<PAGE>   1
 
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                   FORM 10-K
                            ------------------------
 
                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
 
<TABLE>
<S>                                                    <C>
              FOR THE FISCAL YEAR ENDED                               COMMISSION FILE NUMBER
                  DECEMBER 31, 1996                                           1-12374
</TABLE>
 
                                  ALUMAX INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
                            ------------------------
 
<TABLE>
<C>                                                    <C>
                      DELAWARE                                              13-2762395
              (STATE OF INCORPORATION)                                   (I.R.S. EMPLOYER
                                                                      IDENTIFICATION NUMBER)
</TABLE>
 
                             5655 PEACHTREE PARKWAY
                            NORCROSS, GEORGIA 30092
                         (PRINCIPAL EXECUTIVE OFFICES)
 
                        TELEPHONE NUMBER: (770) 246-6600
                            ------------------------
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
 
<TABLE>
<CAPTION>
                                                                       NAME OF EACH EXCHANGE
                TITLE OF EACH CLASS:                                   ON WHICH REGISTERED:
                --------------------                                   ---------------------
<C>                                                    <C>
       Common Stock, $0.01 par value per share                        New York Stock Exchange
              (including Stock Purchase
              Rights relating thereto)
</TABLE>
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                                      NONE
 
     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
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 at least the past 90 days.  Yes  X    No
                                                 ---       --- 

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [  ]
 
     As of January 31, 1997, 54,781,206 shares of the common stock of the
registrant were issued and outstanding. The aggregate market value of the common
stock held by non-affiliates of the registrant was $1,894,232,095 as determined
by the January 31, 1997 closing price of $35.00 for one share of common stock on
the New York Stock Exchange.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     Proxy Statement for the Annual Meeting of Stockholders of the registrant to
be held on May 29, 1997. Certain information therein is incorporated by
reference into Part III hereof.
================================================================================
<PAGE>   2
 
                                     PART I
ITEM 1. BUSINESS
 
GENERAL
 
     Alumax Inc. ("Alumax" or the "Company") is the third largest aluminum
company in the United States and the fourth largest in North America, based on
sales, and operates over 70 plants and other manufacturing and distribution
facilities in 22 states, Canada, Western Europe, Mexico, Australia, the People's
Republic of China and Poland. The Company is an integrated producer of aluminum
products, operating in a single segment: aluminum processing. Using alumina
purchased from one principal supplier, the Company produces primary aluminum
employing an electrolytic process at five reduction plants in the United States
and Canada. Primary products are sold externally or further processed by Alumax
into a broad range of semi-fabricated and fabricated products. The Company's
products are sold to a wide variety of markets, including transportation,
distributors, building and construction, consumer durables, and packaging.
 
     Since becoming an independent public corporation in November 1993, Alumax
has taken several significant steps to increase stockholder value, position the
Company for future growth and strengthen its balance sheet. Alumax has devised
and implemented a four-point business strategy designed to (i) enhance the
Company's position as a low-cost producer of primary aluminum; (ii) grow in
transportation, aluminum's largest and fastest growing market; (iii) emphasize
the manufacture of more specialized, value-added products; and (iv) expand in
emerging global markets where the Company believes it will be able to capitalize
on its product strengths.
 
     The four-point strategy has been complemented by the Company's continuing
efforts to increase its operational strengths and efficiencies, principally by
improving its business and product mix, enhancing its market share and unit
volume growth, reducing controllable costs and improving productivity. The
Company has also reconfigured its asset base by (i) disposing of various
businesses and assets which did not generate, and offered limited prospects of
yielding, acceptable returns or which were not integral to the Company's long-
range business activities and (ii) reinvesting the proceeds derived from such
dispositions into businesses having greater potential for future growth. In the
three years ended December 31, 1996, sales of businesses and assets generated
$770.0 million in cash and were comprised of the following major transactions:
 
     - The September 1996 sale of certain of the Company's fabricated products
      businesses in the United States and Western Europe to Euramax
      International plc for $246.6 million. The sale did not include any of
      Alumax's architectural aluminum operations in Europe or the United States,
      nor did it include the Company's Magnolia Division in the United States.
      The businesses sold had annual sales of $485.0 million in 1995 and $363.3
      million in 1996 (through the date of disposition) and employed
      approximately 2,100 persons.
 
     - The June 1996 sale of the Company's investment in Mexican mining
      interests to Minas Penoles, S.A. de C.V. for total consideration of $160
      million.
 
     - The January 1996 sale of a 23 percent undivided interest in the Company's
      Mt. Holly primary aluminum reduction plant to a subsidiary of Glencore
      Ltd. for $89.3 million, which the Company applied to the early retirement
      of a $90.7 million promissory note due in May 1996. The sale reduced the
      Company's ownership interest in the Mt. Holly plant to 50.33 percent.
 
     - The March 1995 sale of a 14 percent undivided interest in each of the
      Company's Intalco and Eastalco primary aluminum reduction plants to a
      Japanese consortium for $147.6 million. The sale reduced the Company's
      ownership interest in each such facility to 61 percent.
 
     - The March 1994 open market sale of the Company's 37 percent interest in
      Aztec Mining Company, an Australian corporation, for $75 million.
 
     Sales of businesses and assets in 1996 generated after-tax gains of $140.4
million and raised proceeds of $495.9 million, which exceeded the total cost of
the $436.5 million Cressona Aluminum Company ("Cressona") acquisition on January
31, 1996 and enabled the Company to retire the debt acquired and
 
                                        1
<PAGE>   3
 
incurred in connection with that transaction. Cressona, a privately held
Pennsylvania corporation and a leading manufacturer of extruded aluminum
products, has been merged with Alumax's other extrusions operations to form an
organization regarded as having the world's largest soft-alloy extrusion
manufacturing capacity. Active redeployment of assets, as described above and in
greater detail herein, has helped to reduce the Company's exposure to the
domestic building and construction market and to increase its presence in the
higher growth transportation and distribution sectors. It has also helped
strengthen the Company's balance sheet, resulting in a substantial increase in
stockholders' equity and a significant reduction in the ratio of total debt to
invested capital over the last three years. The Company will continue to manage
its asset base actively with a view toward strengthening its business and
product mix and enhancing its position in key aluminum markets.
 
     The table below sets forth certain information concerning the Company's
production, metal shipments and sales by class of product during the last three
years. As used herein, a "tonne" means a metric ton equal to 2,204.6 pounds.
 
<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1996       1995       1994
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Production and metal shipments (in thousands of tonnes):
  Sources of metal
     Primary aluminum production............................     686.3      650.9      680.7
     Metal purchases (including scrap aluminum)(1)..........     419.6      355.3      364.5
                                                              --------   --------   --------
          Total.............................................   1,105.9    1,006.2    1,045.2
                                                              ========   ========   ========
  Metal shipments
     Aluminum processing (including tolling)
       Primary products.....................................     374.3      416.6      423.8
       Semi-fabricated products(2)..........................     574.5      414.3      488.7
       Fabricated products(2)(3)............................     133.3      142.6      166.8
                                                              --------   --------   --------
          Total.............................................   1,082.1      973.5    1,079.3
                                                              ========   ========   ========
Net sales by class of product (in millions):
  Aluminum processing
     Primary products.......................................  $  658.9   $  724.5   $  592.7
     Semi-fabricated products(2)............................   1,639.5    1,235.4    1,264.2
     Fabricated products(2)(3)..............................     860.9      966.2      897.6
                                                              --------   --------   --------
          Total.............................................  $3,159.3   $2,926.1   $2,754.5
                                                              ========   ========   ========
</TABLE>
 
---------------
 
(1) The Company purchases scrap from various sources, including dealers,
     fabricators and customers, for aluminum processing. It also purchases
     primary aluminum to meet customer demand for premium products.
(2) In conjunction with the sale of certain Fabricated products businesses, net
     sales and shipments for the Company's Magnolia operations have been
     reclassified from Fabricated products to Semi-fabricated products.
     Magnolia, which manufactures shower and tub enclosures, stadium seating and
     other extruded products, has been transferred into the Company's extrusions
     business.
(3) Included in Fabricated products metal shipments for the years ended December
     31, 1996, 1995 and 1994 are billet shipments of 28,600, 26,800 and 51,700
     tonnes, respectively.
 
                                        2
<PAGE>   4
 
     Information concerning the estimated distribution of the Company's sales
for the last three years is presented below. Sales to distributors increased
significantly in 1996 as a result of the acquisition of Cressona and the
Company's efforts to diversify its product lines.
 
<TABLE>
<CAPTION>
                                                               APPROXIMATE PERCENTAGE
                                                                  OF SALES DOLLARS
                                                               ----------------------
                                                               1996     1995     1994
                                                               ----     ----     ----
<S>                                                            <C>      <C>      <C>
Primary aluminum and other raw material sales...............    22%      26%      24%
Processed product sales by market:*
  Building and construction.................................    30       34       36
  Transportation............................................    17       15       16
  Distributors..............................................    16       10        9
  Consumer durables.........................................     3        5        5
  Packaging.................................................     4        4        6
  Other.....................................................     8        6        4
                                                               ---      ---      ---
          Total.............................................   100%     100%     100%
                                                               ===      ===      ===
</TABLE>
 
---------------
* Includes both semi-fabricated products and fabricated products. Transportation
  consists primarily of sales to the automotive, truck, trailer and railcar
  markets. Alumax does not have significant sales to the aircraft manufacturing
  market.
 
     Additional operating and geographic area financial information is presented
in Note 16 to the Financial Statements included elsewhere herein.
 
PRIMARY ALUMINUM PRICES
 
     The aluminum industry is highly cyclical in nature. The Company's results
of operations and financial condition depend to a large degree on primary
aluminum prices, as well as conditions in the building and construction and
transportation industries. This price sensitivity impacts substantially all of
the Company's products to varying degrees, with less impact on the more
specialized and value-added products.
 
     Primary aluminum prices, which are determined by worldwide supply and
demand conditions, declined significantly from 1989 through 1993 but have shown
general improvement over the last three years. The most commonly used index of
pricing in the aluminum industry is the average price per tonne as reflected by
the London Metal Exchange (the "LME"). The LME index is not necessarily
representative of prices actually realized by the Company but generally
approximates the trend with respect to Alumax's realized prices (exclusive of
the effects of the Company's price risk management strategy described below).
Using the LME index, the cyclical nature of aluminum pricing is illustrated in
the table below.
 
                         LME AVERAGE ANNUAL CASH PRICE*
                             (HIGH GRADE CONTRACT)
 
<TABLE>
<CAPTION>
                          US$ PER   US$ PER
          YEAR             TONNE     POUND
          ----            -------   -------
<S>                       <C>       <C>
1980....................   1,810      .82
1981....................   1,300      .59
1982....................   1,010      .46
1983....................   1,480      .67
1984....................   1,280      .58
1985....................   1,080      .49
1986....................   1,190      .54
1987....................   1,590      .72
1988....................   2,580     1.17
1989....................   1,950      .88
</TABLE>
 
<TABLE>
<CAPTION>
                          US$ PER   US$ PER
          YEAR             TONNE     POUND
          ----            -------   -------
<S>                       <C>       <C>
1990....................   1,640      .74
1991....................   1,300      .59
1992....................   1,250      .57
1993....................   1,140      .52
1994....................   1,480      .67
1995....................   1,810      .82
1996....................   1,510      .68
1997-First Quarter
  (through January
  31)...................   1,576      .71
</TABLE>
 
---------------
 
* Adjusted for years prior to, and including, 1987 to reflect the introduction
  of High Grade Contract.
 
                                        3
<PAGE>   5
 
     Market fundamentals relative to the supply and consumption of aluminum have
improved significantly since 1993, when aluminum prices reached historic lows on
an inflation-adjusted basis. The LME cash price increased substantially during
1994 and in early 1995, reaching a high of $.97 per pound during January 1995.
Inventory de-stocking and generally weaker economic conditions worldwide during
the second half of 1995, along with significant restarts of previously idled
production capacity, led to reported inventory (consisting of producer plus LME
terminal stocks) increases that lasted through January 1996. The level of
reported inventory remained relatively unchanged through August 1996, with ingot
stocks on the LME alone increasing through early November. During this period of
relatively flat overall consumption, producer and consumer activity on the LME
was subdued, which resulted in the LME cash price declining from $.75 per pound
at the beginning of January 1996 to an average of $.61 per pound during October
1996. Since that time, industry fundamentals have improved, and reported
inventories have declined. The LME cash price increased to a December average of
$.68 per pound and was $.72 per pound at January 31, 1997. Despite the general
improvements in average product prices that have been experienced since 1993,
there can be no assurance that recent price levels will be maintained.
 
     Historically, the Company priced its primary aluminum production at market,
with realized prices closely tracking cyclical shifts in market prices. To
maintain market based pricing while entering into forward fixed price
arrangements required by certain customers and suppliers, the Company utilizes
futures contracts which effectively convert forward fixed price arrangements to
market prices as of specified settlement dates. The Company also may, from time
to time, establish a floor selling price for varying quantities of future
production, while preserving the opportunity to participate in upward price
movements. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Risk Management" and Note 15 to the Financial
Statements included elsewhere herein.
 
ALUMINUM PROCESSING
 
  Primary products
 
     The Company, through Alumax Primary Aluminum Corporation and several other
wholly-owned subsidiaries, produces and markets t-ingot and a variety of premium
primary products, including extrusion billet, slab and foundry ingot. These
products are consumed, by both the Company's downstream operations and third
party customers, in rolling mills, extrusion plants, foundries and remelt
operations. In 1996, over one-half of the Company's primary aluminum production
was sold to its downstream operations. The Company believes, based on its
ownership interest in the facilities described below and upon reports of
industry analysts, that the average primary aluminum reduction costs at its
facilities are well within the lower half of all aluminum reduction facilities
in the western world. The Company is committed both to maximizing its earnings
from the sale of premium primary products and to improving its cost position
relative to other primary aluminum producers.
 
                                        4
<PAGE>   6
 
     The table below summarizes the capacity of the five primary aluminum
reduction facilities in which the Company has an ownership interest and reflects
the Company's share of capacity.
 
<TABLE>
<CAPTION>
                                                 PERCENTAGE
                                                  OWNERSHIP                              ALUMAX'S SHARE OF
                                               INTEREST AS OF       TOTAL AMOUNT OF        TOTAL ANNUAL
                  FACILITY                    DECEMBER 31, 1996   NAMEPLATE CAPACITY    NAMEPLATE CAPACITY
                  --------                    -----------------   -------------------   -------------------
                                                                              (TONNES PER YEAR)
<S>                                           <C>                 <C>                   <C>
Lauralco
  Deschambault, Quebec......................        100.00%              215,000              215,000
Intalco
  Ferndale, Washington......................         61.00%              272,000              165,900
Eastalco
  Frederick, Maryland.......................         61.00%              174,000              106,100
Mt. Holly
  Goose Creek, South Carolina...............         50.33%              205,000              103,200
ABI
  Becancour, Quebec.........................         24.95%              372,000               92,800
                                                                       ---------              -------
     Total..................................                           1,238,000              683,000
                                                                       =========              =======
</TABLE>
 
     During 1996, the above facilities produced an aggregate of 1,311,511 tonnes
of aluminum, of which the Company's share was 686,306 tonnes. In anticipation of
increased demand for primary aluminum by Alumax's downstream operations,
including Cressona, and in response to the availability of more favorably priced
electricity, the Company announced in the fourth quarter of 1995 that it was
restarting approximately 90,000 tonnes of annual primary aluminum production
capacity that had been previously idled. Approximately two-thirds of the
capacity restarted was at Intalco, with the remainder at Mt. Holly. The restarts
were completed by January 1996. The Company's smelter network is currently
operating at or above full nameplate capacity. Production enhancements put into
place during 1996 at Mt. Holly resulted in an increase in total nameplate
capacity from 182,000 to 205,000 tonnes per year at that facility.
 
     A Japanese consortium, led by a subsidiary of Mitsui & Co. Ltd., owns an
aggregate 39 percent undivided interest in each of the Intalco and Eastalco
facilities. Subsidiaries of Century Aluminum Company, a publicly traded domestic
corporation, and Sudelektra Holding AG, a Swiss corporation, together own 49.67
percent of Mt. Holly. On January 26, 1996, a subsidiary of Glencore Ltd., a
Swiss corporation ("Glencore"), acquired a 23 percent ownership interest in Mt.
Holly from Alumax for $89.3 million which the Company applied to the early
retirement of a $90.7 million promissory note due in May 1996. In connection
with the sale, the share of the Company's 1996 production from Mt. Holly to
which Glencore was entitled under the terms of a tolling agreement that expired
in July 1996 was reduced from 90,719 to 48,980 tonnes on an annualized basis.
The Company recorded a pre-tax gain of $78.4 million ($48.6 million after-tax)
in respect of the sale. The 23 percent interest in Mt. Holly acquired by
Glencore in 1996 was subsequently transferred by merger to Sudelektra Aluminum
Corporation. A 26.67 percent interest in Mt. Holly already held by Glencore
comprised part of the assets spun off by Glencore in 1996 through an initial
public offering of shares in Century Aluminum Company.
 
     Primary aluminum is produced by the reduction of alumina, which is refined
from bauxite, in a series of pots (potline) through an electrolytic process. The
Company does not mine bauxite or refine alumina. Alcoa of Australia Limited
("Alcoa of Australia") has been the Company's principal supplier of alumina for
over 20 years and currently provides substantially all of the alumina for the
Company's reduction operations under a long-term contract which, with renewal
options, expires in increments between 2007 and 2018. Pricing under the contract
is determined in part on a cost basis and in part on a market basis, providing
the Company with protection against spot market price extremes during periods of
tight supply and a secure source of supply with a reliable high-quality
producer, reportedly having the lowest costs of production in the world. The
Company believes that any additional supplies of alumina it may require, from
time to time in the foreseeable future, in excess of that supplied by Alcoa of
Australia can be obtained at competitive prices. While there has been no
interruption in supply during the period that Alcoa of Australia has supplied
the Company's alumina requirements, an extended interruption of supply of
alumina from Alcoa of Australia could have a material
 
                                        5
<PAGE>   7
 
adverse effect on the Company's operations. Other raw materials needed for the
production of aluminum, such as petroleum coke, coal tar pitch and aluminum
fluoride, are purchased from third parties. The Company believes that it can
continue to obtain adequate supplies of these materials at competitive market
prices.
 
     The primary aluminum reduction process, which strips the oxygen atoms from
the alumina molecule, requires substantial amounts of electric power. Lauralco,
Intalco, Eastalco, Mt. Holly and ABI purchase electricity under long-term
contracts which expire in the years 2014, 2001, 2000, 2000 and 2014,
respectively, subject to certain extension provisions. Except for Intalco, each
facility's contract is with a single supplier. Power rates for all of the
electricity supplied to ABI and Lauralco are linked to the prevailing price of
aluminum. The Eastalco power contract contains a profit sharing surcharge, which
is capped, that has floor and ceiling trigger prices which are linked to the
price of aluminum. In late 1995, Intalco entered into a series of new long-term
power contracts with the Bonneville Power Administration (the "BPA") and British
Columbia Power Exchange Corporation ("Powerex") to provide for all of its
electricity needs from September 1996 through 2001. Under the new contracts,
Intalco's power costs are no longer linked to the price of aluminum but are set
at a fixed rate. The power supply agreement with BPA requires further regulatory
approval, and legal challenges have been lodged against the long-term agreement
with BPA by a group of industrial consumers of electricity and a group
representing environmental interests. The Company believes these challenges will
be resolved favorably. In the event that the challenges to the agreement with
BPA are successful, the Company believes that it can enter the market to obtain
alternative power at competitive rates. Intalco has certain additional
agreements with BPA to purchase power during favorable pricing periods in the
spring months. The Company expects to meet its power requirements over the
foreseeable future pursuant to the aforementioned contracts. Interruptions of
power supply could have a material adverse impact on the Company by increasing
the cost of production of primary aluminum or necessitating a reduction in
production.
 
     In January 1993, production at Intalco was reduced by approximately 25
percent in response to the curtailment by the BPA, due to drought conditions, of
hydroelectric power supplied to certain of the BPA's direct service industry
customers, including Intalco. Production at this facility was curtailed by an
additional 40,000 tonnes in the second quarter of 1994 due to adverse market
conditions. Production at the Mt. Holly plant was reduced by 20 percent in
February 1993 in response to adverse market conditions and the higher energy
costs at this facility compared to the energy costs at the Company's other
reduction facilities. As indicated above, the Company restarted all of this
previously idled production capacity in late 1995 and early 1996.
 
     For information with respect to the credit agreement entered into in 1990
with a group of banks to finance the construction of the Lauralco primary
aluminum reduction facility, see Note 6 to the Financial Statements included
elsewhere herein.
 
  Semi-fabricated products
 
     Alumax Extrusions.  Alumax Extrusions manufactures a broad line of
soft-alloy extruded products, as well as secondary billet to be sold to third
parties, at ten plants located in Pennsylvania, Tennessee, Florida, Arkansas,
Georgia, Mississippi, Illinois, South Dakota, Utah, and North Carolina. Its
shower and bath enclosures are distributed through eight service centers in
California, Florida, Georgia, North Carolina, Pennsylvania, Texas and
Washington. Alumax Extrusions also maintains an international presence, with
operations in Mexico and Australia. The Mexican operations consist of a
three-press extrusion plant in Monterrey, with distribution facilities in Mexico
City, Guadalajara and Hermosillo. An extrusion plant near Melbourne, Australia
began production of aluminum sheathing for the manufacture of co-axial
television cable in August 1996. Except for the plants located in North
Carolina, Melbourne and Monterrey, the eight service centers, and the
distribution facilities in Guadalajara and Hermosillo, which are leased, Alumax
Extrusions owns all of the aforementioned plants and facilities.
 
     The sales volume and manufacturing capacity of Alumax Extrusions more than
doubled in 1996 when Alumax purchased all of the outstanding common shares of
Cressona, a leading independent manufacturer of extruded aluminum products, for
a cash cost, including expenses, of $436.5 million, net of $3.1 million of cash
 
                                        6
<PAGE>   8
 
acquired. In conjunction with the acquisition, accounts payable, debt and other
liabilities of $87.4 million were acquired.
 
