TABLE OF CONTENTS

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

CONSOLIDATED BALANCE SHEETS (UNAUDITED)



	September 30, 2019			December 31, 2018
	(In millions of dollars, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	172.1		$	125.6
Short-term investments	25.3			36.7
Receivables:
Trade receivables, net	188.1			179.8
Other	26.1			25.6
Contract assets	46.1			54.9
Inventories	192.5			215.1
Prepaid expenses and other current assets	18.4			18.9
Total current assets	668.6			656.6
Property, plant and equipment, net	614.3			611.8
Operating lease assets	26.3			—
Deferred tax assets, net	6.3			35.9
Intangible assets, net	30.3			32.4
Goodwill	44.0			44.0
Other assets	36.5			38.6
Total	$	1,426.3		$	1,419.3
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	93.8		$	121.4
Accrued salaries, wages and related expenses	31.9			40.1
Other accrued liabilities	50.1			44.0
Total current liabilities	175.8			205.5
Long-term portion of operating lease liabilities	25.6			—
Net liabilities of Salaried VEBA	32.8			32.4
Deferred tax liabilities	4.2			4.2
Long-term liabilities	65.4			66.4
Long-term debt	371.1			370.4
Total liabilities	674.9			678.9
Commitments and contingencies – Note 7
Stockholders' equity:
Preferred stock, 5,000,000 shares authorized at both September 30, 2019 and December 31, 2018; no shares were issued and outstanding at September 30, 2019 and December 31, 2018	—			—
Common stock, par value $0.01, 90,000,000 shares authorized at both September 30, 2019 and at December 31, 2018; 22,550,827 shares issued and 15,900,956 shares outstanding at September 30, 2019; 22,471,705 shares issued and 16,234,603 shares outstanding at December 31, 2018	0.2			0.2
Additional paid in capital	1,061.5			1,059.3
Retained earnings	193.0			150.2
Treasury stock, at cost, 6,649,871 shares at September 30, 2019 and 6,237,102 shares at December 31, 2018, respectively	(460.1		)	(420.5		)
Accumulated other comprehensive loss	(43.2		)	(48.8		)
Total stockholders' equity	751.4			740.4
Total	$	1,426.3		$	1,419.3

September 30, 2017 December 31, 2016
(In millions of dollars, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents $ 73.9
$ 55.2
Short-term investments 191.4
231.0
Receivables:
Trade receivables, net 138.2
137.7
Other 15.4
11.9
Inventories 212.2
201.6
Prepaid expenses and other current assets 31.5
18.5
Total current assets 662.6
655.9
Property, plant and equipment, net 557.8
530.9
Deferred tax assets, net 118.7
159.7
Intangible assets, net 25.3
26.4
Goodwill 18.8
37.2
Other assets 39.5
33.4
Total $ 1,422.7
$ 1,443.5
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 94.4
$ 75.8
Accrued salaries, wages and related expenses 39.0
49.1
Other accrued liabilities 43.3
�� 40.1
Total current liabilities 176.7
165.0
Net liabilities of Salaried VEBA 27.8
28.6
Deferred tax liabilities 3.3
3.3
Long-term liabilities 61.9
73.2
Long-term debt 369.4
368.7
Total liabilities 639.1
638.8
Commitments and contingencies – Note 8

Stockholders' equity:
Preferred stock, 5,000,000 shares authorized at both September 30, 2017 and December 31, 2016; no shares were issued and outstanding at September 30, 2017 and December 31, 2016 —
—
Common stock, par value $0.01, 90,000,000 shares authorized at both September 30, 2017 and at December 31, 2016; 22,392,946 shares issued and 16,905,368 shares outstanding at September 30, 2017; 22,332,732 shares issued and 17,651,461 shares outstanding at December 31, 2016 0.2
0.2
Additional paid in capital 1,052.8
1,047.4
Retained earnings 109.0
75.2
Treasury stock, at cost, 5,487,578 shares at September 30, 2017 and 4,681,271 shares at December 31, 2016, respectively (345.7 ) (281.4 )
Accumulated other comprehensive loss (32.7 ) (36.7 )
Total stockholders' equity 783.6
804.7
Total $ 1,422.7
$ 1,443.5

The accompanying notes to interim consolidated financial statements are an integral part of these statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)



	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
	(In millions of dollars, except share and per share amounts)
Net sales	$	374.9		$	393.1		$	1,145.4		$	1,196.5
Costs and expenses:
Cost of products sold, excluding depreciation and amortization and other items	298.6			323.3			917.2			983.4
Depreciation and amortization	12.3			11.0			36.3			32.4
Selling, general, administrative, research and development	23.3			23.9			75.7			73.9
Other operating charges, net	—			—			0.1			0.1
Total costs and expenses	334.2			358.2			1,029.3			1,089.8
Operating income	40.7			34.9			116.1			106.7
Other (expense) income:
Interest expense	(5.8		)	(5.7		)	(17.3		)	(17.0		)
Other (expense) income, net – Note 9	(0.8		)	0.7			(0.4		)	0.3
Income before income taxes	34.1			29.9			98.4			90.0
Income tax provision	(8.7		)	(8.2		)	(25.8		)	(21.9		)
Net income	$	25.4		$	21.7		$	72.6		$	68.1

Net income per common share:
Basic	$	1.59		$	1.31		$	4.52		$	4.09
Diluted	$	1.57		$	1.29		$	4.47		$	4.03
Weighted-average number of common shares outstanding (in thousands):
Basic	15,956			16,573			16,042			16,654
Diluted	16,125			16,783			16,235			16,882

Quarter Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(In millions of dollars, except share and per share amounts)
Net sales $ 332.8
$ 320.6
$ 1,044.4
$ 998.7
Costs and expenses:
Cost of products sold:
Cost of products sold, excluding depreciation and amortization and other items 267.2
254.7
822.7
767.1
Lower of cost or market inventory write-down —
—
—
4.9
Unrealized gain on derivative instruments (10.8 ) (2.0 ) (14.0 ) (16.9 )
Depreciation and amortization 10.2
9.0
29.3
26.7
Selling, general, administrative, research and development:
Selling, general, administrative, research and development 24.7
25.6
74.7
79.2
Net periodic postretirement benefit cost relating to Salaried VEBA 1.2
0.8
3.4
2.5
Loss (gain) on removal of Union VEBA net assets – Note 6 0.5
—
(0.8 ) (0.1 )
Total selling, general, administrative, research and development 26.4
26.4
77.3
81.6
Goodwill impairment —
—
18.4
—
Other operating charges, net

—
2.7
—
2.8
Total costs and expenses 293.0
290.8
933.7
866.2
Operating income 39.8
29.8
110.7
132.5
Other (expense) income:
Interest expense (5.3 ) (5.5 ) (16.4 ) (14.7 )
Other income (expense), net – Note 13 1.5
—
3.1
(10.4 )
Income before income taxes 36.0
24.3
97.4
107.4
Income tax provision (16.1 ) (9.4 ) (36.8 ) (40.2 )
Net income $ 19.9
$ 14.9
$ 60.6
$ 67.2

Net income per common share:
Basic $ 1.18
$ 0.84
$ 3.55
$ 3.76
Diluted $ 1.16
$ 0.82
$ 3.49
$ 3.70
Weighted-average number of common shares outstanding (in thousands):
Basic 16,834
17,841
17,072
17,858
Diluted 17,160
18,175
17,363
18,181

Dividends declared per common share $ 0.50
$ 0.45
$ 1.50
$ 1.35

The accompanying notes to interim consolidated financial statements are an integral part of these statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

Quarter Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(In millions of dollars)
Net income $ 19.9
$ 14.9
$ 60.6
$ 67.2
Other comprehensive income, net of tax – Note 14:
Salaried VEBA and defined benefit pension plan 0.8
0.7
2.5
2.2
Available for sale securities 0.3
0.3
0.6
0.6
Other 0.5
0.1
0.9
0.1
Other comprehensive income, net of tax 1.6
1.1
4.0
2.9
Comprehensive income $ 21.5
$ 16.0
$ 64.6
$ 70.1



	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
	(In millions of dollars)
Net income	$	25.4		$	21.7		$	72.6		$	68.1
Other comprehensive (loss) income, net of tax – Note 8:
Defined benefit pension plan and Salaried VEBA	1.2			1.1			3.4			3.5
Available for sale securities	0.1			(0.2		)	(0.2		)	(0.5		)
Cash flow hedges	(2.2		)	(1.7		)	2.4			(5.7		)
Other comprehensive (loss) income, net of tax	(0.9		)	(0.8		)	5.6			(2.7		)
Comprehensive income	$	24.5		$	20.9		$	78.2		$	65.4

The accompanying notes to interim consolidated financial statements are an integral part of these statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

~~STATEMENT~~STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (UNAUDITED)

Nine Months Ended September 30, 2019



	Common Shares Outstanding		Common Stock		Additional Paid in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Total
	(In millions of dollars, except share and per share amounts)
BALANCE, December 31, 2018	16,234,603		$	0.2	$	1,059.3		$	150.2		$	(420.5	)	$	(48.8	)	$	740.4
Net income	—		—		—			28.0			—			—			28.0
Other comprehensive income, net of tax	—		—		—			—			—			9.7			9.7
Issuance of common shares to employees upon vesting of restricted stock units and performance shares	122,309		—		—			—			—			—			—
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares	(46,388	)	—		(5.0		)	—			—			—			(5.0		)
Repurchase of common stock¹	(175,977	)	—		—			—			(17.4		)	—			(17.4		)
Cash dividends on common stock and restricted shares and dividend equivalents on restricted stock units and performance shares²	—		—		—			(10.2		)	—			—			(10.2		)
Amortization of unearned equity compensation	—		—		2.4			—			—			—			2.4
BALANCE, March 31, 2019	16,134,547		$	0.2	$	1,056.7		$	168.0		$	(437.9	)	$	(39.1	)	$	747.9
Net income	—		—		—			19.2			—			—			19.2
Other comprehensive loss, net of tax	—		—		—			—			—			(3.2		)	(3.2		)
Issuance of non-vested shares to non-employee directors	11,850		—		—			—			—			—			—
Issuance of common shares to non-employee directors	2,850		—		0.3			—			—			—			0.3
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares	(12,395	)	—		(1.2		)	—			—			—			(1.2		)
Repurchase of common stock¹	(108,177	)	—		—			—			(10.2		)	—			(10.2		)
Cash dividends on common stock and restricted shares and dividend equivalents on restricted stock units and performance shares²	—		—		—			(9.9		)	—			—			(9.9		)
Amortization of unearned equity compensation	—		—		3.4			—			—			—			3.4
BALANCE, June 30, 2019	16,028,675		$	0.2	$	1,059.2		$	177.3		$	(448.1	)	$	(42.3	)	$	746.3
Net income	—		—		—			25.4			—			—			25.4
Other comprehensive loss, net of tax	—		—		—			—			—			(0.9		)	(0.9		)
Issuance of non-vested shares to non-employee directors	896		—		—			—			—			—			—
Repurchase of common stock¹	(128,615	)	—		—			—			(12.0		)	—			(12.0		)
Cash dividends on common stock and restricted shares and dividend equivalents on restricted stock units and performance shares²	—		—		—			(9.7		)	—			—			(9.7		)
Amortization of unearned equity compensation	—		—		2.3			—			—			—			2.3
BALANCE, September 30, 2019	15,900,956		$	0.2	$	1,061.5		$	193.0		$	(460.1	)	$	(43.2	)	$	751.4

Common
Shares
Outstanding

Common
Stock

Additional
Paid in Capital

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
Loss
Total
(In millions of dollars, except share and per share amounts)
BALANCE, December 31, 2016 17,651,461
$ 0.2
$ 1,047.4
$ 75.2
$ (281.4 ) $ (36.7 ) $ 804.7
Net income —
—
—
60.6
—
—
60.6
Other comprehensive income, net of tax —
—
—
—
—
4.0
4.0
Issuance of non-vested shares to non-employee directors 11,817
—
—
—
—
—
—
Issuance of common shares to non-employee directors 2,282
—
0.2
—
—
—
0.2
Issuance of common shares to employees upon vesting of restricted stock units and performance shares 102,737
—
—
—
—
—
—
Cancellation of employee non-vested shares (427 ) —
—
—
—
—
—
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares (56,195 ) —
(4.5 ) —
—
—
(4.5 )
Repurchase of common stock (806,307 ) —
—
—
(64.9 ) —
(64.9 )
Cancellation of treasury stock —
—
(0.2 ) (0.4 ) 0.6
—
—
Cash dividends on common stock and restricted shares and dividend equivalents on restricted stock units and performance shares —
—
—
(26.4 ) —
—
(26.4 )
Amortization of unearned equity compensation —
—
9.9
—
—
—
9.9
BALANCE, September 30, 2017 16,905,368
$ 0.2
$ 1,052.8
$ 109.0
$ (345.7 ) $ (32.7 ) $ 783.6
____________________


¹	Weighted-average repurchase price (dollars per share) for the quarters ended March 31, 2019, June 30, 2019 and September 30, 2019 was $98.55, $95.00 and $92.95, respectively. At September 30, 2019, $108.9 million remained available to repurchase our common shares pursuant to the stock repurchase program.


²	Dividends declared per common share were $0.60 during each of the quarters ended March 31, 2019, June 30, 2019 and September 30, 2019.

The accompanying notes to interim consolidated financial statements are an integral part of these statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED ~~CASH FLOWS~~STOCKHOLDERS' EQUITY CONTINUED (UNAUDITED)

Nine Months Ended September 30, 2018

Nine Months Ended
September 30,
2017 2016
(In millions of dollars)
Cash flows from operating activities:
Net income $ 60.6
$ 67.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment 28.3
25.5
Amortization of definite-lived intangible assets 1.0
1.2
Amortization of debt discount and debt issuance costs 0.9
0.8
Deferred income taxes 38.6
40.7
Non-cash equity compensation 10.1
8.8
Lower of cost or market inventory write-down —
4.9
Gain on sale of available for sale securities (1.8 ) —
Non-cash unrealized gain on derivative instruments (14.0 ) (16.9 )
Loss on extinguishment of debt —
11.1
Non-cash intangible asset impairment charge 18.4
2.6
(Gain) loss on disposition of property, plant and equipment (0.4 ) 0.2
Non-cash net periodic postretirement benefit cost relating to Salaried VEBA 3.4
2.5
Other non-cash changes in assets and liabilities (0.8 ) 1.1
Changes in operating assets and liabilities:
Trade and other receivables (4.0 ) (26.7 )
Inventories, excluding lower of cost or market write-down (10.6 ) (8.9 )
Prepaid expenses and other current assets (1.8 ) (0.9 )
Accounts payable 21.6
0.8
Accrued liabilities 0.9
27.9
Annual variable cash contributions to VEBAs (20.0 ) (19.5 )
Long-term assets and liabilities, net 1.1
(15.0 )
Net cash provided by operating activities 131.5
107.4
Cash flows from investing activities¹:

Capital expenditures (56.1 ) (57.4 )
Purchase of available for sale securities (196.0 ) (201.1 )
Proceeds from disposition of available for sale securities 237.2
30.0
Proceeds from disposal of property, plant and equipment 0.6
—
Net cash used in investing activities (14.3 ) (228.5 )
Cash flows from financing activities¹:

Repayment of principal and redemption premium of 8.25% Senior Notes —
(206.0 )
Issuance of 5.875% Senior Notes —
375.0
Cash paid for debt issuance costs —
(6.8 )
Proceeds from stock option exercises —
1.0
Repayment of capital lease (0.2 ) (0.1 )
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares (4.5 ) (2.8 )
Repurchase of common stock (66.7 ) (13.6 )



	Common Shares Outstanding		Common Stock		Additional Paid in Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Total
	(In millions of dollars, except share and per share amounts)
BALANCE, December 31, 2017	16,773,586		$	0.2	$	1,055.9		$	85.5		$	(358.6	)	$	(36.7	)	$	746.3
Cumulative-effect adjustment	—		—		—			10.5			—			(0.4		)	10.1
BALANCE, January 1, 2018	16,773,586		$	0.2	$	1,055.9		$	96.0		$	(358.6	)	$	(37.1	)	$	756.4
Net income	—		—		—			25.7			—			—			25.7
Other comprehensive loss, net of tax	—		—		—			—			—			(8.3		)	(8.3		)
Issuance of common shares to employees upon vesting of restricted stock units and performance shares	135,134		—		—			—			—			—			—
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares	(68,029	)	—		(6.9		)	—			—			—			(6.9		)
Repurchase of common stock¹	(58,155	)	—		—			—			(6.1		)	—			(6.1		)
Cash dividends on common stock and restricted shares and dividend equivalents on restricted stock units and performance shares²	—		—		—			(10.0		)	—			—			(10.0		)
Amortization of unearned equity compensation	—		—		2.8			—			—			—			2.8
BALANCE, March 31, 2018	16,782,536		$	0.2	$	1,051.8		$	111.7		$	(364.7	)	$	(45.4	)	$	753.6
Net income	—		—		—			20.7			—			—			20.7
Other comprehensive income, net of tax	—		—		—			—			—			6.4			6.4
Issuance of non-vested shares to non-employee directors	9,009		—		—			—			—			—			—
Issuance of common shares to non-employee directors	1,954		—		0.2			—			—			—			0.2
Issuance of common shares to employees upon vesting of restricted stock units and performance shares	82		—		—			—			—			—			—
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares	(95	)	—		—			—			—			—			—
Repurchase of common stock¹	(127,545	)	—		—			—			(13.3		)	—			(13.3		)
Cash dividends on common stock and restricted shares and dividend equivalents on restricted stock units and performance shares²	—		—		—			(9.3		)	—			—			(9.3		)
Amortization of unearned equity compensation	—		—		2.7			—			—			—			2.7
BALANCE, June 30, 2018	16,665,941		$	0.2	$	1,054.7		$	123.1		$	(378.0	)	$	(39.0	)	$	761.0
Net income	—		—		—			21.7			—			—			21.7
Other comprehensive loss, net of tax	—		—		—			—			—			(0.8		)	(0.8		)
Issuance of common shares to employees upon vesting of restricted stock units and performance shares	78		—		—			—			—			—			—
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares	(42	)	—		—			—			—			—			—
Repurchase of common stock¹	(118,740	)	—		—			—			(12.9		)	—			(12.9		)
Cash dividends on common stock and restricted shares and dividend equivalents on restricted stock units and performance shares²	—		—		—			(9.2		)	—			—			(9.2		)
Amortization of unearned equity compensation	—		—		2.7			—			—			—			2.7
BALANCE, September 30, 2018	16,547,237		$	0.2	$	1,057.4		$	135.6		$	(390.9	)	$	(39.8	)	$	762.5

~~KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES~~

~~STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)~~

Nine Months Ended
September 30,
2017 2016
Cash dividends and dividend equivalents paid (26.4 ) (24.4 )
Net cash (used in) provided by financing activities (97.8 ) 122.3
Net increase in cash, cash equivalents and restricted cash during the period 19.4
1.2
Cash, cash equivalents and restricted cash at beginning of period 67.7
83.7
Cash, cash equivalents and restricted cash at end of period $ 87.1
$ 84.9

~~____________~~____________________


¹	~~See Note 12~~Weighted-average repurchase price (dollars per share) for the ~~supplemental disclosure on non-cash transactions.~~quarters ended March 31, 2018, June 30, 2018 and September 30, 2018 was $104.50, $104.74 and $108.07, respectively.


