Kaiser Aluminum
Annual Report 2016

Plain-text annual report

KAISER ALUMINUM CORP FORM 10-K (Annual Report) Filed 02/22/17 for the Period Ending 12/31/16 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 27422 PORTOLA PARKWAY, SUITE 200 FOOTHILL RANCH, CA 92610-2831 949-614-1740 0000811596 KALU 3350 - Rolling, Drawing, And Extruding Of Nonferrous Aluminum Basic Materials 12/31 http://www.edgar-online.com © Copyright 2017, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.  UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2016 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________________________ to_________________________________________Commission File Number: 1-09447KAISER ALUMINUM CORPORATION(Exact name of registrant as specified in its charter)Delaware 94-3030279(State or other jurisdiction of incorporation or organization) (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) Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCommon stock, par value $0.01 per share Nasdaq Stock Market LLC Securities registered pursuant to section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of Act. Yes o No þIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þNo oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submitand post such files). Yes þ No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, tothe best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K. þIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer, " " accelerated filer " and " smaller reporting company " in Rule 12b-2 of the Exchange ActLarge accelerated filer þAccelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company)Smaller reporting company oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þThe aggregate market value of the registrant's common stock held by non-affiliates of the registrant as of the last business day of the registrant's most recently completed secondfiscal quarter ( June 30, 2016 ) was approximately $1.6 billion .As of February 15, 2017 , there were 17,482,863 shares of the Common Stock of the registrant outstanding.Documents Incorporated by Reference. Certain portions of the registrant’s definitive proxy statement related to the registrant’s 2017 annual meeting ofstockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.TABLE OF CONTENTSPART I Item 1.Business1Item 1A.Risk Factors9Item 1B.Unresolved Staff Comments19Item 2.Properties20Item 3.Legal Proceedings20Item 4.Mine Safety Disclosures20 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities21Item 6.Selected Financial Data23Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations24Item 7A.Quantitative and Qualitative Disclosures About Market Risk42Item 8.Financial Statements and Supplementary Data45Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure105Item 9A.Controls and Procedures105Item 9B.Other Information105 PART III Item 10.Directors, Executive Officers and Corporate Governance106Item 11.Executive Compensation106Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters106Item 13.Certain Relationships and Related Transactions and Director Independence106Item 14.Principal Accountant Fees and Services106 PART IV Item 15.Exhibits and Financial Statement Schedules107 SIGNATURES108 INDEX OF EXHIBITS109 PART IForward-Looking StatementsThis Annual Report on Form 10-K (this "Report") contains statements which constitute "forward-looking statements" within the meaning of the PrivateSecurities Litigation Reform Act of 1995. These statements appear throughout this Report, including Item 1. "Business – Business Operations," Item 1A. "RiskFactors," and Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations." These forward-looking statements can beidentified by the use of forward-looking terminology such as "believes," "expects," "may," "estimates," "will," "should," "plans," or "anticipates," or the negativeof the foregoing or other variations 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 andthat actual results may vary from those in the forward-looking statements as a result of various factors. These factors include: the effectiveness of management’sstrategies and decisions; general economic and business conditions, including cyclicality and other conditions in the aerospace, automotive and other end marketswe serve; developments in technology; new or modified statutory or regulatory requirements; changing prices and market conditions; and other factors discussed inItem 1A. "Risk Factors" and elsewhere in this Report. No assurance can be given that these are all of the factors that could cause actual results to vary materiallyfrom the forward-looking statements.Readers are urged to consider these factors carefully in evaluating any forward-looking statements and are cautioned not to place undue reliance on theseforward-looking statements. The forward-looking statements included herein are made only as of the date of this Report and we undertake no obligation to updateany information contained in this Report or to publicly release any revisions to any forward-looking statements that may be made to reflect events or circumstancesthat occur, or that we become aware of, after the date of this Report except as required by law.Item 1. BusinessAvailability of InformationWe file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, any amendments to those reportsand other information with the Securities and Exchange Commission ("SEC"). You may inspect and, for a fee, copy any document that we file with the SEC at theSEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the PublicReference Room. You may also obtain the documents that we file electronically from the SEC's website at http://www.sec.gov . Our filings with the SEC are madeavailable free of charge on our website at http://www.kaiseraluminum.com as soon as reasonably practicable after we file or furnish the materials with the SEC.News releases, announcements of upcoming earnings calls and events in which our management participates or hosts with members of the investment communityand an archive of webcasts of such earnings calls and investor events and related investor presentations, are also available on our website. Information on ourwebsite is not incorporated into this Report.Business OverviewKaiser Aluminum Corporation, a Delaware corporation, manufactures and sells semi-fabricated specialty aluminum mill products for the following end marketapplications: 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 andtube) and certain cast aluminum products. The sophistication of our products is due to the metallurgy and physical properties of the metal and the specialcharacteristics that are required for particular end uses. We strategically choose to serve technically challenging applications for which we can deploy our coremetallurgical and process technology capabilities to produce highly engineered mill products with differentiated characteristics that present opportunities for us toreceive 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 strengthand other desired product attributes that cannot be achieved by