facilities that are ultimately determined
not to be an important part of the reorganized entity are likely.

Financial Statement Presentation. The accompanying consolidated financial
statements have been prepared in accordance with AICPA 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.

As previously disclosed, if the Company were to decide to sell certain assets
not deemed a critical part of a reorganized Kaiser, such asset sales could
result in gains or losses (depending on the asset sold) and such gains or losses
could be significant. This is because, under generally accepted accounting
principles ("GAAP"), assets to be held and used are evaluated for recoverability
differently than assets to be sold or disposed of. Assets to be held and used
are evaluated based on their expected undiscounted future net cash flows. So
long as the Company reasonably expects that such undiscounted future net cash
flows for each asset will exceed the recorded value of the asset being
evaluated, no impairment is required. However, if possible or probable plans to
sell or dispose of an asset or group of assets meet a number of specific
criteria, then, under GAAP, such assets should be considered held for
sale/disposition and their recoverability should be evaluated, for each asset,
based on expected consideration to be received upon disposition. Sales or
dispositions at a particular time will be affected by, among other things, the
existing industry and general economic circumstances as well as the Company's
own circumstances, including whether or not assets will (or must) be sold on an
accelerated or more extended timetable. Such circumstances may cause the
expected value in a sale or disposition scenario to differ materially from the
realizable value over the normal operating life of assets, which would likely be
evaluated on long-term industry trends.

As discussed more fully above, the Company is exploring the possible divestiture
of certain of its commodity assets. Specifically, the Company is engaged in
separate processes that could result in the divestiture of the Company's
interests in Anglesey, Alpart and Gramercy/KJBC. Definitive bids for such assets
have recently been received and are currently being evaluated. It is possible
that additional bids may be received. It is possible that one or all of the bids
could be deemed to be acceptable and that sale transactions in respect of the
Company's interests in these assets may be completed during the first half of
2004. It is also possible that the Company's Board of Directors, after
appropriate consultation with the Company's advisors and the UCC, the ACC and
the Futures' Representative and other key constituencies in the Cases, may
determine that a sale of one or more of these assets, at this point, is not in
the best interests of creditors and other stakeholders.

For the purpose of preparing the September 30, 2003 financial statements, the
Company evaluated the book value of its interests in long-term assets related to
these interests on a "hold and use" basis since, among other requirements, none
of the Company's Board of Directors, the DIP Facility lenders or the Court have
approved any possible sales. The Company believes that, if the assets are
retained, undiscounted net cash flows associated with these assets are
sufficient to recover the Company's book value of these long-term assets at
September 30, 2003, which were as follows:


Anglesey                                             $       15.0
Alpart(1)                                                   196.6
Gramercy/KJBC                                               375.9
                                                     -------------
                                                     $      587.5
                                                     =============

---------------------------
(1)   Kaiser's 65% share of Alpart's net property, plant and equipment.

The Company cannot currently predict whether the Company's interests in
Anglesey, Alpart and Gramercy/KJBC will ultimately be sold as a result of the
aforementioned processes. Further, as stated above, the Company has not had
sufficient time to evaluate the terms of the various proposals submitted by the
possible purchasers. Additionally, it is possible that the terms of any
transactions may change by the time that definitive agreements are signed,
requisite approvals of the DIP Facility lenders are obtained and the Court
approval for such transaction would be sought. Therefore, in evaluating the
Debtors' share of the long-term assets and interests related to Anglesey, Alpart
and Gramercy/KJBC, the Company did not include a sale scenario in its impairment
evaluation. However, the Company believes that if it were to sell these assets,
it is likely that (a) a gain would result on the sale of interests in Anglesey,
(b) the interests in Alpart would be sold for amounts within a reasonable range
of its net book value, and (c) the sale of the Company's interests in
Gramercy/KJBC would result in a material non-cash impairment charge.

However, as discussed above, since any sale is subject to a number of approvals
(including the Board of Directors, the DIP Facility lenders and the Court) and
further negotiations still have to occur, no assurances can be given that any of
the foregoing interests or other assets will be sold.

Financial Information. Condensed consolidating financial statements of the
Debtors and non-Debtors are set forth below:


                     CONDENSED CONSOLIDATING BALANCE SHEETS
                               SEPTEMBER 30, 2003

                                                                                      Consolidation/
                                           Original     Additional                      Elimination
                                            Debtors       Debtors       Non-Debtors       Entries      Consolidated
                                         ------------- -------------  -------------- ---------------- --------------
Current assets                           $      325.9  $       29.5   $       109.7  $          -     $       465.1
Investments in subsidiaries and
   affiliates                                 1,418.9         206.1              .1         (1,549.2)          75.9
Intercompany receivables (payables), net       (979.5)        893.7            85.8             -               -
Property and equipment, net                     572.2          18.0           380.6             -             970.8
Deferred income taxes                           (81.9)         81.9             -               -               -
Other assets                                    526.5            .4             7.7             -             534.6
                                         ------------- -------------  -------------- ---------------- --------------
                                         $    1,782.1  $    1,229.6   $       583.9  $      (1,549.2) $     2,046.4
                                         ============= =============  ============== ================ ==============

Liabilities not subject to compromise -
   Current liabilities                   $      246.3  $       25.4   $        85.3  $         (13.5) $       343.5
   Long-term liabilities                         82.8          16.1            28.7             -             127.6
Liabilities subject to compromise             2,755.6           -               -               -           2,755.6
Minority interests                                 .7           -             104.9             17.4          123.0
Stockholders' equity (deficit)               (1,303.3)      1,188.1           365.0         (1,553.1)      (1,303.3)
                                         ------------- -------------  -------------- ---------------- --------------
                                         $    1,782.1  $    1,229.6   $       583.9  $      (1,549.2) $     2,046.4
                                         ============= =============  ============== ================ ==============

For condensed consolidating balance sheets of the Debtors and non-Debtors as of
December 31, 2002, see Note 1 of Notes to Consolidated Financial Statements in
the Company's Form 10-K for the year ended December 31, 2002.

               CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS)
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2003

                                                                                      Consolidation/
                                           Original     Additional                      Elimination
                                            Debtors       Debtors       Non-Debtors       Entries      Consolidated
                                         ------------- -------------  -------------- ---------------- --------------
Net sales                                $      292.6  $       10.9   $        23.6  $          -     $       327.1
                                         ------------- -------------  -------------- ---------------- --------------
Costs and expenses -
   Operating costs and expenses                 342.8           9.9            34.4             -             387.1
   Other operating charges, net                  15.0          -                -               -              15.0
                                         ------------- -------------  -------------- ---------------- --------------
                                                357.8           9.9            34.4                           402.1
                                         ------------- -------------  -------------- ---------------- --------------
Operating income (loss)                         (65.2)          1.0           (10.8)            -             (75.0)
Interest expense                                 (2.7)          -               (.2)            -              (2.9)
All other income (expense), net                 (11.8)         (3.1)             .1              2.7          (12.1)
Income tax and minority interests                (1.3)         (1.2)            3.9             -               1.4
Equity in income of subsidiaries                 (7.6)          -               -                7.6            -
                                         ------------- -------------  -------------- ---------------- --------------
Income (loss) from continuing operations        (88.6)         (3.3)           (7.0)            10.3          (88.6)
Discontinued operations                           -             -               -               -               -
                                         ------------- -------------  -------------- ---------------- --------------
Net income (loss)                        $      (88.6) $       (3.3)  $        (7.0) $          10.3  $       (88.6)
                                         ============= =============  ============== ================ ==============


               CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS)
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2002

                                                                                      Consolidation/
                                           Original     Additional                      Elimination
                                            Debtors       Debtors       Non-Debtors       Entries      Consolidated
                                         ------------- -------------  -------------- ---------------- --------------
Net sales                                $      309.5  $       13.1   $        52.0  $         (26.6) $       348.0
                                         ------------- -------------  -------------- ---------------- --------------
Costs and expenses -
   Operating costs and expenses                 352.6           5.5            55.8            (26.6)         387.3
   Other operating charges, net                  24.3           -               1.0             -              25.3
                                         ------------- -------------  -------------- ---------------- --------------
                                                376.9           5.5            56.8            (26.6)         412.6
                                         ------------- -------------  -------------- ---------------- --------------
Operating income (loss)                         (67.4)          7.6            (4.8)            -             (64.6)
Interest expense                                 (2.0)          -               (.2)            -              (2.2)
All other income (expense), net                  (9.6)         (3.0)             .1              2.5          (10.0)
Income tax and minority interests                (2.2)         (5.8)            2.4             -              (5.6)
Equity in income of subsidiaries                 (1.2)          -               -                1.2            -
                                         ------------- -------------  -------------- ---------------- --------------
Income (loss) from continuing operations        (82.4)         (1.2)           (2.5)             3.7          (82.4)
Discontinued operations                          (1.0)          -               -               -              (1.0)
                                         ------------- -------------  -------------- ---------------- --------------
Net income (loss)                        $      (83.4) $       (1.2)  $        (2.5) $           3.7  $       (83.4)
                                         ============= =============  ============== ================ ==============

               CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003

                                                                                      Consolidation/
                                           Original     Additional                      Elimination
                                            Debtors       Debtors       Non-Debtors       Entries      Consolidated
                                         ------------- -------------  -------------- ---------------- --------------
Net sales                                $      920.2  $       35.4   $        82.7  $         (13.4) $     1,024.9
                                         ------------- -------------  -------------- ---------------- --------------
Costs and expenses -
   Operating costs and expenses               1,069.0          22.2           118.6            (13.4)       1,196.4
   Other operating charges, net                  15.6           -               -               -              15.6
                                         ------------- -------------  -------------- ---------------- --------------
                                              1,084.6          22.2           118.6            (13.4)       1,212.0
                                         ------------- -------------  -------------- ---------------- --------------
Operating income (loss)                        (164.4)         13.2           (35.9)            -            (187.1)
Interest expense                                 (7.6)          -               (.6)            -              (8.2)
All other income (expense), net                 (30.1)         (7.5)             .8              8.2          (28.6)
Income tax and minority interests                (3.9)         (8.4)           13.2             -                .9
Equity in income of subsidiaries                (17.0)          -               -               17.0            -
                                         ------------- -------------  -------------- ---------------- --------------
Income (loss) from continuing operations       (223.0)         (2.7)          (22.5)            25.2         (223.0)
Discontinued operations                           7.9           -               -               -               7.9
                                         ------------- -------------  -------------- ---------------- --------------
Net income (loss)                        $     (215.1) $       (2.7)  $       (22.5) $          25.2  $      (215.1)
                                         ============= =============  ============== ================ ==============

               CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002

                                                                                      Consolidation/
                                           Original     Additional                      Elimination
                                            Debtors       Debtors       Non-Debtors       Entries      Consolidated
                                         ------------- -------------  -------------- ---------------- --------------
Net sales                                $      996.2  $       36.1   $       156.3  $         (83.7) $     1,104.9
                                         ------------- -------------  -------------- ---------------- --------------
Costs and expenses -
   Operating costs and expenses               1,106.0          13.2           170.0            (83.7)       1,205.5
   Other operating charges, net                  33.4           -               1.0             -              34.4
                                         ------------- -------------  -------------- ---------------- --------------
                                              1,139.4          13.2           171.0            (83.7)       1,239.9
                                         ------------- -------------  -------------- ---------------- --------------
Operating income (loss)                        (143.2)         22.9           (14.7)            -            (135.0)
Interest expense                                (17.2)          -              (1.0)            -             (18.2)
All other income (expense), net                 (22.7)         (8.6)             .1              7.6          (23.6)
Income tax and minority interests                (5.9)        (16.2)            5.0             -             (17.1)
Equity in income of subsidiaries                 (4.9)          -               -                4.9            -
                                         ------------- -------------  -------------- ---------------- --------------
Income (loss) from continuing operations       (193.9)         (1.9)          (10.6)            12.5         (193.9)
Discontinued operations                          (4.0)          -               -               -              (4.0)
                                         ------------- -------------  -------------- ---------------- --------------
Net income (loss)                        $     (197.9) $       (1.9)  $       (10.6) $          12.5  $      (197.9)
                                         ============= =============  ============== ================ ==============


                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003

                                                                                      Consolidation/
                                           Original     Additional                      Elimination
                                            Debtors       Debtors       Non-Debtors       Entries      Consolidated
                                         ------------- -------------  -------------- ---------------- --------------
Net cash provided (used) by:
   Operating activities                  $     (100.6) $         .1   $        20.1  $          -     $       (80.4)
   Investing activities                          76.2           (.2)          (20.1)            -              55.9
   Financing activities                          (4.0)          -               -               -              (4.0)
                                         ------------- -------------  -------------- ---------------- --------------
Net decrease in cash and cash equivalents       (28.4)          (.1)            -               -             (28.5)
Cash and cash equivalents, beginning of
   period                                        75.5           2.1             1.1             -              78.7
                                         ------------- -------------  -------------- ---------------- --------------
Cash and cash equivalents, end of period $       47.1  $        2.0   $         1.1  $          -     $        50.2
                                         ============= =============  ============== ================ ==============

                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002

                                                                                      Consolidation/
                                           Original     Additional                      Elimination
                                            Debtors       Debtors       Non-Debtors       Entries      Consolidated
                                         ------------- -------------  -------------- ---------------- --------------
Net cash provided (used) by:
   Operating activities                  $      (67.2) $        1.3   $        23.0  $          -     $       (42.9)
   Investing activities                          15.1           (.6)          (22.9)            -              (8.4)
   Financing activities                          (8.1)          -               -               -              (8.1)
                                         ------------- -------------  -------------- ---------------- --------------
Net (decrease) increase in cash and cash
   equivalents                                  (60.2)           .7              .1             -             (59.4)
Cash and cash equivalents, beginning of
   period                                       151.6           1.4              .3             -             153.3
                                         ------------- -------------  -------------- ---------------- --------------
Cash and cash equivalents, end of period $       91.4  $        2.1   $          .4  $          -     $        93.9
                                         ============= =============  ============== ================ ==============

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 certain of these amounts may not be paid until a plan of reorganization
is approved; and (3) pre-Filing Date liabilities that have been approved for
payment by the Court and that the Debtors expect to pay (in advance of a plan of
reorganization) over the next twelve-month period in the ordinary course of
business, including certain employee related items (salaries, vacation and
medical benefits), claims subject to a currently existing collective bargaining
agreement, and postretirement medical and other costs associated with retirees
(however, see note (2) to the table below).

Liabilities subject to compromise refer to all other pre-Filing Date liabilities
of the Debtors. The amounts of the various categories of liabilities that are
subject to compromise are set forth below. These amounts represent the Company's
estimates of known or probable pre-Filing Date claims that are likely to be
resolved in connection with the Cases. Such claims remain subject to future
adjustments. Further, the Debtors currently believe that it is likely that
substantially all pre-Filing Date claims will be settled at less than 100% of
their face value and the equity of the Company's stockholders will be cancelled
without consideration.