²	Dividends declared per common share were $0.55 during each of the quarters ended March 31, 2018, June 30, 2018 and September 30, 2018.

The accompanying notes to interim consolidated financial statements are an integral part of these statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)



	Nine Months Ended
	September 30,
	2019			2018
	(In millions of dollars)
Cash flows from operating activities¹:
Net income	$	72.6		$	68.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment	34.2			31.3
Amortization of definite-lived intangible assets	2.1			1.1
Amortization of debt discount and debt issuance costs	0.9			0.8
Deferred income taxes	27.8			27.4
Non-cash equity compensation	8.4			8.4
Gain on disposition of available for sale securities	(0.6		)	(2.4		)
Non-cash asset impairment charge	0.1			0.1
Gain on disposition of property, plant and equipment	(0.1		)	(0.2		)
Other non-cash changes in assets and liabilities	9.3			20.2
Changes in operating assets and liabilities:
Trade and other receivables	(8.8		)	(35.7		)
Contract assets	8.8			4.6
Inventories	22.6			(25.6		)
Prepaid expenses and other current assets	(1.7		)	(1.6		)
Accounts payable	(21.9		)	31.1
Accrued liabilities	(3.3		)	(1.0		)
Annual variable cash contributions to VEBAs	(2.1		)	(15.7		)
Long-term assets and liabilities, net	5.6			1.6
Net cash provided by operating activities	153.9			112.5
Cash flows from investing activities¹:
Capital expenditures	(40.7		)	(53.1		)
Purchase of available for sale securities	(56.3		)	(111.9		)
Purchase of equity securities	(0.7		)	(0.9		)
Proceeds from disposition of available for sale securities	68.2			208.7
Cash payment for acquisition of Imperial Machine & Tool Co., net of cash received	—			(43.3		)
Proceeds from disposition of property, plant and equipment	0.2			0.6
Net cash (used in) provided by investing activities	(29.3		)	0.1
Cash flows from financing activities¹:
Repayment of finance lease	(1.1		)	(0.5		)
Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares	(6.2		)	(6.9		)
Repurchase of common stock	(40.6		)	(31.9		)
Cash dividends and dividend equivalents paid	(29.8		)	(28.5		)
Net cash used in financing activities	(77.7		)	(67.8		)
Net increase in cash, cash equivalents and restricted cash during the period	46.9			44.8
Cash, cash equivalents and restricted cash at beginning of period	139.6			64.3
Cash, cash equivalents and restricted cash at end of period	$	186.5		$	109.1

____________________


¹	See Note 12 for supplemental cash flow information.

The accompanying notes to interim consolidated financial statements are an integral part of these statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

NOTES INDEX



Note		Page
Note 1	Summary of Significant Accounting Policies	8
Note 2	Supplemental Balance Sheet Information	11
Note 3	Leases	12
Note 4	Employee Benefits	14
Note 5	Derivatives, Hedging Programs and Other Financial Instruments	16
Note 6	Debt and Credit Facility	20
Note 7	Commitments and Contingencies	20
Note 8	Accumulated Other Comprehensive Loss	21
Note 9	Other (Expense) Income, Net	23
Note 10	Income Tax Matters	23
Note 11	Net Income Per Share and Stockholders' Equity	24
Note 12	Supplemental Cash Flow Information	25
Note 13	Business, Product and Geographical Area Information and Concentration of Risk	25
Note 14	Condensed Guarantor and Non-Guarantor Financial Information	27
Note 15	Subsequent Events	35

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

1. Summary of Significant Accounting Policies

This Quarterly Report on Form 10-Q (this "Report") should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018. Unless the context otherwise requires, references in these notes to interim consolidated financial statements - unaudited to "Kaiser Aluminum Corporation," "we," "us," "our," "the Company" and "our Company" refer collectively to Kaiser Aluminum Corporation and its subsidiaries.

Organization and Nature of Operations. Kaiser Aluminum Corporation specializes in the production of semi-fabricated specialty aluminum mill products, such as aluminum plate and sheet and extruded and drawn products, for the following end market applications: aerospace and high strength ("Aero/HS products"), automotive ~~applications~~ ("Automotive Extrusions"), general engineering ("GE products") and other industrial ("Other products"). Our business is organized into one operating ~~segment, Fabricated Products.~~segment. See Note 1113 for additional information regarding our ~~reportable segment~~business, product and ~~business unit.~~geographical area information and concentration of risk.

Principles of Consolidation and Basis of Presentation. The accompanying unaudited consolidated financial statements include the accounts of our wholly owned subsidiaries and are prepared in accordance with United States generally accepted accounting principles ("GAAP") and the rules and regulations of the Securities and Exchange Commission ("SEC") applicable for interim periods and, therefore, do not include all information and footnotes required by GAAP for complete financial statements. In management's opinion, all adjustments (which include normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for our interim periods are not necessarily indicative of the results of operations that may be achieved for the entire ~~2017~~2019 fiscal year. The financial information as of December 31, ~~2016~~2018 is derived from our audited consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

Use of Estimates in the Preparation of Financial Statements. The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of our consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of our consolidated financial position and results of operations.

Fair Value Measurements. We apply the fair value hierarchy established by GAAP for the recognition and measurement of certain financial assets and liabilities. An asset or liability's fair value classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and consider counterparty risk in our assessment of fair value. We also review the underlying inputs that are significant to the fair value measurement of financial instruments to determine if a transfer among hierarchy levels is appropriate. We historically have not had significant transfers into or out of each hierarchy level.

Financial assets and liabilities that we measure at fair value each period include our derivative instruments, equity investments related to our deferred compensation plan and debt investment securities classified as available for sale securities (see Note 4 and Note 5). Additionally, we measure at fair value once each year at December 31 our Canadian defined benefit pension plan and the plan assets of the Salaried VEBA (defined in Note 4). In determining the fair value of the plan assets at an annual period end, we utilize primarily the results of valuations supplied by the investment advisors responsible for managing the assets of each plan, which we independently review for reasonableness. We record our remaining financial assets and liabilities at carrying value.

For a majority of our non-financial assets and liabilities, which include goodwill, intangible assets, inventories and property, plant and equipment, we are not required to measure their fair value on a recurring basis. However, if certain triggering events occur (or at least annually for goodwill), an evaluation of the affected non-financial asset or liability will be required, which could result in a reduction to the carrying amount of such asset or liability.

None of our non-financial assets and liabilities subject to fair value assessments on a non-recurring basis required a material adjustment to the carrying amount of such assets and liabilities for the quarter and nine months ended September 30, 2019.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

Inventories. Inventories are stated at the lower of cost or market value. On March 31, 2016, we recorded a lower of cost or market inventory write-down of $4.9 million as a result of a decrease in our net realizable value of inventory. The net realizable value reflected commitments as of that date from customers to purchase our inventory at prices that exceeded the Midwest Transaction Price ("Midwest Price"), which reflects the primary aluminum supply/demand dynamics in North America, reduced by an approximate normal profit margin. There were no additional lower of cost or market inventory adjustments since the quarter ended March 31, 2016.

Finished products, work-in-process and raw material inventories are stated on the last-in, first-out ("LIFO") basis. At September 30, ~~2017,~~2019 and December 31, 2018, the current cost of our inventory exceeded its stated LIFO value by ~~$12.5 million. At December 31, 2016, the stated LIFO value of our inventory represented its net realizable value (less a normal profit margin)~~$17.5 million and ~~exceeded the current cost of our inventory by $8.5 million.~~$31.7 million, respectively. Other inventories are stated on the first-in, first-out basis and consist of operating supplies, which are materials and supplies to be consumed during the production process. Inventory costs consist of material, labor and manufacturing overhead, including depreciation. Abnormal costs, such as idle facility expenses, freight, handling costs and spoilage, are accounted for as current period ~~charges. All of our inventories at September 30, 2017 and December 31, 2016 were included in the Fabricated Products segment~~charges (see Note 2 for the components of inventories).

Replacement Parts. Replacement parts consist of preventative maintenance and capital spare parts, which are stated on the first-in, first-out basis. Replacement parts are recorded within Prepaid expenses and other current assets or Other assets depending on whether or not the expected utilization of the replacement parts is to occur within the current operating cycle.

Property, Plant and Equipment, Net. Property, plant and equipment, net, is recorded at cost and includes construction in progress (see Note 2). Interest related to the construction of qualifying assets is capitalized as part of the construction costs. The amount of interest expense capitalized as construction in progress was ~~$0.7~~$0.4 million ~~and $0.6 million during~~for each of the quarters ended September 30, ~~2017~~2019 and September 30, ~~2016, respectively.~~2018. The amount of interest expense capitalized as construction in

~~KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

progress was ~~$1.9~~$1.3 million ~~and $2.4 million during~~for each of the nine months ended September 30, ~~2017~~2019 and September 30, ~~2016, respectively.~~2018.

Depreciation is computed using the straight-line method at rates based on the estimated useful lives of the various classes of assets. ~~Capital~~Finance lease assets and leasehold improvements are depreciated on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term. ~~Depreciation expense is not included in Cost of products sold, excluding depreciation and amortization and other items, but is included in Depreciation and amortization.~~

We classify assets as held for sale only when an asset is being actively marketed and expected to sell within 12 months. Assets held for sale are initially measured at the lesser of the assets' carrying amount and the fair value less costs to sell.

Derivative Financial Instruments. Consistent with guidelines established by management and approved by our Board of Directors, we use derivative financial instruments to mitigate our exposure to changes in the market price of aluminum, alloying metals and energy, and, to a lesser extent, to foreign currency exchange rates. We do not use derivative financial instruments for trading or other speculative purposes. Hedging transactions are executed centrally on behalf of all of our operations to minimize transaction costs, monitor consolidated net exposures and allow for increased responsiveness to changes in market factors.

We reflect the fair value of all of our derivative instruments on our Consolidated Balance Sheets (see Note 5). The fair value of hedges settling within one year is included in Prepaid expenses and other current assets or Other accrued liabilities. The fair value of hedges settling beyond one year is included in Other assets or Long-term liabilities.

We designate our aluminum and energy derivatives and our forward swap contracts for zinc and copper ("Alloying Metals") used in our fabrication operations as cash flow hedges. Unrealized gains and losses associated with our cash flow hedges are deferred in Other comprehensive (loss) income, net of tax, and reclassified to Cost of products sold, excluding depreciation and amortization and other items ("COGS") when such hedges settle (see Note 5).

Self Insurance of Workers' Compensation and Employee Healthcare Liabilities. We self-insure the majority of the costs of workers' compensation benefits and employee healthcare benefits and rely on insurance coverage to protect us from large losses on individual claims. Workers' compensation liabilities are based on a combination of estimates for: (i) incurred-but-not-reported claims and (ii) the ultimate expense of incurred claims. Such estimates are based on judgment, using our historical claims data and information and analysis provided by actuarial and claims advisors, our insurance carriers and other professionals. Our undiscounted workers' compensation liabilities were estimated at ~~$26.6~~$28.0 million and ~~$26.8~~$27.6 million ~~for the periods ended~~as of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively. However, we ~~account~~accounted for our workers' compensation accrued ~~liability~~liabilities on a discounted basis (see Note 2), using a discount rate of ~~2.00%~~1.75% and 3.00% at ~~both~~ September 30, ~~2017~~2019 and December 31, ~~2016.~~2018, respectively. Accrued liabilities for employee healthcare benefits, which are estimates of unpaid incurred medical and prescription drug costs as provided by our healthcare administrators, were $3.3 million and $3.6 million as of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively.

~~Derivative Financial Instruments.~~ Consistent with guidelines established by management and approved by our Board of Directors, we use derivative financial instruments to mitigate our exposure to changes in the market price of aluminum, alloying metals and energy and, to a lesser extent, foreign currency exchange rates. We do not use derivative financial instruments for trading or other speculative purposes. Hedging transactions are executed centrally on behalf of all of our operations to minimize transaction costs, monitor consolidated net exposures and allow for increased responsiveness to changes in market factors.

We reflect the fair value of all of our derivative instruments on our Consolidated Balance Sheets (see Note 9). The carrying values of hedges settling within one year are included in Prepaid expenses and other current assets or Other accrued liabilities. Carrying values for hedges settling beyond one year are included in Other assets or Long-term liabilities.

We do not meet the documentation requirements for hedge (deferral) accounting related to aluminum and energy derivatives. Accordingly, we record unrealized gain or loss associated with these hedges in the Statements of Consolidated Income within Unrealized gain on derivative instruments. As such derivatives settle, we reverse any previously recorded unrealized gain or loss associated with these hedges and record the realized gain or loss within Cost of products sold, excluding depreciation and amortization and other items.

Forward swap contracts for zinc and copper ("Alloy Hedges") used in our fabrication operations are designated and qualify as cash flow hedges. Unrealized gain and loss associated with the Alloy Hedges are deferred in Other comprehensive income, net of tax. As Alloy Hedges settle, we reverse any unrealized gain or loss previously recorded within Other comprehensive income, net of tax associated with settling Alloy Hedges and record the realized gain or loss within Cost of products sold, excluding depreciation and amortization and other items.

From time to time, we enter into foreign currency forward contracts to protect the value of anticipated foreign currency expenses associated with cash commitments for equipment purchases. Some of these derivative contracts qualify for cash flow hedge accounting and are designated as cash flow hedges. The remainder are non-designated hedges. Both realized and unrealized gains and losses of foreign currency forward contracts designated as cash flow hedges are deferred in Accumulated other comprehensive loss and, over the period that the underlying equipment is depreciated, realized gains and losses are recorded as an adjustment to depreciation expense. For non-designated foreign currency forward contracts, gains and losses (both unrealized and realized) are reflected as an increase or reduction in Other income (expense), net.

~~Fair Value Measurements.~~ We apply the fair value hierarchy established by GAAP for the recognition and measurement of certain financial assets and liabilities. An asset or liability's fair value classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. In determining fair value, we utilize valuation techniques

~~KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and consider counterparty risk in our assessment of fair value.~~

The fair values of financial assets and liabilities are evaluated and measured on a recurring basis. As part of that evaluation process, we review the underlying inputs that are significant to the fair value measurement of financial instruments to determine if a transfer among hierarchy levels is appropriate. We historically have not had significant transfers into or out of each hierarchy level.

Financial assets and liabilities that we measure at fair value each period include our derivative instruments and available for sale securities, consisting of debt investment securities and investments related to our deferred compensation plan (see Note 6). Additionally, we measure at fair value once each year at December 31 the plan assets of the Salaried VEBA (defined in Note 6) and our Canadian defined benefit pension plan. We record our remaining financial assets and liabilities at carrying value.

We concluded that none of our other non-financial assets and liabilities subject to fair value assessments on a non-recurring basis required a material adjustment to the carrying amount of such assets and liabilities for the quarter and nine months ended September 30, 2017.

~~New Accounting Pronouncements.~~ ~~Accounting Standards Update ("ASU") No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ~~("ASU 2014-09")~~, was issued in May 2014 and requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015~~, ASU 2014-09 was amended by~~ ~~ASU No. 2015-14,~~ ~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which~~ defers the effective date of ASU 2014-09 by one year for all entities and permits early adoption on a limited basis. ASU 2014-09 was subsequently amended by four additional pronouncements: (i) ASU No. 2016-10, ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; (ii) ASU No. 2016-11,~~ Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting~~; (iii) ASU No. 2016-12,~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; and (iv) ASU No. 2016-20,~~ ~~Revenue from Contracts with Customers (Topic 606): Technical Corrections and Improvements to Topic 606~~.

We have evaluated the impacts on our financial reporting of adopting ASU 2014-09, including its subsequent amendments discussed above (together "ASC 606"), and have regularly reported our findings and implementation readiness to the Audit Committee and internal stakeholders. We plan to adopt ASC 606 using the modified retrospective transition approach for the fiscal year ending December 31, 2018, with the cumulative-effect adjustment recognized in beginning Retained earnings. In calculating the cumulative-effect adjustment, we will only apply the guidance to contracts not completed at the date of adoption. The primary change to our accounting policies upon adopting ASC 606 will relate to the timing of when revenue is recognized. While revenue from sales of certain contracts will continue to be recognized at a point in time, revenue from other contracts will be required to be recognized over time. Upon adoption, a majority of our Aero/HS products and a substantial portion of our Automotive Extrusions will convert to over time recognition. For these products, we will accelerate revenue recognition throughout the production process whereas previously we did not recognize revenue until the product shipped or reached its destination, based on the transfer of risks and title. We are still finalizing our assessment of the specific dollar impact that over-time recognition will have on our consolidated financial statements. After the cumulative-effect adjustment, however, we do not believe it will have a material effect on revenue recognized compared to current accounting during any given period.