     The Cressona facilities have been integrated with the Company's other
extrusion operations to form a unified manufacturing support group consisting of
twelve plants with a total of 45 presses that range in size from 700 to 6,000
tons. The combined operation is regarded as having the world's largest
soft-alloy extrusion manufacturing capacity. Its integrated resources include
complete melting, alloying and casting facilities for 18 alloys, one of the
industry's largest in-house shops for the design and production of tooling and
dies, and facilities for fabrication, assembly, painting and anodizing. Press
operations utilize both direct and indirect extrusion technology. The wide range
of press sizes and capacities offers scheduling flexibility and increased
manufacturing efficiency.
 
     Alumax Extrusions' product line includes primary, semi-fabricated and
fabricated extruded aluminum alloys, parts and components. Available in circle
sizes up to 20 inches, product classifications extend to standard and custom
extruded shapes (solids, semi-hollows and hollows), standard and specialty rod
and bar, seamless and structural pipe and tube, seamless mechanical pipe and
tube, and seamless tubular bus conductors. Alumax Extrusions also produces
DIAMONDBACK(R) Slip-Resistant Systems, an integrated line of components and
accessories that are designed for improved safety on access, walking and working
surfaces.
 
     The Cressona acquisition has provided the Company with improved process
control systems, including many advancements in Computer Integrated
Manufacturing (CIM). It has also created a more diversified product mix and
strengthened distribution capabilities. A resulting expansion of the customer
base, both in the distributor marketplace and Original Equipment Manufacturers
(OEM) accounts supplied by Cressona, will help offset seasonal and cyclical
fluctuations in other markets such as building and construction.
 
     To recognize these expanded capabilities and to provide greater focus on
its key markets, Alumax Extrusions is organized into three distinct business
units: Alumax Building & Construction Products, Cressona Aluminum Company, and
Alumax Transportation Products. Although headquartered at different locations,
all three business units are supported by the unified manufacturing group. The
goal of this structure is to provide specialized sales and service designed to
satisfy customer requirements in the areas represented by the three business
units.
 
     Alumax Building & Construction Products, headquartered in Plant City,
Florida, is a leading supplier principally to the residential and commercial
window and door market. Alumax Building & Construction Products is known for the
quality of its intricate and thin wall specialty extrusions. Utilizing five
paint lines, approximately 80 percent of the products are supplied with thermal
set polyester paint, Kynar resin coatings, anodized finishes, or high
performance coatings for corrosive environments. Representative products include
extrusions for windows, doors and shutters; shower doors and bath enclosures;
patio and pool enclosures up to 40 feet in length; light poles and flagpoles;
bridges, rail and decking; treatment plants and other infrastructure markets;
highway and street signs; clear and colored architectural shapes; louvers and
vents; ladders; conduit; and cable tray and conduit.
 
     Cressona Aluminum Company is a leading supplier to the service center
industry. From its headquarters in Cressona, Pennsylvania, Cressona Aluminum
also services key OEM accounts in the machinery and equipment, electrical
switchgear and transmission, recreation, medical, and consumer durables markets.
Cressona Aluminum offers a broad product line of standard and custom extruded
shapes, extensive capabilities in pipe and tube, large circle size profiles, and
tight tolerance products that utilize indirect extrusion technology. Cressona
also markets a line of specialty rod and bar products that include ECON-O-ROD,
ACC-U-ROD(R), ECON-O-PLATE(R) and ACC-U-PLATE(R).
 
     From its location in West Chicago, Illinois, Alumax Transportation Products
is a leading supplier to the automotive, truck, truck trailer, and railcar
markets. Its resources also include a technical center, product specialists,
engineering and design experts, and a fabrication support group to assist with
the growing usage of extrusions in the transportation industry. Representative
products include extruded profiles for automotive space frames, anti-lock brake
parts, automotive air bag components, bumper beam components, seating and window
components, truck and trailer bodies, recreational vehicle parts, and railcar
structural members.
 
                                        7
<PAGE>   9
 
     In the potential market for frame and chassis extrusions, Alumax
Transportation Products is developing solutions for joining and forming aluminum
structurals through the use of retrogression heat treatment (RHT) and
compression-fit (CF) technologies. RHT employs rapid, short-term and localized
heat treatment of aluminum to improve fatigue properties, ductility and
toughness. When used with appropriate fabrication processes, RHT offers
advantages in forming and bending large, complex profiles of hard tempers.
 
     The growth in transportation and automotive uses of aluminum extrusions
reflects a move toward lightweight, fuel-efficient and environmentally
responsible future modes of transportation. To meet these requirements, Alumax
Transportation Products teams with other Alumax subsidiaries on product
development and technology interchange.
 
     Alumax Mill Products.  Alumax Mill Products produces flat rolled products
with both painted and mill finishes at mills in Lancaster, Pennsylvania, and
Texarkana, Texas. In addition, it operates facilities in Riverside, California
and Lancaster, Pennsylvania which produce semi-fabricated cast aluminum plate,
engineered to meet highly specialized industrial applications. The Lancaster and
Texarkana mills also produce limited quantities of sheet for beverage container
components. The Texarkana mill, which is currently under lease, will be
purchased by Alumax Mill Products in November 1997 for approximately $97 million
in cash.
 
     Alumax Mill Products produces semi-fabricated products, including sheet,
plate, circles and blanks, which are used for building products, transportation
products, consumer durables, machinery and equipment and in other industrial
applications. A major portion of Alumax Mill Products' sales are to
distributors, who are supplied products consisting of painted, embossed, heavy
gauge and anodizing quality sheet. Alumax Mill Products also supplies a
substantial amount of non-heat treatable sheet to the automotive, truck and
marine markets. These products consist of automotive alloys, automotive trim,
brazing materials, truck body and trailer sheet, as well as painted sheet and
coil. Alumax Mill Products' sheet is used in a variety of other products,
including cookware and appliance name plates.
 
     Some of Alumax Mill Products' markets are seasonal, notably the building
and construction market in which demand is generally lower in the fall and
winter seasons than in the spring and summer when the weather is more suitable
for construction.
 
     Alumax Mill Products implemented a restructuring plan in 1994 with a view
toward consolidating, streamlining and modernizing its business over a four-year
period ending in 1997. As part of the plan, Alumax Mill Products closed its
Morris, Illinois mill and terminated sheet operations at its Riverside,
California mill during 1994 and is currently expanding and modernizing the
overall capabilities of the Lancaster and Texarkana mills. Costs of the
expansion and modernization, which are expected to be completed in 1997, are
expected to total approximately $91 million. The restructuring plan also
provided for the construction of a separate cast aluminum plate facility
adjacent to the Lancaster mill at a cost of approximately $26 million. This new
facility began commercial production in the third quarter of 1996.
 
     Alumax Foils.  Alumax Foils' facility in St. Louis, Missouri uses the
continuous casting process to produce aluminum sheet which is then processed
through rolling mills and heat treating ovens to manufacture foil in various
thicknesses, widths, tempers and alloys. Foil products are sold primarily to
commercial users in the flexible packaging, converter, food service and
pharmaceutical industries. The nature of these products and diversity of
customers insulates Alumax Foils from seasonal fluctuations. In 1996, Alumax
Foils completed construction of a new wide, light-gauge aluminum foil rolling
facility in Russellville, Arkansas. The plant, which will expand Alumax Foils'
overall production capacity by approximately 30 percent when fully operational,
includes two wide rolling mills, annealing ovens and ancillary equipment, all
dedicated to the production of light-gauge converter foil. Initial customer
shipments are expected to begin in the first quarter of 1997.
 
  Fabricated products
 
     Kawneer.  Kawneer designs, manufactures and markets architectural aluminum
products and is a leading producer of such products in the United States and
Canada. Kawneer also sells its products for use in major construction projects
in foreign countries where it does not have production facilities, particularly
in the Far East.
 
                                        8
<PAGE>   10
 
     Kawneer products are manufactured mainly from extruded aluminum shapes
which are fabricated into curtainwall, store front and entrance systems,
windows, framing and decorative aluminum products which are then anodized or
painted. Kawneer operates five integrated architectural plants, 15 service
centers and two additional manufacturing locations in the United States, which
include plants owned by Kawneer in Arkansas, California, Georgia, Indiana,
Michigan, Pennsylvania and Tennessee. Distribution is principally through
dealers, most of whom are glazing contractors. These products also may be sold
to building contractors and owners, and Kawneer has acted as a subcontractor for
entire wall or window systems on numerous major projects.
 
     Demand for Kawneer's products generally follows the seasonal and cyclical
trends of the nonresidential construction industry. Kawneer believes that it is
well positioned to participate in the modest rate of growth expected to occur in
this market over the near term and remains committed to continue its efforts
aimed at reducing costs, improving productivity and enhancing product quality
and customer service.
 
     Kawneer has international operations in Canada, the United Kingdom, France,
Germany, Poland and The Netherlands. It also participates in a joint venture in
Morocco. In Canada, Kawneer operates two integrated architectural plants which
provide most of the product that is sold for large overseas projects, as well as
two service centers. Two manufacturing plants located in France, and one each in
England and Germany, three of which are owned by Kawneer and one of which is
leased, provide architectural aluminum products very similar to those offered by
the operations in the United States. These products are marketed under the
Kawneer name in the United Kingdom and Western Europe. Kawneer also operates
service centers it leases in France, Poland and Morocco. Other international
operations of Kawneer include plants it owns in Wales and The Netherlands that
produce custom extrusions for sale throughout Western Europe. These plants also
provide extruded products to Kawneer's architectural companies for further
processing into architectural aluminum products. The billet needed for the
extrusion activities is supplied by a casting plant in The Netherlands. This
plant converts scrap and aluminum ingot into billet on a tolling basis and for
intra-company use and outside sales. In addition, Kawneer continues to pursue
opportunities in the former East-Bloc nations, principally through the sale and
distribution of Kawneer products in Poland.
 
     In November 1996, Alumax announced that negotiations regarding the possible
acquisition of Eduard Hueck GmbH & Co. KG by the Company had been terminated by
mutual agreement. Hueck, based in Ludenscheid, Germany, is a manufacturer of
aluminum architectural products.
 
     AEMP.  Alumax Engineered Metal Processes ("AEMP") is engaged in the forming
of component parts with consistently high integrity and mechanical properties
using aluminum alloys. Marketing activities are focused almost exclusively on
the automotive market. AEMP maintains its headquarters in St. Louis, Missouri,
and a sales office in Detroit, Michigan. Activities in St. Louis include product
and process developments, marketing and support functions, and technical
support. During 1996, production increased steadily at AEMP's new $75 million
plant in Jackson, Tennessee. AEMP is utilizing its proprietary, semi-solid
forming technology to produce high integrity, near-net-shape auto components at
this facility. A majority of the parts produced are used in fluid containment
applications. At year-end 1996, the plant was operating at rates below design
capacity. Production is expected to increase progressively as part programs
become qualified by customers. A $15 million recycling facility was constructed
at Jackson during 1996 to reclaim scrap generated at the manufacturing plant,
enabling such material to be reused in the semi-solid forming technology
process. AEMP also completed construction of a $23 million plant at Bentonville,
Arkansas designed to manufacture larger component parts for the automobile
industry using its semi-solid forming technology. Start-up operations began on
schedule in the third quarter of 1996. The Bentonville facility is expected to
begin producing specialty automotive wheels in the first quarter of 1997. The
Company has also formed a joint venture company with Mitsui & Co., Ltd. of Japan
and Mitsui & Co. (U.S.A.), Inc. to license this proprietary technology to
companies exclusively in Japan.
 
                                        9
<PAGE>   11
 
OTHER ACTIVITIES
  Alumax International Company
 
     To further its objective to participate in growth opportunities in emerging
global markets, the Company, through Alumax International Company, a wholly
owned subsidiary ("AIC"), has entered into a joint venture with Yunnan Aluminum
Processing Factory in Kunming, China, providing for the annual production of
8,000 to 10,000 tonnes of light gauge aluminum foil for China's packaging
market. The Company has a 56 percent interest in the joint venture and will
invest $38 million in cash to develop a continuous cast foil operation. Alumax
Foils is expected to provide training, as well as management and technical
assistance, to the joint venture.
 
     AIC is actively exploring other business opportunities on a worldwide
basis.
 
  Alumax Materials Management
 
     In 1996, the Company organized Alumax Materials Management, Inc. ("AMM"), a
wholly owned subsidiary, to provide certain services to other subsidiaries of
the Company. These services include primary products sales and customer service,
centralized procurement of all non-primary metal and selected non-metal inputs,
and use of the futures markets to hedge certain risks related to primary
aluminum prices, fixed forward sales, metal inventory positions, and energy
costs. AMM is also responsible for the centralized procurement of certain
shipping and freight services.
 
  Product Distribution
 
     Alumax produces and distributes products at all stages of the aluminum
product chain, from primary ingot to fabricated finished products, for a variety
of industrial, commercial and consumer markets. To reach these markets the
Company uses most common forms of product distribution channels -- wholesale
distributors, OEM manufacturers, traders, retail consumer goods outlets, agents,
manufacturers' representatives, general line and specialized dealers, and direct
sales. Many intermediate products, such as ingot, sheet and plate, are
distributed to other aluminum producers and fabricators for further processing
and distribution through many of these same channels.
 
  Competition
 
     The markets for most aluminum products are highly competitive. Primary
aluminum ingot is a commodity product, traded extensively on world metal
markets, and is thus very price sensitive. The market for premium ingot products
is also highly sensitive to pricing, but the Company believes that quality and
service are also important factors in competing with other premium product
manufacturers. Semi-fabricated and fabricated aluminum products compete
extensively on price, quality and service, not only within the aluminum products
industry but also with other materials, such as plastics, steel, copper, glass,
wood, fiberglass, zinc, lead, magnesium and paper. In markets where aluminum
products compete with other materials, the diverse characteristics of aluminum
are also significant factors in its competitiveness, particularly its light
weight and recyclability.
 
     Price competition, product range and quality, and the ability to provide
technical assistance to customers are important aspects of the Company's overall
strategy. A number of producers with which the Company competes are
substantially larger in terms of total assets, operations and sales. Among the
Company's principal competitors are Alcan Aluminium Limited, Aluminum Company of
America and Reynolds Metals Company.
 
  Research and Development
 
     The Company continues to explore new technology, processes and products in
the aluminum industry. Research and development activities are conducted at the
Company's technical center in Golden, Colorado, and at various operating
facilities. Expenditures for research and development totalled $19.2 million,
$18 million and $11.4 million in 1996, 1995 and 1994, respectively.
 
                                       10
<PAGE>   12
 
  Patents and Trademarks
 
     The Company owns or licenses a significant number of patents relating to
various products and processes. The Company does not consider its business to be
materially dependent on any one particular patent or patent license. The Company
also owns a large number of trademarks, including the "Alumax" and "Kawneer"
trademarks, which the Company believes may be material to its business.
 
  Employee and Labor Relations
 
     At year-end 1996, the Company employed approximately 14,000 people
worldwide, including approximately 12,500 employees in the United States.
Approximately 4,400 employees are represented by labor unions under separate
labor agreements with various international unions. Management considers its
employee relations to be good. In 1997, three labor contracts, covering a total
of approximately 1,350 employees, will expire and are expected to be
renegotiated during the year.
 
ENVIRONMENTAL MATTERS
 
     The Company is subject to various federal, state, local and foreign laws
and regulations including, among others, the Clean Air Act (including the 1990
amendments thereto), the Resource Conservation and Recovery Act and the Clean
Water Act and the regulations promulgated in connection therewith, concerning
the discharge of contaminants which may be emitted into the air and discharged
into the waterways and governing the use, discharge and disposal of hazardous
materials and wastes. The Company's present manufacturing facilities are
believed to be in substantial compliance with current laws and regulations.
Compliance with current laws and regulations has not had, and is not expected to
have, a material adverse effect on the Company's financial condition or results
of operations. Based on historical trends toward tighter environmental
standards, it appears likely that the Company will incur additional expenditures
to remain in compliance with federal and state environmental laws.
 
     The Company also is involved in certain claims and legal proceedings that
relate to the Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA") or similar state laws that impose environmental liability. These
matters include claims and proceedings in which the Company has been named as a
defendant or "potentially responsible party" with respect to the disposal of
hazardous substances at 39 pending waste disposal sites which, in most
instances, were owned or operated by third parties. CERCLA and state laws can
impose joint and several liability on generators of hazardous substances placed
in waste disposal sites for investigative, remedial and other costs associated
with cleanup of those sites if hazardous substances have been released into the
environment. The Company's ultimate liability in connection with present and
future environmental claims will depend on many factors, including its
volumetric share of the waste at a given site, the remedial action required, the
total cost of remediation and the financial viability and participation of the
other entities which also sent waste to the site. Based upon current law and
information known to the Company concerning the size of the sites known to it,
their years of operation, the number of other financially viable and
participating past users and the amount of available insurance coverage,
Management believes that it has adequate reserves so that anticipated and
estimable liabilities that may result from these matters, and any expenditures
for remediation programs it may be required to undertake, either individually or
in the aggregate, are not expected to have a material adverse effect on the
financial condition or ongoing results of operations of the Company. The Company
is unaware of any additional environmental matters which, based on information
currently known to the Company, would have a material effect upon the Company's
financial condition or ongoing results of operations. See "Legal Proceedings"
below.
 
     Legislation that would reauthorize and amend CERCLA is expected to be
reintroduced before Congress. The prospects for such legislative effort are
uncertain, as are any potential substantive changes that might result or impact
the Company's liability for cleanup costs in both pending and future claims.
 
     The Company's expenditures for environmental remediation and compliance
amounted to $12.9 million in 1996, $12.7 million in 1995 and $5.3 million in
1994. Of those amounts, $8.8 million, $9.0 million and $4.9 million,
respectively, was capitalized and the balance, net of insurance recoveries, was
charged to reserves. Based on available information, the Company anticipates
making capital and operating expenditures
 
                                       11
<PAGE>   13
 
of approximately $13.0 million and $12.7 million in 1997 and 1998, respectively,
for environmental remediation and compliance.
 
RECENT HISTORY
 
     The Company was incorporated in Delaware in 1973 and was operated as a
joint venture principally between AMAX Inc. ("Amax") and Mitsui & Co., Ltd.
until 1986. In 1986, Amax completed the acquisition of the remaining interest in
Alumax not already owned by it. On November 15, 1993 (the "Distribution Date"),
Amax effected a pro rata distribution (the "Distribution") of all of the
Company's outstanding common shares which it then held to the holders of Amax
common stock pursuant to an Agreement and Plan of Distribution, dated as of May
24, 1993, as amended as of November 15, 1993, between Amax and Alumax. The
Distribution occurred in connection with the merger (the "Merger") of Amax with
and into Cyprus Minerals Company pursuant to an Agreement and Plan of Merger,
dated as of May 24, 1993, as amended as of November 15, 1993. The Company has
operated as an independent, publicly held entity since the Distribution Date.
For a description of certain agreements between Amax and the Company entered
into in connection with the Distribution which define their rights and
obligations in respect of certain taxes, see "Legal Proceedings -- Tax Dispute
Regarding Consolidation with Amax."
 
ITEM 2. PROPERTIES
 
     Information in response to this Item is set forth in Item 1 above.
 
ITEM 3. LEGAL PROCEEDINGS
 
  Tax Dispute Regarding Consolidation with Amax
 
     The Internal Revenue Service (the "IRS") has asserted that the Company and
certain of its subsidiaries were improperly included in Amax's consolidated
income tax returns for 1984, 1985 and 1986 and on that basis has asserted a
federal income tax deficiency against Alumax of approximately $129 million.
Interest on the deficiency through December 31, 1996, would be approximately
$276 million. In response to the IRS' notice of deficiency, the Company filed a
petition in United States Tax Court (the "Tax Court"), seeking a redetermination
in respect of the purported deficiency. The parties have waived their rights to
a trial, and the matter has been submitted to the Tax Court for decision based
upon the pleadings, stipulations, memoranda and other documents submitted, or to
be submitted, to the Tax Court by the parties. A decision by the Tax Court is
expected in late 1997.
 
     In connection with the Distribution and the Merger, the Company and Amax
entered into the tax disaffiliation agreement, dated as of May 24, 1993 (the
"Tax Disaffiliation Agreement"), defining the rights and obligations of the
Company and Amax in respect of taxes following the consummation of those
transactions. Under the terms of the Tax Disaffiliation Agreement, the Company
has assumed responsibility for all proceedings regarding the purported
deficiency and payment of any additional taxes, along with penalties and
interest, which may ultimately be due.
 
     Prior to the Distribution, Amax vigorously contested the IRS' assertions
regarding a deficiency, and the Company is pursuing the same course of action.
Payment of the deficiency, with interest thereon, would provide certain tax
benefits to the Company that would offset in part, in the year of payment and
within a prescribed carryforward period, the cost of paying such deficiency and
interest. Additionally, Amax has agreed with the Company to share certain tax
benefits available to Amax in the event an adverse determination is ultimately
made.
 
     The Company believes that it has adequate reserves so that any unprovided
for net deficiency would not have a material adverse effect on the Company's
financial condition.
 
                                       12
<PAGE>   14
 
  Stringfellow
 
     In 1983, the United States and the State of California commenced an action
under CERCLA in the United States District Court for the Central District of
California against the Company and 30 other potentially responsible parties in
connection with the Stringfellow disposal site located at Glen Avon, California.
In a proceeding in the United States District Court for the Central District of
California, it was determined that both the defendants and the State of
California are responsible for certain costs associated with the cleanup of the
Stringfellow site. The issue of the allocation of liability among the defendants
and the State was tried before a Special Master who filed his Findings of Fact,
Conclusions of Law and Report and Recommendation of the Special Master Regarding
the State Share Fact Finding Hearing on November 30, 1993. On January 23, 1995,
the United States District Court entered an order adopting the findings,
conclusions and recommendations of the Special Master with certain
modifications, which did not adversely impact the Company. The order allocates
liability on the basis of two different types of legal claims, each of which has
a different legal standard of apportionment. As to CERCLA claims, the order
allocates liability as follows: 65 percent to the State, ten percent to
Stringfellow Quarry Company and 25 percent to all other parties (including the
Company). As to the claims asserted against the State under state law theories
such as negligence and breach of a mandatory duty, the order allocates 100
percent of the liability to the State.
 
