UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended March 31, 2003

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                       For the Transition Period from_____ to_____

                         Commission File Number 1-16619


                             KERR-McGEE CORPORATION
             (Exact Name of Registrant as Specified in its Charter)



                     Delaware                      73-1612389
          (State or Other Jurisdiction of       (I.R.S. Employer
           Incorporation or Organization)       Identification No.)


                Kerr-McGee Center, Oklahoma City, Oklahoma 73125
              (Address of Principal Executive Offices and Zip Code)

        Registrant's telephone number, including area code (405) 270-1313


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                  Yes  X      No
                                     ----

Number of shares of common stock,  $1.00 par value,  outstanding as of April 30,
2003: 100,851,109.


<PAGE>


                             KERR-McGEE CORPORATION

                                      INDEX

                          PART I. FINANCIAL INFORMATION


Item 1.  Financial Statements                                              PAGE
                                                                           ----
           Consolidated Statement of Operations for the
           Three Months Ended March 31, 2003 and 2002                         1

           Consolidated Balance Sheet at March 31, 2003
           and December 31, 2002                                              2

           Consolidated Statement of Cash Flows for the
           Three Months Ended March 31, 2003 and 2002                         3

           Notes to Consolidated Financial Statements                         4

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                 25

Item 3.  Quantitative and Qualitative Disclosures about
         Market Risk                                                         30

Item 4.  Controls and Procedures                                             31

Forward-Looking Information                                                  31


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                   32

Item 6.  Exhibits and Reports on Form 8-K                                    32

SIGNATURE                                                                    33

CERTIFICATIONS                                                               34

<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

                 KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (UNAUDITED)

                                                             Three Months Ended
                                                                   March 31,
                                                             ------------------
(Millions of dollars, except per-share amounts)              2003          2002
-------------------------------------------------------------------------------

Sales                                                    $1,127.2        $798.5
                                                         --------        ------

Costs and Expenses
  Costs and operating expenses                              412.0         349.9
  Selling, general and administrative expenses               70.9          55.5
  Shipping and handling expenses                             32.0          29.1
  Depreciation and depletion                                189.6         212.3
  Accretion expense                                           6.2             -
  Asset impairments, net of gains on disposal of
    assets held for sale                                      (.1)            -
  Exploration, including dry holes and
    amortization of undeveloped leases                      140.5          31.9
  Taxes, other than income taxes                             25.4          26.4
  Provision for environmental remediation and
    restoration, net of reimbursements                       17.3           2.4
  Interest and debt expense                                  65.0          70.7
                                                         --------        ------
      Total Costs and Expenses                              958.8         778.2
                                                         --------        ------

                                                            168.4          20.3
Other Income (Expense)                                        1.7         (23.8)
                                                         --------        -------

Income (Loss) before Income Taxes                           170.1          (3.5)
Benefit (Provision) for Income Taxes                        (65.9)          1.8
                                                         --------        ------

Income (Loss) from Continuing Operations                    104.2          (1.7)
Income from Discontinued Operations (net of
  income tax provision of nil and $4.5 for the
  first quarter of 2003 and 2002, respectively)                .4           7.2
Cumulative Effect of Change in Accounting Principle
  (net of benefit for income taxes of $18.2)                (34.7)            -
                                                         --------        ------

Net Income                                               $   69.9        $  5.5
                                                         ========        ======

Income (Loss) per Common Share
  Basic -
    Continuing operations                                $   1.04        $ (.02)
    Discontinued operations                                     -           .07
    Cumulative effect of change in accounting
      principle                                              (.34)            -
                                                         --------        ------
         Total                                           $    .70        $  .05
                                                         ========        ======
  Diluted -
    Continuing operations                                $    .99        $ (.02)
    Discontinued operations                                     -           .07
    Cumulative effect of change in accounting
      principle                                              (.31)            -
                                                         --------        ------
         Total                                           $    .68        $  .05
                                                         ========        ======

Dividends Declared per Common Share                      $    .45        $  .45
                                                         ========        ======

The accompanying notes are an integral part of this statement.

<PAGE>

                 KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
                           CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)

                                                       March 31,   December 31,
(Millions of dollars)                                       2003           2002
-------------------------------------------------------------------------------

ASSETS
------
Current Assets
  Cash                                                 $    80.7      $    89.9
  Accounts receivable                                      656.4          607.8
  Inventories                                              423.1          402.4
  Deposits, prepaid expenses and other assets              107.1          132.8
  Current assets associated with properties held
    for disposal                                            12.4           57.2
                                                       ---------      ---------
      Total Current Assets                               1,279.7        1,290.1
                                                       ---------      ---------

Property, Plant and Equipment                           14,156.7       13,722.8
  Less reserves for depreciation, depletion
  and amortization                                      (7,012.8)      (6,687.2)
                                                       ---------      ---------
                                                         7,143.9        7,035.6
                                                       ---------      ---------

Investments and Other Assets                             1,087.9        1,035.2
Goodwill                                                   356.2          355.9
Long-Term Assets Associated with Properties Held
  for Disposal                                              24.4          192.0
                                                       ---------      ---------
      Total Assets                                     $ 9,892.1      $ 9,908.8
                                                       =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
  Accounts payable                                     $   708.8      $   785.1
  Long-term debt due within one year                       104.8          105.8
  Other current liabilities                                681.6          716.8
  Current liabilities associated with properties
    held for disposal                                       20.0            2.1
                                                       ---------      ---------
      Total Current Liabilities                          1,515.2        1,609.8
                                                       ---------      ---------

Long-Term Debt                                           3,649.9        3,798.1
                                                       ---------      ---------

Deferred Income Taxes                                    1,126.2        1,145.1
Other Deferred Credits and Reserves                      1,037.3          803.7
Long-Term Liabilities Associated with Properties
  Held for Disposal                                            -           16.1
                                                       ---------      ---------
                                                         2,163.5        1,964.9
                                                       ---------      ---------
Stockholders' Equity
  Common stock, par value $1 - 300,000,000 shares
    authorized, 100,871,504 shares issued at 3-31-03
    and 100,391,054 shares issued at 12-31-02              100.9          100.4
  Capital in excess of par value                         1,707.4        1,687.3
  Preferred stock purchase rights                            1.0            1.0
  Retained earnings                                        912.0          885.7
  Accumulated other comprehensive loss                     (63.9)         (62.3)
  Common shares in treasury, at cost - 19,845 shares
    at 3-31-03 and 7,299 at 12-31-02                        (1.0)           (.4)
  Deferred compensation                                    (92.9)         (75.7)
                                                       ---------      ---------
      Total Stockholders' Equity                         2,563.5        2,536.0
                                                       ---------      ---------

      Total Liabilities and Stockholders' Equity       $ 9,892.1      $ 9,908.8
                                                       =========      =========

The  "successful  efforts"  method of accounting for oil and gas exploration and
production activities has been followed in preparing this balance sheet.

The accompanying notes are an integral part of this statement.

<PAGE>

                 KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

                                                            Three Months Ended
                                                                 March 31,
                                                            -------------------
(Millions of dollars)                                       2003           2002
-------------------------------------------------------------------------------

Operating Activities
--------------------
Net income                                               $  69.9      $     5.5
Adjustments to reconcile net income to net cash
  provided by operating activities -
    Depreciation, depletion and amortization               206.7          221.9
    Accretion expense                                        6.2              -
    Asset impairments, net of gains on disposal of
      assets held for sale                                   6.0              -
    Dry hole costs                                         104.6            2.7
    Deferred income taxes                                   32.1          (27.8)
    Provision for environmental remediation and
      restoration, net of reimbursements                    17.3            2.4
    (Gain) loss on sale and retirement of assets            (1.5)           2.4
    Cumulative effect of change in accounting principle     34.7              -
    Noncash items affecting net income                      29.7           31.6
    Other net cash provided by (used in) operating
      activities                                          (184.0)          34.8
                                                         -------      ---------
        Net Cash Provided by Operating Activities          321.7          273.5
                                                         -------      ---------
Investing Activities
--------------------
Capital expenditures                                      (201.4)        (344.2)
Dry hole costs                                            (104.6)          (2.7)
Proceeds from sales of assets                              185.4            3.3
Other investing activities                                 (10.0)         (11.8)
                                                         -------      ---------
        Net Cash Used in Investing Activities             (130.6)        (355.4)
                                                         -------      ---------
Financing Activities
--------------------
Issuance of long-term debt                                  31.5        1,209.3
Repayment of long-term debt                               (184.0)      (1,047.9)
Issuance of common stock                                       -            1.6
Dividends paid                                             (45.2)         (45.1)
Other financing activities                                   (.4)             -
                                                         -------      ---------
        Net Cash Provided by (Used in) Financing
        Activities                                        (198.1)         117.9
                                                         -------      ---------
Effects of Exchange Rate Changes on Cash and
  Cash Equivalents                                          (2.2)           1.0
                                                         -------      ---------
Net Increase (Decrease) in Cash and Cash Equivalents        (9.2)          37.0

Cash and Cash Equivalents at Beginning of Period            89.9           91.3
                                                         -------      ---------

Cash and Cash Equivalents at End of Period               $  80.7      $   128.3
                                                         =======      =========

The accompanying notes are an integral part of this statement.

<PAGE>

                 KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003


A.   Basis of Presentation and Accounting Policies

     Basis of Presentation
     ---------------------

     The condensed  financial  statements  included herein have been prepared by
     the company,  without audit,  pursuant to the rules and  regulations of the
     Securities  and  Exchange  Commission  and, in the  opinion of  management,
     include all  adjustments,  consisting  only of normal  recurring  accruals,
     necessary to present  fairly the  resulting  operations  for the  indicated
     periods.  Certain information and footnote disclosures normally included in
     financial  statements  prepared in accordance  with  accounting  principles
     generally  accepted  in the United  States have been  condensed  or omitted
     pursuant to such rules and regulations.  Although the company believes that
     the  disclosures  are  adequate  to  make  the  information  presented  not
     misleading,  it is suggested that these condensed  financial  statements be
     read in  conjunction  with the financial  statements  and the notes thereto
     included in the company's  latest annual report on Form 10-K.  Presentation
     of the 2002 amounts has been changed to be consistent with the presentation
     of the oil and gas operations in Indonesia as discontinued (see Note C).

     Business Segments
     -----------------

     The company has three  reportable  segments:  oil and gas  exploration  and
     production, production and marketing of titanium dioxide pigment (chemicals
     - pigment),  and production and marketing of other  chemicals  (chemicals -
     other).  Other chemicals include the company's  electrolytic  manufacturing
     and marketing operations and forest products treatment business.

     Change in Accounting Principle - Asset Retirement Obligations
     -------------------------------------------------------------

     In June 2001,  the  Financial  Accounting  Standards  Board  (FASB)  issued
     Statement of Financial  Accounting Standards (FAS) No. 143, "Accounting for
     Asset  Retirement  Obligations."  FAS 143 requires that an asset retirement
     obligation  (ARO)  associated with the retirement of a tangible  long-lived
     asset be  recognized  as a liability  in the period in which it is incurred
     (as defined by the standard),  with an offsetting  increase in the carrying
     amount of the associated  asset. The cost of the tangible asset,  including
     the initially  recognized ARO, is depreciated such that the cost of the ARO
     is  recognized  over the useful  life of the asset.  The ARO is recorded at
     fair value,  and  accretion  expense  will be  recognized  over time as the
     discounted liability is accreted to its expected settlement value. The fair
     value of the ARO is measured using expected future cash outflows discounted
     at the company's credit-adjusted risk-free interest rate.

     The  company  adopted  FAS 143 on  January 1, 2003,  which  resulted  in an
     increase in net  property  of $127.5  million,  an increase in  abandonment
     liabilities  of $180.4  million  and a  decrease  in  deferred  income  tax
     liabilities of $18.2 million.  The net impact of these changes  resulted in
     an  after-tax  charge  to  earnings  of  $34.7  million  to  recognize  the
     cumulative effect of retroactively applying the new accounting standard. In
     accordance  with  the  provisions  of  FAS  143,   Kerr-McGee   accrues  an
     abandonment  liability  associated with its oil and gas wells and platforms
     when those assets are placed in service,  rather than its past  practice of
     accruing the expected abandonment costs on a unit-of-production  basis over
     the productive  life of the  associated  oil and gas field.  No market risk
     premium has been included in the company's  calculation  of the ARO for oil
     and gas wells and platforms  since no reliable  estimate can be made by the
     company. In connection with the change in accounting principle, abandonment
     expense of $9.3 million for the first quarter of 2002 has been reclassified
     from Costs and  operating  expenses to  Depreciation  and  depletion in the
     Consolidated  Statement  of  Operations  to be  consistent  with  the  2003
     presentation.  Additionally in January 2003, the company announced its plan
     to close the synthetic rutile plant in Mobile, Alabama, by the end of 2003.
     Since  the plant has a  determinate  closure  date,  the  company  has also
     accrued an abandonment  liability associated with its plans to decommission
     the Mobile facility.

     A summary of the  changes  in the asset  retirement  obligation  during the
     first quarter of 2003 is included in the table below.

     (Millions of dollars)
     ---------------------------------------------------------------------------

     January 1, 2003                                                     $395.6
       Obligations incurred                                                 6.5
       Accretion expense                                                    6.2
       Abandonment expenditures                                            (3.4)
       Abandonment obligations settled through property divestitures      (12.0)
                                                                         ------
     March 31, 2003                                                      $392.9
                                                                         ======

     Pro forma net income for the three months ended March 31, 2002,  would have
     been $3.5 million, with basic and diluted earnings per share of $.03 if the
     provisions of FAS 143 had been applied as of January 1, 2002, compared with
     net income for the three  months ended March 31,  2003,  of $104.6  million
     before the cumulative  effect of change in accounting  principle with basic
     and diluted earnings per share of $1.04 and $.99, respectively.

     Employee Stock Option Plans
     ---------------------------

     In December  2002,  the FASB issued FAS 148,  "Accounting  for  Stock-Based
     Compensation  -  Transition  and  Disclosure,"  an  amendment  to FAS  123,
     "Accounting for  Stock-Based  Compensation."  FAS 148 provides  alternative
     methods of  transition  for  companies  choosing to  voluntarily  adopt the
     fair-value  based   methodology  of  FAS  123  and  amends  the  disclosure
     provisions of FAS 123 and Accounting Principles Board Opinion (APB) No. 28,
     "Interim Financial  Reporting," to require pro forma disclosures in interim
     financial  statements of net income,  stock-based  compensation expense and
     earnings  per share as if a  fair-value  based  method had been  used.  The
     amended disclosure requirements of FAS 148 were effective for the company's
     first quarter of 2003.

     The company  accounts for its stock option plans under the  intrinsic-value
     method permitted by APB No. 25, "Accounting for Stock Issued to Employees."
     Accordingly,  no stock-based employee compensation cost is reflected in net
     income for the issuance of stock options under the company's  plans,  since
     all options were  fixed-price  options with an exercise  price equal to the
     market value of the underlying common stock on the date of grant.

     The following  table  illustrates the effect on net income and earnings per
     share had the company applied the fair-value  recognition provisions of FAS
     123 to stock-based employee compensation.