common alloy rolled products. The primary end market applications of flat-rolled heat treat plateand sheet are Aero/HS products (which we sell globally) and GE products (which we predominantly sell within North America). We do not supply sheet forautomotive applications, and have chosen not to supply sheet for beverage/food can applications nor common alloy rolled products for construction or otherapplications. Although global demand for these applications is large, the product requirements are less demanding.1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 productioncapability and high product quality. We primarily serve North American demand for extruded mill products. Building and construction applications, the largestsegment of North American aluminum extrusion market, rarely require extruded products with specialized properties. Since we have strategically chosen to deployour capabilities to make differentiated products, we do not focus on building and construction applications.Our rolling mill in Spokane, Washington ("Trentwood") produces heat treat plate and sheet for aerospace and general engineering end market applications. Our11 extrusion/drawing facilities, 10 of which are in the United States and one of which is in Canada, serve aerospace, automotive or general engineeringapplications. Our consolidated Net sales in 2016 totaled approximately $1.3 billion on approximately 614.3 million pounds shipped from these 12 focusedfacilities. We employed approximately 2,760 people at December 31, 2016.A fundamental part of our business model is to remain neutral to the impact from fluctuations in the market price for aluminum, thereby earning profitpredominately from the conversion of aluminum into semi-fabricated mill products. We refer to this as metal price neutrality. We purchase primary and scrap, orrecycled, 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 ofmetal through to our customers so that we remain neutral to metal pricing. For some of our higher value added revenue products sold on a spot basis, however, thepass through of metal price movements can lag by several months, with a favorable impact to us when metal prices decline and an adverse impact to us when metalprices increase. 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 pass through and firm-price sales agreements create metal price exposure for us, which we mitigate through a hedging programwith an objective to remain metal price neutral.We have long-standing relationships with our customers, which consist primarily of blue-chip companies including leading aerospace and automotivemanufacturers, tier one aerospace and automotive suppliers and metal service centers. Approximately 50% of our shipments is sold direct to the manufacturers ortier one suppliers and approximately 50% 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 productoffering and our KaiserSelect ® products, which are engineered and manufactured to deliver enhanced product characteristics with improved consistency, so as toresult in better performance, lower waste and, in many cases, lower production cost for our customers.We further strive to enhance the efficiency of product flow to our customers and our status as supplier of choice by tightly integrating the management of theoperations within our Fabricated Products segment across multiple production facilities, product lines and target markets. Additionally, our strategy to be a supplierof choice and low cost producer is facilitated by a culture of continuous improvement that is facilitated by the Kaiser Production System ("KPS"), an integratedapplication of tools such as Lean Manufacturing, Six Sigma and Total Productive Manufacturing. Using KPS, we seek to continuously reduce our ownmanufacturing costs and eliminate waste throughout the value chain.In recent years, we have pursued significant capital spending initiatives to strengthen our competitive position by expanding manufacturing capabilities,increasing capacity, improving efficiency and enhancing product quality. The most significant of these initiatives was a series of investments that more thandoubled our capacity and expanded our manufacturing capability to produce thick gauge heat treat plate at our Trentwood facility in order to capitalize onsignificant demand growth for Aero/HS products. Additionally, we have invested to support sizable growth in demand for Automotive Extrusions by adding newextrusion presses and upgrading existing presses within our automotive manufacturing platform. Until recently, the primary goal of our capital spending wascapacity expansion, with secondary benefits of improved product quality and efficiency. More recently, to maintain and improve our position in a marketenvironment that we believe will become increasingly competitive in the coming decade, we have shifted our focus to investing primarily for continuedimprovement in our manufacturing cost efficiency from which we will also derive incremental capacity. The multi-year, $150.0 million capital investment projectat our Trentwood facility, which was announced in December 2015, is focused on equipment upgrades throughout the process flow to reduce conversion costs andincrease efficiency, further improving our competitive cost position on all products produced at Trentwood. In addition, a significant portion of the investment isfocused on modernizing the legacy equipment and process flow for thin gauge heat treat plate to achieve KaiserSelect ® quality enhancements for both Aero/HSproducts and GE products. The investments will also result in further expansion of Trentwood’s manufacturing capacity.2Because we recognize that we operate in cyclical markets, another key component of our business model is to maintain financial strength and flexibilitythroughout the business cycle so that even in economic downturns we can proactively pursue strategic growth with financial and competitive strength.Kaiser Aluminum was founded by Henry J. Kaiser in 1946 with the lease and eventual purchase of three aluminum facilities from the United StatesGovernment. Over the ensuing decades, Kaiser Aluminum grew to become a fully-integrated aluminum company involved in all aspects of the aluminum industry.From 2000 to 2010, as a result of a strategic reassessment of our competitive positions in the upstream and downstream portions of the aluminum industry, wedivested or closed our non-strategic bauxite mining, alumina refining, and primary aluminum operations and focused on downstream operations where we had acompetitive advantage. Consequently, we no longer participate in commodity segments within the aluminum industry and focus solely on the production of semi-fabricated specialty aluminum products for major suppliers and manufacturers for applications in our chosen aerospace/high strength, automotive, generalengineering and other end-markets.Business OperationsConsistent with the manner in which our chief operating decision maker reviews and evaluates our business, our Fabricated Products business is treated as asingle operating segment. In