     On July 16, 1996, the State of California filed a motion for
reconsideration of the District Court's liability rulings against the State,
based upon the United States Supreme Court's decision in Seminole Tribe of
Florida v. Florida. That decision, issued in March 1996, reversed an earlier
Supreme Court decision which held that Congress had the authority to abrogate
protections of the Eleventh Amendment of the Constitution barring certain suits
against states in federal courts, including under CERCLA. In the motion, the
State contends that the Eleventh Amendment is a jurisdictional bar which cannot
be waived through conduct in litigation and that the State has not expressly
waived its Eleventh Amendment immunity. Consequently, the State argues that the
liability rulings against the State must be reversed or the defendants'
counterclaims limited to defensive recoupment. The defendants filed an
opposition to that motion on August 2, 1996, which maintains that Seminole Tribe
does not alter prior law by recognizing the Eleventh Amendment as a
jurisdictional bar nor does the case address the doctrine of defensive
recoupment. The opposition also asserts that Seminole Tribe does not affect the
question of waiver of Eleventh Amendment immunity by conduct in litigation or
the District Court's prior finding that the State waived its Eleventh Amendment
immunity through its conduct of the lawsuit. Oral argument on the State's
motion, as well as on a motion filed by the defendants for a ruling that CERCLA
liability cannot be imposed upon them retroactively and a joint motion of the
United States and the defendants for entry of a judgment which will permit the
parties to appeal, was made before the Special Master on November 13 and 14,
1996. The Special Master will submit written recommendations to the District
Court, after which the parties will be afforded an opportunity to present
objections prior to entry of an order by the court.
 
     Based on information presently available, the Company does not believe that
any liability imposed in connection with the Stringfellow site will have a
material adverse effect on the Company's financial condition or ongoing results
of operations given the nature and extent of its involvement at the site and
available reserves.
 
  Proceedings Relating to the Howmet Acquisition
 
     In December 1990, the Company and two of its subsidiaries, among others,
were named as third-party defendants in a CERCLA action arising out of the
operation of the Blackbird Mine, a cobalt mine in Lemhi County, Idaho. The
third-party action was initiated by M.A. Hanna Company, Noranda Mining Company
and certain of their affiliates, all of which were defendants in a lawsuit
brought by the State of Idaho in the United States District Court for the
District of Idaho in 1983 seeking recovery of response costs incurred as a
result of alleged contamination resulting from cobalt mining in and around the
Blackbird Mine. The Company has been involved as a result of its 1983
acquisition of Howmet Corporation from Pechiney, a French corporation. It is
alleged that Howmet, along with certain of its predecessors and subsidiaries,
owned and operated the Blackbird Mine and engaged in extensive mining
activities.
 
                                       13
<PAGE>   15
 
     On June 21, 1993, the Department of Justice filed an action in the United
States District Court for the District of Idaho against the Company, one of its
subsidiaries and several other defendants seeking response costs and natural
resource damages occurring at or near the Blackbird Mine. On October 29, 1993,
the Department of Justice agreed to dismiss the Company as a defendant in such
action; however, a subsidiary of the Company remains a defendant.
 
     Under the terms of an agreement with Pechiney, the Company, subject to
limited contributions, will be indemnified against liabilities associated with
the Blackbird Mine as well as other claims and suits arising from activities
predating and unrelated to the aluminum businesses acquired by the Company in
1983. The Company assigned certain rights in respect of insurance coverage to
Pechiney, but is entitled to receive a portion of any recoveries obtained by
Pechiney.
 
     On August 22, 1991, the Company and certain of its subsidiaries filed an
action for declaratory relief seeking coverage for environmental claims and
damages for breach of contract against the primary and excess insurance carriers
which issued insurance policies to the Howmet corporate entities acquired by the
Company in 1983. The action was brought in the Superior Court of New Jersey,
Morris County and was consolidated with a similar suit between former affiliates
of the acquired entities and the carriers. A motion for summary judgment filed
by the insurance carriers with respect to the Blackbird Mine site on the basis
that Idaho law should be applied to that claim and coverage is not available
under Idaho law has been granted, in part, by the Court and a motion for
reconsideration of that ruling has been filed by Pechiney and the Company. An
adverse ruling on that motion or on appellate review, if sought, will not result
in additional liability to the Company for the Blackbird Mine site, based upon
the terms of the Company's agreement with Pechiney, but could reduce or
eliminate any insurance recovery for amounts already expended by the Company in
connection with that site.
 
     The Company believes that it has adequate reserves so that payments to be
made and reasonably anticipated contributions required under the settlement
agreement with Pechiney will not have a material adverse effect on the financial
condition or ongoing results of operations of the Company.
 
  Cressona Consent Decree
 
     As indicated above, the Company acquired Cressona on January 31, 1996.
Cressona is subject to a consent decree (the "Consent Decree") entered into with
the United States of America to settle an action brought on behalf of the United
States Environmental Protection Agency (the "EPA"). That action was initiated in
the United States District Court for the Eastern District of Pennsylvania on
September 10, 1992, in respect of the remediation and disposal of
polychlorinated biphenyls ("PCBs") discovered at Cressona's facility at
Cressona, Pennsylvania. The PCBs were ingredients in lubricants and hydraulic
fluids used at that facility by the prior owner.
 
     The Consent Decree, which was filed in the action on August 3, 1993,
specified actions that Cressona would undertake to fully characterize and
determine the extent of PCB contamination at the facility as well as criteria
and conditions to be met with respect to the remediation of such contamination.
In addition, the Consent Decree imposed certain reporting requirements,
established dates for the performance of specified actions to be taken, and
provided for stipulated penalties for failure to comply with requirements of the
Consent Decree or for discharges of PCBs in excess of specified concentrations.
Cressona has either substantially complied with the provisions of the Consent
Decree or sought modification of those requirements from the EPA. Cressona has
provided the EPA with extensive information to characterize the nature and
extent of the PCB contamination, has performed substantial remedial work and
proposed measures for remediation of the remaining contamination. The precise
nature and extent of further remedial activities which will be required and the
costs of those activities cannot be determined with certainty at this time and
may be subject to change depending upon results of further monitoring at the
facility as well as EPA concurrence with the additional remedial actions
proposed by Cressona. However, the Company believes that Cressona has adequate
reserves so that reasonably anticipated and estimable costs for remediation of
PCB contamination at the Cressona, Pennsylvania facility will not have a
material adverse effect on the financial condition or ongoing results of
operations of the Company.
 
                                       14
<PAGE>   16
 
  Other Environmental Matters
 
     In addition to the Stringfellow and Blackbird Mine litigation, the Company
has been named as a defendant or identified as a potentially responsible party
at 37 other pending sites which, in most instances, were owned or operated by
third parties, including some sites relating to operations of the Pechiney
subsidiaries acquired in 1983. Unlike the Blackbird Mine and three other
mining-related sites, claims against the Company at sites relating to the
aluminum businesses acquired in 1983 do not fall within the indemnification
obligations of the Company's settlement agreement with Pechiney. In addition,
the Company and its subsidiaries have been named as defendants or potentially
responsible parties at sites associated with operations of its subsidiaries
which are unrelated to the Howmet acquisition. At virtually all sites, the
Company is one of many potentially responsible parties who are alleged to be
jointly and severally responsible for the response costs associated with the
sites.
 
     Management periodically evaluates the Company's potential liability for
remediation and related costs at both its own and other parties' sites. Such
evaluations are based upon then current information, including alternative
methods of remediation, estimated costs for implementation of such alternatives,
the nature and the extent of the Company's involvement at the site in question,
and anticipated contributions of other potentially responsible parties. Once it
becomes probable that the Company will incur costs in connection with
remediation of a site and such costs can be reasonably estimated, the Company
establishes or adjusts its reserve for those projected costs.
 
     Due to uncertainties associated with developing case law relating to
insurance coverage for environmental claims and remediation costs, insurance
recoveries are not considered in estimating the Company's share of remediation
costs at a site unless an insurance carrier has agreed to pay a portion of those
costs. Projections of remediation costs by their nature are imprecise and
reserves accrued by the Company represent Management's best estimate of such
costs based upon available information about known sites. It is not possible to
predict the amount or timing of future remediation costs which may be ultimately
determined or project costs for sites which may be identified in the future. It
should be recognized that a number of the Company's present and past facilities
have been in operation for many years and additional remediation activities may
be required as environmental laws and circumstances continue to evolve. The
Company believes that it has adequate reserves so that anticipated and estimable
liabilities that may result from sites known to it, and any expenditures for
remediation programs it may be required to undertake, either individually or in
the aggregate, are not expected to have a material adverse effect on the
financial condition or ongoing results of operations of the Company.
 
  Other Legal Proceedings
 
     Justice Department Inquiry.  In August 1994, Alumax received a civil
investigative demand from the Antitrust Division of the Department of Justice
requesting documents and information principally relating to reductions in the
production of primary aluminum during the period from 1991 to the date of
demand. Alumax has cooperated with the Department in connection with this
inquiry.
 
     Antitrust Action.  Alumax and four other producers of primary aluminum,
together with The Aluminum Association, an industry trade association, were
served with a summons and complaint in March 1996, alleging violations of
California's State antitrust act (the Cartwright Act). The suit was originally
filed in the Superior Court for Los Angeles County, but was removed by the
defendants to the United States District Court for the Central District of
California. Plaintiff alleges that the defendants conspired, together with the
United States Government and the governments of several other sovereign nations,
to fix the prices of primary aluminum by agreeing to reduce production. The
allegations arise from the Memorandum of Understanding Concerning the Aluminum
Market ("MOU") negotiated by the United States and other governments in 1993 and
1994, and executed by them in Brussels in 1994, and the actions of the
defendants alleged to have been undertaken in connection with the MOU.
 
     The complaint was brought by a California bicycle manufacturer as a
purported class action on behalf of all direct and indirect purchasers of
primary aluminum and aluminum products produced during the period from January
1, 1994 to March 5, 1996. The complaint seeks injunctive relief and recovery of
damages that,
 
                                       15
<PAGE>   17
 
when trebled, are alleged to be in excess of $26 billion. Following removal of
the action to the District Court, the defendants filed a motion to dismiss. Upon
considering that motion, plaintiff's opposition and the defendants' reply, the
Court by order dated May 28, 1996, converted the motion to dismiss to a motion
for summary judgment by the defendant-aluminum producers. In the same order, the
Court granted The Aluminum Association's motion to dismiss for lack of personal
jurisdiction. Following the filing of briefs in support and in opposition to
summary judgment, the Court granted summary judgment in favor of the
defendant-aluminum producers and dismissed the complaint with prejudice by order
dated July 1, 1996. The Court denied plaintiff's subsequent motion for
reconsideration by order entered on July 16, 1996.
 
     On July 18, 1996, the plaintiff filed a notice of appeal to the United
States Court of Appeals for the Ninth Circuit from the United States District
Court's orders granting The Aluminum Association's motion to dismiss and the
aluminum producers' motion for summary judgment and the order denying the
plaintiff's motion for reconsideration. The parties are currently in the process
of submitting briefs to the United States Court of Appeals.
 
     Patent Infringement Action.  On August 17, 1995, the Company filed suit in
the United States District Court for the Eastern District of Arkansas against
Hot Metal Molding, Inc. alleging infringement of a process patent, United States
Patent 4687042 (the "042 patent"), held by the Company which is used in
semi-solid forming applications. The litigation is in the discovery phase and
was recently expanded by order of the Court to include Ormet Primary Aluminum
Corporation ("Ormet"), the exclusive North American licensee of Pechiney
Corporation's technology for casting thixotropic billet, and certain
subsidiaries and affiliates of Buhler International AG, a Swiss manufacturer of
die casting machines. Ormet has filed counterclaims alleging that the patent is
invalid, void and unenforceable and is seeking a declaratory judgment that the
042 patent would not be infringed by the use of Ormet's billet in any diecasting
application. The Company intends to vigorously pursue its infringement claims
while opposing the counterclaims of Ormet and other defendants.
 
     Other.  In addition to the matters described above, the Company and its
subsidiaries are also involved in the defense and handling of various judicial
proceedings and claims arising out of alleged defects in its products as well as
other matters occurring in the ordinary course of business. Management believes,
taking into account its reserves and insurance coverage, that these matters,
either individually or in the aggregate, will not have a material adverse effect
on the financial condition or ongoing results of operations of the Company.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the quarter ended December 31,
1996.
 
EXECUTIVE OFFICERS OF THE REGISTRANT
 
     As of February 1, 1997, the names, offices with the Company, ages and years
of service as an officer of all Executive Officers of the Company were as
follows:
 
<TABLE>
<CAPTION>
                                                                                             YEARS AS
             NAME                                      OFFICE                         AGE    OFFICER
             ----                                      ------                         ---    --------
<S>                              <C>                                                  <C>    <C>
Allen Born                       Chairman and Chief Executive Officer                 63         3
George P. Stoe                   Executive Vice President                             51         6
Lawrence B. Frost                Senior Vice President and Chief Financial Officer    54        10
Helen M. Feeney                  Vice President and Corporate Secretary               56         3
Eugene R. Greenberg              Vice President                                       58        --
Jay M. Linard                    Vice President                                       51        --
Gary D. McDowell                 Vice President                                       54         2
Philippe G. Thaure               Vice President                                       59         6
Michael T. Vollkommer            Vice President and Controller                        38         3
Robert P. Wolf                   Vice President and General Counsel                   53         7
Thomas L. Gleason                Treasurer                                            45        --
</TABLE>
 
                                       16
<PAGE>   18
 
     There are no family relationships, by blood, marriage or adoption, between
the above officers. All officers are elected until the next annual meeting of
the Board of Directors or until their respective successors are chosen and
qualified. There is no arrangement or understanding between any of the above
officers and any other person pursuant to which he or she was selected as an
officer.
 
     The principal occupations and positions for the past five years of each of
the Executive Officers of the Company are as follows:
 
          MR. BORN has been a Director of the Company since 1985, Chairman since
     April 1993 and Chairman and Chief Executive Officer since November 1993.
     For more than five years prior to November 1993, he had been Chief
     Executive Officer of Amax and also served as Chairman of that company from
     June 1988 to November 1993. Mr. Born was also Co-Chairman of Cyprus Amax
     Minerals Company from November 1993 to November 1995 and Vice Chairman of
     that company from November 1995 to May 1996.
 
          MR. STOE has been an Executive Vice President, responsible for the
     Company's semi-fabricated products businesses, since June 1994, after
     having been President of Alumax Mill Products, Inc., a wholly owned
     subsidiary of Alumax, from October 1990. In August 1995, he was given
     additional responsibility for the Company's primary aluminum operations.
     Mr. Stoe was elected a Director of the Company in December 1996.
 
          MR. FROST has been Senior Vice President and Chief Financial Officer
     of Alumax since May 1994, after having been a Vice President since November
     1993. He also served as Treasurer of the Company from November 1993 to
     October 1996. Prior to November 1993, he had been Treasurer of Amax from
     January 1992 to November 1993.
 
          MRS. FEENEY has been Vice President and Corporate Secretary of Alumax
     since November 1993. For more than five years prior thereto, she had been
     Corporate Secretary of Amax.
 
          MR. GREENBERG was elected a Vice President of Alumax in December 1996
     and has been President of Alumax Materials Management, Inc., a wholly owned
     subsidiary of the Company, since September 1996. Before joining Alumax in
     February 1996, Mr. Greenberg was vice president-materials of Commonwealth
     Aluminum Company from 1991.
 
          MR. LINARD was elected a Vice President of Alumax in December 1996 and
     has been President of Alumax Extrusions, Inc., a wholly owned subsidiary of
     the Company and formerly named Cressona Aluminum Company, for more than
     five years.
 
          MR. MCDOWELL has been a Vice President of Alumax since August 1994. He
     joined the Company from Amax Energy, Inc., where he had been an Executive
     Vice President since July 1989.
 
          MR. THAURE has been a Vice President of Alumax for more than five
     years and President of Alumax International Company and Alumax Technology
     Corporation, each a wholly owned subsidiary of the Company, since February
     1994. For more than five years prior thereto, he had been a Vice President
     of Alumax Primary Aluminum Corporation, a wholly owned subsidiary of
     Alumax.
 
          MR. VOLLKOMMER has been a Vice President of Alumax since December 1995
     and Controller of the Company since February 1994. He had served as
     Director of Accounting at Amax from December 1992 to December 1993. Prior
     to December 1992, he had been a Manager with the public accounting firm of
     Coopers & Lybrand for more than five years.
 
          MR. WOLF has been Vice President and General Counsel of Alumax for
     more than five years. He also served as Secretary of Alumax from November
     1989 to November 1993.
 
          MR. GLEASON was elected Treasurer of the Company in November 1996. For
     more than five years prior thereto, he held various executive and
     managerial positions with Royal Bank of Canada, most recently serving as
     Vice President of Corporate Banking for the Eastern region of the United
     States.
 
                                       17
<PAGE>   19
 
                                    PART II
 
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
     The Common Stock, par value $.01 per share, of the Company (the "Common
Stock") is listed on the New York, London, Toronto and Brussels Stock Exchanges.
The following table sets forth on a quarterly basis the high and low sales
prices of the Common Stock on the New York Stock Exchange for the two most
recent fiscal years:
 
<TABLE>
<CAPTION>
                                                              HIGH      LOW
                                                              ----      ---
<S>                                                           <C>       <C>
1995
  First Quarter.............................................  $29 5/8   $23 3/4
  Second Quarter............................................  $31 7/8   $25 7/8
  Third Quarter.............................................  $37 7/8   $31 1/4
  Fourth Quarter............................................  $34 1/2   $27 5/8
1996                                                                           
  First Quarter.............................................  $40       $26 5/8
  Second Quarter............................................  $36 1/2   $29 1/8
  Third Quarter.............................................  $34       $29    
  Fourth Quarter............................................  $34 1/8   $30 5/8
</TABLE>
 
     The Company paid no dividends on the Common Stock in 1996 or 1995 and does
not expect to do so over the foreseeable future. Future Common Stock dividend
decisions will take into account several factors, including the then current
business results and cash requirements of the Company. In addition, the Company
has a loan agreement that contains, among other things, restrictions on the
payment of dividends by the Company. See Note 6 to the Financial Statements
included elsewhere herein.
 
     At December 31, 1996, there were 10,088 holders of record of the Company's
Common Stock.
 
                                       18
<PAGE>   20
 
ITEM 6.  SELECTED FINANCIAL DATA
 
     The following table sets forth selected financial information of the
Company for each of the five years ended December 31, 1996 which has been
derived from the audited Financial Statements of the Company. The information
set forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" which follows this
section, and the Financial Statements and related notes included elsewhere
herein. Historical per share data for earnings and book value for periods prior
to 1993 have not been presented as the Company was not a publicly-held company
prior to 1993.
 
<TABLE>
<CAPTION>
                                                            YEAR ENDED DECEMBER 31,
                                              ----------------------------------------------------
                                                1996       1995       1994       1993       1992
                                              --------   --------   --------   --------   --------
                                                (MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<S>                                           <C>        <C>        <C>        <C>        <C>
OPERATING RESULTS
  Net sales.................................  $3,159.3   $2,926.1   $2,754.5   $2,347.3   $2,431.0
                                              ========   ========   ========   ========   ========
  Earnings (loss) from operations...........  $  231.9   $  305.8   $  134.0   $ (116.1)  $  (33.0)
  Gain on sales of assets(a)................     242.9      128.8        6.6
  Interest expense, net(b)..................     (62.8)     (65.4)     (72.6)     (76.5)     (47.7)
  Other income, net.........................      10.6        7.3        4.4        6.0        1.5
  Income tax provision (benefit)............     172.6      139.1       25.7      (52.1)     (16.0)
  Cumulative effect of accounting
     changes(c).............................                                       (3.8)      (1.0)
                                              --------   --------   --------   --------   --------
  Net earnings (loss)(a)....................  $  250.0   $  237.4   $   46.7   $ (138.3)  $  (64.2)
                                              ========   ========   ========   ========   ========
  Earnings (loss) applicable to common
     shares.................................  $  240.7   $  228.1   $   37.4   $ (147.6)  $  (64.4)
                                              ========   ========   ========   ========   ========
EARNINGS (LOSS) PER COMMON SHARE(D)
  Primary...................................  $   5.19   $   5.05   $    .84   $  (3.33)
  Fully diluted.............................  $   4.53   $   4.33
FINANCIAL POSITION
  Working capital...........................  $  660.6   $  767.9   $  706.9   $  571.9   $  498.0
  Property, plant and equipment, net........   2,027.4    1,611.9    1,523.3    1,571.1    1,626.5
  Total assets..............................   3,298.7    3,135.0    2,958.8    2,973.6    2,871.2
  Long-term debt............................     672.0      708.9      851.9      925.2      853.3
  Total debt................................     710.4      845.9      915.5      988.2      882.7
  Stockholders' equity......................   1,640.8    1,399.3    1,162.1    1,099.6    1,211.7
OTHER DATA
  Total debt to invested capital............      30.2%      37.7%      44.1%      47.3%      42.2%
  Return on sales...........................       7.9%       8.1%       1.7%      (5.9)%     (2.6)%
  Return on average stockholders' equity....      16.4%      18.5%       4.1%     (12.0)%     (5.1)%
  Return on average invested capital........      13.5%      14.1%       4.8%      (4.2)%     (1.6)%
  Book value per share(e)...................  $  30.00   $  25.73   $  21.45   $  20.38
</TABLE>
 
---------------
 
(a) Included in 1996 is a pre-tax gain of $71.7 ($36.7 after-tax) related to the
    sale of certain fabricated products businesses, a pre-tax gain of $92.8
    ($55.1 after-tax) related to the sale of mining interests and a pre-tax gain
    of $78.4 ($48.6 after-tax) related to the sale of a 23 percent interest in
    the Mt. Holly primary aluminum reduction plant. Included in 1995 is a
    pre-tax gain of $128.8 ($81.3 after-tax) related to the sale of a 14 percent
    interest in each of the Intalco and Eastalco primary aluminum reduction
    plants. Included in 1994 is a pre-tax gain of $6.6 ($4.0 after-tax) related
    to the sale of an Australian mining investment.
(b) Includes capitalized interest of $7.5 in 1996, $5.4 in 1995, and $41.7 in
    1992.
(c) The 1993 results include a charge of $3.8 (net of $2 tax benefit) for
    postemployment benefits related to the adoption of SFAS No. 112. The 1992
    results include a charge of $79.8 (net of $46.7 tax benefit) for post
    retirement health care and life insurance benefits related to the adoption
    of SFAS No. 106 and a $78.8 tax benefit related to the adoption of SFAS No.
    109.
(d) Per share data for 1993 are calculated on a pro forma basis using 44,354,000
    average shares outstanding from November 15, 1993 through December 31, 1993,
    as if such shares were outstanding throughout the year. Fully diluted
    earnings per common share are omitted when anti-dilutive.
(e) Book value per share amounts are determined as if the Series A Preferred
    Stock, which was converted to Common Stock in December 1996, had been
    converted to Common Stock in each year presented.
 
