=================================================================

                                      FORM 10-K
                          SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C. 20549

          Annual Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934
          For the fiscal year ended December 31, 1997
          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.)

               6177 SUNOL BOULEVARD, PLEASANTON, CALIFORNIA 94566-7769
                 (Address of principal executive offices)   (Zip Code)

               Registrant's telephone number, including area code:(510)
               462-1122

             Securities registered pursuant to Section 12(b) of the Act:

                                                  Name of each exchange
                Title of each class                on which registered
                -------------------                -------------------
              Cumulative Convertible
              Preference Stock
              (par value $100)
              4 1/8% Series                               None
              4 3/4% (1957 Series)                        None
              4 3/4% (1959 Series)                        None
              4 3/4% (1966 Series)                        None

             Securities registered pursuant to Section 12(g) of the Act:

                                 Title of each class
                                 -------------------
                     Cumulative (1985 Series A) Preference Stock
                     Cumulative (1985 Series B) Preference Stock

          Indicate by check mark whether the registrant (1) has filed all
          reports required to be filed by Section 13 or 15(d) of the
          Securities Exchange Act of 1934 during the preceding 12 months,
          and (2) has been subject to such filing requirements for the past
          90 days.  Yes  X    No     
                        ---      ----

          Indicate by check mark if disclosure of delinquent filers
          pursuant to Item 405 of Regulation S-K is not contained herein,
          and will not be contained, to the best of registrant's knowledge,
          in definitive proxy or information statements incorporated by
          reference in Part III of this Form 10-K or any amendment to this
          Form 10-K.  ---

          As of March 17, 1998, there were 46,171,365 shares of the common
          stock of the registrant outstanding, all of which were owned by
          Kaiser Aluminum Corporation, the parent corporation of the
          registrant.  As of March 17, 1998, non-affiliates of the
          registrant held 513,977 shares of Cumulative (1985 Series A)
          Preference Stock and 59,889 shares of Cumulative (1985 Series B)
          Preference Stock of the registrant. The aggregate value of such
          Cumulative (1985 Series A) Preference Stock and Cumulative (1985
          Series B) Preference Stock, based upon the redemption price for
          such stock, is $28.7 million.

          Certain portions of the registrant's definitive proxy statement
          to be filed not later than 120 days after the close of the
          registrant's fiscal year are incorporated by reference into Part
          III of this Report on Form 10-K.


          =================================================================





                                         NOTE





          Kaiser Aluminum & Chemical Corporation's Report on Form 10-K
          filed with the Securities and Exchange Commission includes all
          exhibits required to be filed with the Report.  Copies of this
          Report on Form 10-K, including only Exhibit 21 of the exhibits
          listed on pages 50 - 54 of this Report, are available without
          charge upon written request.  The registrant will furnish copies
          of the other exhibits to this Report on Form 10-K upon payment of
          a fee of 25 cents per page.  Please contact the office set forth
          below to request copies of this Report on Form 10-K and for
          information as to the number of pages contained in each of the
          other exhibits and to request copies of such exhibits:



                                   Corporate Secretary
                                   Kaiser Aluminum & Chemical Corporation
                                   6177 Sunol Boulevard
                                   Pleasanton, California  94566-7769





                                  TABLE OF CONTENTS
                                                                       Page
                                                                       ----

          PART I                                                          1

               ITEM 1.   BUSINESS                                         1

               ITEM 2.   PROPERTIES                                      10

               ITEM 3.   LEGAL PROCEEDINGS                               11

               ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                         HOLDERS   
          PART II                                                        12

               ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND 
                           RELATED STOCKHOLDER MATTERS                   12

               ITEM 6.   SELECTED FINANCIAL DATA                         12

               ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
                           CONDITION AND RESULTS OF OPERATIONS           13

               ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA     19

               ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 
                           ACCOUNTING AND FINANCIAL DISCLOSURE           48

          PART III                                                       48

               ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
                                                                         48

               ITEM 11.  EXECUTIVE COMPENSATION                          48

               ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                           AND MANAGEMENT                                48

               ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                                                                         48

          PART IV                                                        48
               
               ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                           REPORTS ON FORM 8-K                           48

          SIGNATURES                                                     49

          INDEX OF EXHIBITS                                              50

          EXHIBIT 21     SUBSIDIARIES                                    55




          PART I

          ITEM 1.   BUSINESS

          This Annual Report on Form 10-K contains statements which
          constitute "forward-looking statements" within the meaning of the
          Private Securities Litigation Reform Act of 1995.  These
          statements appear in a number of places in this Report (see, for
          example, Item 1.  "Business - Profit Improvement Program," " -
          Business Development in Strategic Areas," " - Production
          Operations," " - Competition," " - Research and Development," and
          " - Environmental Matters," and Item 3. "Legal Proceedings"). 
          Such statements can be identified by the use of forward-looking
          terminology such as "believes," "expects," "may," "estimates,"
          "will," "should," "plans" or "anticipates" or the negative
          thereof or other variations thereon or comparable terminology, or
          by discussions of strategy.  Readers are cautioned that any such
          forward-looking statements are not guarantees of future
          performance and involve significant risks and uncertainties, and
          that actual results may vary materially from those in the
          forward-looking statements as a result of various factors.  These
          factors include the effectiveness of management's strategies and
          decisions, general economic and business conditions, developments
          in technology, new or modified statutory or regulatory
          requirements and changing prices and market conditions.  Other
          sections of this Report identify other factors that could cause
          such differences.  No assurance can be given that these are all
          of the factors that could cause actual results to vary materially
          from the forward-looking statements.

          General

          Kaiser Aluminum & Chemical Corporation (the "Company"), a
          Delaware corporation organized in 1940, is a direct subsidiary of
          Kaiser Aluminum Corporation ("Kaiser") and is an indirect
          subsidiary of MAXXAM Inc. ("MAXXAM").  Kaiser owns all of the
          Company's Common Stock; and MAXXAM and one of its wholly-owned
          subsidiaries together own approximately 63% of Kaiser's Common
          Stock, with the remaining approximately 37% publicly held.  The
          Company operates in all principal aspects of the aluminum
          industry - the mining of bauxite, the refining of bauxite into
          alumina, the production of primary aluminum from alumina, and the
          manufacture of fabricated (including semi-fabricated) aluminum
          products.  In addition to the production utilized by the Company
          in its operations, the Company sells significant amounts of
          alumina and primary aluminum in domestic and international
          markets.  In 1997, the Company produced approximately 2,945,000
          tons* of alumina, of which approximately 66% was sold to third
          parties, and produced approximately 493,000 tons of primary
          aluminum, of which approximately 67% was sold to third parties. 
          The Company is also a major domestic supplier of fabricated
          aluminum products.  In 1997, the Company shipped approximately
          400,000 tons of fabricated aluminum products to third parties,
          which accounted for approximately 5% of total United States
          domestic shipments.  Note 12 of the Notes to Consolidated
          Financial Statements is incorporated herein by reference.

          The Company's operations are conducted through the Company's
          business units which compete throughout the aluminum industry. 
          The following table sets forth total shipments and intracompany
          transfers of the Company's alumina, primary aluminum, and
          fabricated aluminum operations:

          <TABLE>

          <CAPTION>
                                                                      Year Ended December 31,
                                                          ----------------------------------------------
                                                                    1997            1996            1995
                                                          ----------------------------------------------
                                                                           (in thousands of tons)
          <S>                                             <C>             <C>             <C>
          ALUMINA:
               Shipments to Third Parties                        1,929.8         2,073.7         2,040.1
               Intracompany Transfers                              968.0           912.4           800.6
          PRIMARY ALUMINUM:
               Shipments to Third Parties                          327.9           355.6           271.7
               Intracompany Transfers                              164.2           128.3           217.4
          FABRICATED ALUMINUM PRODUCTS:
               Shipments to Third Parties                          400.0           327.1           368.2

          </TABLE>
          *  All references to tons in this Report refer to metric tons of
          2,204.6 pounds.

          ITEM 1.   BUSINESS (CONTINUED)

          Profit Improvement Program

          In October 1996, the Company established a goal of achieving $120
          million per year of pre-tax cost reductions and other profit
          improvements, independent of metal price changes, with the full
          effect planned to be realized in 1998 and beyond, measured
          against 1996 results.  At the end of 1997, the Company had
          achieved approximately half of the desired profit improvement. 
          This program is being effected through reductions in production
          costs, decreases in corporate general and administrative
          expenses, and enhancements to product mix and volume throughput. 
          There can be no assurance that the initiative will result in the
          desired cost reductions and other profit improvements.  See
          "Management's Discussion and Analysis of Financial Condition and
          Results of Operations - Recent Events and Developments" and Note
          4 of the Notes to Consolidated Financial Statements.

          Business Development in Strategic Areas

          The Company's strategic objectives include both improving the
          financial performance of its existing facilities (see "-Profit
          Improvement Program") and implementing modifications to its
          existing portfolio of businesses and assets in an effort to focus
          its business activities in areas which hold the best potential
          for improving the Company's financial performance.  The Company
          is actively pursuing opportunities to increase its participation
          in businesses and assets in targeted areas of its portfolio
          consistent with its strategic objectives, by internal investment
          and by acquisition, both domestically and internationally, by
          using its technical expertise and capital to form  joint ventures
          or to acquire equity in aluminum-related facilities.  Recent
          examples of such activities include the formation with Accuride
          Corporation of a joint venture to design, manufacture and market
          heavy duty aluminum wheels for the commercial transportation
          industry, and the acquisition of an aluminum extrusion plant in
          Richmond, Virginia, from Reynolds Metals Company, in the second
          quarter of 1997.  See "-Production Operations."

