<PAGE>
 
                      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 Quarter Ended March 31, 1999              Commission File Number 0-18858


                              KAISER VENTURES INC.
                              --------------------
             (Exact name of registrant as specified in its charter)

           DELAWARE                                          94-0594733
--------------------------------                    ----------------------------
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                           Identification No.)


                    3633 East Inland Empire Blvd., Suite 850
                           Ontario, California  91764
             -----------------------------------------------------
             (Address of principal executive offices and zip code)


Registrant's telephone number, including area code: (909) 483-8500


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 registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.

                                Yes [X]  No [_]

On May 10, 1999, the Company had 10,699,354 shares of Common Stock, $.03 par
value, outstanding (including 136,919 shares deemed outstanding and held in
reserve by the Company for issuance to the former general unsecured creditors of
Kaiser Steel Corporation pursuant to its Plan of Reorganization).
<PAGE>
 
                        TABLE OF CONTENTS TO FORM 10-Q

                                                                            PAGE
INTRODUCTION
 
  BUSINESS UPDATE.........................................................    1
 
PART I
 
  Item 1.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                  
            CONDITION AND RESULTS OF OPERATIONS...........................    7
                                                                              
  Item 2.  FINANCIAL STATEMENTS...........................................   15
                                                                              
           CONSOLIDATED BALANCE SHEETS....................................   15
                                                                              
           CONSOLIDATED STATEMENTS OF OPERATIONS..........................   17
                                                                              
           CONSOLIDATED STATEMENTS OF CASH FLOWS..........................   18
                                                                              
           CONSOLIDATED STATEMENT OF CHANGES IN                               
            STOCKHOLDERS' EQUITY..........................................   19
                                                                              
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.....................   20
                                                                              
PART II                                                                       
                                                                              
  Item 1.  LEGAL PROCEEDINGS..............................................   22
                                                                              
  Item 2.  CHANGES IN SECURITIES..........................................   22
                                                                              
  Item 3.  DEFAULTS UPON SENIOR SECURITIES................................   22
                                                                              
  Item 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS..............   22
                                                                              
  Item 5.  OTHER INFORMATION..............................................   23
                                                                              
  Item 6.  EXHIBITS AND REPORTS ON FORM 8-K...............................   23
 
SIGNATURES................................................................   24
                                        
                        AVAILABILITY OF PREVIOUS REPORTS

     The Company will furnish without charge, to each stockholder, upon written
request of any such person, a copy of the Company's annual report on Form 10-K
for the year ended December 31, 1998, as amended (the "10-K Report") as filed
with the Securities Exchange and Commission, including the financial statement
schedules thereto.  Those requesting a copy of the 10-K Report that are not
currently stockholders of the Company may also obtain a copy directly from the
Company.  Requests for a copy of the 10-K Report should be directed to Vice
President-Corporate Relations, at 3633 East Inland Empire Boulevard, Suite 850,
Ontario, California 91764.

     The reader is encouraged to read this Form 10-Q Report in conjunction with
the 10-K Report since the information contained herein is often an update of the
information in such reports.

                                       i
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

                          FORWARD-LOOKING STATEMENTS

  Except for the historical statements and discussions contained herein,
statements contained in this 10-Q Report constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.  Any 10-K,
Annual Report to Stockholders, 10-Q or 8-K Report of the Company may include
forward-looking statements.  In addition, other written or oral statements,
which constitute forward-looking statements, have been made and may be made in
the future by the Company.  When used or incorporated by reference in this 10-Q
Report or in other written or oral statements, the words "anticipate,"
"estimate," "project" and similar expressions are intended to identify forward-
looking statements.  Such statements are subject to certain risks, uncertainties
and assumptions.  Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated, expected or projected.
For example, actual results could materially differ from those projected as a
result of factors such as, but not limited to, general economic conditions in
the United States and Southern California; the impact of any year 2000 problems
on a regional or national basis; the impact of federal, state, and local laws
and regulations on the Company's development activities; the impact of weather
on the Company's construction related activities; the discovery of unanticipated
environmental conditions on any of the Company's properties; the failure of the
bankruptcy discharge granted to the Company to address claims and litigation
that relate to the pre-bankruptcy activities of Kaiser Steel Corporation; or the
failure to obtain any required approval or permit for the proposed Eagle
Mountain landfill project or development of the Company's Mill Site real estate.
Readers are cautioned not to put undue reliance on forward-looking statements.
The Company disclaims any intention to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.


                             ADDITIONAL INFORMATION

  A reader of this Form 10-Q Report is strongly encouraged to read the entire
report, together with the Company's 1998 Form 10-K Report, as amended, for
background information and a complete understanding as to material developments
concerning the Company.


                                  INTRODUCTION
                                        
BUSINESS UPDATE

General

  Kaiser Ventures Inc. ("Kaiser" or the "Company") is an asset development
company pursuing project opportunities and investments in water resources,
motorsports, property redevelopment and solid waste management.  The Company's
long-term emphasis is on the further development of its principal assets:  (i) a
50.88% interest in Fontana Union Water Company ("Fontana Union"), a mutual water
company; (ii) an 11.73 % interest in Penske Motorsports, Inc. ("PMI"), a
publicly-traded professional motorsports company; (iii) approximately a 74%
interest in Mine Reclamation Corporation ("MRC"), the developer of the Eagle
Mountain Landfill Project (the "Landfill Project"); (iv) a 50% joint venture
interest in the West Valley MRF ("WVMRF"), a transfer station and recycling
facility located on land acquired from the Company; (v) approximately 629 acres
(gross) of the former Kaiser Steel Corporation ("KSC") steel mill site (the
"Mill Site Property"), a portion of which is currently being developed as the
Kaiser Commerce Center; and (vi) the 11,350 acre idle iron ore mine in the
California desert (the "Eagle 

                                       1
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                     KAISER VENTURES INC. AND SUBSIDIARIES

Mountain Site"), which includes the associated 460 acre town of Eagle Mountain
("Eagle Mountain Townsite") and the land leased to MRC for the Landfill Project.

Investment in Fontana Union Water Company

  The Company, through a wholly-owned subsidiary, Fontana Water Resources, Inc.,
leases its 50.88% ownership of the capital stock of Fontana Union, a mutual
water company, to Cucamonga pursuant to a 102-year take-or-pay lease expiring in
2092 (the "Cucamonga Lease").  Currently, the Company's pro rata interest in
unclaimed water raises its effective interest in Fontana Union to 57.33%.  Under
the terms of the Cucamonga Lease, Cucamonga's payments to the Company are based
upon established fixed quantities of water for most of the applicable sources,
multiplied by a fixed percentage of a water rate from the Metropolitan Water
District of Southern California ("MWD") as available through the Chino Basin
Municipal Water District as it may change from time-to-time (the "Lease Rate").

  As a result of changed rates and a new rate structure implemented by MWD as of
July 1, 1995, the Company and Cucamonga became involved in a rate dispute under
the terms of the Cucamonga Lease.  After a trial held in March 1998, the San
Bernardino County Superior Court concluded that the rate on which the Cucamonga
Lease had been based was discontinued effective July 1, 1995.  The terms of the
Cucamonga Lease require the parties to negotiate, in good faith, a new
substitute rate.  If the parties are unable to agree on a substitute rate, the
matter is resolved in a reference proceeding which is a private trial much like
arbitration.  There is no specified time period in which the new substitute rate
must be established.  Cucamonga and the Company have been engaged in sporadic
negotiations but such negotiations have not, to date, resulted in a new
substitute rate.  In January 1999, the trial court again ruled against Cucamonga
when it sought to alter the Superior Court's prior decision.  As a result, the
Superior Court ordered that, since the parties were at an impasse, the new
substitute rate was to be resolved by a reference proceeding as required by the
terms of the Cucamonga Lease.  The parties are in the initial stages of the
reference proceeding.