addition to the Fabricated Products segment, we have one business unit, All Other, which provides general and administrative supportfor our operations. For purposes of segment reporting under United States generally accepted accounting principles ("GAAP"), we treat the Fabricated Productssegment as its own reportable segment. All Other is not considered a reportable segment.Fabricated Products SegmentOverviewOur Fabricated Products segment focuses on producing rolled, extruded and drawn aluminum products used principally for aerospace and defense, automotiveand general engineering products that include consumer durables, electronics, electrical and machinery and equipment applications. For information regarding netsales, operating income (loss) and total assets of the Fabricated Products segment, see Note 12 of Notes to Consolidated Financial Statements included in thisReport.The table below provides shipment and sales information for our fabricated aluminum products by end market application (in millions of dollars except forshipment information and percentages): Year EndedDecember 31, 2016 2015 2014Shipments (mm lbs): Aero/HS products 243.2 40% 243.5 40% 236.9 40%Automotive Extrusions 92.9 15% 93.5 15% 78.5 13%GE products 249.9 41% 231.4 38% 223.4 38%Other products 28.3 4% 47.0 7% 50.0 9% 614.3 100% 615.4 100% 588.8 100%Sales: Aero/HS products $675.4 51% $695.5 50% $686.3 51%Automotive Extrusions 188.8 14% 199.2 14% 173.5 13%GE products 420.1 32% 426.1 31% 419.5 31%Other products 46.3 3% 71.1 5% 76.8 5% $1,330.6 100% $1,391.9 100% $1,356.1 100%Aero/HS Products. Our Aero/HS products include heat treat plate and sheet, hard alloy extruded shapes, cold finish rod and bar, seamless drawn tube and billetused for a wide variety of end uses in the global aerospace and defense industries. Typical applications are structural aircraft components that must performconsistently under extreme variations in temperature and pressure due to frequent take-offs, landings and changes in altitude. Required physical properties includehigh tensile strength, superior fatigue resistance and exceptional durability even in harsh environments. We use high-strength 2000- and 7000-series alloys andapply a variety of thermal practices to manufacture our Aero/HS products to meet the demanding specifications3required for such safety-critical applications. While competing materials such as titanium and composites have displaced aluminum for certain applications onseveral newer aircraft designs, aluminum continues to be the material used most extensively for structural aerospace and defense applications because it is lightweight, can meet demanding performance requirements and is cost effective relative to other materials. Overall, the aerospace and defense industries' consumptionof 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 or de-stocking 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/HSproducts as aircraft manufacturers have migrated to monolithic component design, where a single piece of aluminum, usually a plate, is heavily machined to form adesired part rather than creating the same part by assembling sub-components made of aluminum sheet, extrusions or forgings that are affixed to one another usingrivets, 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 otherAero/HS products.Automotive Extrusions. Automotive Extrusions consist of extruded aluminum products for many North American automotive applications. Examples of thevariety of extruded products that we supply to the automotive industry include extruded products for the body-in-white structural components, bumper systems,anti-lock braking systems and drawn tube for drive shafts. For some Automotive Extrusions, we perform limited fabrication, including sawing and cutting tolength. Demand for Automotive Extrusions is determined based upon automotive build rates in North America and increasing aluminum content. In recent years,automotive original equipment manufacturers ("OEMs") and their suppliers have, at an increasing pace, been converting many automotive components thathistorically were made of steel to aluminum to decrease weight without sacrificing structural integrity and safety performance and thereby achieve greater fuelefficiency standards mandated by stringent United States' Corporate Average Fuel Economy ("CAFE") regulations. We believe fuel efficiency standards along withconsumer preference for larger vehicles will continue to drive growth in demand for aluminum extruded components in passenger vehicles as a replacement for theheavier weight of steel components. Our Automotive Extrusions are designed and produced to provide specific mechanical properties and performance attributesrequired in automotive applications across a broad mix of North American OEMs and automotive platforms. We believe that these attributes are not easilyreplicated by our competitors and are important to our customers, who are typically tier one automotive suppliers.GE Products. Our broad portfolio of GE products consists primarily of 6000-series alloy plate, sheet, rod, bar, tube, wire and standard extruded shapes. The6000-series alloy is an extremely versatile, medium-strength, heat treatable alloy that can be both extruded and rolled. Our GE products have a wide range of usesand applications, many of which involve further fabrication for numerous transportation and other industrial end market applications where machining of plate, rodand bar is intensive. For example, our GE products are used to produce armor for military vehicles, ordnances, manufacturing cells for semiconductor production,numerous electronic devices, after-market motor sport parts, tooling plate, parts for machinery and equipment, bolts, screws, nails and rivets. Demand growth andcyclicality for GE products tend to mirror broad economic patterns and industrial activity in North America. Demand is also impacted by the destocking andrestocking of inventory throughout the supply chain.Other Products. Other products consist of extruded, drawn and cast billet aluminum products for a variety of North American industrial end uses. Demand forOther products tends to mirror broad economic patterns and industrial activity in North America.Manufacturing ProcessesWe use two main processes, flat rolling and extrusion/drawing, to produce our fabricated products in the desired forms and dimensions and with the desiredphysical properties. Both processes start by heating aluminum, a rolling ingot or extrusion billet, to an elevated temperature at which the metal is malleable andthen applying pressure in a manner that both forces the metal into a desired shape and begins the "working" of the metal to enhance its strength and relatedproperties.Flat Rolling. Our manufacturing process for aluminum flat-rolled products uses ingot, a large rectangular slab of aluminum, as the starter material. The ingot isprocessed through a series of rolling operations that can be done at elevated (hot) or room (cold) temperatures. Finishing steps may include heat treatment,annealing, stretching, leveling or slitting