Condensed Guarantor and Non-Guarantor Financial Information

During the quarter ended June 30, 2016, we issued $375.0 million aggregate principal amount of our 5.875% Senior Notes and redeemed in full the remaining principal balance of our 8.25% Senior Notes. The 5.875% Senior Notes were issued pursuant to an indenture dated May 12, 2016 ("2016 Indenture"), among Kaiser Aluminum Corporation ("Parent"), the subsidiary guarantors party thereto ("Guarantor Subsidiaries") and Wells Fargo Bank, National Association, as trustee ("Trustee"). The Guarantor Subsidiaries include Kaiser Aluminum Investments Company, Kaiser Aluminum Fabricated Products, LLC, Kaiser Aluminum Washington, LLC and Kaiser Aluminum Alexco, LLC, all of which are 100% owned by the Parent. The guarantees are full and unconditional and joint and several but have customary releases in the following situations: (i) the sale of the Guarantor Subsidiary or all of its assets; (ii) the declaration of a Guarantor Subsidiary as an unrestricted subsidiary under the 2016 Indenture; (iii) the termination or release of the Guarantor Subsidiary's guarantee of certain other indebtedness; or (iv) our exercise of legal defeasance or covenant defeasance or the discharge of our obligations under the 2016 Indenture.

The following condensed consolidating financial information as of December 31, 2016 and December 31, 2015, and for the years ended December 31, 2016, December 31, 2015 and December 31, 2014 present: (i) the financial position, results of operation and cash flows for each of (a) Parent, (b) the Guarantor Subsidiaries on a combined basis and (c) the Non-Guarantor Subsidiaries on a combined basis; (ii) the "Consolidating Adjustments," which represent the adjustments necessary to eliminate the investments in our subsidiaries, other intercompany balances and other intercompany sales and cost of sales among Parent, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries; and (iii) the resulting totals, reflecting information for us on a consolidated basis, as reported. The condensed consolidating financial information should be read in conjunction with the consolidated financial statements herein.

The "Non-Guarantor Subsidiaries" include Kaiser Aluminum Mill Products, Inc., Kaiser Aluminum Canada Limited, Trochus Insurance Company, DCO Management, LLC, Kaiser Aluminum France, S.A.S. and Kaiser Aluminum Beijing Trading Company. Kaiser Aluminum Mill Products, Inc. was included in the "Guarantor Subsidiaries" under the indenture covering the 8.25% Senior Notes but is not a Guarantor Subsidiary under the 2016 Indenture. Historical periods have not been restated to move Kaiser Aluminum Mill Products, Inc. from the Guarantor Subsidiaries category to the Non-Guarantor Subsidiaries category because the impact of this change to the financial position, results of operation and cash flows with respect to the Guarantor Subsidiaries on a combined basis and the Non-Guarantor Subsidiaries on a combined basis is immaterial. DCO Management, LLC was dissolved in the fourth quarter of 2016 and ceased to exist as of January 1, 2017.

CONDENSED CONSOLIDATING BALANCE SHEET

(In millions of dollars)

December 31, 2016



	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	52.9	$	2.3		$	—		$	55.2
Short-term investments	—		231.0		—			—			231.0
Receivables:
Trade receivables – net	—		133.1		4.6			—			137.7
Intercompany receivables	85.8		0.1		0.6			(86.5		)	—
Other	—		11.4		0.5			—			11.9
Inventories	—		197.5		8.0			(3.9		)	201.6
Prepaid expenses and other current assets	0.1		18.0		0.9			(0.5		)	18.5
Total current assets	85.9		644.0		16.9			(90.9		)	655.9
Investments in and advances to subsidiaries	1,012.4		40.1		—			(1,052.5		)	—
Property, plant and equipment – net	—		499.5		31.4			—			530.9
Long-term intercompany receivables	80.2		—		4.9			(85.1		)	—
Deferred tax assets – net	—		154.9		—			4.8			159.7
Intangible assets – net	—		26.4		—			—			26.4
Goodwill	—		37.2		—			—			37.2
Other assets	—		33.4		—			—			33.4
Total	$	1,178.5	$	1,435.5	$	53.2		$	(1,223.7	)	$	1,443.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2.2	$	68.9	$	4.7		$	—		$	75.8
Intercompany payable	—		86.4		0.1			(86.5		)	—
Accrued salaries, wages and related expenses	—		47.2		1.9			—			49.1
Other accrued liabilities	2.9		52.4		(0.7		)	(14.7		)	39.9
Short-term capital lease	—		0.2		—			—			0.2
Total current liabilities	5.1		255.1		6.0			(101.2		)	165.0
Net liabilities of Salaried VEBA	—		28.6		—			—			28.6
Deferred tax liabilities	—		—		3.3			—			3.3
Long-term intercompany payable	—		85.1		—			(85.1		)	—
Long-term liabilities	—		70.5		2.7			—			73.2
Long-term debt	368.7		—		—			—			368.7
Total liabilities	373.8		439.3		12.0			(186.3		)	638.8