                                                             Three Months Ended
                                                                  March 31,
     (Millions of dollars,                                   ------------------
     except per share amounts)                                2003         2002
     --------------------------------------------------------------------------
     Net income as reported                                  $69.9        $ 5.5
       Less stock-based compensation expense
         determined using a fair-value method for
         all awards, net of taxes                             (4.0)        (3.3)
                                                             -----        -----
     Pro forma net income                                    $65.9        $ 2.2
                                                             =====        =====

     Net income per share -
       Basic -
         As reported                                         $ .70         $.05
         Pro forma                                             .66          .02

       Diluted -
         As reported                                           .68          .05
         Pro forma                                             .64          .02



B.   Derivatives

     The company is exposed to risk from  fluctuations  in crude oil and natural
     gas prices,  foreign currency exchange rates, and interest rates. To reduce
     the impact of these risks on earnings and to increase the predictability of
     its cash flow, from time to time the company enters into certain derivative
     contracts,  primarily  swaps and  collars  for a portion of its oil and gas
     production,  forward  contracts  to buy and sell  foreign  currencies,  and
     interest rate swaps.

     The  company  accounts  for all its  derivative  financial  instruments  in
     accordance with FAS 133, "Accounting for Derivative Instruments and Hedging
     Activities."  Derivative  financial  instruments  are recorded as assets or
     liabilities in the Consolidated Balance Sheet, measured at fair value. When
     available,  quoted  market  prices  are  used in  determining  fair  value;
     however,  if quoted market prices are not available,  the company estimates
     fair value using either quoted market prices of financial  instruments with
     similar characteristics or other valuation techniques.

     Changes in the fair value of  instruments  that are designated as cash flow
     hedges and that qualify for hedge  accounting  under the  provisions of FAS
     133 are recorded in accumulated other  comprehensive  income (loss).  These
     hedging  gains or losses  will be  recognized  in  earnings  in the periods
     during  which the  hedged  forecasted  transactions  affect  earnings.  The
     ineffective  portion of the change in fair value of such hedges, if any, is
     included in current earnings. Instruments that do not meet the criteria for
     hedge  accounting and those  designated as fair-value  hedges under FAS 133
     are  recorded  at fair  value with gains or losses  reported  currently  in
     earnings.

     Effective  August 1, 2001, the company  purchased  100% of the  outstanding
     shares of common stock of HS  Resources.  At the time of the  purchase,  HS
     Resources  (now   Kerr-McGee   Rocky  Mountain  Corp.)  and  its  marketing
     subsidiary (now Kerr-McGee  Energy Services Corp.) were parties to a number
     of derivative  contracts for purchases and sales of gas, basis  differences
     and energy-related contracts. Prior to 2002, the company had treated all of
     these  derivatives as speculative  and marked to market through income each
     month the  change in  derivative  fair  values.  In May 2002,  the  company
     designated  the remaining  portion of the HS Resources gas basis swaps that
     settled  in 2002 and all that  settle in 2003 as hedges.  Additionally,  in
     March 2002, the company began hedging a portion of its 2002 oil and natural
     gas production with fixed-price swaps to increase the predictability of its
     cash flow and support  additional capital  expenditures.  During the fourth
     quarter  of 2002,  the  company  expanded  the  hedging  program to cover a
     portion of the  estimated  2003 crude oil and  natural  gas  production  by
     adding  fixed-price  swaps,  basis swaps and costless collars.  The hedging
     program  was  extended  further  during the first  quarter of 2003 with the
     addition of fixed-price swaps covering  fourth-quarter 2003 production.  At
     March 31, 2003, the outstanding commodity-related derivatives accounted for
     as hedges had a net liability fair value of $131.6 million,  of which $10.6
     million was recorded in current  assets and $142.2  million was recorded in
     current    liabilities.    At   December   31,   2002,   the    outstanding
     commodity-related  derivatives  accounted for as hedges had a net liability
     fair value of $83.4 million, of which $27.1 million was recorded in current
     assets and $110.5  million was  recorded in current  liabilities.  The fair
     value  of these  derivative  instruments  was  determined  based on  prices
     actively  quoted,  generally NYMEX and Dated Brent prices as of the balance
     sheet dates. The company had after-tax deferred losses of $75.6 million and
     $50.3 million in accumulated other comprehensive loss associated with these
     contracts  at March 31,  2003 and  December  31,  2002,  respectively.  The
     company  expects to  reclassify  the  entire  amount of these  losses  into
     earnings  during  the  next 12  months,  assuming  no  further  changes  in
     fair-market  value of the contracts.  During the first quarter of 2003, the
     company realized pre-tax losses on contract settlements of $32.8 million on
     domestic  oil  hedging,  $28.5  million on North Sea oil  hedging and $55.4
     million on  domestic  natural gas  hedging.  No losses  were  realized  for
     contract  settlements  during the first quarter of 2002, as settlements did
     not begin to occur until the 2002  second  quarter.  The losses  offset the
     prices  realized on the physical sale of crude oil and natural gas.  Losses
     for hedge  ineffectiveness  are  recognized  as a reduction to Sales in the
     Consolidated  Statement of Operations  and totaled $3.6 million in the 2003
     first quarter and $.1 million in the 2002 first quarter.

     As discussed in the company's  2002 Form 10-K, the company is also party to
     other commodity contracts  (fixed-price natural gas physical and derivative
     contracts)  that  have not  been  designated  as cash  flow  hedges.  These
     commodity  contracts are recorded in the balance sheet at fair value,  with
     any changes in fair value recorded through earnings. At March 31, 2003, the
     fair value of these  contracts  was $26.3  million.  Of this amount,  $15.6
     million was recorded in current  assets,  $17.5 million in Investments  and
     Other  Assets,  $6.2  million in current  liabilities,  and $.6  million in
     deferred  credits.  At December 31, 2002, the fair value of these contracts
     was $29.1  million.  Of this amount,  $30.7 million was recorded in current
     assets,  $22.4 million in  Investments  and Other Assets,  $23.3 million in
     current  liabilities,  and $.7  million in deferred  credits.  The net loss
     associated  with the  derivative  contracts was $13.3 million for the three
     months ended March 31, 2003,  of which $10.8  million was included in Sales
     in the  Consolidated  Statement of Operations and $2.5 million was included
     in Other Income. The net loss associated with the derivative  contracts was
     $24.9  million for the three  months  ended March 31,  2002,  of which $9.2
     million was included in Sales in the  Consolidated  Statement of Operations
     and $15.7 million was included in Other Income.

     From time to time,  the company  enters into  forward  contracts to buy and
     sell  foreign  currencies.   Certain  of  these  contracts   (purchases  of
     Australian  dollars and British pound  sterling)  have been  designated and
     have qualified as cash flow hedges of the company's anticipated future cash
     flow needs for a portion of its capital  expenditures  and operating costs.
     These forward contracts  generally have durations of less than three years.
     At March 31, 2003, the outstanding  foreign exchange  derivative  contracts
     accounted  for as hedges  had a net asset fair  value of $6.6  million,  of
     which $4.5  million  was  recorded in current  assets and $2.1  million was
     recorded  in  Investments  and Other  Assets.  Changes in the fair value of
     these contracts are recorded in accumulated  other  comprehensive  loss and
     will be  recognized  in  earnings in the  periods  during  which the hedged
     forecasted  transactions  affect earnings (i.e., when the forward contracts
     close in the case of a hedge of operating  costs and when the hedged assets
     are depreciated in the case of a hedge of capital  expenditures).  At March
     31,  2003,  the company had an after-tax  deferred  gain of $2.5 million in
     accumulated  other  comprehensive  loss related to these contracts.  In the
     first quarter of 2003,  the company  reclassified  $1.3 million of gains on
     forward  contracts from accumulated other  comprehensive  loss to operating
     expenses in the statement of operations. Of the existing net gains at March
     31, 2003,  approximately  $1.6 million will be  reclassified  into earnings
     during the next 12 months, assuming no further changes in fair value of the
     contracts.  No hedges were  discontinued  during the first quarter,  and no
     ineffectiveness was recognized.

     The  company has  entered  into other  forward  contracts  to sell  foreign
     currencies,   which  will  be  collected  as  a  result  of  pigment  sales
     denominated in foreign  currencies,  primarily European  currencies.  These
     contracts  have not been  designated  as hedges even though they do protect
     the company from changes in foreign  currency rate  changes.  The estimated
     fair value of these contracts was not material at March 31, 2003.  Selected
     pigment  receivables have been sold in an asset  securitization  program at
     their  equivalent U.S. dollar value at the date the receivables  were sold.
     However,  the company  retains the risk of foreign  currency  rate  changes
     between the date of sale and collection of the receivables.

     The company  issued 5 1/2% notes  exchangeable  for common  stock (DECS) in
     August 1999,  allowing each holder to receive  between .85 and 1.0 share of
     Devon stock or the  equivalent  amount of cash at maturity in August  2004.
     Embedded  options in the DECS  provide  Kerr-McGee a floor price on Devon's
     common stock of $33.19 per share (the put option). The company also retains
     the right to 15% of the  shares if  Devon's  stock  price is  greater  than
     $39.16  per  share  (the  DECS  holders  have a call  option  on 85% of the
     shares). Using the Black-Scholes valuation model, the company recognizes in
     Other  Income  on a  monthly  basis any gains or losses of the put and call
     options.  At March 31,  2003,  the fair values of the embedded put and call
     options were nil and $82.8 million, respectively. On December 31, 2002, the
     fair  values  of the  embedded  put and call  options  were  nil and  $66.6
     million,  respectively.  During the first  quarters  of 2003 and 2002,  the
     company  recorded losses of $16.2 million and $74.3 million,  respectively,
     in Other  Income  for the  changes  in the fair  values of the put and call
     options.  As discussed  above,  the fluctuation in the value of the put and
     call derivative financial instruments will generally offset the increase or
     decrease  in the  market  value  of 85% of the  Devon  stock  owned  by the
     company.  The  remaining  15% of  the  Devon  shares  is  accounted  for as
     available-for-sale  securities in accordance with FAS 115,  "Accounting for
     Certain  Investments in Debt and Equity Securities," with changes in market
     value recorded in accumulated other comprehensive income.

     In  connection  with the issuance of $350 million of 5.375% notes due April
     15, 2005, the company entered into an interest rate swap agreement in April
     2002.  The terms of the  agreement  effectively  change  the  interest  the
     company  will pay on the debt  until  maturity  from  the  fixed  rate to a
     variable rate of LIBOR plus .875%.  The company  considers the swap to be a
     hedge  against the change in fair value of the debt as a result of interest
     rate changes.  The estimated fair value of the interest rate swap was $26.1
     and $20.6  million at March 31, 2003 and December  31, 2002,  respectively.
     The company  recognized a $2.7 million reduction in interest expense in the
     2003 first quarter from the swap arrangement.


C.   Discontinued Operations, Asset Impairments and Asset Disposals

     In August 2001, the FASB issued FAS 144,  "Accounting for the Impairment or
     Disposal of Long-Lived Assets." FAS 144 supersedes FAS 121, "Accounting for
     the  Impairment  of  Long-Lived  Assets  and for  Long-Lived  Assets  to be
     Disposed Of," and the portion of Accounting Principles Board Opinion No. 30
     that deals with disposal of a business  segment.  The new standard resolves
     significant  implementation  issues  related to FAS 121 and  establishes  a
     single  accounting  model for long-lived  assets to be disposed of by sale.
     The company  adopted FAS 144 as of January 1, 2002, and, in accordance with
     the standard, has classified certain asset disposal groups whose operations
     and cash flows can be clearly distinguished from the rest of the company as
     discontinued operations.

     During the first quarter of 2002, the company approved a plan to dispose of
     its exploration and production operations in Kazakhstan and of its interest
     in the Bayu-Undan project in the East Timor Sea offshore Australia.  During
     the second quarter of 2002,  the company  approved a plan to dispose of its
     exploration  and  production  interest  in the  Jabung  block  of  Sumatra,
     Indonesia.  These divestiture  decisions were made as part of the company's
     strategic plan to rationalize  noncore oil and gas properties.  The results
     of  these   operations  have  been  reported   separately  as  discontinued
     operations in the company's Consolidated Statement of Operations.

     Sales of the company's  interests in the Bayu-Undan project and the Sumatra
     operations  were completed  during the second quarter of 2002. On March 31,
     2003, the company completed the sale of its Kazakhstan  operations to Shell
     Kazakhstan Development (Shell) for $168.6 million in cash. The net proceeds
     received by the company were used to reduce outstanding debt. In connection
     with the  sale,  the  company  has  recorded  an $18.4  million  settlement
     liability due to Shell for the net cash flow of the  Kazakhstan  operations
     from the effective date of the  transaction to the closing date. The amount
     of the  settlement  liability is subject to review by Shell and is expected
     to be paid during the second quarter of 2003.

     Revenues applicable to the discontinued operations totaled $5.6 million and
     $15.2  million  for the  three  months  ended  March  31,  2003  and  2002,
     respectively.  Pretax income for the  discontinued  operations  totaled $.4
     million (including impairment losses of $6.1 million) and $11.7 million for
     the three months ended March 31, 2003 and 2002, respectively.

     As part of the company's plan to divest noncore properties discussed above,
     certain  exploration  and  production  segment  assets were  identified for
     disposal and are  classified as held for sale.  During the first quarter of
     2003, the company  recorded pretax asset  impairment  charges totaling $8.8
     million  related to assets held for sale.  The impairment  charge  included
     $5.1  million  related to various  Gulf of Mexico  shelf  properties,  $2.4
     million  related to a U.K.  North Sea property and $1.3 million for certain
     U.S.  onshore  properties.  The  impairment  losses  reflect the difference
     between the estimated  sales prices for the individual  properties or group
     of properties,  less the costs to sell, and the carrying  amount of the net
     assets.

     Pretax  impairment losses totaling $5.1 million were also recognized in the
     2003 first  quarter for  certain  assets  used in  operations  that are not
     considered  held for sale.  Of the total  impairment  charge,  $3.2 million
     related to mature  company-operated  properties  where expected future cash
     flows were less than the  carrying  values of the  related  assets and $1.9
     million related to nonoperated  royalty  interests where cash flows were no
     longer  sufficient  to cover  depreciation  and  depletion  expense  on the
     company's investment.

     The  company  recognized  a net gain on disposal of assets held for sale of
     $14.0 million during the first quarter of 2003,  which is netted with total
     asset impairment charges of $13.9 million in the Consolidated  Statement of
     Operations.  No gain or loss on assets held for sale was  recognized in the
     first quarter of 2002. The company  expects to complete the  divestiture of
     its other remaining  assets  identified as being held for sale in the third
     quarter of 2003. The assets and liabilities of discontinued  operations and
     other  assets  held for sale have  been  classified  as  Assets/Liabilities
     Associated with Properties  Held for Disposal in the  Consolidated  Balance
     Sheet.