          Sensitivity to Prices and Hedging Programs

          The Company's operating results are sensitive to changes in the
          prices of alumina, primary aluminum, and fabricated aluminum
          products, and also depend to a significant degree upon the volume
          and mix of all products sold and on its hedging strategies.
          Primary aluminum prices have historically been subject to
          significant cyclical fluctuations.  Alumina prices, as well as
          fabricated aluminum product prices (which vary considerably among
          products), are significantly influenced by changes in the price
          of primary aluminum and generally lag behind primary aluminum
          prices for periods of up to three months.  From time to time in
          the ordinary course of business the Company enters into hedging
          transactions to provide price risk management in respect of its
          net exposure resulting from (i) anticipated sales of alumina,
          primary aluminum, and fabricated aluminum products, less (ii)
          expected purchases of certain items, such as aluminum scrap,
          rolling ingot, and bauxite, whose prices fluctuate with the price
          of primary aluminum.  Forward sales contracts are used by the
          Company to effectively lock-in or fix the price that the Company
          will receive for its shipments.  The Company also uses option
          contracts (i) to establish a minimum price for its product
          shipments, (ii) to establish a "collar" or range of prices for
          its anticipated sales, and/or (iii) to permit the Company to
          realize possible upside price movements.  See Notes 1 and 11 of
          the Notes to Consolidated Financial Statements.

          ITEM 1.   BUSINESS (CONTINUED)

          Production Operations

          -    Alumina
               -------

          The following table lists the Company's bauxite mining and
          alumina refining facilities as of December 31, 1997:

          <TABLE>
          <CAPTION>
                                                                                             Annual
                                                                                         Production           Total
                                                                                           Capacity          Annual
                                                                         Company       Available to      Production
          Activity                   Facility         Location         Ownership        the Company        Capacity
          ----------           --------------   --------------    --------------   ----------------  --------------
                                                                                             (tons)          (tons)
          <S>                  <C>              <C>               <C>                <C>             <C>
          Bauxite Mining       KJBC(1)          Jamaica                      49%          4,500,000       4,500,000
                               Alpart(2)        Jamaica                      65%          2,275,000       3,500,000
                                                                                     --------------  --------------
                                                                                          6,775,000       8,000,000
                                                                                     ==============  ==============
          Alumina Refining     Gramercy         Louisiana                   100%          1,050,000       1,050,000
                               Alpart           Jamaica                      65%            942,500       1,450,000
                               QAL              Australia                  28.3%            973,500       3,440,000
                                                                                     --------------  --------------
                                                                                          2,966,000       5,940,000
                                                                                     ==============  ==============

          </TABLE>

          -------------
          (1)  Although the Company owns 49% of Kaiser Jamaica Bauxite
               Company ("KJBC"), it has the right to receive all of KJBC's
               output.
          (2)  Alumina Partners of Jamaica ("Alpart") bauxite is refined
               into alumina at the Alpart refinery.

          Bauxite mined in Jamaica by KJBC is refined into alumina at the
          Company's plant at Gramercy, Louisiana, or is sold to third
          parties. In 1979, the Government of Jamaica granted the Company a
          mining lease for the mining of bauxite sufficient to supply the
          Company's then-existing Louisiana alumina refineries at their
          annual capacities of 1,656,000 tons per year until January 31,
          2020.  Alumina from the Gramercy plant is sold to third parties.

          Alpart holds bauxite reserves and owns a 1,450,000 ton per year
          alumina plant located in Jamaica.  The Company owns a 65%
          interest in Alpart, and Hydro Aluminium a.s ("Hydro") owns the
          remaining 35% interest.  The Company has management
          responsibility for the facility on a fee basis.  The Company and
          Hydro have agreed to be responsible for their proportionate
          shares of Alpart's costs and expenses.  The Government of Jamaica
          has granted Alpart a mining lease and has entered into other
          agreements with Alpart designed to assure that sufficient
          reserves of bauxite will be available to Alpart to operate its
          refinery, as it may be expanded up to a capacity of 2,000,000
          tons per year, through the year 2024.

          In June 1997, Alpart and JAMALCO, a joint venture between
          affiliates of Aluminum Company of America and the government of
          Jamaica, jointly announced that they had signed a non-binding
          letter of intent agreeing to consolidate their bauxite mining
          operations in Jamaica, with the objective of optimizing operating
          and capital costs.  The transaction is subject to various
          conditions, including the negotiation of definitive agreements,
          third party consents, and board approvals.  No assurance can be
          given that the conditions will be satisfied or that the
          transaction will be consummated.

          ITEM 1.   BUSINESS (CONTINUED)

          The Company owns a 28.3% interest in Queensland Alumina Limited
          ("QAL"), which owns the largest and one of the most competitive
          alumina refineries in the world, located in Queensland,
          Australia.  QAL refines bauxite into alumina, essentially on a
          cost basis, for the account of its stockholders under long-term
          tolling contracts.  The stockholders, including the Company,
          purchase bauxite from another QAL stockholder under long-term
          supply contracts.  The Company has contracted with QAL to take
          approximately 792,000 tons per year of capacity or pay standby
          charges.  The Company is unconditionally obligated to pay amounts
          calculated to service its share ($97.6 million at December 31,
          1997) of certain debt of QAL, as well as other QAL costs and
          expenses, including bauxite shipping costs.

          The Company's principal customers for bauxite and alumina consist
          of other aluminum producers that purchase bauxite and
          reduction-grade alumina, trading intermediaries who resell raw
          materials to end-users, and users of chemical-grade alumina.  All
          of the Company's third-party sales of bauxite in 1997 were made
          to two customers, the largest of which accounted for
          approximately 91% of such sales.  The Company also sold alumina
          in 1997 to 29 customers, the largest and top five of which
          accounted for approximately 24% and 85% of such sales,
          respectively.  See "- Competition."  The Company believes that
          among alumina producers it is the world's second largest seller
          of smelter grade alumina to third parties.  The Company's
          strategy is to sell a substantial portion of the alumina
          available to it in excess of its internal smelting requirements
          under multi-year sales contracts with prices linked to the price
          of primary aluminum.  See "- Sensitivity to Prices and Hedging
          Programs."

          -    Primary Aluminum Products
               -------------------------

          The following table lists the Company's primary aluminum smelting
          facilities as of December 31, 1997:

          <TABLE>
          <CAPTION>
                                                                                                 Total              1997
                                                                                                Annual           Average
                                                              Company                            Rated         Operating
          Location                      Facility            Ownership      the Company        Capacity              Rate
          --------------------          -------------   -------------    -------------   -------------     -------------
                                                                                (tons)          (tons)
          <S>                           <C>             <C>              <C>             <C>               <C>
          Domestic
               Washington               Mead                     100%          200,000         200,000              108%
               Washington               Tacoma                   100%           73,000          73,000              103%
                                                                         -------------   -------------
                                                                         -               -
                    Subtotal                                                   273,000         273,000
                                                                         -------------   -------------
          International
               Ghana                    Valco                     90%          180,000         200,000               76%
               Wales, United Kingdom    Anglesey                  49%           55,000         112,000              118%
                                                                         -------------   -------------
                    Subtotal                                                   235,000         312,000
                                                                         -------------   -------------
                         Total                                                 508,000         585,000
                                                                         =============   =============

          </TABLE>

          The Mead facility uses pre-bake technology and produces primary
          aluminum.  Approximately 64% of Mead's 1997 production was used
          at the Company's Trentwood, Washington, rolling mill, and the
          balance was sold to third parties.  The Tacoma facility uses
          Soderberg technology and produces primary aluminum and
          high-grade, continuous-cast, redraw rod, which currently commands
          a premium price in excess of the price of primary aluminum.  Both
          smelters have achieved significant production efficiencies
          through retrofit technology and a variety of cost controls,
          leading to increases in production volume and enhancing their
          ability to compete with newer smelters.

          The Company is modernizing and expanding the carbon baking
          furnace at its Mead smelter at an estimated cost of approximately
          $54.5 million.  The project will improve the reliability of the
          carbon baking operations, increase productivity, enhance safety,
          and improve the environmental performance of the facility.  The
          first stage of this project, the construction of a new $40.0
          million 90,000 ton per year furnace, has been completed and is in
          operation.  The remaining modernization work is expected to be
          completed in late 1998, when an existing furnace will be rebuilt. 
          A portion of this project was financed with the net proceeds
          (approximately $18.6 million) of 7.6% Solid Waste Disposal
          Revenue Bonds due 2027 issued in March 1997 by the Industrial
          Development Corporation of Spokane County, Washington.

          Electric power represents an important production cost for the
          Company at its aluminum smelters.  In 1995, the Company
          successfully restructured electric power purchase agreements for
          its facilities in the Pacific Northwest, which resulted in
          significantly lower electric power costs in 1996 for the Mead and
          Tacoma, Washington, smelters compared to 1995 electric power
          costs.  The Company continued to benefit from savings in electric
          power costs at those facilities in 1997 and expects to continue
          to benefit from such savings in future years.