We do not believe the adoption of ASC 606 will result in: (i) a change in the number of distinct performance obligations within our contractual arrangements; (ii) a change in our current capitalization and deferral policies; (iii) a change in our accounting for contract acquisition and fulfillment costs; (iv) the addition of any contract liability balances; or (v) the adjustment of the amount of promised consideration from our customers for the effects of significant financing components.

~~KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

Additionally, we plan to account for shipping and handling activities that occur after the customer has obtained control of a product as fulfillment activities (i.e., an expense) rather than as a promised service (i.e., a revenue element).

As of September 30, 2017, we have: (i) finalized our review of most of our customer contracts; (ii) completed most of the system updates to track information needed to apply ASC 606; and (iii) trained internal stakeholders on the pending changes to revenue recognition policies and work procedures. We expect to complete our implementation work in time to adopt ASC 606 for periods starting after December 31, 2017.

~~ASU No. 2016-02,~~ ~~Leases (Topic 842): Amendments to the Financial Accounting Standards Board Accounting Standards Codification~~ ("ASU 2016-02"), was issued in February 2016. Under ASU 2016-02, lessees will need to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). ASU 2016-02 becomes effective for us in the first quarter of 2019. We are currently assessing the impact and expect the adoption of this ASU in 2019 to have a material impact on our consolidated financial statements.

~~ASU No. 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~ ("ASU 2017-12"), was issued in August 2017. The amendments under ASU 2017-12 refine and expand hedge accounting requirements for both financial (e.g., interest rate) and commodity risks. Its provisions create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes. It also makes certain targeted improvements to simplify the application of hedge accounting guidance. ASU 2017-12 becomes effective for us in the first quarter of 2019. We are currently assessing the impact the adoption of this ASU will have on our consolidated financial statements.

~~We do not anticipate any material impact on our consolidated financial statements upon the adoption of the following accounting pronouncements: (i) ASU No. 2016-01,~~ ~~Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~;~~(ii) ASU No. 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments; (iii) ASU~~ ~~No. 2017-07,~~ ~~Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost; and (iv) ASU No. 2017-09,~~ ~~Compensation~~ - ~~Stock Compensation (Topic 718): Scope of Modification Accounting~~.

~~There were no material impacts on our consolidated financial statements resulting from our early adoption in the first quarter of 2017 of the following accounting pronouncements: (i) ASU No. 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments; (ii) ASU No. 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~;~~and (iii) ASU No. 2017-04,~~ ~~Intangibles - Goodwill and Other(Topic 350): Simplifying the Test for Goodwill Impairment.~~

~~2. Supplemental Balance Sheet Information~~

September 30, 2017 December 31, 2016
(In millions of dollars)
Cash and Cash Equivalents
Cash and money market funds $ 17.3
$ 37.9
Commercial paper 56.6
17.3
Total $ 73.9
$ 55.2

~~KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

September 30, 2017 December 31, 2016
(In millions of dollars)
Trade Receivables, Net
Billed trade receivables $ 138.8
$ 138.2
Unbilled trade receivables 0.2
0.3
Trade receivables, gross 139.0
138.5
Allowance for doubtful receivables (0.8 ) (0.8 )
Trade receivables, net $ 138.2
$ 137.7

Inventories
Finished products $ 64.8
$ 73.8
Work-in-process 86.1
71.7
Raw materials 56.9
51.1
Operating supplies 4.4
5.0
Total $ 212.2
$ 201.6

Property, Plant and Equipment, Net
Land and improvements $ 22.7
$ 22.7
Buildings and leasehold improvements 90.2
88.6
Machinery and equipment 675.0
615.1
Construction in progress 27.8
34.8
Property, plant and equipment, gross 815.7
761.2
Accumulated depreciation (258.2 ) (230.6 )
Assets held for sale 0.3
0.3
Property, plant and equipment, net $ 557.8
$ 530.9

Other Accrued Liabilities
Uncleared cash disbursements $ 7.1
$ 5.8
Accrued income taxes and taxes payable 9.0
4.3
Accrued annual contribution to VEBAs 12.0
20.0
Accrued interest 8.4
2.9
Other 6.8
7.1
Total $ 43.3
$ 40.1

Long-Term Liabilities
Workers' compensation accruals $ 25.0
$ 25.0
Long-term environmental accrual – Note 8 16.1
15.8
Long-term portion of contingent contribution to Union VEBA – Note 6 —
12.8
Other long-term liabilities 20.8
19.6
Total $ 61.9
$ 73.2

~~KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~3. Debt and Credit Facility~~

~~Senior Notes~~

~~5.875% Senior Notes.~~ In May 2016, we issued $375.0 million principal amount of 5.875% unsecured senior notes due May 15, 2024 ("5.875% Senior Notes") at 100% of the principal amount. The unamortized amount of debt issuance costs as of September 30, 2017 was $5.6 million. Interest expense, including amortization of debt issuance costs, relating to the 5.875% Senior Notes was $5.7 million and $17.1 million for the quarter and nine months ended September 30, 2017, respectively, and $5.7 million and $8.8 million for the quarter and nine months ended September 30, 2016. A portion of the interest relating to the 5.875% Senior Notes was capitalized as construction in progress. The effective interest rate of the 5.875% Senior Notes is approximately 6.1% per annum, taking into account the amortization of debt issuance costs. The fair value of the outstanding 5.875% Senior Notes, which are Level 1 liabilities, was calculated based on broker quotes and was approximately $402.1 million and $390.8 million at September 30, 2017 and December 31, 2016, respectively.

~~8.25% Senior Notes.~~ In May 2012, we issued $225.0 million principal amount of 8.25% unsecured senior notes due June 1, 2020 ("8.25% Senior Notes"), of which $197.8 million principal amount remained outstanding at December 31, 2015. On June 1, 2016 we redeemed in full all remaining 8.25% Senior Notes at a redemption price of 104.125% of the principal amount. Interest expense, including amortization of debt issuance costs, relating to the 8.25% Senior Notes was $7.1 million for the nine months ended September 30, 2016. A portion of the interest relating to the 8.25% Senior Notes was capitalized as construction in progress.

~~Revolving Credit Facility~~

Our credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the other financial institutions party thereto ("Revolving Credit Facility") provides us with a $300.0 million funding commitment through December 2020. We had $294.4 million of borrowing availability under the Revolving Credit Facility at September 30, 2017, based on the borrowing base determination then in effect. At September 30, 2017, there were no borrowings under the Revolving Credit Facility and $7.8 million was being used to support outstanding letters of credit, leaving $286.6 million of net borrowing availability. The interest rate applicable to any overnight borrowings under the Revolving Credit Facility would have been 4.50% at September 30, 2017.

~~4. Goodwill and Intangible Assets~~

~~Goodwill.~~ Goodwill is related to our acquisitions of the Chandler, Arizona (Extrusion) facility and the Florence, Alabama facility and is included in the Fabricated Products segment. As of September 30, 2017, the carrying value of our goodwill was $18.8 million, reflecting an impairment in the quarter ended June 30, 2017. The carrying value was $37.2 million at both the beginning and the end of the year ended December 31, 2016.

Several factors identified in a qualitative review in the quarter ended June 30, 2017 indicated that long-term demand for hard alloy extruded shapes produced at the Chandler, Arizona (Extrusion) facility was less than previously assumed. Such factors included: (i) reduced build rates of wide body commercial aircraft; (ii) continued low build rates for business jets; and (iii) additional substitution away from hard alloy extruded shapes in favor of composites, titanium and/or aerospace aluminum plate in the manufacture of commercial aircraft. After testing for goodwill impairment applying Level 3 inputs and a combination of an income approach using the estimated discounted cash flow and a market-based valuation methodology, we impaired the carrying value of the Chandler, Arizona (Extrusion) facility by $18.4 million to its fair value as of June 30, 2017. As this goodwill is deductible for income tax purposes, the deferred tax effects were included in the impairment charge and income tax provision.

~~Intangible Assets~~. During the quarter ended September 30, 2016, we impaired one of our customer relationship intangible assets by $2.6 million. The non-cash impairment charge resulted from the loss of a customer during the quarter ended September 30, 2016.

Other than the impairments discussed above, we identified no other indicators of impairment associated with the remainder of our goodwill and intangible assets during the nine months ended September 30, 2017 and September 30, 2016.

~~KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~5. Income Tax Matters~~

~~The provision for~~ in~~come taxes for each period presented consisted of the following (in millions of dollars):~~

Quarter Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Domestic $ 15.7
$ 9.1
$ 35.8
$ 39.5
Foreign 0.4
0.3
1.0
0.7
Total $ 16.1
$ 9.4
$ 36.8
$ 40.2

The income tax provision for the quarters ended September 30, 2017 and September 30, 2016 was $16.1 million and $9.4 million, respectively, reflecting an effective tax rate of 44.7% and 38.7%, respectively. The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended September 30, 2017 was due to an increase of $2.5 million for the recognition of a deferred tax liability associated with earnings of our Canadian subsidiary that are no longer considered indefinitely reinvested, resulting in a 7.1% increase to the blended statutory tax rate. We determined our indefinite reinvestment assertion with respect to our Canadian foreign earnings was no longer applicable based primarily on expectations that productivity improvements will obviate the need to make sizable capital investments to increase capacity.

~~There was no material difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended September 30, 2016.~~

The income tax provision for the nine months ended September 30, 2017 and September 30, 2016 was $36.8 million and $40.2 million, respectively, reflecting an effective tax rate of 37.8% and 37.5%, respectively. The difference between the effective tax rate and the projected blended statutory tax rate for the nine months ended September 30, 2017 was due to: (i) a decrease of $1.7 million for the recognition of excess tax benefits from stock-based compensation, resulting in a 1.7% decrease to the blended statutory tax rate; (ii) a decrease of $0.5 million to the valuation allowance for certain state net operating losses, resulting in a 0.6% decrease to the blended statutory tax rate; (iii) a decrease of $0.2 million related to unrecognized tax benefits, including interest and penalties, resulting in a 0.2% decrease to the blended statutory tax rate; which was offset by (iv) an increase of $2.5 million for the recognition of a deferred tax liability associated with earnings of our Canadian subsidiary that are no longer indefinitely reinvested, resulting in a 2.6% increase to the blended statutory tax rate.

~~There was no material difference between the effective tax rate and the projected blended statutory tax rate for the nine months ended September 30, 2016.~~

Our gross unrecognized benefits relating to uncertain tax positions were $1.5 million and $1.8 million at September 30, 2017 and December 31, 2016, respectively, of which, $0.4 million and $0.7 million would be recorded through our income tax provision and thus impact the effective tax rate at September 30, 2017 and December 31, 2016, respectively, if the gross unrecognized tax benefits were to be recognized.

~~We do not expect our gross unrecognized tax benefits to significantly change within the next 12 months.~~

~~6. Employee Benefits~~

~~Pension and Similar Benefit Plans.~~ We provide contributions to: (i) defined contribution 401(k) savings plans for salaried employees and certain hourly employees; (ii) a non-qualified, unfunded, unsecured plan of deferred compensation for key employees who would otherwise suffer a loss of benefits under our defined contribution plan; (iii) multi-employer pension plans sponsored by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union AFL-CIO, CLC ("USW"), the International Association of Machinists and certain other unions at certain of our production facilities; and (iv) a defined benefit plan for salaried employees at our London, Ontario (Canada) facility.

~~Deferred Compensation Program~~. We have a non-qualified, unfunded, unsecured plan of deferred compensation for key employees who would otherwise suffer a loss of benefits under our defined contribution plan as a result of the limitations imposed by the Internal Revenue Code of 1986. Despite the plan being an unfunded plan, we make an annual contribution to a rabbi trust to fulfill future funding obligations as contemplated by the terms of the plan. These assets are held in various

~~KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

investment funds at certain registered investment companies and are accounted for as available for sale securities within Level 2 of the fair value hierarchy and are measured and recorded at fair value based on their quoted market prices. The fair value of these assets at September 30, 2017 and December 31, 2016 was $9.7 million and $8.2 million, respectively, and are included in Other assets. Offsetting liabilities relating to the deferred compensation plan are included in Long-term liabilities.

~~Union VEBA Postretirement Obligation.~~ Certain eligible retirees participate in a voluntary employees' beneficiary association ("VEBA") that provides healthcare and medical cost reimbursement benefits for eligible retirees represented by certain unions and their surviving spouses and eligible dependents ("Union VEBA"). We have an obligation to make variable cash contributions to the Union VEBA with respect to periods through September 2017. During the first quarter of 2017, we paid $17.1 million to the Union VEBA with respect to the twelve months ended December 31, 2016. Our final cash contribution to the Union VEBA with respect to the nine months ending September 30, 2017 will be paid in the first quarter of 2018. Although the final contribution amount is variable, it cannot exceed $12.8 million. As of September 30, 2017, $12.0 million was recorded within Other accrued liabilities for this final contribution.

~~Salaried VEBA Postretirement Obligation.~~ Additionally, certain other retirees who retired prior to 2004 and certain employees who were hired prior to February 2002 and have subsequently retired or will retire with the requisite age and service, along with their surviving spouses and eligible dependents, are eligible to participate in a separate VEBA that provides healthcare cost, medical cost and long-term care insurance cost reimbursement benefits ("Salaried VEBA"). We have an ongoing obligation with no express termination date to make annual variable cash contributions to the Salaried VEBA based on the contribution formula discussed in Note 6 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. The contribution amount cannot exceed $2.9 million per year. Our contribution with respect to 2016 was $2.9 million, which we paid in the first quarter of 2017. We account for the Salaried VEBA as a defined benefit plan in our financial statements.

~~Fair Value of Plan Assets.~~ The plan assets of the Salaried VEBA and our Canadian pension plan are measured annually on December 31 and reflected in our Consolidated Balance Sheets at fair value. In determining the fair value of the plan assets at an annual period end, we utilize primarily the results of valuations supplied by the investment advisors responsible for managing the assets of each plan, which we independently review for reasonableness.

~~Components of Net Periodic Benefit Cost.~~ Our results of operations included the following impacts associated with the Canadian defined benefit plan and the Salaried VEBA: (i) a charge for service rendered by employees; (ii) a charge for accretion of interest; (iii) a benefit for the return on plan assets; and (iv) amortization of prior service costs associated with plan amendments and net gains or losses on assets. Net periodic benefit cost related to the Canadian defined benefit plan was not material for the quarters and nine months ended September 30, 2017 and ~~September 30, 2016~~.

~~The following table presents the components of Net periodic postretirement benefit cost relating to Salaried VEBA for the periods presented (in millions of dollars):~~

Quarter Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Salaried VEBA¹:

Interest cost $ 0.8
$ 0.7
$ 2.3
$ 2.2
Expected return on plan assets (1.0 ) (1.0 ) (3.1 ) (3.0 )
Amortization of prior service cost 1.2
�� 1.0
3.6
3.0
Amortization of net actuarial loss 0.2
0.1
0.6
0.3
Total net periodic postretirement benefit cost relating to Salaried VEBA $ 1.2
$ 0.8
$ 3.4
$ 2.5

~~____________~~


¹	~~The service cost was insignificant for all periods presented.~~

~~KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~

~~The following table presents the total charges (income) related to all benefit plans for the periods presented (in millions of dollars):~~

Quarter Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Included within Fabricated Products:
Deferred compensation plan $ 0.1
$ 0.1
$ 0.3
$ 0.2
Defined contribution plans 1.3
1.6
6.8
6.7
Multiemployer pension plans 1.1
1.2
3.4
3.5
Total Fabricated Products $ 2.5
$ 2.9
$ 10.5
$ 10.4

Included within All Other:
Deferred compensation plan 0.4
0.4
1.1
0.6
Defined contribution plans 0.1
0.1
0.7
0.7
Net periodic postretirement benefit cost relating to Salaried VEBA 1.2
0.8
3.4
2.5
Loss (gain) on removal of Union VEBA net assets 0.5
—
(0.8 ) (0.1 )
Total All Other $ 2.2
$ 1.3
$ 4.4
$ 3.7
Total $ 4.7
$ 4.2
$ 14.9
$ 14.1

For all periods presented, substantially all of the Fabricated Products segment's employee benefits related charges are in Cost of products sold, excluding depreciation and amortization and other items with the remaining balance in Selling, general, administrative, research and development ("SG&A and R&D").

~~7. Employee Incentive Plans~~

Short-Term Incentive Plans ("STI Plans")

. We have annual short-term incentive compensation plans for senior management and certain other employees payable at our election in cash, shares of common stock or a combination of cash and shares of common stock. Amounts earned under STI Plans are based on our adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), modified for certain safety, quality, delivery, cost and individual performance factors. The

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

Adjusted EBITDA targets are determined based on the return on adjusted net ~~assets of our Fabricated Products business.~~assets. Most of our production facilities have similar programs for both hourly and salaried employees. As of September 30, ~~2017,~~2019, we had a liability of ~~$14.5~~$6.4 million recorded within Accrued salaries, wages and related expenses for estimated probable future payments relating to the nine month performance period of our ~~2017~~2019 STI Plan.

Long-Term Incentive ~~Programs ("LTI Programs")~~

~~General~~. Programs. Executive officers and other key employees of the Company, as well as non-employee directors of the Company, ~~were~~are eligible to participate in the Kaiser Aluminum Corporation 2016 Equity and Incentive Compensation Plan ~~("2016 Plan"). The 2016 Plan was~~ approved by stockholders on May 26, 2016 ~~and replaced and succeeded in its entirety the Kaiser Aluminum Corporation Amended and Restated 2006 Equity and Performance Incentive Plan.~~("2016 Plan"). At September 30, ~~2017, 735,724~~2019, 481,282 shares were available for awards under the 2016 Plan. We issue new shares of our common stock upon vesting under the 2016 Plan.