D.   Cash Flow Information

     Net cash provided by operating activities reflects cash payments for income
     taxes and interest as follows:

                                                             Three Months Ended
                                                                 March 31,
                                                             ------------------
     (Millions of dollars)                                    2003         2002
     --------------------------------------------------------------------------

     Income tax payments                                   $  60.0      $  12.2
     Less refunds received                                   (14.7)      (159.8)
                                                           -------      -------
     Net income tax payments (refunds)                     $  45.3      $(147.6)
                                                           =======      =======

     Interest payments                                     $  79.2      $  86.0
                                                           =======      =======

     Noncash items  affecting net income included in the  reconciliation  of net
     income to net cash provided by operating activities include the following:

                                                             Three Months Ended
                                                                 March 31,
                                                             ------------------
     (Millions of dollars)                                    2003         2002
     --------------------------------------------------------------------------

     Unrealized gain on trading securities                 $ (19.6)     $ (81.2)
     Increase in fair value of embedded options
       in the DECS                                            16.2         74.3
     Unrealized loss on derivative financial instruments       2.4         17.5
     All other (1)                                            30.7         21.0
                                                           -------      -------
        Total                                              $  29.7      $  31.6
                                                           =======      =======


     Other  net  cash  provided  by  (used  in)  operating   activities  in  the
     Consolidated Statement of Cash Flows consists of the following:

                                                             Three Months Ended
                                                                 March 31,
                                                             ------------------
     (Millions of dollars)                                    2003         2002
     --------------------------------------------------------------------------
     Increase (decrease) due to changes in working
       capital accounts                                    $(165.9)     $  68.6
     Environmental expenditures                               (9.5)       (31.6)
     All other (1)                                            (8.6)        (2.2)
                                                           -------      -------
        Total                                              $(184.0)     $  34.8
                                                           =======      =======

     (1) No  other  individual  item  is  material  to  total  cash  flows  from
         operations.


E.   Comprehensive Income and Financial Instruments

     Comprehensive  income  was  $68.3  million  in the first  quarter  of 2003,
     compared with a comprehensive loss of $59.7 million in the first quarter of
     2002.

     The company has certain investments that are considered to be available for
     sale. These financial  instruments are carried in the Consolidated  Balance
     Sheet at fair value,  which is based on quoted market  prices.  The company
     had no  securities  classified  as held to  maturity  at March 31,  2003 or
     December   31,   2002.   At  March  31,  2003  and   December   31,   2002,
     available-for-sale  securities for which fair value can be determined  were
     as follows:

<TABLE>
<CAPTION>
                                                     March 31, 2003                        December 31, 2002
                                           -------------------------------        -------------------------------
                                                                     Gross                                  Gross
                                                                Unrealized                             Unrealized
                                            Fair                   Holding         Fair                   Holding
     (Millions of dollars)                 Value       Cost           Gain        Value      Cost            Gain
     ------------------------------------------------------------------------------------------------------------
     <S>                                   <C>        <C>            <C>          <C>       <C>              <C>

     Equity securities                     $73.2      $31.9          $13.3 (1)    $69.7     $31.9            $9.8 (1)
     U.S. government obligations -
       Maturing within one year              2.3        2.3              -          2.4       2.4               -
       Maturing between one year
         and four years                      1.7        1.7              -          1.6       1.6               -
                                                                     -----                                   ----
            Total                                                    $13.3                                   $9.8
                                                                     =====                                   ====
</TABLE>

     (1) These amounts include $28 million of gross unrealized hedging losses on
         15% of the exchangeable debt at the time of adoption of FAS 133.


F.   Equity Affiliates

     Investments in equity affiliates  totaled $123.0 million at March 31, 2003,
     and  $122.9  million at  December  31,  2002.  Equity  loss  related to the
     investments  is included in Other Income in the  Consolidated  Statement of
     Operations  and totaled $6.1 million and $11.1 million for the three months
     ended March 31, 2003 and 2002, respectively.


G.   Restructuring Provisions and Exit Activities

     During  the  first  quarter  of 2003,  the  company's  chemical  -  pigment
     operating unit provided $16.5 million for costs associated with the closure
     of its  synthetic  rutile plant in Mobile,  Alabama.  Included in the $16.5
     million were $14.1  million  recorded as a  cumulative  effect of change in
     accounting  principle  related to the  recognition  of an asset  retirement
     obligation  and $2.4  million for the accrual of  severance  benefits to be
     paid upon closing the  facility,  which is included in costs and  operating
     expenses in the  Consolidated  Statement of  Operations.  The provision for
     severance  benefits is included in the restructuring  reserve balance below
     (see Note A for a discussion of the asset retirement obligation).  The $2.4
     million  provision  for  severance  benefits  remains in the  restructuring
     accrual  at March  31,  2003,  and  represents  the costs  associated  with
     severance  earned by employees during the first quarter of 2003. A total of
     135 employees  will be terminated  in connection  with this plant  closure,
     which is expected to occur by year-end 2003. Additionally,  the company has
     recognized $3.7 million in accelerated depreciation on the plant assets and
     $1.3  million for cleanup and  decommissioning  costs  associated  with the
     plant.

     During 2002, the company's  chemical - other  operating unit provided $16.5
     for costs  associated with its plans to exit the forest products  business,
     of which $.7 million was recorded during the first quarter of 2002.  During
     the first quarter of 2003, the company  provided an additional $1.6 million
     for  severance  benefits   associated  with  exiting  the  forest  products
     business.  These costs are reflected in costs and operating expenses in the
     Consolidated  Statement  of  Operations.  Of the total  provision  of $18.1
     million,  $1.6  million has been paid  through  the 2003 first  quarter and
     $16.5 million remained in the accrual at March 31, 2003. In connection with
     the plant  closures,  252 employees  will be  terminated,  of which 46 were
     terminated as of March 31, 2003.

     In 2001,  the company's  chemical - pigment  operating  unit provided $31.8
     million  related to the  closure of a plant in  Antwerp,  Belgium.  Of this
     total  accrual,  $25.1 million has been paid through the 2003 first quarter
     and $9.1 million  remained in the accrual at March 31, 2003. As a result of
     this plant closure,  121 employees will ultimately be terminated,  of which
     120 were terminated as of March 31, 2003.

     Also in 2001, the company's  chemical - other operating unit provided $11.9
     million  for the  discontinuation  of  manganese  metal  production  at its
     Hamilton, Mississippi,  facility. Of the total provision, $10.5 million has
     been paid through the 2003 first  quarter and $1.4 million  remained in the
     accrual at March 31, 2003, for pond closure costs.

     The  provisions,   payments,  adjustments  and  reserve  balances  for  the
     three-month period ended March 31, 2003, are included in the table below.

                                                                   Dismantlement
                                                                             and
     (Millions of dollars)                 Total      Severance          Closure
     ---------------------------------------------------------------------------

     December 31, 2002                     $26.6           $3.8           $22.8
       Provisions                            4.0            4.0               -
       Payments                             (1.6)          (1.0)            (.6)
       Adjustments (1)                        .4             .1              .3
                                           -----           ----           -----
     March 31, 2003                        $29.4           $6.9           $22.5
                                           =====           ====           =====

     (1) Foreign-currency  translation adjustments related to Antwerp,  Belgium,
         accrual.


H.   Earnings Per Share

     The  following  table  sets  forth the  computation  of basic  and  diluted
     earnings per share (EPS) from  continuing  operations  for the  three-month
     periods ended March 31, 2003 and 2002.

<TABLE>
<CAPTION>
                                                          For the Three Months Ended March 31,
                                     --------------------------------------------------------------------------------
                                                     2003                                        2002
                                     ------------------------------------        ------------------------------------

                                     Income from                                  Loss from
     (In millions, except             Continuing                Per-Share        Continuing                 Per-Share
     per-share amounts)               Operations      Shares       Income        Operations       Shares         Loss
     --------------------------------------------------------------------------------------------------------------
     <S>                                  <C>          <C>          <C>               <C>          <C>          <C>

     Basic EPS                            $104.2       100.1        $1.04             $(1.7)       100.2        $(.02)
                                                                    =====                                       =====
       Effect of dilutive securities:
         5 1/4% convertible
           debentures                        5.3         9.8                              -            -
         Restricted stock                      -          .7                              -            -
         Stock options                         -           -                              -            -
                                          ------       -----                         ------        -----
     Diluted EPS                          $109.5       110.6         $.99             $(1.7)       100.2        $(.02)
                                          ======       =====         ====             =====        =====        =====

</TABLE>


I.   Accounts Receivable Sales

     In December  2000,  the company began an accounts  receivable  monetization
     program for its  pigment  business  through  the sale of selected  accounts
     receivable with a three-year,  credit-insurance-backed asset securitization
     program.  The program is currently being  renegotiated.  Under the existing
     program,  the company retained servicing  responsibilities and subordinated
     interests and will receive a servicing fee of 1.07% of the receivables sold
     for the period of time  outstanding,  generally 60 to 120 days. No recourse
     obligations  were recorded  since the company has very limited  obligations
     for any recourse  actions on the sold  receivables.  The  collection of the
     receivables  is  insured,  and only  receivables  that  qualify  for credit
     insurance  can be sold.  A portion of the  insurance  is  reinsured  by the
     company's captive insurance company. However, the company believes that the
     risk of  insurance  loss is very low  since  its  bad-debt  experience  has
     historically been insignificant. The company also received preference stock
     in the  special-purpose  entity equal to 3.5% of the receivables  sold. The
     preference  stock is  essentially  a retained  deposit  to provide  further
     credit enhancements, if needed, but otherwise recoverable by the company at
     the end of the program.

     The  company  sold  $156.8  million  and  $134.2  million  of  its  pigment
     receivables  during the first quarter of 2003 and 2002,  respectively.  The
     sale of the  receivables  resulted in pretax losses of $1.1 million  during
     both the first  quarter  of 2003 and 2002.  The  losses  were  equal to the
     difference in the book value of the receivables  sold and the total of cash
     and the fair value of the deposit retained by the  special-purpose  entity.
     The outstanding balance on receivables sold totaled $110.1 million at March
     31, 2003, and $110.6 million at December 31, 2002.


J.   Condensed Consolidating Financial Information

     In  connection  with the  acquisition  of HS  Resources  in 2001, a holding
     company  structure  was  implemented.  The  company  formed  a new  holding
     company,  Kerr-McGee  Holdco,  which then  changed  its name to  Kerr-McGee
     Corporation.  The  former  Kerr-McGee  Corporation's  name was  changed  to
     Kerr-McGee   Operating   Corporation.   At  the   end  of   2002,   another
     reorganization took place whereby among other changes, Kerr-McGee Operating
     Corporation  distributed its investment in certain subsidiaries  (primarily
     the oil and gas  operating  subsidiaries)  to a newly  formed  intermediate
     holding company,  Kerr-McGee  Worldwide  Corporation.  Kerr-McGee Operating
     Corporation formed a new subsidiary, Kerr-McGee Chemical Worldwide LLC, and
     merged into it.

     On October 3, 2001, Kerr-McGee Corporation issued $1.5 billion of long-term
     notes in a public offering. The notes are general, unsecured obligations of
     the company and rank in parity with all of the  company's  other  unsecured
     and  unsubordinated   indebtedness.   Kerr-McGee   Chemical  Worldwide  LLC
     (formerly  Kerr-McGee  Operating  Corporation,  which  was  previously  the
     original Kerr-McGee  Corporation) and Kerr-McGee Rocky Mountain Corporation
     have  guaranteed  the  notes.  Additionally,   Kerr-McGee  Corporation  has
     guaranteed all indebtedness of its subsidiaries, including the indebtedness
     assumed in the  purchase of HS  Resources.  As a result of these  guarantee
     arrangements,  the company is required to present  condensed  consolidating
     financial information.  The top holding company is Kerr-McGee  Corporation.
     The guarantor  subsidiaries  include  Kerr-McGee  Chemical Worldwide LLC at
     March 31, 2003 and  December  31,  2002,  and its  predecessor,  Kerr-McGee
     Operating  Corporation,  at March 31,  2002,  along with  Kerr-McGee  Rocky
     Mountain Corporation in 2003 and 2002.

     The following tables present condensed  consolidating financial information
     for (a)  Kerr-McGee  Corporation,  the parent  company,  (b) the  guarantor
     subsidiaries,  and (c) the  non-guarantor  subsidiaries  on a  consolidated
     basis.


<TABLE>

                     Kerr-McGee Corporation and Subsidiaries
                 Condensed Consolidating Statement of Operations
                    For the Three Months Ended March 31, 2003

<CAPTION>

                                                  Kerr-McGee        Guarantor     Non-Guarantor
(Millions of dollars)                            Corporation     Subsidiaries      Subsidiaries     Eliminations     Consolidated
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>              <C>               <C>             <C>             <C>

Sales                                                 $    -           $153.8            $975.5          $  (2.1)        $1,127.2
                                                      ------           ------            ------          -------         --------

Costs and Expenses
  Costs and operating expenses                             -             71.5             343.1             (2.6)           412.0
  Selling, general and administrative expenses             -              7.1              63.8                -             70.9
  Shipping and handling expenses                           -              2.6              29.4                -             32.0
  Depreciation and depletion                               -             29.9             159.7                -            189.6
  Accretion expense                                        -               .6               5.6                -              6.2
  Asset impairments, net of gains on disposal of
    assets held for sale                                   -                -               (.1)               -              (.1)
  Exploration, including dry holes and
    amortization of undeveloped leases                     -              3.9             136.6                -            140.5
  Taxes, other than income taxes                          .1              5.5              19.8                -             25.4
  Provision for environmental remediation
    and restoration, net of reimbursements                 -              5.1              12.2                -             17.3
  Interest and debt expense                             28.9              8.3              72.9            (45.1)            65.0
                                                      ------           ------            ------          -------         --------
      Total Costs and Expenses                          29.0            134.5             843.0            (47.7)           958.8
                                                      ------           ------            ------          -------         --------
                                                       (29.0)            19.3             132.5             45.6            168.4
Other Income                                           146.6               .6              29.9           (175.4)             1.7
                                                      ------           ------            ------          -------         --------
Income before Income Taxes                             117.6             19.9             162.4           (129.8)           170.1
Provision for Income Taxes                             (47.7)            (4.2)            (61.2)            47.2            (65.9)
                                                      ------           ------            ------          -------         --------
Income from Continuing Operations                       69.9             15.7             101.2            (82.6)           104.2
Income (Loss) from Discontinued Operations,
     net of tax                                            -             12.0             (11.6)               -               .4
Cumulative Effect of Change in Accounting
     Principle, net of tax                                 -             (1.3)            (33.4)               -            (34.7)
                                                      ------           ------            ------          -------         --------
Net Income                                            $ 69.9           $ 26.4            $ 56.2          $ (82.6)        $   69.9
                                                      ======           ======            ======          =======         ========

</TABLE>

<TABLE>

                     Kerr-McGee Corporation and Subsidiaries
                 Condensed Consolidating Statement of Operations
                    For the Three Months Ended March 31, 2002

<CAPTION>

                                                  Kerr-McGee        Guarantor     Non-Guarantor
(Millions of dollars)                            Corporation     Subsidiaries      Subsidiaries      Eliminations    Consolidated
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>              <C>               <C>             <C>             <C>

   Sales                                              $    -           $ 79.1            $719.4          $      -        $  798.5
                                                      ------           ------            ------          --------        --------

   Costs and Expenses
     Costs and operating expenses                          -             26.7             323.2                 -           349.9
     Selling, general and administrative expenses          -               .7              54.8                 -            55.5
     Shipping and handling expenses                        -              3.0              26.1                 -            29.1
     Depreciation and depletion                            -             30.8             181.5                 -           212.3
     Exploration, including dry holes and
       amortization of undeveloped leases                  -              2.0              29.9                 -            31.9
     Taxes, other than income taxes                       .1              4.8              21.5                 -            26.4
     Provision for environmental remediation
       and restoration, net of reimbursements              -                -               2.4                 -             2.4
     Interest and debt expense                          27.0              8.8              83.9             (49.0)           70.7
                                                      ------           ------            ------          --------        --------
         Total Costs and Expenses                       27.1             76.8             723.3             (49.0)          778.2
                                                      ------           ------            ------          --------        --------