                                       19
<PAGE>   21
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
       (Millions of dollars, except per tonne amounts)
 
INTRODUCTION
 
     The Company is an integrated producer of aluminum products, operating in a
single segment: aluminum processing. Using purchased alumina, the raw material
used to produce aluminum, the Company produces primary aluminum employing an
electrolytic process. Primary aluminum products are sold externally or further
processed into a broad range of semi-fabricated and fabricated products. The
Company's products are sold to a wide variety of markets, including
transportation, distributors, building and construction, consumer durables, and
packaging. The following should be read in conjunction with the Company's
consolidated financial statements and the notes thereto, which are contained
elsewhere herein.
 
     Net earnings for the year ended December 31, 1996 totalled $250.0 as
compared to net earnings of $237.4 for the year ended December 31, 1995 and net
earnings of $46.7 for the year ended December 31, 1994. The 1996 and 1995
results represent the Company's third and fourth, respectively, most profitable
years since its incorporation in 1973.
 
     Since becoming an independent public corporation in late 1993, management
has made significant progress in implementing a strategic plan designed to
strengthen the Company's balance sheet, enhance stockholder value and position
the Company for future growth. A significant component of this strategy includes
the sale of certain noncore assets and mature, low growth businesses, with
reinvestment of proceeds into high growth potential, core businesses. In the
three years ended December 31, 1996, the Company has completed the sale of
several such non-essential businesses and assets totalling $770 and has invested
nearly $1 billion into business expansion and strategic acquisitions. Proceeds
from the aforementioned sales include the following notable transactions:
 
     - $235.0 from mining investments in Australia and Mexico;
 
     - $236.9 from excess primary aluminum capacity; and
 
     - $246.6 from the sale of certain fabricated products businesses ("Fab
      Products") in the United States and Europe.
 
Dispositions in 1996 generated after-tax gains of $140.4 and raised proceeds of
$495.9, which exceeded the total cost of the $436.5 Cressona Aluminum Company
("Cressona") acquisition in January 1996 and enabled the Company to retire the
debt acquired and incurred to finance that acquisition. These transactions have
reduced the Company's exposure to the domestic building and construction market
and increased its presence in the higher growth transportation and distribution
sectors. Dispositions in 1995 generated an after-tax gain of $81.3 and raised
proceeds of $147.6. In 1994, dispositions generated an after-tax gain of $4.0
and raised proceeds of $75.0. These gains have been excluded from earnings from
operations in the Company's financial statements. In addition, proceeds of $6.1,
$3.2 and $42.2 were received in 1996, 1995 and 1994, respectively, from the sale
of various other assets.
 
     Parallel with the progress of its strategic plan, the Company's balance
sheet has been substantially strengthened. Total stockholders' equity exceeds
$1.6 billion at December 31, 1996, up almost 50 percent since the Company became
an independent public corporation. The ratio of total debt to invested capital
was 30 percent at December 31, 1996, compared to 38 percent and 44 percent at
December 31, 1995 and 1994, respectively.
 
EARNINGS FROM OPERATIONS
 
     Earnings from operations for the year ended December 31, 1996 totalled
$231.9 compared to earnings of $305.8 for the year ended December 31, 1995 and
of $134.0 for the year ended December 31, 1994. The lower 1996 earnings from
operations is attributable to lower aluminum prices and higher raw material,
research, business and product development costs. Included in 1996 earnings is
$3.7 related to the liquidation of LIFO inventories and $2.1 from the sale of
pollution credits. Included in 1995 earnings is a $7.3 reduction in the sheet
mill operations restructuring liability to account for lower than expected
costs, $5.1 from gains on sales
 
                                       20
<PAGE>   22
 
of assets, and $1.4 related to the liquidation of LIFO inventories. The 1994
earnings include $5.2 of income related to the liquidation of LIFO inventories
and $2.3 in net gains on sales of assets.
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                              --------------------------------
                                                                1996        1995        1994
                                                              --------    --------    --------
<S>                                                           <C>         <C>         <C>
Net sales:
  Aluminum processing:
     Primary products.......................................  $  658.9    $  724.5    $  592.7
     Semi-fabricated products(1)............................   1,639.5     1,235.4     1,264.2
     Fabricated products(1).................................     860.9       966.2       897.6
                                                              --------    --------    --------
                                                              $3,159.3    $2,926.1    $2,754.5
                                                              ========    ========    ========
Earnings from operations:
  Aluminum processing.......................................  $  275.6    $  339.7    $  173.3
  Corporate.................................................     (43.7)      (33.9)      (39.3)
                                                              --------    --------    --------
                                                              $  231.9    $  305.8    $  134.0
                                                              ========    ========    ========
Sources and shipments (thousands of tonnes):
  Sources of metal (unaudited)
     Primary aluminum production............................     686.3       650.9       680.7
     Aluminum purchases.....................................     419.6       355.3       364.5
                                                              --------    --------    --------
                                                               1,105.9     1,006.2     1,045.2
                                                              ========    ========    ========
  Metal shipments (unaudited)
     Aluminum processing:
     Primary products.......................................     374.3       416.6       423.8
     Semi-fabricated products(1)............................     574.5       414.3       488.7
     Fabricated products(1)(2)..............................     133.3       142.6       166.8
                                                              --------    --------    --------
                                                               1,082.1       973.5     1,079.3
                                                              ========    ========    ========
</TABLE>
 
---------------
 
(1) In conjunction with the Fab Products sale, net sales and shipments for the
     Company's Magnolia operation have been reclassified to Semi-fabricated
     products. Magnolia, which manufactures shower and tub enclosures, stadium
     seating and other extruded products, has been transferred into the
     Company's extrusions business.
(2) Included in Fabricated products metal shipments are billet shipments of
     28.6, 26.8 and 51.7 thousand tonnes for the years ended December 31, 1996,
     1995 and 1994, respectively.
 
NET SALES AND SHIPMENTS
 
     The Company generated record sales of $3,159.3 on record aluminum shipments
of approximately 1.1 million tonnes in 1996. Sales of $2,926.1 in 1995 and
$2,754.5 in 1994 were generated on aluminum shipments of approximately 1.0 and
1.1 million tonnes, respectively. The Company's net sales are sensitive to
changes in the world pricing of primary aluminum. The price sensitivity impacts
substantially all of the Company's products to varying degrees, with less impact
on the more specialized and value added products.
 
     The LME cash price averaged $1,510 per tonne in 1996 compared with $1,810
and $1,480 per tonne in 1995 and 1994, respectively. The LME price declined
during 1996 from a January 1996 average of $1,590 per tonne to a December 1996
average of $1,500 per tonne. Net sales for 1996 reflect the impact of the annual
average price decline. Sales growth of 6 percent in 1995 is attributable to
improved pricing offset somewhat by a decline in shipments.
 
     Primary products' external net sales in 1996 decreased nine percent on
shipment declines of ten percent directly resulting from higher internal
consumption from downstream operations. Primary production rose in 1996 as idled
capacity restarts of approximately 90,000 tonnes, which were announced in
November 1995,
 
                                       21
<PAGE>   23
 
were completed in January 1996. The Company's smelter network is currently
operating at or above full nameplate capacity.
 
     Primary products' external net sales in 1995 increased 22 percent on
shipment declines of two percent, having benefited from overall higher realized
selling prices in 1995 as compared to 1994. Primary production declined four
percent in 1995, reflecting the sale of a 14 percent undivided interest in the
Intalco and Eastalco aluminum reduction facilities on March 31, 1995.
 
     Semi-fabricated products' net sales in 1996 increased 33 percent over 1995,
principally due to shipment increases of 39 percent. Substantially all of the
1996 increase in shipments was generated through the acquisition of Cressona,
which more than doubled the capacity of the Company's extrusion business,
creating an organization regarded as having the world's largest soft-alloy
extrusion manufacturing capacity. Slightly offsetting the impact of higher
shipments were lower prices in the Company's sheet mill operations. The sheet
industry continues to experience low pricing due to overcapacity which has
resulted primarily from displaced can sheet capacity. To address the issue of
low prices, the Company is upgrading its sheet facilities and is focusing its
manufacturing and marketing efforts on higher margin niche products while
transitioning away from commodity sheet products.
 
     Semi-fabricated products' net sales in 1995 declined two percent from 1994
on shipment declines of 15 percent. The decline in shipments principally
reflects the closure of two sheet mill operations at Joliet, Illinois, and
Riverside, California, along with the impact of the August 1994 disposition of
an aluminum distribution business. The decline in shipments was offset by higher
realized prices in all businesses, particularly from strong demand of extruded
products in the transportation industry.
 
     Fabricated products' net sales in 1996 declined 11 percent on a seven
percent decline in shipments. The Company sold Fab Products, which had sales of
$485.0 in 1995 and $363.3 in 1996 through the date of disposition, on September
25, 1996. This decline in sales was partially offset by an increase in sales to
the domestic building and construction market. General economic conditions in
the United States have had a positive impact on the domestic building and
construction markets, while European architectural sales declined because of
sluggish economic conditions in major European markets.
 
     Fabricated products' 1995 net sales increased eight percent on a decline in
shipments of 15 percent. Higher realized pricing at all the Fabricated products
businesses more than offset lower volumes. Approximately 50 percent of the
volume decline in 1995 resulted from lower external billet sales in a secondary
aluminum operation in Europe.
 
COST AND EXPENSES
 
     The Company's cost and expenses were $2,927.4 for 1996 compared to $2,620.3
for 1995 and $2,620.5 for 1994. The increase in total cost and expense levels in
1996 reflects the expanded volume from the Company's extrusion operations
combined with increases in raw material, research, business and product
development costs, partially offset by a volume reduction associated with the
Fab Products disposition.
 
     In 1995, the Company incurred certain costs associated with the effects of
production curtailments, higher raw material and power costs, and external
aluminum purchases. However, total cost of goods sold remained flat in 1995 in
comparison to 1994 due to lower shipments.
 
     Primary production during 1995 and 1994 was below total nameplate capacity
due to curtailments at the Company's Intalco and Mt. Holly primary aluminum
reduction facilities. These curtailments were made in response to certain power
curtailments initiated by the Bonneville Power Administration, a supplier of
power to the Intalco facility, and the then prevailing low world pricing of
aluminum. During the fourth quarter of 1995, in response to the anticipated
increase in demand for primary aluminum from the Company's downstream businesses
and the availability of favorably priced power, the Company announced the
restart of its curtailed capacity. The restarts were completed by January 1996
and the facilities are currently operating at capacity.
 
                                       22
<PAGE>   24
 
     Depreciation expense increased 27 percent in 1996 principally due to the
expansion of the Company's extrusions business and the effects of recent capital
spending programs. In 1995, depreciation expense decreased 5 percent compared
with 1994, primarily as a result of asset sales.
 
OTHER ITEMS AFFECTING NET EARNINGS
 
  Other income, net
 
     Other income, net for the years ended December 31, 1996, 1995 and 1994 was
$10.6, $7.3 and $4.4, respectively. Included in 1996 and 1995, respectively, are
$18.6 and $11.6 for dividends received from Mexican mining operations. Included
in 1994 are $12.6 for dividends received from Mexican mining operations and a
$1.9 loss from Alumax's equity share of operating results from an investment in
Australian mining operations. The Company sold its investments in the Mexican
and Australian mining operations during 1996 and 1994, respectively.
 
  Interest expense, net
 
     Gross interest expense was $74.1, $81.6 and $78.2 for the years ended
December 31, 1996, 1995 and 1994. Gross interest expense in 1996 decreased due
to lower interest rates compared to 1995. Gross interest expense in 1995 was
higher than in 1994 due to higher interest rates partially offset by lower
average borrowings. Interest income for the years ended December 31, 1996, 1995
and 1994 was $3.8, $10.8 and $5.6, respectively. Interest income was higher in
1995 due to higher interest rates and higher overall cash balances. Capitalized
interest in 1996 was $7.5 as compared to $5.4 in 1995.
 
  Income taxes
 
     The income tax provision for the year ended December 31, 1996 was $172.6
compared to an income tax provision of $139.1 and $25.7 in 1995 and 1994,
respectively. Effective tax rates differ from the statutory rate due to
provisions for prior years and provisions for state and foreign taxes. In
addition, the 1996 repatriation of foreign earnings associated with the sale of
Fab Products' businesses in Western Europe also contributed to an effective tax
rate higher than the statutory rate. In the first quarter of 1995, the Company
reversed a $13.4 federal income tax valuation allowance in anticipation of
utilization of the asset. This deferred tax asset has been subsequently
realized.
 
STRATEGIC TRANSACTIONS
 
     The Company periodically implements strategic actions which it believes
afford it the opportunity to redeploy resources to enhance profitability and
growth. During 1996, 1995 and 1994 the following notable strategic transactions
occurred:
 
<TABLE>
<CAPTION>
                                                  DISPOSITION   ACQUISITION   PRE-TAX   AFTER-TAX
                                                   PROCEEDS        COST        GAIN       GAIN
                                                  -----------   -----------   -------   ---------
<S>                                               <C>           <C>           <C>       <C>
1996:
  Fab Products..................................    $246.6                    $ 71.7     $ 36.7
  Mexican Mining Investment.....................     160.0                      92.8       55.1
  Excess Primary Aluminum Capacity..............      89.3                      78.4       48.6
  Cressona Aluminum Company.....................                  $436.5
                                                    ------        ------      ------     ------
                                                    $495.9        $436.5      $242.9     $140.4
                                                    ======        ======      ======     ======
1995:
  Excess Primary Aluminum Capacity..............    $147.6                    $128.8     $ 81.3
                                                    ======                    ======     ======
1994:
  Australian Mining Investment..................    $ 75.0                    $  6.6     $  4.0
                                                    ======                    ======     ======
</TABLE>
 
                                       23
<PAGE>   25
 
  Dispositions
 
     On September 25, 1996, the Company sold certain fabricated products
businesses in Western Europe and in the United States for $246.6 in cash, net of
cash sold of $5.4. The Company recorded an after-tax gain of $36.7, net of a
$35.0 tax provision, in the third quarter of 1996.
 
     In June 1996, the Company sold its investment in Mexican mining interests
for total consideration of $160 in cash. The Company recorded an after-tax gain
of $55.1, net of a $37.7 tax provision, in the second quarter of 1996.
 
     In January 1996, the Company sold a 23 percent undivided interest in its
Mt. Holly primary aluminum reduction facility for $89.3, which the Company
applied to the early retirement of a $90.7 promissory note due in May 1996. The
Company recorded an after-tax gain of $48.6, net of a $29.8 tax provision, in
the first quarter of 1996. This transaction reduced the Company's ownership in
the Mt. Holly facility to 50.33 percent.
 
     In March 1995, the Company sold a 14 percent undivided interest in each of
the Company's Intalco and Eastalco primary aluminum reduction facilities for
cash proceeds of $147.6, resulting in an after-tax gain of $81.3, net of a $47.5
tax provision, recorded in the first quarter of 1995. This transaction reduced
the Company's ownership in each facility to 61 percent.
 
     In March 1994, the Company sold a 37 percent undivided interest in
Australian mining interests for $75.0 in cash. The Company recorded an after-tax
gain of $4.0, net of a $2.6 tax provision, in the first quarter of 1994.
 
  Acquisition
 
     On January 31, 1996, the Company purchased all of the common shares of
privately held Cressona for a cash cost, including expenses, of $436.5, net of
$3.1 of cash acquired. In conjunction with the acquisition, accounts payable,
debt and other liabilities of $87.4 were acquired. Cressona is a leading
manufacturer of extruded aluminum products.
 
     The transaction has been accounted for as a purchase and the results of
operations of Cressona have been included in the consolidated financial
statements since January 31, 1996. The acquisition was financed with cash on
hand and $375 of borrowings obtained under available credit facilities. All of
these borrowings have been repaid.
 
  Pro Forma Information
 
     The following summary presents Alumax's unaudited pro forma consolidated
net sales, net earnings, and primary earnings per common share for 1996 and
1995, respectively, as if the acquisition of Cressona and the sale of Fab
Products each occurred on January 1, 1996 and 1995. The pro forma adjustments
for 1996 include the addition of Cressona's operating results for the month of
January 1996. Since the acquisition occurred on January 31, 1996, the Company's
actual results include Cressona from February 1, 1996 through December 1996.
 
<TABLE>
<CAPTION>
                                                                      FOR THE YEAR ENDED
                                                                         DECEMBER 31,
                                                                  --------------------------
                                                                    1996              1995
                                                                  --------          --------
            <S>                                                   <C>               <C>
            Net sales...........................................  $2,830.3          $2,910.1
            Net earnings........................................  $  243.6          $  238.6
            Primary earnings per common share...................  $   5.05          $   5.07
</TABLE>
 
     The pro forma results are based upon certain assumptions and estimates,
which the Company believes are reasonable. The pro forma results do not purport
to be indicative of results that actually would have been obtained had these
transactions occurred on January 1, 1996 or 1995, nor are they intended to be a
projection of future results.
 
                                       24
<PAGE>   26
 
LIQUIDITY AND CAPITAL RESOURCES
 
  Operating activities
 
     Operations provided cash of $193.0 in 1996, compared to $254.7 in 1995 and
$10.5 in 1994. Lower cash flow is directly related to the decrease in earnings
from operations partially offset by working capital reductions, net of the
effects of the Cressona acquisition and the sale of Fab Products. Cash flow in
1994 and 1995 was negatively impacted by $14.5 and $3.0, respectively, due to
advance payments from a customer received in 1993 for future shipments of
primary aluminum. In addition, the Company incurred $14.9 and $42.9 of cash
costs during 1995 and 1994, respectively, related to the 1993 restructuring of
its sheet mill operations, which has been substantially completed.
 
  Investing activities
 
     Cash used in investing activities was $177.7 in 1996 compared with cash
used of $62.9 and cash provided of $36.8 in 1995 and 1994, respectively. As
described under "Strategic Transactions," the Company received net cash of
$59.4, $147.6 and $75 in connection with notable strategic transactions during
1996, 1995 and 1994, respectively. Additional proceeds of $6.1, $3.2 and $42.2
were received in 1996, 1995 and 1994, respectively from the sale of various
other assets. Capital expenditures were $243.2 in 1996 compared with $213.7 in
1995 and $80.4 in 1994.
 
     During 1997, capital expenditures are expected to approximate $350 as the
Company continues its program of investing capital in new markets, technology
and facilities. As part of the 1997 capital spending, the Company, through its
subsidiary, Alumax Mill Products, Inc., exercised its option to purchase its
leased Texarkana rolling mill facility in November 1997 for approximately $97 in
cash. Further, during 1996, the Company entered into a joint venture with Yunnan
Aluminum Processing Factory in Kunming, China for the annual production of 8,000
to 10,000 tonnes of light gauge aluminum foil for China's packaging market.
Alumax will invest $38 of cash in the joint venture to develop a continuous cast
foil operation. As of December 31, 1996, the Company has invested approximately
$13 of cash in the joint venture.
 
  Financing activities
 
     Financing activities during 1996 consumed $186.6 of cash compared with cash
consumed of $78.9 in 1995 and $82 in 1994. The Company borrowed $375 under
available credit facilities in January 1996 to finance the acquisition of
Cressona. During the year, these borrowings were fully repaid. Total debt
repayments of $552.3 in 1996 also include $136.6 of early retirements,
principally consisting of $39.3 of Cressona debt acquired and a $90.7 promissory
note due in May 1996. Debt repayments of $69.6 and $72.7 in 1995 and 1994,
respectively, included early retirements and prepayments of $7.6 and $35.2,
respectively. There were no new borrowings in 1995 or 1994. Dividends totalling
$9.3 per annum were paid to holders of Alumax Series A Preferred Stock in 1996,
1995 and 1994. At December 31, 1996, 1995 and 1994, the Company's total debt to
invested capital was 30.2 percent, 37.7 percent and 44.1 percent, respectively.
Total debt outstanding was $710.4, $845.9 and $915.5, at December 31, 1996, 1995
and 1994, respectively.
 
     In May 1995, the Company entered into a $400 revolving credit facility (the
"Credit Agreement") to replace its then existing revolving credit facility,
which was terminated. The Credit Agreement has a term of five years, expiring in
May 2000, with no provision for reduction in commitments during its term.
Interest on outstanding balances will be based on either a base rate or LIBOR
option. At December 31, 1996, the entire amount of the facility was available to
the Company. The Credit Agreement contains provisions for restricting the
incurrence of indebtedness by subsidiaries, as well as financial and other
covenants. Under the Credit Agreement, the Company and its consolidated
subsidiaries collectively are required to maintain tangible net worth of at
least $700 at any time, and the Company and certain of its subsidiaries,
excluding the Lauralco Project Group (see Note 6 to the Financial Statements
included elsewhere herein), are collectively required to maintain a ratio of
tangible net assets to funded debt of at least 2.0 to 1.0 at any time.
 
     On January 17, 1996, the Company entered into a $400 bridge loan facility
to finance the acquisition of Cressona. All amounts outstanding under this
facility have been repaid and the facility has been retired.
 
                                       25
<PAGE>   27
 
     For further information relating to the Company's loan and credit
facilities and for a description of certain provisions contained in a loan
agreement which restrict the Company's ability to pay dividends, see Note 6 to
the Financial Statements included elsewhere herein. Under this restriction, at
December 31, 1996, $439.8 of retained earnings were available for the payment of
dividends on common stock.
 