to achieve the desired metallurgical, dimensional and/or performance characteristics. Aluminum flat-rolled products aremanufactured in a variety of alloys, a range of tempers (hardness), gauges (thickness) and widths and various finishes. Flat-rolled aluminum semi-finished productsare classified as sheet (under 0.25 inches in thickness) or plate (0.25 inches or greater in thickness).Extrusion/Drawing. Our extrusion process begins with a cast billet, which is an aluminum cylinder of varying length and diameter. After heating the billet tomake the metal malleable, it is placed into an extrusion press and squeezed (extruded) through a die that gives the material the desired two-dimensional crosssection. The material can be quenched as it leaves the4press, or processed through a post-extrusion heat treatment cycle, to control the material’s physical properties. The extrusion is straightened, typically bystretching, and then cut to length before being hardened in aging ovens. Drawing is a fabrication operation in which extruded tubes and rods are pulled through adie, or drawn. The primary purpose of drawing is to reduce the diameter and wall thickness while improving physical properties and dimensions. Material may gothrough multiple drawing steps to achieve the final dimensional specifications. Extruded and drawn semi-fabricated products are manufactured in a variety ofalloys and a range of tempers (hardness).Additionally, some of our locations have remelt and casting operations to produce the ingot or billet for flat rolling or extrusion. To produce the ingot or billet,we purchase primary aluminum, recycled scrap aluminum segregated by alloys, and other metals (including copper, zinc and magnesium) that are necessary tocreate various aluminum alloys. We also recycle internally generated scrap from our own manufacturing processes. Initially in solid form, aluminum is heated in avessel to a temperature at which it melts. While in molten form, additional metals (aluminum alloyed scrap, alloy metals, primary aluminum or high purityaluminum) are introduced to achieve the proper mixture of chemical elements for a particular alloy. When the desired chemical composition of the molten metalhas been achieved, it is poured into a mold in which the molten metal cools in a controlled manner and solidifies into a rolling ingot or extrusion billet. The size ofthe mold determines the dimensions of the rolling ingot or extrusion billet. Our casting operations at our facilities in Kalamazoo, Michigan, London, Ontario, LosAngeles, California, Newark, Ohio and Sherman, Texas produce extrusion billet for their operations and for our other facilities that do not have casting operations.Trentwood casts rolling ingot for its own consumption.A description of the manufacturing processes and category of products at each of our production facilities at December 31, 2016 is shown below:Location Types of Products Manufacturing ProcessChandler, Arizona (Extrusion) Aero/HS, GE ExtrusionChandler, Arizona (Tube) Aero/HS Extrusion/DrawingFlorence, Alabama Aero/HS, GE, Other DrawingJackson, Tennessee Aero/HS, Auto, GE Extrusion/DrawingKalamazoo, Michigan Auto, GE ExtrusionLondon, Ontario (Canada) Auto ExtrusionLos Angeles, California GE, Other ExtrusionNewark, Ohio Aero/HS, GE Extrusion/Rod RollingRichland, Washington GE ExtrusionRichmond, Virginia (Bellwood) Auto, GE Extrusion/DrawingSherman, Texas Auto, GE, Other ExtrusionSpokane, Washington (Trentwood) Aero/HS, GE Flat RollingAs reflected by the table above, many of our facilities employ the same basic manufacturing process and produce the same types of products. We make asignificant effort to tightly integrate the management of our Fabricated Products segment across multiple manufacturing locations, product lines and end marketapplications to enhance the efficiency of product flow to customers. We centralize purchasing of our primary and scrap, or recycled, aluminum requirements andrelated alloying agents in order to better manage price, credit and other benefits. Our sales force and the management thereof are also significantly integrated asmany customers purchase a number of different products that are produced at different plant facilities. We believe that integration of our operations allows us tocapture efficiencies while allowing our facilities to remain highly focused on their specific processes and end market applications.Raw MaterialsTo make our fabricated products, we purchase primary aluminum and scrap, or recycled, aluminum from third party suppliers in varying percentagesdepending on various market factors, including price and availability. The price for primary aluminum purchased for the Fabricated Products segment is typicallybased on the Average Midwest Transaction Price ("Midwest Price"), which reflects the primary aluminum supply/demand dynamics in North America. Scrapaluminum is typically purchased at a discount to the Midwest Price but can require additional processing. The average Midwest Price is comprised of the averageLondon Metal Exchange ("LME") plus average Midwest premium. The average LME and the average Midwest Premium for 2016 , 2015 and 2014 were $0.73 +$0.07 , $0.75 + $0.13 and $0.85 + $0.20 , respectively.5In addition to selling fabricated aluminum products to third parties, certain of our production facilities supply billet, log, or other intermediate material toanother of our facilities for further value added production. As an example, our Newark, Ohio facility supplies billet and log to our Jackson, Tennessee facility.Pricing, Metal Price Risk Management and HedgingAs noted above, we purchase primary and scrap, or recycled, aluminum, our principal raw material, on a floating price basis typically based on the MidwestPrice. Our pricing of fabricated aluminum products is generally intended to lock in a conversion margin (representing the value added from the fabricationprocess(es)) and to pass metal price fluctuation through to our customers. In order to meet our objective to be metal price neutral, we manage the risk offluctuations in the price of aluminum through our pricing policies and use of financial derivatives. Our three principal pricing mechanisms are as follows:•Spot price. A majority of our customers for GE products and some of our customers for Aero/HS products pay a product price that incorporates the spotprice of primary aluminum (LME plus Midwest premium) in effect at the time of shipment to a customer. Spot prices for these products change regularlybased on competitive dynamics. Fluctuation in the underlying aluminum price is a significant factor influencing changes in competitive spot prices.Through spot pricing, we generally can pass metal price risk through to customers. For some of our higher value added revenue products sold on a spotbasis, however, the pass through of metal price movements can lag by several months, with a favorable impact to us when metal prices decline and anadverse impact to us when metal prices increase. We, from time to time, enter into hedging transactions with third parties to minimize the impact to us ofmetal price swings for these higher value added revenue products.