Total stockholders’ equity	804.7		996.2		41.2			(1,037.4		)	804.7
Total	$	1,178.5	$	1,435.5	$	53.2		$	(1,223.7	)	$	1,443.5

CONDENSED CONSOLIDATING BALANCE SHEET

(In millions of dollars)

December 31, 2015



	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	72.2	$	0.3	$	—		$	72.5
Short-term investments	—		30.0		—		—			30.0
Receivables:
Trade receivables – net	—		114.0		2.7		—			116.7
Intercompany receivables	—		111.2		1.1		(112.3		)	—
Other	—		3.8		2.3		—			6.1
Inventories	—		216.3		6.6		(3.3		)	219.6
Prepaid expenses and other current assets	0.2		56.2		1.7		(1.4		)	56.7
Total current assets	0.2		603.7		14.7		(117.0		)	501.6
Investments in and advances to subsidiaries	1,077.2		31.4		—		(1,108.6		)	—
Property, plant and equipment – net	—		464.3		31.1		—			495.4
Long-term intercompany receivables	—		—		3.1		(3.1		)	—
Deferred tax assets – net	—		155.6		—		7.0			162.6
Intangible assets – net	—		30.5		—		—			30.5
Goodwill	—		37.2		—		—			37.2
Other assets	—		19.5		0.1		—			19.6
Total	$	1,077.4	$	1,342.2	$	49.0	$	(1,221.7	)	$	1,246.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	0.5	$	73.6	$	2.6	$	—		$	76.7
Intercompany payable	106.5		14.8		4.0		(125.3		)	—
Accrued salaries, wages and related expenses	—		38.3		1.5		—			39.8
Other accrued liabilities	1.4		52.3		0.4		(1.4		)	52.7
Short-term capital lease	—		0.1		—		—			0.1
Total current liabilities	108.4		179.1		8.5		(126.7		)	169.3
Net liabilities of Salaried VEBA	—		19.0		—		—			19.0
Deferred tax liabilities	—		—		2.1		—			2.1
Long-term intercompany payable	—		3.1		—		(3.1		)	—
Long-term liabilities	—		81.3		6.2		—			87.5
Long-term debt	194.6		—		—		—			194.6
Total liabilities	303.0		282.5		16.8		(129.8		)	472.5

Total stockholders’ equity	774.4		1,059.7		32.2		(1,091.9		)	774.4
Total	$	1,077.4	$	1,342.2	$	49.0	$	(1,221.7	)	$	1,246.9

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

(In millions of dollars)

Year Ended December 31, 2016



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	1,301.6		$	103.4		$	(74.4	)	$	1,330.6
Costs and expenses:
Cost of products sold:
Cost of products sold, excluding depreciation and amortization and other items	—			1,000.6			90.0			(71.1		)	1,019.5
Lower of cost or market inventory write-down	—			4.9			—			—			4.9
Unrealized gain on derivative instruments	—			(18.7		)	—			—			(18.7		)
Depreciation and amortization	—			34.0			2.0			—			36.0
Selling, general, administrative, research and development:
Selling, general, administrative, research and development	4.2			95.0			8.4			(2.6		)	105.0
Net periodic postretirement benefit cost relating to Salaried VEBA	—			3.4			—			—			3.4
Gain on removal of Union VEBA net assets	—			(0.1		)	—			—			(0.1		)
Total selling, general, administrative, research and development	4.2			98.3			8.4			(2.6		)	108.3
Other operating charges, net	—			2.8			—			—			2.8
Total costs and expenses	4.2			1,121.9			100.4			(73.7		)	1,152.8
Operating (loss) income	(4.2		)	179.7			3.0			(0.7		)	177.8
Other (expense) income:
Interest (expense) income	(21.6		)	1.2			—			0.1			(20.3		)
Other (expense) income, net	(11.1		)	0.9			—			(0.1		)	(10.3		)
(Loss) income before income taxes	(36.9		)	181.8			3.0			(0.7		)	147.2
Income tax provision	—			(69.0		)	(0.6		)	14.1			(55.5		)
Earnings in equity of subsidiaries	128.6			1.7			—			(130.3		)	—
Net income	$	91.7		$	114.5		$	2.4		$	(116.9	)	$	91.7