     Management believes current cash balances, anticipated cash flows from
operations and available funds from the revolving credit facility described
above are sufficient to meet the Company's planned level of capital spending and
to service its debt. As a result, in April 1996, the Company withdrew its shelf
registration with the Securities and Exchange Commission covering the issuance
of up to 9.2 million shares of common stock.
 
     On November 4, 1996, the Company announced that it was redeeming all of the
outstanding shares of its $4.00 Series A Convertible Preferred Stock ("Preferred
Stock"), par value $1.00 per share, on December 18, 1996. Each share of the
Preferred Stock was redeemable at a price of $52.40 per share, plus an amount
equal to the quarterly dividend accrued on each share through the redemption
date for a total cash redemption price of $52.60 per share. As an alternative to
redemption, each share of the Preferred Stock was convertible at the option of
the holder into 4.11489 shares of the Company's Common Stock until the close of
business on December 4, 1996. In December 1996, the outstanding shares of
Preferred Stock were converted into approximately 9.6 million shares of Alumax
Common Stock.
 
  Income Taxes
 
     The Internal Revenue Service (the "IRS") has asserted that Alumax and
certain of its subsidiaries were improperly included in the 1984, 1985 and 1986
consolidated income tax returns of AMAX Inc., the Company's former parent
company, and on that basis has asserted a federal income tax deficiency against
Alumax of approximately $129. Interest on the deficiency through December 31,
1996, would be approximately $276. In response to the IRS' notice of deficiency,
the Company filed a petition in the United States Tax Court (the "Court"),
seeking a redetermination in respect of the purported deficiency. The parties
have waived their rights to a trial and the matter has been submitted to the
Court for decision based upon the pleadings, stipulations, memoranda and other
documents submitted, or to be submitted, to the Court by the parties. A decision
by the Court is expected in late 1997. Payment of the deficiency with interest
thereon would provide certain tax benefits to the Company that would offset in
part, in the year of payment and within the carryforward period, the cost of
paying the deficiency and interest. The Company believes that it has adequate
reserves so that any unprovided for net deficiency would not have a material
adverse effect on the Company's financial condition.
 
  Risk Management
 
     The Company utilizes certain financial instruments in connection with its
risk management. The risk of loss related to counterparty nonperformance under
financial instrument agreements at December 31, 1996 is not significant.
 
     The Company enters into forward fixed price arrangements that are required
by certain customers and suppliers. The Company may utilize futures contracts
which effectively convert forward fixed price arrangements to market prices in
order to meet overall strategic objectives. Such contracts covered approximately
177,875 tonnes of aluminum at December 31, 1996 and mature at various dates
through 1999. Gains or losses with respect to these positions are reflected in
earnings concurrent with consummation of the underlying fixed price transaction.
Periodic value fluctuations of the futures contracts approximately offset the
value fluctuations of the underlying fixed price transactions.
 
     The Company also may, from time to time, establish a floor selling price
for varying quantities of future production, while preserving the opportunity to
participate in upward price movements. This may be accomplished by entering into
forward sales of primary aluminum and purchases of call options, which together
provide the same price protection as purchasing put options, or by purchasing
put options alone, in a manner which correlates with the Company's production
and sales of primary aluminum. The strategy may be modified from time to time.
At December 31, 1996, the Company's commitments with respect to these financial
instruments covered approximately 324,000 tonnes of future production. The book
value and market value of these financial instruments were $16.8 and $7.4,
respectively, at December 31, 1996.
 
                                       26
<PAGE>   28
 
     Certain of the Company's foreign operating expenditures are denominated in
currencies other than the operations' functional currencies, which expose the
Company to exchange rate risks. In order to mitigate its exposure to exchange
rate risk where these conditions exist, the Company may utilize forward foreign
currency contracts. At December 31, 1996, the Company had outstanding $106 in
forward foreign currency contracts which principally mature during 1997. The
gains or losses related to these contracts are deferred and included in the
measurement of the related foreign denominated transactions. If these contracts
had been terminated at December 31, 1996, the Company would have received
approximately $1.3.
 
     The Company's debt instruments and related interest rate hedges are
susceptible to market fluctuations based on changes in the cost of borrowing. At
December 31, 1996, the fair value of total debt approximated book value. The
Lauralco credit facility, which has a variable interest rate, required the
Company to establish facilities to effectively limit the interest rate exposure
of the commitment. To meet this requirement, the Company has obtained interest
rate swaps with notional amounts totalling $400 through October 26, 2000 and an
interest rate cap with a notional amount of $150 expiring October 26, 1998. This
program is designed to effectively cap interest rate exposure at a maximum of
approximately nine percent through October 26, 2000. The effective rate on this
debt amounted to 8.5 percent, 9.2 percent and 8.0 percent for the years ended
December 31, 1996, 1995 and 1994, respectively. The Company would have paid
approximately $37.9 to terminate these interest rate agreements at December 31,
1996.
 
     The Company also purchases natural gas for its operations and enters into
forward contracts to eliminate the volatility in prices. At December 31, 1996,
none of these contracts is material.
 
  Environmental Matters
 
     The Company has been named as a defendant or identified as a potentially
responsible party under the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA") and similar state laws by governmental agencies and
private parties at 39 pending waste disposal sites which, in most instances,
were owned and operated by third parties. Management periodically evaluates such
matters and records or adjusts liabilities for remediation and other costs and
potential damages when expenditures for such costs are considered probable and
can be reasonably estimated.
 
     The Company's ultimate liability in connection with present and future
environmental claims will depend on many factors, including its volumetric share
of the waste at a given site, the remedial action required, the total cost of
remediation and the financial viability and participation of the other entities
which also sent waste to the site. Based upon current law and information known
to the Company concerning the size of the sites known to it, their years of
operation, and the number of other past users, Management believes that it has
adequate reserves for the Company's probable share of the estimated aggregate
liability for the costs of remedial actions and related costs and expenses and
that such liability and related costs and expenses should not have a material
adverse effect on the financial condition or ongoing results of operations of
the Company. In addition, the Company establishes reserves for remedial measures
required from time to time at its own facilities. Any expenditures for
remediation programs it may be required to undertake, either individually or in
the aggregate, are not expected to have a material adverse effect on the
financial condition or ongoing results of operations of the Company. The
Company's environmental reserves totalled $29.6 and $22.8 at December 31, 1996
and 1995, respectively ($27.2 at December 31, 1995 with the inclusion of
Cressona). Management believes that the reasonably probable outcomes of these
matters will not materially exceed established reserves. Although the Company
believes it has coverage for some environmental claims under certain insurance
policies, insurance recoveries are not considered in estimating the Company's
share of remediation costs at a site unless an insurance carrier has agreed to
pay a portion of such costs. Insurance recoveries were not considered in
establishing reserves for any of these sites absent an agreement between the
carriers and the Company.
 
     Management does not anticipate that commitments, operating expenses or
capital expenditures for environmental compliance through and including the next
fiscal year will have a material adverse effect on the Company's financial
condition or ongoing results of operations. Based on historical trends toward
tighter environmental standards, however, it appears likely that the Company
will incur additional expenditures to remain in compliance with federal and
state environmental laws. See also "Business -- Environmental Matters" in Part I
hereof.
 
                                       27
<PAGE>   29
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Accountants...........................   29
Statements of Earnings for the Years Ended December 31,
  1996, 1995 and 1994.......................................   30
Statements of Financial Position at December 31, 1996 and
  1995......................................................   31
Statements of Cash Flows for the Years Ended December 31,
  1996, 1995 and 1994.......................................   32
Statements of Changes in Stockholders' Equity for the Years
  Ended December 31, 1996, 1995 and 1994....................   33
Notes to Financial Statements...............................   34
</TABLE>
 
                                       28
<PAGE>   30
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Stockholders and Board of Directors of
Alumax Inc.
 
     We have audited the accompanying statements of financial position of Alumax
Inc. and its subsidiaries as of December 31, 1996 and 1995, and the related
statements of earnings, cash flows and changes in stockholders' equity for each
of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Alumax Inc. and its
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
 
                                          COOPERS & LYBRAND L.L.P.
 
Atlanta, Georgia
January 27, 1997
 
                                       29
<PAGE>   31
 
                                  ALUMAX INC.
 
                             STATEMENTS OF EARNINGS
 
<TABLE>
<CAPTION>
                                                             FOR THE YEAR ENDED DECEMBER 31,
                                                           ------------------------------------
                                                 NOTE        1996          1995          1994
                                                 ----      --------      --------      --------
                                                              (IN MILLIONS, EXCEPT PER SHARE
                                                                         AMOUNTS)
<S>                                              <C>       <C>           <C>           <C>
NET SALES......................................            $3,159.3      $2,926.1      $2,754.5
Cost and expenses:
  Cost of goods sold...........................             2,522.0       2,285.7       2,290.1
  Selling and general..........................               267.3         225.5         215.3
  Depreciation and amortization................               138.1         109.1         115.1
                                                           --------      --------      --------
                                                            2,927.4       2,620.3       2,620.5
                                                           --------      --------      --------
EARNINGS FROM OPERATIONS.......................               231.9         305.8         134.0
Gain on sales of assets........................    2          242.9         128.8           6.6
Interest expense, net..........................   13          (62.8)        (65.4)        (72.6)
Other income, net..............................   14           10.6           7.3           4.4
                                                           --------      --------      --------
EARNINGS BEFORE INCOME TAXES...................               422.6         376.5          72.4
Income tax provision...........................    4          172.6         139.1          25.7
                                                           --------      --------      --------
NET EARNINGS...................................               250.0         237.4          46.7
Preferred dividends............................   10           (9.3)         (9.3)         (9.3)
                                                           --------      --------      --------
EARNINGS APPLICABLE TO COMMON SHARES...........            $  240.7      $  228.1      $   37.4
                                                           ========      ========      ========
Earnings per common share:
  Primary......................................   10       $   5.19      $   5.05      $    .84
                                                           ========      ========      ========
  Fully diluted................................   10       $   4.53      $   4.33
                                                           ========      ========
Weighted average shares outstanding:
  Primary......................................                46.4          45.2          44.8
                                                           ========      ========      ========
  Fully diluted................................                55.2          54.8          54.4
                                                           ========      ========      ========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       30
<PAGE>   32
 
                                  ALUMAX INC.
 
                        STATEMENTS OF FINANCIAL POSITION
 
<TABLE>
<CAPTION>
                                                                           DECEMBER 31,
                                                                      ----------------------
                                                              NOTE      1996          1995
                                                              ----    --------      --------
                                                                      (MILLIONS OF DOLLARS,
                                                                         EXCEPT PER SHARE
                                                                             AMOUNTS)
<S>                                                           <C>     <C>           <C>
                                           ASSETS
Current Assets:
  Cash and equivalents......................................          $   34.6      $  205.9
  Accounts receivable, less allowance for doubtful accounts
     (1996-$16.6; 1995-$17.7)...............................             439.1         437.8
  Inventories...............................................   3         519.9         558.3
  Deferred income taxes.....................................   4          54.5          69.4
  Other current assets......................................              37.7          19.6
                                                                      --------      --------
          Total current assets..............................           1,085.8       1,291.0
                                                                      --------      --------
Noncurrent Assets:
  Property, plant and equipment, net........................   5       2,027.4       1,611.9
  Deferred income taxes.....................................   4          40.4          44.9
  Other assets..............................................             145.1         187.2
                                                                      --------      --------
          Total noncurrent assets...........................           2,212.9       1,844.0
                                                                      --------      --------
TOTAL ASSETS................................................          $3,298.7      $3,135.0
                                                                      ========      ========
                            LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable..........................................          $  162.6      $  148.8
  Accrued liabilities.......................................             224.2         237.3
  Current maturities of long-term debt......................   6          38.4         137.0
                                                                      --------      --------
          Total current liabilities.........................             425.2         523.1
                                                                      --------      --------
Noncurrent Liabilities:
  Long-term debt............................................   6         672.0         708.9
  Postretirement health care................................   8         161.8         162.0
  Deferred income taxes.....................................   4         154.0         125.7
  Other liabilities.........................................             244.9         216.0
                                                                      --------      --------
          Total noncurrent liabilities......................           1,232.7       1,212.6
                                                                      --------      --------
Commitments and Contingencies...............................   9
Stockholders' Equity:
  Preferred stock of $1.00 par value -- authorized
     50,000,000 shares; issued and outstanding 2,333,320
     shares of Series A Convertible Preferred Stock in
     1995...................................................  10            --           2.3
  Common stock of $.01 par value -- authorized 200,000,000
     shares; issued and outstanding 54,692,057 shares in
     1996 and 44,780,179 shares in 1995.....................  10            .5            .4
  Paid-in capital...........................................             920.2         909.5
  Retained earnings.........................................             724.3         483.6
  Cumulative foreign currency translation adjustment........              (4.2)          3.5
                                                                      --------      --------
          Total stockholders' equity........................           1,640.8       1,399.3
                                                                      --------      --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..................          $3,298.7      $3,135.0
                                                                      ========      ========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       31
<PAGE>   33
 
                                  ALUMAX INC.
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                  FOR THE YEAR ENDED DECEMBER
                                                                 -----------------------------
                                                         NOTE     1996       1995       1994
                                                         ----    -------    -------    -------
                                                                     (MILLIONS OF DOLLARS)
<S>                                                      <C>     <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings.........................................          $ 250.0    $ 237.4    $  46.7
  Reconciliation of net earnings to net cash provided
     by operating activities:
  Depreciation and amortization........................            138.1      109.1      115.1
  Provision for doubtful accounts......................              5.2        2.7        4.7
  Gain on sales of assets..............................    2      (242.1)    (133.9)      (8.9)
  Deferred income taxes................................    4        47.7       50.8       11.9
  Other noncash items..................................              8.5        5.7        6.0
  Changes in operating assets and liabilities, net of
     effects of acquisition/dispositions:
     Accounts receivable...............................            (25.4)        .3     (106.3)
     Inventories.......................................    3        17.7      (60.0)      27.3
     Other current assets..............................            (21.8)      57.4      (39.7)
     Accounts payable and accrued liabilities..........              9.8      (51.2)     (30.6)
     Net change in other noncurrent assets and
       liabilities.....................................              5.3       36.4      (15.7)
                                                                 -------    -------    -------
     Net cash provided by operating activities.........            193.0      254.7       10.5
                                                                 -------    -------    -------
INVESTING ACTIVITIES:
  Dispositions, net of cash sold.......................            502.0      150.8      117.2
  Acquisitions, net of cash acquired...................           (436.5)        --         --
  Capital expenditures.................................           (243.2)    (213.7)     (80.4)
                                                                 -------    -------    -------
     Net cash provided by (used in) investing
       activities......................................           (177.7)     (62.9)      36.8
                                                                 -------    -------    -------
FINANCING ACTIVITIES:
  Repayments of long-term and short-term debt..........    6      (552.3)     (69.6)     (72.7)
  Proceeds from long-term and short-term debt..........    6       375.0         --         --
  Dividends paid.......................................   10        (9.3)      (9.3)      (9.3)
                                                                 -------    -------    -------
     Net cash used in financing activities.............           (186.6)     (78.9)     (82.0)
                                                                 -------    -------    -------
Net increase (decrease) in cash and equivalents........           (171.3)     112.9      (34.7)
Cash and equivalents at beginning of year..............            205.9       93.0      127.7
                                                                 -------    -------    -------
Cash and equivalents at end of year....................          $  34.6    $ 205.9    $  93.0
                                                                 =======    =======    =======
Supplemental Cash Flow Information:
  Income taxes paid, net...............................          $  98.0    $  84.0    $  10.0
  Interest paid, net of amounts capitalized............          $  66.5    $  72.8    $  83.9
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       32
<PAGE>   34
 
                                  ALUMAX INC.
 
                 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                 1996               1995               1994
                                           ----------------   ----------------   ----------------
                                   NOTE    SHARES    AMOUNT   SHARES    AMOUNT   SHARES    AMOUNT
                                   ----    ------    ------   ------    ------   ------    ------
                                                               (IN MILLIONS)
<S>                                <C>     <C>       <C>      <C>       <C>      <C>       <C>
Preferred Stock
  At January 1...................             2.3    $  2.3      2.3    $  2.3      2.3    $  2.3
  Conversion to common stock.....   10       (2.3)     (2.3)      --        --       --        --
                                           ------    ------   ------    ------   ------    ------
  At December 31.................              --        --      2.3    $  2.3      2.3    $  2.3
                                           ======    ======   ======    ======   ======    ======
Common Stock
  At January 1...................            44.8    $   .4     44.6    $   .4     44.4    $   .4
  Conversion of preferred
     stock.......................   10        9.6        .1
  Employee stock issuances.......    7         .3                 .2                 .2
                                           ------    ------   ------    ------   ------    ------
  At December 31.................            54.7    $   .5     44.8    $   .4     44.6    $   .4
                                           ======    ======   ======    ======   ======    ======
Paid-in Capital
  At January 1...................                    $909.5             $903.8             $897.8
  Conversion of preferred
     stock.......................   10                  2.2
  Employee stock issuances.......    7                  8.5                5.7                6.0
                                                     ------             ------             ------
  At December 31.................                    $920.2             $909.5             $903.8
                                                     ======             ======             ======
Retained Earnings
  At January 1...................                    $483.6             $255.5             $218.1
  Net earnings...................                     250.0              237.4               46.7
  Dividends on preferred stock...   10                 (9.3)              (9.3)              (9.3)
                                                     ------             ------             ------
  At December 31.................                    $724.3             $483.6             $255.5
                                                     ======             ======             ======
Cumulative Foreign Currency
  Translation Adjustment
  At January 1...................                    $  3.5             $   .1             $(19.0)
  Adjustment for foreign currency
     translation.................                      (7.7)               3.4               19.1
                                                     ------             ------             ------
  At December 31.................                    $ (4.2)            $  3.5             $   .1
                                                     ======             ======             ======
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       33
<PAGE>   35
 
                                  ALUMAX INC.
 
                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1996
                (MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
 
NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
     Principles of Consolidation -- The financial statements include the
consolidated accounts of all majority-owned subsidiaries over which Alumax Inc.
("Alumax" or the "Company") maintains control. Investments in companies over
which the Company has significant influence, but not a controlling interest, are
carried on the equity method of accounting. Investments in companies over which
the Company lacks significant influence are carried on the cost method of
accounting. All significant intercompany accounts and transactions have been
eliminated.
 
     Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that may affect the reported amounts of certain assets
and liabilities and disclosure of contingencies at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
     Cash Equivalents -- Cash equivalents consist of highly liquid investments,
which are readily convertible into cash, with a maturity at date of acquisition
of three months or less.
 
     Financial Instruments -- The Company may, from time to time, utilize
certain financial instruments in connection with its risk management. Amounts to
be paid or received on interest rate swaps and caps are included in interest
expense on an accrual basis. Amounts paid or received on settlement of future,
forward and option contracts, including any cost to purchase the contracts, are
recognized as a component of the related transaction and included in costs and
expenses, except for amounts paid or received on settlement of aluminum
contracts by the primary reduction facilities, which are included in net sales.
The fair value of financial instruments is determined by reference to market
value quotes, where available, and other valuation techniques, as appropriate.
 
     Inventories -- Inventories are stated at the lower of cost or market, with
cost for a substantial portion of U.S. inventories determined under the last-in,
first-out (LIFO) method. The cost of other inventories is principally determined
under the first-in, first-out (FIFO) method.
 
     Property, Plant and Equipment -- Property, plant and equipment is recorded
at cost. Depreciation and amortization of property, plant and equipment is
computed principally on the straight-line method over the estimated useful lives
of the assets. Certain pre-operating costs attributable to new operations of
major facilities are deferred and amortized over a period of approximately three
years. In determining impairment of facilities to be disposed, the Company
includes direct holding costs during the disposal period in its measurement of
net realizable value.
 
     Stock-Based Compensation -- Compensation cost is measured under the
intrinsic value based method. Pro forma disclosures of net income and earnings
per share are presented, as if the fair value based method had been applied.
 
     Revenue Recognition -- The Company recognizes revenue when title passes to
the customer.
 
     Reclassifications -- Certain reclassifications have been made to prior
years' financial statements to conform with the 1996 presentation.
 
                                       34
<PAGE>   36
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 2.  STRATEGIC TRANSACTIONS
 
     The Company periodically implements strategic actions which it believes
afford it the opportunity to redeploy resources to enhance profitability and
growth. During 1996, 1995 and 1994 the following notable strategic transactions
occurred:
 
<TABLE>
<CAPTION>
                                                  DISPOSITION   ACQUISITION   PRE-TAX   AFTER-TAX
                                                   PROCEEDS        COST        GAIN       GAIN
                                                  -----------   -----------   -------   ---------
<S>                                               <C>           <C>           <C>       <C>
1996:
  Fab Products..................................    $246.6                    $ 71.7     $ 36.7
  Mexican Mining Investment.....................     160.0                      92.8       55.1
  Excess Primary Aluminum Capacity..............      89.3                      78.4       48.6
  Cressona Aluminum Company.....................                  $436.5
                                                    ------        ------      ------     ------
                                                    $495.9        $436.5      $242.9     $140.4
                                                    ======        ======      ======     ======
1995:
  Excess Primary Aluminum Capacity..............    $147.6                    $128.8     $ 81.3
                                                    ======                    ======     ======
1994:
  Australian Mining Investment..................    $ 75.0                    $  6.6     $  4.0
                                                    ======                    ======     ======
</TABLE>
 
  Dispositions
 
     On September 25, 1996, the Company sold certain fabricated products
businesses ("Fab Products") in Western Europe and in the United States for
$246.6 in cash, net of cash sold of $5.4. The Company recorded an after-tax gain
of $36.7, net of a $35.0 tax provision, in the third quarter of 1996.
 
     In June 1996, the Company sold its investment in Mexican mining interests
for $160 in cash. The Company recorded an after-tax gain of $55.1, net of a
$37.7 tax provision, in the second quarter of 1996.
 
     In January 1996, the Company sold a 23 percent undivided interest in its
Mt. Holly primary aluminum reduction facility for $89.3, which the Company
applied to the early retirement of a $90.7 promissory note due in May 1996. The
Company recorded an after-tax gain of $48.6, net of a $29.8 tax provision, in
the first quarter of 1996. This transaction reduced the Company's ownership in
the Mt. Holly facility to 50.33 percent.
 