~~Non-Vested Common Shares~~Adoption of New Accounting Pronouncements

ASU No. 2016-02, Leases (Topic 842): Amendments to the Financial Accounting Standards Board Accounting Standards Codification ("ASU 2016-02"), was issued in February 2016 (with amendments issued in 2018) and ~~Restricted Stock Units.~~requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to operating leases under the previous guidance) while finance leases will result in a front-loaded expense pattern (similar to capital leases under the previous guidance). We ~~grant non-vested common shares~~adopted ASU 2016-02 and its subsequent amendments (together "ASC 842") during the quarter ended March 31, 2019 using the transition approach provided for under ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which allowed us to apply the new lease standard as of January 1, 2019, rather than the beginning of the earliest period presented. We elected the package of practical expedients, which permitted us to: (i) not reassess whether any of our contracts contained leases; (ii) carry forward the historical lease classification of our existing leases; and (iii) not reassess initial direct costs for our existing leases. We did not elect to apply the hindsight practical expedient when determining lease term and assessing impairment of right-of-use assets. Due to our ~~non-employee directors~~adoption of ASC 842, we recorded an operating lease right-of-use asset of $29.0 million, a current operating lease liability of $4.1 million and ~~non-vested common shares~~a long-term operating lease liability of $27.4 million on our Consolidated Balance Sheets as of January 1, 2019. There was 0 cumulative-effect adjustment to Retained earnings required. The standard did not materially impact our consolidated net earnings and ~~restricted stock units~~had no impact on cash flows. Comparative information in this Report has not been adjusted and continues to be reported under the previous lease accounting rules. See Note 3 for details of the significant changes and quantitative impacts of the changes, as well as other required disclosures related to our ~~executive officers~~adoption of ASC 842.

There were no material impacts on our consolidated financial statements resulting from our adoption during the nine months ended September 30, 2019 of: (i) ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting; (ii) ASU No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made; and (iii) ASU No. 2019-07, Codification Updates to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates.

Accounting Pronouncements Issued But Not Yet Adopted

ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), was issued in June 2016. Under ASU 2016-13, existing guidance on reporting credit losses for trade and other ~~key employees. The restricted stock units~~receivables and available for sale debt securities will be replaced with a new forward-looking "expected loss" model that generally will result in the earlier recognition of allowances for losses. We are currently in the process of evaluating the impact of adopting ASU 2016-13 in 2020, but do not expect it to have ~~rights similar~~a material impact on our consolidated financial statements.

ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract ("ASU 2018-15"), was issued in August 2018. Under ASU 2018-15, requirements for capitalizing implementation costs incurred in a hosting arrangement (cloud computing) that is a service contract are to be aligned with the ~~rights~~requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We are currently in the process of ~~non-vested common shares and each restricted stock unit that becomes vested entitles~~evaluating the ~~recipient~~impact of adopting ASU 2018-15 in 2020, but do not expect it to ~~receive one common share or~~have a cash amount equaling the value of one common share. For both non-vested common shares and restricted stock units, the service period is generally one year for non-employee directors and three years for executive officers and other key employees.material impact on our consolidated financial statements.

1510

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~Performance Shares~~. In addition to non-vested common shares and restricted stock units, we grant performance shares to executive officers and other key employees. Each performance share that becomes vested and earned entitles the recipient to receive one common share or a cash amount equaling the value of one common share. During the first quarter of 2017, performance shares granted in 2014 under the 2014-2016 LTI Program vested (see "~~Summary of Activity~~" below). The number of performance shares that vested and resulted in the issuance of common shares was determined based on our total shareholder return ("TSR") compared to the TSR of a specified group of peer companies over a three-year performance period.

Performance shares granted in 2015 are subject to performance conditions pertaining to our TSR relative to the TSR of a specified group of peer companies over a three-year performance period ("TSR-Based Performance Shares").

Performance shares granted in 2016 consist of TSR-Based Performance Shares and performance shares subject to performance requirements pertaining to our total controllable cost performance over a three-year performance period ("CP-Based Performance Shares").

Performance shares granted in 2017 consist of TSR-Based Performance Shares, CP-Based Performance Shares and performance shares subject to performance conditions pertaining to our economic value added ("EVA") performance, determined based on our adjusted pre-tax operating income in excess of a capital charge, over a three-year performance period ("EVA-Based Performance Shares").

The number of performance shares under the 2015-2017, 2016-2018 and 2017-2019 LTI Programs that may be earned and result in the issuance of common shares ranges between 0% to 200% of the target number of underlying common shares, which is approximately one-half of the maximum payout. The performance shares granted under the 2015-2017, 2016-2018 and 2017-2019 LTI Programs will vest in 2018, 2019 and 2020, respectively.

~~Non-Cash Compensation Expense.~~ Non-cash compensation expense relating to all awards is included in SG&A and R&D. Non-cash compensation expense by type of award under LTI Programs was as follows for each period presented (in millions of dollars):2. Supplemental Balance Sheet Information



	September 30, 2019			December 31, 2018
	(In millions of dollars)
Cash and Cash Equivalents
Cash and money market funds	$	29.3		$	22.9
Commercial paper	142.8			102.7
Total	$	172.1		$	125.6

Trade Receivables, Net
Billed trade receivables	$	188.9		$	179.5
Unbilled trade receivables	—			1.1
Trade receivables, gross	188.9			180.6
Allowance for doubtful receivables	(0.8		)	(0.8		)
Trade receivables, net	$	188.1		$	179.8

Inventories
Finished products	$	41.4		$	48.0
Work-in-process	80.5			85.6
Raw materials	63.7			75.0
Operating supplies	6.9			6.5
Total	$	192.5		$	215.1

Property, Plant and Equipment, Net
Land and improvements	$	21.4		$	21.4
Buildings and leasehold improvements	99.2			97.0
Machinery and equipment	797.9			755.6
Construction in progress	35.4			43.6
Property, plant and equipment, gross	953.9			917.6
Accumulated depreciation	(341.2		)	(307.4		)
Assets held for sale	1.6			1.6
Property, plant and equipment, net	$	614.3		$	611.8

Other Accrued Liabilities
Uncleared cash disbursements	$	3.7		$	4.8
Accrued income taxes and taxes payable	8.0			6.5
Accrued annual contribution to Salaried VEBA	—			2.1
Accrued interest	8.4			2.9
Accrued environmental – Note 7	4.3			2.6
Other – Note 3 and Note 5	25.7			25.1
Total	$	50.1		$	44.0

Quarter Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Non-vested common shares and restricted stock units $ 1.4
$ 1.2
$ 3.9
$ 3.5
TSR-Based Performance Shares 1.2
1.5
3.7
4.0
CP-Based Performance Shares 0.8
0.4
2.0
0.9
EVA-Based Performance Shares 0.2
—
0.4
0.3
Total non-cash compensation expense $ 3.6
$ 3.1
$ 10.0
$ 8.7

~~The following table presents the allocation of the charges detailed above, by segment (in millions of dollars):~~

Quarter Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Fabricated Products $ 1.3
$ 1.2
$ 3.8
$ 3.1
All Other 2.3
1.9
6.2
5.6
Total non-cash compensation expense $ 3.6
$ 3.1
$ 10.0
$ 8.7

1611

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~Unrecognized Gross Compensation Cost Data.~~



	September 30, 2019		December 31, 2018
	(In millions of dollars)
Long-Term Liabilities
Workers' compensation accruals	$	26.9	$	24.6
Long-term environmental accrual – Note 7	12.2		14.3
Other long-term liabilities	26.3		27.5
Total	$	65.4	$	66.4

3. Leases

We determine whether an agreement is a lease at inception. We have operating and finance leases for equipment and real estate that primarily have fixed lease payments. Our leases have remaining lease terms of approximately one to 15 years, some of which may include options to extend the lease for up to 20 years, and some of which may include options to terminate the lease within one year. None of our options to extend or terminate are reasonably certain of being exercised, and are therefore not included in our determination of lease assets and liabilities. Short-term leases with an initial term of 12 months or less are not recorded on our Consolidated Balance Sheets.

As most of our leases do not provide an implicit rate, we use information available at the lease commencement date in determining an incremental borrowing rate when calculating our operating lease assets and operating lease liabilities. In determining the inputs to the incremental borrowing rate calculation, we make judgments about the value of the leased asset, our credit rating and the lease term, including the probability of our exercising options to extend or terminate the underlying lease. Additionally, we make judgments around contractual asset substitution rights in determining whether a contract contains a lease.

We have lease agreements with lease and non-lease components, which are generally accounted for separately. These non-lease components include items such as common area maintenance, taxes and insurance for our real estate leases, as well as maintenance charges related to our equipment leases. We have, however, applied the practical expedient within ASU 2016-02 to not separate lease and non-lease components to our embedded supply system equipment leases and have therefore accounted for both lease and non-lease components in determining the lease assets and liabilities.

Many of our equipment leases contain clauses that require us to return the equipment with certain functionality intact. We account for these costs as residual value guarantees when the guarantee becomes probable of being owed. Our lease agreements do not contain any material restrictive covenants.

The following table presents ~~unrecognized gross compensation cost data by type of award~~lease terms and discount rates as of September 30, ~~2017:~~2019:

Unrecognized Gross Compensation Costs
(in millions of dollars)
Expected Period (in years) Over Which the Remaining Gross Compensation Costs Will Be Recognized
Non-vested common shares and restricted stock units $ 9.6
2.6
TSR-Based Performance Shares $ 5.6
1.7
CP-Based Performance Shares $ 6.1
2.1
EVA-Based Performance Shares $ 1.5
2.4

~~Summary of Activity.~~ A summary of the activity with respect to non-vested common shares, restricted stock units, TSR-Based Performance Shares, CP-Based Performance Shares and EVA-Based Performance Shares for the nine months ended September 30, 2017 is as follows:

Non-Vested
Common Shares

Restricted
Stock Units
TSR-Based Performance Shares
CP-Based
Performance Shares
EVA-Based Performance Shares
Shares
Weighted-Average
Grant-Date Fair
Value per Share
Units
Weighted-Average
Grant-Date Fair
Value per Unit
Shares Weighted-Average
Grant-Date Fair
Value per Share Shares Weighted-Average
Grant-Date Fair
Value per Share Shares
Weighted-Average
Grant-Date Fair
Value per Share
Outstanding at December 31, 2016 114,658
$ 69.51
61,800
$ 74.94
394,525
$ 90.30
63,678
$ 80.46
—
$ —
Granted¹
11,817
86.92
92,275
76.13
65,044
97.88
65,044
79.69
32,504
79.69
Vested (46,689 ) 71.46
(8,655 ) 76.94
(94,082 ) 83.18
—
—
—
—
Forfeited¹
(427 ) 69.83
(6,412 ) 77.70
(5,519 ) 95.88
(3,342 ) 79.92
(1,164 ) 79.69
Canceled¹
—
—
—
—
(55,288 ) 83.18
—
—
—
—
Outstanding at September 30, 2017 79,359
$ 70.96
139,008
$ 75.72
304,680
$ 95.31
125,380
$ 80.07
31,340
$ 79.69

~~____________~~


¹	For performance shares, the number of shares granted and forfeited are presented at their maximum payout; and the number of shares canceled includes the number of shares that did not vest due to performance results falling below those required for maximum payout.

~~The weighted-average grant-date fair value per share for shares granted by type of award was as follows for each period presented:~~

Quarter Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Non-vested common shares $ —
$ —
$ 86.92
$ 86.11
Restricted stock units $ 82.33
$ —
$ 76.13
$ 75.57
TSR-Based Performance Shares $ —
$ —
$ 97.88
$ 93.02
CP-Based Performance Shares $ —
$ —
$ 79.69
$ 80.46
EVA-Based Performance Shares $ —
$ —
$ 79.69
$ —

~~Stock Options.~~ As of December 31, 2016, we had 1,543 fully-vested outstanding stock options exercisable to purchase common shares at $80.01 per share, all of which subsequently expired on April 2, 2017. No options were granted during the nine months ended September 30, 2017, and no options were outstanding as of September 30, 2017.

1712

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~Participants may elect to have us withhold common shares to satisfy minimum statutory tax withholding obligations arising in connection with~~The following table summarizes the ~~exercise~~classification of ~~stock options~~lease assets and ~~vesting of non-vested shares, restricted stock units and performance shares. We cancel any such shares withheld~~lease liabilities on the applicable vesting dates or earlier dates when service requirements are satisfied, which correspond to the times at which income to the employee is recognized. When we withhold these common shares, we are required to remit to the appropriate taxing authorities the fair value of the shares withheldour Consolidated Balance Sheet as of the ~~vesting date. During~~period presented (in millions of dollars):



Leases	Classification	September 30, 2019
Assets
Operating lease assets	Operating lease assets	$	26.3
Finance lease assets	Property, plant and equipment, net	6.8
Total lease assets		$	33.1

Liabilities
Current:
Operating lease liabilities	Other accrued liabilities	$	3.9
Finance lease liabilities	Other accrued liabilities	1.2
Non-current:
Operating lease liabilities	Long-term portion of operating lease liabilities	25.6
Finance lease liabilities	Long-term liabilities	5.6
Total lease liabilities		$	36.3

The following table summarizes the ~~nine months ended~~ components of lease cost on our Statements of Consolidated Income for the periods presented (in millions of dollars):



Lease Cost	Quarter Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost	$	1.8	$	5.6
Short-term lease cost	0.3		0.8
Finance lease cost:
Amortization of leased assets	0.5		1.2
Interest on lease liabilities	—		0.2
Total lease cost	$	2.6	$	7.8

The following table presents the maturity of our lease liabilities as of September 30, ~~2017~~ ~~and September 30, 2016, 56,195 and~~ ~~35,498~~ ~~common shares, respectively, were withheld and canceled for this purpose. The withholding~~2019 (in millions of ~~common shares by us could be deemed a purchase of the common shares.~~

~~8. Commitments and Contingencies~~

~~Commitments.~~ ~~We have a variety of financial commitments, including purchase agreements, forward foreign exchange and forward sales contracts, indebtedness and letters of credit (see Note 3 and Note 9).~~

~~Environmental Contingencies.~~ We are subject to a number of environmental laws and regulations, to potential fines or penalties assessed for alleged breaches of such laws and regulations and to potential claims based upon such laws and regulations. We are also subject to legacy environmental contingencies related to activities that occurred at operating facilities within Fabricated Products prior to July 6, 2006 while such operating facilities were being operated by a predecessor, which represent the majority of our environmental accruals. The status of these environmental contingencies are discussed below. We have established procedures for regularly evaluating environmental loss contingencies. Our environmental accruals represent our undiscounted estimate of costs reasonably expected to be incurred based on presently enacted laws and regulations, existing requirements, currently available facts, existing technology and our assessment of the likely remediation actions to be taken.

We continue to pursue remediation activities, primarily to address the historical use of oils containing polychlorinated biphenyls ("PCBs") at our Spokane, Washington ("Trentwood") facility. Our remediation efforts are in collaboration with the Washington State Department of Ecology ("Washington State Ecology"), to which we submitted a feasibility study in 2012 of remediation alternatives and from which we received permission to begin certain remediation activities pursuant to a signed work order. As we have finished a number of sections of the work plan, we have received approval from Washington State Ecology on satisfactory completion of those sections. Additionally, in cooperation with Washington State Ecology, to determine the treatability and evaluate the feasibility of removing PCBs from ground water under the Trentwood facility, we constructed a pilot test facility and began treatment operations at the test facility in the first half of 2016. As the success of the new methodology cannot be reasonably determined at this time, it is possible we may need to make upward adjustments to our related accruals as facts and cost estimates regarding the groundwater treatment method and the operation of the treatment facility become available.

During 2013, at the request of the Ohio Environmental Protection Agency ("OEPA"), we initiated an investigational study of the Newark, Ohio ("Newark") facility related to historical on-site waste disposal. Since 2014, we have completed a number of preliminary steps in the preparation of completing the final risk assessment and feasibility study, both of which are subject to review and approval by the OEPA. As work continues and progresses to a final risk assessment and feasibility study, we will establish and update estimates for probable and estimable remediation, if any. The actual and final cost for remediation will not be fully determinable until a final feasibility study is submitted and accepted by the OEPA and work plans are prepared, which is expected to occur in the next 12 to 15 months.

At September 30, 2017, our environmental accrual of $16.9 million represented our estimate of the incremental remediation cost based on: (i) proposed alternatives in the final feasibility study related to the Trentwood facility; (ii) currently available facts with respect to our Newark facility; and (iii) facts related to certain other locations owned or formerly owned by us. In accordance with approved and proposed remediation action plans, we expect that the implementation and ongoing monitoring could occur over a period of 30 or more years.

As additional facts are developed, feasibility studies are completed, draft remediation plans are modified, necessary regulatory approvals for the implementation of remediation are obtained, alternative technologies are developed, and/or other factors change, there may be revisions to management's estimates and actual costs may exceed the current environmental accruals. We believe at this time that it is reasonably possible that undiscounted costs associated with these environmental matters may exceed current accruals by amounts that could be, in the aggregate, up to an estimated $12.2 million over the remediation period. It is reasonably possible that our recorded estimate will change in the next 12 months.