The amounts subject to compromise at September 30, 2003 and December 31, 2002
consisted of the following items:


                                                                                  September 30,      December 31,
                                                                                      2003               2002
                                                                                 ---------------   ----------------
Items, absent the Cases, that would have been considered current:
   Accounts payable                                                              $         50.9    $          47.6
   Accrued interest                                                                        44.0               44.0
   Accrued salaries, wages and related expenses(1)                                        159.0               59.0
   Other accrued liabilities (including asbestos liability of $130.0 - Note 7)            145.7              150.6
Items, absent the Cases, that would have been considered long-term:
   Accrued pension benefits                                                               299.8              362.7
   Accrued postretirement medical obligation(2)                                           661.4              672.4
   Long-term liabilities(3)                                                               564.6              559.5
   Debt (Note 5)                                                                          830.2              830.2
                                                                                 ---------------   ----------------
                                                                                 $      2,755.6    $       2,726.0
                                                                                 ===============   ================

(1)     Accrued salaries, wages and related expenses represent estimated minimum
        pension contributions that, absent the Cases, would have otherwise been
        payable. Amounts for the period ended September 30, 2003 include
        approximately $100.0 associated with estimated special liquidity and
        other pension contributions that were not made. As previously disclosed,
        the Company does not currently expect to make any pension contributions
        in respect of its domestic pension plans. See Note 10 of Notes to
        Consolidated Financial Statements in the Company's Form 10-K for the
        year ended December 31, 2002 for additional information about
        non-payment of pension contributions.
(2)     In August 2003, the Court approved the appointment of the 1114 Committee
        with whom the Debtors are discussing necessary changes, including the
        modification or termination, of certain salaried retiree benefits (such
        as medical and insurance) under Section 1114 of the Code. Separately,
        the Debtors are discussing modification or termination of hourly retiree
        benefits pursuant to collective bargaining agreements with the
        appropriate union representatives. The Company has continued to report
        the current portion of accrued postretirement medical obligations as
        liabilities not subject to compromise, but this treatment is subject to
        change depending on the outcome of the aforementioned discussions and
        specific actions by the Company.
(3)     Long-term liabilities include environmental liabilities of $43.0 at
        September 30, 2003 and $21.7 at December 31, 2002 (Note 7) and asbestos
        liabilities of $480.1 at September 30, 2003 and December 31, 2002 (Note
        7).

The classification of liabilities "not subject to compromise" versus liabilities
"subject to compromise" is based on currently available information and
analysis. See Note 5 for a discussion of the solid waste disposal revenue bonds
which are currently classified as liabilities not subject to compromise.
However, a portion of the bonds could be reclassified to liabilities subject to
compromise based on the results of an appraisal which the Company is currently
obtaining. As the Cases proceed and additional information and analysis is
completed or, as the Court rules on relevant matters, the classification of
amounts between these two categories may change. The amount of any such changes
could be significant. Additionally, as the Company evaluates the proofs of claim
filed in the Cases, adjustments will be made for those claims that the Company
believes will probably be allowed by the Court. The amount of such claims could
be significant.

Reorganization Items. Reorganization items under the Cases are expense or income
items that are incurred or realized by the Company because it is in
reorganization. These items include, but are not limited to, professional fees
and similar types of expenses incurred directly related to the Cases, loss
accruals or gains or losses resulting from activities of the reorganization
process, and interest earned on cash accumulated by the Debtors because they are
not paying their pre-Filing Date liabilities. For the quarter and nine-month
periods ended September 30, 2003 and 2002, reorganization items were as follows:



                                                                      Quarter Ended             Nine Months Ended
                                                                      September 30,               September 30,
                                                                ------------------------    ------------------------
                                                                   2003         2002           2003         2002
                                                                -----------  -----------    ----------  ------------
Professional fees                                               $      5.5   $      8.9     $    20.7   $      19.8
Accelerated amortization of certain deferred
   financing costs                                                      -            -              -           4.5
Interest income                                                        (.2)         (.5)          (.7)         (1.6)
Other                                                                   .1           .1            .2           1.9
                                                                -----------  -----------    ----------  ------------
                                                                $      5.4   $      8.5     $    20.2   $      24.6
                                                                ===========  ===========    ==========  ============

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

Trust Fund. During the first quarter of 2002, KACC paid $5.8 into a trust fund
in respect of potential liability obligations of directors and officers.

2.    GENERAL

This Quarterly Report on Form 10-Q should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended December 31, 2002.

Going Concern. The interim consolidated financial statements of the Company have
been prepared on a "going concern" basis which contemplates the realization of
assets and the liquidation of liabilities in the ordinary course of business;
however, as a result of the commencement of the Cases, such realization of
assets and liquidation of liabilities are subject to a significant number of
uncertainties. Specifically, the interim consolidated financial statements do
not present: (a) the realizable value of assets on a liquidation basis or the
availability of such assets to satisfy liabilities, (b) the amount which will
ultimately be paid to settle liabilities and contingencies which may be allowed
in the Cases, or (c) the effect of any changes that may occur in connection with
the Debtors' capitalizations or operations of the Debtors as a result of a plan
of reorganization. Because of the ongoing nature of the Cases, the discussions
and consolidated financial statements contained herein are subject to material
uncertainties. See Financial Statement Presentation in Note 1 for a discussion
of possible impairment charges as a result of the Company's potential
divestitures of its interests in any or all of its commodities businesses.

Principles of Consolidation. 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 accompanying unaudited interim consolidated financial statements have been
prepared in accordance with GAAP 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 GAAP for
complete financial statements. 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 unless otherwise
noted, necessary for a fair statement of the results for the interim periods
presented.

The preparation of financial statements in accordance with GAAP 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 and nine-month periods ended September 30,
2003, are not necessarily indicative of the results that may be expected for the
year ending December 31, 2003.

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 likely that the equity interests of the Company's
existing stockholders will be cancelled without consideration.

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.

See Note 2 of Notes to Consolidated Financial Statements in the Company's Form
10-K for the year ended December 31, 2002 and Note 8 for additional information
regarding derivative financial instruments.

3.    INVENTORIES

The classification of inventories is as follows:


                                                                              September 30,     December 31,
                                                                                  2003              2002
                                                                             ---------------  ----------------
Finished fabricated aluminum products                                        $         23.3   $          28.1
Primary aluminum and work in process                                                   74.9              71.2
Bauxite and alumina                                                                    52.2              72.9
Operating supplies and repair and maintenance parts                                    77.3              82.7
                                                                             ---------------  ----------------
      Total                                                                  $        227.7   $         254.9
                                                                             ===============  ================

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 SMELTER CURTAILMENTS AND RELATED POWER MATTERS

Future Power Supply. During October 2000, KACC signed a new power contract with
the Bonneville Power Administration ("BPA") under which the BPA, starting
October 1, 2001, was to provide KACC's operations in the State of Washington
with approximately 290 megawatts of power through September 2006. The contract
provided KACC with sufficient power to fully operate KACC's Trentwood facility,
as well as approximately 40% of the combined capacity of KACC's Mead and Tacoma
aluminum smelting operations which have been curtailed since the last half of
2000.

As a part of the reorganization process, the Company concluded that it was in
its best interest to reject the BPA contract as permitted by the Code. As such,
with the authorization of the Court, the Company rejected the BPA contract on
September 30, 2002. The contract rejection gives rise to a pre-petition claim
(see Note 1). The BPA has filed a proof of claim for approximately $75.0 in
connection with the Cases in respect of the contract rejection. The claim is
expected to be settled in the overall context of the Debtors' plan of
reorganization. Accordingly, any payments that may be required as a result of
the rejection of the BPA contract are expected to only be made pursuant to a
plan of reorganization and upon the Company's emergence from the Cases. The
amount of the BPA claim will be determined either through a negotiated
settlement, litigation or a computation of prevailing power prices over the
contract period. As the amount of the BPA's claim in respect of the contract
rejection has not been determined, no provision has been made for the claim in
the accompanying financial statements. KACC has entered into a rolling
short-term contract with an alternate supplier to provide the power necessary to
operate its Trentwood facility.

In addition to the BPA power contract, KACC had a transmission service agreement
with the BPA under which the BPA transmitted power to KACC's Mead, Tacoma and
Trentwood facilities. In October 2003, with the approval of the Court, the BPA
agreement was restructured. Key aspects of the restructuring included: (a) the
existing transmission service agreement was terminated; (b) KACC and the BPA
entered into two new transmission service agreements that provide for the
transmission of power for the Mead and Trentwood facilities at reduced
transmission costs; and (c) KACC and the BPA agreed that the BPA would be
allowed to file an unsecured pre-Filing Date claim of approximately $3.2 (which
amount has been reflected in Other operating charges, net - see Note 10 in
respect of the termination of the existing agreement).

Smelter Operating Rate. In January 2003, the Company announced the indefinite
curtailment of the Mead facility. The curtailment of the Mead facility was due
to the continuing unfavorable market dynamics, specifically unattractive
long-term power prices and weak primary aluminum prices - both of which are
significant impediments for an older smelter with higher-than-average operating
costs. The Mead facility is expected to remain completely curtailed unless and
until an appropriate combination of reduced power prices, higher primary
aluminum prices and other factors occurs. The restart of a portion of KACC's
Mead facility would require the purchase of additional power from available
sources. For KACC to make such a decision, it would have to be able to purchase
such power at a reasonable price in relation to current and expected market
conditions for a sufficient term to justify its restart costs, which could be
significant depending on the number of lines restarted and the length of time
between the shutdown and restart. Given recent primary aluminum prices and the
forward price of power in the Northwest, it is unlikely that KACC will operate
the Mead facility in the near future. If KACC were to restart all or a portion
of its Mead facility, it would take at least three to six months to reach the
full operating rate for such operations, depending upon the number of lines
restarted. Even after achieving the full operating rate, operating only a
portion of the Mead facility would result in production/cost inefficiencies such
that operating results would, at best, be breakeven to modestly negative at
long-term primary aluminum prices. See Note 5 of Notes to Consolidated Financial
Statements in the Company's Form 10-K for the year ended December 31, 2002, for
a discussion of the Northwest smelters 2002 impairment charge.

In January 2003, the Court approved the sale of the Tacoma facility to the Port
of Tacoma. The sale closed in February 2003. See Note 9 for additional
discussion on the sale of the Tacoma facility.

5.    LONG-TERM DEBT

Debt consists of the following:


                                                                         September 30,    December 31,
                                                                             2003             2002
---------------------------------------------------------------------  ----------------  --------------
Secured:
   Post-Petition Credit Agreement                                      $          -      $         -
   8 1/4% Alpart CARIFA Loans due 2007                                            22.0            22.0
   7.6% Solid Waste Disposal Revenue Bonds due 2027                               19.0            19.0
   Other borrowings (fixed rate)                                                   2.5             2.6
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           225.0
   12 3/4% Senior Subordinated Notes due 2003                                    400.0           400.0
   Other borrowings (fixed and variable rates)                                    32.4            32.4
                                                                       ----------------  --------------
Total                                                                            873.7           873.8

Less - Current portion                                                             1.2              .9
        Pre-Filing Date claims included in liabilities
          subject to compromise (Note 1)                                         830.2           830.2
                                                                       ----------------  --------------
Long-term debt                                                         $          42.3   $        42.7
                                                                       ================  ==============

Post-Petition Credit Agreement. On February 12, 2002, the Company and KACC
entered into the DIP Facility with a group of lenders for debtor-in-possession
financing. In March 2003, certain of the Additional Debtors were added as
co-guarantors and the DIP Facility lenders received super-priority status with
respect to certain of the Additional Debtors' assets. The DIP Facility provides
for a secured, revolving line of credit through the earlier of February 13, 2005
(extended from February 12, 2004 in August 2003 as discussed below), the
effective date of a plan of reorganization or voluntary termination by the
Company. Under the DIP Facility, KACC is able to borrow amounts by means of
revolving credit advances and to have issued for its benefit letters of credit
(up to $125.0) in an aggregate amount equal to the lesser of $285.0 (reduced
from $300.0 in August 2003 as discussed below) or a borrowing base relating to
eligible accounts receivable, eligible inventory and an amortizing fixed asset
component, reduced by certain reserves, as defined in the DIP Facility
agreement. The DIP Facility is guaranteed by the Company and certain significant
subsidiaries of KACC. Interest on any outstanding borrowings will bear a spread
over either a base rate or LIBOR, at KACC's option. As of September 30, 2003,
$154.3 was available to the Company under the DIP Facility (of which up to $75.1
could be used for additional letters of credit) and no borrowings were
outstanding under the revolving credit facility.

The DIP Facility requires KACC to comply with certain covenants and places
restrictions on the Company's, KACC's and KACC's subsidiaries' ability to, among
other things, incur debt and liens, make investments, pay dividends, sell
assets, undertake transactions with affiliates, make capital expenditures, and
enter into unrelated lines of business. During June 2003 and August 2003, the
Company and the DIP Facility lenders completed two amendments. The first of the
two amendments (the fifth amendment to the DIP Facility) was necessary in order
to permit the Company to take certain actions necessary to facilitate access by
Queensland Alumina Limited ("QAL"), the Company's 20%-owned affiliate, to
amounts available to QAL under its financing arrangements, thereby reducing the
Company's and the other owners' funding requirements for QAL. The Company's
share of such additional financings at QAL is $43.0. The fifth amendment to the
DIP Facility was approved by the Court in June 2003. The major provisions of the
second of the two amendments (the sixth amendment to the DIP Facility) included:
(a) an extension of the maturity of the DIP Facility to February 2005, (b) an
increase in the eligible borrowing base amount under the DIP Facility by, among
other things, restoring the amortizing fixed asset component to the original
$100.0 amount as of August 2003, (c) the incorporation of the May 2003 limited
waiver and a further modification of the financial covenant for periods
beginning June 30, 2003, and (d) a reduction of the commitment amount of the DIP
Facility to $285.0. The sixth amendment was approved by the Court in August
2003.

The DIP Facility contains a number of provisions that address or could be
affected by any asset sales that may result from the possible commodity asset
divestiture program (see Note 1), including provisions that: (a) limit asset
dispositions by the Debtors; (b) limit releases of collateral securing
obligations under the DIP Facility; (c) address the Debtors' use of proceeds
from asset dispositions; (d) impact the determination of the borrowing base and
the amount of commitments under the DIP Facility; and (e) provide for certain
financial provisions. As a result, amendments or modifications to the DIP
Facility would be necessary in connection with any proposed commodity asset
sales. The Debtors will seek the requisite amendments or modifications to the
DIP Facility as required.

The borrowing base under the DIP Facility could be materially affected by any
asset dispositions that are ultimately completed because: (a) the DIP Facility
currently provides that the fixed asset component of the borrowing base is
reduced by the amount of proceeds received from certain asset dispositions (but
not to an amount less than zero); (b) eligible receivables and inventories
related to such assets would no longer be included; and (c) it is unclear to
what extent sales proceeds resulting from any asset sales that may be completed
would be available to the Company or be available to support the borrowing base.

8 1/4% Alpart CARIFA Loans. The Alpart CARIFA financing would have to be repaid
if the Company's interests in Alpart were to be sold (as discussed in Note 1).
Additionally, upon any such payment, the Company's letter of credit obligation
under the DIP Facility securing the loans (see Note 7 of Notes to Consolidated
Financial Statements in the Company's Form 10-K for the year ended December 31,
2002) would be cancelled.

7.6% Solid Waste Disposal Revenue Bonds. The 7.6% solid waste disposal revenue
bonds (the "Solid Waste Bonds") are secured by certain (but not all) of the
facilities and equipment at the curtailed Mead facility (see Note 4). Given the
uncertainty regarding the Mead facility's future operations, the Company
currently believes that it is unlikely that the value of the collateral securing
the Solid Waste Bonds will be sufficient for full recovery of the bondholders'
claim. To the extent that the total claim amount exceeds the value of the
collateral, any such excess will represent an unsecured claim subject to
compromise. The Company is currently obtaining an independent appraisal that
will assist it in estimating the value of the collateral securing the Solid
Waste Bonds. No adjustment has been reflected in the accompanying financial
statements to reclassify any amount of claims in excess of the collateral value
from secured debt (i.e. liabilities not subject to compromise) to liabilities
subject to compromise. However, the Company expects that such a reclassification
is likely and that the portion of the claim amount that will be reclassified to
liabilities subject to compromise will be significant.

6.    INCOME TAXES

The income tax provisions of $.5 and $7.0 for the quarters ended September 30,
2003 and 2002, respectively, and $4.9 and $21.4 for the nine-month periods ended
September 30, 2003 and 2002, respectively, relate primarily to foreign income
taxes. For the quarter and nine-month periods ended September 30, 2003 and 2002,
as a result of the Cases, the Company did not recognize any U.S. income tax
benefit for the losses incurred from its domestic operations (including
temporary differences) or any U.S. income tax benefit for foreign income taxes.
Instead, the increases in federal and state deferred tax assets as a result of
additional net operating losses and foreign tax credits generated in 2003 and
2002 were fully offset by increases in valuation allowances. See Note 9 of Notes
to Consolidated Financial Statements in the Company's Form 10-K for the year
ended December 31, 2002 for additional information regarding the Deferred Tax
Assets and Valuation Allowances.