                                                       (27.1)             2.3              (3.9)             49.0            20.3
   Other Income (Expense)                               35.3            (31.0)             23.2             (51.3)          (23.8)
                                                      ------           ------            ------          --------        --------
   Income (Loss) before Income Taxes                     8.2            (28.7)             19.3              (2.3)           (3.5)
   Benefit (Provision) for Income Taxes                 (2.7)             6.1              (7.5)              5.9             1.8
                                                      ------           ------            ------          --------        --------
   Income (Loss) from Continuing Operations              5.5            (22.6)             11.8               3.6            (1.7)
   Income from Discontinued Operations,
        net of tax                                         -                -               7.2                 -             7.2
                                                      ------           ------            ------          --------        --------
   Net Income (Loss)                                  $  5.5           $(22.6)           $ 19.0          $    3.6        $    5.5
                                                      ======           ======            ======          ========        ========

</TABLE>
<TABLE>

                     Kerr-McGee Corporation and Subsidiaries
                      Condensed Consolidating Balance Sheet
                                 March 31, 2003

<CAPTION>

                                                  Kerr-McGee        Guarantor     Non-Guarantor
(Millions of dollars)                            Corporation     Subsidiaries      Subsidiaries      Eliminations    Consolidated
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>              <C>               <C>              <C>              <C>

  ASSETS
  ------
  Current Assets
    Cash                                            $    2.9         $      -          $   77.8         $       -        $   80.7
    Intercompany receivables                           881.3           (299.7)          1,519.1          (2,100.7)              -
    Accounts receivable                                 (0.3)            95.4             561.3                 -           656.4
    Inventories                                            -              6.6             416.5                 -           423.1
    Deposits, prepaid expenses and other assets            -             26.2              80.9                 -           107.1
    Current assets associated with properties
      held for disposal                                    -                -              12.4                 -            12.4
                                                    --------         --------          --------         ---------        --------
        Total Current Assets                           883.9           (171.5)          2,668.0          (2,100.7)        1,279.7
                                                    --------         --------          --------         ---------        --------

  Property, Plant and Equipment, net                       -          1,988.2           5,155.7                 -         7,143.9
  Investments and Other Assets                          11.4            130.0           1,026.0             (79.5)        1,087.9
  Goodwill                                                 -            346.8               9.4                 -           356.2
  Long-term Assets Associated with Properties
    Held for Disposal                                      -                -              19.5               4.9            24.4
  Investments in and Advances to Subsidiaries        3,773.9            675.3            (174.3)         (4,274.9)              -
                                                    --------         --------          --------         ---------        --------
         Total Assets                               $4,669.2         $2,968.8          $8,704.3         $(6,450.2)       $9,892.1
                                                    ========         ========          ========         =========        ========

  LIABILITIES AND STOCKHOLDERS' EQUITY
  ------------------------------------
  Current Liabilities
    Accounts payable                                $   45.4         $   67.8          $  595.6         $       -        $  708.8
    Intercompany borrowings                             63.5            538.6           1,498.1          (2,100.2)              -
    Long-term debt due within one year                     -                -             104.8                 -           104.8
    Other current liabilities                            2.4            170.6             508.6                 -           681.6
    Current liabilities associated with
      properties held for disposal                         -                -              20.0                 -            20.0
                                                    --------         --------          --------         ---------        --------
         Total Current Liabilities                     111.3            777.0           2,727.1          (2,100.2)        1,515.2
                                                    --------         --------          --------         ---------        --------

  Long-Term Debt                                     1,847.2                -           1,802.7                 -         3,649.9

  Other Deferred Credits and Reserves                      -            739.2           1,419.9               4.4         2,163.5
  Investments by and Advances from Parent                  -                -             490.9            (490.9)              -
  Stockholders' Equity                               2,710.7          1,452.6           2,263.7          (3,863.5)        2,563.5
                                                    --------         --------          --------         ---------        --------
       Total Liabilities and Stockholders' Equity   $4,669.2         $2,968.8          $8,704.3         $(6,450.2)       $9,892.1
                                                    ========         ========          ========         =========        ========
</TABLE>
<TABLE>

                     Kerr-McGee Corporation and Subsidiaries
                      Condensed Consolidating Balance Sheet
                                December 31, 2002

<CAPTION>

                                                  Kerr-McGee        Guarantor     Non-Guarantor
 (Millions of dollars)                           Corporation     Subsidiaries      Subsidiaries      Eliminations    Consolidated
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>              <C>               <C>              <C>              <C>
  ASSETS
  ------
  Current Assets
    Cash                                            $    2.5         $      -          $   87.4         $       -        $   89.9
    Intercompany receivables                           956.6             46.6           1,641.2          (2,644.4)              -
    Accounts receivable                                    -             73.5             534.3                 -           607.8
    Inventories                                            -              6.5             395.9                 -           402.4
    Deposits, prepaid expenses and other assets            -             59.6              75.0              (1.8)          132.8
    Current assets associated with properties
      held for disposal                                    -                -              57.2                 -            57.2
                                                    --------         --------          --------         ---------        --------
        Total Current Assets                           959.1            186.2           2,791.0          (2,646.2)        1,290.1
                                                    --------         --------          --------         ---------        --------

  Property, Plant and Equipment, net                       -          1,956.1           5,079.5                 -         7,035.6
  Investments and Other Assets                          11.8            117.9             985.7             (80.2)        1,035.2
  Goodwill                                                 -            346.8               9.1                 -           355.9
  Long-term Assets Associated with Properties
    Held for Disposal                                      -                -             187.1               4.9           192.0
  Investments in and Advances to Subsidiaries        3,673.0            694.9              80.1          (4,448.0)              -
                                                    --------         --------          --------         ---------        --------
         Total Assets                               $4,643.9         $3,301.9          $9,132.5         $(7,169.5)       $9,908.8
                                                    ========         ========          ========         =========        ========

  LIABILITIES AND STOCKHOLDERS' EQUITY
  ------------------------------------
  Current Liabilities
    Accounts payable                                $   45.2         $   78.1          $  661.8         $       -   $       785.1
    Intercompany borrowings                             68.5            842.2           1,732.1          (2,642.8)              -
    Long-term debt due within one year                     -                -             105.8                 -           105.8
    Other current liabilities                           17.8            195.0             478.2              25.8           716.8
    Current liabilities associated with
      properties held for disposal                         -                -               2.1                 -             2.1
                                                    --------         --------          --------         ---------        --------
        Total Current Liabilities                      131.5          1,115.3           2,980.0          (2,617.0)        1,609.8
                                                    --------         --------          --------         ---------        --------

  Long-Term Debt                                     1,847.2                -           1,950.9                 -         3,798.1

  Other Deferred Credits and Reserves                      -            675.4           1,297.4             (24.0)        1,948.8
  Long-term Liabilities Associated with
    Properties Held for Disposal                           -                -              16.1                 -            16.1
  Investments by and Advances from Parent                  -                -             728.7            (728.7)              -
  Stockholders' Equity                               2,665.2          1,511.2           2,159.4          (3,799.8)        2,536.0
                                                    --------         --------          --------         ---------        --------
       Total Liabilities and Stockholders' Equity   $4,643.9         $3,301.9          $9,132.5         $(7,169.5)       $9,908.8
                                                    ========         ========          ========         =========        ========

</TABLE>
<TABLE>

                     Kerr-McGee Corporation and Subsidiaries
                 Condensed Consolidating Statement of Cash Flows
                    For the Three Months Ended March 31, 2003


<CAPTION>

                                                  Kerr-McGee        Guarantor     Non-Guarantor
(Millions of dollars)                            Corporation     Subsidiaries      Subsidiaries      Eliminations    Consolidated
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>              <C>               <C>              <C>              <C>

Operating Activities
--------------------
Net income                                          $   69.9         $   26.4          $   56.2         $   (82.6)       $   69.9
Adjustments to reconcile net income to net cash
  provided by (used in) operating activities-
     Depreciation, depletion and amortization              -             30.3             176.4                 -           206.7
     Accretion expense                                     -               .6               5.6                 -             6.2
     Asset impairments, net of gains on
       disposal of assets held for sale                    -                -               6.0                 -             6.0
     Equity in earnings of subsidiaries                (76.5)            19.8                 -              56.7               -
     Dry hole costs                                        -                -             104.6                 -           104.6
     Deferred income taxes                                 -             23.7               8.4                 -            32.1
     Provision for environmental remediation
       and restoration, net of reimbursements              -              5.1              12.2                 -            17.3
     (Gain) loss on sale and retirement of
       assets                                              -            (12.0)             10.5                 -            (1.5)
     Cumulative effect of change in accounting
       principle                                           -              1.3              33.4                 -            34.7
     Noncash items affecting net income                   .4             15.1              14.2                 -            29.7
     Other net cash used in operating activities       (29.8)           (69.5)            (84.7)                -          (184.0)
                                                    --------         --------          --------         ---------        --------
         Net Cash Provided by (Used in)
          Operating Activities                         (36.0)            40.8             342.8             (25.9)          321.7
                                                    --------         --------          --------         ---------        --------

Investing Activities
--------------------
Capital expenditures                                       -            (31.7)           (169.7)                -          (201.4)
Dry hole costs                                             -                -            (104.6)                -          (104.6)
Proceeds from sales of assets                              -                -             185.4                 -           185.4
Other investing activities                                 -                -             (10.0)                -           (10.0)
                                                    --------         --------          --------         ---------        --------
         Net Cash Used in Investing Activities             -            (31.7)            (98.9)                -          (130.6)
                                                    --------         --------          --------         ---------        --------

Financing Activities
--------------------
Issuance of long-term debt                                 -                -              31.5                 -            31.5
Repayment of long-term debt                                -                -            (184.0)                -          (184.0)
Increase (decrease) in intercompany
  notes payable                                         81.4             (9.1)            (72.3)                -               -
Dividends paid                                         (45.2)               -             (26.3)             26.3           (45.2)
Other financing activities                                .2                -               (.2)              (.4)            (.4)
                                                    --------         --------          --------         ---------        --------
        Net Cash Provided by (Used in)
          Financing Activities                          36.4             (9.1)           (251.3)             25.9          (198.1)
                                                    --------         --------          --------         ---------        --------

Effects of Exchange Rate Changes on Cash
   and Cash Equivalents                                    -                -              (2.2)                -            (2.2)
                                                    --------         --------          --------         ---------        --------
Net Increase (Decrease) in Cash and Cash
   Equivalents                                            .4                -              (9.6)                -            (9.2)
Cash and Cash Equivalents at Beginning of
   Period                                                2.5                -              87.4                 -            89.9
                                                    --------         --------          --------         ---------        --------
Cash and Cash Equivalents at End of Period          $    2.9         $      -          $   77.8         $       -        $   80.7
                                                    ========         ========          ========         =========        ========
</TABLE>

<TABLE>

                     Kerr-McGee Corporation and Subsidiaries
                 Condensed Consolidating Statement of Cash Flows
                    For the Three Months Ended March 31, 2002

<CAPTION>

                                                  Kerr-McGee        Guarantor     Non-Guarantor
(Millions of dollars)                            Corporation     Subsidiaries      Subsidiaries      Eliminations    Consolidated
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>              <C>               <C>              <C>      <C>     <C>

Operating Activities
--------------------
Net income (loss)                                   $    5.5         $  (22.6)         $   19.0         $     3.6        $    5.5
Adjustments to reconcile net income or loss
  to net cash provided by (used in) operating
  activities -
     Depreciation, depletion and amortization              -             31.0             190.9                 -           221.9
     Equity in earnings of subsidiaries                (11.6)            15.2                 -              (3.6)              -
     Dry hole costs                                        -                -               2.7                 -             2.7
     Deferred income taxes                              (3.3)            (8.2)            (16.3)                -           (27.8)
     Provision for environmental remediation
       and restoration, net of reimbursements              -                -               2.4                 -             2.4
     Gain on sale and retirement of assets                 -                -               2.4                 -             2.4
     Noncash items affecting net income or loss            -             20.2              11.4                 -            31.6
     Other net cash provided by (used in)
        operating activities                           (27.6)             7.9              54.5                 -            34.8
                                                    --------         --------          --------         ---------        --------
           Net Cash Provided by (Used in)
             Operating Activities                      (37.0)            43.5             267.0                 -           273.5
                                                    --------         --------          --------         ---------        --------
Investing Activities
--------------------
Capital expenditures                                       -            (33.6)           (310.6)                -          (344.2)
Dry hole costs                                             -                -              (2.7)                -            (2.7)
Proceeds from sales of assets                              -                -               3.3                 -             3.3
Other investing activities                                 -              2.9             (14.7)                -           (11.8)
                                                    --------         --------          --------         ---------        --------
           Net Cash Used in Investing Activities           -            (30.7)           (324.7)                -          (355.4)
                                                    --------         --------          --------         ---------        --------

Financing Activities
--------------------
Issuance of long-term debt                                 -                -           1,209.3                 -         1,209.3
Repayment of long-term debt                                -                -          (1,047.9)                -        (1,047.9)
Increase (decrease) in intercompany
  notes payable                                         80.4            (13.9)            (66.5)                -               -
Issuance of common stock                                 1.7                -              (0.1)                -             1.6
Dividends paid                                         (45.1)               -                 -                 -           (45.1)
                                                    --------         --------          --------         ---------        --------
           Net Cash Provided by (Used in)
             Financing Activities                       37.0            (13.9)             94.8                 -           117.9
                                                    --------         --------          --------         ---------        --------

Effects of Exchange Rate Changes on Cash
   and Cash Equivalents                                    -                -               1.0                 -             1.0
                                                    --------         --------          --------         ---------        --------
Net Increase (Decrease) in Cash and Cash
   Equivalents                                             -             (1.1)             38.1                 -            37.0
Cash and Cash Equivalents at Beginning of
   Period                                                  -              1.1              90.2                 -            91.3
                                                    --------         --------          --------         ---------        --------
Cash and Cash Equivalents at End of Period          $      -         $      -          $  128.3         $       -        $  128.3
                                                    ========         ========          ========         =========        ========
</TABLE>


K.   Contingencies

     West Chicago, Illinois

     In 1973, the company's chemical  affiliate  (Chemical) closed a facility in
     West  Chicago,  Illinois,  that  processed  thorium  ores  for the  federal
     government and for certain commercial purposes.  Historical  operations had
     resulted in  low-level  radioactive  contamination  at the  facility and in
     surrounding  areas.  The original  processing  facility is regulated by the
     State of Illinois (the State),  and four vicinity  areas are  designated as
     Superfund sites on the National Priority List (NPL).

     Closed  Facility - In 1994,  Chemical,  the City of West Chicago (the City)
     and the State reached agreement on the initial phase of the decommissioning
     plan for the closed West  Chicago  facility,  and Chemical  began  shipping
     material  from the  site to a  licensed  permanent  disposal  facility.  In
     February  1997,  Chemical  executed an agreement with the City covering the
     terms and  conditions  for  completing  the final phase of  decommissioning
     work. The agreement  requires  Chemical to excavate  contaminated  soil and
     ship  it to a  licensed  disposal  facility,  monitor  and,  if  necessary,
     remediate  groundwater  and  restore  the  property.  The  State  indicated
     approval of the agreement and issued  license  amendments  authorizing  the
     work. Chemical expects most of the work to be completed by the end of 2003,
     leaving principally  surface restoration and groundwater  monitoring and/or
     remediation  for subsequent  years.  Surface  restoration is expected to be
     completed in 2004.  The long-term  scope,  duration and cost of groundwater
     monitoring  and/or  remediation are uncertain because it is not possible to
     reliably predict how groundwater conditions will be affected by the ongoing
     work.