~~Other Contingencies.~~ We are party to various lawsuits, claims, investigations and administrative proceedings that arise in connection with past and current operations. We evaluate such matters on a case-by-case basis and our policy is to vigorously

dollars):



Maturity of Lease Liabilities	Finance Leases			Operating Leases
Remainder of 2019	$	0.4		$	1.3
2020	1.6			5.2
2021	1.4			4.4
2022	1.2			3.6
2023	1.1			3.4
2024	0.7			3.3
2025 and thereafter	1.4			18.9
Total minimum lease payments	$	7.8		$	40.1

Less: interest	(1.0		)	(10.6		)
Present value	$	6.8		$	29.5

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~contest any such claims~~The following table presents minimum rental commitments at December 31, 2018 (in millions of dollars):



Year Ended December 31,	Finance Leases			Operating Leases
2019	$	1.7		$	6.1
2020	1.4			3.7
2021	1.2			2.8
2022	1.1			2.4
2023	1.0			2.2
2024 and thereafter	1.8			20.8
Total minimum lease payments	$	8.2		$	38.0

Less: interest	(1.2		)
Present value¹	$	7.0

_________________________


^1.	Of the $7.0 million in finance lease obligations as of December 31, 2018, $1.4 million was included in Other accrued liabilities and $5.6 million was included in Long-term liabilities. Assets recorded under finance leases and the accumulated amortization thereon were $8.3 million and $1.3 million, respectively, as of December 31, 2018.

4. Employee Benefits

Pension and Similar Benefit Plans. We provide contributions to: (i) defined contribution 401(k) savings plans for salaried employees and certain hourly employees; (ii) a non-qualified, unfunded, unsecured plan of deferred compensation (see "Deferred Compensation Plan" below); (iii) multi-employer pension plans sponsored by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC, the International Association of Machinists and certain other unions at certain of our production facilities; and (iv) a defined benefit pension plan for salaried employees at our London, Ontario (Canada) facility.

Deferred Compensation Plan. We have a non-qualified, unfunded, unsecured plan of deferred compensation for certain employees who would otherwise suffer a loss of benefits under our defined contribution plan as a result of the limitations imposed by the Internal Revenue Code of 1986. Despite the plan being an unfunded plan, we ~~believe~~make an annual contribution to a rabbi trust to fulfill future funding obligations as contemplated by the terms of the plan. The assets in the trust are ~~without merit.~~held in various investment funds at certain registered investment companies and are accounted for as equity investments with changes in fair value recorded within Other (expense) income, net (see Note 9). Assets of our deferred compensation plan are included in Other assets, classified within Level 2 of the fair value hierarchy and are measured and recorded at fair value based on their quoted market prices. The fair value of these assets at September 30, 2019 and December 31, 2018 was $7.9 million and $10.5 million, respectively. Offsetting liabilities relating to the deferred compensation plan are included in Other accrued liabilities and Long-term liabilities.

Salaried VEBA Postretirement Obligation. Certain retirees who retired prior to 2004 and certain employees who were hired prior to February 2002 and have subsequently retired or will retire with the requisite age and service, along with their surviving spouses and eligible dependents, are eligible to participate in a voluntary employees' beneficiary association ("VEBA") that provides healthcare cost, medical cost and long-term care insurance cost reimbursement benefits ("Salaried VEBA"). We ~~accrue~~have an ongoing obligation with no express termination date to make annual variable cash contributions up to a maximum of $2.9 million to the Salaried VEBA. We paid $2.1 million with respect to 2018 during the quarter ended March 31, 2019. We account for the Salaried VEBA as a ~~legal liability when it is both probable that~~defined benefit plan in our financial statements.

Union VEBA Postretirement Obligation. Certain other eligible retirees represented by certain unions, along with their surviving spouses and eligible dependents, participate in a ~~liability has been incurred~~separate VEBA ("Union VEBA"). During the first quarter of 2018, we made a $12.8 million cash contribution to the Union VEBA with respect to the nine months ended September 30, 2017. This was our final contribution. We have no ongoing obligation to make further contributions to the Union VEBA.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

The following tables present the total expense related to all benefit plans for the periods presented (in millions of dollars):



	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Defined contribution plans¹	$	1.7	$	1.7	$	7.3	$	7.3
Deferred compensation plan¹	0.3		0.2		1.3		1.2
Multiemployer pension plans¹	1.3		1.2		3.7		3.5
Net periodic postretirement benefit cost relating to Salaried VEBA²	1.6		1.4		4.9		4.5
Total	$	4.9	$	4.5	$	17.2	$	16.5

____________________


¹	Substantially all of the expense related to employee benefits are in COGS with the remaining balance in Selling, general, administrative, research and development ("SG&A and R&D").


²	The current service cost component of Net periodic postretirement benefit cost relating to Salaried VEBA is included within our Statements of Consolidated Income in SG&A and R&D for all periods presented. All other components of Net periodic postretirement benefit cost relating to Salaried VEBA are included within Other (expense) income, net, on our Statements of Consolidated Income.

Components of Net Periodic Benefit Cost. Our results of operations included the following impacts associated with our Canadian pension plan and the ~~amount~~Salaried VEBA: (i) a charge for service rendered by employees; (ii) a charge for accretion of interest; (iii) a benefit for the ~~loss is reasonably estimable. Quarterly, in addition~~expected return on plan assets; (iv) amortization of prior service costs associated with plan amendments; and (v) amortization of net actuarial differences. Net periodic benefit cost related to ~~when changes in facts~~our Canadian pension plan was not material for the quarters and ~~circumstances require it, we review~~nine months ended September 30, 2019 and ~~adjust these accruals~~September 30, 2018.

The following table presents the components of Net periodic postretirement benefit cost relating to ~~reflect~~Salaried VEBA for the ~~impacts~~periods presented (in millions of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. While uncertainties are inherent in the final outcome of such matters and it is presently impossible to determine the actual cost that may ultimately be incurred, we believe that we have sufficiently accrued for such matters and that the ultimate resolution of pending matters will not have a material impact on our consolidated financial position, operating results or liquidity.dollars):



	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Salaried VEBA¹:
Interest cost	$	0.8		$	0.7		$	2.4		$	2.1
Expected return on plan assets	(0.7		)	(0.8		)	(2.0		)	(2.2		)
Amortization of prior service cost²	1.4			1.3			4.2			4.0
Amortization of net actuarial loss	0.1			0.2			0.3			0.6
Total net periodic postretirement benefit cost relating to Salaried VEBA	$	1.6		$	1.4		$	4.9		$	4.5

____________________


¹	The service cost was insignificant for all periods presented.


²	We amortize prior service cost on a straight-line basis over the average remaining years of service to full eligibility for benefits of the active plan participants.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

5. Derivatives, Hedging Programs and Other Financial Instruments

Overview.

In conducting our business, we enter into derivative transactions, including forward contracts and options, to limit our exposure to: (i) metal price risk related to our sale of fabricated aluminum products and the purchase of metal used as raw material for our fabrication operations; (ii) energy price risk relating to fluctuating prices of natural gas and electricity used in our production processes; and (iii) foreign currency requirements with respect to ~~our foreign subsidiaries and~~ cash commitments for equipment purchases denominated in foreign currency.

Our derivative activities are overseen by a ~~hedging~~ committee ("Hedging Committee"), which is composed of our chief executive officer, chief operating officer, chief financial officer, chief accounting officer, vice president of metal management, treasurer and other officers and employees selected by the chief executive officer.The Hedging Committee meets regularly to review commodity price exposure, derivative positions and ~~strategy, and management reports to~~strategy. Management reviews the scope of the Hedging Committee's activities with our Board of ~~Directors on the scope of its activities.~~Directors.

We are exposed to counterparty credit risk on all of our derivative instruments, which we manage by monitoring the credit quality of our counterparties and allocating our hedging positions among multiple counterparties to limit exposure to any single entity. Our counterparties are major, investment grade financial institutions or trading companies. Hedging transactions are governed by negotiated reciprocal credit lines, which generally require collateral to be posted above specified credit thresholds. We believe the risk of loss is remote and contained due to counterparty credit quality, our diversification practice and collateral requirements.

In a majority of our hedging counterparty agreements, our counterparty offers us a credit line that adjusts up or down, depending on our liquidity. Below specified liquidity thresholds, we may have to post collateral if the fair value of our net liability with such counterparty exceeds our reduced credit line. We manage this risk by allocating hedging transactions among multiple counterparties, using options as part of our hedging activities or both. The aggregate fair value of our derivative instruments that were in a net liability position was ~~insignificant~~$13.7 million and $12.6 million at ~~both~~ September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively, and we had no0 collateral posted as of those dates.

Additionally, our firm-price customer sales commitments create incremental customer credit risk related to metal price movements. Under certain circumstances, we mitigate this risk by periodically requiring cash collateral from them, which we classify as deferred revenue and include as a component of Other accrued liabilities. ~~At September 30, 2017, we had no cash~~Cash collateral posted from ~~any of~~ our ~~customers.~~customers was $0.2 million at both September 30, 2019 and December 31, 2018. For more information about concentration risks concerning customers and suppliers, see Note ~~11.~~13.

~~Notional Amount of Derivative Contracts. The following table summarizes our derivative positions at September 30, 2017:~~



Aluminum	~~Maturity Period~~ ~~(month/year)~~	~~Notional Amount of contracts (mmlbs)~~
~~Purchased put option contracts~~	~~10/17 through 12/17~~	~~13.4~~
~~Fixed price purchase contracts~~	~~10/17 through 12/21~~	~~151.9~~
~~Fixed price sales contracts~~	~~10/17 through 11/19~~	~~1.8~~
~~Midwest premium swap contracts~~¹	~~10/17 through 12/21~~	~~150.1~~



~~Alloying Metals~~	~~Maturity Period~~ ~~(month/year)~~	~~Notional Amount of contracts (mmlbs)~~
~~Fixed price purchase contracts~~	~~10/17 through 6/18~~	~~4.6~~

~~KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES~~

~~NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED~~



~~Natural Gas~~²	~~Maturity Period~~ ~~(month/year)~~	~~Notional Amount of contracts (mmbtu)~~
~~Fixed price purchase contracts~~	~~10/17 through 12/20~~	~~3,650,000~~



~~Euro~~	~~Maturity Period~~ ~~(month/year)~~	~~Notional Amount of contracts (euro)~~
~~Fixed price purchase contracts~~	~~10/17 through 4/18~~	~~301,304~~

~~______________________~~


¹	~~Regional premiums represent the premium over the London Metal Exchange price for primary aluminum which is incurred on our purchases of primary aluminum.~~


²	As of September 30, 2017, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 72% of the expected natural gas purchases for the remainder of 2017, 71% of the expected natural gas purchases for both 2018 and 2019 and 39% of the expected natural gas purchases for 2020.

We have physical delivery commitments at firm prices covering approximately 54% of our expected electricity purchases for the remainder of 2017, 55% of the expected electricity purchases for both 2018 and 2019 and 18% of the expected electricity purchases for 2020.

~~Non-Designated~~ Hedges ~~of Operational Risks~~. Our pricing of fabricated aluminum products is generally intended to lock in a conversion margin (representing the value added from the fabrication process(es)) and to pass through metal price fluctuations to our customers. For some of our higher value added products sold on a spot basis, the pass through of metal price movements can sometimes lag by as much as several months, with a favorable impact to us when metal prices decline and an adverse impact to us when metal prices increase. Additionally, in certain instances, we enter into firm-price arrangements with our customers for stipulated volumes to be delivered in the future. Because we generally purchase primary and secondary aluminum on a floating price basis, the lag in passing through metal price movements to customers on some of our higher value added products sold on a spot basis and the volume that we have committed to sell to our customers under a firm-price arrangement create metal price risk for us. We use third-party hedging instruments to limit exposure to metal price risk related to the metal pass through lag on some of our products and firm-price customer sales contracts.

Alloying Metals Hedges. We are exposed to risk of fluctuating prices for Alloying Metals used as raw materials in our fabrication operations. We, from time to time, in the ordinary course of business, use third-party hedging instruments to mitigate our risk from price fluctuations in Alloying Metals.

Energy Hedges. We are exposed to risk of fluctuating prices for natural gas and electricity. We, from time to time, in the ordinary course of business, enter into hedging transactions and/or physical delivery commitments with third parties to mitigate our risk from fluctuations in natural gas and electricity prices.

We are also exposed to foreign currency exchange risk related to firm-price agreements for equipment purchases from foreign manufacturers. We use foreign currency forward contracts designed to line up with the timing and amounts of scheduled payments to the foreign equipment manufacturers to mitigate our exposure to currency exchange rate fluctuations on these purchases. Realized and unrealized periodic gains and losses of non-designated foreign currency forward contracts are reflected as a reduction or increase in Other income (expense), net.

~~Designated Alloying Metal Hedges~~. We enter into agreements with suppliers to purchase alloying metals (zinc and copper) used as raw materials in our fabrication operations at fluctuating prices that we are unable to pass along to our customers. We mitigate our exposure to metal price risk by entering into Alloy Hedges with third-party financial institutions at predetermined/fixed prices at stated delivery dates. Our Alloy Hedges are expected to be highly effective because monthly settlements correspond to forecasted physical purchases of alloying metals by our manufacturing facilities. The effective portion of the fair value on these Alloy Hedges is recorded within Other comprehensive income, net of tax, and is reclassified into the Statements of Consolidated Income during the month of settlement to Cost of products sold (See Note 14). As of September 30, 2017, we estimate the net gain of $0.5 million will be reclassified from Accumulated other comprehensive income into Net income within the next 12 months. We incurred no ineffectiveness on these hedges during the quarter and nine months ended September 30, 2017.

2016

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~Realized~~Notional Amount of Derivative Contracts

The following table summarizes our derivative positions at September 30, 2019:



Aluminum	Maturity Period (month/year)	Notional Amount of Contracts (mmlbs)
Fixed price purchase contracts	10/19 through 12/21	83.1
Fixed price sales contracts	11/19 through 9/21	0.8
Midwest premium swap contracts¹	10/19 through 12/21	57.6



Alloying Metals	Maturity Period (month/year)	Notional Amount of Contracts (mmlbs)
Fixed price purchase contracts	10/19 through 12/21	12.9



Natural Gas²	Maturity Period (month/year)	Notional Amount of Contracts (mmbtu)
Fixed price purchase contracts	10/19 through 12/24	7,930,000



Electricity³	Maturity Period (month/year)	Notional Amount of Contracts (Mwh)
Fixed price purchase contracts	1/20 through 12/21	394,680



Euro⁴	Maturity Period (month/year)	Notional Amount of Contracts (euro)
Fixed price purchase contracts	10/19 through 1/20	3,189,200

____________________


¹	Regional premiums represent the premium over the London Metal Exchange price for primary aluminum which is incurred on our purchases of primary aluminum.

As of September 30, 2019, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 72% of the expected natural gas purchases for the remainder of 2019, 68% of the expected natural gas purchases for both 2020 and 2021, 83% of the expected natural gas purchases for both 2022 and 2023 and 77% of the expected natural gas purchases for 2024.


³	As of September 30, 2019, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 54% of our expected electricity purchases for the remainder of 2019, 55% of our expected electricity purchases for 2020 and 46% of our expected electricity purchases for 2021.


⁴	We are exposed to foreign currency exchange risk related to firm-price agreements for equipment purchases from foreign manufacturers. We use non-designated foreign currency forward contracts designed to line up with the timing and amounts of scheduled payments to the foreign equipment manufacturers to mitigate our exposure to currency exchange rate fluctuations on these purchases.

Loss (Gain)

See Note 8 for the total amount of loss (gain) for the quarters and ~~Unrealized Gain~~nine months ended September 30, 2019 and ~~Loss.~~ ~~Realized~~September 30, 2018 on derivative instruments designated and ~~unrealized~~qualifying as cash flow hedging instruments that was reported in Accumulated other comprehensive loss ("AOCI"), as well as the related reclassifications into earnings and tax effects. Cumulative gains and losses related to cash flow hedges are reclassified out of AOCI when the associated hedged commodity purchases impact earnings.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

The amount of loss (gain) ~~loss~~ included on ~~the~~our Statements of Consolidated Income (all within COGS) associated with all derivative contracts consisted of the following for ~~each period~~the periods presented (in millions of dollars):



	Quarter Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Total amounts of income and expense line items presented in our Statements of Consolidated Income in which the effects of hedges are recorded	$	298.6	$	323.3	$	917.2	$	983.4

Loss (gain) recognized in income related to cash flow hedges:
Aluminum	$	4.8	$	2.1	$	13.5	$	(1.2	)
Alloying metals	0.5		1.0		0.7		0.4
Natural gas	0.1		—		0.1		(0.1		)
Total loss (gain) recognized in income related to cash flow hedges	$	5.4	$	3.1	$	14.3	$	(0.9	)

Loss recognized in income related to non-designated hedges:
Foreign currency	$	0.1	$	—	$	0.1	$	—
Total loss recognized in income related to non-designated hedges	$	0.1	$	—	$	0.1	$	—

Quarter Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Realized (gain) loss:
Aluminum $ (4.0 ) $ 0.4
$ (13.8 ) $ 4.1
Natural gas 0.2
0.9
0.3
4.2
Alloy Hedges (0.3 ) —
(0.2 ) —
Foreign exchange (0.1 ) —
(0.1 ) —
Total realized (gain) loss¹
$ (4.2 ) $ 1.3
$ (13.8 ) $ 8.3

Unrealized (gain) loss:
Aluminum $ (10.6 ) $ (1.7 ) $ (15.3 ) $ (11.7 )
Natural gas (0.2 ) (0.3 ) 1.3
(5.2 )
Total unrealized gain²
$ (10.8 ) $ (2.0 ) $ (14.0 ) $ (16.9 )

~~______________________~~


¹	~~Recorded within Cost of products sold, excluding depreciation, amortization and other items within the Fabricated Products segment.~~


²	~~Recorded within Unrealized gain on derivative instruments within the Fabricated Products segment.~~

Fair Values of Derivative ~~Contracts.~~ Contracts

The fair values of our derivative contracts are based upon trades in liquid markets. Valuation model inputs can be verified and valuation techniques do not involve significant judgment. The fair values of such financial instruments are classified within Level 2 of the fair value hierarchy.