In March 2003, the Company paid approximately $22.0 in settlement of certain
foreign tax matters in respect of a number of prior periods.

7.    COMMITMENTS AND CONTINGENCIES

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

Commitments. KACC has a variety of financial commitments, including purchase
agreements, tolling arrangements, forward foreign exchange and forward sales
contracts (see Note 8), letters of credit, and guarantees. Such purchase
agreements and tolling arrangements include long-term agreements for the
purchase and tolling of bauxite into alumina in Australia by QAL. These
obligations are scheduled to expire in 2008. Under the agreements, KACC is
unconditionally obligated to pay its proportional share (20%) of debt, operating
costs, and certain other costs of QAL. KACC's share of the aggregate minimum
amount of required future principal payments as of September 30, 2003, was
$60.0, which amount matures in varying amounts during the 2005 to 2008 period.
KACC's share of QAL's debt increased by approximately $8.0 during the quarter
ended September 30, 2003 as the additional draw downs on QAL financing (KACC's
share $40.0) more than offset KACC's share ($32.0) of QAL's debt principal
payment. During July 2002, KACC made payments of approximately $29.5 to QAL to
fund KACC's share of QAL's scheduled debt maturities (see Note 5). KACC's share
of payments to QAL, including operating costs and certain other expenses under
the agreements, has ranged between $95.0 - $103.0 per year over the past three
years. KACC also has agreements to supply alumina to and to purchase aluminum
from Anglesey.

Minimum rental commitments under operating leases at December 31, 2002, were as
follows: years ending December 31, 2003 - $15.2; 2004 - $6.2; 2005 - $5.4; 2006
- $3.1; 2007 - $2.4; thereafter - $3.7. Pursuant to the Code, the Debtors may
elect to reject or assume unexpired pre-petition leases. At this time, no
decisions have been made as to which significant leases will be accepted or
rejected (see Note 1).

Rental expenses were $38.3, $41.0 and $42.5 for the years ended December 31,
2002, 2001 and 2000, respectively.

KACC had a long-term liability, net of estimated subleases income, in respect of
the Kaiser Center office complex in Oakland, California, in which KACC had not
maintained offices for a number of years, but for which it was responsible for
lease payments as master tenant through 2008 under a sale-and-leaseback
agreement. The Company also held an investment in certain notes issued by the
owners of the building (which were included in Other Assets). In October 2002,
the Company entered into a contract to sell its interests in the office complex.
As the contract amount was less than the asset's net carrying value, the Company
recorded a non-cash impairment charge in 2002 of approximately $20.0 (see Note
10). The sale was approved by the Court in February 2003 and closed in March
2003. Net cash proceeds were approximately $61.1.

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 September
30, 2003, the balance of such accruals was $82.2 (of which $43.0 was included in
Liabilities subject to compromise - see Note 1). These environmental accruals
represent the Company's estimate of costs reasonably expected to be incurred in
the ordinary course of business 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. In the ordinary course, the Company
expects that these remediation actions would be taken over the next several
years and estimates that annual expenditures to be charged to these
environmental accruals will be approximately $8.0 to $12.0 in 2003 and 2004,
$1.0 to $4.0 in 2005 through 2007 and an aggregate of approximately $57.0
thereafter. Approximately $20.2 of the adjustments to the environmental
liabilities in the third quarter of 2003 (see below) that applied to non-owned
property sites has been included in the after 2007 balance because such amounts
are expected to be settled solely in connection with the Debtors' plan of
reorganization.

The September 30, 2003 accrual balance includes approximately $23.2 that was
provided during the third quarter of 2003. Approximately $20.2 of the amount
provided in the third quarter of 2003 relates to the previously disclosed
multi-site settlement agreement with various federal and state governmental
regulatory authorities and other parties in respect of KACC's environmental
exposure at a number of non-owned sites. Under this agreement, among other
things, KACC agreed to claims at such sites totaling $25.6 ($20.2 greater than
amounts that had previously been accrued for these sites) and, in return, the
governmental regulatory authorities have agreed that such claims would be
treated as pre-Filing Date unsecured claims (i.e. liabilities subject to
compromise). While KACC and the various federal and state governmental
regulatory authorities signed the agreement prior to the issuance of the June
30, 2003 financial statements, the agreement gave the regulatory authorities the
unilateral right to withdraw their approval until after the conclusion of a
public notice and comment period. Further, the agreement was also subject to
Court approval which was not obtained until October 2003. Because the agreement
was subject to significant modification or termination until the public comment
period lapsed and the Court's approval was obtained, KACC did not record the
charge associated with the agreement until the third quarter of 2003 as it was
not previously believed to be "probable" (which is the criteria for recognition
under GAAP). The Company recorded the portion of the $20.2 accrual that relates
to locations with operations ($15.7) in Other operating charges, net (see Note
10). The remainder of the accrual ($4.5), which relates to locations that have
not operated for a number of years was recorded in Other income (expense) (see
Note 10).

During September 2003, the Company also provided additional accruals totaling
approximately $3.0 associated with certain KACC-owned properties with no current
operations (recorded in Other income (expense) - see Note 10). These additional
accruals resulted primarily from additional cost estimation efforts undertaken
by the Company in connection with its reorganization efforts. The additional
accruals were recorded as liabilities not subject to compromise as they relate
to properties owned by the Company.

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 $17.0 (a majority of which are estimated to
relate to owned sites that are likely not subject to compromise). 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 may pursue claims in this
regard. However, no amounts have been accrued in the financial statements with
respect to such potential recoveries.

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. As of the initial Filing Date, approximately 112,000 claims
were pending. The lawsuits are currently stayed by the Cases.

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, the
ACC, 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 has accrued a liability for estimated asbestos-related costs for
claims filed to date and an estimate of claims to be filed through 2011. At
September 30, 2003, the balance of such accrual was $610.1, all of which was
included in Liabilities subject to compromise (see Note 1). The Company's
estimate is based on the Company's view, at September 30, 2003, of the current
and anticipated number of asbestos-related claims, the timing and amounts of
asbestos-related payments, the status of ongoing litigation and settlement
initiatives, and the advice of Wharton Levin Ehrmantraut & Klein, P.A., with
respect to the current state of the law related to asbestos claims. However,
there are inherent uncertainties involved in estimating asbestos-related costs
and the Company's actual costs could exceed the Company's estimates due to
changes in facts and circumstances after the date of each estimate. Further,
while the Company does not presently believe there is a reasonable basis for
estimating asbestos-related costs beyond 2011 and, accordingly, no accrual has
been recorded for any costs which may be incurred beyond 2011, the Company
expects that the plan of reorganization process may require an estimation of
KACC's entire asbestos-related liability, which may go beyond 2011, and that
such costs could be substantial.

The Company believes that KACC has insurance coverage available to recover a
substantial portion of its asbestos-related costs. Although the Company has
settled asbestos-related coverage matters with certain of its insurance
carriers, other carriers have not yet agreed to settlements and disputes with
carriers exist. The timing and amount of future recoveries from these insurance
carriers will depend on the pendency of the Cases and on the resolution of any
disputes regarding coverage under the applicable insurance policies. The Company
believes that substantial recoveries from the insurance carriers are probable
and additional amounts may be recoverable in the future if additional claims are
added. The Company reached this conclusion after considering its prior
insurance-related recoveries in respect of asbestos-related claims, existing
insurance policies, and the advice of Heller Ehrman White & McAuliffe LLP with
respect to applicable insurance coverage law relating to the terms and
conditions of those policies. During 2000, KACC filed suit in San Francisco
Superior Court against a group of its insurers, which suit was thereafter split
into two related actions. Additional insurers were added to the litigation in
2000 and 2002. During October 2001 and June 2003, the court ruled favorably on a
number of policy interpretation issues, one of which was affirmed in February
2002 by an intermediate appellate court in response to a petition from the
insurers. The rulings did not result in any changes to the Company's estimates
of its current or future asbestos-related insurance recoveries. The trial court
may hear additional issues from time to time. Given the expected significance of
probable future asbestos-related payments, the receipt of timely and appropriate
payments from its insurers is critical to a successful plan of reorganization
and KACC's long-term liquidity.

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


                                                            September 30,        December 31,
                                                                2003                 2002
-------------------------------------------------------   -----------------   ------------------
Liability                                                 $          610.1    $           610.1
Receivable (included in Other assets)(1)                             466.2                484.0
                                                          -----------------   ------------------
                                                          $          143.9    $           126.1
                                                          =================   ==================

(1)   The asbestos-related receivable was determined on the same basis as the
      asbestos-related cost accrual. However, no assurances can be given that
      KACC will be able to project similar recovery percentages for future
      asbestos-related claims or that the amounts related to future
      asbestos-related claims will not exceed KACC's aggregate insurance
      coverage. As of September 30, 2003 and December 31, 2002, $6.9 and $24.7,
      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.


                                                                 Nine Months
                                                                    Ended                Inception
                                                             September 30, 2003           To Date
---------------------------------------------------------  ----------------------   ------------------
Payments made, including related legal costs               $             -          $          (355.7)
Insurance recoveries                                                        17.8                263.2
                                                           ----------------------   ------------------
                                                           $                17.8    $           (92.5)
                                                           ======================   ==================

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

Management continues to monitor claims activity, the status of lawsuits
(including settlement initiatives), legislative developments, and costs incurred
in order to ascertain whether an adjustment to the existing accruals should be
made to the extent that historical experience may differ significantly from the
Company's underlying assumptions. Additional asbestos-related claims are likely
to be asserted as a part of the Chapter 11 process. Management cannot at this
time reasonably predict the ultimate number of such claims or the amount of the
associated liability. However, it is likely that such amounts could exceed,
perhaps significantly, the liability amounts reflected in the Company's
consolidated financial statements, which (as previously stated) is only
reflective of an estimate of claims through 2011. KACC's obligations in respect
of the currently pending and future asbestos-related claims will ultimately be
determined (and resolved) as a part of the overall Chapter 11 proceedings. It is
anticipated that resolution of these matters could 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.

KACC has entered into settlement agreements with several of the insurers whose
asbestos-related obligations are primarily in respect of future asbestos claims.
These settlement agreements were approved by the Court. In accordance with the
Court approval, the insurers are to pay certain amounts, pursuant to the terms
of an escrow agreement, into a fund (the "Escrow Fund") in which KACC has no
interest, but which amounts will be available for the ultimate settlement of
KACC's asbestos-related claims. Because the Escrow Fund is under the control of
the escrow agent, who will make distributions only pursuant to a Court order,
the Escrow Fund is not included in the accompanying consolidated balance sheet
at September 30, 2003. In addition, since neither the Company nor KACC received
any economic benefit or suffered any economic detriment and have not been
relieved of any asbestos-related obligation as a result of the receipt of the
escrow funds, neither the asbestos-related receivable or the asbestos-related
liability have been adjusted as a result of these transactions. As of September
30, 2003, the insurers had paid $7.6 into the Escrow Fund. It is possible that
settlements with additional insurers will occur. However, no assurance can be
given that such settlements will occur.

Labor Matters. In connection with the United Steelworkers of America ("USWA")
strike and subsequent lock-out by KACC, which was settled in September 2000,
certain allegations of unfair labor practices ("ULPs") were filed with the
National Labor Relations Board ("NLRB") by the USWA. As previously disclosed,
KACC has responded to all such allegations and believes that they were without
merit. Twenty-two of twenty-four allegations of ULPs previously brought against
KACC by the USWA have been dismissed. A trial before an administrative law judge
for the two remaining allegations concluded in September 2001. In May 2002, the
administrative law judge ruled against KACC in respect of the two remaining ULP
allegations and recommended that the NLRB award back wages, plus interest, less
any earnings of the workers during the period of the lockout. The administrative
law judge's ruling did not contain any specific amount of proposed award and is
not self-executing. The USWA has filed a proof of claim for $240.0 in the Cases
in respect of this matter. The NLRB also filed a proof of claim in respect of
this matter for $117.0, including interest of approximately $18.0. However, the
Company was recently notified that the NLRB had revised its estimate of its
claim to $213.0. Depending on the ultimate amount of any interest due and amount
of offsetting employee earnings and other factors, if the USWA ultimately were
to prevail it is possible that the amount of the award could exceed $200.0. It
is also possible that the Company may ultimately prevail on appeal and that no
loss will occur.

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

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

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.

8.    DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING PROGRAMS

In conducting its business, KACC uses various instruments, including forward
contracts and options, to manage the risks arising from fluctuations in aluminum
prices, energy prices and exchange rates. KACC enters into hedging transactions
from time to time to limit its exposure resulting from (1) its anticipated sales
of alumina, primary aluminum, and fabricated aluminum products, net of expected
purchase costs for items that fluctuate with aluminum prices, (2) the energy
price risk from fluctuating prices for natural gas, fuel oil and diesel oil used
in its production process, and (3) foreign currency requirements with respect to
its cash commitments with foreign subsidiaries and affiliates. As KACC's hedging
activities are generally designed to lock-in a specified price or range of
prices, gains or losses on the derivative contracts utilized in the hedging
activities generally offset at least a portion of any losses or gains,
respectively, on the transactions being hedged.

2003. The following table summarizes KACC's material derivative positions at
September 30, 2003.


                                                                                  Estimated %
                                                                Notional          of Periods           Carrying/
                                                                Amount of       Sales/Purchases         Market
              Commodity                      Period             Contracts           Hedged               Value
-----------------------------------   ---------------------   -------------   -------------------  -----------------
Aluminum (in tons*) -
      Option contracts                 10/03 through 12/03           54,000           96%          $           1.9

Energy -
   Fuel Oil (in barrels per month):
      Option contracts                 10/03 through 12/03          230,000          100%                       .2

   Natural gas (in mmbtu per day):
      Option contracts                 10/03 through 11/03               50           96%                       .3

In October 2003, KACC purchased additional option contracts which cap the price
that KACC would have to pay for approximately 25% of its fuel oil requirements
for January, February and March 2004 and approximately 25% of its natural gas
requirements for December 2003. During October, KACC also purchased option
contracts that established a floor for approximately one-fourth of its product
sales that are linked to January, February and March 2004 primary aluminum
prices.

The Company anticipates that, subject to prevailing economic conditions, it may
enter into additional hedging transactions with respect to primary aluminum
prices, natural gas and fuel oil prices and foreign currency values to protect
the interests of its constituents. However, no assurance can be given as to when
or if the Company will enter into such additional hedging activities.

As of September 30, 2003, KACC had sold forward substantially all of the alumina
available to it in excess of its projected internal smelting requirements for
the balance of 2003 and a vast majority of such alumina in 2004 and 2005 at
prices indexed to future prices of primary aluminum.

2002. Because the agreements underlying KACC's hedging positions provided that
the counterparties to the hedging contracts could liquidate KACC's hedging
positions if KACC filed for reorganization, KACC chose to liquidate these
positions in advance of the Filing Date. Proceeds from the liquidation totaled
approximately $42.2. A net gain of $23.3 associated with these liquidated
positions was deferred and is being recognized over the period during which the
underlying transactions to which the hedges related are expected to occur. The
net gain upon liquidation consisted of: gains of $30.2 for aluminum contracts
and losses of $5.0 for Australian dollars and $1.9 for energy contracts. As of
September 30, 2003, the remaining unamortized amount was approximately a net
loss of $2.0.