  In April 1999, the Inland Empire Utilities Agency (formerly known as the Chino
Basin Metropolitan Water District) voted to increase its administrative charge
from $5.00 to $7.50 per acre foot effective as of July 1, 1999.  This $2.50 per
acre foot increase will be reflected in the rate charged to Cucamonga. In
addition, MWD announced that it will not increase its rates in 1999.

  Settlement negotiations are still ongoing with San Bernardino County regarding
the litigation commenced by the Company's wholly owned subsidiary, Fontana Water
Resources, Inc., with regard to water quality and quantity concerns arising from
San Bernardino County's Mid-Valley Sanitary Landfill and its proposed expansion.
However, there is no assurance that there will be a satisfactory settlement of
the litigation.

Investment in Penske Motorsports, Inc.

  The Company owns 1,627,923 shares, or approximately 11.73 % of the common
stock of PMI.  The Company's ownership interest in PMI was acquired as a result
of:  (i) its contribution in November 1995, to PMI of approximately 480 acres,
as adjusted, of the Central Mill Site Property on which the California Speedway
("TCS") has been built; and (ii) the subsequent sale of the Speedway Business
Park, totaling approximately 54 acres to PMI in December 1996.  PMI is traded on
the NASDAQ National Market under the symbol "SPWY".  As discussed in more detail
below, on May 10, 1999, PMI and International Speedway Corporation ("ISC")
(NASDAQ:SPWY) announced that they have signed a definitive merger agreement
whereby ISC will acquire PMI for consideration totaling $50.00 per share, which
values the Company's interest in PMI at approximately $81 million.

                                       2
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

  PMI is a leading promoter and marketer of professional motorsports in the
United States as well as an owner and operator of speedway facilities.  PMI
currently owns:  (i) Michigan International Speedway, Inc. which owns and
operates the Michigan Speedway ("MIS"), in Brooklyn, Michigan; (ii) The
California Speedway Corporation, which owns and operates TCS near Los Angeles,
California; (iii) Pennsylvania International Raceway, Inc. which owns and
operates the Nazareth Motor Speedway ("Nazareth") in Nazareth, Pennsylvania;
(iv) North Carolina Motor Speedway, Inc. which owns and operates the North
Carolina Motor Speedway ("NCMS") in Rockingham, North Carolina; (v) a forty-five
percent (45%) interest in Homestead-Miami, LLC, the operator of the Metro-Dade
Homestead Motorsports Complex in Dade County, Florida; (vi) Motorsports
International Corp. ("MIC"), a motorsports apparel and memorabilia company; and
(vii) Competition Tire West, Inc. and Competition Tire South, Inc., distributors
of Goodyear racing tires in the mid-west and southern regions of the United
States.  PMI has also announced that it is contemplating the construction of a
track in Denver, Colorado.

  For the first quarter of 1999, PMI announced gross revenues of $12.9 million
and a net loss of $2.9 million or $0.21 per share.  Due to the seasonal nature
of racing, losses are anticipated in the first quarter of the year and profits
in the second, third and fourth quarters.  As a result, the Company's reported
share of PMI's net income/loss will reflect the seasonal nature of PMI's
business.  The Company began accounting for its share of PMI's net income as of
April 1, 1996.  See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."  The Company will cease accounting for PMI under the
equity method of accounting effective April 1, 1999, due to the decision to sell
the PMI stock owned by the Company, as discussed in more detail below.

  The following table sets forth the range of the low and high reported bid
price of PMI's common stock for the first three months of 1999, as reported on
the NASDAQ National Market(SM) System.

             1999:                        Low             High 
                                          ---             ---- 
             First Quarter              $23.75           $35.25 

  On May 11, 1998, the reported closing price of PMI's common stock was $48.875.

  On May 10, 1999, PMI and ISC announced that they entered into a definitive
merger agreement.  Under the terms of the merger agreement, ISC will acquire the
88% or 12.2 million outstanding common shares of PMI stock that it does not
already own for $50.00 per share, subject to a collar provision.  PMI
stockholders will be able to elect to receive this consideration as either:  (1)
$15.00 in cash and $35.00 in Class A Common Stock of ISC; or (2) $50.00 of ISC
Class A Common Stock.

  In accordance with the transaction's collar provision, if the weighted average
price for ISC's Class A Common Stock calculated for the 20 consecutive trading
days prior to closing is no higher than $53.44 or lower than $41.56, then ISC
will issue the necessary number of its shares to provide $35.00 (plus $15.00 in
cash) or $50.00, as applicable, of value for each share of PMI.  Subject to the
provisions of the merger, if the weighted average price is outside of this
range, for those who choose cash and stock ISC would issue no less than 0.655
and no more than 0.824 ISC Class A shares (plus $15.00 in cash), and in the case
of those who choose to receive entirely stock ISC would issue no less than 0.936
and no more than 1.203 ISC Class shares.

  The transaction has been approved by the Boards of Directors of both PMI and
ISC and is subject to various conditions including:  the shareholders of PMI
agreeing to approve the merger; the shareholders of ISC agreeing to approve the
issuance of ISC shares in the merger; the expiration or termination of the
waiting period under the Hart-Scott-Rodino Act; and other customary conditions.
Members of the Bill France Jr. family group holding a majority interest in ISC
have agreed to vote in favor of the share 

                                       3
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                     KAISER VENTURES INC. AND SUBSIDIARIES

issuance. PSH Corp., a joint venture 80% owned by entities affiliated with Roger
Penske and 20% by ISC, has agreed to vote its shares of PMI stock in favor of
the merger. PSH Corp. owns approximately 56% of PMI.

  The Company will also vote its shares in favor of the merger.  The proposed
transaction values the Company's 1,627,923 shares of PMI at approximately $81
million.  Under the cash and stock election, Kaiser would receive approximately
$24 million in cash and approximately $57 million in ISC common stock.  The
Company will retain the option to take all stock.  Assuming the merger is
consummated, a closing on the transaction is currently anticipated to occur in
the third quarter of 1999.

The Mill Site Property

  Redevelopment Activities and Approvals.  The Company continuities to undertake
various activities to redevelop portions of the Mill Site Property.  Depending
upon the final redevelopment plan and after taking into account slope loss, rail
road easements, the San Sevaine flood control channel, proposed streets and
highway improvements, the sewer treatment facility, and other similar items, the
Company anticipates having approximately 500 useable acres available for
development.  Following is a summary of the progress of the Company's
redevelopment plans.

  In April 1997, the Company filed an application for a Specific Plan with San
Bernardino County for all of the Mill Site Property except for:  (i)
approximately 26 acres within the City of Rancho Cucamonga; (ii) approximately
135 acres constituting the East Slag Pile property; (iii) the remaining NAPA
Lots of approximately 15 acres (already permitted); and (iv) the balance of the
Mill Site reserved for possible expansion of the West Valley MRF, approximately
5 acres (already permitted).  The property being entitled and permitted, which
totals approximately 448 acres (net), is referred to as the "Kaiser Commerce
Center."  The Specific Plan application identified a wide variety of potential
uses for the Kaiser Commerce Center.  Potential uses include a rail-served
distribution and commercial park, a multi-modal rail-truck distribution center,
warehousing, a commercial truck stop, as well as other commercial and
recreational uses.  In furtherance of the entitlement process, an environmental
impact report ("EIR") was prepared and circulated in accordance with the
requirements of the California Environmental Quality Act.

  The San Bernardino County entitlement process for the Kaiser Commerce Center
was completed on April 13, 1999, when the San Bernardino County Board of
Supervisors unanimously approved the Kaiser Commerce Center project, its EIR,
the Specific Plan and other land use documents.  The San Bernardino County
Planning Commission also previously unanimously approved the Kaiser Commerce
Center after two hearings.  This approval is a significant step in the
development of the Kaiser Commerce Center.

  Separately, and in addition to the permitting and entitlement process with the
County, the Company continues to process approvals through the California
Transportation Department for an improved interchange at Etiwanda and the I-10
Freeway.  Such freeway improvements near the Mill Site Property would also
involve the realignment of at least one existing street and the construction of
other street improvements.