All of our derivative contracts with counterparties are subject to enforceable master netting arrangements. We reflect the fair value of our derivative contracts on a gross basis on our Consolidated Balance Sheets. The following table presents ~~our financial instruments, classified under the appropriate level of~~ the fair value ~~hierarchy,~~of our derivative financial instruments as of the ~~period~~periods presented (in millions of dollars):


	September 30, 2017								September 30, 2019								December 31, 2018
	Level 1		Level 2		Level 3		Total		Derivative Assets		Derivative Liabilities			Net Amount			Derivative Assets		Derivative Liabilities			Net Amount
DERIVATIVE ASSETS:
Non-Designated Hedges:
Cash Flow Hedges:
Aluminum –
Fixed price purchase contracts	$	—	$	18.4	$	—	$	18.4	$	—	$	(10.2	)	$	(10.2	)	$	0.1	$	(13.2	)	$	(13.1	)
Fixed price sales contracts									0.1		—			0.1			0.1		—			0.1
Midwest premium swap contracts	—		0.8		—		0.8		0.6		(0.1		)	0.5			3.2		(0.5		)	2.7
Alloying Metals – Fixed price purchase contracts									—		(2.0		)	(2.0		)	—		(1.7		)	(1.7		)
Natural gas – Fixed price purchase contracts	—		0.4		—		0.4		—		(2.0		)	(2.0		)	0.2		(0.5		)	(0.3		)
Electricity – Fixed price purchase contracts									1.5		(1.5		)	—			0.7		—			0.7

Designated Hedges:
Alloying metals – Fixed price purchase contracts	—		0.9		—		0.9
Total derivative assets¹	$	—	$	20.5	$	—	$	20.5
Non-Designated Hedges:
Foreign currency – Fixed price purchase contracts									—		(0.1		)	(0.1		)	—		—			—

Total									$	2.2	$	(15.9	)	$	(13.7	)	$	4.3	$	(15.9	)	$	(11.6	)

~~Highlights of the Quarter Ended~~ ~~September 30, 2017~~;


•	Highlights of the Quarter Ended September 30, 2019;

Results of Operations;

Liquidity and Capital Resources;

Contractual Obligations, Commercial Commitments and Off-Balance-Sheet Arrangements;

Critical Accounting Estimates and Policies;

New Accounting Pronouncements; and

Available Information.

Our MD&A should be read in conjunction with ~~the~~our consolidated financial statements and related notes included in Part I, Item 1. "Financial Statements" of this Report and ~~the~~our consolidated financial statements and related notes included in Part II, Item 8. "Financial Statements and Supplementary Data" of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018.

This information contains certain non-GAAP financial measures. A non-GAAP financial measure is defined as a numerical measure of a company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles ("GAAP") in the statements of income, balance sheets or statements of cash flows of the company. We have provided a reconciliation of non-GAAP financial measures to the most directly comparable financial measure in the accompanying tables. We have also provided discussion of the reasons we believe that presentation of the non-GAAP financial measures provide useful information to investors, as well as any additional ways in which we use the non-GAAP financial measures. The non-GAAP financial measures used in the following discussions are value added revenue ("VAR"), adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") and ratios related thereto. These measures are presented because management uses this information to monitor and evaluate financial results and trends and believes this information to also be useful for investors.

In the discussion of operating results below, we refer to certain items as ~~non-run-rate~~"non-run-rate items." For purposes of such discussion, non-run-rate items are items that, while they may recur from period-to-period: (i) are particularly material to results; (ii) affect costs primarily as a result of external market factors; and (iii) may not recur in future periods if the same level of underlying performance were to occur. Non-run-rate items are part of our business and operating environment but are worthy of being highlighted for the benefit of readers of our financial statements. Our intent is to allow users of the financial statements to consider our results both in light of and separately from ~~items~~ such as unrealized mark-to-market gains or losses on derivatives related to fluctuations in underlying metal and energy prices and currency exchange rates, lower of cost or market inventory write-downs, non-cash impairments, the impact of discount rate changes on workers' compensation liabilities, legacy environmental expenses related to predecessor operations and gains or losses related to the voluntary employee beneficiary associations ("VEBAs").items. For a reconciliation of ~~operating~~Adjusted EBITDA to Net income, ~~(loss) excluding non-run-rate items to operating income (loss),~~ see "Results of Operations - ~~Segment~~Selected Operational and ~~Business Unit~~Financial Information" below.

A fundamental part of our business model is to remain neutral to the impact from fluctuations in the market price for aluminum, thereby earning profit predominately from the conversion of aluminum into semi-fabricated mill products. We refer to this as ~~metal~~"metal price neutrality." We purchase primary and scrap, or recycled, aluminum, our main raw material, at prices that fluctuate on a monthly basis, and our pricing policies generally allow us to pass the underlying cost of metal through to our customers so that we remain neutral to metal pricing. ~~For~~However, for some of our higher ~~value added revenue~~VAR products sold on a spot basis,

~~however,~~ competitive dynamics may limit the ~~pass through~~amount and/or delay the timing of selling price increases to recover our increased aluminum costs, resulting in a lag up to several months during which we may be exposed to metal price ~~movements~~risk. As a result, we can ~~lag by several months, with~~experience an adverse impact when metal prices increase, and a favorable impact to us when metal prices decline, as we and ~~an adverse impact~~our competitors tend to ~~us when~~defer adjusting pricing unless market dynamics require such in a declining metal ~~prices increase.~~cost environment. Additionally, we sometimes enter into firm-price customer sales agreements that specify a firm underlying metal price plus a conversion price. Spot sales with lagged ~~metal price~~ metal price pass through and firm-price sales agreements create metal price exposure for us, which we mitigate through a hedging program with an objective to remain metal price neutral.

Our pricing policies and hedging program are intended to significantly reduce or eliminate the impact on our profitability of fluctuations in underlying metal price so that our earnings are predominantly associated with the conversion of aluminum to semi-fabricated mill products. To allow users of our financial statements to consider the impact of metal cost on our Net sales, we disclose Net sales as well as ~~value added revenue,~~VAR, which is Net sales less the Hedged Cost of Alloyed Metal. ~~The Hedged~~As used in this discussion, "Hedged Cost of Alloyed ~~Metal~~Metal" is the cost of our metal inputs at the average Midwest Transaction Price of aluminum ~~("Midwest Price")~~ plus the cost of alloying elements and any realized gains and/or losses on settled hedges related to the metal sold in the referenced period. The average Midwest Transaction Price of aluminum reflects ~~supply and~~ the primary aluminum supply/demand dynamics ~~for primary aluminum~~ in North America. For a reconciliation of ~~value added revenue~~VAR to Net sales, see "Results of Operations - ~~Segment~~Selected Operational and ~~Business Unit Information"~~Financial Information" below.

Overview

We manufacture and sell semi-fabricated specialty aluminum mill products for the following end market applications: aerospace and high strength ("Aero/HS products"); automotive ("Automotive Extrusions"); general engineering ("GE products"); and other industrial ("Other products"). Our fabricated aluminum mill products include flat-rolled (plate and sheet), extruded (rod, bar, hollows and shapes), drawn (rod, bar, pipe, tube and wire) and certain cast aluminum products. The sophistication of our products is due to the metallurgy and physical properties of the metal and the special characteristics that are required for particular end uses. We strategically choose to serve technically challenging applications for which we can deploy our core metallurgical and process technology capabilities to produce highly engineered mill products with differentiated characteristics that present opportunities for us to receive premium pricing and to create long-term profitable growth.

With respect to the global market for flat-rolled aluminum mill products, our focus is on heat treat plate and sheet for applications that require higher strength and other desired product attributes that cannot be achieved by common alloy rolled products. The primary end market applications of flat-rolled heat treat plate and sheet are Aero/HS products (which we sell globally) and GE products (which we predominantly sell within North America). Similarly, in the areas of aluminum extrusions, we focus on demanding Aero/HS products, Automotive Extrusions and GE products that require high strength, machinability or other specific properties where we can create and maintain a defensible competitive position because of our technical expertise, strong production capability and high product quality. We primarily serve North American demand for extruded mill products.

Our rolling mill in Spokane, Washington ("Trentwood") produces heat treat plate and sheet for aerospace and general engineering end market applications. Our 11 extrusion/drawing facilities, 10 of which are in the United States and one of which is in Canada, serve aerospace, automotive or general engineering applications. Our newest facility, which we acquired on September 19, 2018, is located in Columbia, New Jersey and focuses on multi-material additive manufacturing "3D Printing"

and machining technologies for aerospace and defense, automotive, high tech and general industrial applications. Our consolidated Net sales for the nine months ended September 30, ~~2017,~~2019 totaled ~~$1,044.4~~$1,145.4 million on ~~472.7~~472.5 million pounds shipped from these 1213 focused facilities. We employed approximately ~~2,740~~2,850 people at September 30, ~~2017.~~2019.

We have long-standing relationships with our customers, which consist primarily of blue-chip companies including leading aerospace and automotive manufacturers, tier one aerospace and automotive suppliers and metal service centers. Approximately ~~50%~~52% of our shipments is sold direct to ~~the~~ manufacturers or tier one suppliers and approximately ~~50%~~48% is sold to metal service centers. In our served markets, we seek to be the supplier of choice by pursuing "Best in Class" customer satisfaction driven by quality, availability, service and delivery performance. We strive to differentiate our product portfolio through our broad product offering and our KaiserSelect^® products, which are engineered and manufactured to deliver enhanced product characteristics with improved consistency, so as to result in better performance, lower waste and, in many cases, lower production cost for our customers.

Overall, the aerospace and defense industries' consumption of fabricated aluminum products is driven by factors that include ~~levels of~~ airframe build rates, the mix of aircraft models being built and defense spending. Unanticipated changes in build rates and mix of aircraft models being built can trigger ~~re-stocking~~restocking or ~~de-stocking~~destocking throughout the long aerospace supply chain, temporarily impacting demand for our Aero/HS products. Growth in demand for aerospace plate has exceeded demand growth for other forms of Aero/HS products as aircraft manufacturers have migrated to monolithic component design, where a single

piece of aluminum, usually a plate, is heavily machined to form a desired part rather than creating the same part by assembling sub-components made of aluminum sheet, extrusions or forgings that are affixed to one another using rivets, bolts or welds. ~~As more applications convert to monolithic design, we expect aerospace plate demand to continue to grow at a pace higher than our other Aero/HS products.~~

Demand for Automotive Extrusions is ~~determined based upon~~driven by factors that include automotive build rates in North America, ~~increasing~~ aluminum content ~~by platform~~ and ~~consumer preference.~~the success and customer acceptance of automotive platforms our products are produced for, which may be significantly different than overall automotive build rates. In recent years, automotive original equipment manufacturers ("OEMs") and their suppliers have, at an increasing pace, been converting many automotive components that historically were made of steel to aluminum to decrease weight without sacrificing structural integrity and safety performance and thereby achieve greater fuel efficiency standards mandated by stringent United States' Corporate Average Fuel Economy ~~("CAFE")~~ regulations. We believe fuel efficiency standards along with consumer preference for larger vehicles will continue to drive growth in demand for aluminum extruded components in passenger vehicles as a replacement for the heavier weight of steel components. Our Automotive Extrusions are designed and produced to provide specific mechanical properties and performance attributes required in automotive applications across a broad mix of North American OEMs and automotive platforms. We believe that these attributes are not easily replicated by our competitors and are important to our customers, who are typically tier one automotive suppliers.

Demand growth and cyclicality for GE products tend to mirror broad economic patterns and industrial activity in North America. Demand is also impacted by the destocking and restocking of inventory throughout the supply chain.

Highlights of the quarter ended September 30, ~~2017~~2019 include:

~~Shipment increase~~Higher VAR and Adjusted EBITDA compared to the quarter ~~and nine months~~ ended September 30, ~~2016~~2018 driven by strong demand for GEour Aero/HS products and ~~Automotive Extrusions, partially offset by the impact of continued aerospace~~higher value added pricing;

Weakening industrial demand and supply chain destocking ~~and a slower-than-anticipated ramp-up of new equipment and automated controls at Trentwood;~~for GE products;

~~Compressed sales margins~~Lower than anticipated Automotive Extrusions shipments due to ~~competitive pricing pressure;~~

~~Strong operational performance across our manufacturing platform;~~the General Motors strike and delays in program launches;

Combined cash and cash equivalents, short-term investments and net borrowing availability under our Revolving Credit Facility of approximately ~~$551.9~~$489.4 million as of September 30, ~~2017;~~2019;

Cash dividend and dividend equivalents payment of ~~$8.5~~$9.7 million; and

Repurchase of ~~18,321~~128,615 shares of our common stock for ~~$1.7~~$12.0 million at a weighted average price of ~~$95.13~~.$92.95.

Results of Operations

Consolidated Results of Operations

Net Sales. Net sales totaled ~~$332.8~~$374.9 million and ~~$320.6~~$393.1 million for the quarters ended September 30, ~~2017~~2019 and September 30, ~~2016,~~2018, respectively, reflecting a ~~1% increase~~4.6 million pound (3%) decrease in ~~Fabricated Products segment~~ shipment volume and a ~~3% increase~~$0.05/lb (2%) decrease in average realized sales price per pound. ~~Fabricated Products segment~~The shipment volume ~~increased due~~decrease primarily ~~to:~~reflected: (i) a ~~1.9~~5.0 million pound ~~or 8%, increase~~(8%) decrease in GE products primarily due to weakening industrial demand, supply chain destocking and the impact of allocating a portion of our heat-treat plate capacity to meet aerospace customer demand; (ii) a 3.4 million pound (37%) decrease in Other products as we continue to redirect our resources and production capacity to focus on our primary end market applications; and (iii) a 0.6 million pound (2%) decrease in Automotive Extrusions ~~driven by significantly higher shipments for bumper programs~~due to delays in program launches and ~~(ii) a 1.3 million pound, or 2%, increase in GE products reflecting~~ the ~~continued solid underlying demand for our GE applications,~~impact of the General Motors strike, partially offset by a ~~2.1~~4.4 million pound ~~or 4%, decrease~~(7%) increase in Aero/HS ~~products due to aerospace supply chain destocking and a slower-than-anticipated ramp-up of newly installed equipment and controls at Trentwood.~~products. The ~~increase~~decrease in average realized sales price per pound reflected a ~~$0.13/~~$0.15/lb ~~or 15%, increase~~(13%) decrease in average Hedged Cost of Alloyed Metal ~~prices~~price per pound, partially offset by a ~~$0.07/~~$0.10/lb ~~or 5%, decrease~~(8%) increase in ~~average value added revenue per pound. The decrease in average value added revenue~~VAR per pound ~~reflected: (i) competitive price pressure on spot sales~~due to a higher mix of Aero/HS products and ~~(ii) a leaner value added product mix with less volume of Aero/HS products and more volume of Automotive Extrusions and GE products.~~higher pricing on non-contract sales. See the table in "~~Segment~~Selected Operational and ~~Business Unit~~Financial Information" below for further details.

Net sales totaled ~~$1,044.4~~$1,145.4 million and ~~$998.7~~$1,196.5 million for the nine months ended September 30, ~~2017~~2019 and September 30, ~~2016,~~2018, respectively, reflecting a ~~2% increase~~21.3 million pound (4%) decrease in ~~Fabricated Products segment~~shipment volume. The shipment volume ~~and a 2% increase in average realized sales price per pound. Fabricated Products segment shipment volume increased due~~decrease primarily ~~to:~~reflected: (i) a ~~12.6~~25.8 million

pound ~~or 7%, increase~~(12%) decrease in GE products ~~reflecting~~primarily due to the ~~continued solid underlying~~impact of allocating a portion of our heat-treat plate capacity to meet aerospace customer demand, ~~for~~as well as temporary plate capacity constraints related to the planned and unplanned downtime at our ~~GE applications and~~Trentwood facility; (ii) a ~~5.1~~7.8 million pound ~~or 7%, increase~~(10%) decrease in Automotive Extrusions ~~primarily related~~reflecting the transition from end-of-life automotive programs to ~~significantly higher bumper shipments,~~new programs; and (iii) a $5.5 million (22%) decrease in Other products as we continue to redirect our resources and production capacity to focus on our primary end market applications, partially offset by a ~~6.4~~17.8 million pound ~~or 4%, decrease~~(10%) increase in Aero/HS products due ~~to: (i) aerospace supply chain destocking and (ii) temporary plate capacity constraints due~~ to ~~the installation of new equipment and controls at Trentwood~~solid demand for our products. The decrease in ~~the second quarter of 2017 and the slower-than-anticipated ramp-up of newly installed Trentwood equipment and automation in the third quarter of 2017. The increase in average realized~~Net sales ~~price per pound~~also reflected ~~a $0.12/~~an $0.11/lb ~~or 14%, increase~~(9%) decrease in average Hedged Cost of Alloyed Metal ~~prices~~price per pound, ~~partially~~ offset by ~~a $0.07/~~an $0.11/lb ~~or 5%, decrease~~(9%) increase in ~~average value added revenue per pound. The decrease in average value added revenue~~VAR per pound ~~reflected competitive price pressure on spot sales~~due primarily to a higher mix of Aero/HS ~~and GE~~ products and ~~as discussed above, a leaner value added product mix.~~higher pricing on non-contract sales. See the table in "~~Segment~~Selected Operational and ~~Business Unit~~Financial Information" below for further details.

Fluctuation in the Midwest Price for primary aluminum does not necessarily directly impact profitability because: (i) a substantial portion of the business conducted by the Fabricated Products segment passes aluminum price changes directly onto customers and (ii) our hedging activities in support of the Fabricated Products segment's firm-price sales agreements limit our losses, as well as gains, from primary metal price changes.

