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Kaiser Aluminum Reports Results for Third Quarter of 2002.

Business Editors

HOUSTON--(BUSINESS WIRE)--Nov. 12, 2002

Kaiser Aluminum today reported a net loss of $83.4 million, or $1.04 per share, for the third quarter of 2002, compared to net income of $68.4 million, or $.85 per share, for the year-ago quarter.

For the first nine months of 2002, Kaiser's net loss was $197.9 million, or $2.45 per share, compared to net income of $123.9 million, or $1.55 per share, for the first nine months of 2001.

Results for the third quarter and nine months of 2002, and for the comparable periods of 2001, include a number of significant non-recurring operating items, as outlined in tables accompanying this press release.

Net sales in the third quarter and first nine months of 2002 were $348.0 million and $1,104.9 million, compared to $430.3 million and $1,357.4 million for the comparable periods of 2001.

Kaiser President and Chief Executive Officer Jack A. Hockema said, "Our third- quarter operating results were less favorable than those of the year-ago period due to tough business conditions in all four of our operating segments, combined with the impact of non-cash operating charges.

"Nonetheless, while tough market conditions obviously have had an adverse impact on our financial results, Kaiser's primary focus is cash generation and liquidity and positioning the company for emergence from Chapter 11. In that regard, we are pleased that, after more than a year of these difficult market conditions, we have approximately a quarter of a billion dollars of liquidity. We are confident this amount provides the company with enough to stay the course until the economy improves."

Hockema said, "We continue to move resolutely through the Chapter 11 process and to take steps to strengthen the company. As a result, Kaiser's advisors have developed a preliminary timeline that could allow the company to emerge from Chapter 11 in 2004, although our management team continues to push for an aggressive pace." Hockema cited three areas in which the company has demonstrated its continued momentum:
-- Improving cost performance - The company had significantly reduced its controllable costs in the third quarter and first nine months of 2002, as compared to the same periods of 2001. The reductions were in addition to the elimination of abnormal Gramercy startup costs that were incurred in 2001. Hockema noted that the company expects to realize additional sustainable improvements to bolster the company's competitive position upon emergence from Chapter 11.

-- Attaining procedural milestones - On October 29, the Bankruptcy Court approved Kaiser's request to set January 31, 2003 as the general bar date by which certain entities must file proofs of claims in the company's Chapter 11 case (except for asbestos personal injury claims). Setting the general bar date is an essential step in progressing through the reorganization process.

-- Investing in new product development - On November 8, the company announced Kaiser Select(TM), a family of engineered products featuring enhanced technical properties and competitive pricing.


Kaiser Aluminum Corporation (OTCBB:KLUCQ) is a leading producer of alumina, primary aluminum, and fabricated aluminum products.

Kaiser Select is a trademark of Kaiser Aluminum & Chemical Corporation.

Company press releases may contain statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The company cautions 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 expressed or implied in the forward-looking statements as a result of various factors.

Statements of Consolidated Income (Loss), Selected Operational and Financial Information, and Condensed Consolidated Balance Sheets Follow

 KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

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

 Quarter Ended Nine Months Ended
 September 30, September 30,
 --------------- -------------------
 2002 2001 2002 2001
 ------- ------- --------- ---------
Net sales $348.0 $430.3 $1,104.9 $1,357.4
 ------- ------- --------- ---------

Costs and expenses:
 Cost of products sold 338.7 397.3 1,044.4 1,260.6
 Depreciation and amortization 22.6 23.1 67.6 66.6
 Selling, administrative,
 research and development
 and general 27.1 24.7 97.6 77.4
 Non-recurring operating charges
 (benefits), net (1) 25.3 21.3 34.4 (198.9)
 ------- ------- --------- ---------

 Total cost and expenses 413.7 466.4 1,244.0 1,205.7
 ------- ------- --------- ---------

Operating income (loss) (65.7) (36.1) (139.1) 151.7

Other income (expense):
 Interest expense (excluding
 unrecorded contractual
 interest of $23.8 and $60.3
 in 2002) (2.2) (27.2) (18.2) (82.2)
 Reorganization items (8.5) - (24.6) -
 Gain on sale of interest in
 QAL - 163.6 - 163.6
 Other - net (2) (1.4) 16.3 1.1 (28.1)
 ------- ------- --------- ---------

Income (loss) before income taxes
 and minority interests (77.8) 116.6 (180.8) 205.0

Provision for income taxes (3) (7.0) (49.4) (21.4) (83.9)

Minority interests 1.4 1.2 4.3 2.8
 ------- ------- --------- ---------

Net income (loss) $(83.4) $68.4 $(197.9) $123.9
 ======= ======= ========= =========

Earnings (loss) per share: (4)
 Basic/Diluted $(1.04) $0.85 $(2.45) $1.55
 ======= ======= ========= =========

Weighted average shares
 outstanding (000):
 Basic 80,561 80,839 80,629 80,081
 Diluted 80,561 80,840 80,629 80,082

(1) Operating income (loss) for the quarter and nine-month periods
 ended Sept. 30, 2002 and 2001 included the following net gains
 (losses). The business unit to which the items are applicable is
 indicated.