•Index-based price. The pricing structure of our typical automotive and aerospace contracts calls for our customer to pay a product price that incorporates amonthly index-based price for primary aluminum, such as Platt’s Midwest price for primary aluminum. Index-based pricing typically allows us to passmetal price risk through to the customer and applies to virtually all of our Automotive Extrusions sales and the majority of our Aero/HS products sales.•Firm-price. Some of our customers who commit to volumes and timing of delivery pay a firm-price, creating metal price risk that we must hedge. We areable to limit exposure to metal price risks created by firm-price customer sales contracts by using third-party hedging instruments. Total fabricatedproduct shipments for which we were subject to price risk were, in millions of pounds, 213.7 , 204.6 and 138.3 during 2016 , 2015 and 2014 ,respectively.All hedging activities are managed centrally to minimize transaction costs, monitor consolidated net exposures and allow for increased responsiveness tochanges in market factors. Hedging activities are conducted in compliance with a policy approved by our Board of Directors and administered by our hedgingcommittee (members of which include our principal executive officer, principal financial officer and principal accounting officer).Sales, Marketing and DistributionIndustry sales margins for fabricated products fluctuate in response to competitive and market dynamics. Sales are made directly to customers by our salespersonnel located in the United States, Canada, Europe and China and by independent sales agents in other regions of Asia, Latin America and the Middle East.Our sales and marketing efforts are focused on the markets for Aero/HS products, Automotive Extrusions, GE products and Other products.Aero/HS Products. We sell our Aero/HS products to metal service centers, as well as directly to aerospace manufacturers and tier one suppliers. Sales are madeprimarily under contracts (with terms up to ten years) as well as on an order-by-order basis. We serve this market with a North American sales force focused onAero/HS and GE products and direct sales representatives in Western Europe and China.Automotive Extrusions. Our Automotive Extrusions are sold primarily to tier one automotive suppliers under multi-year sales agreements. Almost all sales ofAutomotive Extrusions occur through direct channels using a North American direct sales force that works closely with our technical sales support organization.GE Products. A majority of our GE products are sold to large metal service centers in North America on an order-by-order basis, with orders primarilyconsisting of standard catalog type items shipped with a relatively short lead-time. We service this market with a North American sales force focused on GE andAero/HS products.Other Products. Other products are primarily sold directly to industrial end users on an order-by-order basis using a North American direct sales force.6CustomersIn 2016 , our Fabricated Products segment had over 750 customers. Our two largest customers, Reliance Steel & Aluminum Co. ("Reliance") and The BoeingCompany ("Boeing") accounted for approximately 26% and 10% , respectively, of our net sales in 2016 . While the loss of Reliance or Boeing as customers couldhave a material adverse effect on us, we believe that our long-standing relationship with each is good and that the risk of losing either as a customer is remote. SeeNote 12 of Notes to Consolidated Financial Statements included in this Report for information about our significant concentrations.Research and DevelopmentWe operate three research and development centers. Our Rolling and Heat Treat Center and our Metallurgical Analysis Center are both located at ourTrentwood facility. The Rolling and Heat Treat Center has complete hot rolling, cold rolling and heat treat capabilities to simulate, in small lots, processing of flat-rolled products for process and product development on an experimental scale. The Metallurgical Analysis Center consists of a full metallographic laboratory and ascanning electron microscope to support research and development programs as well as respond to plant technical service requests. The third center, ourSolidification and Casting Center, is located in Newark, Ohio and has a developmental casting unit capable of casting billets and ingots for extrusion and rollingexperiments. The casting unit is also capable of casting full size billets and ingots for processing on the production extrusion presses and rolling mills. See Note 1of Notes to Consolidated Financial Statements included in this Report for information about our research and development costs.A significant amount of our research and development is devoted to product and process development within our production operations, largely focused oncontrolling the manufacturing process to improve product quality, ensure consistency and enhance one or more specific product attributes. This has resulted in thecreation and delivery of our highly differentiated KaiserSelect ® products.We hold numerous patents, trademarks, trade secrets and copyrights that relate to the design, use and marketing of products. We consider this intellectualproperty important, but no single property is material to the overall conduct of our business.All OtherAll Other provides general and administrative support to our operations. The expenses incurred in this business unit are not allocated to our other operations.All Other is not considered a reportable segment.Segment and Geographical Area Financial InformationFor information regarding our GAAP reporting segment and the geographical areas in which we operate, see Note 12 of Notes to Consolidated FinancialStatements included in this Report.CompetitionThe fabricated aluminum industry is highly competitive. We focus our fabricating operations on technically challenging applications for flat-rolled heat treatplate and sheet and extruded/drawn products that allow us to apply our core metallurgical and process technology capabilities to produce highly engineeredproducts with differentiated characteristics. We further differentiate ourselves from our competitors by providing a broad product offering and striving to deliver"Best in Class" customer satisfaction.Our primary competitors in the global market for Aero/HS products are Arconic, Inc. (previously part of Alcoa, Inc.), Constellium N.V. and AlerisCorporation. In serving our North American customers for both Automotive Extrusions and GE products, our primary competitors are Arconic, Inc. and Sapa AS,and for certain of these products, we also compete with smaller, regional participants. In North America, we also compete with general engineering heat treat plateproducts imported from South Africa, Europe and China. Some of our competitors are substantially larger, have greater financial resources and may have otherstrategic advantages.Because many of our products are used