     Vicinity Areas - The Environmental  Protection Agency (EPA) has listed four
     areas in the  vicinity of the closed West  Chicago  facility on the NPL and
     has designated  Chemical as a Potentially  Responsible Party (PRP) in these
     four areas. The EPA issued unilateral  administrative orders for two of the
     areas  (known  as the  Residential  Areas  and  Reed-Keppler  Park),  which
     required Chemical to conduct removal actions to excavate  contaminated soil
     and  ship  the  soil  to  a  licensed  disposal   facility.   Chemical  has
     substantially completed the work required by the two orders.

     The other two NPL  sites,  known as Kress  Creek and the  Sewage  Treatment
     Plant, are contiguous and involve low levels of insoluble thorium residues,
     principally in streambanks and streambed sediments,  virtually all within a
     floodway.  Chemical has  conducted a thorough  characterization  of the two
     sites  and  has  reached  conceptual   agreement  with  local  governmental
     authorities  on a cleanup plan,  which is currently  being reviewed by EPA.
     The cleanup plan will require  excavation of contaminated  soils and stream
     sediments,  shipment of excavated materials to a licensed disposal facility
     and  restoration of affected areas.  The agreement is conditioned  upon the
     resolution of certain matters,  including  agreements  regarding  potential
     natural resource damages and government  response costs, and is expected to
     be  incorporated  in a consent  decree that will  address  the  outstanding
     issues.  The  consent  decree must be  approved  by EPA,  the State,  local
     communities  and  Chemical  and then  entered  by a  federal  court.  It is
     expected  that the  necessary  parties  will approve the terms of a consent
     decree in 2003 and,  subject to court approval which is not expected before
     2004, the work will take about four years to complete.

     Financial  Reserves  - As of March 31,  2003,  the  company  had  remaining
     reserves of $101 million for costs related to West Chicago. Although actual
     costs may exceed current  estimates,  the amount of any increases cannot be
     reasonably estimated at this time. The amount of the reserve is not reduced
     by reimbursements expected from the federal government under Title X of the
     Energy Policy Act of 1992 (Title X) (discussed below).

     Government  Reimbursement  - Pursuant  to Title X, the U.S.  Department  of
     Energy (DOE) is obligated to reimburse Chemical for certain decommissioning
     and cleanup  costs  incurred in  connection  with the West Chicago sites in
     recognition  of the fact that about 55% of the  facility's  production  was
     dedicated  to  U.S.  government   contracts.   The  amount  authorized  for
     reimbursement  under Title X is $365  million plus  inflation  adjustments.
     That  amount is  expected  to cover  the  government's  full  share of West
     Chicago cleanup costs. Through March 31, 2003, Chemical had been reimbursed
     approximately $156 million under Title X. In April 2003,  Chemical received
     additional  reimbursements  totaling about $15 million,  bringing the total
     reimbursement received to date to about $171 million.

     Reimbursements under Title X are provided by congressional  appropriations.
     Historically,  congressional  appropriations have lagged Chemical's cleanup
     expenditures.  As of  March  31,  2003,  the  government's  share  of costs
     incurred  by  Chemical   but  not  yet   reimbursed   by  the  DOE  totaled
     approximately  $113  million,  which  amount was  reduced to $98 million in
     April 2003 following receipt of the additional  reimbursements totaling $15
     million.  The company  believes  receipt of the remaining  arrearage in due
     course following  additional  congressional  appropriations is probable and
     has reflected  the  arrearage as a receivable in the financial  statements.
     The company will  recognize  recovery of the  government's  share of future
     remediation costs for the West Chicago sites as Chemical incurs the costs.

     Henderson, Nevada

     In 1998,  Chemical decided to exit the ammonium  perchlorate  business.  At
     that time,  Chemical  curtailed  operations and began  preparation  for the
     shutdown of the associated production facilities in Henderson, Nevada, that
     produced ammonium  perchlorate and other related  products.  Manufacture of
     perchlorate compounds began at Henderson in 1945 in facilities owned by the
     U.S. government.  Production expanded significantly in 1953 with completion
     of a plant for manufacture of ammonium perchlorate.  The U.S. Navy paid for
     construction of this plant and took title to it in 1953. The Navy continued
     to  own  the  ammonium  perchlorate  plant  as  well  as  other  associated
     production  equipment at Henderson until 1962, when the plant was purchased
     by a  predecessor  of Chemical.  The ammonium  perchlorate  produced at the
     Henderson  facility was used  primarily in federal  government  defense and
     space  programs.  Perchlorate has been detected in nearby Lake Mead and the
     Colorado River.

     Chemical decided to exit the business in 1998 and began decommissioning the
     facility and remediating  associated perchlorate  contamination,  including
     surface  impoundments and groundwater.  In 1999 and 2001,  Chemical entered
     into consent orders with the Nevada Department of Environmental  Protection
     that require  Chemical to implement  both  interim and  long-term  remedial
     measures to capture and remove perchlorate from groundwater.

     In 1999,  Chemical  initiated the interim measures  required by the consent
     orders.   Chemical   subsequently   developed  and  installed  a  long-term
     remediation  system  based  on new  technology,  but  startup  difficulties
     prevented successful  commissioning of the long-term system. In April 2003,
     Chemical  determined that these startup  difficulties could not be overcome
     and initiated steps to install an alternate  long-term  remediation  system
     using a different  technology.  The interim system was enhanced and will be
     utilized until the successful  commissioning of the alternate  system.  The
     scope and duration of  groundwater  remediation  will be driven in the long
     term by  drinking  water  standards,  which to date have not been  formally
     established  by state or  federal  regulatory  authorities.  EPA and  other
     federal  and  state  agencies  currently  are  evaluating  the  health  and
     environmental  risks associated with perchlorate as part of the process for
     ultimately  setting a drinking  water  standard.  The  resolution  of these
     issues  could  materially  affect  the  scope,  duration  and  cost  of the
     long-term groundwater remediation that Chemical is required to perform.

     Financial  Reserves - A provision was taken in the first quarter of 2003 in
     the  amount  of $32  million  for the  construction  and  operation  of the
     alternate  long-term  remediation system and the continued operation of the
     interim system during the construction and startup period for the long-term
     system. As a result of this provision, the company's remaining reserves for
     Henderson  totaled $46 million as of March 31, 2003.  As noted  above,  the
     long-term scope, duration and cost of groundwater remediation are uncertain
     and,  therefore,  additional costs may be incurred in the future.  However,
     the amount of any additions cannot be reasonably estimated at this time.

     Government  Litigation - In 2000, Chemical initiated litigation against the
     United States seeking contribution for response costs. The suit, Kerr-McGee
     Chemical LLC v. United States of America, is pending in U.S. District Court
     for the District of Columbia.  The government  owned the plant in the early
     years of its operation and was the largest consumer of products produced at
     the plant. The litigation is in the early stages of discovery. Although the
     outcome of the litigation is uncertain,  Chemical  believes it is likely to
     recover a portion of its costs from the  government.  The amount and timing
     of any  recovery  cannot be estimated  at this time and,  accordingly,  the
     company  has not  recorded  a  receivable  or  otherwise  reflected  in the
     financial statements any potential recovery from the government.

     Insurance  -  In  2001,   Chemical   purchased  a  10-year,   $100  million
     environmental  cost cap insurance  policy for  groundwater  remediation  at
     Henderson.  The insurance  policy  provides  coverage  only after  Chemical
     exhausts a self-insured  retention of approximately  $61 million and covers
     only those  costs  incurred  to achieve a cleanup  level  specified  in the
     policy.  As noted above,  federal and state agencies have not established a
     drinking water standard and, therefore, it is possible that Chemical may be
     required to achieve a cleanup level more stringent than that covered by the
     policy.  If so, the amount  recoverable under the policy could be affected.
     Through  March 31, 2003,  Chemical has incurred  expenditures  of about $40
     million  that it  believes  can be applied to the  self-insured  retention.
     Additionally the company believes that about $21 million of the $46 million
     reserve remaining at March 31, 2003, will be creditable against and exhaust
     the  self-insured  retention  and  believes it is  probable  that about $21
     million will be recovered under the policy. Chemical has therefore recorded
     a  receivable  in the  amount of $21  million in its  financial  statements
     reflecting the recovery that is expected under the policy.

     Milwaukee, Wisconsin

     In 1976,  Chemical  closed a  wood-treatment  facility  it had  operated in
     Milwaukee,  Wisconsin.  Operations at the facility prior to its closure had
     resulted in the  contamination  of soil and  groundwater  at and around the
     site with creosote and other substances used in the wood-treatment process.
     In  1984,  EPA  designated  the  Milwaukee  wood-treatment  facility  as  a
     Superfund   site   under   the   Comprehensive    Environmental   Response,
     Compensation,  and Liability Act of 1980  (CERCLA),  listed the site on the
     NPL and named  Chemical a PRP.  Chemical  executed a consent decree in 1991
     that required it to perform soil and  groundwater  remediation at and below
     the  former  wood-treatment  area and to address a  tributary  creek of the
     Menominee   River  that  had  become   contaminated  as  a  result  of  the
     wood-treatment  operations.  Actual remedial activities were deferred until
     after  the  decree  was  finally  entered  in 1996 by a  federal  court  in
     Milwaukee.

     Groundwater treatment, using a pump-and-treat system, was initiated in 1996
     to  remediate  groundwater  contamination  below and in the vicinity of the
     former  wood-treatment  area.  It is not  possible to reliably  predict how
     groundwater conditions will be affected by the ongoing soil remediation and
     groundwater  treatment;  therefore,  it is not known  how long  groundwater
     treatment will  continue.  Soil cleanup of the former  wood-treatment  area
     began in 2000 and was completed in 2002. Also in 2002, terms for addressing
     the tributary  creek were agreed upon with EPA,  after which Chemical began
     the  implementation  of a remedy to  reroute  the  creek  and to  remediate
     associated sediment and stream bank soils. It is expected that the soil and
     sediment remediation will take about four more years.

     As of March 31, 2003, the company had remaining reserves of $12 million for
     the costs of the remediation  work described  above.  Although actual costs
     may  exceed  current  estimates,  the  amount  of any  increases  cannot be
     reasonably estimated at this time.

     Cushing, Oklahoma

     In 1972,  an  affiliate of the company  closed a petroleum  refinery it had
     operated  near  Cushing,  Oklahoma.  Prior to  closing  the  refinery,  the
     affiliate also had produced  uranium and thorium fuel and metal at the site
     pursuant to licenses  issued by the Atomic  Energy  Commission  (AEC).  The
     uranium  and  thorium  operations  commenced  in 1962 and were shut down in
     1966, at which time the affiliate decommissioned and cleaned up the portion
     of the facility  related to uranium and thorium  operations  to  applicable
     standards.  The refinery also was cleaned up to applicable standards at the
     time of closing.

     Subsequent  regulatory  changes required more extensive  remediation at the
     site. In 1990,  the  affiliate  entered into a consent  agreement  with the
     State of Oklahoma to  investigate  the site and take  appropriate  remedial
     actions  related to petroleum  refining and uranium and thorium  residuals.
     Remediation of hydrocarbon  contamination  is being  performed under a plan
     approved  by  the  Oklahoma  Department  of  Environmental   Quality.  Soil
     remediation to address  hydrocarbon  contamination  is expected to continue
     for about four more years.  The scope of any groundwater  remediation  that
     may be required is not known. Additionally, in 1993, the affiliate received
     a decommissioning license from the Nuclear Regulatory Commission (NRC), the
     successor  to AEC's  licensing  authority,  to perform  certain  cleanup of
     uranium and thorium  residuals.  To avoid  anticipated  future increases in
     disposal costs,  much of the uranium and thorium  residuals were cleaned up
     and disposed in 2002 after  obtaining NRC approvals to conduct soil removal
     without first completing the site characterization,  work that is necessary
     for  identifying  the  scope  of  required  cleanup   activities.   Because
     excavation  preceded  characterization,  contamination  that  had not  been
     previously  identified  was  encountered  and removed  during the expedited
     excavation and disposal work.  Characterization  and  verification  work is
     ongoing to confirm whether the work undertaken in 2002 adequately addressed
     the  contaminated  areas.  Additional  excavation  may be  required  in the
     future,  depending on the results of the  characterization and verification
     work.

     As of March 31, 2003, the company had remaining reserves of $20 million for
     the costs of the ongoing  remediation  and  decommissioning  work described
     above.  Although actual costs may exceed current  estimates,  the amount of
     any increases cannot be reasonably estimated at this time.

     New Jersey Wood-Treatment Site

     In 1999,  EPA  notified  Chemical  and its  parent  company  that they were
     potentially  responsible  parties  at a former  wood-treatment  site in New
     Jersey that has been listed by EPA as a Superfund  site. At that time,  the
     company knew little  about the site as neither  Chemical nor its parent had
     ever owned or operated  the site.  A  predecessor  of Chemical had been the
     sole stockholder of a company that owned and operated the site. The company
     that owned the site already had been  dissolved  and the site had been sold
     to a  third  party  before  Chemical  became  affiliated  with  the  former
     stockholder in 1964. EPA has preliminarily estimated that cleanup costs may
     reach $120 million or more.

     There are substantial uncertainties about Chemical's responsibility for the
     site, and Chemical is evaluating  possible defenses to any claim by EPA for
     response  costs.  EPA has not  articulated  the  factual and legal basis on
     which EPA  notified  Chemical  and its  parent  that  they are  potentially
     responsible  parties.  The EPA  notification  may be based  on a  successor
     liability  theory  premised  on the  1964  transaction  pursuant  to  which
     Chemical became affiliated with the former  stockholder of the company that
     had owned and operated the site. Based on available  historical records, it
     is uncertain  whether and, if so, under what terms, the former  stockholder
     assumed liabilities of the dissolved company. Moreover, as noted above, the
     site had been sold to a third party and the company that owned and operated
     the site had been dissolved  before  Chemical  became  affiliated with that
     company's  stockholder.  In addition,  there appear to be other potentially
     responsible parties,  though it is not known whether the other parties have
     received  notification from EPA. EPA has not ordered Chemical or its parent
     to perform work at the site and is instead  performing the work itself. The
     company has not  recorded a reserve  for the site as it is not  possible to
     reliably  estimate whatever  liability  Chemical or its parent may have for
     the cleanup because of the  aforementioned  uncertainties and the existence
     of other potentially responsible parties.

     Forest Products Litigation

     Primary  Lawsuits  -  Between  1999  and  2001,   Kerr-McGee  Chemical  LLC
     (Chemical) and its parent company were named in 22 lawsuits in three states
     (Mississippi,  Louisiana and  Pennsylvania)  in connection with present and
     former forest  products  operations  located in those states.  The lawsuits
     seek recovery  under a variety of common law and statutory  legal  theories
     for personal  injuries and property damages allegedly caused by exposure to
     and/or release of creosote and other substances used in the  wood-treatment
     process.  Some of the  lawsuits are filed on behalf of  specifically  named
     individual  plaintiffs,  while  others  purport  to be filed on  behalf  of
     classes of allegedly similarly situated plaintiffs.