Comprehensive income	$	86.7		$	109.8		$	2.1		$	(111.9	)	$	86.7

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME

(In millions of dollars)

Year Ended December 31, 2015



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	1,361.6		$	123.3		$	(93.0	)	$	1,391.9
Costs and expenses:
Cost of products sold:
Cost of products sold, excluding depreciation and amortization and other items	—			1,095.6			108.4			(88.6		)	1,115.4
Lower of cost or market inventory write-down	—			2.6			—			—			2.6
Unrealized loss on derivative instruments	—			3.4			—			—			3.4
Depreciation and amortization	—			31.3			1.1			—			32.4
Selling, general, administrative, research and development:
Selling, general, administrative, research and development	4.3			76.5			9.3			(2.0		)	88.1
Net periodic postretirement benefit income relating to Salaried VEBA	—			2.4			—			—			2.4
Loss on removal of Union VEBA net assets	—			493.4			—			—			493.4
Total selling, general, administrative, research and development	4.3			572.3			9.3			(2.0		)	583.9
Other operating charges, net	—			0.1			—			—			0.1
Total costs and expenses	4.3			1,705.3			118.8			(90.6		)	1,737.8
Operating (loss) income	(4.3		)	(343.7		)	4.5			(2.4		)	(345.9		)
Other income (expense):
Interest expense	(23.5		)	(0.9		)	—			0.3			(24.1		)
Other (expense) income, net	(2.5		)	3.5			(2.5		)	(0.3		)	(1.8		)
(Loss) income before income taxes	(30.3		)	(341.1		)	2.0			(2.4		)	(371.8		)
Income tax benefit	—			122.5			1.3			11.4			135.2
(Loss) earnings in equity of subsidiaries	(206.3		)	0.9			—			205.4			—
Net (loss) income	$	(236.6	)	$	(217.7	)	$	3.3		$	214.4		$	(236.6	)

Comprehensive (loss) income	$	(172.2	)	$	(153.5	)	$	3.5		$	150.0		$	(172.2	)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME

(In millions of dollars)

Year Ended December 31, 2014



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Net sales	$	—		$	1,323.4		$	133.9	$	(101.2	)	$	1,356.1
Costs and expenses:
Cost of products sold:
Cost of products sold, excluding depreciation and amortization and other items	—			1,098.3			117.8		(98.6		)	1,117.5
Unrealized loss on derivative instruments	—			10.4			—		—			10.4
Depreciation and amortization	—			30.0			1.1		—			31.1
Selling, general, administrative, research and development:
Selling, general, administrative, research and development	4.1			69.7			9.9		(2.3		)	81.4
Net periodic postretirement benefit income relating to VEBAs	—			(23.7		)	—		—			(23.7		)
Total selling, general, administrative, research and development	4.1			46.0			9.9		(2.3		)	57.7
Other operating charges, net	—			1.5			—		—			1.5
Total costs and expenses	4.1			1,186.2			128.8		(100.9		)	1,218.2
Operating (loss) income	(4.1		)	137.2			5.1		(0.3		)	137.9
Other (expense) income:
Interest expense	(37.5		)	(0.6		)	—		0.6			(37.5		)
Other income, net	3.7			3.2			0.4		(0.6		)	6.7
(Loss) income before income taxes	(37.9		)	139.8			5.5		(0.3		)	107.1
Income tax (provision) benefit	—			(50.2		)	0.8		14.1			(35.3		)
Earnings in equity of subsidiaries	109.7			6.0			—		(115.7		)	—
Net income	$	71.8		$	95.6		$	6.3	$	(101.9	)	$	71.8

Comprehensive (loss) income	$	(3.6	)	$	19.9		$	6.6	$	(26.5	)	$	(3.6	)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In millions of dollars)

Year Ended December 31, 2016



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net cash provided by operating activities	$	177.7		$	177.3		$	9.3		$	(200.0	)	$	164.3
Cash flows from investing activities:
Capital expenditures	—			(74.0		)	(2.1		)	—			(76.1		)
Purchase of available for sale securities	—			(255.3		)	—			—			(255.3		)
Proceeds from disposition of available for sale securities	—			55.0			—			—			55.0
Intercompany loans receivable¹	(166.0		)	110.4			(1.3		)	56.9			—
Net cash used in investing activities	(166.0		)	(163.9		)	(3.4		)	56.9			(276.4		)
Cash flows from financing activities:
Repayment of principal and redemption premium of 8.25% Senior Notes	(206.0		)	—			—			—			(206.0		)
Issuance of 5.875% Senior Notes	375.0			—			—			—			375.0
Cash paid for debt issuance costs	(6.8		)	—			—			—			(6.8		)
Proceeds from stock option exercises	1.2			—			—			—			1.2
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares	(2.9		)	—			—			—			(2.9		)
Repurchase of common stock	(33.3		)	—			—			—			(33.3		)
Cash dividends paid to stockholders	(32.4		)	—			—			—			(32.4		)
Cash dividends paid to Parent	—			(200.0		)	—			200.0			—
Intercompany loans payable¹	(106.5		)	167.3			(3.9		)	(56.9		)	—
Net cash (used in) provided by financing activities	(11.7		)	(32.7		)	(3.9		)	143.1			94.8
Net (decrease) increase in cash and cash equivalents during the period	—			(19.3		)	2.0			—			(17.3		)
Cash and cash equivalents at beginning of period	—			72.2			0.3			—			72.5
Cash and cash equivalents at end of period	$	—		$	52.9		$	2.3		$	—		$	55.2