in safety critical applications, our customers have demanding standards for product quality and consistency that make itdifficult to become a qualified supplier. Suppliers must pass a rigorous qualification process to sell to both airframe and automotive manufacturers and must alsomake significant investments in infrastructure and specialized equipment to supply products for these high strength applications. Further, sophisticatedmanufacturing processes make it difficult to become a qualified supplier, even with proper equipment. For example, producing heat treat plate and sheet products,particularly for aerospace applications, requires technological expertise that only a few companies have developed through significant investment in research anddevelopment and decades of operating experience.7EmployeesAt December 31, 2016 , we employed approximately 2,760 people, of which approximately 2,700 were employed in our Fabricated Products segment andapproximately 60 were employed in our corporate group, most of whom are located in our office in Foothill Ranch, California.The table below shows each manufacturing location, the primary union affiliation, if any, and the expiration date for the current union contracts as ofDecember 31, 2016 . As indicated below, union affiliations are with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial andService Workers International Union, AFL-CIO, CLC ("USW"), International Association of Machinists ("IAM") and International Brotherhood of Teamsters("Teamsters"). See Note 12 of Notes to Consolidated Financial Statements in this Report for additional information about concentration of labor subject tocollective bargaining agreements. ContractLocation Union Expiration DateChandler, Arizona (Extrusion) Non-union —Chandler, Arizona (Tube) USW Apr 2018Florence, Alabama USW Mar 2017Jackson, Tennessee Non-union —Kalamazoo, Michigan USW Feb 2021London, Ontario (Canada) USW Canada Feb 2018Los Angeles, California Teamsters Apr 2018Newark, Ohio USW Sep 2020Richland, Washington Non-union —Richmond, Virginia (Bellwood) USW/IAM Nov 2017/Nov 2017Sherman, Texas IAM Apr 2022Spokane, Washington (Trentwood) USW Sep 2020Environmental MattersWe are subject to a number of environmental laws and regulations, to potential fines or penalties assessed for alleged breaches of the environmental laws andregulations and to potential claims and litigation based upon such laws and regulations.We have established procedures for regularly evaluating environmental loss contingencies. Our environmental accruals represent our undiscounted estimate ofcosts reasonably expected to be incurred based on presently enacted laws and regulations, existing requirements, currently available facts, existing technology andour assessment of the likely remediation actions to be taken. See Note 9 of Notes to Consolidated Financial Statements included in this Report.Legal StructureOur current corporate structure is summarized as follows:•We directly own 100% of the issued and outstanding shares of capital stock of Kaiser Aluminum Investments Company, a Delaware corporation("KAIC"), which functions as an intermediate holding company.•We directly own 100% of the ownership interest in Kaiser Aluminum Beijing Trading Company, which was formed in China for the primary purpose ofengaging in market development and commercialization and distribution of our products in Asia.8•KAIC owns 100% of the ownership interests of each of:•Kaiser Aluminum Fabricated Products, LLC, a Delaware limited liability company ("KAFP"), which directly holds the assets and liabilitiesassociated with our Fabricated Products segment (excluding those assets and liabilities associated with our London, Ontario and Chandler, Arizona(Extrusion) facilities and certain of the assets and liabilities associated with our Fabricated Products segment’s operations in the State ofWashington) and owns 100% of the ownership interest of each of:•Kaiser Aluminum Washington, LLC, a Delaware limited liability company, which holds certain of the assets and liabilities associated withour Fabricated Products segment’s operations in the State of Washington; and•Kaiser Aluminum Alexco, LLC, a Delaware limited liability company, which holds the assets and liabilities associated with our Chandler,Arizona (Extrusion) facility;•Kaiser Aluminum Canada Limited, an Ontario corporation, which holds the assets and liabilities associated with our London, Ontario facility;•Kaiser Aluminum Mill Products, Inc., a Delaware corporation, which engages in market development and commercialization and distribution ofour products in the United Kingdom;•Trochus Insurance Co., Ltd., a corporation formed in Bermuda, which has historically functioned as a captive insurance company; and•Kaiser Aluminum France, SAS, a corporation formed in France for the primary purpose of engaging in market development and commercializationand distribution of our products in Europe.DCO Management, LLC, a Delaware limited liability company, a successor by merger to Kaiser Aluminum & Chemical Corporation, was dissolved in thefourth quarter of 2016 and ceased to exist as of January 1, 2017.Item 1A. Risk FactorsThis Item may contain statements which constitute " forward-looking statements " within the meaning of the Private Securities Litigation Reform Act of 1995.See Item 1. " Business – Forward-Looking Statements " for cautionary information with respect to such forward-looking statements. Such cautionary informationshould be read as applying to all forward-looking statements wherever they appear in this Report. Forward-looking statements are not guarantees of futureperformance and involve significant risks and uncertainties. Actual results may vary from those in forward-looking statements as a result of a number of factorsincluding those we discuss in this Item and elsewhere in this Report. In addition to the factors discussed elsewhere in this Report, the risks described below arethose that we believe are material to our company. The occurrence of any of the events discussed below could significantly and adversely affect our business,prospects, financial position, results of operations and cash flows as well as the trading price of our common stock.We operate in a highly competitive industry.The fabricated products segment of the aluminum industry is highly competitive. We compete with others in the industry based upon quality, availability, price,customer service and delivery performance. Some of our competitors are substantially larger and may have greater financial resources than us. Additionally, somecompetitors may operate more facilities than we do, be geographically closer than us to our customers, employ more efficient or advanced technologies, or haveother strategic advantages. To the extent that our competitors have existing facilities or locate new production facilities in developing economies, they may have amanufacturing cost advantage compared to our facilities, which are all located in North America. Foreign competitors may sell products similar to ours at lowerprices as a result