     Seven of the 22 cases were filed in  Mississippi  and relate to  Chemical's
     Columbus,  Mississippi,  wood-treatment plant. Two of the Mississippi cases
     are pending in the U.S. District Court for the Northern  District:  Andrews
     v. Kerr-McGee  (filed September 8, 1999) and Bachelder v. Kerr-McGee (filed
     March 7, 2001).  Three of the Mississippi  cases are pending in the Circuit
     Court of Lowndes County:  Spirit of Prayer v.  Kerr-McGee  (filed March 16,
     2000),  Burgin v.  Kerr-McGee  (filed  March 6, 2001) and  Maranatha  Faith
     Center v.  Kerr-McGee  (filed  February 18, 2000).  Two of the  Mississippi
     cases are pending in Circuit Court of Hinds County:  Jamison v.  Kerr-McGee
     (filed February 18, 2000) and Cockrell v. Kerr-McGee (filed March 6, 2001).

     Seven of the 22  cases  were  filed in  Louisiana  and  relate  to a former
     wood-treatment  plant that was located in Bossier City,  Louisiana.  One of
     the Louisiana  cases is pending in the U.S.  District Court for the Western
     District: Shirlean Taylor, et al. v. Kerr-McGee (filed June 15, 2000). Five
     of the  Louisiana  cases are  pending  in the U.S.  District  Court for the
     Western  District,  subject  to remand to 26th  District  Court of  Bossier
     Parish, and all were filed on October 25, 2001: Brenda Sue Adams, et al. v.
     Kerr-McGee;  J.C. Adams, et al. v. Kerr-McGee;  Linda Paul Anderson, et al.
     v.  Kerr-McGee;  Shirley Marie  Austin,  et al. v.  Kerr-McGee;  and Ronald
     Donald Bailey, et al. v. Kerr-McGee.  One of the Louisiana cases is pending
     in the 26th  District  Court of  Bossier  Parish:  T. J.  Allen,  et al. v.
     Kerr-McGee (filed October 25, 2001).

     Eight of the 22 cases  were  filed in the  Court of Common  Pleas,  Luzerne
     County, Pennsylvania, and relate to a closed wood-treatment plant in Avoca,
     Pennsylvania.  Five of the  Pennsylvania  cases were  filed on October  23,
     2001: Mary Beth Marriggi, et al. v. Kerr-McGee;  Delores Kubasko, et al. v.
     Kerr-McGee;  Barbara Fromet, et al. v. Kerr-McGee; Ann Culp, et al. v. Kerr
     McGee; and Robert Battista, et al. v. Kerr-McGee. Three of the Pennsylvania
     cases  were  filed  on  November  15,  2001:  Stacey  Berkoski,  et al.  v.
     Kerr-McGee;  Kenneth Battista, et al. v. Kerr-McGee;  and James Butcher, et
     al. v. Kerr-McGee.

     The  parties  have  executed   agreements  to  settle  five  of  the  seven
     Mississippi  cases and all seven of the  Louisiana  cases.  The  settlement
     agreements  require  Chemical  to pay up to $56  million for the benefit of
     about 9,400 identified  claimants who are eligible under the agreements and
     who sign releases. Of that potential maximum of $56 million,  approximately
     $49 million had been paid as of March 31, 2003. In addition, the agreements
     require  Chemical to pay up to an additional  $11 million from any recovery
     in certain insurance  litigation that Chemical and its parent filed against
     their insurance  carriers (see below). The agreements also contemplated two
     class-action  settlement  funds - one in Mississippi and one in Louisiana -
     for the  benefit  of a class  of  residents  who  did not  sign  individual
     releases  and who did not choose to opt out of the class  settlements.  The
     parties moved forward with the class  settlement in Mississippi  but agreed
     not to pursue a  class-action  settlement  in  Louisiana.  Chemical  may be
     required  to  pay up to a  maximum  of  $7.5  million  to  the  Mississippi
     class-action  settlement fund. The precise amount of Chemical's obligations
     under the  agreements  depends  on the  number of  plaintiffs  who sign and
     deliver valid  individual  releases,  the number of the  Mississippi  class
     members who submit proof of claim forms and the number of class members who
     opt out of the class.  Further payments  pursuant to the settlements of the
     nonclass-action cases are subject to a number of conditions,  including the
     signing and delivery of releases by named  plaintiffs and court approval of
     various matters such as minors'  settlements.  The class-action  settlement
     agreement,  including certification of the settlement class and approval of
     the class  settlement,  requires court approval.  On February 21, 2003, the
     federal court in Mississippi  approved the  Mississippi  class  settlement.
     Subsequently,  two members of the class filed a notice  appealing the order
     approving the class settlement.

     Although  the  settlement  agreements  are  expected  to resolve all of the
     Louisiana  lawsuits and  substantially  all of the  Columbus,  Mississippi,
     lawsuits  described  above,  the settlements will not resolve the claims of
     plaintiffs  who do not sign  releases,  the claims of any class members who
     opt out of the class  settlement  or any claims by class  members  that may
     arise in the future  for  currently  unmanifested  personal  injuries.  The
     settlements  also do not cover the Maranatha  Faith Center v. Kerr-McGee or
     the Jamison v. Kerr-McGee cases which, together,  involve 27 plaintiffs who
     allege  property damage and/or personal injury arising out of the Columbus,
     Mississippi,  operations or the eight cases in Pennsylvania,  which involve
     55 named  plaintiffs  and an  undetermined  number of  allegedly  similarly
     situated  persons.  The company is  vigorously  defending the two remaining
     Mississippi  lawsuits and the Pennsylvania cases, pending any settlement of
     those cases.

     The  implementation  of the  settlements is progressing.  Of  approximately
     6,100 identified  claimants in Columbus,  Mississippi,  approximately 5,300
     claimants  have  delivered  releases.  Of  approximately  3,300  identified
     claimants  in  Louisiana,  approximately  3,000  claimants  have  delivered
     releases.  Through  March 31,  2003,  Chemical had paid  approximately  $49
     million pursuant to the settlement  agreements to Mississippi and Louisiana
     plaintiffs who signed releases. No payments will be made to the Mississippi
     class  settlement  fund unless and until the court has  certified the class
     and approved the class settlement.

     Insurance  Litigation - In 2001, Chemical and its parent company filed suit
     against  insurance  carriers in the Superior Court of Somerset County,  New
     Jersey.  The suit,  Kerr-McGee  Corporation and Kerr-McGee  Chemical LLC v.
     Hartford Accident & Indemnity Company and Liberty Mutual Insurance Company,
     is to recover  losses  associated  with certain  environmental  litigation,
     agency  proceedings  and  the  Pennsylvania   forest  products   litigation
     described  above.  Chemical  and its  parent  believe  that they have valid
     claims  against  their  insurers;  however,  the prospects for recovery are
     uncertain and the litigation is in its early stages.  Further, a portion of
     any  recovery  will  be  paid  to the  plaintiffs  in the  forest  products
     litigation  as  a  part  of  the  settlement  agreements  described  above.
     Accordingly,  the  company  has not  recorded  a  receivable  or  otherwise
     reflected in its  financial  statements  any  potential  recovery  from the
     insurance litigation.

     Financial  Reserves - The  company  previously  established  a $70  million
     reserve in  connection  with the forest  products  litigation.  The reserve
     included the estimated  amounts owed under the settlements  described above
     and an estimated  amount for the  remaining two  Mississippi  cases and the
     eight Pennsylvania cases. As noted above,  through March 31, 2003, Chemical
     had paid  approximately $49 million pursuant to the settlement  agreements.
     As of March 31,  2003,  the  company's  remaining  reserves  for the forest
     products  litigation totaled $21 million.  The company believes the reserve
     adequately  provides  for the  potential  liability  associated  with these
     matters;  however,  there  is no  assurance  that the  company  will not be
     required  to adjust  the  reserve  in the  future in light of the  inherent
     uncertainties associated with litigation.

     Follow-on  Litigation - A class-action  settlement sometimes results in the
     filing  of  additional   lawsuits  alleging  facts  and  causes  of  action
     substantially  similar  to those  alleged  in the  case(s)  covered  by the
     settlement.  In addition, in the fall of 2002, the Mississippi  legislature
     enacted a tort reform law that became  effective  for lawsuits  filed on or
     after  January 1, 2003.  Among other  things,  the new law limits  punitive
     damages and makes  other  changes  intended to help ensure  fairness in the
     Mississippi civil justice system.  The tort reform law resulted in numerous
     lawsuits being filed in Mississippi  immediately  before the effective date
     of the new law. On December 31, 2002, approximately 245 lawsuits were filed
     against  Chemical  and its  affiliates  on  behalf of  approximately  4,598
     claimants in connection with Chemical's Columbus, Mississippi,  operations.
     All of the  lawsuits  were filed in the  Circuit  Court of Lowndes  County,
     Mississippi,  Case Nos. 2002-0302 CV1 through 2002-0543 CV1; 2002-0549 CV1;
     2002-0550 CV1; 2002-0294 CV1 and 2002-0278 CV1. Chemical and its affiliates
     believe the lawsuits are without substantial merit and intend to vigorously
     defend  the  lawsuits.  The  company  has not  provided  a reserve  for the
     lawsuits because it cannot reasonably  determine the probability of a loss,
     and the amount of loss, if any, cannot be reasonably estimated.

     Hattiesburg  Litigation - On December 31, 2002, a lawsuit was filed against
     Chemical in the Circuit Court of Forest County,  Mississippi.  The lawsuit,
     Betty Bolton et al. v. Kerr-McGee Chemical Corporation, names approximately
     975  plaintiffs  and relates to a former  wood-treatment  plant  located in
     Hattiesburg,  Mississippi.  The lawsuit  seeks  recovery on legal  theories
     substantially  similar to those advanced in the forest products  litigation
     described above.

     There are substantial  uncertainties  about Chemical's  responsibility  for
     operations at the former  facility.  A predecessor of Chemical had been the
     sole  stockholder  of a company that owned and operated the  facility.  The
     company that had operated the facility  already had been  dissolved and its
     leasehold  interest  in the  site  had been  sold to a third  party  before
     Chemical became  affiliated with the former  stockholder in 1964.  Based on
     available  historical  records,  it is uncertain  whether and, if so, under
     what terms,  the former  stockholder  assumed  liabilities of the dissolved
     company.  However,  Chemical is currently  discussing the  possibility of a
     settlement with the plaintiffs.  The company has not provided a reserve for
     the litigation because it cannot reasonably  determine the probability of a
     loss, and the amount of a loss, if any, cannot be reasonably estimated.

     Other Matters

     The  company  and/or its  affiliates  are  parties to a number of legal and
     administrative  proceedings  involving  environmental  and/or other matters
     pending in various courts or agencies. These include proceedings associated
     with  facilities  currently or  previously  owned,  operated or used by the
     company's  affiliates  and/or their  predecessors,  and include  claims for
     personal  injuries and property  damages.  Current and former operations of
     the company's affiliates also involve management of regulated materials and
     are subject to various  environmental laws and regulations.  These laws and
     regulations  will  obligate the  company's  affiliates  to clean up various
     sites at which  petroleum  and  other  hydrocarbons,  chemicals,  low-level
     radioactive  substances  and/or other  materials  have been  disposed of or
     released.  Some of these sites have been designated  Superfund sites by EPA
     pursuant  to CERCLA.  Similar  environmental  regulations  exist in foreign
     countries in which the company's affiliates operate.

     The company  provides  for costs  related to  contingencies  when a loss is
     probable and the amount is reasonably estimable. It is not possible for the
     company  to  reliably   estimate  the  amount  and  timing  of  all  future
     expenditures   related  to  environmental   and  legal  matters  and  other
     contingencies because, among other reasons:

          o some sites are in the early stages of investigation, and other sites
            may be identified in the future;

          o cleanup  requirements  are  difficult  to  predict  at  sites  where
            remedial  investigations  have not been completed or final decisions
            have not been made regarding cleanup  requirements,  technologies or
            other factors that bear on cleanup costs;

          o environmental  laws frequently impose joint and several liability on
            all  potentially  responsible  parties,  and it can be  difficult to
            determine  the number and financial  condition of other  potentially
            responsible  parties and their respective  shares of  responsibility
            for cleanup costs;

          o environmental  laws and regulations are  continually  changing,  and
            court proceedings are inherently uncertain;

          o some  legal  matters  are in the early  stages of  investigation  or
            proceeding or their outcomes  otherwise may be difficult to predict,
            and other legal matters may be identified in the future;

          o unanticipated  construction  problems  and  weather  conditions  can
            hinder the completion of environmental remediation;

          o the  inability  to  implement  a planned  engineering  design or use
            planned technologies and excavation methods may require revisions to
            the design of  remediation  measures,  which delay  remediation  and
            increase costs; and

          o the  identification  of additional areas or volumes of contamination
            and changes in costs of labor,  equipment  and  technology  generate
            corresponding changes in environmental remediation costs.

     As of March 31, 2003,  the company had reserves  totaling  $281 million for
     cleaning up and remediating  environmental sites, reflecting the reasonably
     estimable costs for addressing these sites.  This includes $101 million for
     the West Chicago sites,  $46 million for the Henderson,  Nevada,  site, and
     $44 million  for forest  products  sites.  Cumulative  expenditures  at all
     environmental  sites through March 31, 2003,  total $1.038 billion  (before
     considering government reimbursements). Additionally, as of March 31, 2003,
     the company had litigation reserves totaling  approximately $59 million for
     the reasonably  estimable losses associated with litigation.  This includes
     $21 million for the forest products litigation described above.  Management
     believes,  after  consultation  with general  counsel,  that  currently the
     company has  reserved  adequately  for the  reasonably  estimable  costs of
     environmental  matters and other contingencies.  However,  additions to the
     reserves may be required as additional information is obtained that enables
     the company to better estimate its  liabilities,  including  liabilities at
     sites now under review, though the company cannot now reliably estimate the
     amount of future additions to the reserves.


L.   Business Segments

     Following  is a  summary  of sales  and  operating  profit  for each of the
     company's business segments for the first quarter of 2003 and 2002.

                                                             Three Months Ended
                                                                 March 31,
                                                             ------------------
     (Millions of dollars)                                 2003            2002
     --------------------------------------------------------------------------

    Sales
      Exploration and production                       $  823.5         $ 534.6
      Chemicals - Pigment                                 253.3           216.5
      Chemicals - Other                                    50.3            47.4
                                                       --------         -------
                                                        1,127.1           798.5
      All other                                              .1               -
                                                       --------         -------
          Total Sales                                  $1,127.2         $ 798.5
                                                       ========         =======

    Operating Profit (Loss)
      Exploration and production                       $  272.2         $ 118.7
      Chemicals - Pigment                                   7.4           (11.5)
      Chemicals - Other                                   (10.0)            3.6
                                                       --------         -------
          Total Operating Profit                          269.6           110.8

    Other Expense                                         (99.5)         (114.3)
                                                       --------         -------

    Income (Loss) from Continuing Operations
      before Income Taxes                                 170.1            (3.5)
    Benefit (Provision) for Income Taxes                  (65.9)            1.8
                                                       --------         -------
    Income (Loss) from Continuing Operations              104.2            (1.7)

    Discontinued Operations, Net of Income
      Taxes                                                  .4             7.2

    Cumulative Effect of Change in Accounting
      Principle, Net of Income Taxes                      (34.7)              -
                                                       --------         -------
     Net Income                                        $   69.9         $   5.5
                                                       ========         =======


     Item 2.  Management's  Discussion  and Analysis of Financial  Condition and
              Results of Operations.