          The Company manages, and owns a 90% interest in, the Volta
          Aluminium Company Limited ("Valco") aluminum smelter in Ghana. 
          The Valco smelter uses pre-bake technology and processes alumina
          supplied by the Company and the other participant into primary
          aluminum under tolling contracts which provide for proportionate
          payments by the participants.  The Company's share of the primary
          aluminum is sold to third parties.  Power for the Valco smelter
          is supplied under an agreement with the Volta River Authority
          (the "VRA") which expires in 2017.  The agreement indexes
          two-thirds of the price of the contract quantity of power to the
          market price of primary aluminum.  The agreement also provides
          for a review and adjustment of the base power rate and the price
          index every five years.  The most recent review was completed in
          April 1994 for the 1994-1998 period.

          Effective January 1, 1998, the VRA reduced the allocation of
          electric power to the Valco smelter.  Kaiser announced that, due
          to the reduced power allocation, Valco expected to operate three
          potlines in 1998 compared to the four potlines which were
          operated throughout 1997.  During February 1998, Valco and the
          VRA reached an agreement whereby Valco agreed to receive
          compensation in lieu of the power necessary to operate one of its
          three remaining operating potlines.  Compensation under the
          agreement is expected to substantially offset the financial
          impact of the curtailment of that potline.  As a result of the
          curtailment, Valco said that it expected to operate two of its
          five potlines after February 25, 1998.  See "Management's
          Discussion and Analysis of Financial Condition and Results of
          Operations - Recent Events and Developments."

          The Company owns a 49% interest in the Anglesey Aluminium Limited
          ("Anglesey") aluminum smelter and port facility at Holyhead,
          Wales.  The Anglesey smelter uses pre-bake technology.  The
          Company supplies 49% of Anglesey's alumina requirements and
          purchases 49% of Anglesey's aluminum output.  The Company sells
          its share of Anglesey's output to third parties.  Power for the
          Anglesey aluminum smelter is supplied under an agreement which
          expires in 2001.

          The Company has developed and installed proprietary retrofit and
          control technology in all of its smelters, as well as at third
          party locations.  This technology - which includes the redesign
          of the cathodes, anodes and bus that conduct electricity through
          reduction cells, improved feed systems that add alumina to the
          cells, and a computerized process control and energy management
          system - has significantly contributed to increased and more
          efficient production of primary aluminum and enhanced the
          Company's ability to compete more effectively with the industry's
          newer smelters.  The Company is actively engaged in efforts to
          license this technology and sell technical and managerial
          assistance to other producers worldwide, and may participate in
          joint ventures or similar business partnerships which employ the
          Company's technical and managerial knowledge.  See "-Research and
          Development."

          During October 1997, a joint decision was made by a subsidiary of
          the Company and its joint venture partner to terminate and
          dissolve the Sino-foreign aluminum joint venture formed in 1995.
          In January 1998, the Company's subsidiary reached an agreement to
          sell its interests in the venture to its partner.  The terms of
          the agreement are subject to certain governmental approvals by
          officials of the People's Republic of China.

          ITEM 1.   BUSINESS (CONTINUED)

          The Company's principal primary aluminum customers consist of
          large trading intermediaries and metal brokers, who resell
          primary aluminum to fabricated product manufacturers, and large
          and small international aluminum fabricators.  In 1997, the
          Company sold its primary aluminum production not utilized for
          internal purposes to approximately 52 customers, the largest and
          top five of which accounted for approximately 13% and 47% of such
          sales, respectively.  See "- Competition."  Marketing and sales
          efforts are conducted by personnel located in Pleasanton,
          California, Houston, Texas, and Tacoma and Spokane, Washington. 
          A majority of the business unit's sales are based upon long-term
          relationships with metal merchants and end-users.

          -    Fabricated Aluminum Products
               ----------------------------

          The Company manufactures and markets fabricated aluminum products
          for the transportation, packaging, construction, and consumer
          durables markets in the United States and abroad. Sales in these
          markets are made directly and through distributors to a large
          number of customers.  The Company's fabricated products compete
          with those of numerous domestic and foreign producers and with
          products made of steel, copper, glass, plastic, and other
          materials.  Product quality, price, and availability are the
          principal competitive factors in the market for fabricated
          aluminum products.  The Company has focused its fabricated
          products operations on selected products in which it has
          production expertise, high-quality capability, and geographic and
          other competitive advantages.

          Fabricated aluminum products are manufactured by two business
          units - flat-rolled products and engineered products.  The
          products include heat-treated products; body, lid, and tab stock
          for beverage containers; sheet and plate products; screw machine
          stock; redraw rod; forging stock; truck wheels and hubs; air bag
          canisters; engine manifolds; and other castings, forgings and
          extruded products, which are manufactured at plants located in
          principal marketing areas of the United States and Canada.  The
          aluminum utilized in the Company's fabricated products operations
          is comprised of primary aluminum, obtained both internally and
          from third parties, and scrap metal purchased from third parties.

          Flat-Rolled Products - The flat-rolled products business unit
          operates the Trentwood, Washington, rolling mill and the
          Micromill(TM) facility, near Reno, Nevada.  The Trentwood
          facility accounted for approximately 62% of the Company's 1997
          fabricated aluminum products shipments.  The business unit
          supplies the aerospace and general engineering markets (producing
          heat-treat products), the beverage container market (producing
          body, lid, and tab stock), and the specialty coil markets
          (producing automotive brazing sheet, wheel, and tread products),
          both directly and through distributors.

          The Company continues to enhance the process and product mix of
          its Trentwood rolling mill in an effort to maximize its
          profitability and maintain full utilization of the facility.  The
          Company is implementing a plan to expand its annual production
          capacity of heat-treated flat-rolled products at the Trentwood
          facility by approximately one-third over 1996 levels, most of
          which was achieved in 1997. Implementation of the plan also will
          enable the Company to improve the reliability of its heat-treated
          operations, enhance the quality of its heat-treat products, and
          improve Trentwood's operating efficiency.  The project is
          estimated to cost approximately $22.0 million and is expected to
          be completed in late 1998. Global sales of the Company's heat-
          treat products have increased significantly over the last
          several years and are made primarily to the aerospace and general
          engineering markets, which have been experiencing growth in
          demand.  In 1997, the business unit shipped products to
          approximately 141 customers in the aerospace, transportation, and
          industrial ("ATI") markets, most of which were distributors who
          sell to a variety of industrial end-users.  The top five
          customers in the ATI markets for flat-rolled products accounted
          for approximately 17% of the business unit's revenue.

          The Company's flat-rolled products are also sold to beverage
          container manufacturers located in the western United States and
          in the Asian Pacific Rim countries where the Trentwood plant's
          location provides the Company with a transportation advantage. 
          Quality of products for the beverage container industry, service,
          and timeliness of delivery are the primary bases on which the
          Company competes.  In recent years the Company has made
          significant capital expenditures at Trentwood in rolling
          technology and process control to improve the metal integrity,
          shape and gauge control of its products.  The Company believes
          that such improvements have enhanced the quality of its products
          for the beverage container industry and the capacity and
          efficiency of its manufacturing operations.  The Company believes
          that it is one of the highest quality producers of aluminum
          beverage can stock in the world.  In 1997, the business unit had
          37 domestic and foreign can stock customers.  The largest and top
          five of such customers accounted for approximately 15% and 27%,
          respectively, of the business unit's revenue.  See "-
          Competition."  The marketing staff for the business unit is
          located at the Trentwood facility and in Pleasanton, California. 
          Sales are made directly to end-use customers and distributors
          from four sales offices in the United States, from sales offices
          in England and Japan, and by independent sales agents in Europe,
          Asia and Latin America.

          The first Micromill(TM) facility, constructed in 1996 as a
          demonstration and production facility, was in a start-up mode
          during 1997. Micromill(TM) technology is based on a proprietary
          thin-strip, high-speed, continuous-belt casting technique linked
          directly to hot and cold rolling mills.  Assuming the successful
          implementation and commercialization of the Micromill(TM)
          technology, the capital and conversion costs of Micromill(TM)
          facilities are expected to be significantly lower than
          conventional rolling mills.  The Company is continuing its
          efforts to implement the Micromill(TM) technology on a full-scale
          basis.  The facility is currently shipping qualification
          quantities of product to various customers.  However, the
          Micromill(TM) technology has not yet been fully implemented or
          commercialized, and there can be no assurance that it will be
          successfully implemented and commercialized for use at full-scale
          facilities.

          Engineered Products - The engineered products business unit
          maintains its headquarters and a sales and engineering office in
          Southfield, Michigan, which works with car makers and other
          customers, the Company's Center for Technology ("CFT," see
          "-Research and Development"), and plant personnel to create new
          automotive component designs and to improve existing products. 
          The business unit operates soft-alloy and hard-alloy extrusion
          facilities and engineered component (forging and casting) 
          facilities in the United States and in Canada.  Soft-alloy
          extrusion facilities are located in Los Angeles, California;
          Santa Fe Springs, California; Sherman, Texas; Richmond, Virginia;
          and London, Ontario, Canada.  Each of the soft-alloy extrusion
          facilities has fabricating capabilities and provides finishing
          services.  The Richmond, Virginia, facility, acquired in mid-1997
          by Kaiser Bellwood Corporation, a wholly-owned subsidiary of the
          Company, increased the Company's extruded products capacity and
          enhanced its existing extrusion business due to that facility's
          ability to manufacture seamless tubing and large circular
          extrusions and to serve the distribution and ground
          transportation industries.  Hard-alloy rod and bar extrusion
          facilities are located in Newark, Ohio, and Jackson, Tennessee,
          which produce screw machine stock, redraw rod, forging stock, and
          billet.  A facility located in Richland, Washington, produces
          seamless tubing in both hard and soft alloys for the automotive,
          other transportation, export, recreation, agriculture, and other
          industrial markets.  The business unit also operates a cathodic
          protection business located in Tulsa, Oklahoma, that extrudes
          both aluminum and magnesium.  Major markets for extruded products
          are in the transportation industry, to which the business unit
          provides extruded shapes for automobiles, trucks, trailers, cabs,
          and shipping containers, and in the distribution, durable goods,
          defense, building and construction, ordnance and electrical
          markets.