9.    DISCONTINUED OPERATIONS

The Company has previously disclosed that, in connection with the development of
a plan of reorganization, it conducted a study of the long-term competitive
position of the Mead and Tacoma facilities and potential options for these
facilities. When the Company received the preliminary results of the study, it
analyzed the findings and met with the USWA and other parties prior to making
its determination as to the appropriate action(s). The outcome of the study and
the Company's ongoing work on developing a plan of reorganization led the
Company to conclude that the Tacoma facility, whose aluminum smelting operations
had been curtailed since the last half of 2000, could not compete with the much
larger, newer and more efficient smelters, generally located outside the United
States. As a result, the Company entered into an agreement, which was approved
by the Court in January 2003, to sell the Tacoma facility to the Port of Tacoma
(the "Port"). Gross proceeds from the sale, before considering approximately
$4.0 of proceeds being held in escrow pending the resolution of certain
environmental and other issues, were approximately $12.1. The Port also agreed
to assume the on-site environmental remediation obligations. The sale closed in
February 2003. The sale resulted in a pre-tax gain of approximately $9.5. In
accordance with Statement of Financial Accounting Standards No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"), the
operating results of the Tacoma facility for the quarter and nine-month periods
ended September 30, 2003 and 2002 and the gain from the sale of the Tacoma
facility have been reported as discontinued operations in the accompanying
Statements of Consolidated Income (Loss). The balances and operating results
associated with the Tacoma facility were previously included in the Primary
Aluminum business segment.

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

10.   OTHER OPERATING CHARGES AND OTHER INCOME (EXPENSE)

Other Operating (Charges) Benefits, Net. The income (loss) impact associated
with other operating (charges) benefits, net for the quarter and nine-month
periods ended September 30, 2003 and 2002, was as follows (the business segment
to which the item is applicable is indicated):


                                                                      Quarter Ended             Nine Months Ended
                                                                      September 30,               September 30,
                                                                ------------------------    ------------------------
                                                                   2003         2002           2003         2002
                                                                -----------  -----------    ----------  ------------
Restructuring charges -
   Primary Aluminum                                             $       -    $     (1.0)    $    (1.3)  $      (2.7)
   Bauxite & Alumina                                                    -            -            (.1)         (1.9)
   Fabricated Products                                                  -          (2.8)            -          (6.7)
Impairment charges -
   Primary Aluminum                                                     -          (3.4)            -          (3.4)
   Eliminations - Intersegment profit elimination on Primary
      Aluminum inventory charge                                         -           1.9             -           1.9
   Corporate - Kaiser Center Office Complex (Note 7)                    -         (20.0)            -         (20.0)
Restructured transmission service agreement - Primary
   Aluminum (Note 4)                                                  (3.2)          -           (3.2)           -
Environmental multi-site settlement - Corporate (Note 7)             (15.7)          -          (15.7)           -
Gain on sale of equipment, net - Fabricated Products                   3.9           -            3.9            -
Product lines exit charge - Fabricated Products                         -            -              -          (1.6)
Other                                                                   -            -             .8            -
                                                                -----------  -----------    ----------  ------------
                                                                $    (15.0)  $    (25.3)    $   (15.6)  $     (34.4)
                                                                ===========  ===========    ==========  ============

Restructuring Charges -

Restructuring charges in 2003 consist of employee benefit costs associated with
approximately 20 job eliminations (all of which have been eliminated) during the
first half of 2003 resulting primarily from the Primary aluminum business
segment's Mead facility's indefinite curtailment (see Note 4 ). Restructuring
charges in 2002 resulted from initiatives designed to increase operating cash
flow, generate cash from inventory reduction and improve the Company's financial
flexibility. These initiatives resulted in restructuring charges in the third
quarter of 2002 of employee benefit and related costs of $3.8 associated with
140 job eliminations. Restructuring charges for the 2002 year-to-date period
consisted of $9.4 of employee benefit and related costs associated with 200 job
eliminations and $1.9 of third party costs associated with cost reduction
initiatives. All of the positions had been eliminated by the end of 2002.

Impairment Charges -

Impairment charges at the Primary aluminum business segment in 2002 included a
third quarter charge of $3.4 to write-down certain alumina inventories at the
Company's Northwest smelters to their net realizable values. The charge at
Primary Aluminum was partially offset by a $1.9 benefit in the Eliminations
segment representing the elimination of deferred intersegment profit included in
the Primary aluminum inventory charge.

Other (Charges) Credits -

In July 2003, with Court approval, the Company sold certain equipment at the
Trentwood flat rolled products facility that was no longer required as a part of
past product rationalizations. Proceeds from the sale were approximately $7.0,
resulting in a net gain of approximately $5.0 after considering sale related
costs. The gain on the sale of this equipment has been netted against additional
impairment charges of approximately $1.1 associated with equipment to be
abandoned or otherwise disposed of primarily as a result of product
rationalizations. The equipment that was sold in July 2003 had been impaired to
a zero basis in the fourth quarter of 2001. The impairment was based on
information available at that time and the expectation that proceeds from the
eventual sale of the equipment would be fully offset by sale related costs to be
borne by the Company (see Note 5 of Notes to Consolidated Financial Statements
in the Company's Form 10-K for the year ended December 31, 2002 for additional
information regarding the 2001 Trentwood impairment charge).

The product line exit charge in 2002 relates to a $1.6 LIFO inventory charge
which resulted from the Fabricated products segment's exit from the lid and tab
stock and brazing sheet product lines.

Other Income (Expense). Other income (expense), other than interest expense, for
the quarter and nine-month periods ended September 30, 2003, included
adjustments to the environmental liabilities of approximately $7.5. Other income
(expense), other than interest expense, for the nine-month period ended
September 30, 2003 also included approximately $1.7 of adverse foreign currency
exchange impacts associated with a foreign tax settlement in the first quarter
of 2003. Other income (expense), other than interest expense, in 2002 included a
gain of $4.0 for the nine-month period ended September 30, 2002 from the sale,
in the ordinary course of business, of certain non-operating property. Proceeds
from the sale totaled $4.5.

11.   VALCO RELATED MATTERS

The amount of power made available to the Company's 90%-owned Volta Aluminium
Company ("Valco") by the Volta River Authority ("VRA") depends in large part on
the level of the lake that is the primary source for generating the
hydroelectric power used to supply the smelter. The level of the lake is
primarily a function of the level of annual rainfall and the alternative
(non-Valco) uses of the power generated, as directed by the VRA. The Company has
previously disclosed that Valco's power allocation was reduced in January 2003
resulting in the curtailment of two of its three operating potlines.

As previously disclosed, during the first half of 2003, the lake level was at or
near a record low level. Based on the level of the lake and the rate at which it
had been declining, the Company believed that curtailment of Valco's last
remaining operating potline was likely. Accordingly, in light of the previous
curtailments ordered by the VRA and the declining lake level, in May 2003, the
Company curtailed the last operating potline. The curtailment of the last
operating potline was believed to: (1) offer the VRA and the Government of Ghana
("GoG") a contribution toward conservation of the water supply to improve their
ability to meet Valco's future power needs as well as meet the near-term needs
of the rest of Ghana and (2) provide Valco its best opportunity to restart late
in 2003 once the annual rainy season had replenished the lake level and Valco's
2004 power allocation was known. The rainy season has now nearly ended and the
lake level is currently expected to crest at a more typical level. However,
given the relatively short time to the beginning of 2004 and the status of
negotiations with the VRA and GoG, Valco currently does not expect that it will
have the opportunity to restart until early to mid-2004. However, no assurances
can be given as to when any such restart will actually occur or that, when Valco
desires to restart its operations, the status of the negotiation and/or
arbitration processes will permit a restart or power usage by the VRA will not
cause the lake to once again approach a critical level. Further, any restart
would initially have negative cost and liquidity ramifications for Valco as
restart costs have typically approximated $2.5 per line and increased funding by
KACC would be required to fund inventory. Accordingly, for Valco to restart one
or more potlines would require appropriate market circumstances as well as a
level of certainty that the operating level be maintained for an extended
period.

During the first six months of 2003, $12.8 of employee end-of-service benefits
were paid resulting in $8.1 of charges in 2003 in connection with the 2003
potline curtailments. All charges are included in Cost of products sold. In
addition, if a restart of Valco potlines does not occur by early 2004, Valco
will become liable for approximately $2.8 of additional end-of-service benefits.
The additional accruals relate to employees currently on layoff status who have
the ability to receive (pursuant to contractual terms) end-of-service benefits
if they are not returned to work within 12 months of their layoff date. Since
Valco cannot predict at this time whether a restart of any potlines in early
2004 is likely, Valco and the Company do not consider the end-of-service
benefits to be probable and have, therefore, not provided an accrual in respect
of such obligation.

Valco has met with the GoG and the VRA and anticipates such discussions will
continue in respect of the current and future power situation and other matters.
Valco has objected to the power curtailments and expects to seek appropriate
compensation from the GoG and the VRA. In addition, Valco and KACC have filed
for arbitration with the International Chamber of Commerce in Paris against both
the GoG and the VRA. The arbitration process began in October 2003 and will be
conducted periodically throughout most of 2004. However, a decision in this
matter is not expected until the latter part of 2004 at the earliest. No
assurances can be given as to the ultimate success of the arbitration process or
any alternative negotiations. Valco and KACC do not expect the curtailment of
the last operating potline to have any adverse impact on the pending
arbitrations or negotiations with the VRA and GoG.

12.   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, 2002. 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 16 of Notes to Consolidated Financial
Statements in the Company's Form 10-K for the year ended December 31, 2002.

During the second quarter of 2003, the Company elected to change its business
segment reporting. Two of the Company's previously reported operating segments,
Flat-rolled products and Engineered products, have been designated as one
business segment, Fabricated products. The previously reported segments were
combined primarily due to a significant integration in the organization and
management of the two segments, as well as the similarity of their economic
characteristics, products, customers and production and distribution processes.
The change in segment reporting is also an outgrowth of the Company's strategic
vision as part of its planning for its ultimate emergence from Chapter 11.
Financial data for prior periods has been restated to conform to the revised
segment reporting.

Financial information by operating segment for the quarter and nine-month
periods ended September 30, 2003 and 2002 is as follows:


                                                         Quarter Ended               Nine Months Ended
                                                         September 30,                 September 30,
                                                  ---------------------------   --------------------------
                                                      2003           2002           2003          2002
                                                  ------------   ------------   ------------  ------------
Net Sales:
   Bauxite and Alumina:
      Net sales to unaffiliated customers         $     129.5    $      99.0    $     405.0   $     327.5
      Intersegment sales                                  4.4            9.2           14.7          41.4
                                                  ------------   ------------   ------------  ------------
                                                        133.9          108.2          419.7         368.9
                                                  ------------   ------------   ------------  ------------
   Primary Aluminum:
      Net sales to unaffiliated customers                26.7           64.7          101.6         200.0
      Intersegment sales                                   -              .1             -            2.5
                                                  ------------   ------------   ------------  ------------
                                                         26.7           64.8          101.6         202.5
                                                  ------------   ------------   ------------  ------------
   Fabricated Products                                  145.4          149.6          443.4         474.0
   Commodities Marketing (Note 8)                         1.8            9.3            5.6          30.8
   Minority Interests                                    23.7           25.4           69.3          72.6
   Eliminations                                          (4.4)          (9.3)         (14.7)        (43.9)
                                                  ------------   ------------   ------------  ------------
                                                  $     327.1    $     348.0    $   1,024.9   $   1,104.9
                                                  ============   ============   ============  ============
Operating income (loss):
   Bauxite and Alumina                            $     (25.6)   $     (15.3)   $     (67.7)  $     (30.5)
   Primary Aluminum (Note 9)                             (8.8)          (5.7)         (36.2)        (12.7)
   Fabricated Products                                   (5.5)          (5.2)         (12.4)        (11.1)
   Commodities Marketing (Note 8)                         (.5)           9.0            2.4          28.1
   Eliminations                                            .4           (1.5)           1.4           1.4
   Corporate and Other                                  (20.0)         (20.6)         (59.0)        (75.8)
   Other Operating Charges, Net (Note 10)               (15.0)         (25.3)         (15.6)        (34.4)
                                                  ------------   ------------   ------------  ------------
                                                  $     (75.0)   $     (64.6)   $    (187.1)  $    (135.0)
                                                  ============   ============   ============  ============
Depreciation and amortization:
   Bauxite and Alumina                            $       9.9    $       9.8    $      29.7   $      29.4
   Primary Aluminum                                       2.2            5.4            6.6          16.1
   Fabricated Products                                    5.7            6.9           17.5          21.0
   Corporate and Other                                     .2             .5            1.6           1.1
                                                  ------------   ------------   ------------  ------------
                                                  $      18.0    $      22.6    $      55.4   $      67.6
                                                  ============   ============   ============  ============

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, 2002, 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

The Company, its wholly owned subsidiary, Kaiser Aluminum & Chemical Corporation
("KACC"), and 24 of KACC's subsidiaries have filed separate voluntary petitions
in the United States Bankruptcy Court for the District of Delaware (the "Court")
for reorganization under Chapter 11 of the United States Bankruptcy Code (the
"Code"); the Company, KACC and 15 of KACC's subsidiaries (the "Original
Debtors") filed in the first quarter of 2002 and nine additional KACC
subsidiaries (the "Additional Debtors") filed in the first quarter of 2003. The
Original Debtors and Additional Debtors are collectively referred to herein as
the "Debtors" and the Chapter 11 proceedings of these entities are collectively
referred to herein as the "Cases." For purposes of this Report, the term "Filing
Date" shall mean, with respect to any particular Debtor, the date on which such
Debtor filed its Case. None of KACC's non-U.S. joint ventures are included in
the Cases. The Cases are being jointly administered. The Debtors are managing
their businesses in the ordinary course as debtors-in-possession subject to the
control and administration of the Court.

Original Debtors. The necessity for filing the Cases by the Original Debtors was
attributable to the liquidity and cash flow problems of the Company and its
subsidiaries arising in late 2001 and early 2002. The Company was facing
significant near-term debt maturities at a time of unusually weak aluminum
industry business conditions, depressed aluminum prices and a broad economic
slowdown that was further exacerbated by the events of September 11, 2001. In
addition, the Company had become increasingly burdened by asbestos litigation
and growing legacy obligations for retiree medical and pension costs. The
confluence of these factors created the prospect of continuing operating losses
and negative cash flows, resulting in lower credit ratings and an inability to
access the capital markets. In connection with the filing of the Original
Debtors' Cases, the Original Debtors are prohibited from paying pre-Filing Date
obligations other than those related to certain joint ventures and in certain
other limited circumstances approved by the Court.

Additional Debtors. The Cases filed by the Additional Debtors were commenced,
among other reasons, to protect the assets held by these Debtors against
possible statutory liens that might arise and be enforced by the Pension Benefit
Guaranty Corporation ("PBGC") primarily as a result of the Company's failure to
meet a $17.0 million accelerated funding requirement to its salaried employee
retirement plan in January 2003. From an operating perspective, the filing of
the Cases by the Additional Debtors had no impact on the Company's day-to-day
operations. In contrast to the circumstances of the Original Debtors, the Court
authorized the Additional Debtors to continue to make all payments in the normal
course of business (including payments of pre-Filing Date amounts) to creditors.

All Debtors. Two creditors' committees, one representing the unsecured creditors
(the "UCC") and the other representing the asbestos claimants (the "ACC"), have
been appointed as official committees in the Cases and, in accordance with the
provisions of the Code, will have the right to be heard on all matters that come
before the Court. In August 2003, the Court approved the appointment of a
committee of salaried retirees (the "1114 Committee" and, together with the UCC
and the ACC, the "Committees") with whom the Debtors are discussing necessary
changes, including the modification or termination, of certain retiree benefits
(such as medical and insurance) under Section 1114 of the Code. The Debtors
expect that the Committees, together with the legal representative for potential
future asbestos claimants (the "Futures' Representative") that has been
appointed in the Cases, will play important roles in the Cases and the
negotiation of the terms of any plan or plans of reorganization. The Debtors are
required to bear certain costs and expenses for the Committees and the Futures'
Representatives, including those of their counsel and other advisors.

As provided by the Code, the Original Debtors had the exclusive right to propose
a plan of reorganization for 120 days following the initial Filing Date. The
Court has subsequently approved several extensions of the exclusivity period for
all Debtors, the most recent of which was set to expire October 31, 2003. A
motion to extend the exclusivity period through February 29, 2004, was filed by
the Debtors in October 2003. By filing the motion to extend the exclusivity
period, the period is automatically extended until the December 15, 2003 Court
hearing date. As the Debtors' motion to extend the exclusivity period through
February 29, 2004 was agreed to by the UCC, the ACC and the Futures'
Representative in advance of the filing, the Debtors expect the motion to be
approved by the Court. Additional extensions are likely to be sought. However,
no assurance can be given that such future requests will be granted by the
Court. If the Debtors fail to file a plan of reorganization during the
exclusivity period, or if such plan is not accepted by the requisite numbers of
creditors and equity holders entitled to vote on the plan, other parties in
interest in the Cases may be permitted to propose their own plan(s) of
reorganization for the Debtors.