     In March 1995, the Company sold a 14 percent undivided interest in each of
the Company's Intalco and Eastalco primary aluminum reduction facilities for
cash proceeds of $147.6, resulting in an after-tax gain of $81.3, net of a $47.5
tax provision, recorded in the first quarter of 1995. This transaction reduced
the Company's ownership in each facility to 61 percent.
 
     In March 1994, the Company sold a 37 percent undivided interest in
Australian mining interests for $75.0 in cash. The Company recorded an after-tax
gain of $4.0, net of a $2.6 tax provision, in the first quarter of 1994.
 
  Acquisition
 
     On January 31, 1996, the Company purchased all of the common shares of
privately held Cressona for a cash cost, including expenses, of $436.5, net of
$3.1 of cash acquired. In conjunction with the acquisition, accounts payable,
debt and other liabilities of $87.4 were acquired. Cressona is a leading
manufacturer of extruded aluminum products.
 
     The transaction has been accounted for as a purchase and the results of
operations of Cressona have been included in the consolidated financial
statements since January 31, 1996. The acquisition was financed with
 
                                       35
<PAGE>   37
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
cash on hand and $375 of borrowings obtained under available credit facilities.
All of these borrowings have been repaid.
 
  Pro Forma Information
 
     The following summary presents Alumax's unaudited pro forma consolidated
net sales, net earnings, and primary earnings per common share for 1996 and
1995, respectively, as if the acquisition of Cressona and the sale of Fab
Products each occurred on January 1, 1996 and 1995. The pro forma adjustments
for 1996 include the addition of Cressona's operating results for the month of
January 1996. Since the acquisition occurred on January 31, 1996, the Company's
actual results include Cressona from February 1, 1996 through December 31, 1996.
 
<TABLE>
<CAPTION>
                                                                FOR THE YEAR ENDED
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                1996          1995
                                                              --------      --------
<S>                                                           <C>           <C>
Net sales...................................................  $2,830.3      $2,910.1
Net earnings................................................  $  243.6      $  238.6
Primary earnings per common share...........................  $   5.05      $   5.07
</TABLE>
 
     The pro forma results are based upon certain assumptions and estimates,
which the Company believes are reasonable. The pro forma results do not purport
to be indicative of results that actually would have been obtained had these
transactions occurred on January 1, 1996 or 1995, nor are they intended to be a
projection of future results.
 
NOTE 3.  INVENTORIES
 
     Inventories, at December 31, were comprised of:
 
<TABLE>
<CAPTION>
                                                               1996     1995
                                                              ------   ------
<S>                                                           <C>      <C>
Raw materials...............................................  $323.7   $361.6
Work in process.............................................    87.3    105.9
Finished products...........................................   108.9     90.8
                                                              ------   ------
                                                              $519.9   $558.3
                                                              ======   ======
</TABLE>
 
     Approximately 78 percent and 72 percent of inventory at December 31, 1996
and 1995, respectively, have been determined under the LIFO cost basis. The
excess of replacement cost over the LIFO basis of such inventory is
approximately $74.0 and $101.2 at December 31, 1996 and 1995, respectively. The
reduction in levels of LIFO valued inventories during 1996, 1995, and 1994
resulted in $3.7, and $1.4, and $5.2 of pre-tax income related to LIFO
liquidation, respectively.
 
                                       36
<PAGE>   38
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 4.  INCOME TAXES
 
     The income tax provision is comprised of the following:
 
<TABLE>
<CAPTION>
                                                             1996      1995     1994
                                                            ------    ------    -----
<S>                                                         <C>       <C>       <C>
Current:
  Federal.................................................  $ 84.1    $ 67.8    $ 2.0
  Foreign.................................................    34.0      10.5      5.5
  State...................................................    13.1      10.3      6.3
                                                            ------    ------    -----
                                                             131.2      88.6     13.8
                                                            ------    ------    -----
Deferred:
  Federal.................................................    36.8      43.9      9.7
  Foreign.................................................     4.3       5.0      2.2
  State...................................................      .3       1.6       --
                                                            ------    ------    -----
                                                              41.4      50.5     11.9
                                                            ------    ------    -----
          Total...........................................  $172.6    $139.1    $25.7
                                                            ======    ======    =====
</TABLE>
 
     The domestic and foreign components of earnings before income taxes are as
follows:
 
<TABLE>
<CAPTION>
                                                             1996      1995     1994
                                                            ------    ------    -----
<S>                                                         <C>       <C>       <C>
Domestic..................................................  $396.4    $338.1    $45.0
Foreign...................................................    26.2      38.4     27.4
                                                            ------    ------    -----
          Total...........................................  $422.6    $376.5    $72.4
                                                            ======    ======    =====
</TABLE>
 
     Reconciliation of the differences between income taxes computed at federal
statutory tax rates and the Company's consolidated income tax provision follows:
 
<TABLE>
<CAPTION>
                                                            1996       1995     1994
                                                           -------    ------    -----
<S>                                                        <C>        <C>       <C>
Tax at federal statutory rate............................  $ 147.9    $131.8    $25.3
Foreign tax credits......................................   (110.4)       --       --
Sale of foreign businesses...............................     86.8        --       --
Foreign taxes in excess of federal statutory rate........     29.2       2.1     (1.9)
State income taxes, net of federal income tax benefit....     10.2       7.7      4.1
Valuation allowance reversal.............................       --     (13.4)      --
Other, net...............................................      8.9      10.9     (1.8)
                                                           -------    ------    -----
          Total..........................................  $ 172.6    $139.1    $25.7
                                                           =======    ======    =====
</TABLE>
 
     The foreign provision for income taxes includes $28.7 of dividend
withholding taxes.
 
                                       37
<PAGE>   39
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     The approximate tax effects of cumulative temporary differences at December
31 are as follows:
 
<TABLE>
<CAPTION>
                                                               ASSET (LIABILITY)
                                                              --------------------
                                                               1996         1995
                                                              -------      -------
<S>                                                           <C>          <C>
Accrued expenses............................................  $  52.2      $  40.5
Book versus tax basis of inventory..........................     (2.2)        (5.2)
Tax credit carryforwards....................................       --         30.0
Allowance for doubtful accounts.............................      4.5          4.1
                                                              -------      -------
Current, net................................................     54.5         69.4
                                                              -------      -------
Book versus tax basis of depreciable assets.................   (208.0)      (170.9)
Foreign capital cost allowance carryforward.................     59.8         64.2
Tax credit carryforwards....................................       --         10.1
Postretirement health care accrual..........................     56.6         56.7
Other.......................................................    (22.0)       (40.9)
                                                              -------      -------
Noncurrent, net.............................................   (113.6)       (80.8)
                                                              -------      -------
          Total, net........................................  $ (59.1)     $ (11.4)
                                                              =======      =======
</TABLE>
 
     At December 31, 1996, the Company has $225.2 in foreign capital cost
allowance carryforwards which accrued in periods prior to becoming an
independent public corporation in 1993. The Company has not provided for
domestic income taxes or foreign withholding taxes on $33.7 of foreign
subsidiaries' undistributed earnings as of December 31, 1996, which are
reinvested indefinitely.
 
NOTE 5.  PROPERTY, PLANT AND EQUIPMENT
 
     Components of property, plant and equipment at December 31, are as follows:
 
<TABLE>
<CAPTION>
                                                                1996          1995
                                                              --------      --------
<S>                                                           <C>           <C>
Land and improvements.......................................  $   60.4      $   55.9
Machinery and equipment.....................................   2,455.1       2,079.5
Buildings...................................................     267.3         199.1
Other.......................................................     145.0         140.3
                                                              --------      --------
                                                               2,927.8       2,474.8
Less -- accumulated depreciation and amortization...........  (1,036.8)     (1,051.3)
                                                              --------      --------
                                                               1,891.0       1,423.5
Construction in progress....................................     136.4         188.4
                                                              --------      --------
                                                              $2,027.4      $1,611.9
                                                              ========      ========
</TABLE>
 
                                       38
<PAGE>   40
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 6.  DEBT
 
     Debt at December 31, consists of:
 
<TABLE>
<CAPTION>
                                                               1996        1995
                                                              ------      ------
<S>                                                           <C>         <C>
Lauralco debt, payable 1997 to 2003 -- variable rate........  $645.0      $682.5
Promissory note -- 10.0%....................................      --        90.7
Revenue and pollution control bonds, payable 1997 to
  2015 -- 3.8% to 9.5%......................................    62.9        64.8
Other debt..................................................     2.5         7.9
                                                              ------      ------
                                                               710.4       845.9
Less -- current maturities..................................   (38.4)     (137.0)
                                                              ------      ------
          Total long-term debt..............................  $672.0      $708.9
                                                              ======      ======
</TABLE>
 
     A project finance credit agreement was arranged in 1990 with a group of
banks permitting borrowings of up to $750 to finance construction of a primary
aluminum reduction plant in Quebec, Canada ("Lauralco Project Group"). The
credit agreement required the Company to establish facilities to effectively
limit the interest rate exposure on half of the commitment (Note 15). The
Company's rights to the Lauralco Project Group, including its ownership of the
reduction plant and its rights to various operating agreements, are pledged as
collateral under the credit agreement. The net book value of reduction plant
assets pledged is approximately $905.5 at December 31, 1996.
 
     The project finance credit agreement contains, among other restrictions,
provisions limiting the declaration or payment of dividends to the Company by
certain subsidiaries engaged in Lauralco activities.
 
     In May 1995, the Company entered into a $400 revolving credit facility (the
"Credit Agreement") to replace its then existing revolving credit facility,
which was terminated. The Credit Agreement has a term of five years, expiring in
May 2000, with no provision for reduction in commitments during its term.
Interest on outstanding balances will be based on either a base rate or LIBOR
option. At December 31, 1996, the entire amount of the facility was available to
the Company. The Credit Agreement contains provisions restricting the incurrence
of indebtedness by subsidiaries, as well as financial and other covenants. Under
the Credit Agreement, the Company and its consolidated subsidiaries are
collectively required to maintain tangible net worth of at least $700 at any
time, and the Company and certain of its subsidiaries, excluding the Lauralco
Project Group, are collectively required to maintain a ratio of tangible net
assets to funded debt of at least 2.0 to 1.0 at any time.
 
     On January 17, 1996, the Company entered into a $400 bridge loan facility
to finance the Cressona acquisition. All amounts outstanding under this facility
have been repaid and the facility has been terminated.
 
     The Company has a loan agreement that contains provisions restricting the
payment of dividends on the Alumax Common Stock. At December 31, 1996, $439.8 of
retained earnings are available for the payment of dividends on common stock
under this restriction.
 
     Commitment and facility fees for revolving credit arrangements amounted to
$.6 in 1996. The annual principal payments of long-term debt for the five-year
period ending December 31, 2001 are: 1997-$38.4; 1998-$46.4; 1999-$68.9,
2000-$69.4 and 2001-$91.9.
 
NOTE 7.  EMPLOYEE PENSION AND THRIFT PLANS
 
     Pension plans cover substantially all employees of the Company and are
generally non-contributory. The benefits of salaried employee plans are based on
the projected unit credit method. The benefits of hourly
 
                                       39
<PAGE>   41
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
employee plans are based on the unit credit method. The Company's funding policy
is to meet minimum funding requirements.
 
     Net periodic pension cost is comprised of the following:
 
<TABLE>
<CAPTION>
                                                               1996     1995     1994
                                                              ------   ------   ------
<S>                                                           <C>      <C>      <C>
Service cost -- benefits earned during the period...........  $ 19.3   $ 15.6   $ 15.9
Interest cost on projected benefit obligations..............    23.7     20.9     18.8
Actual return on assets.....................................   (37.0)   (42.9)    (2.9)
Net amortization and deferral...............................    11.9     22.4    (19.8)
                                                              ------   ------   ------
  Net periodic pension cost.................................  $ 17.9   $ 16.0   $ 12.0
                                                              ======   ======   ======
</TABLE>
 
     The following table sets forth the funded status of the Company's pension
plans and amounts recognized in its statements of financial position at December
31, 1996 and 1995 for its pension plans:
 
<TABLE>
<CAPTION>
                                                                            ABO EXCEEDS
                                                ASSETS EXCEED ABO             ASSETS
                                                -----------------         ---------------
                                                 1996      1995            1996     1995
                                                -------   -------         ------   ------
<S>                                             <C>       <C>             <C>      <C>
Actuarial present value of benefit
  obligations:
Vested benefit obligation.....................   $234.3    $174.5         $ 14.8   $ 58.8
                                                 ======    ======         ======   ======
Accumulated benefit obligation (ABO)..........   $257.1    $188.8         $ 16.8   $ 61.4
                                                 ======    ======         ======   ======
Projected benefit obligation..................   $314.9    $236.4         $ 19.2   $ 63.3
Plan net assets at fair value.................    336.5     242.7           10.7     47.1
                                                 ------    ------         ------   ------
Plan net assets in excess of (less than)
  projected benefit obligation................     21.6       6.3           (8.5)   (16.2)
Unrecognized net (gain) loss..................     (6.6)     13.9            5.5     10.3
Unrecognized prior service cost...............     15.3      11.0            1.3      6.8
Unrecognized transition amounts...............     (6.5)     (7.2)            .6      (.7)
                                                 ------    ------         ------   ------
Prepaid (accrued) pension costs...............   $ 23.8    $ 24.0         $ (1.1)  $   .2
                                                 ======    ======         ======   ======
</TABLE>
 
     Plan assets consist of approximately 55 percent equities, 42 percent fixed
income and 3 percent cash and cash equivalents at December 31, 1996.
 
     Key economic assumptions used in the above calculations at December 31,
were:
 
<TABLE>
<CAPTION>
                                                              1996    1995    1994
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Settlement discount rate....................................  7.5%    7.0%    8.0%
Rate of compensation increases..............................  5.0%    5.0%    5.8%
Expected long-term rate of return...........................  9.0%    9.0%    9.0%
</TABLE>
 
     Defined contribution employee thrift plans cover substantially all salaried
and certain hourly employees. Employee contributions are matched through Company
issuances of Alumax Common Stock. Alumax Common Stock issuances amounted to
$5.3, $4.9 and $5.3 in 1996, 1995 and 1994, respectively. Total administrative
expenses of these plans paid by the Company amounted to $5.6, $5.3 and $4.7 in
1996, 1995 and 1994, respectively.
 
NOTE 8.  POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
 
     In addition to providing pension benefits, the Company provides certain
health care and life insurance benefits for retired employees. A majority of the
Company's domestic employees may become eligible for such benefits if they reach
normal or, in certain cases, early retirement age while working for the Company.
 
                                       40
<PAGE>   42
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     The components of periodic cost for these postretirement benefits are as
follows:
 
<TABLE>
<CAPTION>
                                                            1996      1995      1994
                                                            -----    ------    ------
<S>                                                         <C>      <C>       <C>
Service cost -- benefits earned during the period.........  $ 3.8    $  3.7    $  3.5
Interest cost on accumulated postretirement benefit
  obligation..............................................    9.2      10.0       8.7
Amortization of prior service cost and plan amendments....   (5.2)     (5.3)     (5.5)
Amortization of (gains) losses............................     .6       (.4)       .1
                                                            -----    ------    ------
Net periodic cost.........................................  $ 8.4    $  8.0    $  6.8
                                                            =====    ======    ======
</TABLE>
 
     The actuarial and recorded liabilities for these postretirement benefits,
none of which have been funded at December 31, are as follows:
 
<TABLE>
<CAPTION>
                                                               1996        1995
                                                              ------      ------
<S>                                                           <C>         <C>
Accumulated postretirement benefit obligation (APBO):
  Retirees..................................................  $ 62.2      $ 61.2
  Fully eligible active plan participants...................    18.4        17.6
  Other active participants.................................    54.2        62.8
  Unrecognized prior service cost and plan amendments.......    22.4        31.4
  Unrecognized net gain (loss)..............................     4.6       (11.0)
                                                              ------      ------
Liability for postretirement health care and life insurance
  benefits..................................................  $161.8      $162.0
                                                              ======      ======
</TABLE>
 
     For measurement purposes, a 10.1 percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1996. The rate was
assumed to decrease gradually to 5 percent through the year 2009 and remain at
that level thereafter. An increase in the assumed health care cost trend rates
by one percent in each year would increase the APBO as of December 31, 1996 by
11 percent and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for the year then ended by 11 percent. The
weighted-average discount rate used in determining the APBO as of December 31,
1996 and 1995 was 7.5 and 7.0 percent, respectively.
 
     In addition to providing postretirement benefits to eligible retired
employees, the Company provides specified postemployment benefits to certain
former or inactive employees. Substantially all domestic employees may become
eligible to receive these benefits, which are either self-insured or provided
through the Company's insurance carriers.
 
NOTE 9.  COMMITMENTS AND CONTINGENCIES
 
     Minimum commitments under long-term noncancelable operating leases,
principally for operating and office facilities, totalled $72.5 at December 31,
1996. Lease commitments for future periods are as follows: 1997-$25.8,
1998-$10.0, 1999-$6.7, 2000-$5.0, 2001-$4.2 and 2002 to 2013-$20.8. Rent expense
amounted to $23.0, $25.8 and $22.5 in 1996, 1995 and 1994, respectively. The
Company arranged for letters of credit in the amount of $182.0 at December 31,
1996, primarily relating to collateral support for certain financing
arrangements and a power contract guarantee.
 
     The Company has a noncancelable long-term contract for the purchase of
alumina and both noncancelable and cancelable contracts for electric power for
its primary aluminum reduction plants. Power contracts for each plant, except
for Intalco, and the alumina contract are with single suppliers. The power
contracts expire in the years 2000 through 2014, subject to certain extension
provisions. The alumina contract, with renewal options, expires in increments
between 2007 and 2018. Contracted amounts of alumina and power approximate the
Company's anticipated requirements.
 
                                       41
<PAGE>   43
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     On September 30, 1996, the Company, through its subsidiary, Alumax Mill
Products, Inc., exercised its option to purchase its leased Texarkana rolling
mill facility in November 1997 for approximately $97 in cash.
 
     During 1996, the Company entered into a joint venture with Yunnan Aluminum
Processing Factory in Kunming, China for the annual production of 8,000 to
10,000 tonnes of light gauge aluminum foil for China's packaging market. Alumax
will invest $38 of cash in the joint venture to develop a continuous cast foil
operation. As of December 31, 1996, the Company has invested approximately $13
of cash in the joint venture.
 
     The Internal Revenue Service (the "IRS") has asserted that Alumax and
certain of its subsidiaries were improperly included in the 1984, 1985 and 1986
consolidated income tax returns of AMAX Inc. ("Amax"), the Company's former
parent, and on that basis has asserted a federal income tax deficiency against
Alumax of approximately $129. Interest on the deficiency through December 31,
1996, would be approximately $276. In response to the IRS' notice of deficiency,
the Company filed a petition in the United States Tax Court (the "Court")
seeking a redetermination in respect of the purported deficiency. The parties
have waived their rights to a trial and the matter has been submitted to the
Court for decision based upon the pleadings, stipulations, memoranda and other
documents submitted, or to be submitted, to the Court by the parties. A decision
by the Court is expected in late 1997. Payment of the deficiency with interest
thereon would provide certain tax benefits to the Company that would offset in
part, in the year of payment and within the carryforward period, the cost of
paying the deficiency and interest. The Company believes that it has adequate
reserves so that any unprovided for net deficiency would not have a material
adverse effect on the Company's financial condition.
 
     The Company has been named as a defendant or identified as a potentially
responsible party under the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA") and similar state laws by governmental agencies and
private parties at 39 pending waste disposal sites which, in most instances,
were owned and operated by third parties. Management periodically evaluates such
matters and records or adjusts liabilities for remediation and other costs and
potential damages when expenditures for such costs are considered probable and
can be reasonably estimated.
 
     The Company's ultimate liability in connection with present and future
environmental claims will depend on many factors, including its volumetric share
of the waste at a given site, the remedial action required, the total cost of
remediation and the financial viability and participation of the other entities
which also sent waste to the site. Based upon current law and information known
to the Company concerning the size of the sites known to it, their years of
operation, and the number of other past users, Management believes that it has
adequate reserves for the Company's probable share of the estimated aggregate
liability for the costs of remedial actions and related costs and expenses and
that such liability and related costs and expenses should not have a material
adverse effect on the financial condition or ongoing results of operations of
the Company. In addition, the Company establishes reserves for remedial measures
required from time to time at its own facilities. Any expenditures for
remediation programs it may be required to undertake, either individually or in
the aggregate, are not expected to have a material adverse effect on the
financial condition or ongoing results of operations of the Company. The
Company's environmental reserves totalled $29.6 and $22.8 at December 31, 1996
and 1995, respectively ($27.2 at December 31, 1995 with the inclusion of
Cressona). Management believes that the reasonably probable outcomes of these
matters will not materially exceed established reserves. Although the Company
believes it has coverage for some environmental claims under certain insurance
policies, insurance recoveries are not considered in estimating the Company's
share of remediation costs at a site unless an insurance carrier has agreed to
pay a portion of such costs. Insurance recoveries were not considered in
establishing reserves for any of these sites absent an agreement between the
carriers and the Company.
 
                                       42
<PAGE>   44
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 10.  STOCKHOLDERS' EQUITY
 
  Preferred Stock
 
     On November 4, 1996, the Company announced that it was redeeming all of the
outstanding shares of the $4.00 Series A Convertible Preferred Stock ("Preferred
Stock"), par value $1.00 per share, on December 18, 1996. Each share of the
Preferred Stock was redeemable at a price of $52.40 per share, plus an amount
equal to the quarterly dividend accrued on each share through the redemption
date for a total cash redemption price of $52.60 per share. As an alternative to
redemption, each share of the Preferred Stock was convertible at the option of
the holder into 4.11489 shares of the Company's common stock until the close of
business on December 4, 1996. In December 1996, the outstanding shares of
Preferred Stock were converted into approximately 9.6 million shares of Alumax
Common Stock.
 