          The engineered products business unit operates forging facilities
          at Oxnard, California, and Greenwood, South Carolina; a machine
          shop at Greenwood, South Carolina; and a casting facility in
          Canton, Ohio; and participates in a joint venture with Accuride
          Corporation, located in Erie, Pennsylvania, and Cuyahoga Falls,
          Ohio, that designs, manufactures and markets aluminum wheels for
          the commercial transportation industry.  The business unit is one
          of the largest producers of aluminum forgings in the United
          States and is a major supplier of high-quality forged parts to
          customers in the automotive, commercial vehicle and ordnance
          markets. The high strength-to-weight properties of forged and
          cast aluminum make it particularly well-suited for automotive
          applications. The business unit's casting facility manufactures
          aluminum engine manifolds for the automobile, truck and marine
          markets.

          In 1997, the engineered products business unit had 641 customers,
          the largest and top five of which accounted for approximately 8%
          and 18%, respectively, of the business unit's revenue.  See "-
          Competition."  Sales are made directly from plants, as well as
          marketing locations elsewhere in the United States.

          ITEM 1.   BUSINESS (CONTINUED)

          Competition

          Aluminum competes in many markets with steel, copper, glass,
          plastic, and other materials.  In recent years, plastic
          containers have increased and glass containers have decreased
          their respective shares of the soft drink sector of the beverage
          container market.  In the United States, beverage container
          materials, including aluminum, face increased competition from
          plastics as increased polyethylene terephthalate ("PET")
          container capacity is brought on line by plastics manufacturers. 
          Within the aluminum business, the Company competes with both
          domestic and foreign producers of bauxite, alumina and primary
          aluminum, and with domestic and foreign fabricators.  Many of the
          Company's competitors have greater financial resources than the
          Company.  The Company's principal competitors in the sale of
          alumina include Alcoa Alumina & Chemicals L.L.C., Billiton
          Marketing and Trading BV, and Alcan Aluminium Limited.  The
          Company competes with most aluminum producers in the sale of
          primary aluminum.

          Primary aluminum and, to some degree, alumina are commodities
          with generally standard qualities, and competition in the sale of
          these commodities is based primarily upon price, quality and
          availability.  The Company also competes with a wide range of
          domestic and international fabricators in the sale of fabricated
          aluminum products.  Competition in the sale of fabricated
          products is based upon quality, availability, price and service,
          including delivery performance.  The Company concentrates its
          fabricating operations on selected products in which it has
          production expertise, high-quality capability, and geographic and
          other competitive advantages.  The Company believes that,
          assuming the current relationship between worldwide supply and
          demand for alumina and primary aluminum does not change
          materially, the loss of any one of its customers, including
          intermediaries, would not have a material adverse effect on its
          financial condition or results of operations.

          Research and Development

          The Company conducts research and development activities
          principally at two facilities - CFT in Pleasanton, California,
          and the Northwest Engineering Center adjacent to the Mead smelter
          in Washington.  Net expenditures for company-sponsored research
          and development activities were $19.7 million in 1997, $20.5
          million in 1996, and $18.5 million in 1995.  The Company's
          research staff totaled 133 at December 31, 1997.  The Company
          estimates that research and development net expenditures will be
          approximately $11.6 million in 1998.

          CFT performs research and development across a range of aluminum
          process and product technologies to support the Company's
          business units and new business opportunities.  It also
          selectively offers technical services to third parties. 
          Significant efforts are directed at product and process
          technology for the aircraft, automotive, and can sheet markets,
          and aluminum reduction cell models which are applied to improving
          cell designs and operating conditions.  The Northwest Engineering
          Center maintains specialized laboratories and a miniature carbon
          plant where experiments with new anode and cathode technology are
          performed.  The Northwest Engineering Center supports the
          Company's primary aluminum smelters, and concentrates on the
          development of cost-effective technical innovations such as
          equipment and process improvements.

          CFT and the Reno, Nevada, facility are continuing their efforts
          to implement the Micromill(TM) technology for the production of can
          sheet and other sheet products.  See "-Production Operations -
          Fabricated Aluminum Products - Flat-Rolled Products."

          The Company licenses its technology and sells technical and
          managerial assistance to other producers worldwide.  The
          Company's technology has been installed in alumina refineries,
          aluminum smelters and rolling mills located in the United States,
          Jamaica, Sweden, Germany, Russia, India, Australia, Korea, New
          Zealand, Ghana, United Arab Emirates, Bahrain, Venezuela, Brazil,
          and the United Kingdom.  The Company has technical services
          contracts with smelters in Wales, Africa, Europe, the Middle
          East, and India.

          ITEM 1.   BUSINESS (CONTINUED)

          Employees

          During 1997, the Company employed an average of 9,553 persons,
          compared with an average of 9,567 employees in 1996, and 9,546
          employees in 1995.  At December 31, 1997, the Company's work
          force was 9,597, including a domestic work force of 6,081, of
          whom 4,118 were paid at an hourly rate.  Most hourly paid
          domestic employees are covered by collective bargaining
          agreements with various labor unions.  Approximately 72% of such
          employees are covered by a master agreement (the "Labor
          Contract") with the United Steelworkers of America which expires
          September 30, 1998.  The Labor Contract covers the Company's
          plants in Spokane (Trentwood and Mead) and Tacoma, Washington;
          Gramercy, Louisiana; and Newark, Ohio.  The Company anticipates
          that the Labor Contract will be renegotiated during 1998.

          The Labor Contract provides for base wages at all covered plants. 
          In addition, workers covered by the Labor Contract may receive
          quarterly or more frequent bonus payments based on various
          indices of profitability, productivity, efficiency, and other
          aspects of specific plant or departmental performance, as well
          as, in certain cases, the price of alumina or primary aluminum. 
          Pursuant to the Labor Contract, base wage rates were raised
          effective November 3, 1997, and an amount in respect of the cost
          of living adjustment under the previous master agreement has been
          phased into base wages.  In the first half of 1998, the Company
          will acquire up to $4,000 per employee (80 shares) of preference
          stock held in a stock plan for the benefit of certain employees
          covered by the Labor Contract.  The Company will make comparable
          acquisitions of preference stock held for the benefit of certain
          salaried employees.

          Management considers the Company's employee relations to be
          satisfactory.

          Environmental Matters

          The Company is subject to a wide variety of international,
          federal, state and local environmental laws and regulations (the
          "Environmental Laws").  The Environmental Laws regulate, among
          other things, air and water emissions and discharges; the
          generation, storage, treatment, transportation, and disposal of
          solid and hazardous waste; the release of hazardous or toxic
          substances, pollutants and contaminants into the environment;
          and, in certain instances, the environmental condition of
          industrial property prior to transfer or sale.  In addition, the
          Company is subject to various federal, state, and local workplace
          health and safety laws and regulations ("Health Laws").

          From time to time, the Company is subject, with respect to its
          current and former operations, to fines or penalties assessed for
          alleged breaches of the Environmental and Health Laws and to
          claims and litigation brought by federal, state or local agencies
          and by private parties seeking remedial or other enforcement
          action under the Environmental and Health Laws or damages related
          to alleged injuries to health or to the environment, including
          claims with respect to certain waste disposal sites and the
          remediation of sites presently or formerly operated by the
          Company.  The Company currently is subject to certain lawsuits
          under the Comprehensive Environmental Response, Compensation and
          Liability Act of 1980, as amended by the Superfund Amendments and
          Reauthorization Act of 1986 ("CERCLA").  See "Legal Proceedings." 
          The Company, along with certain other entities, has been named as
          a Potentially Responsible Party ("PRP") for remedial costs at
          certain third-party sites listed on the National Priorities List
          under CERCLA and, in certain instances, may be exposed to joint
          and several liability for those costs or damages to natural
          resources.  The Company's Mead, Washington, facility has been
          listed on the National Priorities List under CERCLA.  The
          Washington State Department of Ecology has advised the Company
          that there are several options for remediation at the Mead
          facility that would be acceptable to the Department.  The Company
          expects that one of these remedial options will be agreed upon
          and incorporated into a Consent Decree.  In addition, in
          connection with certain of its asset sales, the Company has
          agreed to indemnify the purchasers with respect to certain
          liabilities (and associated expenses) resulting from acts or
          omissions arising prior to such dispositions, including
          environmental liabilities.