The Debtors anticipate that substantially all liabilities of the Debtors as of
the date of the Filing will be resolved under one or more plans of
reorganization to be proposed and voted on in 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 as to whether such plan or plans will be confirmed by the Court
and consummated. At this time, it is not possible to predict the outcome of the
Cases, in general, or the effect any such outcome may have on the businesses of
the Debtors.

In working toward a plan of reorganization, the Debtors have been, and continue
to be, engaged in discussions with each of their key constituencies, including
the Committees, the Futures' Representative, the PBGC, and the appropriate union
representatives. The treatment of individual groups of creditors in any such
plan of reorganization cannot be determined definitively at this time. The
ultimate treatment of and recoveries to individual creditors is dependent on,
among other things, the total amount of claims against the Debtors as ultimately
determined by the Court, the priority of the applicable claim, the outcome of
ongoing discussions with the key constituencies, the amount of value available
for distribution in respect of claims and the completion of the plan
confirmation process consistent with applicable bankruptcy law.

The Debtors' objective is to achieve the highest possible recoveries for all
stakeholders, consistent with the Debtors' abilities to pay, and to continue the
operations of their businesses. However, there can be no assurance that the
Debtors will be able to attain these objectives or achieve a successful
reorganization. While valuation of the Debtors' assets and estimation of
pre-Filing Date claims at this stage of the Cases are subject to inherent
uncertainties, the Debtors currently believe that it is likely that their
liabilities will be found to exceed the fair value of their assets. Therefore,
the Debtors currently believe that it is likely that substantially all
pre-Filing Date claims will be settled at less than 100% of their face value and
the equity of the Company's stockholders will be cancelled without
consideration. Further, the Debtors believe that it is likely that: (a) the
claims of pre-petition creditors that are given certain priorities by statute or
have the benefit of guarantees or other contractual or structural seniority will
likely receive substantially greater recoveries than pre-petition creditors that
have no such priorities or seniority; and (b) all pending and future
asbestos-related personal injury claims are likely to be resolved through the
formation, pursuant to a plan of reorganization, of a statutory trust to which
all claims would be directed by a channeling injunction that would permanently
remove all asbestos liability from the Debtors. The trust would be funded
according to statutory requirements, using the Debtors' insurance assets and
certain other consideration that has yet to be agreed. No assurances can be
provided that the foregoing will ultimately be included in any plan(s) of
reorganization the Debtors may file. Further, while the Debtors believe it is
possible to successfully reorganize their operations and emerge from Chapter 11
in 2004, their ability to do so is subject to inherent market-related risks as
well as successful negotiation and Court approval for the treatment of creditors
consistent with the applicable bankruptcy law.

The Company expects that, when the Debtors ultimately file a plan of
reorganization, it is likely to reflect the Company's strategic vision for
emergence from Chapter 11: (a) a standalone going concern with manageable
leverage, improved cost structure and competitive strength; (b) a company
positioned to execute its long-standing vision of market leadership and growth
in fabricated products specifically with a financial structure that provides
financial flexibility, including access to capital markets, for accretive
acquisitions; (c) a company that delivers a broad product offering and
leadership in service and quality for its customers and distributors; and (d) a
company with continued presence in those commodities markets that have the
potential to generate significant cash at steady-state metal prices. While the
Company intends to continue to pursue a standalone fabricated products company
emergence strategy, from time to time the Debtors may also evaluate other
reorganization strategies, consistent with the Debtors' responsibility to
maximize the recoveries for its stakeholders. The Company's advisors have
developed a preliminary timeline that, assuming the current pace of the Cases
continues, could allow the Company to emerge from Chapter 11 in mid-2004.
However, the Debtors' ability to do so is subject to the confirmation of a plan
of reorganization in accordance with the applicable bankruptcy law. Accordingly,
no assurances can be given in this regard.

In light of the Company's stated strategy and to further the Debtors' ultimate
planned emergence from Chapter 11, the Debtors, with the approval of the Board
of Directors and in consultation with the UCC, the ACC and the Futures'
Representative, are exploring the possible sale of one or more of their
commodities businesses. In particular, the Debtors are currently exploring the
possible sale of their interests in and related to: (a) Alumina Partners of
Jamaica ("Alpart"); (b) Anglesey Aluminium Limited ("Anglesey"); and (c) KACC's
alumina refinery located at Gramercy, Louisiana ("Gramercy") and Kaiser Jamaica
Bauxite Company ("KJBC"). The possible sale of the Debtors' interests in respect
of Gramercy and KJBC is being explored jointly given their significant
integration.

In exploring the sale of the commodities businesses, the Debtors, through their
investment advisors, surveyed the potential market and initiated discussions
with numerous parties believed to have an interest in such assets. In addition,
other parties contacted the Debtors and/or their investment advisors to express
an interest in purchasing the assets. The Debtors provided (subject to
confidentiality agreements) information regarding the applicable interests to
these parties, each of which was asked to submit a non-binding expression of
interest regarding the individual assets. After receiving these initial
expressions of interest from potential purchasers, the Debtors determined which
of the expressions of interest received through the date hereof represented
reasonable indications of value ("Qualified Bids"). Potential bidders
("Qualified Bidders") that submitted Qualified Bids were then permitted to
conduct due diligence in respect of the assets for which they submitted a
Qualified Bid and to submit definitive proposals.

The Debtors are currently reviewing the definitive proposals submitted and, in
consultation with the UCC, the ACC and the Futures' Representative, and other
key constituencies, will determine whether to pursue further negotiations with
Qualified Bidders. Although the Company's Board of Directors has authorized the
Debtors to explore the potential divestiture of each of the identified
commodities businesses, the Company's Board of Directors has not, as of this
time, authorized the sale of any of the interests. Any sale that the Debtors
might ultimately choose to pursue would be subject to the approval of the
Company's Board of Directors, the lenders under the Debtors'
debtor-in-possession financing (the "DIP Facility") and the Court. In addition,
the DIP Facility would have to be amended or modified in connection with any
such sales. Moreover, in connection with any sales of the interests in Alpart
and Anglesey, the Debtors would be required to accommodate certain rights of the
other holders in those entities to purchase the Debtors' interests at the price
specified at which such interests are proposed to be sold by the Debtors.

While no commodity asset sales are currently imminent, it is possible that one
or more sales may occur during the first half of 2004. However, no assurances
can be given that acceptable offers will be received for any assets or that any
assets will ultimately be sold. Further, the Company's strategic vision is
subject to continuing review in consultation with the Company's stakeholders and
may also be modified from time to time as the Cases proceed due to such items as
changes in the global markets, changes in the economics of the Company's
facilities or changing financial circumstances.

Continued sales of non-core assets and facilities that are ultimately determined
not to be an important part of the reorganized entity are likely.

Impact of the Cases on Financial Information. In light of the Cases, the
accompanying financial information of the Company and related discussions of
financial condition and results of operations are based on the assumption that
the Company will continue as a "going concern," which contemplates the
realization of assets and the liquidation of liabilities in the ordinary course
of business; however, as a result of the commencement of the Cases, such
realization of assets and liquidation of liabilities are subject to a
significant number of uncertainties. Specifically, the financial information for
the quarter and nine-month periods ended September 30, 2003, contained herein
does not present: (a) the realizable value of assets on a liquidation basis or
the availability of such assets to satisfy liabilities, (b) the amount which
will ultimately be paid to settle liabilities and contingencies that may be
allowed in the Cases, or (c) the effect of any changes that may occur in
connection with the Debtors' capitalizations or operations resulting from a plan
of reorganization. Because of the ongoing nature of the Cases, the discussions
and consolidated financial statements contained herein are subject to material
uncertainties.

As discussed more fully above, the Company is exploring the possible divestiture
of certain of its commodity assets. Specifically, the Company is engaged in
separate processes that could result in the divestiture of the Company's
interests in Anglesey, Alpart and Gramercy/KJBC. Definitive bids for such assets
have recently been received and are currently being evaluated. It is possible
that additional bids may be received. It is possible that one or all of the bids
could be deemed to be acceptable and that sale transactions in respect of the
Company's interests in these assets may be completed during the first half of
2004. It is also possible that the Company's Board of Directors, after
appropriate consultation with the Company's advisors and the UCC, the ACC and
the Futures' Representative and other key constituencies in the Cases, may
determine that a sale of one or more of these assets, at this point, is not in
the best interests of creditors and other stakeholders.

For the purpose of preparing the September 30, 2003 financial statements, the
Company evaluated the book value of its interests in long-term assets related to
these interests on a "hold and use" basis since, among other requirements, none
of the Company's Board of Directors, the DIP Facility lenders or the Court have
approved any possible sales. The Company believes that, if the assets are
retained, undiscounted net cash flows associated with these assets are
sufficient to recover the Company's book value of these long-term assets at
September 30, 2003, which were as follows:


Anglesey                                       $             15.0
Alpart(1)                                                   196.6
Gramercy/KJBC                                               375.9
                                               -------------------
                                               $            587.5
                                               ===================

---------------------------
(1)   Kaiser's 65% share of Alpart's net property, plant and equipment.

The Company cannot currently predict whether the Company's interests in
Anglesey, Alpart and Gramercy/KJBC will ultimately be sold as a result of the
aforementioned processes. Further, as stated above, the Company has not had
sufficient time to evaluate the terms of the various proposals submitted by the
possible purchasers. Additionally, it is possible that the terms of any
transactions may change by the time that definitive agreements are signed,
requisite approvals of the DIP Facility lenders are obtained and the Court
approval for such transaction would be sought. Therefore, in evaluating the
Debtors' share of the long-term assets and interests related to Anglesey, Alpart
and Gramercy/KJBC, the Company did not include a sale scenario in its impairment
evaluation. However, the Company believes that if it were to sell these assets,
it is likely that (a) a gain would result on the sale of interests in Anglesey,
(b) the interest in Alpart would be sold for amounts within a reasonable range
of its net book value, and (c) the sale of the Company's interests in
Gramercy/KJBC would result in a material non-cash impairment charge.

However, as discussed above, since any sale is subject to a number of approvals
(including the Board of Directors, the DIP Facility lenders and the Court) and
further negotiations still have to occur, no assurances can be given that any of
the foregoing interests or other assets will be sold.

RECENT EVENTS AND DEVELOPMENTS

Liquidity/Negative Cash Flow. Cash and cash equivalents decreased by $28.5
million during the first nine months of 2003. The net decrease resulted from
cash used by operating activities ($80.4 million) and financing activities ($4.0
million) offset by net cash generated from investing activities of $55.9 million
(see Notes 7 and 9 of Notes to Interim Consolidated Financial Statements). The
$80.4 million of cash used by operating activities included receipts and
payments that are significant and/or may not be typical. The following table
displays the impact of such items on cash used by operating activities (amounts
in millions):


Net cash used by operating activities per Statement of Consolidated Cash Flows                       $       (80.4)
Less receipts:
   Asbestos-related insurance receipts in respect of prior year asbestos-related payments                    (17.8)
   KACC's share of Queensland Alumina Limited ("QAL") net borrowings in second and third
      quarters that reduced Company's cash requirements to fund QAL (11.0)
   Benefit from decreases in receivables and inventories due to Volta Aluminium
   Company
      Limited ("Valco") potline curtailment in excess of lost earnings                                       (20.0)
Add payments:
   Foreign income tax payments related to prior years                                                         22.0
   End-of-service benefit payments in connection with Valco's potline curtailment                             12.8
                                                                                                     --------------
                                                                                                     $       (94.4)
                                                                                                     ==============

The negative cash flow in 2003 resulted from a combination of adverse market
factors in the business segments in which the Company operates including (a)
primary aluminum prices that were below long-term averages, (b) weak demand for
fabricated metal products in general, but particularly for engineered products,
(c) higher than average power, fuel oil and natural gas prices and (d)
significant expenditures in respect of retiree medical and reorganization costs.

The net $94.4 million (as shown above) can be split, in broad terms, as follows
(in millions):


Commodities                                            $          (19.0)
Fabricated Products                                                17.0
Corporate and Other                                               (92.4)
                                                       -----------------
                                                       $          (94.4)
                                                       =================

Negative cash flow of the Commodities businesses reflects the adverse primary
aluminum, energy and operating factors discussed above and in Results of
Operations below. The primary components of the negative cash flow are due to
high energy prices, weak primary aluminum prices, issues with respect to
operating performance at the alumina facilities (see Results of Operations) and
ongoing costs at the fully curtailed Mead and Valco facilities.

Fabricated Products reflects a net positive cash flow, albeit minimal, despite
the adverse economic environment. This is largely due to cost-cutting
initiatives offsetting reduced product prices and shipments.

The Corporate and Other negative cash flow includes all retiree medical
payments, which totaled approximately $45.0 million, for the nine-month period
ended September 30, 2003. For cash flow analysis purposes, these amounts are not
allocated back to the business segments. Also the Corporate and Other negative
cash flow includes key employee retention program ("KERP") payments of
approximately $5.0 million, approximately $19.2 million of reorganization
disbursements and other disbursements (primarily general and administrative
costs).

Cash used in operations during 2002 of $49.6 million also had a number of
significant receipts and payments, and was affected by similar operating
conditions and market factors as those experienced in 2003 (see Management's
Discussion and Analysis of Financial Condition and Results of Operations,
Significant Items, Liquidity/Negative Cash in the Company's Annual Report on
Form 10-K for the year ended December 31, 2002).

Despite the foregoing, the Company's liquidity (cash and cash equivalents plus
unused credit availability under the DIP Facility) has remained strong,
averaging approximately $200.0 million during the first nine months of 2003.
Also, during August 2003, the Company and the lenders under the DIP Facility
completed an amendment to the DIP Facility which, among other things, extended
the maturity of the DIP Facility to February 2005 and increased the amount of
availability under the DIP Facility by, among other things, restoring the
amortizing fixed assets component back to the original $100.0 million amount as
of August 2003 (see Note 5 of Notes to Interim Consolidated Financial Statements
for additional discussion of the amendment to the DIP Facility). However, no
assurances can be given that recent improvements in primary aluminum price and
fabricated product demand will be sustained or that the Company's liquidity will
not deteriorate for other reasons.

Valco Operating Level. The amount of power made available to Valco by the Volta
River Authority ("VRA") depends in large part on the level of the lake that is
the primary source for generating the hydroelectric power used to supply the
smelter. The level of the lake is primarily a function of the level of annual
rainfall and the alternative (non-Valco) uses of the power generated, as
directed by the VRA.

During late 2000, Valco, the Government of Ghana ("GoG") and the VRA reached an
agreement, subject to Parliamentary approval, that would provide sufficient
power for Valco to operate at least three and one-half of its five potlines
through 2017. However, Parliamentary approval was not received and, in March
2002, the GoG reduced Valco's power allocation forcing Valco to curtail one of
its four operating potlines. Valco's power allocation was further reduced in
January 2003 resulting in the curtailment of two additional operating potlines.