 Quarter Ended Nine Months Ended
 September 30, September 30,
 ----------------- -----------------
 2002 2001 2002 2001
 -------- -------- -------- --------
Net gains from power sales
 (Primary Aluminum)- $- $6.5 $- $229.2
Restructuring charges -
 Bauxite & Alumina - (2.9) (1.9) (4.9)
 Primary Aluminum (1.0) (4.8) (2.7) (4.8)
 Flat-Rolled Products (1.5) (10.7) (5.4) (10.7)
 Engineered Products (1.3) - (1.3) -
 Corporate - (0.5) - (1.0)
Impairment charges -
 Bauxite & Alumina - (5.0) - (5.0)
 Primary Aluminum (3.4) (0.6) (3.4) (0.6)
 Eliminations - intersegment
 profit elimination on
 Primary Aluminum impairment
 charges 1.9 - 1.9 -
 Flat-Rolled Products - - (1.6) -
 Corporate - non-operating
 properties (20.0) - (20.0) -
Contractual labor costs related to
 smelter curtailment (Primary
 Aluminum) - (3.3) (3.3)
 -------- -------- -------- --------
 Non-recurring operating items $(25.3) $(21.3) $(34.4) $198.9
 ======== ======== ======== ========

(2) Other income (expense) for the quarter and nine month periods
 ended Sept. 30, 2002 and 2001 included the following pre-tax gains
 (losses):

 Quarter Ended Nine Months Ended
 September 30, September 30,
 ------------------- ------------------
 2002 2001 2002 2001
 --------- --------- -------- ---------
Gains on sale of real estate $- $5.7 $4.0 $5.7
Mark-to-market gains (losses) - 13.9 (0.4) 32.3
Asbestos related charges - - - (53.3)
Adjustment to environment
 liabilities - (1.0) - (9.0)
MetalSpectrum investment write-
 off - - - (2.8)
 --------- --------- -------- ---------
 Special items, net - 18.6 3.6 (27.1)
All Other, net (1.4) (2.3) (2.5) (1.0)
 --------- --------- -------- ---------
 Other - net $(1.4) $16.3 $1.1 $(28.1)
 ========= ========= ======== =========

(3) The income tax provisions for the quarter and nine-month periods
 ended Sept. 30, 2002 of $7.0 and $21.4, respectively, relate to
 foreign income taxes. For the quarter and nine-month periods ended
 September 30, 2002, as a result of the Cases, the Company did not
 recognize income tax benefits for the losses incurred from its
 domestic operations or any U.S. tax benefits for foreign income
 taxes. Instead, the increases in federal and state deferred tax
 assets as a result of the losses were offset by equal increases in
 the valuation allowances.

(4) Basic and fully diluted earnings (loss) per share have been
 presented in accordance with generally accepted accounting
 principles. However, earnings (loss) per share may not be
 meaningful because, as a part of a plan of reorganization, it is
 possible that interests of the Company's existing stockholders
 could be diluted or cancelled.


 KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
 SELECTED OPERATIONAL AND FINANCIAL INFORMATION
 (Unaudited)
 (In millions of dollars, except shipments and prices)

 Quarter Ended Nine Months Ended
 September 30, September 30,
 ---------------- -------------------
 2002 2001 2002 2001
 -------- ------ --------- --------
Shipments: (000 metric tons)
 Alumina
 Third Party 566.1 680.2 1,839.7 2,009.1
 Intersegment 53.8 51.2 240.1 286.0
 -------- ------ --------- --------
 Total Alumina 619.9 731.4 2,079.8 2,295.1
 -------- ------ --------- --------
 Primary Aluminum
 Third party 49.2 59.7 145.2 186.4
 Intersegment 0.1 0.3 1.7 2.3
 -------- ------ --------- --------
 Total Primary Aluminum 49.3 60.0 146.9 188.7
 -------- ------ --------- --------
 Flat-Rolled Products 9.6 17.0 37.2 59.8
 -------- ------ --------- --------
 Engineered Products 32.5 28.0 95.0 92.2
 -------- ------ --------- --------
Average realized third-
 party sales price:
 Alumina (per ton) $169 $183 $168 $189
 Primary aluminum (per pound) $.60 $.63 $.62 $.69
Net Sales:
 Bauxite and Alumina
 Third Party (including
 net sales of bauxite) $99.0 $132.0 $327.5 $402.3
 Intersegment 9.2 9.1 41.4 55.0
 -------- ------ --------- --------
 Total Bauxite and
 Alumina 108.2 141.1 368.9 457.3
 -------- ------ --------- --------
 Primary Aluminum
 Third party 64.7 83.0 200.0 282.1
 Intersegment 0.1 0.5 2.5 3.8
 -------- ------ --------- --------
 Total Primary Aluminum 64.8 83.5 202.5 285.9
 -------- ------ --------- --------
 Flat-Rolled Products 39.9 75.5 145.6 248.3
 Engineered Products 109.7 101.4 328.4 337.9
 Commodities Marketing 9.3 9.5 30.8 5.9
 Minority Interests 25.4 28.9 72.6 80.9
 Eliminations (9.3) (9.6) (43.9) (58.8)
 -------- ------ --------- --------
 Total Net Sales $348.0 $430.3 $1,104.9 $1,357.4
 ======== ====== ========= ========
Operating Income (Loss):
 Bauxite and Alumina (a) $(15.3) $0.4 $(30.5) $(12.4)
 Primary Aluminum (6.8) (0.3) (16.8) 8.1
 Flat-Rolled Products (b) (9.8) 0.2 (26.6) 6.5
 Engineered Products (c) 4.6 - 15.5 5.1
 Commodities Marketing 9.0 3.2 28.1 (5.8)
 Eliminations (1.5) (0.4) 1.4 5.1
 Corporate and Other (20.6) (17.9) (75.8) (53.8)
 Non-Recurring Operating
 (Charges) Benefits, Net(d) (25.3) (21.3) (34.4) 198.9
 -------- ------ --------- --------
 Total Operating
 Income (Loss) $(65.7) $(36.1) $(139.1) $151.7
 ======== ====== ========= ========
Net Income (Loss) $(83.4) $68.4 $(197.9) $123.9
 ======== ====== ========= ========
Capital Expenditures $9.3 $33.3 $29.2 $120.1
 ======== ====== ========= ========