     Comparison of 2003 Results with 2002 Results

     First-quarter  2003  income  from  continuing   operations  totaled  $104.2
     million, compared with a loss of $1.7 million for the same 2002 period. Net
     income for the 2003 first  quarter was $69.9  million,  compared  with 2002
     first-quarter net income of $5.5 million.

     First-quarter  2003  operating  profit was $269.6  million,  compared  with
     first-quarter  2002 operating profit of $110.8 million,  for an increase of
     $158.8  million  between  periods.  Higher  operating  profit from both the
     exploration and production and chemical - pigment  operating units resulted
     primarily from higher realized sales prices for both operations,  partially
     offset by higher dry hole costs. The combined  increase in operating profit
     of $172.4 million for the exploration and production and pigment operations
     was partially  offset by a $13.6 million  decrease in operating profit from
     the chemical - other operating unit.  These variances are discussed in more
     detail in the segment discussion that follows.

     The first-quarter  2003 other expense totaled $99.5 million,  compared with
     expense of $114.3  million in the same 2002 period.  The decrease is due in
     part to an increase of $9.7 million in income from trading  securities  and
     nonoperating derivative financial instruments, combined with lower interest
     expense net of interest  income of $6.2  million,  lower losses from equity
     affiliates of $5.0 million, lower losses on asset disposals of $3.6 million
     and an  increase in foreign  currency  transaction  gains of $2.3  million,
     partially offset by higher corporate legal and environmental  costs of $9.7
     million and higher  general  administration  costs of $5.8  million.  Lower
     average  outstanding  debt  balances  during  the first  quarter of 2003 as
     compared with the prior year  resulted in the $6.2 million  decrease in net
     interest expense between periods. The losses from equity affiliates in 2003
     and 2002 are primarily due to losses from AVESTOR,  a joint venture  formed
     in 2001 to produce a revolutionary lithium-metal-polymer battery.

     The income tax  expense  for the first  quarter of 2003 was $65.9  million,
     compared  with an  income  tax  benefit  of $1.8  million  in the same 2002
     period.  The change was primarily due to the company  generating  income in
     the  2003  first  quarter  versus  a loss in the  comparable  2002  period.
     Additionally,  on July 24, 2002, the United Kingdom government made certain
     changes to its existing tax laws. Under one of these changes, companies are
     required to pay a supplementary corporate tax charge of 10% on profits from
     their U.K. oil and gas  production in addition to the  previously  required
     30%  corporate  tax on  these  profits.  The  impact  of this  rate  change
     increased the company's  first-quarter  2003  provision for income taxes by
     $11.2 million.  The U.K.  government also  accelerated tax depreciation for
     capital  investments in U.K.  upstream  activities and abolished  North Sea
     royalty effective  January 1, 2003,  neither of which is expected to have a
     material effect on the company's earnings.

     Segment Operations

     Exploration and Production -

     Operating profit for the first quarter of 2003 was $272.2 million, compared
     with $118.7  million for the same 2002  period.  The  increase in operating
     profit was primarily due to higher  average  realized crude oil and natural
     gas sales  prices and lower  production  costs,  partially  offset by lower
     crude oil sales volumes and higher exploration  expense resulting primarily
     from an  increase  in dry hole  costs.  Realized  crude oil and natural gas
     sales  prices  (including  the effects of hedging)  increased  42% and 86%,
     respectively, over 2002 levels.

     Tight crude oil and natural gas  supplies  and fear of the impact of war in
     Iraq caused oil and gas prices to  increase  dramatically  over  prior-year
     levels.  However,  production  output level  adjustments  were made by OPEC
     before the war in Iraq to prevent a possible  shortage in crude oil supply.
     The result of these output  increases  combined with the short  duration of
     the war have led to a potential over-supply of crude oil, causing prices to
     begin to decline from the first-quarter 2003 levels. As a result,  OPEC has
     announced  additional  plans to adjust  its  output  levels in an effort to
     stabilize oil prices around the $25-per-barrel mark. In contrast,  the U.S.
     natural gas sector  continues to  experience  tight market  conditions  and
     strong prices as storage levels reached  historically low levels during the
     2003 first quarter.

     Total revenues  increased $288.9 million,  from $534.6 million for the 2002
     first  quarter to $823.5 for the same 2003 period.  The  increase  resulted
     from higher oil and gas prices of $269.6 million,  higher natural gas sales
     volumes of $8.3  million  and an increase  in other  operating  revenues of
     $70.8 million,  partially  offset by lower crude oil sales volumes of $59.8
     million.  The increase in other operating revenues is primarily a result of
     increased sales of third party oil and gas in the Rocky Mountain region and
     the U.K. The decrease in crude oil sales volumes  occurred in Ecuador,  the
     U.S.  onshore  and U.K.  North  Sea  regions  and is  primarily  due to the
     divestiture  of high-cost  properties  in 2002 and the 2003 first  quarter,
     partially offset by higher oil sales in the Gulf of Mexico.

     Operating  costs totaled  $551.3  million for the first quarter of 2003 and
     $415.9  million  for the first  quarter of 2002,  for an increase of $135.4
     million  between  periods.  The  increase  resulted  primarily  from higher
     exploration expense of $108.6 million and higher product, gas-gathering and
     pipeline  costs of $67.3  million,  offset by lower oil and gas  production
     costs of $20.4  million  and  lower  depreciation  and  depletion  of $28.9
     million. Of the total increase in exploration  expense,  $101.9 million was
     attributable  to higher  dry hole  costs.  The $67.3  million  increase  in
     product,  gas-gathering  and pipeline  costs is directly  correlated to the
     $70.8 million  increase in other operating  revenues  discussed  above, and
     resulted  primarily  from higher  product  costs for natural gas  marketing
     activities combined with higher volumes.  The decreases in production costs
     and  depreciation  and depletion  expense  resulted  from lower  production
     volumes  between  periods.  The decrease in production  costs also reflects
     improvement in the company's cost structure  resulting from the divestiture
     of  certain  high-cost  properties  over  the  past  year.  These  property
     divestitures  were the primary  cause for the drop in crude oil  production
     volumes from 204,800  barrels per day in the 2002 first  quarter to 165,400
     barrels  per day in the 2003 first  quarter.  Higher  crude oil  production
     volumes  from new  projects  in the Gulf of  Mexico  partially  offset  the
     decrease between periods.

     The following  table shows the company's  average crude oil and natural gas
     sales prices and volumes for the first quarter of 2003 and 2002.

                                                             Three Months Ended
                                                                 March 31,
                                                             ------------------
                                                           2003            2002
     --------------------------------------------------------------------------

     Crude oil and condensate sales (thousands of bbls/day)
       Domestic
           Offshore                                        59.7             53.3
           Onshore                                         21.3             29.1
       North Sea                                           81.7            111.1
       Other international                                  4.3              8.8
                                                         ------           ------
                 Total continuing operations              167.0            202.3
       Discontinued operations                              2.4              9.1
                                                         ------           ------
                 Total                                    169.4            211.4
                                                         ======           ======

     Average crude oil sales price (per barrel) (a)
       Domestic
           Offshore                                      $26.29           $18.22
           Onshore                                        27.57            18.32
       North Sea                                          27.09            19.60
       Other international                                31.12            16.93
       Average for continuing operations                  26.97            18.94
       Discontinued operations                           $24.47           $18.23

     Natural gas sold (MMcf/day)
       Domestic
           Offshore                                         286              244
           Onshore                                          369              383
       North Sea                                            106              101
                                                         ------           ------
                 Total                                      761              728
                                                         ======           ======

     Average natural gas sales price (per Mcf) (a)
       Domestic
           Offshore                                       $5.38            $2.48
           Onshore                                         4.59             2.48
       North Sea                                           3.35             2.83
       Average                                            $4.71            $2.53

     (a)  The effects of the company's  hedging program during the first quarter
          of 2003 are  included  in the  average  sales  prices  shown above and
          reduced  the  average  crude  oil and  condensate  sales  prices  from
          continuing operations by $4.08 per barrel, and the average natural gas
          sales prices by $.81 per Mcf.

     The  company  continues  to review its options  with  respect to the Leadon
     field, which was impaired to fair market value during the fourth quarter of
     2002 due to field performance issues. The company's options include sale of
     the  field,  tieback  of wells to other  fixed  infrastructure  in the area
     (allowing the company to monetize the Leadon floating facility by marketing
     it as a development option for another  discovery) or continued  production
     from the  field  until  existing  wells  are  fully  depleted;  however,  a
     long-term solution has not yet been determined.

     Chemicals - Pigment

     Operating profit for the first quarter of 2003 was $7.4 million on revenues
     of $253.3  million,  improving  from an operating  loss of $11.5 million on
     revenues  of  $216.5  million  for the same  2002  period.  Total  revenues
     increased $36.8 million,  or 17%, between  periods,  of which $27.4 million
     was due to higher  average  sales  prices and $9.4  million  resulted  from
     higher sales  volumes as compared with the prior year.  The higher  average
     sales prices were driven by strengthening  customer demand, which supported
     price increases for pigment products throughout 2002 and into 2003. Pigment
     sales volumes  increased  6,300 tonnes in the 2003 first  quarter  compared
     with the prior-year quarter.

     The $18.9  million  increase in operating  profit in the 2003 first quarter
     was  primarily  due to higher  sales  prices and  volumes,  which  together
     increased operating profit by $21.4 million between periods.  Lower average
     product costs during the 2003 first quarter also increased operating profit
     by $6.7  million over the prior year.  These  improvements  were  partially
     offset  by a $7.4  million  provision  for  the  closure  of the  company's
     synthetic rutile plant in Mobile, Alabama.

     In  January  2003,  Kerr-McGee  announced  its plans to close  the  Mobile,
     Alabama,  facility by year-end  2003, as part of the  company's  continuous
     effort to enhance operating  profitability.  The Mobile plant processes and
     supplies a portion of the  feedstock  for the  company's  titanium  dioxide
     pigment plants in the United States; however,  through Kerr-McGee's ongoing
     supply chain initiatives,  feedstock can now be purchased more economically
     than it can be  manufactured  at the  Mobile  plant.  As a result  of these
     steps, the company anticipates significant savings.

     Chemicals - Other

     Operating  loss in the 2003 first  quarter was $10.0 million on revenues of
     $50.3 million,  compared with operating  profit of $3.6 million on revenues
     of $47.4 million in the same 2002 period.  The decrease in operating profit
     was primarily due to a net environmental  provision of $11.0 million in the
     first quarter of 2003 for  remediation of ammonium  perchlorate  related to
     the company's Henderson, Nevada, operations (see Note K).

     Financial Condition

     At March 31,  2003,  the  company's  net  working  capital  position  was a
     negative  $235.5  million,  compared with a positive $87.4 million at March
     31, 2002,  and a negative  $319.7 million at December 31, 2002. The current
     ratio was .8 to 1 at both March 31, 2003 and December  31,  2002,  compared
     with 1.1 to 1 at March 31,  2002.  The  negative  working  capital  at both
     December  31,  2002 and March 31,  2003,  was not  indicative  of a lack of
     liquidity,  as the company  maintains  sufficient  current assets to settle
     current  liabilities  when due.  Additionally,  the company has  sufficient
     unused lines of credit and revolving credit facilities, as discussed below.
     Current  asset  balances  are  minimized  as  one  way to  finance  capital
     expenditures and lower borrowing costs.

     The company's percentage of net debt (debt less cash) to capitalization was
     59% at March 31,  2003,  compared  with 60% at both  December  31, 2002 and
     March 31, 2002.  The decrease  from December 31, 2002,  resulted  primarily
     from  reduced  debt  balances  combined  with an increase in  stockholders'
     equity for the period. The company had unused lines of credit and revolving
     credit facilities of $1.399 billion at March 31, 2003. Of this amount, $870
     million can be used to support  commercial  paper  borrowings of Kerr-McGee
     Credit  LLC and $490  million  can be used to support  European  commercial
     paper  borrowings  of  Kerr-McGee  (G.B.) PLC,  Kerr-McGee  Chemical  GmbH,
     Kerr-McGee  Pigments  (Holland)  B.V.  and  Kerr-McGee  International  ApS.
     Currently the size of the company's  commercial  paper program  totals $1.2
     billion, which can be issued based on market conditions.

     As of December 31, 2002, the company's  senior unsecured debt was rated BBB
     by Standard & Poor's and Fitch and the  equivalent  by Moody's.  During May
     2003,  Moody's  downgraded the company's senior unsecured debt from Baa2 to
     Baa3 and downgraded the company's commercial paper from Prime-2 to Prime-3.
     As a result of the Moody's  downgrade,  the company's  borrowing  costs may
     increase,  and the  company  may  experience  a  different  mix of investor
     interest  in its debt  and/or  amounts  they are  individually  willing  to
     invest.  The  company  believes  that it has the ability to provide for its
     operational needs and its long- and short-term capital programs through its
     operating cash flow (partially protected by the company's hedging program),
     borrowing capacity and ability to raise capital. Should operating cash flow
     decline,  the company may reduce its capital expenditures  program,  borrow
     under its commercial  paper program  and/or  consider  selective  long-term
     borrowings or equity issuances.  Kerr-McGee's commercial paper programs are
     backed by the revolving credit facilities currently in place.

     The company  issued 5 1/2% notes  exchangeable  for common  stock (DECS) in
     August 1999,  which allow each holder to receive  between .85 and 1.0 share
     of Devon common stock or, at the company's  option, an equivalent amount of
     cash at maturity in August 2004.  Embedded  options in the DECS provide the
     company a floor price on Devon's  common stock of $33.19 per share (the put
     option). The company also retains the right to 15% of the shares if Devon's
     stock price is greater  than $39.16 per share (the DECS holders have a call
     option on 85% of the shares). Using the Black-Scholes  valuation model, the
     company  recognizes  in Other Income  (Loss) any gains or losses  resulting
     from  changes in the fair value of the put and call  options.  At March 31,
     2002,  the fair values of the  embedded  put and call  options were nil and
     $82.8 million,  respectively.  On December 31, 2002, the fair values of the
     embedded  put and call  options  were nil and $66.6  million  respectively.
     During the first quarters of 2003 and 2002, the company  recorded losses of
     $16.2  million and $74.3  million,  respectively,  in Other  Income for the
     changes in the fair values of the put and call options.  The fluctuation in
     the  value  of the put  and  call  derivative  financial  instruments  will
     generally  offset the increase or decease in the market value of 85% of the
     Devon stock owned by the company.  The fair value of the 8.4 million shares
     of Devon  classified as trading  securities was $406.8 million at March 31,
     2003, and $387.2 million at December 31, 2002. During the first quarters of
     2003 and 2002, the company  recorded  unrealized gains of $19.6 million and
     $81.2 million,  respectively, in Other Income for the changes in fair value
     of the Devon shares  classified as trading.  The remaining 15% of the Devon
     shares are  accounted  for as  available-for-sale  securities in accordance
     with  FAS 115,  "Accounting  for  Certain  Investments  in Debt and  Equity
     Securities,"  with changes in market value  recorded in  accumulated  other
     comprehensive  income.  The fair value of the Devon  shares  classified  as
     available for sale was $73.2  million at March 31, 2003,  and $69.7 million
     at December 31, 2002.

     Operating activities provided net cash of $321.7 million in the first three
     months of 2003.  Cash  provided by  operating  activities  and  proceeds of
     $185.4 million from exploration and production divestitures were sufficient
     to fund the company's net  reduction in long-term  debt of $149.2  million,
     capital  expenditures  of $201.4  million,  and  dividends of $45.2 million
     during the first quarter of 2003.