As previously disclosed, during the first half of 2003, the lake level was at or
near a record low level. Based on the level of the lake and the rate at which it
had been declining, the Company believed that curtailment of Valco's last
remaining operating potline was likely. Accordingly in light of the previous
curtailments ordered by the VRA and the declining lake level, in May 2003, the
Company curtailed the last operating potline. The curtailment of the last
operating potline was believed to: (1) offer the VRA and the GoG a contribution
toward conservation of the water supply to improve their ability to meet Valco's
future power needs as well as meet the near-term needs of the rest of Ghana and
(2) provide Valco its best opportunity to restart late in 2003 once the annual
rainy season had replenished the lake level and Valco's 2004 power allocation
was known. The rainy season has now nearly ended and the lake level is currently
expected to crest at a more typical level. However, given the relatively short
time to the beginning of 2004 and the status of negotiations with the VRA and
GoG, Valco currently does not expect that it will have the opportunity to
restart until early to mid-2004. However, no assurances can be given as to when
any such restart will actually occur or that, when Valco desires to restart its
operations, that the status of the negotiation and/or arbitration processes will
permit a restart or that power usage by the VRA will not cause the lake to once
again approach a critical level. Further, any restart would initially have
negative cost and liquidity ramifications for Valco as restart costs have
typically approximated $2.5 million per line and increased funding by KACC would
be required to fund inventory. Accordingly, for Valco to restart one or more
potlines would require appropriate market circumstances as well as a level of
certainty that the operating level could be maintained for an extended period.

During the first six months of 2003, $12.8 million of employee end-of-service
benefits were paid resulting in $8.1 million of charges in 2003 in connection
with the 2003 potline curtailments. All charges are included in Cost of products
sold. In addition, if a restart of Valco potlines does not occur by early 2004,
Valco will become liable for approximately $2.8 million of additional
end-of-service benefits. The additional accruals relate to employees currently
on layoff status who have the ability to receive (pursuant to contractual terms)
end-of-service benefits if they are not returned to work within 12 months of
their layoff date. Since Valco cannot predict at this time whether a restart of
any potlines in early 2004 is likely, Valco and the Company do not consider the
end-of-service benefits to be probable and have, therefore, not provided an
accrual in respect of such obligation.

Valco has met with the GoG and the VRA and anticipates such discussions will
continue in respect of the current and future power situation and other matters.
Valco has objected to the power curtailments and expects to seek appropriate
compensation from the GoG. In addition, Valco and the Company have filed for
arbitration with the International Chamber of Commerce in Paris against both the
GoG and the VRA. The arbitration process began in October 2003 and will be
conducted periodically throughout most of 2004. However, a decision in this
matter is not expected until the latter part of 2004 at the earliest. No
assurances can be given as to the ultimate success of the arbitration process or
any alternative negotiations. Valco and the Company do not expect the voluntary
curtailment of the last operating potline to have any adverse impact on the
pending arbitrations or negotiations with the VRA and GoG.

Benefit (Legacy) Cost Matters. The Company has previously disclosed (since the
Filing Date) that pension and retiree medical obligations were significant
factors that would have to be addressed during the reorganization process.

As previously disclosed, the Company does not currently expect to make any
pension contributions in respect to its domestic pension plans during the
pendency of the Cases as it believes that virtually all amounts are pre-Filing
Date obligations. The Company did not make required accelerated funding payments
to its salaried employee retirement plan of $17.0 million in January 2003, $83.0
million in April 2003, $60.5 million in July 2003 or $64.8 million in October
2003 (such amounts are separate standalone requirements and not additive). As
previously disclosed, the Company has met on several occasions with the PBGC,
the government agency that guarantees annuity payments from defined pension
plans, to discuss alternative solutions to the pension funding issue that would
help the Company's emergence from bankruptcy. These options could include
extended amortization periods for payments of unfunded liabilities or the
potential termination of the plans.

Even though the Company is not making contributions to its domestic pension
plans, the Company's 2003 operating results have been adversely impacted by
substantially higher pension-related expenses than those experienced in 2002
(see Note 10 of Notes to Consolidated Financial Statements in the Company's Form
10-K for the year ended December 31, 2002 for further information regarding
higher pension-related expenses in 2003). Before considering any special
pension-related charges that may occur in 2003, pension-related expenses for
2003 are expected to be approximately $48.0 million, more than $20.0 million
higher than comparable 2002 pension-related expenses. Higher pension-related
expenses during the quarter and nine-month periods ended September 30, 2003
adversely impacted the operating results of all business units. Given the
positive performance of the capital markets for the year to date period through
October 31, 2003, it is possible that the 2004 pension expenses will be less
than those recorded in 2003. However, part of such impact may be reduced by the
lower interest rates which have prevailed during most of 2003. As 2004 pension
expenses will be impacted by the full year's asset performance and year-end
interest rates, a definitive estimate of the impact on 2004 expense is not
possible at this time.

In August 2003, the Court approved the appointment of the 1114 Committee with
whom the Debtors are discussing necessary changes, to certain salaried retiree
medical and insurance benefits under Section 1114 of the Code. Negotiations have
begun with the 1114 Committee. The Company's view, as previously disclosed, is
that substantial modification or termination of certain retiree benefits, such
as medical and life insurance, will be required. Further, given the continuing
escalation in medical costs experienced during 2003 (as well as the Company's
expectation of future escalation rates, until such time as any modifications are
made to retirees' medical plan provisions or such plans are terminated), the
Company currently expects that 2004 retiree medical costs and related expenses
will increase significantly over 2003 amounts.

Environmental Matters. The September 30, 2003 accrual balance includes
approximately $23.2 million that was provided during the third quarter of 2003.
Approximately $20.2 million of the amount provided in the third quarter of 2003
relates to the previously disclosed multi-site settlement agreement with various
federal and state governmental regulatory authorities and other parties in
respect of KACC's environmental exposure at a number of non-owned sites. Under
this agreement, among other things, KACC agreed to claims at such sites totaling
$25.6 million ($20.2 million greater than amounts that had previously been
accrued for these sites) and, in return, the governmental regulatory authorities
have agreed that such claims would be treated as pre-Filing Date unsecured
claims (i.e. liabilities subject to compromise). While KACC and the various
federal and state governmental regulatory authorities signed the agreement prior
to the issuance of the June 30, 2003 financial statements, the agreement gave
the regulatory authorities the unilateral right to withdraw their approval until
after the conclusion of a public notice and comment period. Further, the
agreement was also subject to Court approval which was not obtained until
October 2003. Because the agreement was subject to significant modification or
termination until the public comment period lapsed and the Court's approval was
obtained, KACC did not record the charge associated with the agreement until the
third quarter of 2003 as it was not previously believed to be "probable" (which
is the criteria for recognition under GAAP). The Company recorded the portion of
the $20.2 million accrual that relates to locations with operations ($15.7
million) in Other operating charges, net (see Note 10 of Notes to Interim
Consolidated Financial Statements). The remainder of the accrual ($4.5 million),
which relates to locations that have not operated for a number of years was
recorded in Other income (expense) (see Note 10 of Notes to Interim Consolidated
Financial Statements).

During September 2003, the Company also provided additional accruals totaling
approximately $3.0 million associated with certain KACC-owned properties with no
current operations (recorded in Other income (expense) - see Note 10 of Notes to
Interim Consolidated Financial Statements). These additional accruals resulted
from additional cost estimation efforts undertaken by the Company in connection
with its reorganization efforts. The additional accruals were recorded as
liabilities not subject to compromise as they relate to properties owned by the
Company.

Indefinite Curtailment of Mead Facility. In January 2003, the Company announced
the indefinite curtailment of the Mead facility. The curtailment of the facility
was due to the continuing unfavorable market dynamics, specifically unattractive
long-term power prices and weak primary aluminum prices, both of which are
significant impediments for an older smelter with higher-than-average operating
costs. The Mead facility is expected to remain completely curtailed unless and
until an appropriate combination of reduced power prices, higher primary
aluminum prices and other factors occurs. See Note 4 of Notes to Interim
Consolidated Financial Statements and Note 5 of Notes to Consolidated Financial
Statements in the Company's Form 10-K for the year ended December 31, 2002 for
additional discussion of the Mead curtailment.

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 quarter
and nine-month periods ended September 30, 2003 and 2002. 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 16 of
Notes to Consolidated Financial Statements in the Company's Form 10-K for the
year ended December 31, 2002, for further information regarding segments.

Interim results are not necessarily indicative of those for a full year. Average
realized prices for the Company's Fabricated products segment 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               Nine Months Ended
                                                                  September 30,                 September 30,
                                                           ---------------------------   ---------------------------
                                                               2003          2002            2003          2002
                                                           ------------ --------------   ------------  -------------
Shipments:  (000 tons)
   Alumina
      Third Party                                                697.0          566.1        2,220.4        1,839.7
      Intersegment                                                26.2           53.8           88.7          240.1
                                                           ------------ --------------   ------------  -------------
        Total Alumina                                            723.2          619.9        2,309.1        2,079.8
                                                           ------------ --------------   ------------  -------------
   Primary Aluminum
      Third Party                                                 18.5           49.2           72.1          147.2
      Intersegment                                                  -              .1             -             1.7
                                                           ------------ --------------   ------------  -------------
        Total Primary Aluminum                                    18.5           49.3           72.1          148.9
                                                           ------------ --------------   ------------  -------------
   Fabricated Products (Note 12)                                  41.5           42.1          125.1          132.2
                                                           ------------ --------------   ------------  -------------
Average Realized Third Party Sales Price:
   Alumina (per ton)                                       $       175  $         169    $       173   $        168
   Primary Aluminum (per pound)                            $       .65  $         .60    $       .64   $        .62
Net Sales:
   Bauxite and Alumina
      Third Party (includes net sales of bauxite)          $     129.5  $        99.0    $     405.0   $      327.5
      Intersegment                                                 4.4            9.2           14.7           41.4
                                                           ------------ --------------   ------------  -------------
        Total Bauxite and Alumina                                133.9          108.2          419.7          368.9
                                                           ------------ --------------   ------------  -------------
   Primary Aluminum
      Third Party                                                 26.7           64.7          101.6          200.0
      Intersegment                                                  -              .1            -              2.5
                                                           ------------ --------------   ------------  -------------
        Total Primary Aluminum                                    26.7           64.8          101.6          202.5
                                                           ------------ --------------   ------------  -------------
   Fabricated Products (Note 12)                                 145.4          149.6          443.4          474.0
   Commodities Marketing (Note 8)                                  1.8            9.3            5.6           30.8
   Minority Interests                                             23.7           25.4           69.3           72.6
   Eliminations                                                   (4.4)          (9.3)         (14.7)         (43.9)
                                                           ------------ --------------   ------------  -------------
      Total Net Sales                                      $     327.1  $       348.0    $   1,024.9   $    1,104.9
                                                           ============ ==============   ============  =============

Operating Income (Loss):
   Bauxite and Alumina                                     $     (25.6) $       (15.3)   $     (67.7)  $      (30.5)
   Primary Aluminum (Note 9)                                      (8.8)          (5.7)         (36.2)         (12.7)
   Fabricated Products (Note 12)                                  (5.5)          (5.2)         (12.4)         (11.1)
   Commodities Marketing (Note 8)                                  (.5)           9.0            2.4           28.1
   Eliminations                                                     .4           (1.5)           1.4            1.4
   Corporate and Other                                           (20.0)         (20.6)         (59.0)         (75.8)
   Other Operating Charges, Net (Note 10)                        (15.0)         (25.3)         (15.6)         (34.4)
                                                           ------------ --------------   ------------  -------------
      Total Operating Loss                                 $     (75.0) $       (64.6)   $    (187.1)  $     (135.0)
                                                           ============ ==============   ============  =============
Net Loss                                                   $     (88.6) $       (83.4)   $    (215.1)  $     (197.9)
                                                           ============ ==============   ============  =============
Capital Expenditures                                       $       8.1  $         9.3    $      27.3   $       29.2
                                                           ============ ==============   ============  =============

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 8 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 nine months ended September 30, 2002, the average London Metal
Exchange transaction price ("LME price") per pound of primary aluminum was $.61
per pound. During the nine months ended September 30, 2003, the average LME
price was $.64 per pound. The average LME price for primary aluminum for the
week ended October 31, 2003 was $.68 per pound.

QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2003, COMPARED TO QUARTER AND NINE
MONTHS ENDED SEPTEMBER 30, 2002

SUMMARY
The Company reported a net loss of $88.6 million, or $1.11 of basic loss per
common share, for the quarter ended September 30, 2003, compared to a net loss
of $83.4 million, or $1.04 of basic loss per common share, for the third quarter
of 2002. For the nine months ended September 30, 2003, the Company reported a
net loss of $215.1 million, or $2.68 of basic loss per common share, compared to
a net loss of $197.9 million, or $2.45 of basic loss per common share, for the
same period in 2002. However, basic loss per common share may not be meaningful,
because as a part of a plan of reorganization, it is likely that the equity
interests of the Company's existing stockholders will be cancelled without
consideration.

Net sales in the third quarter of 2003 totaled $327.1 million compared to $348.0
million in the third quarter of 2002. Net sales for the nine-month period ended
September 30, 2003, totaled $1,024.9 million compared to $1,104.9 million for
the nine-month period ended September 30, 2002.

Bauxite and Alumina. Third party net sales of alumina for the quarter ended
September 30, 2003, increased 34% as compared to the same period in 2002, due to
a 29% increase in third party shipments and a 4% increase in third party average
realized prices. For the nine-month period ended September 30, 2003, third party
net sales of alumina were 26% higher than the comparable period in 2002 as the
result of a 22% increase in third party shipments and a 3% increase in third
party average realized prices. Third party shipments for the quarter and
nine-month periods were higher than the comparable periods last year, primarily
due to reduced intersegment shipments resulting from Valco's 2003 potline
curtailments (see "Recent Events and Developments -- Valco Operating Level"
above). The increases in average realized prices during both periods were due to
increases in primary aluminum market prices to which the Company's third-party
alumina sales contracts are linked.

Intersegment net sales of alumina for the quarter ended September 30, 2003
reflect a shipment of alumina to the Company's 49%-owned affiliate, Anglesey
Aluminium Limited ("Anglesey") at the end of September 2003. This shipment
typically would have been delivered in the fourth quarter of the year.
Intersegment net sales of alumina for the quarter and nine-month periods ended
September 30, 2003, decreased 52% in both periods as compared to the same
periods in 2002. The decreases were primarily the result of 51% decreases in
intersegment shipments in both periods due to the 2003 Valco potline
curtailment. In the near-term, absent a restart at Valco, the only intersegment
shipments expected are to Anglesey, which shipments typically occur in the first
and fourth quarters of each year.

Segment operating losses (before Other operating charges, net) for the quarter
and nine-month periods ended September 30, 2003 were worse than the comparable
periods in 2002. The primary reason for the period-to-period decreases in
operating income were higher energy costs ($11.0 million and $36.0 million
during the quarter and nine months ended September 30, 2003, respectively).
Although cost performance improved quarter to quarter and year to year, the
segment's operating results for the quarter and nine-month periods ended
September 30, 2003 were adversely impacted by separate unrelated short-term
power outages at Alpart, the Gramercy facility and the Company's 20%-owned
affiliate, Queensland Alumina Limited ("QAL") and KACC's share of non-cash
inventory write-downs at QAL totaling approximately $.8 million. Also, segment
operating results for the quarter and nine-month periods of 2003 were adversely
impacted by increased pension related expenses and an increase in foreign
exchange rates. These impacts were only partially offset by the net increase in
shipments and increase in average realized prices discussed above and by
improved cost performance. Segment operating loss for the nine-month period
ended September 30, 2002, discussed above, excluded Other operating charges, net
of $1.9 million incurred in connection with cost reduction initiatives.

Primary Aluminum. Third party net sales of primary aluminum decreased 59% for
the third quarter of 2003 as compared to the same period in 2002 due to a 62%
decrease in third party shipments offset by an 8% increase in third party
average realized prices. For the nine-month period ended September 30, 2003,
third party sales of primary aluminum decreased approximately 49% from the
comparable period in 2002 due to a 51% decrease in third party shipments offset
by a 3% increase in third party average realized prices. The decreases in third
party shipments were primarily due to the 2003 Valco potline curtailment
discussed above. The increases in the average realized prices were primarily due
to increases in primary aluminum market prices.

Segment operating losses (before Other operating charges, net) for the quarter
and nine-month periods ended September 30, 2003, were worse than the comparable
periods in 2002. The primary reason for the decreases was the decreases in net
shipments discussed above. Segment operating loss for the nine-month period
ended September 30, 2003, also includes $8.1 million of charges for
end-of-service benefits associated with the 2003 Valco potline curtailments
discussed above. The foregoing were only partially offset by increased prices
discussed above, lower depreciation expense, resulting from the 2002 year-end
impairment of the Mead smelter assets ($3.2 million for the quarter and $9.5
million for the nine-month period), and reductions in overhead costs primarily
due to the Mead and Valco curtailments.

Segment operating losses for the quarter and nine-month periods ended September
30, 2003, discussed above, exclude a pre-Filing Date claim of approximately $3.2
million related to a restructured transmission service agreement (see Note 4 of
Notes to Interim Consolidated Financial Statements). Segment operating loss for
the nine-month period ended September 30, 2003, also excludes restructuring
charges of $1.3 million resulting from the Mead facility indefinite curtailment
(see Note 10 of Notes to Interim Consolidated Financial Statements). Segment
operating losses for the quarter and nine-month periods ended September 30,
2002, excluded a non-cash charge of approximately $3.4 million related to a
write-down of certain alumina inventories and costs of $1.0 million and $2.7
million, respectively, incurred in connection with cost reduction initiatives
(which are included in Other operating charges, net).

Fabricated Products. Net sales of fabricated products decreased by 3% during the
third quarter 2003 as compared to 2002 primarily as a result of a 2% decrease in
shipments. For the nine-month period ended September 30, 2003, net sales of
fabricated products decreased by approximately 6% as compared to the same period
in 2002 primarily as the result of a 5% decrease in shipments. Current period
and year-to-date shipments in 2003 were less than the comparable 2002 periods
due to the exit of the can lid and tab stock and brazing sheet products in the
second quarter of 2002. During 2003, weaker demand for engineered products was
offset by a modest improvement in demand for general engineering and aerospace
heat-treat products. Prices for fabricated products were also weaker in 2003
than the prior year periods.

Segment operating results for the quarter and nine-month periods ended September
30, 2003, were modestly lower than the comparable periods in 2002 primarily due
to the volume and price factors discussed above, increased energy costs
(approximately $2.0 million in the quarter and $8.0 million in the nine-month
period) and increased pension related expenses. The foregoing were offset, in
part, by reductions in overhead and other operating costs as a result of
cost-cutting initiatives.

Segment operating results for the quarter and nine-month periods ended September
30, 2003, discussed above, exclude a net gain of approximately $3.9 million from
the sale of equipment (see Note 10 of Notes to Interim Consolidated Financial
Statements). Segment operating results for the quarter and nine-month periods
ended September 30, 2002, excluded Other operating charges, net of $2.8 million
and $6.7 million, respectively, incurred in connection with cost reduction
initiatives. Segment operating results for the nine-month period ended September
30, 2002, also excluded a $1.6 million non-cash LIFO inventory charge.

Commodities Marketing. In 2003, net sales for this segment represents net
settlements with unaffiliated counterparties for maturing derivative positions.
In 2002, net sales for this segment primarily represented recognition of
deferred gains from hedges closed prior to the commencement of the Cases. Gains
or losses associated with these liquidated positions were deferred in Other
comprehensive income and are being recognized as income and costs over the
original hedging periods as the underlying purchases/sales occur.

Segment operating income for the quarter and nine-month periods ended September
30, 2003, decreased compared to the comparable periods in 2002 due to the
prevailing market prices during 2003 versus the higher prices implicit in the
liquidation of the positions in January 2002.

Eliminations. Eliminations of intersegment profit vary from period to period
depending on fluctuations in market prices as well as the amount and timing of
the affected segments' production and sales. Eliminations for the third quarter
of 2002 included a benefit of $1.9 million of deferred intersegment profit
offsetting the $3.4 million inventory write-down in the Primary Aluminum segment
discussed above.

Corporate and Other. Corporate operating expenses represent corporate general
and administrative expenses which are not allocated to the Company's business
segments. Corporate operating expenses (before Other operating charges, net) for
the quarter ended September 30, 2003 were substantially the same as the same
period in 2002 as a decrease in overhead expenses from cost reduction
initiatives was offset by an increase in pension-related expenses. Corporate
operating expenses for the nine-month period ended September 30, 2003, as
compared to the same period in 2002, were lower primarily because corporate
expenses in 2002 included special pension settlement charges of approximately
$14.6 million. Corporate expenses in the nine-month period of 2003 also included
a decrease in payroll-related expenses resulting from 2002 job eliminations and
other overhead expenses which were partially offset by an increase in
pension-related expenses. See Note 10 of Notes to Consolidated Financial
Statements in the Company's Form 10-K for the year ended December 31, 2002 for a
discussion of the special pension settlement charges in 2002.

Corporate operating results for both the quarter and nine-month periods ended
September 30, 2003, discussed above, excluded an environmental multi-site
settlement of $15.7 million (which is included in Other operating charges, net).
Corporate operating results for both the quarter and nine-month periods ended
September 30, 2002, excluded a non-cash impairment charge of approximately $20.0
million related to the Company's non-operating properties (which is included in
Other operating charges, net).

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 Interim 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. Operating activities used $80.4 million of cash during the
nine months ended September 30, 2003. However, cash used in operations for the
nine-month period included several receipts and payments that are significant
and/or may not be typical. These receipt and payment items included: (a)
receipts of (i) asbestos-related insurance receipts of $17.8 million in respect
of prior year asbestos-related payments, (ii) KACC's share of QAL net borrowings
in the second and third quarters of 2003 that reduced the Company's cash
requirements by approximately $11.0 million and (iii) the benefit from decreases
in receivables and inventories of approximately $20.0 million due to Valco's
2003 potline curtailment in excess of lost earnings; and (b) payments of (i) a
foreign income tax payment related to prior periods of $22.0 million and (ii)
end of service benefits payments totaling approximately $12.8 million in
connection with the Valco potline curtailments. The net cash used by operating
activities resulted from a combination of adverse market factors in the business
segments in which the Company operates including: (a) primary aluminum prices
that are below long-term averages, (b) weak demand for fabricated metal products
in general, but particularly for engineered products, (c) higher than average
power, fuel oil and natural gas prices, and (d) significant expenditures in
respect of retiree medical and reorganization costs. Cash used by operating
activities during the nine-month period ended September 30, 2002 ($42.9 million)
primarily reflected: (a) operating results at a near-break even level at the
then primary aluminum prices and a continuing weak market for fabricated metal
products; (b) approximately $29.5 million of funding to QAL in respect of QAL's
regularly scheduled debt maturities (see Note 8 of Notes to Interim Consolidated
Financial Statements); and (c) foreign income tax payments of $31.3 million.

Investing Activities. Capital expenditures during the nine months ended
September 30, 2003 were $27.3 million. The 2003 capital expenditures were
incurred to improve production efficiency and reduce operating costs at the
Company's facilities. Total consolidated capital expenditures are currently
expected to be between $35.0 and $40.0 million in 2003 and between $20.0 and
$30.0 million in 2004 (of which approximately 20% and 10% is expected to be
funded by the Company's minority partners in certain foreign joint ventures in
2003 and 2004, respectively). The level of capital expenditures may be adjusted
from time to time depending on the Company's price outlook for primary aluminum
and other products, the Company's ability to assure future cash flows through
hedging or other means, the Company's financial position and other factors.

Financing Activities and Liquidity. On February 12, 2002, the Company and KACC
entered into the DIP Facility which provides for a secured, revolving line of
credit through the earlier of February 13, 2005 (extended from February 12, 2004
in August 2003 as discussed below), the effective date of a plan of
reorganization or voluntary termination by the Company. In March 2003, certain
of the Additional Debtors were added as co-guarantors and the DIP Facility
lenders received super priority status with respect to certain of the Additional
Debtors' assets. KACC is able to borrow under the DIP Facility by means of
revolving credit advances and to issue letters of credit (up to $125.0 million)
in an aggregate amount equal to the lesser of $285.0 million (reduced from
$300.0 million in August 2003 as discussed below) or a borrowing base relating
to eligible accounts receivable, eligible inventory and eligible fixed assets
reduced by certain reserves, as defined in the DIP Facility agreement. The DIP
Facility is guaranteed by the Company and certain significant subsidiaries of
KACC. Interest on any outstanding borrowings will bear a spread over either a
base rate or LIBOR, at KACC's option.

The DIP Facility contains a number of provisions that address or could be
affected by any asset sales that may result from the possible commodity asset
divestiture program (see "Reorganization Proceedings" above), including
provisions that: (a) limit asset dispositions by the Debtors; (b) limit releases
of collateral securing obligations under the DIP Facility; (c) address the
Debtors' use of proceeds from asset dispositions; (d) impact the determination
of the borrowing base and the amount of commitments under the DIP Facility; and
(e) provide for certain financial provisions. As a result, amendments to the DIP
Facility would be necessary for any proposed commodity asset sales. The Debtors
will seek the requisite amendments to the DIP Facility as required.

The borrowing base under the DIP Facility could be materially affected by any
asset dispositions that are ultimately completed because: (a) the DIP Facility
currently provides that the fixed asset component of the borrowing base is
reduced by the amount of proceeds received from certain asset dispositions (but
not to an amount less than zero); (b) eligible receivables and inventories
related to such assets would no longer be included; and (c) it is unclear to
what extent sales proceeds resulting from any asset sales that may be completed
would be available to the Company or be available to support the borrowing base.

The Company and KACC currently believe that the cash and cash equivalents of
$43.8 million at October 31, 2003, cash flows from operations, cash proceeds
available from the sale of assets that are ultimately determined not to be an
important part of the reorganized entity and cash available under the DIP
Facility will provide sufficient working capital to allow the Company to meet
its obligations during the pendency of the Cases. At October 31, 2003, there
were no outstanding borrowings under the revolving credit facility and there
were outstanding letters of credit of approximately $47.4 million. As of October
31, 2003, $156.9 million (of which $77.6 million could be used for additional
letters of credit) was available to the Company under the DIP Facility.

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. 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 likely
that MAXXAM's equity interests will be cancelled without consideration 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
Critical accounting policies are those that are both very important to the
portrayal of the Company's financial condition and results, and require
management's most difficult, subjective, and/or complex judgments. Typically,
the circumstances that make these judgments difficult, subjective and/or complex
have to do with the need to make estimates about the effect of matters that are
inherently uncertain. While the Company believes that all aspect of its
financial statements should be studied and understood in assessing its current
(and expected future) financial condition and results, the Company believes that
the accounting policies that warrant additional attention include:

   1. The fact that the interim consolidated financial statements as of (and for
      the quarter and nine-month periods ending) September 30, 2003 have been
      prepared on a "going concern" basis in accordance with AICPA Statement of
      Position 90-7, Financial Reporting by Entities in Reorganization Under the
      Bankruptcy Code, and do not include possible impacts arising in respect of
      the Cases. The interim consolidated financial statements included
      elsewhere in this Report do not include any adjustments relating to the
      recoverability and classification of recorded asset amounts or the amount
      and classification of liabilities or the effect on existing stockholders'
      equity that may result from any plans, arrangements or other actions
      arising from the Cases, or the possible inability of the Company to
      continue in existence. Adjustments necessitated by such plans,
      arrangements or other actions could materially change the interim
      consolidated financial statements included elsewhere in this Report. For
      example,

      a.If the Company were to decide to sell certain assets not deemed a
        critical part of a reorganized Kaiser, such asset sales could result in
        gains or losses (depending on the asset sold) and such gains or losses
        could be significant. This is because, under generally accepted
        accounting principles ("GAAP"), assets to be held and used are evaluated
        for recoverability differently than assets to be sold or disposed of.
        Assets to be held and used are evaluated based on their expected
        undiscounted future net cash flows. So long as the Company reasonably
        expects that such undiscounted future net cash flows for each asset will
        exceed the recorded value of the asset being evaluated, no impairment is
        required. However, if possible or probable plans to sell or dispose of
        an asset or group of assets meet a number of specific criteria, then,
        under GAAP, such assets should be considered held for sale/disposition
        and their recoverability should be evaluated, for each asset, based on
        expected consideration to be received upon disposition. Sales or
        dispositions at a particular time will be affected by, among other
        things, the existing industry and general economic circumstances as well
        as the Company's own circumstances, including whether or not assets will
        (or must) be sold on an accelerated or more extended timetable. Such
        circumstances may cause the expected value in a sale or disposition
        scenario to differ materially from the realizable value over the normal
        operating life of assets, which would likely be evaluated on long-term
        industry trends. See "Financial Statement Presentation" in Note 1 of
        Notes to Interim Consolidated Financial Statements for a discussion of
        possible impairment charges as a result of the Company's potential
        divestitures of its interests in any or all of its commodities
        businesses.

      b.Additional pre-Filing Date claims may be identified through the proof of
        claim reconciliation process and may arise in connection with actions
        taken by the Debtors in the Cases. For example, while the Debtors
        consider rejection of the Bonneville Power Administration ("BPA")
        contract to be in the Company's best long-term interests, such rejection
        may increase the amount of pre-Filing Date claims by approximately $75.0
        million based on the BPA's proof of claim filed in connection with the
        Cases in respect of the contract rejection.

      c.As more fully discussed below, the amount of pre-Filing Date claims
        ultimately allowed by the Court in respect of contingent claims and
        benefit obligations may be materially different from the amounts
        reflected in the Interim Consolidated Financial Statements.

      While valuation of the Company's assets and pre-Filing Date claims at this
      stage of the Cases is subject to inherent uncertainties, the Company
      currently believes that it is likely that its liabilities will be found in
      the Cases to exceed the fair value of its assets. Therefore, the Company
      currently believes that it is likely that substantially all pre-Filing
      Date claims will be paid at less than 100% of their face value and the
      equity of the Company's stockholders will be cancelled without
      consideration.

   2. The Company's judgments and estimates with respect to commitments and
      contingencies; in particular: (a) future asbestos related costs and
      obligations as well as estimated insurance recoveries, and (b) possible
      liability in respect of claims of unfair labor practices ("ULPs") which
      were not resolved as a part of the Company's September 2000 labor
      settlement.

      Valuation of legal and other contingent claims is subject to a great deal
      of judgment and substantial uncertainty. Under GAAP, companies are
      required to accrue for contingent matters in their financial statements
      only if the amount of any potential loss is both "probable" and the amount
      (or a range) of possible loss is "estimatable." In reaching a
      determination of the probability of an adverse ruling in respect of a
      matter, the Company typically consults outside experts. However, any such
      judgments reached regarding probability are subject to significant
      uncertainty. The Company may, in fact, obtain an adverse ruling in a
      matter that it did not consider a "probable" loss and which, therefore,
      was not accrued for in its financial statements. Further, in estimating
      the amount of any loss, in many instances a single estimation of the loss
      may not be possible. Rather, the Company may only be able to estimate a
      range for possible losses. In such event, GAAP requires that a liability
      be established for at least the minimum end of the range.

      The Company has two potentially material contingent obligations that are
      subject to significant uncertainty and variability in their outcome: (a)
      the United Steelworkers of America's ("USWA") ULP claim, and (b) the net
      obligation in respect of asbestos-related matters. Both of these matters
      are discussed in Note 8 of Notes to Interim Consolidated Financial
      Statements and it is important that you read this note.

      As more fully discussed in Note 7 of Notes to Interim Consolidated
      Financial Statements, we have not accrued any amount in our September 30,
      2003 financial statements in respect of the USWA ULP matter as we do not
      consider the contingent loss to be "probable." The possible range of loss
      in this matter is in the $200.0 million to $250.0 million range based on
      the proof of claims filed (and other information provided) by the National
      Labor Relations Board ("NLRB") and USWA in connection with the Company's
      and KACC's reorganization proceedings. This matter is not currently stayed
      by the Cases. However, as previously stated, seeing this matter to its
      ultimate outcome could take several years. Further, any amounts ultimately
      determined by a court to be payable in this matter will be dealt with in
      the overall context of the Debtors' plan of reorganization and will be
      subject to compromise. Accordingly, any payments that may ultimately be
      required in respect of this matter would only be paid upon or after the
      Company's emergence from the Cases.

      Also, as more fully discussed in Note 7 of Notes to Interim Consolidated
      Financial Statements, KACC is one of many defendants in personal injury
      claims by large number of persons who assert that their injuries were
      caused by, among other things, exposure to asbestos during their
      employment or association with KACC or by exposure to products containing
      asbestos last produced or sold by KACC more than 20 years ago. It is
      difficult to predict the number of claims that will ultimately be made
      against KACC or the settlement value of such claims. As of September 30,
      2003, KACC had recorded an obligation for approximately $610.1 million in
      respect of pending and an estimate of possible future asbestos claims
      through 2011. The Company did not accrue for amounts past 2011 because the
      Company believed that significant uncertainty existed in trying to
      estimate any such amounts. However, it is possible that a different number
      of claims will be made through 2011 and that the settlement amounts during
      this period may differ and that this will cause the actual amounts to
      differ materially from the Company's estimate. Further, the Company
      expects that, during its reorganization process, an estimate will have to
      be made in respect of its exposure to asbestos-related claims after 2011
      and that such amounts could be substantial. Due to the Cases, holders of
      asbestos claims are stayed from continuing to prosecute pending litigation
      and from commencing new lawsuits against the Debtors. However, during the
      pendency of the Cases, KACC expects additional asbestos claims will be
      asserted as part of the claims process. A separate creditors' committee
      representing the interests of the asbestos claimants, the ACC, has been
      appointed. The Debtors' obligations with respect to present and future
      asbestos claims will be resolved pursuant to a plan of reorganization.

      The Company believes that KACC has insurance coverage in respect of its
      asbestos-related exposures and that substantial recoveries in this regard
      are probable. At September 30, 2003, KACC had recorded a receivable for
      approximately $466.2 million in respect of expected insurance recoveries
      related to existing claims and the estimate future claims through 2011.
      However, the actual amount of insurance recoveries may differ from the
      amount recorded and the amount of such differences could be material.
      Further, depending on the amount of asbestos-related claims ultimately
      determined to exist (including those in the periods after 2011), it is
      possible that the amount of such claims could exceed the amount of
      additional insurance recoveries available.

      See Note 7 of Notes to Interim Consolidated Financial Statements for a
      more complete discussion of these matters.

   3. The Company's judgments and estimates in respect of its employee benefit
      plans.

      Pension and post-retirement medical obligations included in the
      consolidated balance sheet are based on assumptions that are subject to
      variation from year-to-year. Such variations can cause the Company's
      estimate of such obligations to vary significantly. Restructuring actions
      (such as the indefinite curtailment of the Mead smelter) can also have a
      significant impact on such amounts.

      For pension obligations, the most significant assumptions used in
      determining the estimated year-end obligation are the assumed discount
      rate and long-term rate of return ("LTRR") on pension assets. Since
      recorded pension obligations represent the present value of expected
      pension payments over the life of the plans, decreases in the discount
      rate (used to compute the present value of the payments) will cause the
      estimated obligations to increase. Conversely, an increase in the discount
      rate will cause the estimated present value of the obligations to decline.
      The LTRR on pension assets reflects the Company's assumption regarding
      what the amount of earnings will be on existing plan assets (before
      considering any future contributions to the plans). Increases in the
      assumed LTRR will cause the projected value of plan assets available to
      satisfy pension obligations to increase, yielding a reduced net pension
      obligation. A reduction in the LTRR reduces the amount of projected net
      assets available to satisfy pension obligations and, thus, causes the net
      pension obligation to increase.

      For post-retirement obligations, the key assumptions used to estimate the
      year-end obligations are the discount rate and the assumptions regarding
      future medical costs increases. The discount rate affects the
      post-retirement obligations in a similar fashion to that described above
      for pension obligations. As the assumed rate of increase in medical costs
      goes up, so does the net projected obligation. Conversely, if the rate of
      increase is assumed to be smaller, the projected obligation will decline.

      See Note 10 of Notes to Consolidated Financial Statements in the Company's
      Form 10-K for the year ended December 31, 2002 and Recent Events and
      Developments, Benefit (Legacy) Cost Matters above for information
      regarding the Company's pension and post-retirement obligations. Actual
      results may differ from the assumptions made in computing the estimated
      September 30, 2003 obligations and such differences may be material.

   4. The Company's judgments and estimates in respect to environmental
      commitments and contingencies.

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

      Based on the Company's evaluation of these and other environmental
      matters, the Company has established environmental accruals, primarily
      related to potential solid waste disposal and soil and groundwater
      remediation matters. These environmental accruals represent the Company's
      estimate of costs reasonably expected to be incurred on a going concern
      basis in the ordinary course of business based on presently enacted laws
      and regulations, currently available facts, existing technology, and the
      Company's assessment of the likely remediation action to be taken.
      However, making estimates of possible environmental remediation costs is
      subject to inherent uncertainties. As additional facts are developed and
      definitive remediation plans and necessary regulatory approvals for
      implementation of remediation are established or alternative technologies
      are developed, changes in these and other factors may result in actual
      costs exceeding the current environmental accruals.

      An example of how environmental accruals could change is the current
      situation of KACC's Mead smelter. KACC announced the indefinite
      curtailment of the Mead smelter in January 2003. The Mead smelter is
      expected to remain curtailed indefinitely unless and until an appropriate
      combination of reduced power prices, higher primary aluminum prices and
      other factors occurs to make a restart commercially feasible. However, at
      some point in the future, the Company may decide, due to economic
      conditions, foreign competition or other factors, to dispose of the
      facility. If, in connection with such hypothetical disposition the Company
      were required to dismantle, demolish or otherwise permanently close the
      Mead facility, the demolition and environmental remediation costs could be
      significant. While proceeds of a disposition might offset such costs, no
      assurances can be provided that receipts would fully or substantially
      offset the total costs of the environmental remediation costs.

      Another example of how environmental accruals could change is provided by
      the multi-site agreement discussed in Note 7 of Notes to Interim
      Consolidated Financial Statements. As a means of expediting the
      reorganization process and to assure treatment of the claims under a plan
      of reorganization that is favorable to the Debtors and their stakeholders,
      it may be in the best interests of the stakeholders for the Company to
      agree to claim amounts in excess of previous accruals, which were based on
      an ordinary course, going concern basis.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
In a new regulation issued in January 2003, the Securities and Exchange
Commission adopted amendments to existing rules, which require the Company to
provide explanations of its known contractual obligations in a tabular format
and its off-balance sheet arrangements in a separately captioned subsection of
the Management's Discussion and Analysis ("MD&A") section of the Company's
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Although such
items are already fully disclosed in the Company's Commitments and Contingencies
notes (see Note 5 of Notes to Interim Consolidated Financial Statements and Note
12 of Notes to Consolidated Financial Statements in the Company's Form 10-K for
the year ended December 31, 2002), the principle of the amendments is that the
Company should disclose, in a single section, information regarding: (1) its
obligations and commitments to make future payments, such as debt and lease
agreements, and (2) material off-balance sheet arrangements and their material
effects on the Company's financial condition, results of operations, liquidity,
etc. in a tabular format.

The following summarizes the Company's significant contractual obligations at
September 30, 2003 (dollars in millions):


                                                                                 Payments due in
                                                            --------------------------------------------------------
                                                               Less than       2 - 3          4 - 5       More than
           Contractual Obligations                Total         1 Year         Years          Years        5 years
--------------------------------------------  ------------- -------------- -------------  ------------- ------------
Long-term debt, including capital lease of
   $2.5(a)                                    $       43.5  $         1.2  $        1.2   $       22.1  $      19.0
Operating leases                                      31.3            9.2           9.6            6.6          5.9
                                              ------------- -------------- -------------  ------------- ------------

Total cash contractual obligations            $       74.8  $        10.4  $       10.8   $       28.7  $      24.9
                                              ============= ============== =============  ============= ============

(a)     See Note 5 of Notes to Interim Consolidated Financial Statements for
        information in respect of long-term debt. Long-term debt obligations
        exclude debt subject to compromise of approximately $830.2 million which
        amounts will be dealt with in connection with a plan of reorganization.
        See Notes 1 and 5 of Notes to Interim Consolidated Financial Statements
        for additional information about debt subject to compromise.

The following paragraphs summarize the Company's off-balance sheet arrangements.

KACC owns a 20% interest in QAL, which owns one of the largest and most
competitive alumina refineries in the world, located in Queensland, Australia.
QAL refines bauxite into alumina, essentially on a cost basis, for the account
of its shareholders under long-term tolling contracts. KACC currently sells its
share of QAL's production to third parties. The shareholders, including KACC,
purchase bauxite from another QAL shareholder under long-term purchase
contracts. These tolling and purchase contracts are scheduled to expire in 2008.
Under the agreements, KACC is unconditionally obligated to pay its proportional
share of debt, operating costs and certain other costs of QAL. KACC's share of
the aggregate minimum amount of future principal payments as of September 30,
2003 is $60.0 million, which will mature in varying amounts from 2005 to 2008.
KACC's share of QAL's scheduled debt principal repayment in July 2003 was
funded with additional QAL borrowings. KACC's share of payments, including
operating costs and certain other expenses under the agreements, has ranged
between $95.0 million and $103.0 million per year over the past three years.

The Company has agreements to supply alumina to and to purchase aluminum from
Anglesey, a 49.0%-owned aluminum smelter in Holyhead, Wales.

As of September 30, 2003, outstanding letters of credit under the DIP Facility
were approximately $49.9 million, substantially all which expire within the next
twelve months. The letters of credit relate primarily to environmental,
insurance, Alpart-related debt and other activities. Approximately $15.3 million
of the letters of credit are in respect of the Company's 65% share of the $22.0
million Alpart CARIFA financing (see Note 5 of Notes to Interim Consolidated
Financial Statements) which are reflected in the debt maturities table above. As
such, that portion of the letters of credit is duplicative of the obligation
reflected in the table above. If the Company's interests in Alpart were to be
sold (see Note 1 of Notes to Interim Consolidated Financial Statements), the
CARIFA financing would have to be repaid and the Company's letter of credit
obligation under the DIP Facility securing the loans would be cancelled.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's operating results are sensitive to changes in the prices of
alumina, primary aluminum, and fabricated aluminum products, and also depend to
a significant degree upon the volume and mix of all products sold. As discussed
more fully in Notes 2 and 8 of Notes to Interim Consolidated Financial
Statements, KACC historically has utilized hedging transactions to lock-in a
specified price or range of prices for certain products which it sells or
consumes in its production process and to mitigate KACC's exposure to changes in
foreign currency exchange rates. However, because the agreements underlying
KACC's hedging positions provided that the counterparties to the hedging
contracts could liquidate KACC's hedging positions if KACC filed for
reorganization, KACC chose to liquidate these positions in advance of the
initial Filing Date. KACC has only completed limited hedging activities since
the Filing Date (see below). The Company anticipates that, subject to prevailing
economic conditions, it may enter into additional hedging transactions with
respect to primary aluminum prices, natural gas and fuel oil prices and foreign
currency values to protect the interests of its constituents. However, no
assurance can be given as to when or if the Company will enter into such
additional hedging activities.

SENSITIVITY

The sensitivity information set forth below is before considering any impacts
from possible commodity asset divestitures discussed more fully in Note 1 of
Notes to Interim Consolidated Financial Statements. The following are the major
impacts on price exposures related to the facilities for which possible
divestiture activities are ongoing:

   -  If the Company were to sell its interests in Anglesey, Alpart and
      Gramercy/KJBC (as more fully discussed in Note 1 of Notes to Interim
      Consolidated Financial Statements), the Company would substantially
      eliminate its exposure to primary aluminum price changes as sales linked
      to primary aluminum prices would be largely offset by costs that are
      expected to fluctuate with primary aluminum prices.

   - Approximately 70% of the Company's exposure to natural gas prices relates
     to Gramercy's alumina refinery.

   - The vast majority of the Company's exposure to fuel oil prices relates to
     Alpart's operations.

Alumina and Primary Aluminum. Alumina and primary aluminum production in excess
of internal requirements is sold in domestic and international markets, exposing
the Company to commodity price opportunities and risks. KACC's hedging
transactions are intended to provide price risk management in respect of the net
exposure of earnings resulting from (i) anticipated sales of alumina, primary
aluminum and fabricated aluminum products, less (ii) expected purchases of
certain items, such as aluminum scrap, rolling ingot, and bauxite, whose prices
fluctuate with the price of primary aluminum. On average, before consideration
of hedging activities, variations in production and shipment levels, and timing
issues related to price changes, the Company estimates that during 2003 each
$.01 increase (decrease) in the market price per price-equivalent pound of
primary aluminum increases (decreases) the Company's annual pre-tax earnings by
approximately $5.0 million, based on recent operating levels. The lower 2003
impact (as compared to prior periods) on pre-tax earnings linked to primary
aluminum prices is due to the Valco potline curtailments.

As of September 30, 2003, the Company has option contracts covering
substantially all of the Company's net hedgable volume for the fourth quarter of
2003 (at a strike price of approximately $.65 per pound).

Foreign Currency. KACC from time to time in the ordinary course of business
enters into forward exchange contracts to hedge material cash commitments for
foreign currencies. KACC's primary foreign exchange exposure is related to
KACC's Australian Dollar (A$) commitments in respect of activities associated
with its 20.0%-owned affiliate, QAL. The Company estimates that, before
consideration of any hedging activities, a US $0.01 increase (decrease) in the
value of the A$ results in an approximate $1.5 million (decrease) increase in
the Company's annual pre-tax operating income.

Energy. KACC is exposed to energy price risk from fluctuating prices for natural
gas, fuel oil and diesel oil consumed in the production process. The Company
estimates that each $1.00 change in natural gas prices (per mmbtu) impacts the
Company's annual pre-tax operating results by approximately $20.0 million.
Further, the Company estimates that each $1.00 change in fuel oil prices (per
barrel) impacts the Company's pre-tax operating results by approximately $3.0
million.

KACC from time to time in the ordinary course of business enters into hedging
transactions with major suppliers of energy and energy related financial
instruments. As of September 30, 2003, KACC held option contracts which capped
KACC's price for fuel oil to $25.00 per barrel for substantially all of its fuel
oil needs in the fourth quarter of 2003.

As of September 30, 2003, KACC had option contracts which cap the average price
KACC would pay for natural gas to approximately $5.02 per mcf so that, when
combined with price limits in the physical gas supply agreement, substantially
all of KACC's exposure to increases in natural gas prices during October 2003
and November 2003 was limited.

ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. An evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures was performed as of the end of the period covered by this Report
under the supervision and with the participation of the Company's management,
including the Chief Executive Officer and Chief Financial Officer. Based on that
evaluation, the Company's management, including the Chief Executive Officer and
Chief Financial Officer, concluded that the Company's disclosure controls and
procedures were effective.

Changes in Internal Control. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
internal controls subsequent to the date of their evaluation. Additionally, no
changes in the Company's internal controls over financial reporting have
occurred during the Company's most recently completed quarter that have
materially affected, or are reasonably likely to materially affect, the
Company's internal controls over financial reporting.

                           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, 2002 for information concerning material
legal proceedings with respect to the Company.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

   (a)  Exhibits.

        *4.1    Sixth Amendment to Post-Petition Credit Agreement, dated August
                1, 2003, amending the Post-Petition Credit Agreement dated
                February 12, 2002, among Kaiser Aluminum & Chemical Corporation
                ("KACC"), Kaiser Aluminum Corporation ("KAC"), certain financial
                institutions and Bank of America, N.A., as Agent.

        *31.1   Certification of Jack A. Hockema pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.

        *31.2   Certification of John T. La Duc pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.

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

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

   (b) Reports on Form 8-K.

        On August 20, 2003, under Item 5, "Other Events" of Form 8-K, the
        Company filed a Current Report on Form 8-K reporting that the sixth
        amendment to the Company's DIP Facility had become effective.

        No other Reports on Form 8-K were filed by the Company during the
        quarter ended September 30, 2003.

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

                                    SIGNATURE

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


                                    KAISER ALUMINUM CORPORATION


                                    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:  November 13, 2003