Cost of Products Sold, Excluding Depreciation and Amortization and Other Items.Cost of products sold, excluding depreciation and amortization and other items for the quarter ended September 30, ~~2017~~2019 totaled ~~$267.2~~$298.6 million, or 80% of Net sales, compared to ~~$254.7~~$323.3 million, or ~~79%~~82% of Net sales, for the quarter ended September 30, ~~2016.~~2018. The ~~increase~~decrease of ~~$12.5~~$24.7 million ~~was comprised of~~reflected a ~~$21.1~~$27.9 million ~~increase~~decrease in Hedged Cost of Alloyed Metal, partially offset by a ~~$8.6~~$3.2 million ~~reduction~~increase in net manufacturing conversion and other costs. Of the $27.9 million decrease in Hedged Cost of Alloyed Metal, $22.5 million was due to lower hedged metal prices and $5.4 million was due to lower shipment volume, as discussed above in "Net Sales." The ~~reduction~~$3.2 million increase in net manufacturing conversion and other costs ~~reflected:~~was due primarily to the impact of: (i) allocating a ~~$3.3 million improvement in raw material costs due~~portion of our heat-treat plate capacity to ~~favorable scrap pricing~~meet aerospace customer demand and ~~usage;~~ (ii) ~~$1.3 million of lower planned major maintenance expense; and (iii) a $5.1 million decrease in~~Automotive Extrusions manufacturing ~~LIFO and other costs, partially offset by a $1.1 million increase in costs~~inefficiencies related to ~~product mix. Of~~delays in program launches and the ~~$21.1 million increase in Hedged Cost~~impact of ~~Alloyed Metal, $20.1 million was due to higher hedged metal prices~~the General Motors strike. See "Selected Operational and ~~$1.0 million was due to higher shipment volume, as discussed in "Net Sales" above.~~Financial Information" below for a further discussion of the comparative results of operations for the quarters ended September 30, 2019 and September 30, 2018.

Cost of products sold, excluding depreciation and amortization and other items for the nine months ended September 30, ~~2017~~2019 totaled ~~$822.7~~$917.2 million, or ~~79%~~80% of Net sales, compared to ~~$767.1~~$983.4 million, or ~~77%~~82% of Net sales, for the nine months ended September 30, ~~2016.~~2018. The ~~increase~~decrease of ~~$55.6~~$66.2 million ~~was comprised of~~reflected a ~~$65.1~~$75.7 million ~~increase~~decrease in Hedged Cost of Alloyed Metal, partially offset by a $9.5 million ~~reduction~~increase in net manufacturing conversion and other costs. Of the $75.7 million decrease in Hedged Cost of Alloyed Metal, $50.7 million was due to lower hedged metal prices and $25.0 million was due to lower shipment volume, as discussed above in "Net Sales." The ~~reduction~~$9.5 million increase in net manufacturing conversion and other costs ~~reflected: (i) a $9.3 million improvement in raw material costs due to favorable scrap pricing and usage; (ii) $1.1~~reflected $16.5 million of higher costs associated with: (i) planned and unplanned downtime at our Trentwood facility during the quarters ended June 30, 2019 and March 31, 2019, respectively, and (ii) cost inefficiencies related to lower ~~planned major maintenance expense; and (iii) a $3.4 million decrease in manufacturing, LIFO and other costs,~~Automotive Extrusions shipments, partially offset by a ~~$4.5~~decrease of $7.1 million ~~increase in costs~~ related to ~~higher~~lower shipment ~~volume~~volume. See "Selected Operational and ~~product mix. Of the $65.1 million increase in Hedged Cost of Alloyed Metal, $56.7 million was due to higher hedged metal prices and $8.4 million was due to higher shipment volume, as discussed in "Net Sales" above. See "Segment and Business Unit~~Financial Information" below for a further discussion of the comparative results of operations for the ~~quarters and~~ nine months ended September 30, ~~2017~~2019 and September 30, ~~2016.~~2018.

~~Lower of Cost or Market Inventory Write-Down. See Note 1 of Notes to Interim Consolidated Financial Statements included in this Report for information on our inventory lower of cost or market value adjustments.~~

Selling, General, Administrative, Research and Development ("SG&A and R&D"). SG&A and R&D expense ~~totaled $24.7~~remained relatively consistent at $23.3 million ~~and $25.6~~compared to $23.9 million for the quarters ended September 30, ~~2017~~2019 and September 30, ~~2016,~~2018, respectively. ~~The decrease was due primarily to a decrease in short-term incentive compensation expense based on performance factors and modifiers.~~

SG&A and R&D expense totaled ~~$74.7~~$75.7 million and ~~$79.2~~$73.9 million for the nine months ended September 30, ~~2017~~2019 and September 30, ~~2016,~~2018, respectively. The ~~decrease~~increase was due primarily to ~~a $3.9~~$1.7 million ~~decrease in short-term incentive compensation expense based on performance factors and modifiers and a decrease in professional fees and services~~ of ~~$0.6 million.~~increased selling expenses.

~~Net Periodic Postretirement Benefit Cost Relating to Salaried VEBA.~~ ~~See Note 6 of Notes to Interim Consolidated Financial Statements included in this Report for disclosure regarding the Salaried VEBA and net periodic postretirement benefit cost relating thereto.~~

~~Goodwill Impairment.~~ ~~See Note 4 of Notes to Interim Consolidated Financial Statements included in this Report for details.~~

4339

Interest Expense. Interest expense represents cash and non-cash interest expense incurred on our 5.875% unsecured senior notes due May 15, 2024 ("~~5.875%~~ Senior Notes")~~, our 8.25% unsecured senior notes, which were redeemed on June 1, 2016,~~ and our revolving credit facility, net of capitalized interest. Interest expense was ~~$5.3~~$5.8 million and ~~$5.5~~$5.7 million for the quarters ended September 30, ~~2017~~2019 and September 30, ~~2016,~~2018, respectively, net of ~~$0.7 million and $0.6~~$0.4 million of interest expense capitalized as part of construction in progress ~~respectively.~~for each period.

Interest expense was ~~$16.4~~$17.3 million and ~~$14.7~~$17.0 million for the nine months ended September 30, ~~2017~~2019 and September 30, ~~2016,~~2018, respectively, net of ~~$1.9 million and $2.4~~$1.3 million of interest expense capitalized as part of construction in progress ~~respectively.~~for each period.

Other (Expense) Income, ~~(Expense),~~ Net. See Note 139 of Notes to Interim Consolidated Financial Statements included in this Report for details.

Income Tax Provision. See Note 510 of Notes to Interim Consolidated Financial Statements included in this Report for disclosure regarding our income tax provision.

~~Segment~~Selected Operational and ~~Business Unit~~Financial Information

The following data should be read in conjunction with our consolidated financial statements and the notes thereto included in Part I, Item 1. "Financial Statements" of this Report. ~~See Note 11 of Notes to Interim Consolidated Financial Statements included in this Report for further information regarding segments.~~ Interim results are not necessarily indicative of those for a full year.

~~Fabricated Products~~

The table below provides selected operational and financial information ~~for our Fabricated Products segment~~ for each period presented (in millions of dollars):

Quarter Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Segment operating income $ 53.7
$ 42.1
$ 149.9
$ 172.1
Impact to segment operating income of non-run-rate items:
Adjustments to plant-level LIFO¹
(2.0 ) (4.1 ) (3.9 ) (2.2 )
Mark-to-market gain on derivative instruments 10.8
2.0
14.0
16.9
Non-cash lower of cost or market inventory write-down²
—
—
—
(4.9 )
Workers' compensation cost due to discounting 0.1
(0.1 ) (0.1 ) —
Goodwill impairment³
—
—
(18.4 ) —
Asset impairment charges³
—
(2.7 ) —
(2.8 )
Environmental expenses (0.2 ) —
(0.2 ) —
Total non-run-rate items 8.7
(4.9 ) (8.6 ) 7.0
Segment operating income excluding non-run-rate items $ 45.0
$ 47.0
$ 158.5
$ 165.1



	Quarter Ended September 30,					Nine Months Ended September 30,
	2019		2018			2019		2018
Net income	$	25.4	$	21.7		$	72.6	$	68.1
Interest expense	5.8		5.7			17.3		17.0
Other expense (income), net	0.8		(0.7		)	0.4		(0.3		)
Income tax provision	8.7		8.2			25.8		21.9
Depreciation and amortization	12.3		11.0			36.3		32.4
Non-run-rate items:
Adjustments to plant-level LIFO¹	2.1		(2.2		)	1.3		(4.6		)
Mark-to-market loss on derivative instruments²	1.1		2.9			5.0		14.7
Workers' compensation cost (benefit) due to discounting	0.2		(0.2		)	0.9		(0.6		)
Non-cash asset impairment charge	—		—			0.1		0.1
Environmental expenses³	0.3		1.0			0.7		1.5
Total non-run-rate items	3.7		1.5			8.0		11.1
Adjusted EBITDA	$	56.7	$	47.4		$	160.4	$	150.2

~~_____________________~~____________________

We manage our ~~Fabricated Products segment~~ business on a monthly last-in, first-out ("LIFO") basis at each plant, but report inventory externally on an annual LIFO basis in accordance with GAAP on a consolidated basis. This ~~amount~~line item represents the conversion from GAAP LIFO applied on a consolidated basis ~~for the Fabricated Products segment~~ to monthly LIFO applied on a plant-by-plant basis.

~~The $4.9 million lower~~

Mark-to-market loss on derivative instruments represents the reversal of ~~cost or market inventory write-down during~~mark-to-market gain on hedges entered into prior to our adoption of ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12") on January 1, 2018 and settled in the ~~nine months ended September 30, 2016 was due primarily to a decrease in our net realizable value~~periods presented above. Adjusted EBITDA reflects the realized loss of ~~inventory (less a normal profit margin).~~such settlements.


³	Non-run-rate environmental expenses are related to legacy activities at operating facilities prior to July 6, 2006. See Note 47 of Notes to Interim Consolidated Financial Statements included in this Report for additional information relating to the ~~impairment of goodwill and one of our customer relationship intangible assets.~~environmental expenses.

~~As noted above, segment operating income excluding non-run-rate items~~Adjusted EBITDA for the quarter ended September 30, ~~2017~~2019 was ~~$2.0~~$9.3 million ~~lower~~higher than ~~segment operating income excluding such items~~Adjusted EBITDA for the quarter ended September 30, ~~2016. Lower operating income excluding non-run-rate items reflected:~~2018 due primarily to: (i) a ~~$10.2~~$6.1 million ~~unfavorable~~positive sales ~~impact due primarily to~~impact; (ii) a ~~leaner product mix and lower sales margins, as discussed above and (ii) $1.3~~$2.8 million ~~of higher depreciation and amortization expense, partially offset by: (i) a $3.3 million improvement from favorable price spreads for scrap raw material purchases; (ii) $1.3 million of lower~~reduction in planned major ~~maintenance expense;~~maintenance; and (iii) a ~~$4.8~~$2.7 million ~~improvement~~reduction in ~~net manufacturing conversion~~tariff and other ~~costs.~~costs, partially offset by Automotive Extrusions

~~Segment operating income excluding non-run-rate items~~

manufacturing inefficiencies as discussed in "Cost of Products Sold, Excluding Depreciation and Amortization and Other Items" above.

Adjusted EBITDA for the nine months ended September 30, ~~2017~~2019 was ~~$6.6~~$10.2 million ~~lower~~higher than ~~segment operating income excluding such items~~Adjusted EBITDA for the nine months ended September 30, ~~2016. Lower operating income excluding non-run-rate items reflected: (i) a $23.9 million unfavorable sales impact~~2018 due ~~primarily~~ to a ~~leaner product mix and lower sales margins,~~$24.6 million increase in VAR, as discussed in "Net Sales" above, partially offset by the negative impact associated with: (i) both planned and unplanned downtime at our Trentwood facility during the quarters ended June 30, 2019 and March 31, 2019, respectively, and (ii) ~~$2.7 million~~transitioning of ~~higher depreciation and amortization expense, partially offset by: (i) a $9.3 million improvement~~our Automotive Extrusions from favorable price spreads for scrap raw material purchases; (ii) a $7.8 million improvement in net manufacturing conversion and other costs; (iii) $1.1 million of lower planned major maintenance expense; and (iv) a $1.8 million decrease in incentive compensation expense based on performance factors and modifiers.

end-of-life to new program launches.

The table below provides our ~~Fabricated Products segment~~ shipment and ~~value added revenue~~VAR information (in millions of dollars, except shipments and ~~value added revenue~~VAR per pound) by end market applications for each period presented:


	Quarter Ended September 30,												Nine Months Ended September 30,												Quarter Ended September 30,												Nine Months Ended September 30,
	2017						2016						2017						2016						2019						2018						2019						2018
Aero/HS Products:
Shipments (mmlbs)	53.4						55.5						172.8						179.2						67.1						62.7						198.1						180.3
	$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb
Net sales	$	150.2		$	2.81		$	156.1		$	2.81		$	483.2		$	2.80		$	500.7		$	2.79		$	198.9		$	2.96		$	185.7		$	2.96		$	586.8		$	2.96		$	540.9		$	3.00
Less: Hedged Cost of Alloyed Metal	(51.8		)	(0.97		)	(47.5		)	(0.85		)	(162.7		)	(0.95		)	(152.7		)	(0.85		)	(71.3		)	(1.06		)	(73.2		)	(1.17		)	(213.6		)	(1.08		)	(207.9		)	(1.15		)
Value added revenue	$	98.4		$	1.84		$	108.6		$	1.96		$	320.5		$	1.85		$	348.0		$	1.94		$	127.6		$	1.90		$	112.5		$	1.79		$	373.2		$	1.88		$	333.0		$	1.85

Automotive Extrusions:
Shipments (mmlbs)	24.5						22.6						75.9						70.8						23.5						24.1						71.8						79.6
	$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb
Net sales	$	52.7		$	2.15		$	46.5		$	2.06		$	161.6		$	2.13		$	143.6		$	2.03		$	47.5		$	2.02		$	56.1		$	2.33		$	146.0		$	2.03		$	183.9		$	2.31
Less: Hedged Cost of Alloyed Metal	(23.8		)	(0.97		)	(18.9		)	(0.84		)	(72.9		)	(0.96		)	(58.0		)	(0.82		)	(23.7		)	(1.01		)	(28.6		)	(1.19		)	(74.9		)	(1.04		)	(94.6		)	(1.19		)
Value added revenue	$	28.9		$	1.18		$	27.6		$	1.22		$	88.7		$	1.17		$	85.6		$	1.21		$	23.8		$	1.01		$	27.5		$	1.14		$	71.1		$	0.99		$	89.3		$	1.12

GE Products:
Shipments (mmlbs)	64.1						62.8						203.1						190.5						57.7						62.7						183.4						209.2
	$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb
Net sales	$	115.9		$	1.81		$	105.6		$	1.68		$	361.1		$	1.78		$	318.3		$	1.67		$	117.1		$	2.03		$	133.9		$	2.14		$	375.3		$	2.05		$	425.1		$	2.03
Less: Hedged Cost of Alloyed Metal	(63.3		)	(0.99		)	(52.6		)	(0.84		)	(195.9		)	(0.97		)	(157.9		)	(0.83		)	(59.4		)	(1.03		)	(75.5		)	(1.21		)	(194.9		)	(1.07		)	(247.2		)	(1.18		)
Value added revenue	$	52.6		$	0.82		$	53.0		$	0.84		$	165.2		$	0.81		$	160.4		$	0.84		$	57.7		$	1.00		$	58.4		$	0.93		$	180.4		$	0.98		$	177.9		$	0.85

Other Products:
Shipments (mmlbs)	7.6						7.4						20.9						22.1						5.9						9.3						19.2						24.7
	$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb
Net sales	$	14.0		$	1.84		$	12.4		$	1.68		$	38.5		$	1.84		$	36.1		$	1.63		$	11.4		$	1.93		$	17.4		$	1.87		$	37.3		$	1.94		$	46.6		$	1.89
Less: Hedged Cost of Alloyed Metal	(7.4		)	(0.97		)	(6.2		)	(0.84		)	(20.3		)	(0.97		)	(18.1		)	(0.82		)	(5.7		)	(0.96		)	(10.8		)	(1.16		)	(19.6		)	(1.02		)	(29.0		)	(1.18		)
Value added revenue	$	6.6		$	0.87		$	6.2		$	0.84		$	18.2		$	0.87		$	18.0		$	0.81		$	5.7		$	0.97		$	6.6		$	0.71		$	17.7		$	0.92		$	17.6		$	0.71

Total:
Shipments (mmlbs)	149.6						148.3						472.7						462.6						154.2						158.8						472.5						493.8
	$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb			$			$ / lb
Net sales	$	332.8		$	2.22		$	320.6		$	2.16		$	1,044.4		$	2.21		$	998.7		$	2.16		$	374.9		$	2.43		$	393.1		$	2.48		$	1,145.4		$	2.42		$	1,196.5		$	2.42
Less: Hedged Cost of Alloyed Metal	(146.3		)	(0.97		)	(125.2		)	(0.84		)	(451.8		)	(0.96		)	(386.7		)	(0.84		)	(160.1		)	(1.04		)	(188.1		)	(1.19		)	(503.0		)	(1.06		)	(578.7		)	(1.17		)
Value added revenue	$	186.5		$	1.25		$	195.4		$	1.32		$	592.6		$	1.25		$	612.0		$	1.32		$	214.8		$	1.39		$	205.0		$	1.29		$	642.4		$	1.36		$	617.8		$	1.25

For the quarter ended September 30, 2017, Net sales of Fabricated Products increased by 4% to $332.8 million, as compared to the quarter ended September 30, 2016, reflecting a 1% increase in Fabricated Products segment shipment volume and a 3% increase in average realized sales price per pound, as discussed in further detail above in "~~Consolidated Results of Operations.~~"

For the nine months ended September 30, 2017, Net sales of Fabricated Products increased by 5% to $1,044.4 million, as compared to the nine months ended September 30, 2016, reflecting a 2% increase in Fabricated Products segment shipment

4641

~~volume~~Outlook

Driven by a strong aerospace order book, we anticipate results for the fourth quarter of 2019 will be similar to the fourth quarter of 2018, reflecting the impact of normal seasonal demand weakness, slowing industrial demand and a 2%potential $3.0 million to $6.0 million Adjusted EBITDA impact related to the General Motors strike, depending on how quickly demand ramps up in the supply chain. For the full year 2019, we continue to anticipate low- to mid-single digit percent year-over-year growth in VAR and an EBITDA margin (Adjusted EBITDA as a percentage of VAR) above 25%. Shipments are expected to be down year-over-year as our mix has shifted towards an increase in ~~average realized sales price per pound, as discussed~~higher value added Aero/HS products and a decrease in ~~further detail above in "Consolidated Results of Operations.~~"

~~Outlook~~

~~While our 2017 outlook for Automotive Extrusions and~~ GE products and Automotive Extrusions.