          ITEM 1.   BUSINESS (CONTINUED)

          Based on the Company's evaluation of these and other
          environmental matters, the Company has established environmental
          accruals, primarily related to potential solid waste disposal and
          soil and groundwater remediation matters.  At December 31, 1997,
          the balance of such accruals, which are primarily included in
          Long-term liabilities, was $29.7 million.  These environmental
          accruals represent the Company's estimate of costs reasonably
          expected to be incurred based on presently enacted laws and
          regulations, currently available facts, existing technology, and
          the Company's assessment of the likely remediation to be
          performed.  The Company expects remediation to occur over the
          next several years and estimates that annual expenditures to be
          charged to these environmental accruals will be approximately
          $3.0 million to $8.0 million per year for the years 1998 through
          2002 and an aggregate of approximately $8.0 million thereafter.
          Cash expenditures of $5.6 million in 1997, $8.8 million in 1996,
          and $4.5 million in 1995 were charged to previously established
          accruals relating to environmental costs.  Approximately $5.1
          million is expected to be charged to such accruals in 1998.

          As additional facts are developed and definitive remediation
          plans and necessary regulatory approvals for implementation of
          remediation are established or alternative technologies are
          developed, changes in these and other factors may result in
          actual costs exceeding the current environmental accruals.  The
          Company believes that it is reasonably possible that costs
          associated with these environmental matters may exceed current
          accruals by amounts that could range, in the aggregate, up to an
          estimated $18.0 million.  While uncertainties are inherent in the
          final outcome of these environmental matters, and it is presently
          impossible to determine the actual costs that ultimately may be
          incurred, the Company currently believes that the resolution of
          such uncertainties should not have a material adverse effect on
          the Company's consolidated financial position, results of
          operations, or liquidity.  In addition to cash expenditures
          charged to environmental accruals, environmental capital spending
          was $6.8 million in 1997, $18.4 million in 1996, and $9.2 million
          in 1995.  Annual operating costs for pollution control, not
          including corporate overhead or depreciation, were approximately
          $27.5 million in 1997, $30.1 million in 1996, and $26.0 million
          in 1995.  Legislative, regulatory and economic uncertainties make
          it difficult to project future spending for these purposes. 
          However, the Company currently anticipates that in the 1998-1999
          period, environmental capital spending will be within the range
          of approximately $5.0 million to $7.0 million per year, and
          operating costs for pollution control will be approximately $35.0
          million per year.

          The Company is a defendant in a number of lawsuits, some of which
          involve claims of multiple persons, in which the plaintiffs
          allege that certain of their injuries were caused by, among other
          things, exposure to asbestos during, and as a result of, their
          employment or association with the Company or exposure to
          products containing asbestos produced or sold by the Company. 
          The lawsuits generally relate to products the Company has not
          manufactured for at least 20 years.  See "Management's Discussion
          and Analysis of Financial Condition and Results of Operations -
          Environmental and Asbestos Contingencies."

          The portion of Note 10 of the Notes to Consolidated Financial
          Statements under the headings "Environmental Contingencies" and
          "Asbestos Contingencies" is incorporated herein by reference.

          ITEM 2.   PROPERTIES

          The locations and general character of the principal plants,
          mines, and other materially important physical properties
          relating to the Company's operations are described in "Business -
          The Company - Production Operations" and those descriptions are
          incorporated herein by reference.  The Company owns in fee or
          leases all the real estate and facilities used in connection with
          its business.  Plants and equipment and other facilities are
          generally in good condition and suitable for their intended uses,
          subject to changing environmental requirements.  Although the
          Company's domestic aluminum smelters and alumina facility were
          initially designed early in the Company's history, they have been
          modified frequently over the years to incorporate technological
          advances in order to improve efficiency, increase capacity, and
          achieve energy savings.  The Company believes that its plants are
          cost competitive on an international basis.

          The Company's obligations under the Credit Agreement entered into
          on February 15, 1994, as amended (the "Credit Agreement"), are
          secured by, among other things, mortgages on the Company's major
          domestic plants (other than the Gramercy alumina refinery and
          Nevada Micromill(TM)).  See "Management's Discussion and Analysis
          of Financial Condition and Results of Operations - Financing
          Activities and Liquidity" and Note 5 of the Notes to Consolidated
          Financial Statements.

          ITEM 3.   LEGAL PROCEEDINGS

          This section contains statements which constitute "forward-
          looking statements" within the meaning of the Private
          Securities Litigation Reform Act of 1995.  See Item 1, above, for
          cautionary information with respect to such forward-looking
          statements.

          Aberdeen Pesticide Dumps Site Matter

          The Aberdeen Pesticide Dumps Site, listed on the Superfund
          National Priorities List, is composed of five separate sites
          around the town of Aberdeen, North Carolina (collectively, the
          "Sites").  The Sites are of concern to the United States
          Environmental Protection Agency (the "EPA") because of their past
          use as either pesticide formulation facilities or pesticide
          disposal areas from approximately the mid-1930's through the
          late-1980's.  The EPA issued unilateral Administrative Orders
          under Section 106(a) of CERCLA ordering the respondents,
          including the Company, to perform the soil remedial design and
          remedial action and groundwater remediation for three of the
          Sites.  In March 1997, nine of the corporate respondents,
          including the Company, entered into a Settlement Agreement and
          Participation Agreement which allocates one hundred percent of
          all costs incurred or to be incurred at each of the Sites. 
          Thereafter, the nine respondents entered into a Partial Consent
          Decree with the United  States Department of Justice (the "DOJ")
          and the EPA regarding the work to be performed by the respondents
          and their responsibility for past and future response costs
          incurred by the United States.  This Partial Consent Decree was
          lodged with the United States District Court in December 1997. 
          Based on current estimates of future costs, the Company believes
          that its aggregate financial exposure at these Sites is less that
          $2.0 million.

          United States of America v. Kaiser Aluminum & Chemical
          Corporation

          In February 1989, a civil action was filed by the DOJ at the
          request of the EPA against the Company in the United States
          District Court alleging that emissions from certain stacks at the
          Company's Trentwood facility in Spokane, Washington,
          intermittently violated the opacity standard contained in the
          Washington State Implementation Plan ("SIP"), approved by the EPA
          under the federal Clean Air Act.  The Company and the EPA,
          without adjudication of any issue of fact or law, and without any
          admission of the violations alleged in the underlying complaint,
          have entered into a Consent Decree, which was approved by a
          Consent Order entered by the United States District Court for the
          Eastern District of Washington in January 1996.  As approved, the
          Consent Decree settles the underlying disputes and requires the
          Company to (i) pay a $.5 million civil penalty (which penalty has
          been paid), (ii) complete a program of plant improvements and
          operational changes that began in 1990 at its Trentwood facility,
          including the installation of an emission control system to
          capture particulate emissions from certain furnaces, and (iii)
          achieve and maintain furnace compliance with the opacity standard
          in the Washington SIP.  The Company has completed the
          installation of the emission control system.  If the relevant
          furnaces continue to show compliance through July 15, 1998, the
          Company intends to request termination of the Consent Decree.

          Hammons v. Alcan Aluminum Corp. et al

          On March 5, 1996, a class action complaint was filed against
          Kaiser, Alcan Aluminum Corp., Aluminum Company of America,
          Alumax, Inc, Reynolds Metal Company, and the Aluminum Association
          in the Superior Court of California for the County of Los
          Angeles, alleging that the defendants conspired, in violation of
          the California Cartwright Act (Bus. & Prof. Code Section 16720 &
          16750), in conjunction with a Memorandum of Understanding ("MOU")
          entered into in 1994 by representatives of Australia, Canada, the
          European Union, Norway, the Russian Federation and the United
          States, to restrict the production of primary aluminum resulting
          in rises in prices for primary aluminum and aluminum products. 
          The complaint seeks certification of a class consisting of
          persons who at any time between January 1, 1994, and the date of
          the complaint purchased aluminum or aluminum products
          manufactured by one or more of the defendants and estimates
          damages sustained by the class to be $4.4 billion during the year
          1994, before trebling.  Plaintiff's counsel has estimated damages
          to be $4.4 billion per year for each of the two years the MOU was
          active, which when trebled equals $26.4 billion.  On April 2,
          1996, the case was removed to the United States District Court
          for the Central District of California.  On July 11, 1996, the
          Court granted summary judgment in favor of Kaiser and other
          defendants and dismissed the complaint as to all defendants.  On
          July 18, 1996, the plaintiff filed a notice of appeal to the
          United States Court of Appeals for the Ninth Circuit.  On
          December 11, 1997, the United States Court of Appeals for the
          Ninth Circuit affirmed the decision of the District Court.  On
          December 23, 1997, the plaintiff filed a petition for rehearing
          en banc.

          ITEM 3.   LEGAL PROCEEDINGS (CONTINUED)

          Asbestos-related Litigation

          The Company is a defendant in a number of lawsuits, some of which
          involve claims of multiple persons, in which the plaintiffs
          allege that certain of their injuries were caused by, among other
          things, exposure to asbestos during, and as a result of, their
          employment or association with the Company or exposure to
          products containing asbestos produced or sold by the Company. 
          The lawsuits generally relate to products the Company has not
          manufactured for at least 20 years.  Subsequent to December 31,
          1997, the Company reached agreements settling approximately
          25,000 of the pending asbestos-related claims.  Also, subsequent
          to year-end 1997, the Company reached agreements on asbestos-
          related coverage matters with two insurance carriers under
          which the Company collected a total of approximately $17.5 million. 
          For additional information, see "Management's Discussion and
          Analysis of Financial Condition and Results of Operations -
          Environmental and Asbestos Contingencies."  The portion of Note
          10 of the Notes to Consolidated Financial Statements under the
          heading "Asbestos Contingencies" is incorporated herein by
          reference.