     Capital expenditures for the first three months of 2003, excluding dry hole
     costs,  totaled  $201.4  million,  compared  with  $344.2  million  for the
     comparable  prior-year  period.  This  decrease  is  largely  due to higher
     capital  expenditures  in the U.K.  North Sea region  during the 2002 first
     quarter  related  primarily  to the Leadon,  Tullich  and  Maclure  fields.
     Exploration and production expenditures,  principally in the Gulf of Mexico
     and  onshore  United  States,  were  91% of the  2003  total  expenditures.
     Chemical - pigment expenditures were 8% of the 2003 total, while chemical -
     other and  corporate  incurred the remaining 1% of the  first-quarter  2003
     expenditures.  Management  anticipates  that the cash  requirements for the
     next several years can be provided through  internally  generated funds and
     selective borrowings.

     New Accounting Standards

     In June 2001,  the  Financial  Accounting  Standards  Board  (FASB)  issued
     Statement of Financial  Accounting Standards (FAS) No. 143, "Accounting for
     Asset  Retirement  Obligations."  FAS 143 requires that an asset retirement
     obligation  (ARO)  associated with the retirement of a tangible  long-lived
     asset be  recognized  as a liability  in the period in which it is incurred
     (as defined by the standard),  with an offsetting  increase in the carrying
     amount of the associated  asset. The cost of the tangible asset,  including
     the initially  recognized ARO, is depreciated such that the cost of the ARO
     is  recognized  over the useful  life of the asset.  The ARO is recorded at
     fair value,  and  accretion  expense  will be  recognized  over time as the
     discounted liability is accreted to its expected settlement value. The fair
     value of the ARO is measured using expected future cash outflows discounted
     at the company's credit-adjusted risk-free interest rate.

     The  company  adopted  FAS 143 on  January 1, 2003,  which  resulted  in an
     increase in net  property  of $127.5  million,  an increase in  abandonment
     liabilities  of $180.4  million  and a  decrease  in  deferred  income  tax
     liabilities of $18.2 million.  The net impact of these changes  resulted in
     an  after-tax  charge  to  earnings  of  $34.7  million  to  recognize  the
     cumulative effect of retroactively  applying the new accounting  principle.
     In  accordance  with the  provisions  of FAS  143,  Kerr-McGee  accrues  an
     abandonment  liability  associated with its oil and gas wells and platforms
     when those assets are placed in service,  rather than its past  practice of
     accruing the expected abandonment costs on a unit-of-production  basis over
     the productive  life of the  associated  oil and gas field.  No market risk
     premium has been included in the company's  calculation  of the ARO for oil
     and gas wells and platforms  since no reliable  estimate can be made by the
     company. In connection with the change in accounting principle, abandonment
     expense of $9.3 million for the first quarter of 2002 has been reclassified
     from Costs and  operating  expenses to  Depreciation  and  depletion in the
     Consolidated  Statement  of  Operations  to be  consistent  with  the  2003
     presentation.  Additionally in January 2003, the company announced its plan
     to close the synthetic rutile plant in Mobile, Alabama, by the end of 2003.
     Since  the plant has a  determinate  closure  date,  the  company  has also
     accrued an abandonment  liability associated with its plans to decommission
     the Mobile facility.

     Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

     Beginning in March 2002 and  continuing  through  January 2003, the company
     entered  into  hedging  contracts  for a portion of its oil and natural gas
     production.  The  commodity  hedging  program was initiated to increase the
     predictability of the company's cash flows and support  additional  capital
     projects since hedging contracts fix the commodity prices to be received in
     the future.  At March 31, 2003,  the company had  outstanding  contracts to
     hedge a total of 12.3  million  barrels of North Sea crude oil  production,
     9.6 million  barrels of domestic  crude oil  production  and 103.1  million
     MMBtu of domestic  natural gas production for the period from April through
     December  2003.  The  net  liability  fair  value  of the  hedge  contracts
     outstanding  at March 31, 2003,  was $11.1 million for North Sea crude oil,
     $19.9  million  for  domestic  crude oil and $100.6  million  for  domestic
     natural gas.

     At March 31, 2003,  the following  commodity-related  derivative  contracts
     were outstanding:

                                                        Daily            Average
     Contract Type (1)                    Period       Volume              Price
     ---------------------------------------------------------------------------

     Natural Gas                                         MMBtu           $/MMBtu
     -----------                                         -----           -------

     Fixed-price swaps (NYMEX)              2003       310,000             $4.00

     Costless collars (NYMEX)               2003        65,000       $3.50-$5.26

     Basis swaps (CIG)                      2003        64,580             $0.36

     Crude Oil                                             Bbl             $/Bbl
     ---------                                             ---             -----

     Fixed-price swaps (WTI)           Q2 - 2003        35,000            $26.02
                                       Q3 - 2003        34,500            $25.99
                                       Q4 - 2003        35,000            $26.01

     Fixed-price swaps (Brent)         Q2 - 2003        44,500            $25.01
                                       Q3 - 2003        44,500            $24.99
                                       Q4 - 2003        45,000            $25.04

     (1) These  contracts  may be subject to margin calls above  certain  limits
         established with individual counterparty institutions.

     Periodically,  the company  enters into  forward  contracts to buy and sell
     foreign  currencies.  Certain of these  contracts  (purchases of Australian
     dollars and British pound sterling) have been designated and have qualified
     as cash flow hedges of the  company's  operating  and  capital  expenditure
     requirements.  These contracts  generally have durations of less than three
     years. The resulting  changes in fair value of these contracts are recorded
     in accumulated other comprehensive income.


     Following  are  the  notional  amounts  at  the  contract  exchange  rates,
     weighted-average  contractual  exchange rates and estimated contract values
     for open contracts at March 31, 2003 to purchase (sell) foreign currencies.
     Contract values are based on the estimated forward exchange rates in effect
     at quarter-end. All amounts are U.S. dollar equivalents.

<TABLE>
<CAPTION>
                                                                                                          Estimated
     (Millions of dollars,                            Notional           Weighted-Average                  Contract
     except average contract rates)                     Amount              Contract Rate                     Value
     --------------------------------------------------------------------------------------------------------------
<S>                                                     <C>                        <C>                       <C>

     Open contracts at March 31, 2003 -
         Maturing in 2003 -
              British pound sterling                    $107.5                     1.5448                    $108.5
              Australian dollar                           46.9                      .5598                      49.6
              Euro                                        (6.6)                    1.0721                      (6.6)
              British pound sterling                       (.4)                    1.6027                       (.4)
              New Zealand dollar                           (.4)                     .5343                       (.4)
         Maturing in 2004 -
              Australian dollar                           37.7                      .5366                      40.5
</TABLE>

     Item 4.  Controls and Procedures.

     Within  the 90 days prior to the date of this  report,  an  evaluation  was
     carried  out  under  the  supervision  and  with the  participation  of the
     company's  management,  including  its Chief  Executive  Officer  and Chief
     Financial Officer,  of the effectiveness of the design and operation of the
     company's  disclosure controls and procedures pursuant to Exchange Act Rule
     13a-14.  Based upon that evaluation,  the Chief Executive Officer and Chief
     Financial  Officer  concluded  that the company's  disclosure  controls and
     procedures  are  effective in alerting  them in a timely manner to material
     information   relating  to  the   company   (including   its   consolidated
     subsidiaries)  required  to be  included  in  the  company's  periodic  SEC
     filings.  There  were no  significant  changes  in the  company's  internal
     controls or in other factors that could significantly affect these controls
     subsequent to the date of their evaluation.


                           Forward-Looking Information

     Statements in this quarterly report regarding the company's or management's
     intentions,  beliefs or  expectations,  or that  otherwise  speak to future
     events, are "forward-looking  statements" within the meaning of the Private
     Securities  Litigation  Reform Act of 1995. Future results and developments
     discussed  in these  statements  may be affected  by  numerous  factors and
     risks,   such  as  the  accuracy  of  the  assumptions  that  underlie  the
     statements,  the  success  of the oil and gas  exploration  and  production
     program,  drilling  risks,  the  market  value  of  Kerr-McGee's  products,
     uncertainties  in  interpreting   engineering  data,  demand  for  consumer
     products  for which  Kerr-McGee's  businesses  supply  raw  materials,  the
     financial  resources of competitors,  changes in laws and regulations,  the
     ability  to respond  to  challenges  in  international  markets,  including
     changes in currency exchange rates, political or economic conditions, trade
     and regulatory matters, general economic conditions,  and other factors and
     risks identified in the Risk Factors section of the company's Annual Report
     on Form 10-K and other SEC filings.  Actual  results and  developments  may
     differ materially from those expressed in this quarterly report.



                           PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.


     (a)  For a discussion of legal proceedings and contingencies,  reference is
          made to Note K to the consolidated  financial  statements  included in
          Part I, Item 1. of this Form  10-Q,  which is  incorporated  herein by
          reference.

Item 6.   Exhibits and Reports on Form 8-K.

     (a)  Exhibits -

             Exhibit No
             ----------

                    3.1  Amended and restated  Certificate of  Incorporation  of
                         Kerr-McGee  Corporation,  filed as  Exhibit  4.1 to the
                         company's Registration Statement on Form S-4 dated June
                         28, 2001, and incorporated herein by reference.

                    3.2  Amended and restated Bylaws of Kerr-McGee  Corporation,
                         filed as Exhibit 3.2 to the company's  Annual Report on
                         Form 10-K for the year ended  December  31,  2002,  and
                         incorporated herein by reference.

                   99.1  Certification  Pursuant to 18 U.S.C.  Section  1350, as
                         adopted  pursuant to Section 906 of the  Sarbanes-Oxley
                         Act of 2002.

                   99.2  Certification  Pursuant to 18 U.S.C.  Section  1350, as
                         adopted  pursuant to Section 906 of the  Sarbanes-Oxley
                         Act of 2002.


        (b) Reports on Form 8-K -

             The following Current Reports on Form 8-K were filed by the company
             during the quarter ended March 31, 2003:


                    o    Current  Report dated  January 23,  2003,  announcing a
                         conference   call  to   discuss   fourth-quarter   2002
                         financial and operating  results and  expectations  for
                         the future.

                    o    Current  Report dated  January 28,  2003,  announcing a
                         conference   call  to   discuss   fourth-quarter   2002
                         financial and operating  results and  expectations  for
                         the future and certain expectations for oil and natural
                         gas production volumes for the year 2003.

                    o    Current  Report dated January 29, 2003,  announcing the
                         company's fourth-quarter 2002 earnings.

                    o    Current Report dated February 11, 2003,  announcing the
                         availability  of a live  internet link to the Company's
                         security analyst meeting,  held on Wednesday,  February
                         19, 2003, which included presentations by the company's
                         senior  management  team and covered the  financial and
                         operating outlook for 2003.

                    o    Current  Report dated  February 19, 2003,  announcing a
                         security  analyst  meeting  to  discuss  the  company's
                         financial  and  operating  outlook for 2003 and certain
                         expectations for oil and natural gas production volumes
                         for the year 2003.

                    o    Current  Report dated  February 24, 2003,  announcing a
                         conference call to discuss first-quarter 2003 financial
                         and  operating  activities,  and  expectations  for the
                         future.

                    o    Current Report dated March 17, 2003, announcing Kenneth
                         W. Crouch had been elected executive vice president and
                         David A. Hager had been elected senior vice  president,
                         succeeding Crouch as head of worldwide  exploration and
                         production.

                    o    Current  Report  dated  March 19,  2003,  announcing  a
                         conference call to discuss interim  first-quarter  2003
                         financial and operating  activities,  and  expectations
                         for the future.

                    o    Current  Report  dated  March 25,  2003,  announcing  a
                         security  analyst  meeting  to  discuss  the  company's
                         financial  and  operating  outlook for 2003 and certain
                         expectations for oil and natural gas production volumes
                         for the year 2003.





                                    SIGNATURE

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
     Registrant  has duly  caused  this report to be signed on its behalf by the
     undersigned, thereunto duly authorized.

                                            KERR-McGEE CORPORATION

     Date:  May 13, 2003                    By:    /s/ John M. Rauh
            ------------
                                                   -----------------------------
                                                   John M. Rauh
                                                   Vice President and Controller
                                                   and Chief Accounting Officer



<PAGE>


                                 CERTIFICATIONS

I, Luke R. Corbett, certify that:

     1.   I have  reviewed  this  quarterly  report on Form  10-Q of  Kerr-McGee
          Corporation;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the issuer as of, and for, the periods presented in this
          quarterly report;

     4.   The  company's  other  certifying  officer and I are  responsible  for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the company and
          we have:

          i.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating  to the  company,  including  its
               consolidated subsidiaries, is made known to them by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          ii.  evaluated the effectiveness of the company's  disclosure controls
               and  procedures  as of a date  within 90 days prior to the filing
               date of this quarterly report (the "Evaluation Date"); and

          iii. presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The company's other certifying officer and I have disclosed,  based on
          our most recent  evaluation,  to the company's  auditors and the audit
          committee of the company's  board of directors (or persons  fulfilling
          the equivalent function):

          i.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls  which could  adversely  affect the  company's
               ability to record,  process,  summarize and report financial data
               and have  identified  for the  company's  auditors  any  material
               weaknesses in internal controls; and

          ii.  any fraud,  whether or not material,  that involves management or
               other  employees  who have a  significant  role in the  company's
               internal controls; and

     6.   The company's  other  certifying  officer and I have indicated in this
          quarterly  report whether there were  significant  changes in internal
          controls or in other factors that could significantly  affect internal
          controls  subsequent  to the  date  of  our  most  recent  evaluation,
          including   any   corrective   actions  with  regard  to   significant
          deficiencies and material weaknesses.


                                                         /s/ Luke R. Corbett
                                                         -----------------------
                                                         Luke R. Corbett
                                                         Chief Executive Officer
                                                         May 13, 2003


<PAGE>


                                 CERTIFICATIONS

I, Robert M. Wohleber, certify that:

     1.   I have  reviewed  this  quarterly  report on Form  10-Q of  Kerr-McGee
          Corporation;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the issuer as of, and for, the periods presented in this
          quarterly report;

     4.   The  company's  other  certifying  officer and I are  responsible  for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the company and
          we have:

          i.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating  to the  company,  including  its
               consolidated subsidiaries, is made known to them by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          ii.  evaluated the effectiveness of the company's  disclosure controls
               and  procedures  as of a date  within 90 days prior to the filing
               date of this quarterly report (the "Evaluation Date"); and

          iii. presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The company's other certifying officer and I have disclosed,  based on
          our most recent  evaluation,  to the company's  auditors and the audit
          committee of the company's  board of directors (or persons  fulfilling
          the equivalent function):

          i.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls  which could  adversely  affect the  company's
               ability to record,  process,  summarize and report financial data
               and have  identified  for the  company's  auditors  any  material
               weaknesses in internal controls; and

          ii.  any fraud,  whether or not material,  that involves management or
               other  employees  who have a  significant  role in the  company's
               internal controls; and

     6.   The company's  other  certifying  officer and I have indicated in this
          quarterly  report whether there were  significant  changes in internal
          controls or in other factors that could significantly  affect internal
          controls  subsequent  to the  date  of  our  most  recent  evaluation,
          including   any   corrective   actions  with  regard  to   significant
          deficiencies and material weaknesses.


                                                         /s/ Robert M. Wohleber
                                                         ----------------------
                                                         Robert M. Wohleber
                                                         Chief Financial Officer
                                                         May 13, 2003