  Common Stock
 
     As of December 31, 1996, authorized and unissued shares of Alumax Common
Stock were reserved for the following purposes: 2,408,500 for issuance of stock
options and other stock compensation plans, 968,800 for issuance under employee
thrift and 721,800 for issuance pursuant to employee deferred compensation
agreements.
 
     Primary earnings per share for 1996, 1995 and 1994 are based on average
shares outstanding over the year and include the impact of common stock
equivalents related to stock options and grants. The average number of shares
used to compute primary earnings per share was 46,409,000, 45,200,000 and
44,757,000 in 1996, 1995 and 1994, respectively. Fully diluted earnings per
share, which are omitted when anti-dilutive, also include conversion of the
Alumax Series A Preferred Stock. The average number of shares used to calculate
fully-diluted earnings per share was 55,251,000 and 54,846,000 in 1996 and 1995.
 
NOTE 11.  STOCK-BASED COMPENSATION
 
     Under its 1993 Long-Term Incentive Plan ("Long-Term Plan"), the Company may
grant stock options, stock appreciation rights, restricted stock and other
stock-based awards to salaried employees for up to an aggregate of 3,960,129
shares of common stock. The 1995 Employee Equity Ownership Plan ("Equity
Ownership Plan") provides for discretionary stock option grants to salaried
employees in lower grade levels up to an aggregate of 1,000,000 shares of common
stock. Under its Non-Employee Directors Stock Compensation Plan ("Directors
Stock Plan"), the Company is authorized to grant options up to an aggregate of
750,000 shares of common stock. Upon joining the Board of Directors, each
non-employee director of the Company was provided with a one time stock option
grant of 10,000 shares of common stock. Annually, stock grants for 850 shares of
common stock are issued to each non-employee director.
 
     Options granted under the Long-Term Plan and the Equity Ownership Plan
generally vest two years after issue and have a term of ten years. Options
granted under the Directors Stock Plan vest ratably over three years. The
exercise price of options granted under each plan generally equals the market
price of the Company's stock on the date of grant. However, options may be
granted with differing vesting periods, terms and exercise prices. In 1996,
total options of 1,327,650 were granted, of which 687,800 were granted with a
vesting period of one to three years and a term of six years. Of these 687,800
options, 458,533 were granted with a weighted-average exercise price of $38.12,
which exceeded the market price at the date of grant.
 
     In 1993 certain former Amax executives became executives of the Company and
were awarded 623,350 options, not pursuant to the Long-Term Plan. These options,
which have a market based exercise price of $23.61 and vest ratably over five
years, were granted in consideration of the cancellation without payment of
rights which the executives may have had under severance policies of Amax.
 
                                       43
<PAGE>   45
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     The Company may grant performance accelerated restricted stock to key
management employees under the terms of the Long-Term Plan. The annual stock
awards vest approximately ten years after grant date with accelerated vesting if
the Company meets certain cumulative net income objectives.
 
     A summary of the status of the stock compensation plans as of December 31,
and changes during the years ended on those dates is presented below:
 
<TABLE>
<CAPTION>
                                                 OUTSTANDING                  EXERCISABLE
                                          --------------------------   --------------------------
                                                         WEIGHTED                     WEIGHTED
                                          NUMBER OF      AVERAGE       NUMBER OF      AVERAGE
                                           SHARES     EXERCISE PRICE    SHARES     EXERCISE PRICE
                                          ---------   --------------   ---------   --------------
<S>                                       <C>         <C>              <C>         <C>
Outstanding at December 31, 1993........    693,350       $23.19
  Granted...............................  1,293,175       $26.68
  Cancelled.............................    (65,850)      $27.13
                                          ---------
Outstanding at December 31, 1994........  1,920,675       $25.41         148,003
                                                                       =========
  Granted...............................    821,850       $33.13
  Exercised.............................     (3,333)      $19.44
  Cancelled.............................    (38,342)      $25.50
                                          ---------
Outstanding at December 31, 1995........  2,700,850       $27.76         296,008
                                                                       =========
  Granted (option value -- $11.24)......    869,117       $32.16
  Granted (option value -- $8.92).......    458,533       $38.12
  Exercised.............................   (144,200)      $26.80
  Cancelled.............................   (106,159)      $31.87
                                          ---------
Outstanding at December 31, 1996........  3,778,141       $29.95       1,463,484
                                          =========                    =========
Range of option exercise prices:
  $19.44 -- $27.13 (average life -- 7.5
     years).............................  1,706,541       $25.27       1,450,534       $25.55
                                          =========       ======       =========       ======
  $30.63 -- $40.13 (average life -- 8.2
     years).............................  2,071,600       $33.81          12,950       $30.81
                                          =========       ======       =========       ======
</TABLE>
 
     The following pro forma summary presents the Company's net earnings,
primary earnings per share and fully diluted earnings per share for the years
ended December 31, 1996 and 1995 as if compensation cost had been measured under
the fair value based method. The effects of the fair value of stock options in
the following pro forma disclosure are not likely to be representative of the
effects for future years because outstanding options vest over a period of up to
three years and awards are generally made during the fourth quarter of each
year.
 
<TABLE>
<CAPTION>
                                                               1996     1995
                                                              ------   ------
<S>                                                           <C>      <C>
Pro Forma Information:
  Net earnings..............................................  $247.1   $237.2
  Primary earnings per common share.........................  $ 5.13   $ 5.04
  Fully diluted earnings per common share...................  $ 4.48   $ 4.33
</TABLE>
 
     The pro forma adjustments are determined using an option valuation model.
Option valuation models require the input of highly subjective assumptions,
including the expected stock price volatility. Because the Company's employee
stock options have characteristics significantly different from traded options,
and because changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its employee
stock options. The following assumptions were used for the years ended December
31:
 
<TABLE>
<CAPTION>
                                                              1996   1995
                                                              ----   ----
<S>                                                           <C>    <C>
Risk-free interest rate.....................................   5.9%   5.5%
Expected life...............................................   5.0    5.0
Expected volatility.........................................  26.0%  26.0%
Expected dividend yield.....................................    --     --
</TABLE>
 
     The Company also granted performance accelerated restricted stock awards of
64,680, 62,100, and 55,956 shares to certain employees in 1996, 1995 and 1994,
respectively. The fair value per share on the date of the
 
                                       44
<PAGE>   46
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
grants was $34.25, $27.50 and $25.63, respectively. During the years ended
December 31, 1996, 1995 and 1994, compensation cost of $1.7, $1.0 and $.4,
respectively, has been recognized in connection with these awards.
 
NOTE 12.  STOCKHOLDER RIGHTS AGREEMENT
 
     On February 22, 1996, the Executive Committee of the Board of Directors of
the Company declared a dividend distribution of one right (a "Right") for each
outstanding share of Common Stock held of record at the close of business on
February 22, 1996. The Rights attach automatically to each share of Common Stock
outstanding as of February 22, 1996, and to each share of Common Stock issued
after February 22, 1996.
 
     Each Right entitles the holder to purchase from the Company one
one-hundredth of a share of the Company's Participating Preferred Stock at an
exercise price of $130, subject to certain adjustments. The Rights will not be
exercisable or transferable apart from the Common Stock until either the tenth
business day after the announcement by a person or group of the commencement of
a tender or exchange offer for 15 percent or more of the Voting Stock or the
first date of announcement by the Company that a person or group has acquired
beneficial ownership of 15 percent or more of the Voting Stock (an "Acquiring
Person"). "Voting Stock" means shares of capital stock of the Company entitled
to vote generally in the election of directors. If the Company is consolidated
or merged with another company or 50 percent or more of its consolidated assets
or earning power are sold and, at the time, an Acquiring Person controls the
Company's Board of Directors, each holder of a Right will have the right to
receive, upon exercise at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which have a market
value of twice the then current exercise price of the Right. If any person
becomes an Acquiring Person, each holder of a Right other than by the Acquiring
Person (whose Rights will be void) will have the right to receive, upon exercise
at the then current exercise price of the Right, that number of shares of Common
Stock having a market value of twice the exercise price of the Right. The Rights
will expire on February 22, 2006 and may be redeemed for $.01 per Right at any
time prior to the time an Acquiring Person becomes such. Until a Right is
exercised, the record holder will have no rights as a stockholder of the
Company.
 
     After the announcement that an Acquiring Person has become such and prior
to the acquisition by an Acquiring Person of 50 percent or more of the
outstanding Voting Stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such Acquiring Person) at an exchange ratio
of one share of Common Stock, or one one-hundredth of a share of the Company's
Participating Preferred Stock, per Right, subject to adjustment.
 
     The Company's Board of Directors may amend the Rights Agreement, in any
respect, until the time an Acquiring Person becomes such. Thereafter, the
Company's Board of Directors may amend the Rights Agreement in any respect not
materially adverse to Rights holders generally.
 
NOTE 13.  INTEREST EXPENSE, NET
 
     Interest expense, net was comprised of:
 
<TABLE>
<CAPTION>
                                                             1996        1995        1994
                                                            ------      ------      ------
<S>                                                         <C>         <C>         <C>
Interest expense..........................................  $(74.1)     $(81.6)     $(78.2)
Interest income...........................................     3.8        10.8         5.6
Capitalized interest......................................     7.5         5.4          --
                                                            ------      ------      ------
                                                            $(62.8)     $(65.4)     $(72.6)
                                                            ======      ======      ======
</TABLE>
 
                                       45
<PAGE>   47
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 14.  OTHER INCOME, NET
 
     Other income, net for the years ended December 31, 1996, 1995 and 1994 was
$10.6, $7.3 and $4.4, respectively. Included in 1996 and 1995 respectively, are
$18.6 and $11.6 for dividends received from Mexican mining operations. Included
in 1994 are $12.6 for dividends received from Mexican mining operations and a
$1.9 loss from Alumax's equity share of operating results from an investment in
Australian mining operations. The Company sold its investments in the Mexican
and Australian mining operations during 1996 and 1994, respectively.
 
NOTE 15.  FINANCIAL INSTRUMENTS
 
     The Company utilizes certain financial instruments in connection with its
risk management. The risk of loss related to counterparty nonperformance under
financial instrument agreements at December 31, 1996 is not significant.
 
     The Company enters into forward fixed price arrangements that are required
by certain customers and suppliers. The Company may utilize futures contracts
which effectively convert forward fixed price arrangements to market prices in
order to meet overall strategic objectives. Such contracts covered approximately
177,875 tonnes of aluminum at December 31, 1996 and mature at various dates
through 1999. Gains or losses with respect to these positions are reflected in
earnings concurrent with consummation of the underlying fixed price transaction.
Periodic value fluctuations of the futures contracts approximately offset the
value fluctuations of the underlying fixed price transactions.
 
     The Company also may, from time to time, establish a floor selling price
for varying quantities of future production, while preserving the opportunity to
participate in upward price movements. This may be accomplished by entering into
forward sales of primary aluminum and purchases of call options, which together
provide the same price protection as purchasing put options, or by purchasing
put options alone, in a manner which correlates with the Company's production
and sales of primary aluminum. The strategy may be modified from time to time.
At December 31, 1996, the Company's commitments with respect to these financial
instruments covered approximately 324,000 tonnes of future production. The book
value and market value of these financial instruments were $16.8 and $7.4
respectively, at December 31, 1996.
 
     Certain of the Company's foreign operating expenditures are denominated in
currencies other than the operations' functional currencies, which expose the
Company to exchange rate risks. In order to mitigate its exposure to exchange
rate risk where these conditions exist, the Company may utilize forward foreign
currency contracts. At December 31, 1996, the Company had outstanding $106 in
forward foreign currency contracts which principally mature during 1997. The
gains or losses related to these contracts are deferred and included in the
measurement of the related foreign denominated transactions. If these contracts
had been terminated at December 31, 1996, the Company would have received
approximately $1.3.
 
     The Company's debt instruments and related interest rate hedges are
susceptible to market fluctuations based on changes in the cost of borrowing. At
December 31, 1996, the fair value of total debt approximated book value. The
Lauralco credit facility, which has a variable interest rate, required the
Company to establish facilities to effectively limit the interest rate exposure
of the commitment. To meet this requirement, the Company has obtained interest
rate swaps with a notional amount totalling $400 through October 26, 2000 and an
interest rate cap with a notional amount of $150 expiring October 26, 1998. This
program is designed to effectively cap interest rate exposure at a maximum of
approximately nine percent through October 26, 2000. The effective rate on this
debt amounted to 8.5 percent, 9.2 percent and 8.0 percent for the years ended
December 31, 1996, 1995 and 1994, respectively. The Company would have paid
approximately $37.9 to terminate these interest rate agreements at December 31,
1996.
 
     The Company also purchases natural gas for its operations and enters into
forward contracts to eliminate the volatility in prices. At December 31, 1996,
none of these contracts is material.
 
                                       46
<PAGE>   48
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash and equivalents and trade accounts
receivable. The fair value of these financial instruments approximated book
value at December 31, 1996. The Company places its cash and equivalents with
high credit quality institutions. At times, such investments may be in excess of
the Federal Deposit Insurance Corporation insurance limit. The Company routinely
assesses the financial strength of its customers and, as a consequence, believes
that its trade accounts receivable credit risk exposure is not significant.
 
NOTE 16.  OPERATIONS AND GEOGRAPHIC DATA
 
     The Company is an integrated producer of aluminum products, operating in a
single segment: aluminum processing. Alumax is the third largest aluminum
company in the United States and the fourth largest in North America, based on
sales, and operates over 70 plants and other manufacturing and distribution
facilities in 22 states, Canada, Western Europe, Mexico, Australia, the People's
Republic of China and Poland. Using alumina purchased from one principal
supplier, the Company produces primary aluminum at five reduction plants in the
United States and Canada. Primary products are sold externally or further
processed by Alumax into a broad range of semi-fabricated and fabricated
products. The Company's products are sold to a wide variety of markets,
including transportation, distributors, building and construction, consumer
durables, and packaging.
 
     Domestic and Canadian sales and earnings from operations are combined in
the geographic data below, as Canadian assets are primarily aluminum reduction
facilities that toll alumina for U.S. operations and sales. Sales of primary
products to affiliated customers are accounted for at prices comparable to
unaffiliated customer sales.
 
<TABLE>
<CAPTION>
                                                                1996          1995          1994
                                                              --------      --------      --------
<S>                                                           <C>           <C>           <C>
Operations data:
Net sales to unaffiliated customers:
  Aluminum processing
     Primary products.......................................  $  658.9      $  724.5      $  592.7
     Semi-fabricated products...............................   1,639.5       1,235.4       1,264.2
     Fabricated products....................................     860.9         966.2         897.6
                                                              --------      --------      --------
                                                              $3,159.3      $2,926.1      $2,754.5
                                                              ========      ========      ========
 
Net sales to affiliated customers...........................  $  713.9      $  727.6      $  655.7
                                                              ========      ========      ========
Earnings from operations:
  Aluminum processing.......................................  $  275.6      $  339.7      $  173.3
  Corporate and other.......................................     (43.7)        (33.9)        (39.3)
                                                              --------      --------      --------
                                                              $  231.9      $  305.8      $  134.0
                                                              ========      ========      ========
Identifiable assets:
  Aluminum processing.......................................  $3,063.7      $2,718.7      $2,636.2
  Corporate and other.......................................     235.0         416.3         322.6
                                                              --------      --------      --------
                                                              $3,298.7      $3,135.0      $2,958.8
                                                              ========      ========      ========
Geographic data:
Net sales:
  United States and Canada..................................  $2,853.5      $2,548.0      $2,387.6
  Europe and other international............................     305.8         378.1         366.9
                                                              --------      --------      --------
                                                              $3,159.3      $2,926.1      $2,754.5
                                                              ========      ========      ========
</TABLE>
 
                                       47
<PAGE>   49
 
                                  ALUMAX INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
                                                                1996          1995          1994
                                                              --------      --------      --------
<S>                                                           <C>           <C>           <C>
Earnings from operations:
  United States and Canada..................................  $  219.9      $  273.9      $  105.5
  Europe and other international............................      12.0          31.9          28.5
                                                              --------      --------      --------
                                                              $  231.9      $  305.8      $  134.0
                                                              ========      ========      ========
Identifiable assets:
  United States and Canada..................................  $3,171.7      $2,820.6      $2,629.0
  Europe and other international............................     127.0         314.4         329.8
                                                              --------      --------      --------
                                                              $3,298.7      $3,135.0      $2,958.8
                                                              ========      ========      ========
</TABLE>
 
     A significant portion of the Company's sales are to the building and
construction, transportation and distributors markets. Concentrations of credit
risk with respect to the trade receivables, relating to sales into these as well
as other markets, are limited due to the large number of customers and the
widely dispersed geographic areas in which the Company's businesses operate. The
Company's one principal supplier of alumina has been its supplier for over 20
years under a long-term contract which, with renewal options, expires in
increments between 2007 and 2018. An extended interruption of alumina supply
from this supplier could have a material adverse effect on the Company's
operations. In addition, each of the Company's primary aluminum reduction
plants, except for Intalco, is supplied by a single source of electric power.
Although the Company may experience power curtailments from time to time, a
sudden or extended interruption of power at one or more of its primary aluminum
reduction plants could have a material adverse effect on the Company's
operations.
 
NOTE 17.  QUARTERLY DATA (UNAUDITED)
 
<TABLE>
<CAPTION>
                                          1996 QUARTERS                        1995 QUARTERS
                                ---------------------------------    ---------------------------------
                                FIRST    SECOND   THIRD    FOURTH    FIRST    SECOND   THIRD    FOURTH
                                ------   ------   ------   ------    ------   ------   ------   ------
<S>                             <C>      <C>      <C>      <C>       <C>      <C>      <C>      <C>
Net sales.....................  $802.6   $851.4   $809.1   $696.2    $698.6   $721.2   $767.7   $738.6
                                ------   ------   ------   ------    ------   ------   ------   ------
Earnings from operations......  $ 75.1   $ 64.4   $ 44.4   $ 48.1    $ 51.5   $ 76.5   $ 91.0   $ 86.8
                                ------   ------   ------   ------    ------   ------   ------   ------
Net earnings(a)...............  $ 95.4   $ 83.1   $ 52.4   $ 19.1    $110.4   $ 39.2   $ 43.0   $ 44.8
                                ======   ======   ======   ======    ======   ======   ======   ======
Earnings per share:
  Primary.....................  $ 2.04   $ 1.77   $ 1.10   $  .34    $ 2.41   $  .82   $  .90   $  .94
                                ======   ======   ======   ======    ======   ======   ======   ======
  Fully diluted(b)............  $ 1.73   $ 1.50   $  .95   $  .35    $ 2.03   $  .71   $  .78   $  .82
                                ======   ======   ======   ======    ======   ======   ======   ======
  Primary -- pro forma(c).....  $ 1.73   $ 1.50   $  .95   $  .35
                                ======   ======   ======   ======
</TABLE>
 
---------------
 
(a)  Included in 1996 is a first quarter after-tax gain of $48.6 related to the
     sale of a 23 percent interest in the Mt. Holly primary aluminum reduction
     plant, a second quarter after-tax gain of $55.1 related to the sale of
     mining interests and a third quarter after-tax gain of $36.7 related to the
     sale of Fab Products. Included in 1995 is a first quarter after-tax gain of
     $81.3 related to the sale of a 14 percent interest in each of the Intalco
     and Eastalco primary aluminum reduction plants.
(b)  The computation of fully diluted earnings per common share for the fourth
     quarter of 1996 includes the effect of the conversion of the Preferred
     Stock as if it had occurred at the beginning of the quarter.
(c)  Pro forma amounts represent primary earnings per common share assuming the
     conversion of the Preferred Stock had occurred at the beginning of the
     year.
 
                                       48
<PAGE>   50
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE
 
     None.
 
                                    PART III
 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     Information in response to this Item is incorporated herein by reference to
the sections entitled "Information Concerning Directors and Nominees", "Security
Ownership" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the
Company's definitive Proxy Statement for the 1997 Annual Meeting of Stockholders
(the "Proxy Statement").
 
     Information concerning Executive Officers required by this Item is
incorporated herein by reference to the section in Part I hereof entitled
"Executive Officers of the Registrant."
 
ITEM 11.  EXECUTIVE COMPENSATION
 
     Information in response to this Item is incorporated herein by reference to
the sections entitled "Directors' Meetings, Compensation and Committees,"
"Executive Compensation" and "Common Stock Performance Graph" in the Proxy
Statement.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     Information in response to this Item is incorporated herein by reference to
the section entitled "Security Ownership" in the Proxy Statement. Alumax knows
of no arrangements, including any pledges by any person of its securities, the
operation of which may at a subsequent date result in a change in control of the
Company.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     Information in response to this Item is incorporated herein by reference to
the sections entitled "Certain Transactions" and "Executive Employment and
Separation Agreements" in the Proxy Statement.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
     FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES. The Company's
financial statements, the notes thereto and the report of the independent
accountants are set forth on pages 29 through 48 of this Form 10-K.
 
     The following report and additional financial data should be read in
conjunction with the Company's financial statements:
 
     Independent Accountant's Report of Coopers & Lybrand L.L.P. dated January
     27, 1997 on the Company's financial statement schedule filed as a part
     hereof for the fiscal years ended December 31, 1996, 1995 and 1994.
 
                                       49
<PAGE>   51
 
     Schedule II -- Valuation and Qualifying Accounts for the fiscal years ended
     December 31, 1996, 1995 and 1994.
 
     Schedules other than the one referred to above are omitted because they are
not required or the information is included in the financial statements or the
notes thereto.
 
     EXHIBITS. Unless otherwise indicated, exhibits are incorporated by
reference to the exhibits filed with the Company's Registration Statement on
Form S-1 (Commission File No. 33-69442).
 
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                            DESCRIPTION
    -------                           -----------
    <C>       <S>                                                           <C>
      2.02    Agreement and Plan of Distribution, dated as of May 24,
                1993, by and between AMAX Inc. and Alumax Inc.
      2.03    Tax Disaffiliation Agreement, dated as of May 24, 1993, by
                and between AMAX Inc. and Alumax Inc.
      2.04    Amendment No. 1 to the Agreement and Plan of Distribution,
                dated as of November 15, 1993, by and between AMAX Inc.
                and Alumax Inc.*
      3.01    Restated Certificate of Incorporation of the Company*
      3.02    Restated By-laws of Alumax Inc., as amended on September 5,
                1996, filed as Exhibit 3.01 to the Company's Quarterly
                Report on Form 10-Q for the quarterly period ended
                September 30, 1996 and incorporated herein by reference.
      4.01    Form of Common Stock Certificate
      4.02    Rights Agreement, dated as of February 22, 1996, between
                Alumax Inc. and Chemical Mellon Shareholder Services,
                L.L.C., as Rights Agent, including as Exhibit A the forms
                of Rights Certificate and Election to Exercise and as
                Exhibit B the form of Certificate of Designation and Terms
                of Participating Preferred Stock of the Company, filed as
                Exhibit 4 to the Company's Current Report on Form 8-K,
                dated February 22, 1996, and incorporated herein by
                reference.
      4.03    Credit Agreement, dated as of September 14, 1990, as amended
                as of November 13, 1990 and as further amended as of
                February 19, 1991, by and among Aluminerie Lauralco, Inc.,
                as Borrower, Canalco, Inc., as Continuing Guarantor, and
                Bank of Montreal and National Westminster Bank PLC, as
                Arrangers, Bank of Montreal, as Agent, and the Banks named
                therein
      4.04    Credit Agreement, dated as of May 19, 1995, among Alumax
                Inc., Royal Bank of Canada, as Agent, Arranger and Letter
                of Credit Issuer, Canadian Imperial Bank of Commerce, as
                Administrative Agent, and the Banks signatory thereto,
                filed as Exhibit 4.01 to the Company's Quarterly Report on
                Form 10-Q for the quarterly period ended June 30, 1995 and
                incorporated herein by reference
     Note:    No other long-term debt instrument issued by the Company
                exceeds 10% of the consolidated total assets of the
                Company and its subsidiaries. In accordance with paragraph
                4(iii) of Item 601 of Regulation S-K, the Company will
                furnish to the Commission upon request copies of long-term
                debt instruments and related agreements
     10.01    Form of Alumax Inc. Excess Benefit Plan**~
     10.02    1993 Long-Term Incentive Plan (as Amended and Restated and
                as Further Amended on October 3, 1996)**~
     10.03    Deferred Compensation Plan (as Amended on October 3,
                1996)**~
</TABLE>
 
                                       50
<PAGE>   52
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                            DESCRIPTION
    -------                           -----------
    <C>       <S>                                                           <C>
     10.04    1993 Annual Incentive Plan (as Amended and Restated and as
                Further Amended on October 3, 1996)**~
     10.05    Executive Separation Policy*~
     10.06    Non-Employee Directors Stock Compensation Plan (as Amended
                on October 3, 1996)**~
     10.07    Non-Employee Directors Deferred Compensation Plan (as
                Amended on October 3, 1996)**~
     10.08    Lease Agreement, dated as of November 25, 1986, by and
                between Connecticut National Bank as Owner Trustee for the
                benefit of U.S. West Capital Corporation under an Owner
                Trust Agreement, dated as of November 25, 1986, and Alumax
                Mill Products, Inc.
     10.09    Facility Purchase Agreement, executed and effective as of
                September 18, 1996, among Alumax Mill Products, Inc.,
                Fleet National Bank and US WEST Financial Services, Inc.**
     10.10    Restated Sales Agreement, dated as of January 1, 1986, as
                amended and supplemented as of April 8, 1992 and April 9,
                1992, by and between Alcoa of Australia Limited and Alumax
                Inc. (Certain portions of this agreement have been deleted
                and filed separately with the Secretary of the Securities
                and Exchange Commission pursuant to a request for
                confidential treatment.)
     10.11    Power Sales Agreement, dated September 28, 1995, as amended,
                between Intalco Aluminum Corporation and Bonneville Power
                Administration (Certain portions of this agreement have
                been deleted and filed separately with the Secretary of
                the Securities and Exchange Commission pursuant to a
                request for confidential treatment.)***
     10.12    Power Sales Agreement, dated as of October 1, 1995, between
                British Columbia Power Exchange Corporation and Intalco
                Aluminum Corporation (Certain portions of this agreement
                have been deleted and filed separately with the Secretary
                of the Securities and Exchange Commission pursuant to a
                request for confidential treatment.)***
     10.13    Electric Service Agreement, dated as of July 1, 1993, by and
                between Eastalco Aluminum Company and The Potomac Edison
                Company*
     10.14    Agreement for the Sale of Electric Power and Energy, dated
                September 23, 1977, as amended, by and between the South
                Carolina Public Service Authority and Alumax of South
                Carolina
     10.15    Electricity Contract, dated February 1, 1990, as amended on
                October 15, 1992, by and between Aluminerie Lauralco, Inc.
                and Hydro-Quebec (Certain portions of this agreement have
                been deleted and filed separately with the Secretary of
                the Securities and Exchange Commission pursuant to a
                request for confidential treatment.)
     10.16    Employment Agreement, As Amended and Restated as of December
                5, 1996, between Alumax Inc. and C. Allen Born**~
     10.17    Agreement, dated as of November 15, 1993, as amended as of
                February 3, 1994, among AMAX Inc., Alumax Inc. and Helen
                M. Feeney*~
</TABLE>
 
                                       51
<PAGE>   53
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                            DESCRIPTION
    -------                           -----------
    <C>       <S>                                                           <C>
     10.18    Agreement, dated as of November 15, 1993, as amended as of
                February 3, 1994, among AMAX Inc., Alumax Inc. and
                Lawrence B. Frost*~
     10.19    Agreement, dated as of March 10, 1994, between Alumax Inc.
                and Helen M. Feeney, amending the Agreement, dated as of
                November 15, 1993, as amended as of February 3, 1994****~
     10.20    Agreement, dated as of March 10, 1994, between Alumax Inc.
                and Lawrence B. Frost, amending the Agreement, dated as of
                November 15, 1993, as amended as of February 3, 1994****~
     10.21    Grantor Trust Agreement, dated as of October 10, 1994,
                between Alumax Inc. and E. William Smethurst, Jr., filed
                as Exhibit 10.24 to the Company's Annual Report on Form
                10-K for the fiscal year ended December 31, 1994 and
                incorporated herein by reference.~
     10.22    Stock Purchase Agreement, dated as of October 6, 1995, By
                and Among the Shareholders of Cressona Aluminum Company,
                as Sellers, and Alumax Inc., as Purchaser*****
     10.23    Bridge Loan Agreement, dated as of January 17, 1996, among
                Alumax Inc., The Chase Manhattan Bank, N.A., as
                Syndication Agent, Royal Bank of Canada, as Documentation
                and Administrative Agent, and the Banks signatory
                thereto*****
     10.24    Acquisition Agreement, dated March 31, 1995, among Eastalco
                Aluminum Company, Eastalco Venture, Alumax of Maryland,
                Inc. and Alumet Corporation, Atmos (U.S.A.) Incorporated
                and Mitalco Inc., filed as Exhibit 10.01 to the Company's
                Quarterly Report on Form 10-Q for the quarterly period
                ended March 31, 1995 and incorporated herein by reference.
     10.25    Acquisition Agreement, dated as of January 26, 1996, between
                Alumax of South Carolina, Inc. and Glencore Primary
                Aluminum Company, LLC*****
     10.26    Purchase Agreement, dated as of June 24, 1996, between
                Euramax International, Ltd. and Alumax Inc., filed as
                Exhibit 10.01 to the Company's Quarterly Report on Form
                10-Q for the quarterly period ended June 30, 1996 and
                incorporated herein by reference.
     10.27    Agreement, dated as of June 28, 1996, by and between Minas
                Penoles, S.A. de C.V. and The Fresnillo Company, filed as
                Exhibit 10.01 to the Company's Quarterly Report on Form
                10-Q for the quarterly period ended June 30, 1996 and
                incorporated herein by reference.
     11.01    Calculation of Earnings per Common Share**
     21.01    Subsidiaries of the Company**
     23.01    Consent of Coopers & Lybrand L.L.P.**
     24.01    Power of Attorney**
     27.01    Financial Data Schedule ** (For SEC use only)
</TABLE>
 
---------------
 
     * Previously filed as an exhibit to the Company's 1993 Annual Report on
       Form 10-K and incorporated herein by reference.
 
   ** Filed herewith.
 
                                       52
<PAGE>   54
 
  *** Previously filed as an exhibit to Amendment No. 1 to the Company's 1995
      Annual Report on Form 10-K/A and incorporated herein by reference.
 
 **** Previously filed as an exhibit to Amendment No. 1 to the Company's 1993
      Annual Report on Form 10-K/A and incorporated herein by reference.
 
***** Previously filed as an exhibit to the Company's 1995 Annual Report on Form
      10-K and incorporated herein by reference.
 
~ Management contract or compensatory plan or arrangement required to be filed
  as an exhibit pursuant to Item 601 of Regulation S-K.
 
     REPORTS ON FORM 8-K. No Reports on Form 8-K were filed by the Company
during the quarter ended December 31, 1996.
 
                                       53
<PAGE>   55
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) 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, on February 10, 1997.
 
                                          Alumax Inc.
 
                                          By       /s/ HELEN M. FEENEY
 
                                            ------------------------------------
                                                      HELEN M. FEENEY
                                                Vice President and Secretary
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on February 10, 1997.
 
<TABLE>
<CAPTION>
                      SIGNATURE                                              TITLE
                      ---------                                              -----
<C>                                                      <C>
 
                          *                              Chairman, Chief Executive Officer and Director
-----------------------------------------------------            (Principal Executive Officer)
                     ALLEN BORN
 
                          *                                                 Director
-----------------------------------------------------
                  J. DENNIS BONNEY
 
                          *                                                 Director
-----------------------------------------------------
                    HAROLD BROWN
 
                          *                                                 Director
-----------------------------------------------------
                    L. DON BROWN
 
                          *                                                 Director
-----------------------------------------------------
                PIERRE DES MARAIS II
 
                          *                                                 Director
-----------------------------------------------------
              JAMES C. HUNTINGTON, JR.
 
                          *                                                 Director
-----------------------------------------------------
                  W. LOEBER LANDAU
 
                          *                                                 Director
-----------------------------------------------------
                   PAUL W. MACAVOY
 
                          *                                                 Director
-----------------------------------------------------
                   GEORGE P. STOE
 
                          *                                                 Director
-----------------------------------------------------
                     ANNE WEXLER
 
                          *                                     Senior Vice President and Chief
-----------------------------------------------------                  Financial Officer
                  LAWRENCE B. FROST                              (Principal Financial Officer)
 
                          *                                      Vice President and Controller
-----------------------------------------------------            (Principal Accounting Officer)
                MICHAEL T. VOLLKOMMER
 
               *By /s/ HELEN M. FEENEY
-----------------------------------------------------
                   HELEN M. FEENEY
            As Attorney-in-Fact for each
              of the persons indicated
</TABLE>
 
                                       54
<PAGE>   56
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Stockholders and Board of Directors of
Alumax Inc.
 
     Our report dated January 27, 1997, on our audits of the financial
statements of Alumax Inc. is included on page 29 of this Form 10-K. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed under Item 14 of this Form 10-K.
 
     In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
 
                                          COOPERS & LYBRAND L.L.P.
 
Atlanta, Georgia
January 27, 1997
 
                                       55
<PAGE>   57
 
                                  ALUMAX INC.
 
                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                             (MILLIONS OF DOLLARS)
 
<TABLE>
<CAPTION>
                COLUMN A                    COLUMN B            COLUMN C              COLUMN D        COLUMN E
----------------------------------------  ------------   -----------------------   ---------------   ----------
                                                                ADDITIONS
                                                         -----------------------
                                                            (1)          (2)
                                           BALANCE AT    CHARGED TO   CHARGED TO                     BALANCE AT
                                           BEGINNING     COSTS AND      OTHER        DEDUCTIONS        END OF
DESCRIPTION                                OF PERIOD      EXPENSES     EXPENSES    FROM RESERVE(A)     PERIOD
-----------                               ------------   ----------   ----------   ---------------   ----------
<S>                                       <C>            <C>          <C>          <C>               <C>
Year Ended December 31, 1996
  Reserves deducted from assets.........
     Accounts receivable, trade.........     $17.7          $5.2        $  --          $ (6.3)         $16.6
Year Ended December 31, 1995
  Reserves deducted from assets
     Deferred income taxes..............     $13.4          $ --        $  --          $(13.4)         $  --
     Accounts receivable, trade.........     $20.1          $2.7        $  --          $ (5.1)         $17.7
Year Ended December 31, 1994
  Reserves deducted from assets
     Deferred income taxes..............     $13.4          $ --        $  --          $   --          $13.4
     Accounts receivable, trade.........     $19.1          $4.7        $  --          $ (3.7)         $20.1
</TABLE>
 
---------------
 
(a) 1996 amount includes $4.1 related to write-offs, net of recoveries, and $2.2
     related to divestitures, net of acquisitions, which occurred in 1996.
 
                                       56
<PAGE>   58
 
                                 EXHIBIT INDEX
 
     Unless otherwise indicated, exhibits are incorporated by reference to
exhibits filed with the Company's Registration Statement on Form S-1 (Commission
File No. 33-69442).
 
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                            DESCRIPTION
    -------                           -----------
    <C>       <S>                                                           <C>
      2.02    Agreement and Plan of Distribution, dated as of May 24,
                1993, by and between AMAX Inc. and Alumax Inc.
      2.03    Tax Disaffiliation Agreement, dated as of May 24, 1993, by
                and between AMAX Inc. and Alumax Inc.
      2.04    Amendment No. 1 to the Agreement and Plan of Distribution,
                dated as of November 15, 1993, by and between AMAX Inc.
                and Alumax Inc.*
      3.01    Restated Certificate of Incorporation of the Company*
      3.02    Restated By-laws of Alumax Inc., as amended on September 5,
                1996, filed as Exhibit 3.01 to the Company's Quarterly
                Report on Form 10-Q for the quarterly period ended
                September 30, 1996 and incorporated herein by reference
      4.01    Form of Common Stock Certificate
      4.02    Rights Agreement, dated as of February 22, 1996, between
                Alumax Inc. and Chemical Mellon Shareholder Services,
                L.L.C., as Rights Agent, including as Exhibit A the forms
                of Rights Certificate and Election to Exercise and as
                Exhibit B the form of Certificate of Designation and Terms
                of Participating Preferred Stock of the Company, filed as
                Exhibit 4 to the Company's Current Report on Form 8-K,
                dated February 22, 1996, and incorporated herein by
                reference
      4.03    Credit Agreement, dated as of September 14, 1990, as amended
                as of November 13, 1990 and as further amended as of
                February 19, 1991, by and among Aluminerie Lauralco, Inc.,
                as Borrower, Canalco, Inc., as Continuing Guarantor, and
                Bank of Montreal and National Westminster Bank PLC, as
                Arrangers, Bank of Montreal, as Agent, and the Banks named
                therein
      4.04    Credit Agreement, dated as of May 19, 1995, among Alumax
                Inc., Royal Bank of Canada, as Agent, Arranger and Letter
                of Credit Issuer, Canadian Imperial Bank of Commerce, as
                Administrative Agent, and the Banks signatory thereto,
                filed as Exhibit 4.01 to the Company's Quarterly Report on
                Form 10-Q for the quarterly period ended June 30, 1995 and
                incorporated herein by reference
     Note:    No other long-term debt instrument issued by the Company
                exceeds 10% of the consolidated total assets of the
                Company and its subsidiaries. In accordance with paragraph
                4(iii) of Item 601 of Regulation S-K,
                the Company will furnish to the Commission upon request
                copies of long-term debt instruments and related
                agreements
     10.01    Form of Alumax Inc. Excess Benefit Plan**~
     10.02    1993 Long-Term Incentive Plan (as Amended and Restated and
                as Further Amended on October 3, 1996)**~
     10.03    Deferred Compensation Plan (as Amended on October 3,
                1996)**~
     10.04    1993 Annual Incentive Plan (as Amended and Restated and as
                Further Amended on October 3, 1996)**~
     10.05    Executive Separation Policy*~
     10.06    Non-Employee Directors Stock Compensation Plan (as Amended
                on October 3, 1996)**~
     10.07    Non-Employee Directors Deferred Compensation Plan (as
                Amended on October 3, 1996)**~
</TABLE>
<PAGE>   59
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                            DESCRIPTION
    -------                           -----------
    <C>       <S>                                                           <C>
     10.08    Lease Agreement, dated as of November 25, 1986, by and
                between Connecticut National Bank as Owner Trustee for the
                benefit of U.S. West Capital Corporation under an Owner
                Trust Agreement, dated as of November 25, 1986, and Alumax
                Mill Products, Inc.
     10.09    Facility Purchase Agreement, executed and effective as of
                September 18, 1996, among Alumax Mill Products, Inc.,
                Fleet National Bank and US WEST Financial Services, Inc.**
     10.10    Restated Sales Agreement, dated as of January 1, 1986, as
                amended and supplemented as of April 8, 1992 and April 9,
                1992, by and between Alcoa of Australia Limited and Alumax
                Inc. (Certain portions of this agreement have been deleted
                and filed separately with the Secretary of the Securities
                and Exchange Commission pursuant to a request for
                confidential treatment.)
     10.11    Power Sales Agreement, dated September 28, 1995, as amended,
                between Intalco Aluminum Corporation and Bonneville Power
                Administration (Certain portions of this agreement have
                been deleted and filed separately with the Secretary of
                the Securities and Exchange Commission pursuant to a
                request for confidential treatment.)***
     10.12    Power Sales Agreement, dated as of October 1, 1995, between
                British Columbia Power Exchange Corporation and Intalco
                Aluminum Corporation (Certain portions of this agreement
                have been deleted and filed separately with the Secretary
                of the Securities and Exchange Commission pursuant to a
                request for confidential treatment.)***
     10.13    Electric Service Agreement, dated as of July 1, 1993, by and
                between Eastalco Aluminum Company and The Potomac Edison
                Company*
     10.14    Agreement for the Sale of Electric Power and Energy, dated
                September 23, 1977, as amended, by and between the South
                Carolina Public Service Authority and Alumax of South
                Carolina
     10.15    Electricity Contract, dated February 1, 1990, as amended on
                October 15, 1992, by and between Aluminerie Lauralco, Inc.
                and Hydro-Quebec (Certain portions of this agreement have
                been deleted and filed separately with the Secretary of
                the Securities and Exchange Commission pursuant to a
                request for confidential treatment.)
     10.16    Employment Agreement, As Amended and Restated as of December
                5, 1996 between Alumax Inc. and C. Allen Born**~
     10.17    Agreement, dated as of November 15, 1993, as amended as of
                February 3, 1994, among AMAX Inc., Alumax Inc. and Helen
                M. Feeney*~
     10.18    Agreement, dated as of November 15, 1993, as amended as of
                February 3, 1994, among AMAX Inc., Alumax Inc. and
                Lawrence B. Frost*~
     10.19    Agreement, dated as of March 10, 1994, between Alumax Inc.
                and Helen M. Feeney, amending the Agreement, dated as of
                November 15, 1993, as amended as of February 3, 1994****~
     10.20    Agreement, dated as of March 10, 1994, between Alumax Inc.
                and Lawrence B. Frost, amending the Agreement, dated as of
                November 15, 1993, as amended as of February 3, 1994****~
     10.21    Grantor Trust Agreement, dated as of October 10, 1994,
                between Alumax Inc. and E. William Smethurst, Jr., filed
                as Exhibit 10.24 to the Company's Annual Report on Form
                10-K for the fiscal year ended December 31, 1994 and
                incorporated herein by reference~
</TABLE>
<PAGE>   60
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                            DESCRIPTION
    -------                           -----------
    <C>       <S>                                                           <C>
     10.22    Stock Purchase Agreement, dated as of October 6, 1995, By
                and Among the Shareholders of Cressona Aluminum Company,
                as Sellers, and Alumax Inc., as Purchaser*****
     10.23    Bridge Loan Agreement, dated as of January 17, 1996, among
                Alumax Inc., The Chase Manhattan Bank, N.A., as
                Syndication Agent, Royal Bank of Canada, as Documentation
                and Administrative Agent, and the Banks signatory
                thereto*****
     10.24    Acquisition Agreement, dated March 31, 1995, among Eastalco
                Aluminum Company, Eastalco Venture, Alumax of Maryland,
                Inc. and Alumet Corporation, Atmos (U.S.A.) Incorporated
                and Mitalco Inc., filed as Exhibit 10.01 to the Company's
                Quarterly Report on Form 10-Q for the quarterly period
                ended March 31, 1995 and incorporated herein by reference.
     10.25    Acquisition Agreement, dated as of January 26, 1996, between
                Alumax of South Carolina, Inc. and Glencore Primary
                Aluminum Company, LLC*****
     10.26    Purchase Agreement, dated as of June 24, 1996, between
                Euramax International, Ltd. and Alumax Inc., filed as
                Exhibit 10.01 to the Company's Quarterly Report on Form
                10-Q for the quarterly period ended June 30, 1996 and
                incorporated herein by reference.
     10.27    Agreement, dated as of June 28, 1996, by and between Minas
                Penoles, S.A. de C.V. and The Fresnillo Company, filed as
                Exhibit 10.01 to the Company's Quarterly Report on Form
                10-Q for the quarterly period ended June 30, 1996 and
                incorporated herein by reference.
     11.01    Calculation of Earnings per Common Share**
     21.01    Subsidiaries of the Company**
     23.01    Consent of Coopers & Lybrand L.L.P.**
     24.01    Power of Attorney**
     27.01    Financial Data Schedule** (For SEC use only)
</TABLE>
 
---------------
     * Previously filed as an exhibit to the Company's 1993 Annual Report on
       Form 10-K and incorporated herein by reference.
   ** Filed herewith.
  *** Previously filed as an exhibit to Amendment No. 1 to the Company's 1995
      Annual Report on Form 10-K/A and incorporated herein by reference.
 **** Previously filed as an exhibit to Amendment No. 1 to the Company's 1993
      Annual Report on Form 10-K/A and incorporated herein by reference.
 
***** Previously filed as an exhibit to the Company's 1995 Annual Report on Form
      10-K and incorporated herein by reference.
~ Management contract or compensatory plan or arrangement required to be filed
  as an exhibit pursuant to Item 601 of Regulation S-K.