Although timing of the Boeing 737-MAX resolution remains ~~unchanged, we have lowered the outlook for~~uncertain, our Aero/HS products ~~due~~order book is strong with solid visibility well into 2020. Our Trentwood facility has been operating near capacity for more than a decade as growing demand for our aerospace and general engineering plate has absorbed six separate phases of capacity expansion. As Aero/HS products demand has further increased in 2019, our order book has been exceptionally strong resulting in the need to ~~constraints on throughput during installation and ramp-up~~allocate some of ~~new equipment and automated controls at Trentwood. For Automotive Extrusions,~~our general engineering plate capacity to meet our strong customer demand.

We expect to have increased capacity available in 2020 as we continue to ~~expect double-digit year-over-year growth~~realize the full benefits of our Trentwood facility modernization, in ~~shipments and mid-single-digit growth~~addition to expecting significantly less downtime than we experienced in ~~value added revenue~~the first half of 2019. However, as new product growth is predominantly in lower value added parts. As we have previously noted for our Aero/HS products, we anticipate headwinds from lower sales margins and commercial aerospace supply chain destocking will continue through the remainder of the year. While we had previously anticipated our Aero/HS products shipments would be comparable to 2016, we now expect our 2017 Aero/HS shipments will be lower than the prior year due to the slower-than-anticipated Trentwood ramp-up.

~~Longer term,~~ we continue to ~~anticipate solid Aero/HS products~~monitor the long-term needs of our customers, we have developed a future state vision for additional brown site expansions at our Trentwood facility that can be implemented in phases to accommodate expected customer demand ~~growth driven by military~~needs well beyond the next decade. We are closely evaluating those needs and ~~commercial aircraft applications in both 2018 and 2019, with isolated instances of the supply chain inventory overhang lingering into 2018~~opportunities to create a modest drag on overall industry demand growth. As demand strengthens and we implement the improved manufacturing practices and capacity expansion at Trentwood, we expect increasing benefits from the new equipment and automated controls at Trentwood. Overall, we expect to enter 2018 well positioned to serve industry-wide demand growth across our served markets.

~~All Other~~

All Other provides support for our operations and incurs general and administrative expenses that are not allocated to the Fabricated Products segment. All Other is not considered a reportable segment. The table below presents the impact of non-run-rate items to operating loss within the All Other business unit for each period presented (in millions of dollars):

Quarter Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Operating loss $ (13.9 ) $ (12.3 ) $ (39.2 ) $ (39.6 )
Impact to operating loss of non-run-rate items:
Net periodic post retirement benefit cost relating to Salaried VEBA (1.2 ) (0.8 ) (3.4 ) (2.5 )
(Loss) gain on removal of Union VEBA net assets (0.5 ) —
0.8
0.1
Total non-run-rate items (1.7 ) (0.8 ) (2.6 ) (2.4 )
Operating loss excluding non-run-rate items $ (12.2 ) $ (11.5 ) $ (36.6 ) $ (37.2 )

~~All Other operating loss excluding non-run-rate items~~assess timing for the quarter ended September 30, 2017 was $0.7 million higher for the same period in 2016. The increase was due primarily to an increase in workers' compensation expense and other general and administrative expenses.next phases of expansion.

All Other operating loss excluding non-run-rate items for the nine months ended September 30, 2017, was $0.6 million lower than the comparable prior period in 2016 due primarily to a decrease in employee incentive compensation expense.

Liquidity and Capital Resources

Summary

The following table summarizes our liquidity atas of the ~~dates~~periods presented (in millions of dollars):


	September 30, 2017		December 31, 2016		September 30, 2019		December 31, 2018
Available cash and cash equivalents	$	73.9	$	55.2	$	172.1	$	125.6
Short-term investments	191.4		231.0		25.3		36.7
Net borrowing availability under Revolving Credit Facility after letters of credit	286.6		275.3
Borrowing availability under Revolving Credit Facility, net of letters of credit					292.0		292.0
Total liquidity	$	551.9	$	561.5	$	489.4	$	454.3


~~For the quarterly period ended September 30, 2017~~
☐
~~[ ]~~ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~For the transition period from _______________________________ to_________________________________________~~



Delaware			94-3030279
(State of incorporation)			(I.R.S. Employer Identification No.)

~~27422 Portola Parkway, Suite 200 Foothill Ranch, California~~		~~92610-2831~~
~~(Address of principal executive offices)~~		~~(Zip Code)~~
	~~(949) 614-1740~~
~~(Registrant's telephone number, including area code)~~



Large accelerated filerþ	☒	Accelerated filero	☐

Non-accelerated filero	☐ (Do not check if a smaller reporting company)	Smaller reporting companyo	☐

		Emerging growth companyo

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o ☐



Title of each class	Trading symbol	Name of each exchange on which registered
Common stock, par value $0.01 per share	KALU	Nasdaq Global Select Market



PART I
Item 1. Financial Statements	1
Item 2. ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations	4036
Item 3. Quantitative and Qualitative Disclosures About Market Risk	5346
Item 4. Controls and Procedures	5447

PART II
Item 1. Legal Proceedings	5549
Item 1A. Risk Factors	5549
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	5549
Item 3. Defaults Upon Senior Securities	5549
Item 4. Mine Safety Disclosures	5649
Item 5. Other Information	5650
Item 6. Exhibits	5650

SIGNATURES	5751



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



	Unrecognized Gross Compensation Costs (in millions of dollars)		Expected Period (in years) Over Which the Remaining Gross Compensation Costs Will Be Recognized
Non-vested common shares and restricted stock units	$	9.6	2.6
TSR-Based Performance Shares	$	5.6	1.7
CP-Based Performance Shares	$	6.1	2.1
EVA-Based Performance Shares	$	1.5	2.4



	Non-Vested Common Shares				Restricted Stock Units				TSR-Based Performance Shares				CP-Based Performance Shares				EVA-Based Performance Shares
	Shares		Weighted-Average Grant-Date Fair Value per Share		Units		Weighted-Average Grant-Date Fair Value per Unit		Shares		Weighted-Average Grant-Date Fair Value per Share		Shares		Weighted-Average Grant-Date Fair Value per Share		Shares		Weighted-Average Grant-Date Fair Value per Share
Outstanding at December 31, 2016	114,658		$	69.51	61,800		$	74.94	394,525		$	90.30	63,678		$	80.46	—		$	—
Granted¹	11,817		86.92		92,275		76.13		65,044		97.88		65,044		79.69		32,504		79.69
Vested	(46,689	)	71.46		(8,655	)	76.94		(94,082	)	83.18		—		—		—		—
Forfeited¹	(427	)	69.83		(6,412	)	77.70		(5,519	)	95.88		(3,342	)	79.92		(1,164	)	79.69
Canceled¹	—		—		—		—		(55,288	)	83.18		—		—		—		—
Outstanding at September 30, 2017	79,359		$	70.96	139,008		$	75.72	304,680		$	95.31	125,380		$	80.07	31,340		$	79.69


¹	~~Of the $20.5 million in total derivative assets, $15.8 million and $4.7 million were recorded within Prepaid expenses and other current assets and Other assets, respectively.~~


²	~~Of the $1.4 million in total derivative liabilities, $0.9 million and $0.5 million were recorded within Other accrued liabilities and Long-term liabilities, respectively.~~


¹	~~Of the $5.8 million in total derivative assets, $5.0 million and $0.8 million were recorded within Prepaid expenses and other current assets and Other assets, respectively.~~


²	~~Of the $1.8 million in total derivative liabilities, $0.8 million and $1.0 million were recorded within Other accrued liabilities and Long-term liabilities, respectively.~~



	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets		Net Amount
Counterparty (with netting agreements)	$	20.5	$	—	$	20.5	$	1.4	$	19.1
Total	$	20.5	$	—	$	20.5	$	1.4	$	19.1



	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Liabilities Presented in the Consolidated Balance Sheets			Gross Amounts Not Offset in the Consolidated Balance Sheets			Net Amount
Counterparty (with netting agreements)	$	(1.4	)	$	—	$	(1.4	)	$	(1.4	)	$	—
Total	$	(1.4	)	$	—	$	(1.4	)	$	(1.4	)	$	—


¹	~~The basic weighted-average number of common shares outstanding during the periods presented excludes non-vested common shares, restricted stock units and performance shares.~~


²	~~The diluted weighted-average number of common shares outstanding during the periods presented was calculated using the treasury method.~~



	September 30, 2017		December 31, 2016
Assets:
Fabricated Products	$	1,007.9	$	969.4
All Other¹	414.8		474.1
Total assets	$	1,422.7	$	1,443.5


¹	~~Assets~~Amounts amortized out of AOCI relating to Salaried VEBA adjustments were included within Other (expense) income, net, as a component of Net periodic postretirement benefit cost relating to Salaried VEBA.


²	Income tax amounts reclassified out of AOCI were included as a component of Income tax provision.


³	Amounts reclassified out of AOCI relating to sales of available for sale securities were included as a component of Other (expense) income, net. We use the specific identification method to determine the amount reclassified out of AOCI.


¹	During both the quarter and nine months ended September 30, 2019, a total of 7000 securities were excluded from the weighted-average diluted shares computation as their inclusion would have been anti-dilutive. There were 0 anti-dilutive securities during both the quarter and nine months ended September 30, 2018.


¹	We are required to keep on deposit certain amounts that are pledged or held as collateral relating to workers' compensation and other agreements. We account for such deposits as restricted cash. From time to time, such restricted funds could be returned to us or we could be required to pledge additional cash.


¹	Represents the loss on extinguishment of our 8.25% Senior Notes during the nine months ended September 30, 2016, which included an $8.2 million premium paid to redeem the notes and a $2.9 million write-off of unamortized debt issuance costs associated with the notes.


¹	~~Amounts reclassified out of AOCI relating to Salaried VEBA adjustments were included as a component of Net periodic postretirement benefit cost relating to Salaried VEBA.~~


²	~~Income tax amounts reclassified out of AOCI were included as a component of Income tax provision.~~


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated		Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	70.7	$	3.2	$	—		$	73.9	$	—	$	170.7	$	1.4	$	—		$	172.1
Short-term investments	—		191.4		—		—			191.4		—		25.3		—		—			25.3
Receivables:
Trade receivables, net	—		133.1		5.1		—			138.2		—		183.2		4.9		—			188.1
Intercompany loans receivable	55.6		0.1		0.6		(56.3		)	—		50.6		1.4		5.5		(57.5		)	—
Other	—		14.6		0.8		—			15.4		—		24.3		1.8		—			26.1
Contract assets												—		43.6		2.5		—			46.1
Inventories	—		208.5		8.6		(4.9		)	212.2		—		183.1		9.4		—			192.5
Prepaid expenses and other current assets	0.1		31.0		0.4		—			31.5		0.3		17.7		0.4		—			18.4
Total current assets	55.7		649.4		18.7		(61.2		)	662.6		50.9		649.3		25.9		(57.5		)	668.6
Investments in and advances to subsidiaries	1,107.0		41.9		—		(1,148.9		)	—		1,081.4		95.7		0.2		(1,177.3		)	—
Property, plant and equipment, net	—		527.6		30.2		—			557.8		—		580.6		33.7		—			614.3
Operating lease assets												—		26.3		—		—			26.3
Long-term intercompany loans receivable	—		—		10.5		(10.5		)	—		—		—		17.0		(17.0		)	—
Deferred tax assets, net	—		113.9		—		4.8			118.7		—		3.3		—		3.0			6.3
Intangible assets, net	—		25.3		—		—			25.3		—		22.6		7.7		—			30.3
Goodwill	—		18.8		—		—			18.8		—		18.7		25.3		—			44.0
Other assets	—		39.5		—		—			39.5		—		36.2		0.2		0.1			36.5
Total	$	1,162.7	$	1,416.4	$	59.4	$	(1,215.8	)	$	1,422.7	$	1,132.3	$	1,432.7	$	110.0	$	(1,248.7	)	$	1,426.3
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1.4	$	86.8	$	6.2	$	—		$	94.4	$	1.5	$	86.7	$	5.6	$	—		$	93.8
Intercompany loans payable	—		56.2		0.1		(56.3		)	—		—		56.1		1.4		(57.5		)	—
Accrued salaries, wages and related expenses	—		37.2		1.8		—			39.0		—		30.3		1.6		—			31.9
Other accrued liabilities	8.3		41.0		1.1		(7.1		)	43.3		8.3		46.1		0.5		(4.8		)	50.1
Total current liabilities	9.7		221.2		9.2		(63.4		)	176.7		9.8		219.2		9.1		(62.3		)	175.8
Long-term portion of operating lease liabilities												—		25.6		—		—			25.6
Net liabilities of Salaried VEBA	—		27.8		—		—			27.8		—		32.8		—		—			32.8
Deferred tax liabilities	—		—		3.3		—			3.3		—		—		4.2		—			4.2
Long-term intercompany loans payable	—		10.5		—		(10.5		)	—		—		17.0		—		(17.0		)	—
Long-term liabilities	—		59.3		2.6		—			61.9		—		61.8		3.6		—			65.4
Long-term debt	369.4		—		—		—			369.4		371.1		—		—		—			371.1
Total liabilities	379.1		318.8		15.1		(73.9		)	639.1		380.9		356.4		16.9		(79.3		)	674.9

Total stockholders' equity	783.6		1,097.6		44.3		(1,141.9		)	783.6		751.4		1,076.3		93.1		(1,169.4		)	751.4
Total	$	1,162.7	$	1,416.4	$	59.4	$	(1,215.8	)	$	1,422.7	$	1,132.3	$	1,432.7	$	110.0	$	(1,248.7	)	$	1,426.3



	Nine Months Ended September 30,
	2017			2016
Total cash provided by (used in):
Operating activities:
Fabricated Products	$	194.3		$	158.8
All Other	(62.8		)	(51.4		)
Total cash provided by operating activities	$	131.5		$	107.4
Investing activities:
Fabricated Products	$	(55.4	)	$	(57.2	)
All Other	41.1			(171.3		)
Total cash used in investing activities	$	(14.3	)	$	(228.5	)
Financing activities:
Fabricated Products	$	(0.2	)	$	(0.1	)
All Other	(97.6		)	122.4
Total cash (used in) provided by financing activities	$	(97.8	)	$	122.3


	October 16, 2017			September 30, 2017			October 21, 2019			September 30, 2019
Revolving Credit Facility borrowing commitment	$	300.0		$	300.0		$	300.0		$	300.0
Borrowing base availability	$	290.9		$	294.4		$	300.0		$	300.0
Less: Outstanding borrowings under Revolving Credit Facility	—			—			—			—
Less: Outstanding letters of credit under Revolving Credit Facility	(7.8		)	(7.8		)	(8.0		)	(8.0		)
Net remaining borrowing availability	$	283.1		$	286.6
Remaining borrowing availability							$	292.0		$	292.0
Borrowing rate (if applicable)¹	4.50		%	4.50		%	5.25		%	5.25		%


¹	Such borrowing rate, if applicable, represents the interest rate for any overnight borrowings under the Revolving Credit Facility.



	Amended and Restated 2016 Equity and Performance Incentive Plan			Stock Repurchase Plan
	Total Number of Shares Purchased¹	Average Price per Share		Total Number of Shares Purchased²	Average Price per Share		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs (millions)²
July 1, 2017 - July 31, 2017	—	$	—	7,571	$	91.57	$	124.5
August 1, 2017 - August 31, 2017	—	—		5,750	96.12		$	123.9
September 1, 2017 - September 30, 2017	—	—		5,000	99.40		$	123.4
Total	—	$	—	18,321	$	95.13	N/A



	Equity Incentive Plan			Stock Repurchase Plan
	Total Number of Shares Purchased¹	Average Price per Share		Total Number of Shares Purchased²	Average Price per Share		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs (millions)²
July 1, 2019 - July 31, 2019	—	$	—	30,130	$	94.76	$	118.1
August 1, 2019 - August 31, 2019	—	—		60,283	90.60		$	112.5
September 1, 2019 - September 30, 2019	—	—		38,202	95.23		$	108.9
Total	—	$	—	128,615	$	92.95	N/A



Exhibit Number		Description

10.1		~~CEO~~ Employment Agreement, dated as of September 19, 2019, between the Company and Jack A. Hockema (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by the Company on ~~July 17, 2017,~~September 19, 2019, File No. 001-09447).

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

*31.2		Certification of ~~Daniel J. Rinkenberger~~Neal E. West pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32.1		Certification of Jack A. Hockema pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2		Certification of ~~Daniel J. Rinkenberger~~Neal E. West pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* 101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

* 101.SCH		XBRL Taxonomy Extension Schema

*101.CAL		XBRL Taxonomy Extension Calculation

* 101.DEF		XBRL Taxonomy Extension Definition

* 101.LAB		XBRL Taxonomy Extension Label

* 101.PRE		XBRL Taxonomy Extension Presentation

* 104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).



	KAISER ALUMINUM CORPORATION
	~~/s/ Daniel J. Rinkenberger~~
	~~Daniel J. Rinkenberger~~
	/s/ Neal E. West
	Neal E. West
	~~Executive~~Senior Vice President and Chief Financial Officer (Principal Financial Officer)


	/s/ ~~Neal West~~Jennifer Huey
	~~Neal West~~ Jennifer Huey
	Vice President and Chief Accounting Officer (Principal Accounting Officer)

Finance Leases

Operating Leases

Weighted-average lease term (in years):

Weighted-average discount rate: