##### 



SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
 For the fiscal year ended December 31, 2005
  Commission file number 1-3605
  KAISER ALUMINUM & CHEMICAL
 CORPORATION
 (Exact name of registrant as
    specified in its charter)
  Delaware

94-0928288(State of
    Incorporation)

(I.R.S. Employer
    Identification No.)  27422 PORTOLA PARKWAY, SUITE 350,
 FOOTHILL RANCH, CALIFORNIA
    92610-2831
 (Address of principal executive
    offices) (Zip Code)
  Registrants
    telephone number, including area code:(949) 614-1740
  Securities registered pursuant to Section 12(b) of the
    Act:
  Name of Each ExchangeTitle of Each Class

on Which RegisteredCumulative Convertible Preference
    Stock
    (par value $100)41/8%
    Series


None43/4%
    (1957 Series)


None43/4%
    (1959 Series)


None43/4%
    (1966 Series)


None   o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  o o þ
  Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE
  None




---



##### 



NOTE
  Form 10-K Form 10-K, Form 10-K Form 10-K
  Corporate
    Secretary
    Kaiser Aluminum & Chemical Corporation
    27422 Portola Parkway, Suite 350
    Foothill Ranch, California
    92610-2831(949) 614-1740
 i




---



##### 



KAISER
    ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES(Debtor-in-Possession)
  TABLE OF
    CONTENTS
  PagePART I


1Item 1.

Business


1Item 1A.

Risk Factors


14Item 1B.

Unresolved Staff Comments


18Item 2.

Properties


18Item 3.

Legal Proceedings


18Item 4.

Submission of Matters to a Vote of
    Security Holders


20PART II


20Item 5.

Market for Registrants
    Common Equity and Related Stockholder Matters


20Item 6.

Selected Financial Data


20Item 7.

Managements Discussion and
    Analysis of Financial Condition and Results of Operations


21Item 7A.

Quantitative and Qualitative
    Disclosures About Market Risk


42Item 8.

Financial Statements and
    Supplementary Data


44Item 9.

Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure


108Item 9A.

Controls and Procedures


108Item 9B.

Other Information


109PART III


110Item 10.

Directors and Executive Officers
    of the Registrant


110Item 11.

Executive Compensation


114Item 12.

Security Ownership of Certain
    Beneficial Owners and Management and Related Stockholder Matters


124Item 13.

Certain Relationships and Related
    Transactions


126Item 14.

Principal Accountant Fees and
    Services


126PART IV


128Item 15.

Exhibits and Financial Statement
    Schedules


128SIGNATURES


129INDEX OF EXHIBITS


130EXHIBIT 21 SUBSIDIARIES


137  ii




---



##### 



KAISER
    ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES(Debtor-in-Possession)
 PART I  Item 1.
    Business  Form 10-K Business Operations  Competition
     Environmental Matters,  Factors Affecting Future Performance, Business  Factors
    Affecting Future Performance
  General
       1




---



##### 



Business
    Operations
   Fabricated
    Products Business Unit
  Overview.
    ManufacturingLocation

Process

Types of ProductsChandler, Arizona

Drawing

Aero/HSGreenwood, South Carolina

Forging

AutoJackson, Tennessee

Extrusion/Drawing

Aero/HS, GELondon, Ontario

Extrusion

Auto, CILos Angeles, California

Extrusion

GE, CINewark, Ohio

Extrusion/Rod Rolling

Aero/HS, GE, Conversion products(1)Richland, Washington

Extrusion

Aero/HS, GERichmond, Virginia

Extrusion/Drawing

GE, Auto, CISherman, Texas

Extrusion

Auto, CISpokane, Washington

Flat Rolling

Aero/HS, GETulsa, Oklahoma

Extrusion

GE     (1)
    
    Conversion products can undergo one or two additional processing
    steps before being identified to an end-use application.     2




---



##### 



Types of
    Products Produced
  General Engineering Products
  Aerospace and High Strength
    Products order-by-order
  Automotive Extruded and Forged
    Products
 3




---



##### 



Custom Industrial Products
  Concentrations Competition
    Types of
    Manufacturing Processes Employed
  Flat Rolled Products
  Extruded Products
  Forged Products
 4




---



##### 



Legal
    Structure
       Primary
    Aluminum Business Unit
    Anglesey. day-to-day
    Hedging.
   5




---



##### 



month-to-month
     Discontinued
    Operations
    Valco.
  Washington Smelters. 2002-2004
  KJBC.
  Gramercy.
  Alpart.
 6




---



##### 



QAL.
  Commodities Marketing.
  Competition
    Research
    and Development
    Employees
   7




---



##### 



ContractLocation

Union

Expiration DateChandler, AZ

Non-union

NAGreenwood, SC

Non-union

NAJackson, TN

Non-union

NALondon, Ontario

USW Canada

Feb 2009Los Angeles, CA

Teamsters

May 2006Newark, OH

USWA

Sept 2010Richland, WA

Non-union

NARichmond, VA

USWA IAM

Nov 2010Sherman, TX

IAM

Dec 2007Spokane, WA

USWA

Sept 2010Tulsa, OK

USWA

Nov 2010   Environmental
    Matters
      clean-up
  Reorganization
    Proceedings
   Background
   8




---



##### 



debtors-in-possession
         Case
    Administration
     9




---



##### 



 Commodity-related
    and Inactive Subsidiaries
    7 8 7 8
  3 4
     10




---



##### 



 Entities
    Containing the Fabricated Products and Certain Other
    Operations
     11




---



##### 



12




---



##### 



 Financial
    Statement Presentation
  Position 90-7 (SOP 90-7), Financial Reporting by Entities in Reorganization Under the
    Bankruptcy Code
  SOP 90-7.
 13




---



##### 



Segment
    and Geographical Area Financial Information








|             |                 
|------------ | ----------------
|Item
    1A. | Risk
    Factors







| |   |                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Cases and any plan or plans of reorganization may
    have adverse consequences on the Company and its stakeholders
    and/or our reorganization from the Cases may not be
    successful











debtors-in-possession






14



---



##### 



| |   |                                            
| | - | -------------------------------------------
| |  | We may not operate profitably in the future



last-in,




| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Our business is subject to adverse changes in various
    market conditions outside of our control















| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | Our profits and cash flows may be adversely impacted by
    the results of the Companys hedging programs







| |   |                                            
| | - | -------------------------------------------
| |  | We operate in a highly competitive industry





15



---



##### 



| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our business could be adversely affected by the loss of
    specific customers or changes in the business or financial
    condition of specific customers







| |   |                                                                          
| | - | -------------------------------------------------------------------------
| |  | Unplanned business interruptions may adversely impact
    our performance











| |   |                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------
| |  | Expiration of power agreement of Anglesey may adversely
    impact our cash flows and hedging programs







| |   |                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------
| |  | Loss of key management and other personnel or inability
    to attract management or other personnel may adversely impact
    performance







| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | Compliance with health and safety laws and regulations
    may adversely affect our results of operations





16



---



##### 



| |   |                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Other legal proceedings or investigations or changes of
    laws and regulations in which we will be subject may adversely
    affect our operations











| |   |                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Companys current or past operations subject
    it to environmental compliance,
    clean-up and
    damage claims that have been and continue to be
    costly







clean-up clean-up




clean-up clean-up










17



---



##### 











 The
    Company is subject to political and regulatory risks in a number
    of countries








|             |                              
|------------ | -----------------------------
|Item
    1B. | Unresolved
    Staff Comments







|        |           
|------- | ----------
|Item 2. | Properties







and/or












|        |                      
|------- | ---------------------
|Item 3. | Legal
    Proceedings





18



---



##### 



Reorganization
    Proceedings








Other
    Environmental Matters








Asbestos
    and Certain Other Personal Injury Claims












Asbestos and Certain Other Personal Injury Claims




Labor
    Matters










19



---



##### 



Labor Matters




Hearing
    Loss Claims




Hearing Loss Claims




Other
    Matters












|        |                                                        
|------- | -------------------------------------------------------
|Item 4. | Submission
    of Matters to a Vote of Security Holders







PART II




|        |                                                                              
|------- | -----------------------------------------------------------------------------
|Item 5. | Market
    for Registrants Common Equity and Related Stockholder
    Matters







Incentive Plans




Capital Structure




|        |                            
|------- | ---------------------------
|Item 6. | Selected
    Financial Data





20



---



##### 



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Reorganization
    Proceedings
  Background. debtors-in-possession
    Commodity-related and Inactive
    Subsidiaries.
  7 8 7 8
  3 4
 21




---



##### 



22




---



##### 



Entities Containing the Fabricated Products and Certain Other
    Operations.
             23




---



##### 



24




---



##### 



Overview
      Year Ended
    December 31,2005


2004


2003(In millions of dollars, except
    shipments and prices)Shipments (mm lbs):Fabricated Products


481.9



458.6



372.3Primary Aluminum


155.6



156.6



158.7637.5



615.2



531.0Average Realized Third Party Sales
    Price (per pound):Fabricated Products(1)

$
1.95


$
1.76


$
1.61Primary Aluminum

$
.95


$
.85


$
.71Net Sales:Fabricated Products

$
939.0


$
809.3


$
597.8Primary Aluminum


150.7



133.1



112.4Total Net Sales

$
1,089.7


$
942.4


$
710.2Segment Operating Income (Loss):Fabricated Products(2)

$
87.2


$
33.0


$
(21.2
)Primary Aluminum(3)


16.4



13.9



6.7Corporate and Other


(35.6
)


(71.1
)


(74.5
)Other Operating Charges, Net(4)


(8.0
)


(793.2
)


(141.6
)Total Operating Income (Loss)

$
60.0


$
(817.4
)

$
(230.6
)Reorganization Items

$
(1,162.1
)

$
(39.0
)

$
(27.0
)Discontinued Operations

$
363.7


$
121.3


$
(514.7
)Loss from Cumulative Effect on
    Years Prior to 2005 of Adopting Accounting For Conditional Asset
    Retirement Obligations(5)

$
(4.7
)

$



$
Net Loss

$
(753.5
)

$
(746.6
)

$
(788.1
)Capital Expenditures (excluding
    discontinued operations)

$
31.0


$
7.6


$
8.9     (1)
    
    Average realized prices for the Companys Fabricated
    products business unit are subject to fluctuations due to
    changes in product mix as well as underlying primary aluminum
    prices and is not necessarily indicative of changes in
    underlying profitability. See Business. 25




---



##### 



(2)
    
    Operating results for 2005, 2004 and 2003 include LIFO inventory
    charges of $9.3, $12.1, and $3.2, respectively.(3)
    
    Includes
    non-cash
    charges of approximately $4.1 million in respect of the
    Companys decision to restate its accounting for derivative
    financial instruments as more fully discussed in Notes 2,
    12 and 17 of Notes to Consolidated Financial Statements.(4)
    
    See Note 6 of Notes to Consolidated Financial Statements
    for a detailed summary of the components of Other operating
    charges, net and the business segment to which the items relate.(5)
    
    See Notes 2 and 4 of Notes to Consolidated Financial
    Statements for a discussion of the changes in accounting for
    conditional asset retirement obligations.  Significant
    Items
  Market-related Factors.
      Credit Arrangement.
    Asbestos-Related Insurance Coverage Conditional
    Settlements.
 26




---



##### 



KBC Agreement Rejection Claim.
  Significant Charges Associated with the Reorganization
    Process.
  
    A charge of $1,131.5 million in 2005 related to
    implementation of the Liquidating Plans, whereby (for purposes
    of computing distributions under the KAAC/KFC Plan) the value of
    an intercompany claim is 27




---



##### 




    Charges related to the sale of commodity interests in 2003 and
    2004. These items are classified as discontinued
    operations in the accompanying financial statements. See
    Note 3 of Notes to Consolidated Financial Statements for
    additional discussion of these items and amounts.
    Significant charges in 2003 and 2004 related to the termination
    of certain of the Companys previous pension and retiree
    medical plans and other agreements reached with the PBGC, the
    USWA and certain other labor unions. These items are discussed
    in Note 9 and Note 11 of Notes to Consolidated
    Financial Statements.
    Certain environmental charges in 2003 and 2004 associated with
    various settlements and transactions. See Note 11 of Notes
    to Consolidated Financial Statements    Environmental Matters.
  Results
    of Operations
  Summary.
    2005
    as Compared to 2004
  Fabricated Aluminum Products.
     28




---



##### 



Primary Aluminum.
      Corporate and Other.
      Reorganization Items.
 29




---



##### 



Discontinued Operations.
    2004
    as Compared to 2003
  Fabricated Aluminum Products.
      Primary aluminum.
      Corporate and Other.
 30




---



##### 



Discontinued Operations.
  Liquidity
    and Capital Resources
  debtors-in-possession,
  Operating Activities.
 31




---



##### 



Investing Activities. and/or
      Financing Activities and Liquidity.
  
    Replaced the existing post-petition credit facility with a new
    $200.0 million DIP Facility and 32




---



##### 




    Included a commitment, upon the Debtors emergence from the
    Chapter 11 proceedings, for exit financing in the form of a
    $200.0 million revolving credit facility (the
    Revolving Credit Facility) and a fully drawn term
    loan (the Term Loan) of up to $50.0 million
    (collectively referred to as the Exit Financing).                 33




---



##### 



Commitments and Contingencies.
         34




---



##### 



Other
    Matters
  Income Tax Matters. and/or
  New
    Accounting Pronouncements
    Critical
    Accounting Policies
  and/or and/or
  Position 90-7, Financial Reporting by Entities in Reorganization Under the
    Bankruptcy Code (SOP 90-7),
     35




---



##### 



SOP 90-7.
     36




---



##### 



2002-2005,
  and/or
     37




---



##### 



year-to-year.
       38




---



##### 



39




---



##### 



Contractual
    Obligations and Commercial Commitments
    Payments Due inLess Than


2-3


4-5


More ThanContractual
    Obligations

Total


1 Year


Years


Years


5 YearsLong-term debt, including capital
    lease of $.8(a)

$
2.3


$
1.1


$
1.2


$



$
Operating leases


7.4



2.6



3.1



1.6



.1Total cash contractual obligations

$
9.7


$
3.7


$
4.3


$
1.6


$
.1     (a)
    
    See Note 7 of Notes to Consolidated Financial Statements
    for information in respect of long-term debt. Long-term debt
    obligations exclude debt subject to compromise of approximately
    $847.6 million, which amounts will be dealt with in
    connection with a plan of reorganization. See Notes 1 and 7
    of Notes to Consolidated Financial Statements for additional
    information about debt subject to compromise.           40




---



##### 




    An amount not to exceed $36.0 million and payable on
    emergence from the Chapter 11 proceedings so long as the
    Companys liquidity (i.e. cash plus borrowing availability)
    is at least $50.0 million after considering such payments.
    To the extent that less than the full $36.0 million is paid
    and the Companys interests in Anglesey are subsequently
    sold, a portion of such sales proceeds, in certain
    circumstances, will be used to pay the shortfall.
    On an annual basis, 10% of the first $20.0 million of
    annual cash flow, as defined, plus 20% of annual cash flow, as
    defined, in excess of $20.0 million. Such annual payments
    shall not exceed $20.0 million and will also be limited
    (with no carryover to future years) to the extent that the
    payments do not cause the Companys liquidity to be less
    than $50.0 million.
    Advances of $3.1 million in June 2004 and $1.9 million
    per month thereafter until the Company emerges from the Cases.
    Any advances made pursuant to such agreement will constitute a
    credit toward the $36.0 million maximum contribution due
    upon emergence.        and/or
 41




---



##### 



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk    Sensitivity
  Primary Aluminum.
   42




---



##### 



month-to-month
    Foreign Currency.
  Energy.
   43




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data  PageReport of Independent Registered
    Public Accounting Firm


45Consolidated Balance Sheets


46Statements of Consolidated Income
    (Loss)


47Statements of Consolidated
    Stockholders Equity (Deficit) and Comprehensive Income
    (Loss)


48Statements of Consolidated Cash
    Flows


49Notes to Consolidated Financial
    Statements


50Quarterly Financial Data
    (Unaudited)


105Five-Year Financial Data


106  44




---



##### 



KAISER
    ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY
    COMPANIES(DEBTOR-IN-POSSESSION)
 REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    (Debtor-In-Possession)
                45




---



##### 



KAISER
    ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY
    COMPANIES(Debtor-in-Possession)
 CONSOLIDATED
    BALANCE SHEETS  December 31,2005


2004(In millions of dollars, except
    share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
49.5


$
55.4Receivables:Trade, less allowance for doubtful
    receivables of $2.9 and $6.9


94.6



97.4Due from affiliate






8.0Other


6.9



10.9Inventories


115.3



105.3Prepaid expenses and other current
    assets


21.0



19.6Discontinued operations
    current assets






30.6Total current assets


287.3



327.2Investments in and advances to
    unconsolidated affiliate


12.6



16.7Property, plant, and
    equipment  net


223.4



214.6Restricted proceeds from sale of
    commodity interests






280.8Personal injury-related insurance
    recoveries receivable


965.5



967.0Goodwill


11.4



11.4Other assets


38.7



31.1Discontinued operations
    long-term assets






38.9Total

$
1,538.9


$
1,887.7LIABILITIES AND
    STOCKHOLDERS EQUITY (DEFICIT)Liabilities not subject to
    compromise Current liabilities:Accounts payable

$
49.8


$
50.2Accrued interest


1.0



.9Accrued salaries, wages, and
    related expenses


42.0



48.9Other accrued liabilities


55.2



73.8Payable to affiliate


14.8



14.6Long-term
    debt  current portion


1.1



1.2Discontinued operations
    current liabilities


2.1



57.7Total current liabilities


166.0



247.3Long-term liabilities


42.0



32.9Long-term debt


1.2



2.8Discontinued operations
    liabilities (liabilities subject to compromise)