of lower manufacturing costs, currency exchange rates that periodically favor foreign competition, or dumping those products in North Americain violation of existing trade laws. Additionally, new parties may become capable of manufacturing similar products and qualifying them with our customers. Thecapability and incremental capacity for such products that these new competitors introduce to the market could lead to further competitive pricing pressure. Wemay not be able to compete by differentiating ourselves based on the quality, availability and delivery of our products or our customer service. We also may not beable to adequately reduce our selling prices or our costs to levels competitive with new or foreign competitors. Increased competition could cause a reduction inour shipment volumes, our product pricing, or both shipment volume and product pricing, any one of which could have an adverse effect on our financial position,results of operations and cash flows.9We depend on a core group of significant customers.In 2016 , Reliance and Boeing were our two largest customers, representing approximately 26% and 10% , respectively, of our net sales. Our five largestcustomers in total accounted for approximately 51% of our 2016 net sales. Most of these customers have one or more sizable sales agreements with us. If one ormore of these customers experienced a prolonged period of adverse demand, depressed business activity, or financial distress, if they breached or sought relieffrom their contractual obligations under their sales agreements with us, or if any of these customer relationships otherwise ended or materially deteriorated andsuch lost business was not successfully replaced, our financial position, results of operations and cash flows could be adversely affected.We experience fluctuation in certain costs that we cannot pass through to our customers and face pressure from our customers on pricing.We generally are unable to pass fluctuations of certain costs through to our customers, including the cost of energy, certain raw materials and freight. Further,cost cutting initiatives that many of our customers have adopted generally result in downward pressure on pricing. If we are unable to generate sufficientproductivity improvements and cost savings in the future to offset reductions in our selling prices and spikes in our costs that we cannot pass through to ourcustomers, our financial position, results of operations and cash flows could be adversely affected.Our industry is very sensitive to foreign economic, regulatory and political factors that may adversely affect our business.We import primary aluminum from, and manufacture fabricated products used in, foreign countries. Our financial position, results of operations and cash flowscould be adversely affected by numerous factors in the politically and economically diverse jurisdictions in which we operate, have customers or suppliers, or ourproducts are consumed or further fabricated. Such factors include but are not limited to:•inflation relative to the U.S. and related fluctuations in currency and interest rates;•trade disputes;•the implementation of controls on imports, exports or prices;•the adoption of new forms of taxation and duties;•the imposition of currency restrictions;•government regulation in the countries in which we operate, service customers or purchase raw materials;•civil unrest and labor problems;•the nationalization or appropriation of rights or other assets; and•acts or threats of war or terrorism;The commercial aerospace industry is cyclical and downturns in the commercial aerospace industry could adversely affect our business.We derive a significant portion of our revenue from products sold to the aerospace industry. The aerospace industry has historically been highly cyclical,driven by the demand for new commercial aircraft which is influenced by trends in airline passenger traffic and increasing global travel, normal replacement ofolder aircraft, replacement of fuel inefficient aircraft, airline industry profitability, the state of the U.S. and global economies, concerns regarding terrorism or thethreat of terrorism, concerns regarding pandemics of infectious disease, safety concerns with newly introduced aircraft, and numerous other factors, any of whichcould result in order cancellations or deferrals by the major airlines and a sharp decrease globally in new commercial aircraft deliveries. Despite existing backlogs,any one or more of these influencing factors may lead to reduced demand for new aircraft that utilize our products, which could adversely affect our financialposition, results of operations and cash flows.Reductions in demand for our products may be more severe than, and may occur prior to, reductions in demand for our customers’ products.Most of our products undergo further fabrication by other parties before being deployed in its end use. In particular, our Aero/HS products undergo numerousstages of further fabrication or assembly by a number of parties in the supply chain, often over the course of many months. The lead time from when we sell ourAero/HS product to when the finished product is installed on an aircraft often exceeds a year. Due to this long lead time, demand for our products may increaseprior to demand10for our customers' products or may decrease when our customers experience or anticipate softening demand for their products. Our customers typically meetreduced demand for their products by depleting their inventory without replenishment until their inventory falls to a new desired level. This causes a greaterreduction in demand for our products than our customers experience for their products. Further, the reduction in demand for our products can be exacerbated if ourcustomers' inventory levels had been higher than normal, if production is delayed for specific commercial airframe models, if our customers previously hadpurchased products from us at committed sales contract volumes that exceeded their actual need, or for other reasons. The amplified reduction in demand for ourproducts while our customers consume their inventory to meet their business needs (destocking) may adversely affect our financial position, results of operationsand cash flows.Reductions in defense spending for aerospace and non-aerospace military applications could adversely affect demand for our products.Our products are used in a wide variety of military applications, including military aircraft, armored vehicles and ordnance. Many military programs thatcurrently use or in the future could use our products may be subject to changes in military strategy and government priorities. Further, while many of the U.S.government programs span several years, they are often funded annually, and funding is generally subject to congressional appropriations. When U.S. and foreigngovernments are faced with competing national priorities, there can be significant pressure to reduce defense spending which could reduce the demand for ourproducts and adversely affect our financial position, results of operations