Summary of KAISER ALUMINUM CORP

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Item should be read in conjunction with Part I, Item 1, "Financial Statements," of this Report.
This Report contains statements which constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this Report and can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "estimates," "will," "should," "plans," or "anticipates" or comparable terminology, or by discussions of strategy. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of various factors. These factors include: the effectiveness of management's strategies and decisions; general economic and business conditions; developments in technology; new or modified statutory or regulatory requirements; and changing prices and market conditions. Part I, Item 1A. "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2008, identifies other factors that could cause actual results to vary. No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements.
Management's discussion and analysis of financial condition and results of operations ("MD&A") is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A is presented in six sections:
• Overview;

• Results of Operations;

• Liquidity and Capital Resources;

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

• Critical Accounting Estimates and Policies; and

• New Accounting Pronouncements.

We believe our MD&A should be read in conjunction with the 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, 2008.
In the discussion of operating results below, certain items are referred to as 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 the users of the 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 fluctuations in underlying metal prices, natural gas prices, and currency exchange rates. Overview
We are a leading producer of fabricated aluminum products for aerospace / high strength, general engineering and custom automotive and industrial applications. In addition, we own a 49% interest in Anglesey Aluminium Limited ("Anglesey"), which owns and operates an aluminum smelter in Holyhead, Wales.

We have two reportable operating segments, Fabricated Products and Primary Aluminum, and a Corporate segment. The Fabricated Products segment is comprised of all of the operations within the fabricated aluminum products industry including ten fabricating facilities in North America at March 31, 2009. The Fabricated Products segment sells value-added products such as heat treat aluminum sheet and plate, extrusions and forgings which are used in a wide range of industrial applications, including aerospace, defense, automotive and general engineering end-use applications.
The Primary Aluminum segment produces commodity grade products as well as value-added products such as ingot and billet, for which we receive a premium over normal commodity market prices, and conducts hedging activities in respect of our exposure to primary aluminum price risk.
Changes in global, regional, or country-specific economic conditions can have a significant impact on overall demand for aluminum-intensive fabricated products in the market segments in which we participate. Such changes in demand can directly affect our earnings by impacting the overall volume and mix of such products sold. During 2008 and the first quarter of 2009, the markets for aerospace and high strength products in which we participate remained strong. However, demand for our products for general engineering and custom automotive and industrial applications dramatically declined in the final months of 2008 and the first quarter of 2009, reflecting weak end-use demand as well as inventory destocking by our customers and others in the value stream for our products.
Primary aluminum prices fell significantly over the course of the last half of 2008 and the first quarter of 2009. The average London Metal Exchange, or LME, transaction price per pound of primary aluminum for the quarters ended March 31, 2009 and March 31, 2008 were $.62 and $1.24, respectively. At April 15, 2009, the LME transaction price per pound of primary aluminum was $.67. The Company's Fabricated Products segment operates its business with an intent to remain neutral to primary aluminum price changes by passing such price changes on to its customers or, to the extent it has firm price contracts, hedging such exposures to primary aluminum prices with counterparties. Our Primary Aluminum segment, however, is impacted more directly by changes in primary aluminum prices.
Our operating results are also, albeit to a lesser degree, sensitive to changes in prices for power and natural gas and changes in certain foreign exchange rates. All of the foregoing have been subject to significant price fluctuations over recent years. For a discussion of our sensitivity to changes in market conditions, see Part I, Item 3. "Quantitative and Qualitative Disclosures About Market Risks" of this Report. Highlights of the Quarter Ended March 31, 2009 include:
• Fabricated Products segment shipments of 109 million pounds, reflecting record aerospace and high strength product shipments, mitigated by softness in the ground transportation and industrial application markets.

• Consolidated net income of $3.8 million, or $.19 per diluted share, which includes $9.3 million of lower of cost or market inventory write-downs, $4.3 million of pre-tax, non-cash mark-to-market losses on our derivative positions, $1.2 million of restructuring charges relating to 2008 restructuring involving the closure of our Tulsa, Oklahoma facility and curtailment of operations at our Bellwood, Virginia facility, and $.6 million of impairment charges relating to our investment in Anglesey.

• Cash generated from operations of $66.0 million reflecting the benefit of working capital management.

• Dividend payment on February 13, 2009 of $4.8 million, or $.24 per common share, to stockholders of record at the close of business on January 26, 2009; and subsequent to the end of the first quarter, declaration of a dividend of $.24 per common share on April 14, 2009 to stockholders of record at the close of business on April 27, 2009, which will be paid on May 15, 2009.

• Repayment of $36.0 million of borrowing under the Revolving Credit Facility leaving no outstanding borrowings and borrowing availability of $170.9 million at March 31, 2009.

• Announcement in January 2009 of the expected full curtailment of the Anglesey smelting operations in September 2009 and the continued impairment of our investment in Anglesey.

Results of Operations
Consolidated Selected Operational and Financial Information The table below provides selected operational and financial information on a consolidated basis (in millions of dollars, except shipments and average sales prices).
The following data should be read in conjunction with our interim consolidated financial statements and the notes thereto contained elsewhere herein. See Note 16 of Notes to Consolidated Financial Statements 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, 2008 for further information regarding segments. Interim results are not necessarily indicative of those for a full year.