68.5



26.4277.7



309.4Liabilities subject to compromise


4,400.1



3,954.9Commitments and contingenciesStockholders equity (deficit):Preference
    stock  Cumulative and Convertible, par value
    $100, authorized 1,000,000 shares, issued and outstanding
    8,669 shares


.7



.7Common stock, par value
    $.331/3
    cents, authorized 1,000,000 shares; issued and outstanding
    46,171,365 shares


15.4



15.4Additional capital


255.6



2,452.8Accumulated deficit


(3,401.8
)


(2,648.3
)Accumulated other comprehensive
    income (loss)


(8.8
)


(5.5
)Note receivable from parent






(2,191.7
)Total stockholders equity
    (deficit)


(3,138.9
)


(2,376.6
)Total

$
1,538.9


$
1,887.7     46




---



##### 



KAISER
    ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY
    COMPANIES(Debtor-in-Possession)
 STATEMENTS OF CONSOLIDATED INCOME (LOSS)  Year Ended
    December 31,2005


2004


2003(In millions of
    dollars)Net sales

$
1,089.7


$
942.4


$
710.2Costs and expenses:Cost of products sold


951.1



852.2



681.2Depreciation and amortization


19.9



22.3



25.7Selling, administrative, research
    and development, and general


50.7



92.1



92.3Other operating charges, net


8.0



793.2



141.6Total costs and expenses


1,029.7



1,759.8



940.8Operating income (loss)


60.0



(817.4
)


(230.6
)Other income (expense):Interest expense (excluding
    unrecorded contractual interest expense of $95.0 in 2005, 2004
    and 2003)


(5.2
)


(9.5
)


(9.1
)Reorganization items


(1,162.1
)


(39.0
)


(27.0
)Other  net


(2.4
)


4.2



(5.2
)Loss before income taxes and
    discontinued operations


(1,109.7
)


(861.7
)


(271.9
)Provision for income taxes


(2.8
)


(6.2
)


(1.5
)Loss from continuing operations


(1,112.5
)


(867.9
)


(273.4
)Discontinued operations:Loss from discontinued operations,
    net of income taxes, including minority interests


(2.5
)


(5.3
)


(514.7
)Gain from sale of commodity
    interests


366.2



126.6



Income (loss) from discontinued
    operations


363.7



121.3



(514.7
)Cumulative effect on years prior
    to 2005 of adopting accounting for conditional asset retirement
    obligations


(4.7
)






Net loss

$
(753.5
)

$
(746.6
)

$
(788.1
)    47




---



##### 



KAISER
    ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY
    COMPANIES(Debtor-in-Possession)STATEMENTS OF CONSOLIDATED STOCKHOLDERS
    EQUITY (DEFICIT) AND
    COMPREHENSIVE INCOME (LOSS)
  AccumulatedOther


NoteComprehensive


ReceivablePreference


Common


Additional


Accumulated


Income


FromStock


Stock


Capital


Deficit


(Loss)


Parent


Total(In millions of
    dollars)BALANCE, December 31, 2002

$
.7


$
15.4


$
2,454.8


$
(1,113.6
)

$
(243.9
)

$
(2,191.7
)

$
(1,078.3
)Net loss














(788.1
)










(788.1
)Minimum pension liability adjustment


















138.6







138.6Unrealized net decrease in value of
    derivative instruments arising during the year


















(1.6
)






(1.6
)Reclassification adjustment for net
    realized gains on derivative instruments included in net loss


















(1.0
)






(1.0
)Comprehensive income (loss)


























(652.1
)Restricted stock cancellations










(1.0
)














(1.0
)Restricted stock accretion










.2















.2BALANCE, December 31, 2003


.7



15.4



2,454.0



(1,901.7
)


(107.9
)


(2,191.7
)


(1,731.2
)Net loss














(746.6
)










(746.6
)Minimum pension liability adjustment


















97.9







97.9Unrealized net increase in value of
    derivative instruments arising during the year


















2.1







2.1Reclassification adjustment for net
    realized losses on derivative instruments included in net loss


















2.4







2.4Comprehensive income (loss)


























(644.2
)Restricted stock cancellations










(1.2
)














(1.2
)BALANCE, December 31, 2004


.7



15.4



2,452.8



(2,648.3
)


(5.5
)


(2,191.7
)


(2,376.6
)Net loss














(753.5
)










(753.5
)Minimum pension liability adjustment


















(3.2
)






(3.2
)Unrealized net decrease in value of
    derivative instruments arising during the year


















(.3
)






(.3
)Reclassification adjustment for net
    realized losses on derivative instruments included in net loss


















.2







.2Comprehensive income (loss)


























(756.8
)Release of note from parent










(2,197.2
)










2,191.7



(5.5
)BALANCE, December 31, 2005

$
.7


$
15.4


$
255.6


$
(3,401.8
)

$
(8.8
)

$



$
(3,138.9
)    48




---



##### 



KAISER
    ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY
    COMPANIES(Debtor-in-Possession)STATEMENTS OF CONSOLIDATED CASH FLOWS
  Year Ended
    December 31,2005


2004


2003(In millions of
    dollars)Cash flows from operating
    activities:Net loss

$
(753.5
)

$
(746.6
)

$
(788.1
)Less net income (loss) from
    discontinued operations


363.7



121.3



(514.7
)Net loss from continuing
    operations, including loss from cumulative effect of adopting
    change in accounting in 2005


(1,117.2
)


(867.9
)


(273.4
)Adjustments to reconcile net loss
    from continuing operations to net cash used by continuing
    operationsNon-cash charges in reorganization
    items in 2005 and other operating charges in 2004 and 2003


1,131.5



805.3



161.7Depreciation and amortization
    (including deferred financing costs of $4.4, $5.8 and $4.7,
    respectively)


24.3



28.1



30.4Loss from cumulative effect on
    years prior to 2005 of adopting accounting for conditional asset
    retirement obligations


4.7







Gains  sale of real
    estate in 2005; sale of Tacoma facility in 2003


(.2
)






(14.5
)Equity in (income) loss of
    unconsolidated affiliates, net of distributions


1.5



(4.0
)


1.0Decrease (increase) in trade and
    other receivables


9.3



(30.7
)


(13.5
)(Increase) decrease in inventories,
    excluding LIFO adjustments and other non-cash operating items


(9.4
)


(24.5
)


10.7(Increase) decrease in prepaid
    expenses and other current assets






.8



3.1(Decrease) increase in accounts
    payable and accrued interest


(2.6
)


16.4



8.1(Decrease) increase in other
    accrued liabilities


(15.0
)


(18.6
)


9.8Increase in payable to affiliates


.1



3.3



.2(Decrease) increase in accrued and
    deferred income taxes


(4.3
)


1.7



(4.1
)Net cash impact of changes in
    long-term assets and liabilities


(25.0
)


(11.5
)


27.1Net cash provided (used) by
    discontinued operations


17.9



64.0



(29.5
)Other


1.3



(.4
)


(4.0
)Net cash provided (used) by
    operating activities


16.9



(38.0
)


(86.9
)Cash flows from investing
    activities:Capital expenditures


(31.0
)


(7.6
)


(8.9
)Net proceeds from dispositions:
    real estate in 2005, real estate and equipment in 2004,
    primarily Tacoma facility and interests in office building
    complex in 2003


.9



2.3



83.0Net cash provided (used) by
    discontinued operations; primarily proceeds from sale of
    commodity interests in 2005 and 2004 and Alpart-related capital
    expenditures in 2003


401.4



356.7



(25.0
)Net cash provided by investing
    activities


371.3



351.4



49.1Cash flows from financing
    activities:Financing costs, primarily DIP
    Facility related


(3.7
)


(2.4
)


(4.1
)Repayment of debt


(1.7
)






Increase in restricted cash


(1.5
)






Net cash used by discontinued
    operations: primarily increase in restricted cash in 2005 and
    increase in restricted cash and payment of Alpart CARIFA loan of
    $14.6 in 2004


(387.2
)


(291.1
)


Net cash used by financing
    activities


(394.1
)


(293.5
)


(4.1
)Net (decrease) increase in cash and
    cash equivalents during the year


(5.9
)


19.9



(41.9
)Cash and cash equivalents at
    beginning of year


55.4



35.5



77.4Cash and cash equivalents at end of
    year

$
49.5


$
55.4


$
35.5Supplemental disclosure of cash
    flow information:Interest paid, net of capitalized
    interest of $.6, $.1, and $.2

$
.7


$
3.8


$
4.0Less interest paid by discontinued
    operations, net of capitalized interest of $.9 in 2003






(.9
)


(1.2
)$
.7


$
2.9


$
2.8Income taxes paid

$
22.3


$
10.7


$
46.1Less income taxes paid by
    discontinued operations


(18.9
)


(10.7
)


(41.3
)$
3.4


$



$
4.8    49




---



##### 



KAISER
    ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY
    COMPANIES(Debtor-in-Possession)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In millions of dollars, except share amounts)
  1.  Reorganization
    Proceedings
  Background. debtors-in-possession non-U.S. joint
        day-to-day
   50




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Case Administration.
    Commodity-related and Inactive
    Subsidiaries.
  7 8 7 8
 51




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   3 4
       52




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Entities Containing the Fabricated Products and Certain Other
    Operations.
       53




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              54




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Financial Statement Presentation. Position 90-7 (SOP 90-7), Financial Reporting by Entities in Reorganization Under the
    Bankruptcy Code
  SOP 90-7.
 55




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Financial Information. SOP 90-7
  Condensed
    Consolidating Balance Sheets
    December 31, 2005 and 2004
  2005


2004Current assets

$
2.3


$
2.1Intercompany receivables
    (payables), net(1)


4.0



4.5$
6.3


$
6.6Liabilities not subject to
    compromise Current liabilities

$
3.9


$
3.2Long-term liabilities


1.4



1.2Stockholders equity
    (deficit)(1)


1.0



2.2$
6.3


$
6.6     (1)
    
    Intercompany receivables (payables), net and stockholders
    equity (deficit) amounts are eliminated in consolidation.  Condensed
    Consolidating Statements of Income (Loss)
    For the Year Ended December 31, 2005, 2004, and
    2003
  2005


2004


2003Costs and
    expenses Operating costs and expenses

$
1.5


$
.5


$
.7Operating loss


(1.5
)


(.5
)


(.7
)All other income (expense), net


.4



.6



.2Income tax and minority interests










.1Equity in income of subsidiaries










Income (loss) from continuing
    operations


(1.1
)


.1



(.4
)Discontinued operations(1)






(58.1
)


(32.0
)Net loss

$
(1.1
)

$
(58.0
)

$
(32.4
)     (1)
    
    Non-debtor subsidiary activity in 2005 was nominal. In 2004 and
    2003, the combined non-debtor subsidiary financial information
    included amounts attributed to Valco Aluminum Company Limited
    (Valco) and Alpart that were sold in 2004 (see
    Note 3). 56




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Condensed
    Consolidating Statements of Cash Flows
    For the Year Ended December 31, 2005, 2004, and
    2003
  2005


2004


2003Net cash provided (used) by:Operating
    activities Continuing operations

$
(.3
)

$
(.2
)

$
(.7
)Discontinued operations(1)






18.0



27.3(.3
)


17.8



26.6Investing
    activities Continuing operations










Discontinued operations(1)






(2.9
)


(26.5
)



(2.9
)


(26.5
)Financing
    activities Continuing operations










Discontinued operations(1)






(14.6
)






(14.6
)Net decrease in cash and cash
    equivalents


(.3
)


.3



.1Cash and cash equivalents,
    beginning of period


.4



.1



Cash and cash equivalents, end of
    period

$
.1


$
.4


$
.1     (1)
    
    Non-debtor subsidiary activity in 2005 was nominal. In 2004 and
    2003, the combined non-debtor subsidiary financial information
    included amounts attributed to Valco Aluminum Company Limited
    (Valco) and Alpart that were sold in 2004 (see
    Note 3).  Classification of Liabilities as Liabilities Not
    Subject to Compromise Versus Liabilities Subject to
    Compromise.
   57




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31,2005


2004Accrued postretirement medical
    obligation (Note 9)

$
1,017.0


$
1,042.1Accrued asbestos and certain other
    personal injury liabilities (Note 11)


1,115.0



1,115.0Assigned intercompany claims for
    benefit of certain creditors (see Reorganization Items
    below)


1,131.5



Debt (Note 7)


847.6



847.6Accrued pension benefits
    (Note 9)


626.2



625.7Unfair labor practice settlement
    (Note 11)


175.0



175.0Accounts payable


29.8



29.8Accrued interest


44.7



47.5Accrued environmental liabilities
    (Note 11)


30.7



30.6Other accrued liabilities


37.2



41.6Proceeds from sale of commodity
    interests


(654.6
)


$
4,400.1


$
3,954.9     (1)
    
    Other accrued liabilities include hearing loss claims of $15.8
    at December 31, 2005 and 2004 (see Note 11).(2)
    
    The above amounts exclude $68.5 at December 31, 2005 and
    $26.4 at December 31, 2004 of liabilities subject to
    compromise related to discontinued operations. The increase
    between 2004 and 2005 primarily relates to a $42.1 claim
    settlement in the fourth quarter of 2005 (see Note 3). The
    balance of the amounts at December 31, 2005 and 2004 were
    primarily accounts payable.    Reorganization Items.
  Years Ended
    December 31,2005


2004


2003Professional fees

$
35.2


$
39.0


$
27.5Interest income


(2.1
)


(.8
)


(.8
)Assigned intercompany claims for
    benefit of certain creditors


1,131.5







Other


(2.5
)


.8



.3$
1,162.1


$
39.0


$
27.0  58




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2.  Summary
    of Significant Accounting Policies
  Going Concern.
  Financial Statement
    Presentation
  Principles of Consolidation.
      Recognition of Sales.
   Cash and Cash Equivalents.
 59




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Inventories. last-in,
  December 31,2005


2004Fabricated
    products Finished products

$
34.7


$
23.3Work in process


43.1



42.2Raw materials


26.3



27.9Operating, repairs and maintenance
    parts


11.1



11.8115.2



105.2Commodities  Primary
    aluminum


.1



.1$
115.3


$
105.3       Depreciation. SOP 90-7.
  Stock-Based Compensation.
   60




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Other Income (Expense).
  Year Ended
    December 31,2005


2004


2003Gains on sale of real estate and
    miscellaneous equipment associated with properties with no
    operations (Note 5)

$



$
1.8


$
Settlement of outstanding
    obligations of former affiliate






6.3



Asbestos and personal
    injury-related charges (Note 11)






(1.0
)


Adjustment to environmental
    liabilities (Note 11)






(1.4
)


(7.5
)All other, net


(2.4
)


(1.5
)


2.3$
(2.4
)

$
4.2


$
(5.2
)     Deferred Financing Costs.
  Goodwill.
  Foreign Currency.
  Derivative Financial Instruments.
  marking-to-market mark-to-market Accounting for
    Derivative Instruments and Hedging Activities
 61




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  mark-to-market
        Fair Value of Financial Instruments.
  Asset Retirement Obligations. Accounting for
    Conditional Asset Retirement Obligations, an interpretation of
    FASB Statement No. 143
    (SFAS No. 143)
 62




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        New Accounting Pronouncements. Share-Based Payment (SFAS No. 123-R) Accounting for Stock-Based
    Compensation Accounting for Stock Issued to Employees SFAS No. 123-R SFAS No. 123-R SFAS No. 123-R SFAS No. 123-R
  Inventory Costs, an Amendment of ARB No. 43,
    Chapter 4
  Accounting Changes and Error Corrections Accounting
 63




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Changes Reporting Changes
    in Interim Financial Statements.
  Reclassifications.
  3.  Discontinued
    Operations
  Accounting for the Impairment or Disposal of Long-Lived
    Assets
       64




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2005


2004


2003Primary








Primary








PrimaryAlumina


Aluminum





Alumina


Aluminum





Alumina


AluminumInterests


Interests


Total


Interests


Interests


Total


Interests


Interests


TotalNet sales

$
42.9


$



$
42.9


$
546.0


$
.2


$
546.2


$
637.9


$
26.8


$
664.7Operating income (loss)


(20.7
)


.7



(20.0
)


53.6



(59.8
)


(6.2
)


(450.1
)


(58.2
)


(508.3
)Gain on sale of commodity interests


366.2







366.2



103.2



23.4



126.6











Income (loss) before income taxes
    and minority interests 


363.4



.7



364.1



158.2



(35.7
)


122.5



(453.7
)


(57.5
)


(511.2
)Net income (loss)


363.0



.7



363.7



142.7



(21.4
)


121.3



(459.9
)


(54.8
)


(514.7
)     (1)
    
    Alumina interests for the year ended December 31, 2003
    include Gramercy/KJBC impairment charges of $368.0 (see
    Note 5).(2)
    
    Primary aluminum interests for the year ended December 31,
    2004 includes impairment charges of $33.0
    (Valco  Notes 2 and 5).(3)
    
    Alumina interests for the year ended December 31, 2005
    includes a KBC bauxite supply agreement rejection charge of
    $42.1 (see below).           65




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4.  Investment
    In and Advances To Unconsolidated Affiliate
    Summary
    of Financial Position
  December 31,2005


2004Current assets

$
69.9


$
50.7Non-current assets (primarily
    property, plant, and equipment, net)


52.9



36.3Total assets

$
122.8


$
87.0Current liabilities

$
36.1


$
15.6Long-term liabilities


50.1



21.6Stockholders equity


36.6



49.8Total liabilities and
    stockholders equity

$
122.8


$
87.0   Summary
    of Operations
  Year Ended
    December 31,2005


2004


2003Net sales

$
266.2


$
249.2


$
205.5Costs and expenses


(243.9
)


(223.1
)


(196.5
)Provision for income taxes


(6.7
)


(7.4
)


(2.6
)Net income

$
15.6


$
18.7


$
6.4Companys equity in income

$
4.8


$
8.2


$
3.3Dividends received

$
9.0


$
4.5


$
4.3    66




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          5.  Property,
    Plant, and Equipment
    December 31,2005


2004Land and improvements

$
7.7


$
8.2Buildings


62.4



63.8Machinery and equipment


460.4



459.8Construction in progress


25.0



6.1555.5



537.9Accumulated depreciation


(332.1
)


(323.3
)Property, plant, and equipment, net

$
223.4


$
214.6     2005 
  
    In April 2005, the Company completed the sale of its interests
    in and related to QAL. Net cash proceeds from the sale total
    approximately $401.4. The buyer also assumed the Companys
    obligations in respect of approximately $60.0 of QAL debt (see
    Note 4). In connection with the completion of the sale, the
    Company also paid a termination fee of $11.0. After considering
    transaction costs (including the termination fee and a $7.7
    deferred charge associated with a
    back-up bid
    fee), the transaction resulted in a gain, net of estimated
    income tax of $7.9, of approximately $366.2. As described in
    Note 1, a substantial majority of the proceeds from the
    sale of the Companys interests in and related to QAL were
    held in escrow for the benefit of KAACs creditors until
    the KAAC/KFC Plan was confirmed by the Court (see
    Note 1) and became effective. In accordance with
    SFAS No. 144, balances and results of operations
    related to the Companys interests in and related to QAL
    have been reported as discontinued operations in the
    accompanying financial statements (see Note 3).  2004 
  
    On July 1, 2004, with Court approval, the Company completed
    the sale of its interests in and related to Alpart for a base
    purchase price of $295.0 plus certain adjustments of
    approximately $20.0. The transaction resulted 67




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  in a gross sales price of approximately $315.0, subject to
    certain post-closing adjustments, and a pre-tax gain of
    approximately $101.6. Offsetting the cash proceeds were
    approximately $14.5 of payments made by the Company to fund the
    prepayment of the Companys share of the Alpart-related
    debt (see Note 7) and $3.3 of transaction-related
    costs. The balance of the proceeds were held in escrow primarily
    for the benefit of certain creditors as provided in the AJC and
    KJC joint plan of liquidation (the AJC/KJC Plan). In
    accordance with SFAS No. 144, balances and results of
    operations related to the Companys interests and related
    to Alpart have been reported as discontinued operations in the
    accompanying financial statements (see Note 3). A net
    benefit of approximately $1.6 was recorded in December 2004 in
    respect of the Alpart-related purchase price adjustments. Such
    amounts were collected during the second quarter of 2005.  
    In May 2004, the Company entered into an agreement to sell its
    interests in and related to the Gramercy facility and KJBC. The
    sale closed on October 1, 2004 with Court approval. Net
    proceeds from the sale were approximately $23.0, subject to
    various closing and post closing adjustments. Such adjustments
    were insignificant. The transaction was completed at an amount
    approximating its remaining book value (after impairment
    charges). A substantial portion of the proceeds were used to
    satisfy transaction related costs and obligations. As previously
    reported, the Company had determined that the fair values of its
    interests in and related to Gramercy/KJBC was below the carrying
    values of the assets because all offers that had been received
    for such assets were substantially below the carrying values of
    the assets. Accordingly, in the fourth quarter of 2003, the
    Company adjusted the carrying value of its interests in and
    related to Gramercy/KJBC to the estimated fair value, which
    resulted in a non-cash impairment charge of approximately $368.0
    (which amount was reflected in discontinued
    operations  see Note 3). In accordance with
    SFAS No. 144, the Companys interests in and
    related to the Gramercy facility and KJBC have been reported as
    discontinued operations in the accompanying financial statements
    (see Note 3).
    During 2003, the Company and Valco participated in extensive
    negotiations with the Government of Ghana (GoG) and
    the Volta River Authority (VRA) regarding
    Valcos power situation and other matters. Such
    negotiations did not result in a resolution of such matters.
    However, as an outgrowth of such negotiations, the Company and
    the GoG entered into a Memorandum of Understanding
    (MOU) in December 2003 pursuant to which The Company
    would sell its 90% interest in and related to Valco to the GoG.
    The Company collected $5.0 pursuant to the MOU. However, a new
    financial agreement was reached in May 2004 and the MOU was
    amended. Under the revised financial terms, the Company was to
    retain the $5.0 already paid by the GoG and $13.0 more was to be
    paid by the GoG as full and final consideration for the
    transaction at closing. The Company also agreed to fund certain
    end of service benefits of Valco employees (estimated to be
    approximately $9.8) which the GoG was to assume under the
    original MOU. The agreement was approved by the Court on
    September 29, 2004. The sale closed on October 29,
    2004. As the revised purchase price under the amended MOU was
    well below the Companys recorded value for Valco, the
    Company recorded a non-cash impairment charge of $31.8 in its
    first quarter 2004 financial statements to reduce the carrying
    value of its interests in and related to Valco at March 31,
    2004 to the amount of the expected proceeds (which amount was
    reflected in discontinued operations  see
    Note 3). As a result, at closing there was no material gain
    or loss on disposition. In accordance with
    SFAS No. 144, balances and results of operations
    related to the Companys interests in and related to Valco
    have been reported as discontinued operations in the
    accompanying financial statements (see Note 3).
    In June 2004, with Court approval, the Company completed the
    sale of the Mead Facility for approximately $7.4 plus assumption
    of certain site-related liabilities. The sale resulted in net
    proceeds of approximately $6.2 and a pre-tax gain of
    approximately $23.4. The pre-tax gain includes the impact from
    the sale of certain non-operating land in the first quarter of
    2004 that was adjacent to the Mead Facility. The pre-tax gain on
    the sale of this property had been deferred pending the
    finalization of the sale of the Mead Facility and transfer of
    the site-related liabilities. Proceeds from the sale of the Mead
    Facility totaling $4.0 were held in escrow as Restricted
    proceeds from sale of commodity interests until the value of the
    secured claim of the holders of 68




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  the 7.6% solid waste disposal revenue bonds was determined by
    the Court (see Note 7). In accordance with
    SFAS No. 144, the assets, liabilities and operating
    results of the Mead Facility have been reported as discontinued
    operations in the accompanying financial statements (see
    Note 3).  
    In the ordinary course of business, the Company sold
    non-operating real estate and certain miscellaneous equipment
    for total proceeds of approximately $1.9. These transactions
    resulted in pre-tax gains of $1.8 (included in Other income
    (expense)  see Note 2).  2003 
  
    In January 2003, the Court approved the sale of the Tacoma
    facility to the Port of Tacoma (the Port). Gross
    proceeds from the sale, before considering approximately $4.0 of
    proceeds being held in escrow pending the resolution of certain
    environmental and other issues, were approximately $12.1. The
    Port also agreed to assume the
    on-site
    environmental remediation obligations. The sale closed in
    February 2003. The sale resulted in a pre-tax gain of
    approximately $9.5 (which amount was reflected in Other
    operating charges (benefits), net  see
    Note 6). The operating results of the Tacoma facility for
    2004, 2003 and 2002 have not been reported as discontinued
    operations in the accompanying Statements of Consolidated Income
    (Loss) because such amounts were not material.
    The Company had a long-term liability, net of estimated
    subleases income, on an office complex in Oakland, California,
    in which the Company had not maintained offices for a number of
    years, but for which it was responsible for lease payments as
    master tenant through 2008 under a
    sale-and-leaseback
    agreement. The Company also held an investment in certain notes
    issued by the owners of the building (which were included in
    Other assets). In October 2002, the Company entered into a
    contract to sell its interests and obligations in the office
    complex. As the contract amount was less than the assets
    net carrying value (included in Other assets), the Company
    recorded a non-cash impairment charge in 2002 of approximately
    $20.0 (which amount was reflected in Other operating charges
    (benefits), net  see Note 6). The sale was
    approved by the Court in February 2003 and closed in March 2003.
    Net cash proceeds were approximately $61.1.
    In July 2003, with Court approval, the Company sold certain
    equipment at the Spokane, Washington facility that was no longer
    required as a part of past product rationalizations. Proceeds
    from the sale were approximately $7.0, resulting in a net gain
    of approximately $5.0 after considering sale related costs. The
    gain on the sale of this equipment has been netted against
    additional impairment charges of approximately $1.1 associated
    with equipment to be abandoned or otherwise disposed of
    primarily as a result of product rationalizations (which amounts
    were reflected in Other operating charges (benefits),
    net  see Note 6). The equipment that was
    sold in July 2003 had been previously impaired to a zero basis.
    The impairment was based on information available at that time
    and the expectation that proceeds from the eventual sale of the
    equipment would be fully offset by sale related costs to be
    borne by the Company. 69




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   6.  Other
    Operating Charges, Net
    Year Ended
    December 31,2005


2004


2003Charges associated with 2004
    portion of deferred contribution plans implemented in 2005
    (Note 9) Fabricated Products

$
(6.3
)

$



$
Corporate


(.5
)






Pension charge related to
    terminated pension plans  Corporate (Note 9)






(310.0
)


(121.2
)Charge related to settlement with
    United Steelworkers of America unfair labor practice
    allegations  Corporate (Note 11)






(175.0
)


Settlement charge related to
    termination of Post-retirement medical benefits
    plans  Corporate (Note 9)






(312.5
)


Restructured transmission service
    agreement  Primary Aluminum (Note 14)










(3.2
)Environmental multi-site
    settlement  Corporate (Note 11)










(15.7
)Hearing loss
    claims  Corporate (Note 11)










(15.8
)Gain on sale of Tacoma
    facility  Primary Aluminum (Note 5)










9.5Gain on sale of equipment,
    net  Fabricated Products (Note 5)










3.9Other


(1.2
)


4.3



.9$
(8.0
)

$
(793.2
)

$
(141.6
)    70




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   7.  Long-Term
    Debt
    December 31,2005


2004Secured:Post-Petition Credit Agreement

$



$
7.6% Solid Waste Disposal Revenue
    Bonds due 2027






1.6Other borrowings (fixed rate)


2.3



2.4Unsecured or Undersecured:97/8% Senior
    Notes due 2002, net


172.8



172.8107/8% Senior
    Notes due 2006, net


225.0



225.0123/4% Senior
    Subordinated Notes due 2003


400.0



400.07.6% Solid Waste Disposal Revenue
    Bonds due 2027


17.4



17.4Other borrowings (fixed and
    variable rates)


32.4



32.4Total


849.9



851.6Less  Current
    portion


(1.1
)


(1.2
)Pre-Filing Date claims
    included in subject to compromise (i.e. unsecured debt)
    (Note 1)


(847.6
)


(847.6
)Long-term debt

$
1.2


$
2.8     
    Replaced the existing post-petition credit facility with a new
    $200.0 post-petition credit facility (the DIP
    Facility) and
    Included a commitment, upon the Debtors emergence from the
    Chapter 11 proceedings, for exit financing in the form of a
    $200.0 revolving credit facility (the Revolving Credit
    Facility) and a fully drawn term loan (the Term
    Loan) of up to $50.0 (collectively referred to as
    Exit Financing).     71




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                7.6% Solid Waste Disposal Revenue Bonds.
 72




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    83/4%
    Alpart CARIFA Loans.
    97/8% Notes,
    107/8% Notes
    and
    123/4% Notes.
  Debt Covenants and Restrictions.
  8.  Income
    Taxes
    Year Ended
    December 31,2005


2004


2003Domestic

$
(1,130.5
)

$
(885.9
)

$
(286.5
)Foreign


20.8



24.2



14.6Total

$
(1,109.7
)

$
(861.7
)

$
(271.9
)    73




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Federal


Foreign


State


Total2005 Current

$



$
(3.8
)

$
.5


$
(3.3
)Deferred






.5







.5Total

$



$
(3.3
)

$
.5


$
(2.8
)2004 Current

$



$
(6.4
)

$



$
(6.4
)Deferred






.2







.2Total

$



$
(6.2
)

$



$
(6.2
)2003 Current

$



$
(1.3
)

$



$
(1.3
)Deferred






(.2
)






(.2
)Total

$



$
(1.5
)

$



$
(1.5
)     Year Ended
    December 31,2005


2004


2003Amount of federal income tax
    benefit based on the statutory rate

$
388.5


$
301.7


$
95.2Increase in valuation allowances


(379.8
)


(304.7
)


(98.1
)Percentage depletion






5.1



6.4Foreign taxes


3.9



(6.3
)


(1.5
)Other


(15.4
)


(2.0
)


(3.5
)Provision for income taxes

$
(2.8
)

$
(6.2
)

$
(1.5
)  74




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Deferred Income Taxes.
  December 31,2005


2004Deferred income tax assets:Postretirement benefits other than
    pensions

$
398.9


$
396.0Loss and credit carryforwards


348.0



411.3Pension benefits


170.5



243.6Other liabilities


168.3



153.7Other


39.0



75.0Assigned intercompany claim for
    benefit of certain creditors


443.9



Valuation allowances


(1,527.1
)


(1,221.3
)Total deferred income tax
    assets  net


41.5



58.3Deferred income tax liabilities:Property, plant, and equipment


(41.3
)


(39.0
)Other


(2.5
)


(22.0
)Total deferred income tax
    liabilities


(43.8
)


(61.0
)Net deferred income tax assets
    (liabilities)(1)

$
(2.3
)

$
(2.7
)     (1)
    
    These deferred income tax liabilities are included in the
    Consolidated Balance Sheets as of December 31, 2005 and
    2004, respectively, in the caption entitled Long-term
    liabilities.    Tax Attributes.
   75




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Other.
      9.  Employee
    Benefit and Incentive Plans
  Historical Pension and Other Postretirement Benefit
    Plans.
  Reorganization Efforts Affecting Pension and Post Retirement
    Medical Obligations.
  and/or
 76




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Contingencies Regarding
    Settlement with the PBGC.
  Financial
    Data.
  Assumptions
     77




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Pension Benefits


Medical/Life Benefits2005


2004


2003


2005


2004


2003Benefit obligations assumptions:Discount rate


5.50
%


5.75
%


6.00
%






5.75
%


6.00
%Rate of compensation increase


3.00
%


3.00
%


4.00
%






4.00
%


4.00
%Net periodic benefit cost
    assumptions:Discount rate


5.75
%


5.75
%


6.00
%






6.00
%


6.75
%Expected return on plan assets


8.50
%


8.50
%


9.00
%










Rate of compensation increase


3.00
%


3.00
%


4.00
%






4.00
%


4.00
%    78




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Benefit
    Obligations and Funded Status
    Pension Benefits


Medical/Life Benefits2005


2004


2005


2004Change in Benefit Obligation:Obligation at beginning of year

$
27.2


$
644.7


$
1,042.0


$
1,014.0Service cost


1.2



3.8







7.0Interest cost


1.6



28.6







58.9Curtailments, settlements and
    amendments


(.2
)


(609.6
)






Actuarial (gain) loss


3.4



(37.0
)






19.1Benefits paid


(1.1
)


(3.3
)


(25.0
)


(57.0
)Obligation at end of year


32.1



27.2



1,017.0



1,042.0Change in Plan Assets:FMV of plan assets at beginning of
    year


14.2



364.1







Actual return on assets


2.0



(13.0
)






Employer contributions


6.4



2.4



25.0



57.0Assets for which contributions
    transferred to the PBGC






(336.0
)






Benefits paid


(1.1
)


(3.3
)


(25.0
)


(57.0
)FMV of plan assets at end of year


21.5



14.2







Obligation in excess of plan assets


10.6



13.0



1,017.0



1,042.0Unrecognized net actuarial loss


(9.6
)


(6.6
)






Unrecognized prior service costs


(1.1
)


(.5
)






Adjustment required to recognize
    minimum liability


8.9



6.8







Estimated net liability to PBGC in
    respect of Terminated Plans


619.0



630.0







Intangible asset and other


1.1



1.3







Accrued benefit liability

$
628.9


$
644.0


$
1,017.0


$
1,042.0      79




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Components
    of Net Periodic Benefit Cost 
    Pension Benefits


Medical/Life Benefits2005


2004


2003


2005


2004


2003Service cost

$
1.2


$
4.7


$
10.2


$



$
7.0


$
7.1Interest cost


1.6



30.8



60.7







58.9



51.3Expected return on plan assets


(1.5
)


(22.9
)


(38.6
)










Amortization of prior service cost


.1



2.6



3.6







(21.7
)


(22.5
)Amortization of net (gain) loss


.4



5.0



16.1







24.6



9.7Net periodic benefit costs


1.8



20.2



52.0







68.8



45.6Less discontinued operations
    reported separately






(7.8
)


(15.3
)






(10.2
)


(11.9
)Defined benefit plans


1.8



12.4



36.7







58.6



33.7401K (pension)


7.2



















$
9.0


$
12.4


$
36.7


$



$
58.6


$
33.7       Additional
    Information
    Description
    of Defined Contribution Plans
     80




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        i.e.
  Plan
    Assets
    Cash
    Flow
  Domestic Plans.
   81




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     
    An amount not to exceed $36.0 and payable on emergence from the
    Chapter 11 proceedings so long as the Companys
    liquidity (i.e. cash plus borrowing availability) is at least
    $50.0 after considering such payments. To the extent that less
    than the full $36.0 is paid and the Companys interests in
    Anglesey are subsequently sold, a portion of such sales
    proceeds, in certain circumstances, will be used to pay the
    shortfall.
    On an annual basis, 10% of the first $20.0 of annual cash flow,
    as defined, plus 20% of annual cash flow, as defined, in excess
    of $20.0. Such annual payments shall not exceed $20.0 and will
    also be limited (with no carryover to future years) to the
    extent that the payments do not cause the Companys
    liquidity to be less than $50.0.
    Advances of $3.1 in June 2004 and $1.9 per month thereafter
    until the Company emerges from the Cases. Any advances made
    pursuant to such agreement will constitute a credit toward the
    $36.0 maximum contribution due upon emergence.        Foreign Plans.
  Significant
    Charges in 2004 and 2003
   82




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Postemployment Benefits.
  Restricted Common Stock.
  Incentive Plans.
    2005


2004


2003Outstanding at beginning of year
    ($3.14, $3.34 and $5.63, respectively)


810,040



850,140



1,454,861Expired or forfeited ($2.49, $7.25
    and $8.86, respectively)


(318,920
)


(40,100
)


(604,721
)Outstanding at end of year ($3.57,
    $3.14 and $3.34, respectively)


491,120



810,040



850,140Exercisable at end of year ($3.41,
    $3.04 and $3.34, respectively)


462,936



781,856



645,659     10.
    Stockholders
    Equity  Preference Stock. 1 8 3 4
 83




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Receivable from Parent.
  11.  Commitments
    and Contingencies
  Impact of Reorganization Proceedings.
  Commitments. and/or
    Environmental Contingencies.
   84




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2005


2004


2003Balance at beginning of period

$
58.3


$
82.5


$
59.1Additional accruals


.5



8.4



25.6Less expenditures


(12.3
)


(32.6
)


(2.2
)Balance at end of period(1)

$
46.5


$
58.3


$
82.5     (1)
    
    As of December 31, 2005 and 2004, $30.7 and $30.6,
    respectively, of the environmental accrual was included in
    Liabilities subject to compromise (see Note 1) and the
    balance was included in Long-term liabilities.           85




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Other Environmental Matters.
  Asbestos and Certain Other Personal Injury
    Claims.
      December 31,2005


2004Liability

$
1,115.0


$
1,115.0Receivable(1)


965.5



967.0$
149.5


$
148.0   86




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended
    December 31,


Inception2005


2004


2003


to DatePayments made, including related
    legal costs

$



$



$



$
(355.7
)Insurance recoveries(2)


1.5



2.7



18.6



267.7$
1.5


$
2.7


$
18.6


$
(88.0
)     (1)
    
    The asbestos-related receivable was determined on the same basis
    as the asbestos-related cost accrual. However, no assurances can
    be given that the Company will be able to project similar
    recovery percentages for future asbestos-related claims or that
    the amounts related to future asbestos-related claims will not
    exceed the Companys aggregate insurance coverage. Amounts
    are stated in nominal dollars and not discounted to present
    value as the Company cannot currently project the actual timing
    of payments or insurance recoveries particularly in light of the
    expected treatment of such items in any plan of reorganization
    that is ultimately filed. The Company believes that, as of
    December 31, 2005, it had received all insurance recoveries
    that it is likely to collect in respect of asbestos-related
    costs paid. See Note 1.(2)
    
    Excludes certain amounts paid by insurers into a separate escrow
    account (in respect of future settlements) more fully discussed
    below.     87




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
       88




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Hearing Loss Claims.
 89




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Labor Matters.
      Labor Agreement.
  Contingencies Regarding Settlement with the
    PBGC.
 90




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Other Contingencies.
  12.  Derivative
    Financial Instruments and Related Hedging Programs
     91




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      month-to-month
      NotionalAmount of


Carrying/Contracts


MarketCommodity

Period


(mmlbs)


ValueAluminum Option sale contracts


1/06 through 12/11



84.7


$
1.5Fixed priced purchase contracts


1/06 through 12/06



15.7



1.1   NotionalAmount of


Carrying/Contracts


MarketForeign Currency

Period


(mm GBP)


ValuePounds Sterling Option purchase contracts


1/06 through 12/07



84.0


$
3.2Fixed priced purchase contracts


1/06 through 12/07



84.0



(4.2
)        92




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    13.
    Key
    Employee Retention Program    14.
    Pacific
    Northwest Power Matters    take-or-pay
 93




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    15.
    Segment
    and Geographical Area Information         94




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Year Ended
    December 31,2005


2004


2003Net Sales:Fabricated Products

$
939.0


$
809.3


$
597.8Primary Aluminum


150.7



133.1



112.4$
1,089.7


$
942.4


$
710.2Equity in income (loss) of
    unconsolidated affiliate:Primary Aluminum

$
4.8


$
8.5


$
3.3Segment Operating Income (Loss):(2)Fabricated Products(1)

$
87.2


$
33.0


$
(21.2
)Primary Aluminum


16.4



13.9



6.7Corporate and Other


(35.6
)


(71.1
)


(74.5
)Other Operating Charges
    Net  Note 6


(8.0
)


(793.2
)


(141.6
)$
60.0


$
(817.4
)

$
(230.6
)     (1)
    
    Operating results for 2005, 2004 and 2003 include LIFO inventory
    charges of $9.3, $12.1 and $3.2, respectively.(2)
    
    In 2005 and 2004, the Company chose to reallocate for segment
    purposes the amount of post-retirement medical costs charged to
    the business units so that the Corporate segment began to incur
    the excess of the total expenses over the amount of VEBA
    contributions allocable to the Fabricated products business unit
    and Discontinued operations. Year Ended
    December 31,2005


2004


2003Depreciation and amortization(1)Fabricated Products

$
19.6


$
21.8


$
22.8Primary Aluminum






.2



1.1Corporate and Other


.3



.3



1.8$
19.9


$
22.3


$
25.7Capital expenditures:(2)Fabricated Products

$
30.6


$
7.6


$
8.9Corporate and Other


.4







$
31.0


$
7.6


$
8.9     (1)
    
    Depreciation and amortization expense excludes depreciation and
    amortization expense of discontinued operations of $13.1 in 2004
    and $47.5 in 2003.(2)
    
    Capital expenditures exclude capital expenditures of
    discontinued operations of $3.5 in 2004 and $28.3 in 2003.  95




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31,2005


2004Investments in and advances to
    unconsolidated affiliate:Primary Aluminum

$
12.6


$
16.7Corporate and Other






$
12.6


$
16.7Segment assets:Fabricated Products

$
403.8


$
430.0Primary Aluminum


62.3



95.5Corporate and Other, including
    restricted proceeds from the sale of commodity interests in 2004
    of $280.8


1,072.8



1,287.4Discontinued operations






69.5$
1,538.9


$
1,882.4   Year EndedDecember 31,2005


2004


2003Income taxes paid:(1)Fabricated
    Products United States

$



$



$
.1Canada


3.4







4.7$
3.4


$



$
4.8     (1)
    
    Income taxes paid excludes income tax paid by discontinued
    operations of $18.9 in 2005, $10.7 in 2004 and $41.3 in 2003.    Year Ended
    December 31,2005


2004


2003Net sales to unaffiliated
    customers:Fabricated ProductsUnited States

$
836.1


$
705.7


$
525.6Canada


102.9



103.6



72.2939.0



809.3



597.8Primary AluminumUnited States


2.6







3.8United Kingdom


148.1



133.1



108.6150.7



133.1



112.4$
1,089.7


$
942.4


$
710.2   96




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31,2005


2004Long-lived assets:(1)Fabricated
    Products United States

$
204.0


$
193.4Canada


17.6



17.8221.6



211.2Primary Aluminum United Kingdom


12.6



16.7Corporate and
    Other United States


2.1



3.4$
236.3


$
231.3     (1)
    
    Long-lived assets include Property, plant, and equipment, net
    and Investments in and advances to unconsolidated affiliates.
    Prepared on a going-concern basis  see
    Note 2.(2)
    
    Long-lived assets excludes long-lived assets of discontinued
    operations of $38.9 in 2004.    16.
    Supplemental
    Guarantor Information  7 8 7 8 3 4
 97




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Condensed
    Consolidating Balance Sheets
    December 31, 2005
  Subsidiary


Other


EliminatingCompany


Guarantors


Subsidiaries


Entries


ConsolidatedASSETSCurrent assets

$
223.5


$
13.9


$
49.9


$



$
287.3Investments in subsidiaries


53.5











(53.5
)


Intercompany advances receivable
    (payable)


(62.5
)






62.5







Investments in and advances to
    unconsolidated affiliates


12.6















12.6Property and equipment, net


184.7



20.5



18.2







223.4Personal injury-related insurance
    recoveries receivable


965.5















965.5Goodwill


11.4















11.4Other assets


38.5



.2











38.7$
1,427.2


$
34.6


$
130.6


$
(53.5
)

$
1,538.9LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities

$
128.1


$
7.0


$
28.8


$



$
163.9Discontinued operations
    current liabilities


1.8







.3







2.1Other long-term liabilities


36.9



1.2



3.9







42.0Long-term debt


1.2















1.2Discontinued operations
    long-term liabilities (liabilities subject to compromise)


26.4







42.1







68.5Liabilities subject to compromise


4,371.7



14.6



13.8







4,400.1Stockholders equity


(3,138.9
)


11.8



41.7



(53.5
)


(3,138.9
)$
1,427.2


$
34.6


$
130.6


$
(53.5
)

$
1,538.9   (1)
    
    As AJI, KJC, KAAC and KFC were liquidated in
    December 2005, The December 31, 2005 condensed balance
    sheet for Subsidiary Guarantors does not include any amounts
    relating to these entities. 98




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Condensed
    Consolidating Balance Sheets
    December 31, 2004
  Subsidiary


Other


EliminatingCompany


Guarantors


Subsidiaries


Entries


ConsolidatedASSETSCurrent assets

$
234.7


$
18.8


$
43.1


$



$
296.6Discontinued operations
    current assets


.6



19.0



11.0







30.6Investments in subsidiaries


2,662.0











(2,662.0
)


Intercompany advances receivable
    (payable)


(2,244.3
)


590.4



1,653.9







Investments in and advances to
    unconsolidated affiliate


16.7















16.7Property and equipment, net


176.0



20.1



18.5







214.6Deferred income taxes


(88.4
)


41.5



46.9







Restricted proceeds from sale of
    commodity interests


4.0



271.8



5.0







280.8Personal injury-related insurance
    recoveries receivable


967.0















967.0Goodwill


11.4















11.4Other assets


30.8



.2



.1







31.1Discontinued operations
    long-term assets






38.9











38.9$
1,770.5


$
1,000.7


$
1,778.5


$
(2,662.0
)

$
1,887.7LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities

$
159.9


$
5.2


$
24.5


$



$
189.6Discontinued operations
    current liabilities


2.1



55.2



.4







57.7Other long-term liabilities


32.9



.9



(.9
)






32.9Long-term debt


2.8















2.8Discontinued operations
    liabilities (liabilities subject to compromise)


26.4















26.4Liabilities subject to compromise


3,923.0



18.2



13.7







3,954.9Stockholders equity


(2,376.6
)


921.2



1,740.8



(2,662.0
)


(2,376.6
)$
1,770.5


$
1,000.7


$
1,778.5


$
(2,662.0
)

$
1,887.7   Condensed
    Consolidating Statements of Income (Loss)
    For the Year Ended December 31, 2005
  Subsidiary


Other


EliminatingCompany


Guarantors


Subsidiaries


Entries


ConsolidatedNet sales

$
904.6


$
43.5


$
352.0


$
(210.4
)

$
1,089.7Costs and expenses:Operating costs and expenses


854.6



54.5



323.0



(210.4
)


1,021.7Other operating charges, net


8.0















8.0Operating income (loss)


42.0



(11.0
)


29.0







60.0Interest expense


(5.2
)














(5.2
)Reorganization items


(30.7
)


(1,131.4
)(1)










(1,162.1
)Other income (expense), net


(16.9
)


14.7



(.2
)






(2.4
)Provision for income taxes


(4.7
)


7.8



(5.9
)






(2.8
)Equity in income of subsidiaries


(730.5
)










730.5



Loss from continuing operations


(746.0
)


(1,119.9
)


22.9



730.5



(1,112.5
)Loss from discontinued operations
    (2)


(2.8
)


407.6
(3)


(41.1
)






363.7Cumulative effect on years prior to
    2005 of adopting accounting for conditional asset retirement
    obligations


(4.7
)














(4.7
)Net loss

$
(753.5
)

$
(712.3
)

$
(18.2
)

$
730.5


$
(753.5
)  99




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Condensed
    Consolidating Statements of Income (Loss)
    For the Year Ended December 31, 2004
  Subsidiary


Other


EliminatingCompany


Guarantors


Subsidiaries


Entries


ConsolidatedNet sales

$
757.6


$
41.2


$
294.8


$
(151.2
)

$
942.4Costs and expenses:Operating costs and expenses


796.8



50.9



270.1



(151.2
)


966.6Other operating charges, net


793.2















793.2Operating income (loss)


(832.4
)


(9.7
)


24.7







(817.4
)Interest expense


(9.5
)














(9.5
)Reorganization items


(39.0
)














(39.0
)Other income (expense), net


5.1







(.9
)






4.2Provision for income taxes


(3.2
)






(3.0
)






(6.2
)Equity in loss of subsidiaries


122.2











(122.2
)


(Loss) from continuing operations


(756.8
)


(9.7
)


20.8



(122.2
)


(867.9
)Income (loss) from discontinued
    operations (2)


10.2



130.3



(19.2
)






121.3Net loss

$
(746.6
)

$
120.6


$
1.6


$
(122.2
)

$
(746.6
)   Condensed
    Consolidating Statements of Income (Loss)
    For the Year Ended December 31, 2003
  Subsidiary


Other


EliminatingCompany


Guarantors


Subsidiaries


Entries


ConsolidatedNet sales

$
573.4


$
42.3


$
238.5


$
(144.0
)

$
710.2Costs and expenses:Operating costs and expenses


661.9



55.3



226.0



(144.0
)


799.2Other operating charges, net


141.4



.2











141.6Operating income (loss)


(229.9
)


(13.2
)


12.5







(230.6
)Interest expense


(9.1
)














(9.1
)Reorganization items


(27.0
)














(27.0
)Other income (expense), net


6.3



(.7
)


(10.8
)






(5.2
)Provision for income taxes


(1.8
)






.3







(1.5
)Equity in income (loss) of
    subsidiaries


(126.9
)










126.9



Loss from continuing operations


(388.4
)


(13.9
)


2.0



126.9



(273.4
)Loss from discontinued operations
    (2)


(399.7
)


(78.0
)


(37.0
)






(514.7
)Net Loss

$
(788.1
)

$
(91.9
)

$
(35.0
)

$
126.9


$
(788.1
)  (1)
    
    See Note 1.(2)
    
    See Note 3.(3)
    
    Despite the fact that AJI, KJC, KAAC and KFC were liquidated in
    December 2005, the condensed income statement (loss) for
    Subsidiary Guarantors includes certain activities related to
    these entities. 100




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Condensed
    Consolidating Statements of Cash Flows
    For the Year Ended December 31, 2005
  Subsidiary


Other


EliminatingCompany


Guarantors


Subsidiaries


Entries


ConsolidatedNet cash provided (used) by:Operating
    activities Continuing operations

$
(10.0
)

$
(12.0
)

$
21.0


$



$
(1.0
)Discontinued operations


.1



7.1



10.7







17.9(9.9
)


(4.9
)


31.7







16.9Investing activities-Continuing operations


(26.8
)


(2.1
)


(1.2
)






(30.1
)Discontinued operations






401.4











401.4(26.8
)


399.3



(1.2
)






371.3Financing activities-Continued operations


(6.9
)














(6.9
)Discontinued operations


4.0



(392.2
)


1.0







(387.2
)(2.9
)


(392.2
)


1.0







(394.1
)Intercompany activity


31.7



(2.2
)


(29.5
)






Net decrease in cash and cash
    equivalents during the year


(7.9
)






2.0







(5.9
)Cash and cash equivalents at
    beginning of year


54.0







1.4







55.4Cash and cash equivalents at end of
    year

$
46.1


$



$
3.4


$



$
49.5   Condensed
    Consolidating Statements of Cash Flows
    For the Year Ended December 31, 2004
  Subsidiary


Other


EliminatingCompany


Guarantors


Subsidiaries


Entries


ConsolidatedNet cash provided (used) by:Operating
    activities Continuing operations

$
(122.3
)

$
(8.1
)

$
28.4


$



$
(102.0
)Discontinued operations


(5.1
)


38.4



30.7







64.0(127.4
)


30.3



59.1







(38.0
)Investing
    activities Continuing operations


(4.5
)


(.3
)


(.5
)






(5.3
)Discontinued operations


76.0



278.6



2.1







356.771.5



278.3



1.6







351.4Financing
    activities Continued operations


(2.4
)














(2.4
)Discontinued operations






(271.6
)


(19.5
)






(291.1
)(2.4
)


(271.6
)


(19.5
)






(293.5
)Intercompany activity


77.6



(37.0
)


(40.6
)






Net decrease in cash and cash
    equivalents during the year


19.3







.6







19.9Cash and cash equivalents at
    beginning of year


34.7







.8







35.5Cash and cash equivalents at end of
    year

$
54.0


$



$
1.4


$



$
55.4  101




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Condensed
    Consolidating Statements of Cash Flows
    For the Year Ended December 31, 2003
  Subsidiary


Other


EliminatingCompany


Guarantors


Subsidiaries


Entries


ConsolidatedNet cash provided (used) by:Operating
    activities Continuing operations

$
(72.3
)

$
(.4
)

$
15.3


$



$
(57.4
)Discontinued operations


(40.1
)


34.3



(23.7
)






(29.5
)(112.4
)


33.9



(8.4
)






(86.9
)Investing
    activities Continuing operations


69.3



(.1
)


4.9







74.1Discontinued operations


1.3







(26.3
)






(25.0
)70.6



(.1
)


(21.4
)






49.1Financing
    activities Continued operations


(4.1
)














(4.1
)Discontinued operations


















(4.1
)














(4.1
)Intercompany activity


7.4



(33.8
)


26.4







Net decrease in cash and cash
    equivalents during the year


(38.5
)






(3.4
)