(a) Results for the quarter and nine-month periods ended Sept. 30,
 2002, include $4.4 of charges resulting from an increase in the
 allowance for doubtful receivables; a LIFO inventory charge of
 $1.5; and estimated weather-related excess costs and
 inefficiencies of between $2.0 and $3.0 resulting from hurricane
 conditions in the Caribbean and Gulf of Mexico in late September
 2002. Operating results for the quarter and nine-month periods
 ended Sept. 30, 2001 included: (1) abnormal Gramercy-related
 start- up costs of $13.9 and $54.9 offset by business
 interruption- related insurance accruals of $21.4 and $36.6 and
 (2) a LIFO inventory charge of $2.0.

(b) Results for the quarter and nine-month periods ended September 30,
 2002 include a $1.5 LIFO inventory charge.

(c) Results for the quarter and nine-month periods ended September 30,
 2001 included a $1.0 LIFO inventory charge.

(d) Results for the quarter and nine-month periods ended September 30,
 2002 and 2001 included non-recurring operating (charges) benefits.
 See Note 1 to Statements of Consolidated Income (Loss).

 KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In millions of dollars)

 September 30, December 31,
 2002 2001
 ------------------- -------------------
 Assets (1) (Unaudited)

Current assets (2) $594.3 $759.2
Investments in and advances to
 unconsolidated affiliates 68.7 63.0
Property, plant, and equipment
 - net 1,160.7 1,215.4
Other assets 677.9 706.1
 ------------------- -------------------
 Total $2,501.6 $2,743.7
 =================== ===================

 Liabilities & Stockholders'
 Equity (1)

Liabilities not subject to
 compromise-
 Current liabilities (3) $323.4 $803.4
 Long-term liabilities 94.9 919.9
 Accrued postretirement medical
 benefit obligation - 642.2
 Long-term debt 42.8 700.8
Liabilities subject to
 compromise 2,592.2 -
Minority interests 119.9 118.5
Commitments and contingencies
Stockholders' equity (671.6) (441.1)
 ------------------- -------------------
 Total $2,501.6 $2,743.7
 =================== ===================

(1) On Feb. 12, 2002, the Company, KACC and 13 of KACC's subsidiaries
 filed petitions for reorganization under Chapter 11 of the United
 States Federal Code. On March 15, 2002, two additional
 subsidiaries of KACC filed petitions. The balance sheet as of June
 30, 2002 has 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 Chapter 11 filings, such realization of assets and
 liquidation liabilities are subject to a significant number of
 uncertainties. Specifically, but not all inclusive, the balance
 sheet does not present: (a) the realizable value of assets on a
 liquidation basis or the availability of such assets to satisfy
 liabilities, (b) the amount which will ultimately be paid to
 settle liabilities and contingencies which may be allowed or (c)
 the effect of any changes which may occur in connection with the
 Company's capitalization or operations resulting from a plan of
 reorganization

(2) Includes Cash and cash equivalents of $93.9 and $153.3 at Sept.
 30, 2002 and Dec. 31, 2001, respectively.

(3) Includes Current portion of long-term debt of $.9 and $173.5 at
 Sept. 30, 2002 and Dec. 31, 2001, respectively. On Feb. 12, 2002,
 the Company and KACC entered into a $300.0 post-petition credit
 agreement with a group of lenders for debtor-in-possession
 financing (the "DIP Facility"). As of Sept. 30, 2002, there were
 no outstanding borrowings under the DIP facility. At Sept. 30,
 2002, outstanding letters of credit were approximately $37.3.

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