  Subsequent to the approval of the Kaiser Commerce Center project by San
Bernardino County, San Bernardino County and the California Transportation
Department received a letter from the U. S. Fish and Wildlife Service ("USF&W").
In summary, the letter expressed concerns that the freeway improvements and the
Kaiser Commerce Center may have indirect impacts on two federally endangered
species, the San Bernardino kangaroo rat and the Delphi sands flower-loving fly.
In response to a previous letter, the Company had already surveyed both the
Kaiser Commerce Center and the location of the proposed freeway improvements and
found no suitable habitat for either species.  However, with 

                                       4
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                     KAISER VENTURES INC. AND SUBSIDIARIES

regard to the San Bernardino Kangaroo Rat, there may be habitat on the property
adjoining the site owned by others. The Company has begun meeting with
appropriate officials to determine what steps, if any, need to be taken with
regard to the USF&W's concerns. It is possible that the USF&W's concerns could
delay final approval of the Etiwanda and I-10 Freeway improvements by state and
federal officials.

  As noted in previous reports, significant capital funds will be required to
implement the infrastructure and access improvements.  Pursuant to the approvals
granted by San Bernardino County, construction of infrastructure and access
improvements must be completed prior to occupancy of the Kaiser Commerce Center.
The Company currently estimates the total on-site and off-site improvements will
cost approximately $43 million. Consistent with the Company's overall
development strategy, the Company intends to minimize its capital investments
for these improvements by: (a) seeking public or private financing sources; (b)
land sales; (c) structuring joint ventures and leases; or (d) contributing
portions of the land for an ownership interest in operating companies seeking to
develop the land. Congress has already allocated approximately $1.5 million in
the Federal highway and transportation funds toward the costs of the planned
improvements to the Etiwanda and I-10 Freeway interchange. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
additional information.

  Sales Efforts and Tentative Sales.  As a result of the approval of the Kaiser
Commerce Center project by San Bernardino County, a great deal of interest has
been generated regarding the purchase of property within the project area, as
well as the Company's remaining NAPA Lots.  In addition, the Company is
concentrating on the evaluation of its real estate opportunities and possible
development plans.

  In late April 1999, the Company accepted a non-binding proposal to sell one of
the NAPA Lots of 5.2 acres for $4.90 per square foot.  This sale, if ultimately
consummated, would be for a total cash purchase price of approximately 
$1,109,908, subject to normal closing adjustments.  This proposal is subject to
the preparation and execution of a definitive purchase agreement.  It is
currently anticipated that this sale, if it proceeds, will be consummated in the
third quarter of 1999.

  In May 1999, the Company accepted a non-binding proposal to sell a portion of
another NAPA Lot for $5.00 per square foot.  This parcel will be for
approximately 7.8 acres for a total cash purchase price of approximately
$1,698,840.  This proposal, like the other NAPA Lot proposal, is subject to the
preparation and execution of a definitive purchase agreement.  It is currently
anticipated that this sale, if it proceeds, will be consummated late in the
third quarter of 1999.

  Environmental.  During the first quarter of 1999 the Company continued its
environmental remediation activities.  Of particular significance, in March
1999, the California Department of Toxic Substances Control ("DTSC") confirmed
the Company's belief that no known environmental remediation is required for the
West Slag Pile.  The West Slag Pile, an  approximately 150 acre parcel, is a
part of the Kaiser Commerce Center.  In keeping with standard practice, the
Company will be required to prepare a contingency plan to address impacted soil
if any should exist and be found during grading of the site.

  The Company also continued in its efforts to determine if there are
appropriate mechanisms by which substantially all the environmental risks
associated with the Mill Site Property can be fixed or minimized.  For example,
it appears that environmental insurance products may be available that will fix
and substantially minimize the environmental risks associated with the Mill Site
Property.  The Company is continuing to explore such environmental insurance
products as well as other mechanisms to address environmental risks.

MTC Lease Extension

  Effective February 1, 1999, the Company amended its lease with Management
Training Corporation.  The lease was extended through June 30, 2001.  The
amendment also increased the monthly rent to 

                                       5
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                     KAISER VENTURES INC. AND SUBSIDIARIES

approximately $63,580 per month. The monthly rent will continue to be adjusted
annually by the annual increase in the Consumer Price Index.

Waste Management

West Valley Materials Recovery Facility

  The Company, through a wholly-owned subsidiary, and Burrtec Waste Industries,
Inc., also through a wholly-owned subsidiary, each own a fifty percent (50%)
interest in West Valley MRF, LLC, a limited liability company that owns the West
Valley MRF.  Phase 1 of the West Valley MRF includes a 62,000 square foot
building, sorting equipment, and related facilities for waste transfer and
recycling services.  The West Valley MRF currently receives and processes
approximately up to approximately 2,000 tons per day of non-hazardous commercial
and municipal solid waste.  Waste is primarily received from jurisdictions in
which Burrtec affiliated companies have hauling contracts, and from the cities
of Ontario.  In late 1998, West Valley MRF, LLC entered into a contract with USA
Waste to process substantially all of the municipal solid waste generated in
Ontario.  In addition, West Valley MRF entered into subsequent agreements with
USA Waste in the first quarter of 1999 to provide additional transfer and other
services for the benefit of USA Waste.

  Given the current volumes of waste being handled by the West Valley MRF,
construction of Phase 2 of the West Valley MRF is being considered.  Phase 2
would expand the processing capacity of the West Valley MRF from approximately
2,000 tons per day to approximately 3,5000 tons per day.  The estimated cost of
the expansion is currently approximately $5.2 million.  A final decision on the
expansion will not be made until later in 1999.

Eagle Mountain Landfill Project

  In 1988, the Company entered into a 100-year lease agreement (the "MRC Lease")
with MRC.  MRC is seeking to develop the Company's former iron ore mine near
Eagle Mountain, California into a large, regional rail-haul, municipal solid
waste landfill.  MRC became a subsidiary of the Company when the Company's
subsidiary, Eagle Mountain Reclamation, Inc., acquired a 70% interest in MRC
during the first quarter of 1995 in exchange for the elimination of the minimum
monthly rent due the Company under the MRC Lease.  The elimination of the
minimum monthly rent did not change the future royalty payments due the Company
once the landfill commences operations.  As a result of a series of private
placements, the Company's interest in MRC is now approximately 74%.

  EIR Litigation and Appeal.  After the September 1997 approval of the new
environmental impact report for the Landfill Project, (the "Project EIR"), the
litigation with respect to the Project EIR resumed.  In February 1998, Judge
Judith McConnell of the San Diego County Superior Court issued her final ruling
with respect to the litigation before her on the new Project EIR.  Judge
McConnell in her final ruling found that the new Project EIR remained inadequate
in evaluating the Landfill Project's impacts in two general areas:  (i) the
threatened desert tortoise; and (ii) impacts to Joshua Tree National Park.
Details of Judge McConnell's ruling are contained in previous reports.  MRC, the
Company and Riverside County appealed the Superior Court's decision.

  On May 7, 1999, the Court of Appeal announced its decision to completely
reverse the San Diego Superior Court's prior adverse decision.  The Court of
Appeal's decision in effect certified the Project EIR and reinstated Riverside
County's approval of the Landfill Project.  The Court of Appeal, in a 39-page
opinion, concluded that there was substantial evidence to support the decision
of the Riverside County Board of Supervisors to approve the Landfill Project in
September 1997, and that the San Diego 

                                       6
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

Superior Court had improperly substituted its judgment in concluding that the
Project EIR was defective. The Court of Appeal concluded that there had been
adequate study of the potential impacts on the desert tortoise and on Joshua
Tree National Park. MRC will resume seeking the technical permits for the
Landfill Project. Landfill opponents have stated that they intend to appeal the
decision to the California Supreme Court.

  Federal Land Exchange.  In January 1999, an appeal was filed with the Interior
Board of Land Appeals ("IBLA") with regard to United States Bureau of Land
Management's ("BLM") decision to deny all protests to the proposed Federal land
exchange with the Company.  By way of background, the Company plans to transfer
to the BLM approximately 2,800 acres of Kaiser-owned property along its railroad
right-of-way, which has been identified as prime desert tortoise habitat, in
exchange for fee ownership of approximately 3,500 acres of land within the
Landfill Project area.  In September 1997, the BLM approved the proposed land
exchange.  A number of protests to the land exchange were received, which
protests were denied by the BLM in December 1998.  As anticipated, in January
1999 the same two opponents in the EIR litigation discussed above filed an
appeal of the BLM's decision to proceed with the land exchange.  The Company,
MRC, and the BLM have filed their respective answers to the appeal.  The IBLA
has granted expedited consideration of this appeal.  The Company currently
estimates that the IBLA will announce its decision during the third or fourth
quarter of 1999.

  Risks.  As is discussed in more detail in the Company's 1998 Form 10-K Report,
there are numerous risks associated with MRC and the Landfill Project which must
be overcome to achieve the financing, permitting, construction, opening and
operation of the Landfill Project.  There have been and will continue to be
opponents to the Landfill Project.  Given the legal challenges that have
occurred to date and the controversies that generally surround landfill
projects, future legal challenges are likely.  There is no guarantee that the
Landfill Project will be successfully permitted and ultimately operational.


                                     PART I
                                        
Item 1.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

                         Section 1:  Operating Results

General

  Kaiser Ventures Inc. ("Kaiser" or the "Company") is an asset development
company pursuing project opportunities and investments in water resources,
motorsports, property redevelopment and solid waste management.  The Company's
long-term emphasis is on the further development of its principal assets:  (i) a
50.88% interest in Fontana Union Water Company ("Fontana Union"), a mutual water
company; (ii) a 11.73% interest in Penske Motorsports, Inc. ("PMI"), a publicly-
traded professional motorsports company that has developed the California
Speedway ("TCS") on land acquired from the Company; (iii) approximately a 74%
interest in Mine Reclamation Corporation ("MRC"), the developer of the Eagle
Mountain Landfill Project (the "Landfill Project"); (iv) a 50% joint venture
interest in the West Valley MRF ("WVMRF"), a transfer station and recycling
facility located on land acquired from the Company; (v) approximately 629 acres
of the former Kaiser Steel Corporation ("KSC") steel mill site (the "Mill Site
Property") which is currently undergoing redevelopment; and (vi) the 11,350 acre
idle iron ore mine in the California desert (the "Eagle Mountain Site"), which
includes the associated 460 acre town of Eagle Mountain ("Eagle Mountain
Townsite") and the land leased to MRC for the Landfill Project.  The Company is
also pursuing other related longer-term growth opportunities on the balance of
its Mill Site Property, including the redevelopment of industrial and commercial
parcels of land near TCS and the WVMRF.

                                       7
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES
 
 As discussed in the "Introduction - Business Update - Investment in Penske
Motorsports, Inc." section and in Note 5 to the Financial Statements, on May 10,
1999, PMI and International Speedway Corporation ("ISC") announced that they
entered into a definitive merger agreement.  Under the terms of the agreement,
ISC will acquire the 88% or 12.2 million outstanding common shares of PMI stock
that it does not already own for $50.00 per share subject to a collar provision.
PMI shareholders will be able to elect to receive this consideration as either:
(1) $15.00 in cash and $35.00 in Class A Common Stock of ISC; or (2) $50.00 of
ISC Class A Common Stock.

  In anticipation of this merger, the Company, commencing April 1, 1999, will
start accounting for its investment in PMI in accordance with Financial
Accounting Standards Board ("FASB") Statement No. 115, Accounting for Certain
Investments in Debt and Equity Securities (FASB 115). Under FASB 115 the
Company's share of PMI will be classified as available-for-sale securities and
reported at fair value, with unrealized gains and losses excluded from earnings
and reported as a separate adjustment to shareholders' equity.

Primary Revenue Sources

Ongoing Operations

  The Company's revenues from ongoing operations are generally derived from the
development of the Company's long-term projects.  Revenues from water resources
represent payments under the lease of the Company's interest in Fontana Union to
Cucamonga.  Property redevelopment revenues primarily reflect revenues from
long-term redevelopment activities at the Mill Site Property, including water
and waste water treatment revenues; housing rental income, aggregate and rock
sales, and lease payments for the minimum security prison at the Eagle Mountain
Townsite; and royalty revenues from iron ore shipments from the Company's iron
ore mine in California (the "Silver Lake Mine").  Income from equity method
investments reflect Kaiser's share of income related to those equity investments
(i.e., PMI) and joint ventures (i.e., West Valley MRF) which the Company
accounts for under the equity method.

Interim Activities

  Revenues from interim activities are generated from various sources primarily
related to the Mill Site Property.  Significant components of interim activities
include rentals under short-term tenant lease arrangements, royalty revenues
from the sale of slag to outside contractors, royalty revenues from the sale of
recyclable revert materials and other miscellaneous short-term activities.
Revenues from these activities are declining rapidly as the development of the
remaining Mill Site property proceeds.

Summary of Revenue Sources

  Due to the developmental nature of certain Company projects and the Company's
recognition of revenues from bankruptcy-related and other non-recurring items,
historical period-to-period comparisons of total revenues may not be meaningful
for developing an overall understanding of the Company.  Therefore, the Company
believes it is important to evaluate the trends in the components of its
revenues as well as the recent developments regarding its long-term ongoing and
interim revenue sources.  See "Part I, Item 1. - Business" for a discussion of
recent material events affecting the Company's revenue sources.

                                       8
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

Results of Operations

Analysis of Results for the Quarters Ended March 31, 1999 and 1998

  An analysis of the significant components of the Company's resource revenues
for the quarters ended March 31, 1999 and 1998 follows:

<TABLE>
<CAPTION>
 
                                       1999          1998        % Inc. (Dec)   
                                       ----          ----        -----------    
<S>                                 <C>           <C>            <C>           
Ongoing Operations                                                             
 Water resource...............      $1,180,000    $1,169,000           1%      
 Property redevelopment.......         356,000       345,000           3%      
 Loss from equity method                                                       
 investments..................        (329,000)     (148,000)      (122%)      
                                    ----------    ----------       -----       
   Total ongoing operations...       1,207,000     1,366,000        (12%)      
                                    ----------    ----------       -----       
Interim Activities                                                             
 Lease, service and other.....          67,000       307,000        (78%)      
                                    ----------    ----------       -----       
  Total resource revenues.....      $1,274,000    $1,673,000        (24%)      
                                    ==========    ==========       =====        
Revenues as a Percentage                                                  
of Total Resource Revenues:                                              
 Ongoing operations...........              95%           82%             
 Interim activities...........               5%           18%             
                                    ----------    ----------              
                                                                          
   Total resource revenues....             100%          100%             
                                    ==========    ==========              
</TABLE>

  Resource Revenues.  Total resource revenues for the first quarter of 1999 were
$1,274,000, compared to $1,673,000 for 1998.  Revenues from ongoing operations
decreased 12% during the quarter to $1,207,000 from $1,366,000 in 1998, and
revenues from interim activities decreased 78% to $67,000 from $307,000 in 1998.
Revenues from ongoing operations as a percentage of total revenues increased to
95% in 1999 from 82% in 1998.

  Ongoing Operations.  Water lease revenues under the Company's 102-year take-
or-pay lease with Cucamonga were $1,180,000 during the first quarter of 1999
compared to $1,169,000 for 1998.  The 1% increase in water revenues during the
quarter reflects an increase, as of July 1, 1998, in the effective non-
interruptible untreated water rate being paid by Cucamonga to $354.00 from
$351.75 per acre foot. As previously disclosed, Metropolitan Water District of
Southern California ("MWD"), effective July 1, 1995, implemented changed rates
and a changed rate structure which resulted in the continuing lease
interpretation dispute with Cucamonga regarding the extent of the MWD rate
increases.  Although the Company is continuing to bill Cucamonga at what it
believes is the correct MWD rate under the lease with Cucamonga, the Company has
elected to report revenues on the basis of amounts Cucamonga is currently
paying.  The total amount of lease payments in dispute as of March 31, 1999 is
approximately $2,043,000.  In addition, MWD has stated that it may further
refine its rate structure in the future.