(41.9
)Cash and cash equivalents at
    beginning of year


73.2







4.2







77.4Cash and cash equivalents at end of
    year

$
34.7


$



$
.8


$



$
35.5   Notes to
    Condensed Consolidating Financial Information
  Impact of Cases 
  Income Taxes 
  Foreign Currency 
  Debt Covenants and Restrictions 
  17.
    Restated
    2005 Quarterly Financial Data (Unaudited)  Form 10-Q
 102




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Statements
    of Consolidated Income
    (Loss)  Unaudited
  As





As





AsPreviously


As


Previously


As


Previously


AsReported(1)


Restated


Reported(1)


Restated


Reported(1)


RestatedMar. 31,


Mar. 31,


Jun 30,


Jun. 30,


Sept. 30,


Sept. 30,2005


2005


2005


2005


2005


2005Net sales

$
281.4


$
281.4


$
262.9


$
262.9


$
271.6


$
271.6Costs and expenses:Cost of products sold


242.2



243.0



234.2



234.4



233.7



233.5Depreciation and amortization


4.9



4.9



5.2



5.2



4.9



4.9Selling, administration, research
    and development, and general


17.7



12.2



16.9



12.5



17.6



13.1Other operating charges, net


6.2



6.2











.3



.3Total costs and expenses


271.0



266.3



256.3



252.1



256.5



251.8Operating income (loss)


10.4



15.1



6.6



10.8



15.1



19.8Other income (expense):Interest expense (excluding
    unrecorded interest expense


(2.1
)


(2.1
)


(1.1
)


(1.1
)


(1.0
)


(1.0
)Reorganization items


(7.8
)


(7.8
)


(9.3
)


(9.3
)


(8.2
)


(8.2
)Other-net


(.4
)


(.4
)


(.6
)


(.6
)


(.5
)


(.5
)Income (loss) before income taxes
    and discontinued operations


.1



4.8



(4.4
)


(.2
)


5.4



10.1Provision for income taxes


(2.4
)


(2.4
)


(2.2
)


(2.2
)


(1.4
)


(1.4
)Income (loss) from continuing
    operations


(2.3
)


2.4



(6.6
)


(2.4
)


4.0



8.7Income (loss) from discontinued
    operations


10.6



10.6



368.3



368.3



8.0



8.0Cumulative effect on years prior
    to 2005 of adopting accounting for conditional asset retirement
    obligations


(4.7
)


(4.7
)










Net income (loss)

$
3.6


$
8.3


$
361.7


$
365.9


$
12.0


$
16.7  103




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Consolidated
    Balance Sheets  Unaudited
  As





As





AsPreviously


As


Previously


As


Previously


AsReported(1)


Restated


Reported(1)


Restated


Reported(1)


RestatedMar. 31,


Mar. 31,


Jun 30,


Jun. 30,


Sept. 30,


Sept. 30,2005


2005


2005


2005


2005


2005Liabilities subject to compromise

$
3,952.9


$
3,946.2


$
3,950.4


$
3,938.0


$
3,949.8


$
3,931.7Stockholders equity
    (deficit):Preference Stock


.7



.7



.7



.7



.7



.7Common stock


15.4



15.4



15.4



15.4



15.4



15.4Additional capital


255.6



255.6



255.6



255.6



255.6



255.6Accumulated deficit


(2,644.7
)


(2,640.0
)


(2,283.0
)


(2,274.1
)


(2,281.0
)


(2,267.4
)Accumulated other comprehensive
    income (loss)


(7.6
)


(5.6
)


(9.0
)


(5.5
)


(10.0
)


(5.5
)Total stockholders equity
    (deficit)


(2,380.6
)


(2,373.9
)


(2,020.3
)


(2,007.9
)


(2,009.3
)


(1991.2
)Total liabilities and
    stockholders equity (deficit)

$
1,572.3


$
1,572.3


$
1,930.1


$
1,930.1


$
1,940.5


$
1,940.5   Statements
    of Consolidated Cash
    Flows  Unaudited
  As





As





AsPreviously


As


Previously


As


Previously


AsReported(1)


Restated


Reported(1)


Restated


Reported(1)


RestatedMar. 31,


Mar. 31,


Jun 30,


Jun. 30,


Sept. 30,


Sept. 30,2005


2005


2005


2005


2005


2005Cash flows from operating
    activities:Net income (loss)

$
3.6


$
8.3


$
365.3


$
374.2


$
377.3


$
390.9Less net income (loss) from
    discontinued operations


10.6



10.6



378.9



378.9



386.9



386.9Net income (loss) from continuing
    operations, including from cumulative effect of adopting change
    in accounting in 2005


(7.0
)


(2.3
)


(13.6
)


(4.7
)


(9.6
)


4.0(Decrease) increase in prepaid
    expenses and other current assets


(2.5
)


.5



(1.3
)


8.0



.3



7.1Increase (decrease) in other
    accrued liabilities


4.8



4.1



2.5



(3.4
)


(8.9
)


(11.8
)Net cash impact of changes in
    long-term assets and liabilities


(1.0
)


(8.0
)


(.3
)


(12.6
)


2.6



(14.9
)Net cash provided (used) by
    operating activities

$
(8.3
)

$
(8.3
)

$
11.3


$
11.3


$
15.1


$
15.1    (1)
    
    The As previously reported amounts shown above
    include the effect of the adoption of FIN 47 on
    December 31, 2005 retroactive to the beginning of the year
    as discussed in Notes 2 and 4. Such retroactive application
    is required by GAAP and is not considered a
    restatement. The retroactive impact of the adoption
    of FIN 47 was a charge of $4.7 in the first quarter of 2005
    in respect of the cumulative effect upon adoption and immaterial
    adjustments to cost of products sold in each quarter of 2005. 104




---



##### 



KAISER ALUMINUM & CHEMICAL CORPORATION AND
    SUBSIDIARY COMPANIES
 (Debtor-in-Possession)
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 QUARTERLY
    FINANCIAL DATA (Unaudited)
    (In millions of dollars, except share amounts)  Quarter EndedMarch 31,


June 30,


September 30,(Restated)(1)


(Restated)(1)


(Restated)(1)


December 31,2005Net sales

$
281.4


$
262.9


$
271.6


$
273.8Operating income (loss)


15.1



10.8



19.8



14.3Income (loss) from continuing
    operations


2.4



(2.4
)


8.7



(1,121.2
)(2)Income (loss) from discontinued
    operations


10.6



368.3
(3)


8.0



(23.2
)Cumulative effect on years prior
    to 2005 of adopting accounting for conditional asset retirement
    obligations


(4.7
)










Net income (loss)


8.3



365.9



16.7



(1,144.4
)   Quarter EndedMarch 31,


June 30,


September 30,


December 31,2004Net sales

$
210.2


$
230.1


$
244.4


$
257.7Operating income (loss)


(10.3
)


(4.4
)


(160.5
)


(642.4
)Loss from continuing operations


(22.6
)


(14.8
)


(173.2
)(4)


(657.5
)(5)Income (loss) from discontinued
    operations


(41.4
)


39.0



103.7



20.0Net income (loss)


(64.0
)


24.2



(69.5
)


(637.5
)     (1)
    
    As more fully discussed in Note 17 of Notes to Consolidated
    Financial Statements, the Company has restated its financial
    statements for the quarters ended March 31, 2005;
    June 30, 2005; and September 30, 2005, to reflect a
    different treatment for cash payments to the VEBAs and change in
    accounting for derivative financial instruments.(2)
    
    Includes a non-cash reorganization charge of $1,131.5 related to
    assignment (for the purposes of determining distribution under
    the KAAC/KFC Plan) of the value of an intercompany claim to
    certain third party creditors (see Note 1 of Notes to
    Consolidated Financial Statements).(3)
    
    Includes a gain of approximately $366.2 in respect of the sale
    of the Companys interests in and related to QAL.(4)
    
    Includes a non-cash pension charge of $155.5 (see Note 6 of
    Notes to Consolidated Financial Statements).(5)
    
    Includes a non-cash pension charge of $154.5, a non-cash charge
    related to termination of post-retirement medical benefits plan
    of $312.5 and a related non-cash charge of $175.0 related to a
    settlement with the United Steel Workers of America (see
    Note 6 of Notes to Consolidated Financial Statements). 105




---



##### 



KAISER
    ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES
    (Debtor-in-Possession)FIVE-YEAR FINANCIAL DATA
    UNAUDITED CONSOLIDATED BALANCE SHEETS (1) (2)
  December 31,2005


2004


2003


2002


2001(In millions of
    dollars)ASSETSCurrent assets:Cash and cash equivalents

$
49.5


$
55.4


$
35.5


$
77.4


$
154.1Receivables


101.5



116.3



85.7



67.5



73.3Inventories


115.3



105.3



92.5



103.8



138.3Prepaid expenses and other current
    assets


21.0



19.6



23.8



27.0



20.6Discontinued operations
    current assets






30.6



193.7



245.9



379.4Total current assets


287.3



327.2



431.2



521.6



765.7Investments in and advances to
    unconsolidated affiliate


12.6



16.7



13.1



15.2



18.9Property, plant, and
    equipment  net


223.4



214.6



230.1



255.3



294.4Restricted proceeds from sale of
    commodity interests






280.8











Personal injury-related insurance
    recoveries receivable


965.5



967.0



465.4



484.0



501.2Goodwill


11.4



11.4



11.4



11.4



11.4Other assets


38.7



31.1



43.7



126.3



149.9Discontinued operations
    long-term assets






38.9



433.8



816.6



1,008.7Total

$
1,538.9


$
1,887.7


$
1,628.7


$
2,230.4


$
2,750.2LIABILITIES AND
    STOCKHOLDERS EQUITYLiabilities not subject to
    compromise Current liabilities:Accounts payable and accruals

$
148.0


$
173.8


$
96.8


$
92.2


$
273.1Accrued postretirement medical
    benefit obligation  current portion










32.5



60.2



62.0Payable to affiliate


14.8



14.6



11.4



11.1



12.2Long-term
    debt  current portion


1.1



1.2



1.3



.9



173.5Discontinued operations
    current liabilities


2.1



57.7



177.5



167.6



282.6Total current liabilities


166.0



247.3



319.5



332.0



803.4Long-term liabilities


42.0



32.9



59.4



55.7



808.9Accrued postretirement medical
    benefit obligation


















642.2Long-term debt


1.2



2.8



2.2



20.7



678.7Discontinued operations
    liabilities, including liabilities subject to compromise and
    minority interests


68.5



26.4



208.7



226.4



251.0277.7



309.4



589.8



634.8



3,184.2Liabilities subject to compromise


4,400.1



3,954.9



2,770.1



2,673.9



Stockholders equity:Preference stock


.7



.7



.7



.7



.7Common stock


15.4



15.4



15.4



15.4



15.4Additional capital


255.6



2,452.8



2,454.0



2,454.8



2,437.6Accumulated deficit


(3,401.8
)


(2,648.3
)


(1,901.7
)


(1,113.6
)


(645.2
)Accumulated other comprehensive
    income (loss)


(8.8
)


(5.5
)


(107.9
)


(243.9
)


(67.3
)Note receivable from parent






(2,191.7
)


(2,191.7
)


(2,191.7
)


(2,175.2
)Total stockholders equity


(3,138.9
)


(2,376.6
)


(1,731.2
)


(1,078.3
)


(434.0
)Total

$
1,538.9


$
1,887.7


$
1,628.7


$
2,230.4


$
2,750.2    (1)
    
    Prepared on a going
    concern basis. See Notes 1 and 2 of Notes to
    Consolidated Financial Statements for a discussion of the
    possible impact of the Cases. Also, as more fully discussed in
    Note 1 of Notes to Consolidated Financial Statements, the
    Company expects that, upon emergence from the Cases, fresh start
    accounting would be applied which would adversely affect
    comparability of the December 31, 2005 balance sheet to the
    balance sheet of the entity upon emergence.(2)
    
    The Selected Consolidated Financial
    Data should be read in conjunction with Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations and the consolidated financial statements and
    the notes thereto. The consolidated financial data has been
    derived from the audited consolidated financial statements. 106




---



##### 



KAISER
    ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES(Debtor-in-Possession)
   FIVE-YEAR FINANCIAL DATA
    UNAUDITED STATEMENTS OF CONSOLIDATED INCOME (LOSS)(1)(2)
  Year Ended
    December 31,2005


2004


2003


2002


2001(In millions of
    dollars)Net sales

$
1,089.7


$
942.4


$
710.2


$
709.0


$
889.5Costs and expenses:Cost of products sold


951.1



852.2



681.2



671.4



823.4Depreciation and amortization


19.9



22.3



25.7



32.3



32.1Selling, administrative, research
    and development, and general


50.7



92.1



92.3



118.5



93.4Other operating charges, net


8.0



793.2



141.6



31.8



30.1Total costs and expenses


1,029.7



1,759.8



940.8



854.0



979.0Operating income (loss)


60.0



(817.4
)


(230.6
)


(145.0
)


(89.5
)Other income (expense):Interest expense (excluding
    unrecorded contractual interest expense of $95.0 in 2005, 2004
    and 2003, respectively, and $84/0 in 2002)


(5.2
)


(9.5
)


(9.1
)


(19.0
)


(106.2
)Reorganization items


(1,162.1
)


(39.0
)


(27.0
)


(33.3
)


Other  net


(2.4
)


4.2



(5.2
)


(.9
)


(68.7
)Loss before income taxes and
    discontinued operation


(1,109.7
)


(861.7
)


(271.9
)


(198.2
)


(264.4
)Provision for income taxes


(2.8
)


(6.2
)


(1.5
)


(4.2
)


(521.5
)Loss from continuing operations


(1,112.5
)


(867.9
)


(273.4
)


(202.4
)


(785.9
)Discontinued operations:Loss from discontinued operation,
    net of income taxes and minority interests


(2.5
)


(5.3
)


(514.7
)


(266.0
)


165.3Gain from sale of commodity
    interests


366.2



126.6











163.6Income (loss) from discontinued
    operations


363.7



121.3



(514.7
)


(266.0
)


328.9Cumulative effect on years prior to
    2005 of adopting accounting for conditional asset retirement
    obligations


(4.7
)














Net loss

$
(753.5
)

$
(746.6
)

$
(788.1
)

$
(468.4
)

$
(457.0
)     (1)
    
    Prepared on a going concern basis. See Notes 1
    and 2 of Notes to Consolidated Financial Statements for a
    discussion of the possible impact of the Cases.(2)
    
    The Selected Consolidated Financial Data should be read in
    conjunction with Managements Discussion and Analysis
    of Financial Condition and Results of Operations and the
    consolidated financial statements and the notes thereto. The
    consolidated financial data has been derived from the audited
    consolidated financial statements. 107




---



##### 



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures    Evaluation of Disclosure Controls and
    Procedures.
    Accounting for Derivative Instruments and
    Hedging Activities
   108




---



##### 



Changes in Internal Controls Over Financial
    Reporting. Chapter 11-related
      Item 9B.
    Other
    Information   109




---



##### 



PART III  ITEM 10.
    DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT  Current
    Directors and Executive Officers
    Name

Positions and Offices with the
    Company and KACC*Jack A. Hockema

President, Chief Executive Officer
    and DirectorJohn Barneson

Senior Vice President and Chief
    Administrative OfficerEdward F. Houff

Chief Restructuring OfficerJohn M. Donnan

Vice President, Secretary and
    General CounselDaniel D. Maddox

Vice President and ControllerDaniel J. Rinkenberger

Vice President and TreasurerRobert J. Cruikshank

DirectorGeorge T. Haymaker, Jr

Chairman of the Board and DirectorCharles E. Hurwitz

DirectorEzra G. Levin

DirectorJohn D. Roach

Director     *
    
    All named individuals hold the same positions and offices with
    both the Company and Kaiser.  Jack A. Hockema.
  John Barneson.
  Edward F. Houff.
 110




---



##### 



John M. Donnan.
  Daniel D. Maddox.
  Daniel J. Rinkenberger.
  Robert J. Cruikshank.
  George T.
    Haymaker, Jr. Mid-America
  Charles E. Hurwitz.
 111




---



##### 



Ezra G. Levin.
  John D. Roach.
  Post  Emergence
    Directors of the Company and Kaiser
    Name

Anticipated ClassAlfred E.
    Osborne, Jr., Ph.D.

Class IJack Quinn

Class IThomas M. Van Leeuwen

Class IGeorge Becker

Class IIJack A. Hockema

Class IIGeorganne C. Proctor

Class IIBrett Wilcox

Class IICarl B. Frankel

Class IIITeresa A. Hopp

Class IIIWilliam F. Murdy

Class III   George Becker.
 112




---



##### 



Carl B. Frankel.
  Teresa A. Hopp.
  William F. Murdy.
  Alfred E.
    Osborne, Jr., Ph.D.
  Georganne C. Proctor.
  Jack Quinn.
 113




---



##### 



Thomas M. Van Leeuwen.
  Brett E. Wilcox.
  Audit
    Committee Financial Expert
    Code of
    Ethics
    92610-2831
  Section 16(a)
    Beneficial Ownership Reporting Compliance
    ITEM 11.
    EXECUTIVE
    COMPENSATION  Summary
    Compensation Table
   114




---



##### 



Long-Term CompensationAnnual Compensation


Awards


Payouts(a)

(b)


(c)


(d)


(e)


(f)


(g)


(h)


(i)Other


Restricted


SecuritiesAnnual


Stock


Underlying


LTIP


All OtherName and Principal




Salary


Bonus


Compensation


Award(s)


Options/


Payouts


CompensationPosition

Year


($)


($)


($)(1)


($)


SARS #


($)(2)


($)Jack A. Hockema


2005



730,000



600,000







-0-



-0-



-0-



23,193
(3)President and Chief


2004



730,000



378,500







-0-



-0-



-0-



199,193
(3)(4)(5)Executive Officer


2003



730,000



-0-







-0-



-0-



-0-



365,000
(4)Edward F. Houff


2005



250,000
(6)


103,125
(7)






-0-



-0-



-0-



1,480,777
(3)(8)Chief Restructuring


2004



400,000



218,750
(7)






-0-



-0-



-0-



118,450
(3)(4)Officer


2003



400,000



125,000
(7)






-0-



-0-



-0-



200,000
(4)John Barneson


2005



275,000



150,000







-0-



-0-



-0-



23,875
(3)Senior Vice President


2004



275,000



94,625







-0-



-0-



-0-



81,200
(3)(4)and Chief


2003



275,000



-0-







-0-



-0-



-0-



125,000
(4)Administrative OfficerJohn M. Donnan


2005



260,000



108,000







-0-



-0-



-0-



20,733
(3)Vice President,


2004



200,000



45,420







-0-



-0-



-0-



109,000
(3)(4)General Counsel


2003



200,000



-0-







-0-



-0-



-0-



200.000
(4)and SecretaryDaniel D. Maddox


2005



200,000



84,000







-0-



-0-



-0-



19,720
(3)Vice President


2004



200,000



52,990







-0-



-0-



-0-



116,000
(3)(4)and Controller


2003



200,000



-0-



24,721
(9)


-0-



-0-



-0-



200,000
(4)Kerry A. Shiba


2005



270,000



114,000







-0-



-0-



-0-



20,825
(3)Former Vice President


2004



242,500



68,130







-0-



-0-



-0-



118,925
(3)(4)and Chief Financial


2003



190,000



-0-







-0-



-0-



-0-



190,000
(4)Officer(10)     (1)
    
    Except as otherwise indicated for Mr. Maddox in 2003,
    excludes perquisites and other personal benefits, which in the
    aggregate amount do not exceed the lesser of either $50,000 or
    10% of the total of annual salary and bonus reported for the
    Named Executive Officer.(2)
    
    Awards under the Companys long-term incentive plan are
    generally payable in two installments  the first
    on the date the Company emerges from bankruptcy and the second
    one year later. Awards under the program are forfeited if the
    participant voluntarily terminates his or her employment (other
    than normal retirement) prior to the scheduled payment dates.
    For additional information, see discussion under Long Term
    Incentive Plans  Awards in Last Fiscal
    Year and Employment Contracts, Retention Plan and
    Agreements and Termination of Employment and
    Change-in-Control
    Arrangements  Long-Term Incentive
    Plan below.(3)
    
    Includes contributions under the Companys Salaried Savings
    Plan made with respect to 2004 and 2005, respectively, in the
    amount of $16,400 and $23,983 for Mr. Hockema; $18,450 and
    $5,162 for Mr. Houff; $18,700 and $23,875 for
    Mr. Barneson; $9,000 and $20,733 for Mr. Donnan;
    $16,000 and $19,720 for Mr. Maddox; and $23,925 and $20,825
    for Mr. Shiba. For additional information, see discussion
    under Employment Contracts, Retention Plan and Agreements
    and Termination of Employment and
    Change-in-Control
    Arrangements  Kaiser Salaried Savings
    Plansbelow.(4)
    
    Includes retention payments made during 2004 and 2003,
    respectively, under the Court approved Key Employee Retention
    Program in the amount of $182,500 and $365,000 for
    Mr. Hockema; $100,000 and $200,000 for Mr. Houff;
    $62,500 and $125,000 for Mr. Barneson; $100,000 and
    $200,000 for Mr. Donnan; $100,000 and $200,000 for
    Mr. Maddox; and $95,000 and $190,000 for Mr. Shiba. As
    described in more detail below, the program was not extended
    beyond March 2004 and no further retention payments were made
    after March 2004. In addition to such retention amounts,
    pursuant to the terms of the Key Employee Retention Program, the
    Company is withholding additional retention payments with
    respect to the years 2004, 2003 and 2002, respectively, for each
    of Messrs. Hockema and Barneson as follows: $182,333,
    $365,000 and $182,333 for Mr. Hockema; and $62,500,
    $125,000 and $62,500 for Mr. Barneson. Payment of such
    additional retention amounts generally is subject to, among
    other conditions, the Companys emergence from
    chapter 11 and the timing thereof. For additional
    information, see discussion under Employment Contracts,
    Retention Plan and 115




---



##### 



Agreements and Termination of Employment and
    Change-in-Control
    Arrangements  Kaiser Retention Plan and
    Agreementsbelow.(5)
    
    Includes $293 paid to Mr. Hockema for unused allowances
    under the Companys benefit program.(6)
    
    Reflects the base salary paid to Mr. Houff in 2005 through
    the termination of his employment on August 15, 2005.(7)
    
    Under the terms of his employment agreement, Mr. Houff was
    guaranteed a bonus of $125,000 annually. Includes additional
    short term incentive payments made to Mr. Houff in respect
    of 2004 and 2005 in the amount of $93,755 and $25,000,
    respectively.(8)
    
    Includes $1,200,000 in the form of payments made to
    Mr. Houff in 2005 in connection with the termination of his
    employment and $275,614 in the form of payments to
    Mr. Houff under the terms of Mr. Houffs
    non-exclusive consulting agreement for services provided in
    2005. For additional information, see discussion under
    Employment Contracts, Retention Plan and Agreements and
    Termination of Employment and
    Change-in-Control
    Arrangements  Kaiser Retention Plan and
    Agreements below.(9)
    
    Includes an auto allowance of $22,217 and personal use of
    company car of $2,504(10)
    
    Mr. Shiba resigned effective as of January 23, 2006.  Option/SAR
    Grants in Last Fiscal Year
    Aggregated
    Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
    Option/SAR Values
    (a)

(b)


(c)


(d)


(e)Number of Securities


Value of UnexercisedShares





Underlying Unexercised


in-the-MoneyAcquired on


Value


Options/SARs at Fiscal Year


Options/SARs at FiscalExercise


Realized


End(#)


Year-End ($)Name

(#)


($)


Exercisable


Unexercisable


Exercisable


UnexercisableJack A. Hockema


-0-



-0-



375,770
(1)


28,184
(1)



(2)



(2)Edward F. Houff


-0-



-0-



-0-



-0-




(2)



(2)John Barneson


-0-



-0-



-0-



-0-



-0-



-0-John M. Donnan


-0-



-0-



-0-



-0-



-0-



-0-Daniel D. Maddox


-0-



-0-



35,715
(1)


-0-




(2)



(2)Kerry A. Shiba


-0-



-0-



-0-



-0-



-0-



-0-     (1)
    
    Represents shares of Kaisers Common Stock underlying stock
    options.(2)
    
    No value is shown because the exercise price is higher than the
    closing price of $0.03 per share of Kaisers Common
    Stock on the OTC Bulletin Board on December 30, 2005.  Long-Term
    Incentive Plans  Awards in Last Fiscal
    Year
   116




---



##### 



Change-in-Control Long-Term Incentive
    Plan
  Estimated Future PayoutsUnder Non-Stock Price-Based
    Plans(a)

(b)


(c)


(d)


(e)


(f)PerformanceNumber


or Otherof Shares,


Periods UntilUnits or


MaturationName

Other Rights


or Payout


Threshold


Target(1)(3)


Maximum(1)(3)Jack A. Hockema


N/A



(2
)


(3
)

$
1,500,000


$
4,500,000Edward F. Houff


N/A



(2
)


(3
)


300,000



900,000John Barneson


N/A



(2
)


(3
)


350,000



1,050,000John M. Donnan


N/A



(2
)


(3
)


200,000



600,000
(4)Daniel D. Maddox


N/A



(2
)


(3
)


100,000



300,000Kerry A. Shiba


N/A



(2
)


(3
)


258,000
(5)


774,000
(5)     (1)
    
    The target and maximum payout amounts in the table are per annum.(2)
    
    Awards are generally payable in two equal
    installments  the first on the date that the
    Company emerges from bankruptcy and the second on the one year
    anniversary of such date. Any awards earned under the program
    generally are forfeited if the participant voluntarily
    terminates his or her employment (other than at normal
    retirement) or is terminated for cause prior to the scheduled
    payment date.(3)
    
    Final amounts, if any, that may be paid under the program are
    generally not determinable until the end of the performance
    period. Subject to the foregoing, based on results during the
    applicable performance periods, awards for 2002, 2003, 2004 and
    2005 are anticipated to be below the target amounts. In this
    regard, the aggregate anticipated awards for 2002 and 2003 are
    $2,247,043 for Mr. Hockema; $472,654 for Mr. Houff;
    $452,960 for Mr. Barneson; $141,796 for Mr. Donnan;
    and $157,551 for Mr. Maddox, representing average annual
    payouts ranging from 65% to 78% of the applicable targets.
    Average awards for 2004 and 2005 are generally expected to be
    more than 50% lower.(4)
    
    The initial target and maximum for Mr. Donnan were $90,000
    and $270,000, respectively. These amounts were increased to the
    levels indicated in the table effective January 2005 in
    connection with Mr. Donnans promotion to General
    Counsel.(5)
    
    The initial target and maximum for Mr. Shiba were $90,000
    and $270,000, respectively. These amounts were increased to
    $250,000 and $750,000, respectively, effective April 2004 in
    connection with Mr. Shibas promotion to Chief
    Financial Officer, and to the levels indicated in the table
    effective January 2005.  Defined
    Benefit Plans
  Kaiser Retirement Plan.
 117




---



##### 



Average Annual

Years of ServiceRemuneration

15


20


25


30


35$250,000

$
56,250


$
75,000


$
93,750


$
112,500


$
131,250350,000


78,750



105,000



131,250



157,500



183,750450,000


101,250



135,000



168,750



202,500



236,250550,000


123,750



165,000



206,250



247,500



288,750650,000


146,250



195,000



243,750



292,500



341,250750,000


168,750



225,000



281,250



337,500



393,750850,000


191,250



255,000



318,750



382,500



446,250950,000


213,750



285,000



356,250



427,500



498,7501,050,000


236,250



315,000



393,750



472,500



551,250           Kaiser Supplemental Benefits Plan.
 118




---



##### 



Kaiser Termination Payment Policy.
  Salaried Savings Plan and Supplemental Retirement Plan.
    Director
    Compensation
   119




---



##### 



Employment
    Contracts, Retention Plan and Agreements and Termination of
    Employment and
    Change-in-Control
    Arrangements
  Kaiser Key Employee Retention Program.
 120




---



##### 



Kaiser Retention Plan and
    Agreements.












Kaiser Severance Plan and
    Agreements.












Kaiser Change in Control Severance Program.


121



---



##### 



Long-Term Incentive Plan. Long-Term
    Incentive Plans  Awards for Last Fiscal
    Year
   122




---



##### 



Short-Term Incentive Plan.
    Consulting Agreement with Edward F. Houff.
  Release with Kerry A. Shiba.
    Compensation
    Committee Interlocks and Insider Participation
   123




---



##### 



Regulation S-K.
    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    Ownership
    of Kaiser
  Reorganization
    Proceedings
  Name of Beneficial
    Owner

Title of Class


# of Shares(1)


% of ClassMAXXAM Inc.


Common Stock



50,000,000
(2)


62.8John Barneson


Common Stock



10,700



*Robert J. Cruikshank


Common Stock



15,009
(3)


*John M. Donnan


Common Stock



2,076



*George T. Haymaker, Jr.


Common Stock



9,685
(3)


*Jack A. Hockema


Common Stock



393,621
(3)


*Edward F. Houff


Common Stock



-0-



*Charles E. Hurwitz


Common Stock



-0-
(4)


*Ezra G. Levin


Common Stock



13,009
(3)


*Daniel D. Maddox


Common Stock



40,144
(3)


*John D. Roach


Common Stock



-0-



*All directors and executive
    officers of the Company as a group (11 persons)


Common Stock



484,277
(5)


*     *
    
    Less than 1%.(1)
    
    Unless otherwise indicated, the beneficial owners have sole
    voting and investment power with respect to the shares listed in
    the table. Also includes options exercisable within 60 days
    of March 24, 2006 to acquire such shares.(2)
    
    Includes 27,938,250 shares beneficially owned by MGHI. The
    address of MAXXAM is 1330 Post Oak Blvd., Suite 2000,
    Houston, Texas 77056. 124




---



##### 



|    |  |                                                                                                                                                                                                                                                                
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) |  | Includes options exercisable within 60 days of
    March 24, 2006 to acquire shares of Kaisers Common
    Stock as follows: Mr. Cruikshank  13,009;
    Mr. Haymaker  7,143;
    Mr. Hockema  375,770;
    Mr. Levin  13,009; and
    Mr. Maddox  35,715.
|   
|(4) |  | Excludes shares owned by MAXXAM. Mr. Hurwitz may be deemed
    to hold beneficial ownership in Kaiser as a result of his
    beneficial ownership in MAXXAM.                                                                                                   
|   
|(5) |  | Includes options exercisable within 60 days of
    March 24, 2006, to acquire 690,633 shares of
    Kaisers Common Stock.                                                                                                                                     



Ownership
    of MAXXAM








|                                                                 |  |                |                 |  |                |  |           |           |  |  |                 |  |  |  |      | 
|---------------------------------------------------------------- |  | -------------- | --------------- |  | -------------- |  | --------- | --------- |  |  | --------------- |  |  |  | ---- | 
|                                                                 |  |                |                 |  |                |  |           | % of      |  |  | % of Combined   | 
|Name of Beneficial
    Owner                                     |  | Title of Class |                 |  | # of Shares(1) |  |           | Class     |  |  | Voting Power(2) | 
|                                                                
|Charles E. Hurwitz                                               |  |                | Common Stock    |  |                |  | 3,338,116 | (3)(4)    |  |  | 51.8            |  |  |  | 76.3 | 
|                                                                 |  |                | Preferred Stock |  |                |  | 684,941   | (4)(5)    |  |  | 99.2            |  |  |  |      | 
|Robert J. Cruikshank                                             |  |                | Common Stock    |  |                |  | 5,200     | (6)       |  |  | *               |  |  |  | *    | 
|Ezra G. Levin                                                    |  |                | Common Stock    |  |                |  | 5,200     | (6)       |  |  | *               |  |  |  | *    | 
|All directors and executive
    officers as a group (11 persons) |  |                | Common Stock    |  |                |  | 3,348,516 | (3)(4)(6) |  |  | 53.0            |  |  |  |      | 
|                                                                 |  |                | Preferred Stock |  |                |  | 684,941   | (4)(5)    |  |  | 99.2            |  |  |  | 76.7 | 









|  |  |             
|- |  | ------------
|* |  | Less than 1%



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | Unless otherwise indicated, the beneficial owners have sole
    voting and investment power with respect to the shares listed in
    the table. Includes the number of shares such persons would have
    received on March 15, 2006, if any, for their SARs
    (excluding SARs payable in cash only) exercisable within
    60 days of such date if any such rights had been paid
    solely in shares of MAXXAM Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(2) |  | MAXXAM Preferred Stock is generally entitled to ten votes per
    share on matters presented to a vote of MAXXAMs
    stockholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(3) |  | Includes 2,451,714 shares of MAXXAM Common Stock owned by
    Gilda Investments, LLC (Gilda), a wholly owned
    subsidiary of Giddeon Holdings, Inc. (Giddeon), as
    to which Mr. Hurwitz indirectly possesses voting and
    investment power. Mr. Hurwitz serves as the sole director
    of Giddeon, and together with members of his immediate family
    and trusts for the benefit thereof, owns all of the voting
    shares of Giddeon. Also includes (a) 36,149 shares of
    MAXXAM Common Stock held by the Charles E. Hurwitz 2004 Retained
    Annuity Trust, (b) 36,150 shares of MAXXAM Common
    Stock held by the Barbara R. Hurwitz 2004 Retained Annuity Trust
    and as to which Mr. Hurwitz disclaims beneficial ownership,
    (c) 10,127 shares of MAXXAM Common Stock separately
    owned by Mr. Hurwitzs spouse and as to which
    Mr. Hurwitz disclaims beneficial ownership,
    (d) 46,500 shares of MAXXAM Common Stock owned by the
    Hurwitz Investment Partnership L.P., a limited partnership in
    which Mr. Hurwitz and his spouse each have a 4.32% general
    partnership interest, 2,009 of which shares were separately
    owned by Mr. Hurwitzs spouse prior to their transfer
    to such limited partnership and as to which Mr. Hurwitz
    disclaims beneficial ownership, (e) 279,535 shares of
    MAXXAM Common Stock held directly by Mr. Hurwitz,
    (f) options to purchase 21,029 shares of MAXXAM Common
    Stock held by Gilda, and (g) options held by
    Mr. Hurwitz to purchase 456,912 shares of MAXXAM
    Common Stock exercisable within 60 days of March 15,
    2006.
|   
|(4) |  | Gilda, Giddeon, the Hurwitz Investment Partnership L.P. and
    Mr. Hurwitz may be deemed a group (the
    Stockholder Group) within the meaning of
    Section 13(d) of the Securities Exchange Act of 1934, as
    amended. As of March 15, 2006, in the aggregate, the
    members of the Stockholder Group owned                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

125



---



##### 



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | 3,338,116 shares of MAXXAM Common Stock and
    684,941 shares of MAXXAM Preferred Stock, aggregating
    approximately 76.3% of the total voting power of MAXXAM. By
    reason of his relationship with the members of the Stockholder
    Group, Mr. Hurwitz may be deemed to possess shared voting
    and investment power with respect to the shares held by the
    Stockholder Group. The address of Gilda is 1330 Post Oak
    Boulevard, Suite 2000, Houston, Texas 77056. The address of
    the Stockholder Group is Giddeon Holdings, Inc., 1330 Post Oak
    Boulevard, Suite 2000, Houston, Texas 77056.
|   
|(5) |  | Includes options exercisable by Mr. Hurwitz within
    60 days of March 15, 2006 to acquire
    22,500 shares of MAXXAM Preferred Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(6) |  | Includes options exercisable within 60 days of
    March 15, 2006 to acquire shares of MAXXAM Common Stock as
    follows: Mr. Cruikshank  4,200 and
    Mr. Levin  4,200.                                                                                                                                                                                                                                                                                                                                                                                                                                           



Equity
    Compensation Plan Information








|                                                               |  |                            |         |     |                               |   |      |                                     |  |  |           |    
|-------------------------------------------------------------- |  | -------------------------- | ------- | --- | ----------------------------- | - | ---- | ----------------------------------- |  |  | --------- | ---
|                                                               |  |                            |         |     |                               |   |      | Number of securities                | 
|                                                               |  |                            |         |     |                               |   |      | remaining available for
    future  | 
|                                                               |  | Number of securities to be |         |     |                               |   |      | issuance under equity               | 
|                                                               |  | issued upon exercise of    |         |     | Weighted-average exercise     |   |      | compensation plans                  | 
|                                                               |  | outstanding options,       |         |     | price of outstanding options, |   |      | (excluding securities
    reflected | 
|                                                               |  | warrants and rights        |         |     | warrants and rights           |   |      | in column (a))                      | 
|Plan Category                                                  |  | (a)                        |         |     | (b)                           |   |      | (c)                                 | 
|                                                              
|Equity compensation plans approved
    by security holders     |  |                            | 491,120 | (1) |                               | $ | 3.57 |                                     |  |  | 4,864,889 | (2)
|Equity compensation plans not
    approved by security holders |  |                            |        |     |                               |   |     |                                     |  |  |          |    
|Total                                                          |  |                            | 491,120 |     |                               | $ | 3.57 |                                     |  |  | 4,864,889 |    









|    |  |                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | Represents shares of Kaisers Common Stock underlying
    outstanding stock options.                                                                                                                                                                                                                                                                                               
|   
|(2) |  | Shares are issuable under the 1997 Omnibus Plan. Stock-based
    awards made under the 1997 Omnibus Plan may be in the form of
    stock options, stock appreciation rights, restricted stock,
    performance shares or performance units. Of the shares available
    for future issuance under the 1997 Omnibus Plan, 1,698,951 may
    be made in the form of restricted stock.



|         |                                                   
|-------- | --------------------------------------------------
|ITEM 13. | CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS







|         |                                           
|-------- | ------------------------------------------
|ITEM 14. | PRINCIPAL
    ACCOUNTANT FEES AND SERVICES











Audit
    Fees




Form 10-Q


126



---



##### 



Audit-Related
    Fees








Tax
    Fees








All Other
    Fees












Audit
    Committee Pre-Approved Policies and Procedures
















year-to-date








and/or










127



---



##### 



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Page1.


Financial StatementsReport of Independent Registered
    Public Accounting Firm


45Consolidated Balance Sheets


46Statements of Consolidated Income
    (Loss)


47Statements of Consolidated
    Stockholders Equity (Deficit) and Comprehensive Income
    (Loss)


48Statements of Consolidated Cash
    Flows


49Notes to Consolidated Financial
    Statements


50Quarterly Financial Data
    (Unaudited)


105Five-Year Financial Data


1062.


Financial Statement Schedules     3.
    Exhibits   128




---



##### 



SIGNATURES      By:
    /s/  Jack A. Hockema          /s/  Jack A. HockemaJack
    A. Hockema
    President, Chief Executive Officer and Director (Principal
    Executive Officer)

Date: March 30, 2006/s/  Daniel D. MaddoxDaniel
    D. Maddox
    Vice President and Controller
    (Principal Financial Officer)

Date: March 30, 2006/s/  George T. Haymaker
    Jr.George
    T. Haymaker, Jr.
    Chairman of the Board and Director

Date: March 30, 2006/s/  Robert J.
    CruikshankRobert
    J. Cruikshank
    Director

Date: March 30, 2006/s/  Charles E.
    HurwitzCharles
    E. Hurwitz
    Director

Date: March 30, 2006/s/  Ezra G. LevinEzra
    G. Levin
    Director

Date: March 30, 2006/s/  John D. RoachJohn
    D. Roach
    Director

Date: March 30, 2006  129




---



##### 



INDEX OF
    EXHIBITS  ExhibitNumber

Description2
.1

Purchase Agreement, dated as of
    June 8, 2004, among Kaiser Aluminum & Chemical
    Corporation (KACC), Kaiser Aluminium International,
    Inc., Kaiser Bauxite Company (KBC), Kaiser Jamaica
    Corporation and Alpart Jamaica Inc. and Quality Incorporations I
    Limited (incorporated by reference to Exhibit 2.1 to the
    Report on
    Form 8-K,
    dated as of July 1, 2004, filed by Kaiser Aluminum
    Corporation (KAC), File No. 1-9447).2
.2

Purchase Agreement, dated as of
    May 17, 2004, among KACC, KBC, Gramercy Alumina LLC and St.
    Ann Bauxite Limited (incorporated by reference to
    Exhibit 2.1 to the Report on
    Form 8-K,
    dated as of October 1, 2004, filed by KAC, File
    No. 1-9447).2
.3

Purchase Agreement, dated as of
    October 29, 2004, between KACC, and the Government of Ghana
    (incorporated by reference to Exhibit 2.1 to the Report on
    Form 8-K,
    dated as of October 29, 2004, filed by KAC, File
    No. 1-9447).2
.4

Purchase Agreement, dated as of
    September 22, 2004, between KACC, Kaiser Alumina Australia
    Corporation (KAAC) and Comalco Aluminium Limited
    (incorporated by reference to Exhibit 2.3 to the Report on
    Form 10-Q
    for the quarterly period ended September 30, 2004, filed by
    KAC, File No. 1-9447).2
.5

Agreement to Submit Qualified Bid
    for QAL, dated as of September 22, 2004, between KACC, KAAC
    and Glencore AG (incorporated by reference to Exhibit 2.4
    to the Report on
    Form 10-Q
    for the quarterly period ended September 30, 2004, filed by
    KAC, File No. 1-9447).2
.6

Purchase Agreement, dated as of
    October 28, 2004, among KACC, KAAC and Alumina &
    Bauxite Company Ltd. (incorporated by reference to
    Exhibit 2.5 to the Report on
    Form 10-Q
    for the quarterly period ended September 30, 2004, filed by
    KAC, File No. 1-9447).2
.7

Third Amended Joint Plan of
    Liquidation for Alpart Jamaica Inc. (AJI) and Kaiser
    Jamaica Corporation (KJC), dated February 25,
    2005 (incorporated by reference to Exhibit 99.1 to the
    Report on
    Form 10-K
    for the period ended December 31, 2004, filed by KAC, File
    No. 1-9447).2
.8

Disclosure Statement Pursuant to
    Section 1125 of the Bankruptcy Code with Respect to the
    Third Amended Joint Plan of Liquidation for AJI and KJC, dated
    February 28, 2005 (incorporated by reference to
    Exhibit 99.2 to the Report on
    Form 10-K
    for the period ended December 31, 2004, filed by KAC, File
    No. 1-9447).2
.9

Modification to the Third Amended
    Joint Plan of Liquidation for AJI and KJC, dated April 7,
    2005 (incorporated by reference to Exhibit 2.2 to the
    Report
    Form 8-K
    dated December 19, 2005, filed by KAC, File
    No. 1-9447).2
.10

Second Modification to the Third
    Amended Joint Plan of Liquidation for AJI and KJC, dated
    November 22, 2005 (incorporated by reference to
    Exhibit 2.3 to the Report
    Form 8-K
    dated December 19, 2005, filed by KAC, File
    No. 1-9447).2
.11

Third Modification to the Third
    Amended Joint Plan of Liquidation for AJI and KJC, dated
    December 19, 2005 (incorporated by reference to
    Exhibit 2.4 to the Report
    Form 8-K
    dated December 19, 2005, filed by KAC, File
    No. 1-9447).2
.12

Third Amended Joint Plan of
    Liquidation for KAAC and Kaiser Finance Corporation
    (KFC), dated February 25, 2005 (incorporated by
    reference to Exhibit 99.3 to the Report on
    Form 10-K
    for the period ended December 31, 2004, filed by KAC, File
    No. 1-9447).2
.13

Disclosure Statement Pursuant to
    Section 1125 of the Bankruptcy Code with respect to the
    Third Amended Joint Plan of Liquidation for KAAC and KFC, dated
    February 28, 2005 (incorporated by reference to
    Exhibit 99.4 to the Report on
    Form 10-K
    for the period ended December 31, 2004, filed by KAC, File
    No. 1-9447).2
.14

Modification to the Third Amended
    Joint Plan of Liquidation for KAAC and KFC, dated April 7,
    2005 (incorporated by reference to Exhibit 2.6 to the
    Report on
    Form 8-K
    dated December 19, 2005, filed by KAC, File
    No. 1-9447).2
.15

Second Modification to the Third
    Amended Joint Plan of Liquidation for KAAC and KFC, dated
    November 22, 2005 (incorporated by reference to
    Exhibit 2.7 to the Report on
    Form 8-K
    dated December 19, 2005, filed by KAC, File
    No. 1-9447). 130




---



##### 



ExhibitNumber

Description2
.16

Third Modification to the Third
    Amended Joint Plan of Liquidation for KAAC and KFC, dated
    December 19, 2005 (incorporated by reference to
    Exhibit 2.8 to the Report on
    Form 8-K
    dated December 19, 2005, filed by KAC, File
    No. 1-9447).2
.17

Second Amended Joint Plan of
    Reorganization for KAC, KACC and Certain of Their Debtor
    Affiliates, dated as of September 7, 2005 (incorporated by
    reference to Exhibit 99.2 to Report on
    Form 8-K,
    dated as of September 8, 2005, filed by KAC, File
    No. 1-9447)2
.18

Disclosure Statement Pursuant to
    Section 1125 of the Bankruptcy Code for the Second Amended
    Joint Plan of Reorganization for KAC, KACC and Certain of Their
    Debtor Affiliates, dated as of September 7, 2005
    (incorporated by reference to Exhibit 99.3 to Report on
    Form 8-K,
    dated as of September 8, 2005, filed by KAC, File
    No. 1-9447)2
.19

Modification to the Second Amended
    Joint Plan of Reorganization for KAC, KACC and Certain of Their
    Affiliates Pursuant to Stipulation and Agreed Order between
    Insurers, Debtors, Committee and Future Representatives
    (incorporated by reference to Exhibit 2.2 to Report of
    Form 8-K,
    dated as of February 1, 2006, Filed by KAC, File
    No. 1-9447).2
.20

Modification to the Second Amended
    Joint Plan of Reorganization for KAC, KACC and Certain of Their
    Affiliates, dated as of November 22, 2005 (incorporated by
    reference to Exhibit 2.3 to Report of
    Form 8-K,
    dated as of February 1, 2006, Filed by KAC, File
    No. 1-9447).2
.21

Third Modification to the Second
    Amended Joint Plan of Reorganization for KAC, KACC and Certain
    of Their Affiliates, dated as of December 16, 2005
    (incorporated by reference to Exhibit 2.3 to Report of
    Form 8-K,
    dated as of February 1, 2006, Filed by KAC, File No.
    1-9447).2
.22

Order Confirming the Second
    Amended Joint Plan of Reorganization of KAC, KACC and Certain of
    Their Debtor Affiliates (incorporated by reference to
    Exhibit 2.5 to the Report of
    Form 8-K,
    dated as of February 1, 2006, Filed by KAC, File
    No. 1-9447).3
.1

Restated Certificate of
    Incorporation of KACC, dated July 25, 1989 (incorporated by
    reference to Exhibit 3.1 to the Registration Statement on
    Form S-1
    dated August 25, 1991, filed by KACC, Registration
    No. 33-30645).3
.2

Certificate of Retirement of KACC,
    dated February 7, 1990 (incorporated by reference to
    Exhibit 3.2 to the Report on
    Form 10-K
    for the period ended December 31, 1989, filed by KACC, File
    No. 1-3605).3
.3

Amended and Restated By-Laws of
    KACC, dated October 1, 1997 (incorporated by reference to
    Exhibit 3.3 to the Report on
    Form 10-Q
    for the quarterly period ended September 30, 1997, filed by
    KACC, File
    No. 1-3605).4
.1

Indenture, dated as of
    February 1, 1993, among KACC, as Issuer, KAAC, Alpart
    Jamaica Inc., and Kaiser Jamaica Corporation, as Subsidiary
    Guarantors, and The First National Bank of Boston, as Trustee,
    regarding KACCs
    123/4% Senior
    Subordinated Notes Due 2003 (incorporated by reference to
    Exhibit 4.1 to the Report on
    Form 10-K
    for the period ended December 31, 1992, filed by KACC, File
    No. 1-3605).4
.2

First Supplemental Indenture,
    dated as of May 1, 1993, to the Indenture, dated as of
    February 1, 1993 (incorporated by reference to
    Exhibit 4.2 to the Report on
    Form 10-Q
    for the quarterly period ended June 30, 1993, filed by
    KACC, File No. 1-3605).4
.3

Second Supplemental Indenture,
    dated as of February 1, 1996, to the Indenture, dated as of
    February 1, 1993 (incorporated by reference to
    Exhibit 4.3 to the Report on
    Form 10-K
    for the period ended December 31, 1995, filed by KAC, File
    No. 1-9447).4
.4

Third Supplemental Indenture,
    dated as of July 15, 1997, to the Indenture, dated as of
    February 1, 1993 (incorporated by reference to
    Exhibit 4.1 to the Report on
    Form 10-Q
    for the quarterly period ended June 30, 1997, filed by KAC,
    File No. 1-9447).4
.5

Fourth Supplemental Indenture,
    dated as of March 31, 1999, to the Indenture, dated as of
    February 1, 1993, (incorporated by reference to
    Exhibit 4.1 to the Report on
    Form 10-Q
    for the quarterly period ended March 31, 1999, filed by
    KAC, File No. 1-9447). 131




---



##### 



ExhibitNumber

Description4
.6

Indenture, dated as of
    February 17, 1994, among KACC, as Issuer, KAAC, Alpart
    Jamaica Inc., Kaiser Jamaica Corporation, and Kaiser Finance
    Corporation, as Subsidiary Guarantors, and First Trust National
    Association, as Trustee, regarding KACCs
    97/8%
    Senior Notes Due 2002 (incorporated by reference to
    Exhibit 4.3 to the Report on
    Form 10-K
    for the period ended December 31, 1993, filed by KAC, File
    No. 1-9447).4
.7

First Supplemental Indenture,
    dated as of February 1, 1996, to the Indenture, dated as of
    February 17, 1994 (incorporated by reference to
    Exhibit 4.5 to the Report on
    Form 10-K
    for the period ended December 31, 1995, filed by KAC, File
    No. 1-9447).4
.8

Second Supplemental Indenture,
    dated as of July 15, 1997, to the Indenture, dated as of
    February 17, 1994 (incorporated by reference to
    Exhibit 4.2 to the Report on
    Form 10-Q
    for the quarterly period ended June 30, 1997, filed by KAC,
    File No. 1-9447).4
.9

Third Supplemental Indenture,
    dated as of March 31, 1999, to the Indenture, dated as of
    February 17, 1994 (incorporated by reference to
    Exhibit 4.2 to the Report on
    Form 10-Q
    for the quarterly period ended March 31, 1999, filed by
    KAC, File No. 1-9447).4
.10

Indenture, dated as of
    October 23, 1996, among KACC, as Issuer, KAAC, Alpart
    Jamaica Inc., Kaiser Jamaica Corporation, Kaiser Finance
    Corporation, Kaiser Micromill Holdings, LLC, Kaiser Sierra
    Micromills, LLC, Kaiser Texas Micromill Holdings, LLC and Kaiser
    Texas Sierra Micromills, LLC, as Subsidiary Guarantors, and
    First Trust National Association, as Trustee, regarding
    KACCs
    107/8%
    Series B Senior Notes Due 2006 (incorporated by reference
    to Exhibit 4.2 to the Report on
    Form 10-Q
    for the quarterly period ended September 30, 1996, filed by
    KAC, File No. 1-9447).4
.11

First Supplemental Indenture,
    dated as of July 15, 1997, to the Indenture, dated as of
    October 23, 1996 (incorporated by reference to
    Exhibit 4.3 to the Report on
    Form 10-Q
    for the quarterly period ended June 30, 1997, filed by KAC,
    File No. 1-9447).4
.12

Second Supplemental Indenture,
    dated as of March 31, 1999, to the Indenture, dated as of
    October 23, 1996 (incorporated by reference to
    Exhibit 4.3 to the Report on
    Form 10-Q
    for the quarterly period ended March 31, 1999, filed by
    KAC, File No. 1-9447).4
.13

Indenture, dated as of
    December 23, 1996, among KACC, as Issuer, KAAC, Alpart
    Jamaica Inc., Kaiser Jamaica Corporation, Kaiser Finance
    Corporation, Kaiser Micromill Holdings, LLC, Kaiser Sierra
    Micromills, LLC, Kaiser Texas Micromill Holdings, LLC, and
    Kaiser Texas Sierra Micromills, LLC, as Subsidiary Guarantors,
    and First Trust National Association, as Trustee, regarding
    KACCs
    107/8%
    Series D Senior Notes due 2006 (incorporated by reference
    to Exhibit 4.4 to the Registration Statement on
    Form S-4,
    dated January 2, 1997, filed by KACC, Registration
    No. 333-19143).4
.14

First Supplemental Indenture,
    dated as of July 15, 1997, to the Indenture, dated as of
    December 23, 1996 (incorporated by reference to
    Exhibit 4.4 to the Report on
    Form 10-Q
    for the quarterly period ended June 30, 1997, filed by KAC,
    File No. 1-9447).4
.15

Second Supplemental Indenture,
    dated as of March 31, 1999, to the Indenture, dated as of
    December 23, 1996 (incorporated by reference to
    Exhibit 4.4 to the Report on
    Form 10-Q
    for the quarterly period ended March 31, 1999, filed by
    KAC, File No. 1-9447).4
.16

Post-Petition Credit Agreement,
    dated as of February 12, 2002, among KACC, KAC, certain
    financial institutions and Bank of America, N.A., as Agent
    (incorporated by reference to Exhibit 4.44 to the Report on
    Form 10-K
    for the period ended December 31, 2001, filed by KAC, File
    No. 1-9447).4
.17

First Amendment to Post-Petition
    Credit Agreement and Post-Petition Pledge and Security Agreement
    and Consent of Guarantors, dated as of March 21, 2002,
    amending the Post-Petition Credit Agreement dated as of
    February 12, 2002, among KACC, KAC, certain financial
    institutions and Bank of America, N.A., as Agent, and amending a
    Post-Petition Pledge and Security Agreement dated as of
    February 12, 2002, among KACC, KAC, certain subsidiaries of
    KAC and KACC, and Bank of America, N.A., as Agent (incorporated
    by reference to Exhibit 4.45 to the Report on
    Form 10-K
    for the period ended December 31, 2001, filed by KAC, File
    No. 1-9447). 132




---



##### 



ExhibitNumber

Description4
.18

Second Amendment to Post-Petition
    Credit Agreement and Consent of Guarantors, dated as of
    March 21, 2002, amending the Post-Petition Credit Agreement
    dated as of February 12, 2002, among KACC, KAC, certain
    financial institutions and Bank of America, N.A., as Agent
    (incorporated by reference to Exhibit 4.46 to the Report on
    Form 10-K
    for the period ended December 31, 2001, filed by KAC, File
    No. 1-9447).4
.19

Third Amendment to Post-Petition
    Credit Agreement, Second Amendment to Post-Petition Pledge and
    Security Agreement and Consent of Guarantors, dated as of
    December 19, 2002, amending the Post-Petition Credit
    Agreement dated as of February 12, 2002, among KACC, KAC,
    certain financial institutions and Bank of America, N.A., as
    Agent (incorporated by reference to Exhibit 4.19 to the
    Report on
    Form 10-K
    for the period ended December 31, 2002, filed by KAC, File
    No. 1-9447).4
.20

Fourth Amendment to Post-Petition
    Credit Agreement and Consent of Guarantors, dated as of
    March 17, 2003, amending the Post-Petition Credit Agreement
    dated as of February 12, 2002, among KACC, KAC, certain
    financial institutions and Bank of America, N.A., as Agent
    (incorporated by reference to Exhibit 4.20 to the Report on
    Form 10-K
    for the period ended December 31, 2002, filed by KAC, File
    No. 1-9447).4
.21

Waiver and Consent with Respect to
    Post-Petition Credit Agreement, dated October 9, 2002,
    among KAC, KACC, the financial institutions party to the
    Post-Petition Credit Agreement, dated as of February 12,
    2002, as amended, and Bank of America, N.A., as Agent
    (incorporated by reference to Exhibit 4.21 to the Report on
    Form 10-K
    for the period ended December 31, 2002, filed by KAC, File
    No. 1-9447).4
.22

Second Waiver and Consent with
    respect to Post-Petition Credit Agreement, dated
    January 13, 2003, among KACC, KAC, the financial
    institutions party to the Post-Petition Credit Agreement, dated
    as of February 12, 2002, as amended, and Bank of America,
    N.A., as Agent (incorporated by reference to Exhibit 4.22
    to the Report on
    Form 10-K
    for the period ended December 31, 2002, filed by KAC, File
    No. 1-9447).4
.23

Waiver Letter with Respect to
    Post-Petition Credit Agreement, dated March 24, 2003, among
    KACC, KAC, the financial institutions party to the Post-Petition
    Credit Agreement, dated as of February 12, 2002, as
    amended, and Bank of America, N.A., as Agent (incorporated by
    reference to Exhibit 4.1 to Report on
    Form 10-Q
    for the quarterly period ended March 31, 2003, filed by
    KAC, File No. 1-9447).4
.24

Extension and Modification of
    Waiver Letter with Respect to Post-Petition Credit Agreement,
    dated May 5, 2003, among KACC, KAC, the financial
    institutions party to the Post-Petition Credit Agreement, dated
    as of February 12, 2002, as amended, and Bank of America,
    N.A., as Agent (incorporated by reference to Exhibit 4.1 to
    Report on
    Form 10-Q
    for the quarterly period ended June 30, 2003, filed by KAC,
    File No. 1-9447).4
.25

Fifth Amendment to Post-Petition
    Credit Agreement, dated June 6, 2003, amending the
    Post-Petition Credit Agreement dated as of February 12,
    2002, among KACC, KAC, certain financial institutions and Bank
    of America, N.A., as Agent (incorporated by reference to
    Exhibit 4.2 to Report on
    Form 10-Q
    for the quarterly period ended June 30, 2003, filed by KAC,
    File No. 1-9447).4
.26

Sixth Amendment to Post-Petition
    Credit Agreement, dated August 1, 2003, amending the
    Post-Petition Credit Agreement dated as of February 12,
    2002, among KACC, KAC, certain financial institutions and Bank
    of America, N.A., as Agent (incorporated by reference to
    Exhibit 4.1 to the Report on
    Form 10-Q
    for the quarterly period ended September 30, 2003, filed by
    KAC, File
    No. 1-9447).4
.27

Waiver Letter with Respect to
    Post-Petition Credit Agreement dated March 29, 2004,
    amending the Post-Petition Credit Agreement dated as of
    February 12, 2002, among KACC, KAC, certain financial
    institutions and Bank of America, N.A., as Agent (incorporated
    by reference to Exhibit 4.1 to Report on
    Form 10-Q
    for the quarterly period ended March 31, 2004, filed by
    KAC, File No. 1-9447).4
.28

Waiver Letter with Respect to
    Post-Petition Credit Agreement dated May 21, 2004, amending
    the Post-Petition Credit Agreement dated as of February 12,
    2002, among KACC, KAC, certain financial institutions and Bank
    of America, N.A., as Agent (incorporated by reference to
    Exhibit 4.1 to Report on
    Form 10-Q
    for the quarterly period ended June 30, 2004, filed by KAC,
    File No. 1-9447). 133




---



##### 



ExhibitNumber

Description4
.29

Waiver Letter with Respect to
    Post-Petition Credit Agreement dated September 29, 2004,
    amending the Post-Petition Credit Agreement dated as of
    February 12, 2002, among KACC, KAC, certain financial
    institutions and Bank of America, N.A., as Agent (incorporated
    by reference to Exhibit 4.2 to Report on
    Form 10-Q
    for the quarterly period ended September 30, 2004, filed by
    KAC, File No. 1-9447).4
.30

Seventh Amendment to Post-Petition
    Credit Agreement dated October 28, 2004, amending the
    Post-Petition Credit Agreement dated as of February 12,
    2002, among KACC, KAC, certain financial institutions and Bank
    of America, N.A., as Agent (incorporated by reference to
    Exhibit 4.1 to Report on
    Form 10-Q
    for the quarterly period ended September 30, 2004, filed by
    KAC, File No. 1-9447).4
.31

Secured Super-Priority
    Debtor-In-Possession Revolving Credit and Guaranty Agreement
    Among KAC, KACC and certain of their subsidiaries, as Borrowers,
    and certain Subsidiaries of KAC and KACC, as Guarantors, and
    certain financial institutions and JP Morgan Chase Bank,
    National Association, as Administrative Agent, dated as of
    February 11, 2005 (incorporated by reference to
    Exhibit 99.1 to Report on
    Form 8-K,
    dated as of February 11, 2005, filed by KAC, File
    No. 1-9447).4
.33

First Amendment to Secured
    Super-Priority Debtor-In-Possession Revolving Credit and
    Guaranty Agreement (incorporated by reference to
    Exhibit 4.1 to the Report on
    Form 8-K,
    dated as of February 1, 2006, filed by KAC, File
    No. 1-9447).4
.32

Intercompany Note dated as of
    December 21, 1989, between KAC and KACC (incorporated by
    reference to Exhibit 10.10 to the Report on
    Form 10-K
    for the period ended December 31, 1996, filed by MAXXAM
    Inc. (MAXXAM), File No. 1-3924).4
.34

Confirmation of Amendment of
    Non-Negotiable Intercompany Note, dated as of October 6,
    1993, between KAC and KACC (incorporated by reference to
    Exhibit 10.11 to the Report on
    Form 10-K
    for the period ended December 31, 1996, filed by MAXXAM,
    File No. 1-3924).4
.35

Amendment to Non-Negotiable
    Intercompany Note, dated as of December 11, 2000, between
    KAC and KACC (incorporated by reference to Exhibit 4.41 to
    the Report on
    Form 10-K
    for the period ended December 31, 2000, filed by KAC, File
    No. 1-9447).4
.36

Senior Subordinated Intercompany
    Note between KAC and KACC dated February 15, 1994
    (incorporated by reference to Exhibit 4.22 to the Report on
    Form 10-K
    for the period ended December 31, 1993, filed by KAC, File
    No. 1-9447).4
.37

Senior Subordinated Intercompany
    Note between KAC and KACC dated March 17, 1994
    (incorporated by reference to Exhibit 4.23 to the Report on
    Form 10-K
    for the period ended December 31, 1993, filed by KAC, File
    No. 1-9447). KAC has not filed certain long-term debt
    instruments not being registered with the Securities and
    Exchange Commission where the total amount of indebtedness
    authorized under any such instrument does not exceed 10% of the
    total assets of KAC and its subsidiaries on a consolidated
    basis. KAC agrees and undertakes to furnish a copy of any such
    instrument to the Securities and Exchange Commission upon its
    request.10
.1

Form of indemnification agreement
    with officers and directors (incorporated by reference to
    Exhibit (10)(b) to the Registration Statement of KAC on
    Form S-4,
    File
    No. 33-12836).10
.2

Tax Allocation Agreement, dated as
    of June 30, 1993, between KACC and KAC (incorporated by
    reference to Exhibit 10.3 to the Report on
    Form 10-Q
    for the quarterly period ended June 30, 1993, filed by
    KACC, File No. 1-3605).Executive Compensation Plans and
    Arrangements[Exhibits 10.3  10.26,
    inclusive]10
.3

Kaiser 1997 Omnibus Stock
    Incentive Plan (incorporated by reference to Appendix A to the
    Proxy Statement, dated April 29, 1997, filed by KAC, File
    No. 1-9447).10
.4

Non-Executive Chairman of the
    Boards Agreement, dated March 20, 2006, among KAC, KACC and
    George T. Haymaker, Jr. (incorporated by reference to
    Exhibit 10.1 to the Report on
    Form 8-K,
    dated March 20, 2006, filed by KAC, File No. 1-9447).10
.5

Amended Employment Agreement,
    dated October 1, 2004, between KACC and Edward F. Houff
    (incorporated by reference to Exhibit 10.1 to the Report on
    Form 10-Q
    for the period ended September 30, 2004, filed by KAC, File
    No. 1-9447). 134




---



##### 



ExhibitNumber

Description10
.6

Stock Option Grant pursuant to the
    Kaiser 1997 Omnibus Stock Incentive Plan to Jack A. Hockema
    (incorporated by reference to Exhibit 10.1 to the Report on
    Form 10-Q
    for the quarterly period ended September 30, 2000, filed by
    KAC, File No. 1-9447).10
.7

Form of Deferred Fee Agreement
    between KAC, KACC, and directors of KAC and KACC (incorporated
    by reference to Exhibit 10 to the Report on
    Form 10-Q
    for the quarterly period ended March 31, 1998, filed by
    KAC, File No. 1-9447).10
.8

Form of Non-Employee Director
    Stock Option Grant for options issued commencing January 1,
    2001 under the 1997 Kaiser Omnibus Stock Incentive Plan
    (incorporated by reference to Exhibit 10.1 to the Report on
    Form 10-Q
    for the quarterly period ended June 30, 2001, filed by KAC,
    File No. 1-9447).10
.9

Form of Stock Option Grant for
    options issued commencing January 1, 2001 under the 1997
    Kaiser Omnibus Stock Incentive Plan (incorporated by reference
    to Exhibit 10.2 to the Report on
    Form 10-Q
    for the quarterly period ended June 30, 2001, filed by KAC,
    File No. 1-9447)10
.10

Form of Restricted Stock Agreement
    for restricted shares issued commencing January 1, 2001
    under the 1997 Kaiser Omnibus Stock Incentive Plan (incorporated
    by reference to Exhibit 10.3 to the Report on
    Form 10-Q
    for the quarterly period ended June 30, 2001, filed by KAC,
    File No. 1-9447).10
.11

The Kaiser Aluminum &
    Chemical Corporation Retention Plan, dated January 15, 2002
    (the January 2002 Retention Plan) (incorporated by
    reference to Exhibit 10.35 to the Report on
    Form 10-K
    for the period ended December 31, 2001, filed by KAC, File
    No. 1-9447).10
.12

The Kaiser Aluminum &
    Chemical Corporation Key Employee Retention Plan (effective
    September 3, 2002) (incorporated by reference to
    Exhibit 10.26 to the Report on
    Form 10-K
    for the period ended December 31, 2002, filed by KAC, File
    No. 1-9447).10
.13

Form of Retention Agreement for
    the Kaiser Aluminum & Chemical Corporation Key Employee
    Retention Plan (effective September 3, 2002) for John
    Barneson, Jack A. Hockema and Edward F. Houff (incorporated by
    reference to Exhibit 10.27 to the Report on
    Form 10-K
    for the period ended December 31, 2002, filed by KAC, File
    No. 1-9447).10
.14

Form of Retention Agreement for
    the Kaiser Aluminum & Chemical Corporation Key Employee
    Retention Plan (effective September 3, 2002) for Certain
    Executive Officers including Kerry A. Shiba and Daniel D. Maddox
    (incorporated by reference to Exhibit 10.29 to the Report
    on
    Form 10-K
    for the period ended December 31, 2002, filed by KAC, File
    No. 1-9447).10
.15

Kaiser Aluminum &
    Chemical Corporation Severance Plan (effective September 3,
    2002) (incorporated by reference to Exhibit 10.30 to the
    Report on
    Form 10-K
    for the period ended December 31, 2002, filed by KAC, File
    No. 1-9447).10
.16

Form of Severance Agreement for
    the Kaiser Aluminum & Chemical Corporation Severance
    Plan (effective September 3, 2002) for John Barneson, Jack
    A. Hockema, Edward F. Houff, Kerry A. Shiba and Daniel D. Maddox
    and Certain Other Executive Officers (incorporated by reference
    to Exhibit 10.31 to the Report on
    Form 10-K
    for the period ended December 31, 2002, filed by KAC, File
    No. 1-9447).10
.17

Form of Kaiser Aluminum &
    Chemical Corporation Change in Control Severance Agreement for
    John Barneson, Jack A. Hockema and Edward F. Houff (incorporated
    by reference to Exhibit 10.32 to the Report on
    Form 10-K
    for the period ended December 31, 2002, filed by KAC, File
    No. 1-9447).10
.18

Form of Kaiser Aluminum &
    Chemical Corporation Change in Control Severance Agreement for
    Kerry A. Shiba and Daniel D. Maddox and Certain Other Executive
    Officers (incorporated by reference to Exhibit 10.33 to the
    Report on
    Form 10-K
    for the period ended December 31, 2002, filed by KAC, File
    No. 1-9447).10
.19

Description of KACC Short-Term
    Incentive Plan (incorporated by reference to Exhibit 10.20
    to the Report on
    Form 10-K
    for the period ended December 31, 2004, filed by KAC, File
    No. 1-9447).10
.20

Description of KACC Long-Term
    Incentive Plan (incorporated by reference to Exhibit 10.21
    to the Report on
    Form 10-K
    for the period ended December 31, 2004, filed by KAC, File
    No. 1-9447).10
.21

Settlement and Release Agreement
    dated October 5, 2004 by and among the Debtors and the
    Creditors Committee (incorporated by reference to
    Exhibit 10.2 to the Report on
    Form 10-Q
    for the period ended September 30, 2004, filed by KAC, File
    No. 1-9447). 135




---



##### 



ExhibitNumber

Description10
.22

Amendment, dated as of
    January 27, 2005, to Settlement and Release Agreement dated
    as of October 5, 2004, by and among the Debtors and the
    Creditors Committee (incorporated by reference to
    Exhibit 10.23 to the Report on
    Form 10-K
    for the period ended December 31, 2004, filed by KAC, File
    No. 1-9447).10
.23

Settlement Agreement dated
    October 14, 2004, between KACC and the Pension Benefit
    Guaranty Corporation (incorporated by reference to
    Exhibit 10.3 to the Report on
    Form 10-Q
    for the period ended September 30, 2004, filed by KAC, File
    No. 1-9447).10
.24

Amended and Restated Non Exclusive
    Consulting Agreement between KACC and Edward F. Houff, dated
    January 23, 2006 (incorporated by reference to
    Exhibit 10.1 to the Report on
    Form 8-K,
    dated as of February 1, 2006, filed by KAC, File
    No. 1-9447)10
.25

Release Agreement between KACC and
    Edward F. Houff, dated August 15, 2005 (incorporated by
    reference to the Report on
    Form 10-Q
    for the period ended June 30, 2005, filed by KAC, File
    No. 1-9447)10
.26

Release between KACC and Kerry A.
    Shiba (incorporated by reference to Exhibit 10.1 to the
    Report on
    Form 8-K,
    dated as of March 14, 2006, filed by KAC, File
    No. 1-9447)*21


Significant Subsidiaries of KACC.*31
.1

Certification of Jack A. Hockema
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31
.2

Certification of Daniel D. Maddox
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32
.1

Confirmation of Jack A. Hockema
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32
.2

Confirmation of Daniel D. Maddox
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     *
    
    Filed herewith 136