          Other Matters

          Various other lawsuits and claims are pending against the
          Company.  While uncertainties are inherent in the final outcome
          of such matters and it is presently impossible to determine the
          actual costs that ultimately may be incurred, management believes
          that the resolution of such uncertainties and the incurrence of
          such costs should not have a material adverse effect on the
          Company's consolidated financial position, results of operations,
          or liquidity.

          ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          No matter was submitted to a vote of security holders of the
          Company during the fourth quarter of 1997.

          PART II

          ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                    STOCKHOLDER MATTERS

          There is no established public trading market for the Company's
          common stock, which is held solely by Kaiser.  The information in
          Note 5 of the Notes to Consolidated Financial Statements under
          the heading "Loan Covenants and Restrictions" at pages 28 - 29 of
          this Report,  is incorporated herein by reference.  The Company 
          has not paid any dividends on its common stock during the two
          most recent fiscal years.

          The Indentures and the Credit Agreement (Exhibits 4.1 through
          4.24 to this Report) contain restrictions on the ability of the
          Company to pay dividends on or make distributions on account of
          the Company's common stock and restrictions on the ability of the
          Company's subsidiaries to transfer funds to the Company in the
          form of cash dividends, loans or advances.  Exhibits 4.1 through
          4.24 to this Report, Note 5 of the Notes to Consolidated
          Financial Statements at pages 28 - 29 of this Report, and the
          information under the heading "Financing Activities and
          Liquidity" at page 17 of this Report, are incorporated herein by
          reference.

          ITEM 6.   SELECTED FINANCIAL DATA

          Selected financial data for the Company is incorporated herein by
          reference to the table at page 1 of this Report, to the table at
          page 13 of this Report, to the discussion under the heading
          "Results of Operations" at pages 15 - 16 of this Report, to Note
          1 of the Notes to Consolidated Financial Statements at pages 24 -
          25 of this Report, and to pages 45 - 46 of this Report.

          ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS

          The Company operates in two business segments: bauxite and
          alumina, and aluminum processing.  As an integrated aluminum
          producer, the Company uses a portion of its bauxite, alumina, and
          primary aluminum production for additional processing at certain
          of its facilities.  Intracompany shipments and sales are excluded
          from the information set forth in the table below.  The table
          below provides selected operational and financial information on
          a consolidated basis with respect to the Company for the years
          ended December 31, 1997, 1996, and 1995.  The following should be
          read in conjunction with the Company's consolidated financial
          statements and the notes thereto, contained elsewhere herein.

          <TABLE>
          <CAPTION>
                                                                                  Year Ended December 31,
                                                                      ----------------------------------------------
          (In millions of dollars, except shipments and prices)                 1997            1996            1995
          ----------------------------------------------------------------------------------------------------------
          <S>                                                         <C>             <C>             <C>
          Shipments: (000 tons) (1)
               Alumina                                                      1,929.8         2,073.7         2,040.1 
               Aluminum products:
                    Primary aluminum                                          327.9           355.6           271.7 
                    Fabricated aluminum products                              400.0           327.1           368.2 
                                                                      --------------  --------------  --------------
                         Total aluminum products                              727.9           682.7           639.9 
                                                                      ==============  ==============  ==============
          Average realized sales price:
               Alumina (per ton)                                      $         198   $         195   $         208 
               Primary aluminum (per pound)                                     .75             .69             .81 

          Net sales:
               Bauxite and alumina:
                    Alumina                                           $       382.1   $       404.1   $       424.8 
                    Other (2)(3)                                              106.5           103.9            89.4 
                                                                      --------------  --------------  --------------
                         Total bauxite and alumina                            488.6           508.0           514.2 
                                                                      --------------  --------------  --------------
               Aluminum processing:
                    Primary aluminum                                          543.4           538.3           488.0 
                    Fabricated aluminum products                            1,324.3         1,130.4         1,218.6 
                    Other (3)                                                  16.9            13.8            17.0 
                                                                      --------------  --------------  --------------
                         Total aluminum processing                          1,884.6         1,682.5         1,723.6 
                                                                      --------------  --------------  --------------

                              Total net sales                         $     2,373.2   $     2,190.5   $     2,237.8 
                                                                      ==============  ==============  ==============
          Operating income (loss):
               Bauxite and alumina                                    $        20.0   $         1.1   $        54.0 
               Aluminum processing (4)                                        222.6           156.5           238.9 
               Corporate (4)                                                  (72.7)          (57.5)          (81.8)
                                                                      --------------  --------------  --------------
                    Total operating income                            $       169.9   $       100.1   $       211.1 
                                                                      ==============  ==============  ==============
          Net income                                                  $        52.1   $        13.2   $        65.3 
                                                                      ==============  ==============  ==============
          Capital expenditures                                        $       128.5   $       161.5   $        88.4 
                                                                      ==============  ==============  ==============

          </TABLE>


          (1)  All references to tons refer to metric tons of 2,204.6
               pounds.
          (2)  Includes net sales of bauxite.
          (3)  Includes the portion of net sales attributable to minority
               interests in consolidated subsidiaries.
          (4)  Includes pre-tax charges of $15.1 for the Aluminum
               processing segment and $4.6 for the Corporate segment
               recorded in the quarter ended June 30, 1997, related to
               restructuring of operations.

          This section contains statements which constitute "forward-
          looking statements" within the meaning of the Private
          Securities Litigation Reform Act of 1995.  These statements
          appear in a number of places in this section (see "Overview,"
          "Recent Events and Developments," "Results of Operations,"
          "Liquidity and Capital Resources" and "Other Matters").  Such
          statements can be identified by the use of forward-looking
          terminology such as "believes," "expects," "may," "estimates,"
          "will," "should," "plans" or "anticipates" or the negative
          thereof or other variations thereon or comparable terminology, or
          by discussions of strategy.  Readers are cautioned that any such
          forward-looking statements are not guarantees of future
          performance and involve significant risks and uncertainties, and
          that actual results may vary materially from those in the
          forward-looking statements as a result of various factors.  These
          factors include the effectiveness of management's strategies and
          decisions, general economic and business conditions, developments
          in technology, new or modified statutory or regulatory
          requirements and changing prices and market conditions.  No
          assurance can be given that these are all of the factors that
          could cause actual results to vary materially from the forward-
          looking statements.

          OVERVIEW

          The Company's operating results are sensitive to changes in
          prices of alumina, primary aluminum, and fabricated aluminum
          products, and also depend to a significant degree on the volume
          and mix of all products sold and on the Company's hedging
          strategies.  Primary aluminum prices have historically been
          subject to significant cyclical price fluctuations.  See Notes 1
          and 11 of the Notes to Consolidated Financial Statements for a
          discussion of the Company's hedging activities.

          During the first eleven months of 1997, the Average Midwest
          United States transaction price ("AMT Price") for primary
          aluminum remained relatively stable generally in the $.75 - $.80
          per pound range.  During December of 1997, the AMT Price fell to
          the $.70 - $.75 per pound range.  However, the average 1997 AMT
          Price compared favorably to the average 1996 AMT Price which
          remained fairly stable generally in the $.70 - $.75 range through
          June and then declined during the second half of the year,
          reaching a low of approximately $.65 per pound for October 1996,
          before recovering late in the year.  The AMT Price for 1995 was
          generally in the $.80 - $.90 per pound range.  For the week ended
          February 20, 1998, the AMT Price was $.70 per pound.

          RECENT EVENTS AND DEVELOPMENTS

          The Company has previously disclosed that it set a goal of
          achieving $120.0 million of pre-tax cost reductions and other
          profit improvements, independent of metal price changes, with the
          full effect planned to be realized in 1998 and beyond, measured
          against 1996 results.  Management believes that recent operating
          performance has been at a rate which indicates that approximately
          half of the desired profit improvement was achieved at year-end
          1997 and that the remainder should be achieved in the second half
          of 1998.  However, there are inherent uncertainties regarding
          operating factors and economic and other external forces (such as
          the Valco power situation discussed below), many of which are
          outside management's direct control, and, as such, no assurances
          can be given that the desired benefit of profit improvements will
          be achieved.

          In addition to working to improve the performance of the
          Company's existing assets, the Company has expended significant
          efforts on analyzing its current asset portfolio with the intent
          of focusing its efforts and capital in sectors of the industry
          that are considered most attractive.  The initial steps of this
          process resulted in the Company recording a $19.7 million pre-tax
          restructuring charge during June 1997 related to the closing and
          rationalization of certain businesses and facilities. 
          Additionally, this process led to the Company's acquisition of
          the Bellwood aluminum extrusion plant in Richmond, Virginia.  See
          Notes 3 and 4 of the Notes to Consolidated Financial Statements.

          As discussed more fully in Note 10 of the Notes to Consolidated
          Financial Statements, at December 31, 1997, there were
          approximately 77,400 claims pending against the Company
          pertaining to asbestos-related matters and the Company had
          accrued approximately $158.8 million related to the litigation
          and settlement of these claims and estimated future claims. 
          Subsequent to December 31, 1997, the Company reached agreements
          settling approximately 25,000 of the pending asbestos-related
          claims. Also, subsequent to year-end 1997, the Company reached
          agreements on asbestos related coverage matters with two
          insurance carriers under which the Company will collect a total
          of approximately $17.5 million during the first quarter of 1998. 
          The insurance recoveries will reduce the approximately $134.0
          million of asbestos related receivable accrued at December 31,
          1997.  As the amounts related to the claim settlements and
          insurance recoveries were consistent with the Company's year-end
          1997 accrual assumptions, these events are not expected to have a
          material impact on the Company's financial position, results of
          operations or liquidity.

          The Company has previously disclosed that the Volta River
          Authority ("VRA") would partially reduce its electric power
          allocation to the Company's 90%-owned Volta Aluminium Company
          Limited ("Valco") smelter facility in Ghana in January 1998 and
          that Valco expected to operate approximately three potlines at
          the facility in 1998 as compared to the four potlines operated
          throughout 1997.  During February 1998, Valco and the VRA reached
          an agreement whereby Valco agreed to receive compensation in lieu
          of the power necessary to run one of the three remaining
          operating potlines, effective February 25, 1998.  Compensation
          under the agreement is expected to substantially offset the
          financial impact of the curtailment.  As previously disclosed
          Valco has notified the VRA that it believes it has contractual
          rights to sufficient energy to run four and one-half potlines in
          1998 and Valco continues to seek compensation from the VRA with
          respect to the January 1998, reduction of its power allocation. 
          Valco and the VRA also are in continuing discussions concerning
          other matters, including steps that might be taken to reduce the
          likelihood of such power curtailments beyond 1998.  No assurances
          can be given, however, as to the success of these discussions,
          the possibility of requests by the VRA for additional
          curtailments, or the operating level of Valco for the remainder
          of 1998 or beyond.  Valco intends to pursue its legal rights in
          respect of reduced power allocation and compensation in respect
          of such reductions.

          RESULTS OF OPERATIONS

          1997 AS COMPARED TO 1996
          Summary - The Company reported net income of $52.1 million for
          1997 compared to net income of $13.2 million, for 1996. Net sales
          in 1997 totaled $2,373.2 million compared to $2,190.5 million in
          1996.

          Net income for 1997 includes the effect of certain non-recurring
          items, including a $19.7 million pre-tax restructuring charge
          (discussed above), an approximate $12.5 million non-cash tax
          benefit related to settlement of certain tax matters, and a $5.8
          million pre-tax charge related to additional litigation reserves.

          Bauxite and Alumina - Net segment sales decreased by 4% in 1997
          as a 7% decline in alumina shipments more than offset a 2%
          increase in average realized alumina prices.  Shipment volumes
          were down as compared to 1996 as a result of the timing of
          shipments and a slight increase in internal transfers.  Segment
          operating income improved substantially from 1996 to 1997 despite
          the reduced level of shipments and certain increased costs, in
          part resulting from a slowdown at the Company's 49%-owned Kaiser
          Jamaican Bauxite Company, prior to the signing of a new labor
          contract in December 1997, primarily due to lower overall
          operating costs.

          Aluminum Processing - Net sales of primary aluminum in 1997
          approximated 1996 net sales figures as a 10% increase in average
          realized prices offset an 8% decrease in primary aluminum
          shipments.  Net sales of fabricated aluminum products for 1997
          were up 17% as compared to 1996 as a 22% increase in shipments
          more than offset a 4% decrease in average realized prices.  The
          increase in fabricated aluminum product shipments over 1996 was
          primarily the result of the Company's June 1997 acquisition of an
          extrusion facility in Richmond, Virginia, and to a lesser extent
          the result of increased international shipments of can sheet and
          increased shipments of heat-treated products.

          The aluminum processing segment's operating income improved
          substantially in 1997 as a result of the increases in average
          realized prices for primary aluminum and shipments of fabricated
          aluminum product cited above.  Additionally, reduced power, raw
          material and supply costs and improved operating efficiencies
          also contributed to the improvement in segment operating income. 
          Included in the segment's operating income for the quarter and
          year ended December 31, 1997, was approximately $2.8 million and
          $10.3 million of operating income realized during the periods,
          related to the settlement of certain energy service contract
          issues.  Operating income for the year ended December 31, 1997,
          also included a $15.1 million second quarter pre-tax charge
          resulting from the restructuring of operations.

          Corporate - Corporate operating expenses represent corporate
          general and administrative expenses which are not allocated to
          the Company's business segments.  Operating results for 1997
          included a second quarter pre-tax charge of approximately $4.6
          million associated with the Company's restructuring of
          operations.  Corporate operating expenses for the year ended
          December 31, 1997, also include consulting and other costs
          associated with the Company's ongoing profit improvement program
          and portfolio review initiatives.

          1996 AS COMPARED TO 1995
          Summary - For the year ended December 31, 1996, the Company's net
          income was $13.2 million, compared to net income of $65.3
          million, in 1995.  Net sales for 1996 were $2,190.5 million,
          compared to $2,237.8 million in 1995.  Results for the year ended
          December 31, 1996, included an after tax benefit of approximately
          $17.0 million resulting from settlements of certain tax matters
          in December 1996.  Excluding the impact of these non-recurring
          items, the Company would have reported a net loss for the year
          ended December 31, 1996.

          Results for the year ended December 31, 1996, reflected the
          substantial reduction in market prices for primary aluminum more
          fully discussed above.  Alumina prices, which are significantly
          influenced by changes in primary aluminum prices, also declined
          from period to period.  The decrease in product prices more than
          offset the positive impact of increases in shipments in several
          segments of the Company's business, as more fully discussed
          below.  Results for 1996 also included approximately $20.5
          million in research and development expenses and other costs
          related to the Company's new Micromill(TM) facility as well as
          additional expenses related to other strategic initiatives.

          Results for 1995 included approximately $17.0 million of first
          quarter 1995 pre-tax expenses associated with an eight-day strike
          at five major U.S. locations, a six-day strike at the Company's
          65% owned Alumina Partners of Jamaica ("Alpart") bauxite mining
          and alumina refinery in Jamaica, and a four-day disruption of
          alumina production at Alpart caused by a boiler failure.

          Bauxite and Alumina - Net segment sales for 1996 were basically
          unchanged from 1995 as a nominal decline in the average realized
          price of alumina was offset by a modest increase in alumina
          shipments.  The reduction in prices realized reflected the
          substantial decline in primary aluminum prices experienced in
          1996 discussed above.

          Operating income for this segment of the Company's business
          declined significantly from prior year periods as a result of
          reduced gross margins from alumina sales resulting from the
          previously discussed price declines and increased natural gas
          costs at the Company's Gramercy, Louisiana, alumina refinery. 
          Operating income for the year ended December 31, 1996, was also
          unfavorably impacted by high operating costs associated with
          disruptions in the power supply at the Company's Alpart alumina
          refinery during the first nine months of 1996, higher
          manufacturing costs resulting from higher market prices for fuel
          and caustic soda, and a temporary raw material quality problem
          experienced at the Company's Gramercy facility during the second
          quarter of 1996.

          Aluminum Processing - An increase in primary aluminum shipments
          in 1996 of 31% more than offset a 15% decline in the average
          realized price for primary aluminum from period to period.  The
          increase in shipments during the year ended December 31, 1996,
          was the result of increased shipments of primary aluminum to
          third parties as a result of a decline in intracompany transfers.

          Net sales of fabricated aluminum products were down 7% for the
          year ended December 31, 1996, as compared to the prior year as a
          result of a decrease in shipments (primarily related to can sheet
          activities) resulting from reduced growth in demand and the
          reduction of customer inventories.  The impact of reduced product
          shipments was to a limited degree offset by a 4% increase in the
          average realized price from the sale of fabricated aluminum
          products, resulting primarily from a shift in product mix to
          higher value added products.

          Operating income for the aluminum processing segment for 1996 was
          also impacted by approximately $5.6 million of scheduled non-
          recurring maintenance costs at the Company's Trentwood,
          Washington, rolling mill facility in the fourth quarter of 1996,
          offset by $11.5 million ($7.2 on an after-tax basis) of reduced
          operating costs resulting from the non-cash settlement in
          December 1996 of certain tax matters.

          Corporate - A substantial portion of the 1996 reduction in
          operating losses of the corporate segment as compared to 1995 was
          due to reduced incentive compensation accruals resulting from the
          decline in earnings from the prior year period.  Reduced post
          employment benefit plan and pension plan costs also contributed
          to the 1996 reduction.

          LIQUIDITY AND CAPITAL RESOURCES

          See Note 5 of the Notes to Consolidated Financial Statements for
          a listing of the Company's indebtedness and information
          concerning certain restrictive debt covenants.

          OPERATING ACTIVITIES
          Cash provided by operating activities was $45.6, $22.9 and $119.5
          million in 1997, 1996 and 1995, respectively.  The improvement in
          cash flows from operating activities between 1996 and 1997 was
          primarily due to higher earnings resulting from increased product
          prices and increased sales of fabricated products partially
          offset by increased investment in working capital.  The reduction
          in cash generated by operating activities from 1995 to 1996 was
          primarily due to lower earnings resulting from the reduction in
          prices realized by the Company from the sale of primary aluminum
          and alumina.

          At December 31, 1997, the Company had working capital of $456.6
          million, compared with working capital of $409.3 million at
          December 31, 1996.  The increase in working capital in 1997 was
          due primarily to an increase in Receivables, offset by a
          reduction in Cash and cash equivalents.