  Property redevelopment revenues were $356,000 for 1999 compared to $345,000
for 1998.  The 3% increase from 1998 is a result of the 5% lease increase
included in the 2 1/2 year lease extension with Management Training Corporation
($11,000).

                                       9
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

  Loss from equity method investments increased to a loss of $329,000 for the
first quarter of 1999 compared to a loss of $148,000 for 1998. The increase of
$181,000 reflects an increase in the reported first quarter net loss of PMI
($151,000), and a decrease in equity income from the WVMRF ($30,000).

  Interim Activities.  Revenues from interim activities for the first quarter of
1999 were $67,000 compared to $307,000 for 1998.  The 78% decrease in revenues
from interim activities in 1999 is primarily attributable to lower revenues from
tenant rental and services and from scrap and metallic sales at the Mill Site
due to continued re-development activities ($236,000).
              
  Resource Operating Costs.  Resource operating costs are those costs directly
related to the resource revenue sources.  Total resource operating costs for the
first quarter of 1999 decreased to $615,000 from $1,035,000 in 1998.  Operations
and maintenance costs for 1999 were $218,000 compared to $334,000 for 1998.  The
35% decrease in 1999 operations and maintenance costs was primarily due to lower
maintenance and supplies costs for buildings and equipment at the Mill Site
($116,000).  Administrative support expenses for the first quarter of 1999
decreased 44% to $397,000 from $701,000 for 1998.  This decrease was primarily
due to a decrease in outside legal costs associated with the CCWD lease rate
dispute ($175,000), the reduction of certain reserves for bad debt ($112,000),
and lower outside service expenses at the Mill Site ($118,000) being partially
offset by restructuring charges relating to planned layoffs at the Mill Site
($100,000) and higher depreciation expense relating to the sewer plant
improvements ($9,000) at the Mill Site.

  Corporate General and Administrative Expenses.  Corporate general and
administrative expenses for the first quarter of 1999 decreased 13% to $882,000
from $1,008,000 for 1998.  The decrease is primarily due to lower payroll and
related expenses ($51,000) and lower professional and outside consulting
expenses ($76,000).

  Net Interest Expense.  Net interest expense for the first quarter of 1999 was
$319,000 compared to $216,000 in 1998.  The increase was due primarily to: (a)
an increase in interest expense ($62,000) associated with the $4,750,000 in
additional long term debt ($9,750,000 in additional borrowings under the Union
Bank of California ("Union Bank") credit facility less the payoff of the Lusk
debt $5,000,000); (b) an increase in the amortization of deferred loan fees
($24,000); and (c) lower interest income ($18,000).

  Pre-Tax Loss and Income Tax Provision.  The Company recorded a loss before
income tax provision of $542,000 for the first quarter of 1999, an 8% decrease
from the $586,000 loss recorded in 1998.  An income tax benefit of $215,000 was
recorded in the first quarter of 1999 as compared with a $247,000 tax benefit in
1998.

  Net Loss.  For first quarter of 1999, the Company reported a net loss of
$327,000, or $.03 per share, a 4% improvement from the net loss of $339,000, or
$.03 per share, reported for 1998.

                         Section 2:  Financial Position
                                        
  Cash, Cash Equivalents and Short-Term Investments.  The Company defines cash
equivalents as highly liquid debt instruments with original maturities of 90
days or less.  Cash and cash equivalents decreased $613,000 to $2,796,000 at
March 31, 1999 from $3,409,000 at December 31, 1998.  Included in cash and cash
equivalents is $2,428,000 and $2,545,000 held solely for the benefit of MRC at
March 31, 1999 and December 31, 1998, respectively.  The decrease in cash and
cash equivalents is primarily due to $692,000 in capital expenditures and
$577,000 in environmental remediation costs being partially offset by equity
funding by the MRC minority partners ($393,000), the issuance of common stock
relating to the exercise of stock options ($128,000) and cash provided by
operations ($110,000).

                                       10
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

  Working Capital.  During the first quarter of 1999, current assets decreased
$876,000 to $4,972,000 while current liabilities increased $593,000 to
$8,928,000.  The decrease in current assets resulted primarily from the $613,000
decrease in cash and cash equivalents and a $263,000 decline in net accounts
receivable.  The increase in current liabilities resulted primarily from an
increase in liabilities associated with the permitting of Eagle Mountain
landfill and environmental remediation at the Mill Site.  Included in current
liabilities as of March 31, 1999 is $906,000 in accounts payable and accrued
liabilities relating to MRC.  As a result, working capital decreased during the
first quarter of 1999 by $1,469,000 to a negative $3,956,000 at March 31, 1999.

  Real Estate.  Real Estate increased $159,000 during 1999 due to continuing
redevelopment of the Mill Site properties.

  Investments.  There was a $329,000 decrease in the Company's investments in
PMI during the first quarter of 1999 due to the Company's recording of its
equity share of PMI's 1999 first quarter loss ($329,000).

  Other Assets.  The increase in other assets ($954,000) is primarily related
to: (a) capitalized landfill permitting and development costs incurred by MRC
($834,000); (b) recording of the deferred tax benefit resulting from the first
quarter loss ($222,000); and (c) capital improvements at Eagle Mountain
($60,000).  These increases were partially offset by an increase in accumulated
depreciation as of March 31, 1999 ($105,000).

  Environmental Remediation.  The Company estimates, based upon current
information, that its future remediation and other environmental costs for the
balance of its land and related matters, including groundwater and other
possible third party claims, will be between approximately $18 million and $28
million, depending both upon the ultimate extent of the environmental
remediation and clean-up effort involved and which approved remediation
alternatives are eventually selected.  In order to provide better information
regarding these future remediation and other environmental costs, the Company
elected, in 1996, to restate its balance sheets to show as a separate liability
rather than, as previously, an offset to land, the amount of future
environmental related costs reflected in its financial statements.  The
restatement reflects the original $34.7 million remediation adjustment to land;
the $6.6 million groundwater remediation reserve recorded in 1988 when the
Company emerged from bankruptcy as the reorganized successor of KSC; and the net
$12.5 million in environmental insurance litigation settlement proceeds received
in 1995 being offset by approximately $26.3 million in remediation and other
environmental costs expended through March 31, 1999.  The Company's decision to
restate its balance sheet was based upon, among other things, the more extensive
investigation and remediation activities that have been pursued over the past
several years and the Company's ability to better estimate the probable range of
future remediation and other environmental costs.

  As of March 31, 1999, the total short-term and long-term environmental
liabilities including remediation reflected on the Company's balance sheet were
approximately $27.5 million, the high end of the probable range of future
remediation and other environmental costs, which declined from the $28.3 million
as of December 31, 1998.  The decrease is a result of approximately $800,000 in
remediation and other environmental costs incurred in the first quarter of 1999
on the Mill Site property.

  Although ongoing environmental investigations are being conducted on the Mill
Site Property and management believes it is currently in a position to estimate
with some reasonable certainty future investigation and remediation costs, there
can be no assurance that the actual amount of environmental remediation
expenditures to be incurred will not substantially exceed those currently
anticipated or that 

                                       11
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

additional areas of contamination may not be identified. Accordingly, future
facts and circumstances could cause these estimates to change significantly.

  Long-term Debt.  Of March 31, 1999, the Company had $13,750,000 in long-term
debt, solely comprised of borrowings under the Company's $30,000,000 revolving-
to-term credit facility with Union Bank.

  Long-term Liabilities.  The $940,000 decrease in other long-term liabilities
is primarily due to the reduction of the environmental remediation liability as
a result of $742,000 in environmental remediation undertaken during the first
quarter of 1999 and a decrease of $198,000 in other long term liabilities.

  Minority Interest and Other Liabilities. As of March 31, 1999, the Company has
recorded $4,168,000 of minority interest relating to the approximately 26%
ownership interest in MRC the Company does not own.

  Contingent Liabilities.  The Company has contingent liabilities more fully
described in the notes to the financial statements.

                          Section 3:  Business Outlook
                                        
  The statements contained in this Business Outlook are based upon current
operations and expectations.  In addition to the forward-looking statements and
information contained elsewhere in this 10-Q Report, these statements are
forward-looking and, therefore, actual results may differ materially.

  On-Going Operations.  As noted above, the Company's revenues from ongoing
operations are generally derived from the development of the Company's major
long-term projects and investments.  The development of a number of these
projects and investments, such as the 102-year take-or-pay lease with Cucamonga,
the 11.75% equity ownership in PMI and the 50% equity ownership of the West
Valley MRF, are essentially complete and the Company is recognizing significant
revenues and income from these investments.  The Company expects revenues from
these projects and investments to increase moderately over time as certain key
economic factors impacting these projects and investments increase.  In
addition, the Company continues to evaluate these completed projects and
investments in light of how to best provide maximum realizable value to its
shareholders.

  In regard to the lease with Cucamonga, the most significant economic factor
affecting future water lease revenues is likely to be adjustments in the MWD
rate for untreated and non-interruptible water as available through the Chino
Basin Municipal Water District (now called Inland Empire Utilities Agency (the
"Lease Rate") upon which the lease payments are calculated.  The MWD rate
established for untreated, non-interruptible water is based on a number of
factors, including MWD's need for funds to finance capital improvements and to
cover large fixed overhead costs.  After increasing at an average of nearly 8.6%
per year during the past 25 years, MWD is projecting that the MWD rate for
untreated, non-interruptible water, including all of the changed rates and
charges implemented by MWD since July 1, 1995, will likely increase at less than
5.0% per year for the next 2-4 years.  This reduction is due to a reduced
capital budget, lower overhead, lower borrowing costs and reduced levels of
inflation.  Also affecting the Company's future water lease revenues is the
dispute with Cucamonga regarding the calculation of the Lease Rate.  In March
1998, the San Bernardino Superior Court ruled that the Lease Rate had been
discontinued as of July 1, 1995.  Thus, the parties are required to negotiate in
good faith a substitute Lease Rate.  To date, the parties have been unable to
negotiate a substitute Lease Rate; consequently, the matter is being submitted
to a reference process, which is a private trial much like arbitration.

                                       12
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

  In regard to the Company's 11.73% investment in PMI, management anticipates
that the Company's interest in PMI will be acquired by ISC sometime in the third
quarter of 1999 pursuant to the terms of the proposed merger agreement between
PMI and ISC.  The proposed transaction at $50.00 per share of consideration
values the Company's interest in PMI at approximately $81 million.  Under the
cash stock election, the Company would receive approximately $24 million in cash
and approximately $57 million in ISC common stock.  The Company has not, to
date, made a decision as to whether to take the cash and stock election or all
ISC stock.  The Company will no longer be utilizing the equity method of
accounting for its investment in PMI commencing April 1, 1999.

  In regard to the WVMRF, the most significant factors affecting the Company's
future equity income from the WVMRF will be the securing of additional resources
of municipal waste for processing and disposal.  At the beginning of 1999, the
facility was operating at full capacity and had begun to explore the potential
of expanding the processing capabilities of the facility under its existing
permits.  A Phase 2 expansion of the WVMRF would cost approximately $8.2 million
and would increase processing capacity to 3,000 tons per day.

  The Company is also spending a significant amount of capital in the continued
development of its two other major project and investment opportunities: the
redevelopment of approximately 496 acres (gross) of the Company's Mill Site
Property and the re-permitting of the Eagle Mountain Landfill by MRC, the
Company's 74% owned subsidiary.  If it is successful in completing the
development of these two projects as planned, the Company expects to generate
significant future revenues and net income from them.  However, as is noted in
the 1998 Form 10-K Report and elsewhere in this Report, there are numerous risks
associated with the redevelopment of the remaining Mill Site Property and
completing the re-permitting of the Landfill Project that could materially
impact the Company's future revenues and net income from these projects.

  In regard to the redevelopment of approximately 448 acres (gross) of the Mill
Site Property, the Company is currently seeking the final approvals necessary
for the development of a variety of possible commercial, industrial and
recreational uses.  The Company received approval, from San Bernardino County,
of its EIR for the project in April 1999, and is seeking the approval of the
California Department of Transportation ("CalTrans") for improvements to the
existing freeway access to the site.  In support of these efforts, the Company
expects to spend, in 1999, up to approximately $3.8 million for required
environmental remediation and approximately $2.1 million for real estate
entitlement and improvement expenditures.  The $3.8 million to be spent in 1999
for required environmental remediation is a component of the $18-28 million
estimate to complete all remaining required remediation for the Mill Site
Property.  In addition, substantial capital expenditures beyond the $2.1 million
projected for 1999 will be required to complete the necessary on-site and off-
site improvements for the redevelopment of remaining Mill Site Property.

  Although neither the Company nor any subsidiary of the Company has any
obligation to invest funds in MRC, the Company has, to date, continued to make
investments in MRC.  Through a series of private placements with existing MRC
shareholders, from July 1995 through March 31, 1999, a total of $14.9 million
has been raised by MRC, with Kaiser contributing approximately $11 million of
that amount.  The Company has also approved advances to MRC totaling $1.2
million for 1999, which together with the minority shareholders advances, will
fund MRC through September 30, 1999.

  Capital Resources.  The Company expects that its current cash balances and
short-term investments together with:  (a) cash provided from operating
activities; (b) amounts available under its $30,000,000 revolving-to-term credit
facility (less $4,850,000 reserved for financial assurances required by the DTSC
and relating to environmental remediation on the Mill Site Property) will be
sufficient to satisfy both the Company's near-term operating cash requirements
and to enable the Company to continue to fund the 

                                       13
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

development of its long-term projects and investments. As was discussed in more
detail above, the Company expects to commit, in 1999, a total of approximately
$8.4 million for capital projects and investments. To the extent that additional
capital resources are required, such capital will be raised through bank
borrowings, partnerships, joint venture arrangements, additional equity or the
sales or monetization of assets.

  Improved Cash Flow from Use of Net Operating Loss Tax Carryforwards.  Due to
the Company's status as successor to KSC and its use of KSC-related NOLs, income
taxes actually paid by the Company are substantially less than the income tax
provision reported in its financial statements.  The tax benefit associated with
the utilization of these NOLs is reflected as an increase to stockholders'
equity rather than as an increase to net income.  The Company expects that its
use of these NOLs will substantially reduce the cash paid for income taxes until
these NOLs are fully utilized.  The total NOLs at March 31, 1999, are estimated
to be approximately $114 million for federal purposes and $3.4 million for
California purposes.  The federal NOLs expire in varying amounts over a period
from year 2000 to 2014 while the California NOLs expire from 2000 through 2004.

  If, within a three-year period, 50% or more of the stock of the Company
changes ownership, the future annual use of NOLs may be limited.  The annual
limitation would be calculated as the product of:  (i) the highest long-term
tax-exempt rate for a designated period prior to the ownership change; and (ii)
the market value of the Company at such time.



                      (THIS PAGE INTENTIONALLY LEFT BLANK)

                                       14
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                                     as of
<TABLE>
<CAPTION>
                                                     March 31,     December 31,
                                                       1999            1998    
                                                    -----------    ------------
                                                    (Unaudited)               
<S>                                                 <C>            <C>          
ASSETS                                                                         
                                                                               
Current Assets                                                                 
   Cash and cash equivalents....................... $  2,796,000   $  3,409,000
   Accounts receivable and other, net of allowance                             
    for doubtful accounts of $254,000 and $303,000,                            
    respectively...................................    2,076,000      2,339,000
   Note receivable.................................      100,000        100,000
                                                    ------------   ------------
                                                       4,972,000      5,848,000
                                                    ------------   ------------
                                                                               
Investment in common stock of Penske Motorsports,                              
 Inc...............................................   45,455,000     45,784,000
                                                    ------------   ------------
Investment in Fontana Union Water Company..........   16,108,000     16,108,000
                                                    ------------   ------------
Investment in West Valley MRF......................    2,549,000      2,549,000
                                                    ------------   ------------
Real Estate                                                                    
   Land and improvements...........................   15,621,000     15,621,000
   Real estate in development......................   40,766,000     40,607,000
                                                    ------------   ------------
                                                      56,387,000     56,228,000
                                                    ------------   ------------
Other Assets                                                                   
   Note Receivable.................................      689,000        714,000
   Landfill permitting and development.............   13,475,000     12,641,000
   Buildings and equipment (net)...................    2,904,000      2,949,000
   Other assets....................................      311,000        121,000
                                                    ------------   ------------
                                                      17,379,000     16,425,000
                                                    ------------   ------------
Total Assets....................................... $142,850,000   $142,942,000
                                                    ============   ============
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.

                                       15
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                                     as of

<TABLE>
<CAPTION>
                                                March 31,       December 31, 
                                                  1999              1998      
                                                  ----              ----        
                                               (Unaudited)                   
<S>                                            <C>              <C>          
LIABILITIES AND STOCKHOLDERS' EQUITY                                         
                                                                             
Current Liabilities                                                          
   Accounts payable.......................     $  1,303,000     $    708,000 
   Accrued liabilities....................        3,820,000        3,822,000 
   Environmental remediation..............        3,805,000        3,805,000 
                                               ------------     ------------ 
                                                  8,928,000        8,335,000 
                                               ------------     ------------ 
Long-term Liabilities                                                        
   Deferred gain on sale of real estate...          656,000          656,000 
   Accrued liabilities....................        1,576,000        1,774,000 
   Deferred tax liabilities...............        2,349,000        2,349,000 
   Long-term debt.........................       13,750,000       13,750,000 
   Environmental remediation..............       23,723,000       24,465,000 
                                               ------------     ------------ 
                                                 42,054,000       42,994,000 
                                               ------------     ------------ 
Total Liabilities.........................       50,982,000       51,329,000 
                                               ------------     ------------ 
Minority Interest.........................        4,168,000        3,775,000 
                                               ------------     ------------ 
Commitments and Contingencies                                                
                                                                             
Stockholders' Equity                                                         
   Common stock, par value $.03 per                                          
    share, authorized 13,333,333 shares;                                     
    issued and outstanding 10,699,354                                        
    and 10,685,257 respectively...........          321,000          321,000 
   Capital in excess of par value.........       74,930,000       74,741,000 
   Retained earnings since November 15,                                      
    1988..................................       12,449,000       12,776,000 
                                               ------------     ------------ 
Total Stockholders' Equity................       87,700,000       87,838,000 
                                               ------------     ------------ 
Total Liabilities and Stockholders'                                          
 Equity...................................     $142,850,000     $142,942,000 
                                               ============     ============  
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

                                       16
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                      for the Three Months Ended March 31
                                  (Unaudited)


<TABLE>
<CAPTION>
                                              1999                  1998
                                              ----                  ----
<S>                                       <C>                  <C> 
Resource Revenues                       
Ongoing Operations                      
  Water resource........................  $ 1,180,000          $ 1,169,000
  Property redevelopment................      356,000              345,000
  Loss from equity method investments...     (329,000)            (148,000)
                                          -----------          -----------
     Total ongoing operations...........    1,207,000            1,366,000
                                          -----------          -----------
 Interim Activities                     
  Lease, service and other..............       67,000              307,000
                                          -----------          -----------
     Total resource revenues............    1,274,000            1,673,000
                                          -----------          -----------
Resource Operating Costs                
 Operations and maintenance.............      218,000              334,000
 Administrative support expenses........      397,000              701,000
                                          -----------          -----------
     Total resource operating costs.....      615,000            1,035,000
                                          -----------          -----------
Income from Resources...................      659,000              638,000
 Corporate general and                  
  administrative expenses...............      882,000            1,008,000
                                          -----------          -----------
Loss from Operations....................     (223,000)            (370,000)
 Net interest expense...................      319,000              216,000
                                          -----------          -----------
Loss before Income Tax Provision........     (542,000)            (586,000)
 Income tax provision                   
  Currently payable.....................        7,000                7,000
  Deferred tax benefit..................     (222,000)            (254,000)
                                          -----------          -----------
Net Loss................................  $  (327,000)         $  (339,000)
                                          ===========          ===========
Basic Loss Per Share....................  $      (.03)         $      (.03)
                                          ===========          ===========
Diluted Loss Per Share..................  $      (.03)         $      (.03)
                                          ===========          ===========
Basic Weighted Average Number           
 of Shares Outstanding..................   10,695,000           10,610,000
Diluted Weighted Average Number         
 of Shares Outstanding..................   10,808,000           10,785,000
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

                                       17
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                      for the Three Months Ended March 31
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                1999                 1998
                                                ----                 ----
<S>                                         <C>                 <C> 
Cash Flows from Operating Activities      
 Net loss.................................  $ (327,000)         $  (339,000)
 Loss from equity method investments......     329,000              148,000
 Deferred tax (benefit) expense...........    (222,000)            (254,000)
 Depreciation and amortization............     135,000              113,000
 Allowance for doubtful accounts..........     (49,000)              (6,000)
 Changes in assets:                       
   Receivables and other..................     312,000              179,000
 Changes in liabilities:                  
   Current liabilities....................     130,000               16,000
   Long-term accrued liabilities..........    (198,000)              62,000
                                            ----------          -----------
 Net cash flows from operating activities.     110,000              (81,000)
                                            ----------          -----------
Cash Flows from Investing Activities      
 Minority interest and other liabilities..     393,000               36,000
 Note receivable collections..............      25,000              178,000
 Capital expenditures.....................    (692,000)          (1,595,000)
 Environmental remediation expenditures...    (577,000)            (330,000)
                                            ----------          -----------
 Net cash flows from investing activities.    (851,000)          (1,711,000)
                                            ----------          -----------
Cash Flows from Financing Activities      
 Issuance of common stock.................     128,000               18,000
 Principal payments on note payable.......          --              (60,000)
 Payment of loan fees.....................          --              (25,000)
                                            ----------          -----------
 Net cash flows from financing activities.     128,000              (67,000)
                                            ----------          -----------
Net Changes in Cash and Cash Equivalents..    (613,000)          (1,859,000)
Cash and Cash Equivalents at Beginning    
 of Year..................................   3,409,000            4,330,000
                                            ----------          -----------
Cash and Cash Equivalents at End of       
 Quarter..................................  $2,796,000          $ 2,471,000
                                            ==========          ===========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

                                       18
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                   for the Three Months Ended March 31, 1999
                                  (Unaudited)
                                        
<TABLE>
<CAPTION>
                                                                        
                                               Common Stock                Capital In                  
                                        ---------------------------        Excess of          Retained 
                                          Shares            Amount         Par Value          Earnings              Total
                                        -------------------------------------------------------------------------------------
<S>                                     <C>                <C>            <C>                <C>                  <C>
Balance at December 31, 1998....        10,685,257         $321,000       $74,741,000        $12,776,000          $87,838,000
   Issuance of shares of
       Common stock.............            14,097               --           189,000                 --              189,000
   Net Income...................                --               --                --           (327,000)            (327,000)
                                        ----------         --------       -----------        -----------          -----------
Balance at March 31, 1999               10,699,354         $321,000       $74,930,000        $12,449,000          $87,700,000
                                        ==========         ========       ===========        ===========          ===========

The accompanying notes are an integral part of the consolidated financial statements.
</TABLE> 
                                       19
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


Note 1.  BASIS OF PRESENTATION

  The unaudited, consolidated financial statements as of March 31, 1999 and for
the three month periods ended March 31, 1999 and 1998, as well as related notes,
should be read in conjunction with the audited consolidated financial statements
and related notes as of and for the year ended December 31, 1998.  In the
opinion of management, the accompanying unaudited financial statements contain
all adjustments necessary (all of which are normal and/or recurring in nature)
to present fairly the Company's financial position at March 31, 1999, and
results of operations and cash flows for the three month periods ended March 31,
1999 and 1998.


Note 2.  CUCAMONGA LEASE

  The Company, through a wholly-owned subsidiary, Fontana Water Resources, Inc.,
leases its 50.88% ownership of the capital stock of Fontana Union, a mutual
water company, to Cucamonga County Water District ("Cucamonga") pursuant to a
take-or-pay lease (the "Cucamonga Lease") that terminates in the year 2092.  In
1996, the Company instituted litigation against Cucamonga due to a dispute
concerning the amount payable to the Company pursuant to the terms of the
Cucamonga Lease.  The dispute centers on the Company's assertion that either the
MWD Rate in the Cucamonga Lease was discontinued on July 1, 1995, or that the
Lease Rate should be interpreted to include all the changed rates and items
implemented by Metropolitan Water District of Southern California ("MWD") since
July 1, 1995.  A five-day trial on the matter was held in March 1998.  The Court
ruled, in favor of the Company, that the rate on which the Cucamonga Lease had
been based was discontinued effective July 1, 1995.  Therefore the terms of the
Cucamonga Lease require the parties to negotiate in good faith a new substitute
MWD rate.  To date, the parties have been unable to negotiate a substitute Lease
Rate; consequently, the matter is being submitted to a reference process, which
is a private trial much like arbitration.  Cucamonga continues to pay under the
terms of the Cucamonga Lease, but at a rate substantially less than the Lease
Rate that the Company maintains it is entitled to receive pursuant to the
Cucamonga Lease.  Although the Company is continuing to bill Cucamonga at what
it believes is the correct MWD rate under the lease with Cucamonga, the Company
has elected to report revenues on the basis of amounts Cucamonga is currently
paying.  The total amount of lease payments in dispute as of March 31, 1999 is
approximately $2,043,000.


Note 3.  SUPPLEMENTAL CASH FLOW INFORMATION

  During the three months ended March 31, 1999 and 1998 the Company issued
$61,000 and $142,000 of common stock, respectively, for the payment of bonuses.


Note 4.  COMMITMENTS AND CONTINGENCIES

Environmental Contingencies

  The Company estimates, based upon current information, that its future
remediation and other environmental costs, including groundwater and other
possible third party claims, will be between 

                                       20
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

approximately $18 million and $28 million, depending upon which approved
remediation alternatives are eventually selected.

  Although ongoing environmental investigations are being conducted on the
Company's property, and management believes it is currently in a position to
estimate with some reasonable certainty future investigation and remediation
costs, there can be no assurance that the actual amount of environmental
remediation expenditures and incurred will not substantially exceed those
currently anticipated or that additional areas of contamination may not be
identified.  Accordingly, future facts and circumstances could cause these
estimates to change significantly.  The Company anticipates recovery of the
remediation costs incurred through redevelopment of the property, primarily in
connection with specific redevelopment projects or joint ventures.  Further, the
Company has provided certain financial assurances to the DTSC in connection with
anticipated remediation activities, the primary one being the dedication of
approximately $4.8 million of Kaiser's Union Bank Credit facility.

  While the Company has monitored certain groundwater wells in the past, the
DTSC requested and the Company will implement a supplemental groundwater
monitoring system.  The Company previously settled obligations of groundwater
contamination with the California Regional Water Quality Control Board.  The
settlement required a $1,500,000 cash payment by the Company, which was made in
February 1994, and the contribution of 1,000 acre feet of water annually for 25
years to a water quality project.  These water rights are unrelated to those
leased to Cucamonga.  In 1995, the Company contributed 18,000 acre feet of its
water in storage thus, satisfying the first 18 years of its obligation.  The
Company remains contingently liable for any impacts the groundwater plume may
have on water wells owned by third parties.  The City of Ontario, California has
commenced litigation against the Company alleging that the Company has
contaminated one of its municipal wells.


Note 5.  SUBSEQUENT EVENT

  On May 10, 1999, PMI and International Speedway Corporation ("ISC") announced
that they entered into a definitive merger agreement.  Under the terms of the
agreement ISC will acquire the 88% or 12.2 million outstanding common shares of
PMI stock that it does not already own for $50.00 per share subject to a collar
provision.  PMI shareholders will be able to elect to receive this consideration
as either:  (1) $15.00 in cash and $35.00 in Class A Common Stock of ISC; or (2)
$50.00 of ISC Class A Common Stock.

  The Company will vote its share in favor of the transaction, which is expected
to close during the third quarter.  At $50.00 per share, the Company's 1,627,923
shares would be valued at approximately $81 million.

  In anticipation of this merger, the Company, commencing April 1, 1999, will
start accounting for its investment in PMI in accordance with Financial
Accounting Standards Board ("FASB") Statement No. 115, Accounting for Certain
Investments in Debt and Equity Securities (FASB 115). Under FASB 115 the
Company's share of PMI will be classified as available-for-sale securities and
reported at fair value, with unrealized gains and losses excluded from earnings
and reported in a separate component of shareholders' equity.

                                       21
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

                                    PART II

                                        
Item 1.  LEGAL PROCEEDINGS

  As discussed in the Company's Form 10-K Report for 1998, the Company is
engaged in certain claims and litigation.  There were no material developments
in any legal proceeding in the first quarter of 1999 except as noted below:

  Eagle Mountain Landfill Project Litigation.  On May 7, 1999, a unanimous
three-judge panel of the California Court of Appeal, 4th Appellate District,
Division 1, completely overturned a prior adverse decision of the San Diego
Superior Court on the Landfill Project's environmental impact report.  The Court
of Appeal's decision in effect certified the environmental impact report and
reinstated Riverside County's approval of the Landfill Project.

  An appeal was also filed in January 1999 by Landfill Project opponents to the
Federal land exchange approved by the BLM.  This appeal is before the Interior
Board of Land Appeals which agreed to hear the case on an expedited basis.  It
is currently anticipated that a decision in the appeal will be announced in the
third or fourth quarter of 1999.

  For additional information on the Landfill Project litigation, see
"Introduction -- Business Update -- Waste Management -- Eagle Mountain" of 
this 10-Q Report, as well as the Company's 1998 10-K Report.

  Settlements.  Two litigation matters previously reported, Johnson Machinery
and Ranger Insurance, settled in the first quarter of 1999.  Settlement of these
two matters did not have a material adverse impact on the Company's financial
statements.


Item 2.  CHANGES IN SECURITIES

         None.


Item 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable.


Item 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

         None.

                                       22
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

Item 5.  OTHER INFORMATION

         A.  See the "Introduction" section of this Form 10-Q Report.

         B.  During the first quarter, the Company's Special Committee continued
             its work, assisted by Merrill Lynch and other advisors, in
             evaluating strategic alternatives for the Company and its assets.
             As a result of the Special Committee's work, the Board recently
             created a committee of the independent outside members of the Board
             to review and evaluate certain possible strategic alternatives.


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

          A.  Exhibits
              --------

              Exhibit 27 - Financial Data Schedule for first quarter 10-Q.

          B.  Reports on Form 8-K.
              --------------------

              None.

                                       23
<PAGE>
 
                     KAISER VENTURES INC. AND SUBSIDIARIES

                                   SIGNATURES

     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.

                                         KAISER VENTURES INC.



Dated:  May 14, 1999                      /s/ James F. Verhey
                                         ---------------------------
                                         James F. Verhey
                                         Principal Financial Officer

                                       24