________________

As a result of the Parent's additional liquidity associated with the 5.875% Senior Notes (see Note 3), we classify all intercompany receivables and payables as Intercompany loans receivable and Intercompany loans payable, respectively, and therefore categorize changes in these balances within the investing and financing sections, respectively, of the Condensed Consolidating Statement of Cash Flows.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In millions of dollars)

Year Ended December 31, 2015



	Parent			GuarantorSubsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	285.7		$	(127.2	)	$	0.3		$	—	$	158.8
Cash flows from investing activities:
Capital expenditures	—			(47.9		)	(15.2		)	—		(63.1		)
Purchase of available for sale securities	—			(0.5		)	—			—		(0.5		)
Proceeds from disposition of available for sale securities	—			84.0			—			—		84.0
Net cash provided by (used in) investing activities	—			35.6			(15.2		)	—		20.4
Cash flows from financing activities:
Repayment of principal and redemption premium of 8.25% Senior Notes	(30.0		)	—			—			—		(30.0		)
Repayment of Convertible Notes	(175.0		)	—			—			—		(175.0		)
Proceeds from cash-settled call options related to settlement of Convertible Notes	94.9			—			—			—		94.9
Payment for conversion premium related to settlement of Convertible Notes	(94.9		)	—			—			—		(94.9		)
Cash paid for debt issuance costs	(0.6		)	—			—			—		(0.6		)
Excess tax benefit upon vesting of non-vested shares and dividend payment on unvested shares expected to vest	—			1.3			—			—		1.3
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares	(2.8		)	—			—			—		(2.8		)
Repurchase of common stock	(49.2		)	—			—			—		(49.2		)
Cash dividends paid to stockholders	(28.1		)	—			—			—		(28.1		)
Intercompany loan	—			(12.8		)	12.8			—		—
Net cash (used in) provided by financing activities	(285.7		)	(11.5		)	12.8			—		(284.4		)
Net decrease in cash and cash equivalents during the period	—			(103.1		)	(2.1		)	—		(105.2		)
Cash and cash equivalents at beginning of period	—			175.3			2.4			—		177.7
Cash and cash equivalents at end of period	$	—		$	72.2		$	0.3		$	—	$	72.5

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In millions of dollars)

Year Ended December 31, 2014



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net cash provided by operating activities	$	35.6		$	351.8		$	6.7		$	(270.0	)	$	124.1
Cash flows from investing activities:
Capital expenditures	—			(56.4		)	(3.0		)	—			(59.4		)
Purchase of available for sale securities	—			(93.5		)	—			—			(93.5		)
Proceeds from disposition of available for sale securities	—			108.2			—			—			108.2
Net cash used in investing activities	—			(41.7		)	(3.0		)	—			(44.7		)
Cash flows from financing activities:
Repayment of capital lease	—			(0.1		)	—			—			(0.1		)
Excess tax benefit upon vesting of non-vested shares and dividend payment on unvested shares expected to vest	—			0.8			—			—			0.8
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares	(2.4		)	—			—			—			(2.4		)
Repurchase of common stock	(44.1		)	—			—			—			(44.1		)
Cash dividends paid to stockholders	(25.4		)	—			—			—			(25.4		)
Cash dividends paid to Parent	—			(270.0		)	—			270.0			—
Intercompany loan	31.3			(23.2		)	(8.1		)	—			—
Net cash used in financing activities	(40.6		)	(292.5		)	(8.1		)	270.0			(71.2		)
Net (decrease) increase in cash and cash equivalents during the period	(5.0		)	17.6			(4.4		)	—			8.2
Cash and cash equivalents at beginning of period	5.0			157.7			6.8			—			169.5
Cash and cash equivalents at end of period	$	—		$	175.3		$	2.4		$	—		$	177.7