          INVESTING ACTIVITIES
          Total consolidated capital expenditures were $128.5, $161.5 and
          $88.4 million in 1997, 1996 and 1995, respectively (of which
          $6.6, $7.4, and $8.3 million were funded by the minority partners
          in certain foreign joint ventures in 1997, 1996, and 1995,
          respectively), and were made primarily to construct or acquire
          new facilities, improve production efficiency, reduce operating
          costs, and expand capacity at existing facilities.  Total
          consolidated capital expenditures are currently expected to be
          between $75.0 and $125.0 million per annum in each of 1998
          through 2000 (of which approximately 8% is expected to be funded
          by the Company's minority partners in certain foreign joint
          ventures).

          A substantial portion of the increase in capital expenditures in
          1996 over the 1995 level was attributable to the development and
          construction of the Company's proprietary Micromill(TM)
          technology for the production of can sheet and other sheet
          products from molten metal.  The first Micromill(TM) facility,
          which was constructed in Nevada during 1996 as a demonstration
          and production facility, remained in a start-up mode throughout
          1997.  During January of 1998, the facility commenced trial
          product shipments to customers.  The Company currently
          anticipates that commercial deliveries from the facility will
          commence during the first quarter of 1998.  However, the
          Micromill(TM) technology has not yet been fully implemented or
          commercialized and there can be no assurances that full
          implementation or commercialization will be successful.

          During October 1997, a joint decision was made by a subsidiary of
          the Company and its joint venture partner to terminate and
          dissolve the Sino-foreign aluminum joint venture formed in 1995. 
          In January 1998, the Company's subsidiary reached an agreement to
          sell its interests in the venture to its partner.  The terms of
          the agreement are subject to certain governmental approvals by
          officials of the People's Republic of China.  This transaction
          will not have a material effect on the Company's results of
          operations or financial position.

          Management continues to evaluate numerous projects, all of which
          would require substantial capital, both in the United States and
          overseas.

          FINANCING ACTIVITIES AND LIQUIDITY
          Under the Credit Agreement, the Company is able to borrow by
          means of revolving credit advances and letters of credit (up to
          $125.0 million) an aggregate amount equal to the lesser of $325.0
          million or a borrowing base relating to eligible accounts
          receivable and eligible inventory.  During January 1998, the
          maturity of the Credit Agreement was extended from February 1999
          to August 2001.  The Credit Agreement is guaranteed by the
          Company and by certain of its significant subsidiaries of the
          Company.  The Credit Agreement also requires the Company to
          maintain certain financial covenants, places significant
          restrictions on the Company and Kaiser and is secured by a
          substantial majority of the Company's and Kaiser's assets.  The
          Company's public indebtedness also includes various restrictions
          and a repurchase obligation upon a Change of Control.  The Credit
          Agreement does not permit the Company or Kaiser to pay any
          dividends on their common stock.

          See Notes 5 and 8 of the Notes to Consolidated Financial
          Statements.

          As of December 31, 1997, the Company's total consolidated
          indebtedness was $971.7 million, no amounts were outstanding
          under the revolving credit facility of the Credit Agreement, and
          after allowances for $51.6 million of outstanding letters of
          credit, $273.4 million of unused availability remained under the
          Credit Agreement.

          Management believes that the Company's existing cash resources,
          together with cash flows from operations and borrowings under the
          Credit Agreement, will be sufficient to satisfy its working
          capital and capital expenditure requirements for the next year.
          With respect to long-term liquidity, management believes that
          operating cash flow, together with the ability to obtain both
          short and long-term financing, should provide sufficient funds to
          meet the Company's working capital and capital expenditure
          requirements.

          ENVIRONMENTAL AND ASBESTOS CONTINGENCIES
          The Company is subject to a number of environmental laws, to
          fines or penalties assessed for alleged breaches of the
          environmental laws, and to claims and litigation based upon such
          laws.  The Company currently is subject to a number of lawsuits
          and, along with certain other entities, has been named as a
          potentially responsible party for remedial costs at certain
          third-party sites listed on the National Priorities List under
          CERCLA.  Based on the Company's current evaluation of these and
          other environmental matters, the Company has established
          environmental accruals of $29.7 million at December 31, 1997. 
          However, the Company believes that it is reasonably possible that
          changes in various factors could cause costs associated with
          these environmental matters to exceed current accruals by amounts
          that could range, in the aggregate, up to an estimated $18.0
          million.  The Company believes that it has insurance coverage
          available to recover certain incurred and future environmental
          costs and is actively pursuing claims in this regard.  However,
          no accruals have been made for any such insurance recoveries and
          no assurances can be given that the Company will be successful in
          its attempt to recover incurred or future costs.

          The Company is also a defendant in a number of lawsuits, some of
          which involve claims of multiple persons, in which the plaintiffs
          allege that certain of their injuries were caused by, among other
          things, exposure to asbestos during, and as a result of, their
          employment or association with the Company or exposure to
          products containing asbestos produced or sold by the Company. The
          lawsuits generally relate to products the Company has not
          manufactured for at least 20 years.  Based on past experience and
          reasonably anticipated future activity, the Company has
          established a $158.8 million accrual for estimated asbestos-
          related costs for claims filed and estimated to be filed through
          2008, before consideration of insurance recoveries.  The Company,
          based on prior insurance related recoveries in respect of
          asbestos-related claims, existing insurance policies and the
          advice of outside counsel with respect to applicable insurance
          coverage law relating to the terms and conditions of these
          policies, believes that it has insurance coverage available to
          recover a substantial portion of its asbestos-related costs and
          that substantial insurance recoveries are probable.  Accordingly,
          the Company has recorded an estimated aggregate insurance
          recovery of $134.0 million (determined on the same basis as the
          asbestos-related cost accrual) at December 31, 1997.  However,
          claims for recovery from some of the Company's insurance carriers
          are currently subject to pending litigation and other carriers
          have raised certain defenses, which have resulted in delays in
          recovering costs from the insurance carriers.

          While uncertainties are inherent in the final outcome of these
          matters and it is presently impossible to determine the actual
          costs that ultimately may be incurred and insurance recoveries
          that ultimately may be received, management currently believes
          that the resolution of these uncertainties and the incurrence of
          related costs, net of any related insurance recoveries, should
          not have a material adverse effect on the Company's consolidated
          financial position, results of operations, or liquidity.

          See Note 10 of the Notes to Consolidated Financial Statements for
          a more detailed discussion of these contingencies and the factors
          affecting management's beliefs.  See also "Recent Events and
          Developments."

          OTHER MATTERS

          YEAR 2000
          The Company utilizes software and related technologies throughout
          its business that will be affected by the date change to the year
          2000.  An internal assessment has been undertaken to determine
          the scope and the related costs to assure that the Company's
          systems continue to function adequately to meet the Company's
          needs and objectives.  A detailed implementation plan is being
          developed from these findings.  Spending for related projects,
          which began in 1997 and will likely continue through 1999, is
          currently expected to total in the $10 million to $15 million
          range.  System modification costs will be expensed as incurred.
          Costs associated with new systems will be capitalized and
          amortized over the life of the product.

          RECENT ASIAN ECONOMIC DOWNTURN
          The Company has not experienced any significant direct financial,
          operating or other difficulties to date as a result of the recent
          Asian economic downturn.  Further, no significant direct impact
          is currently anticipated as direct sales to the region are
          relatively limited and the Company has taken steps to assure the
          creditworthiness of customers.  No assurance can be given,
          however, as to any possible indirect impact that the Asian
          economic downturn may have on the volume of shipments and prices
          on sales to customers outside the region.

          RECENT ACCOUNTING PRONOUNCEMENTS
          During June 1997, two new accounting standards were issued that
          will affect future financial reporting.  Statement of Financial
          Accounting Standards No. 130, Reporting Comprehensive Income
          ("SFAS No. 130"), requires the presentation of an additional
          income measure (termed "comprehensive income"), which adjusts
          traditional net income for certain items that previously were
          only reflected as direct charges to equity (such as minimum
          pension liabilities).  Statement of Financial Accounting
          Standards No. 131, Disclosures About Segments of an Enterprise
          and Related Information ("SFAS No. 131"), requires that segment
          reporting for public reporting purposes be conformed to the
          segment reporting used by management for internal purposes.  SFAS
          No. 131 also adds a requirement for the presentation of certain
          segment data on a quarterly basis starting in 1999.  SFAS No. 130
          and SFAS No. 131 must both be adopted in the Company's year-end
          1998 reporting. Management is currently evaluating the impact of
          these two standards on the Company's future financial reporting.

          INCOME TAX MATTERS
          The Company's net deferred income tax assets as of December 31,
          1997, were $350.1 million, net of valuation allowances of $113.3
          million.  The Company believes a long-term view of profitability
          is appropriate and has concluded that these net deferred income
          tax assets will more likely than not be realized. See Note 6 of
          the Notes to Consolidated Financial Statements for a discussion
          of these and other income tax matters.

          ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                                                                      Page

          Report of Independent Public Accountants.................   20

          Consolidated Balance Sheets..............................   21

          Statements of Consolidated Income........................   22

          Statements of Consolidated Cash Flows....................   23

          Notes to Consolidated Financial Statements...............   24

          Five-Year Financial Data................................    45

          Quarterly Financial Data (Unaudited)....................    47

          Financial statement schedules are inapplicable or the required
          information is included in the Consolidated Financial Statements 
          or the Notes thereto.