and cash flows.Our customers may reduce their demand for aluminum products in favor of alternative materials.Our products compete with other materials for use in various customer applications. For instance, the commercial aerospace industry has used and continues toevaluate the further use of titanium, composites and carbon fiber materials as alternatives to aluminum to reduce aircraft weight and increase fuel efficiency.Additionally, while the automotive industry has continued to increase use of aluminum in vehicle production to reduce vehicle weight and achieve government-mandated fuel efficiency standards, manufacturers may revert to steel or other materials for certain applications. The willingness of customers to use materialsother than aluminum could adversely affect the demand for our products, particularly our Aero/HS products and Automotive Extrusions, and thus could adverselyaffect our financial position, results of operations and cash flows.Our customers may reduce their demand for our products if oil prices remain low for a protracted period of time or if the government loosens CAFEstandards.With the decline of oil prices in recent years, the economic benefits of new, more fuel efficient aircraft and automobiles are less compelling. Additionally,while government-established fuel efficiency standards have remained in place during an extended period of lower oil prices, there is a potential for those standardsto be relaxed by the Environmental Protection Agency ("EPA"). An extended period of moderate oil prices or a change in fuel efficiency standards by the EPAcould reduce demand for new aircraft and automobiles, which could adversely affect the demand for our products and have an adverse effect on our financialposition, results of operations and cash flows.Downturns in the automotive and ground transportation industries could adversely affect our business.The demand for our Automotive Extrusions and many of our general engineering and other industrial products is dependent on the production of cars, lighttrucks, SUVs and heavy duty vehicles and trailers in North America. The automotive industry is highly cyclical, as new vehicle demand is dependent on consumerspending and is tied closely to the overall strength of the North American economy. Even with the automotive industry’s growing use of aluminum to reducevehicle weight, weak demand for, or lower production of, new cars, light trucks, SUVs and heavy duty vehicles and trailers, could adversely affect the demand forour products and have an adverse effect on our financial position, results of operations and cash flows.Changes in consumer demand for particular motor vehicles could adversely affect our business.Sensitivity to fuel prices and consumer preferences can influence consumer demand for motor vehicles that have a higher content of the aluminum AutomotiveExtrusions that we supply. The loss of business with respect to, or a lack of commercial success of, one or more particular vehicle models for which we are asignificant supplier could have an adverse impact on our financial position, results of operations and cash flows.11We may experience difficulties in the launch or production ramp-up of new products which could adversely affect our business.As we ramp up manufacturing processes for newly introduced products, we may experience difficulties, including manufacturing disruptions, delays or othercomplications, which could adversely impact our ability to serve our customers, our reputation or our costs of production and ultimately, our financial position,results of operations and cash flows.Unplanned events may interrupt our production operations, which may adversely affect our business.The production of fabricated aluminum products is subject to unplanned events such as explosions, fires, inclement weather, natural disasters, accidents, labordisruptions, transportation interruptions and supply interruptions. Operational interruptions could significantly curtail the production capacity of a facility for aperiod of time. We have redundant capacity and capability to produce many of our extruded products within our manufacturing platform to mitigate our businessrisk from such interruptions, but interruptions at our Trentwood facility where our production of plate and sheet is concentrated could significantly compromise ourability to meet our customers’ needs. Delayed delivery of our products to customers who require on-time delivery from us may cause customers to purchasealternative products at a higher cost, reschedule their own production, or incur other incremental costs. Customers may be able to pursue financial claims against usfor their incremental costs, and we may incur costs to correct such problems in addition to any liability resulting from such claims. Interruptions may also harm ourreputation among actual and potential customers, potentially resulting in a loss of business. To the extent these losses are not covered by insurance, our financialposition, results of operations and cash flows may be adversely affected by such events.We may not be able to successfully implement our productivity enhancement and cost reduction initiatives that are necessary to offset competitive pricepressure.Over time, we have experienced pricing pressure on many of our products and anticipate continued pricing pressure in the future. Ongoing and heightenedcompetitive price pressure makes it increasingly important for us to be a low cost producer. Although we have undertaken and expect to continue to undertakeproductivity enhancement and cost reduction initiatives, including significant investments in our facilities to improve our manufacturing efficiency, cost andproduct quality, we cannot assure you that we will complete all of these initiatives, that we will fully realize the estimated cost savings from such activities, thatshort-to-medium term improvements from new efficiencies and lower cost structure achieved will become permanent, or that we will be able to continue to reducecost and increase productivity over the long term.Our investment and other expansion projects may not be completed, start up as scheduled or deliver the expected capacity and other benefits.Our ability to complete our investment and expansion projects and the timing and costs of doing so are subject to various risks associated with all majorconstruction projects, many of which are beyond our control, including technical or mechanical problems and economic conditions. Additionally, the start-up ofoperations after such projects have been completed can be complicated and costly. If we are unable to fully complete these projects, if the actual costs for theseprojects exceed our expectations, if the start-up phase after completion is more complicated than anticipated, or if the capacity and other benefits of these projectsare less than anticipated, our financial position, results of operations and cash flows could be adversely affected.Our business could be adversely affected by increases in the cost of aluminum.Our largest inputs to produce fabricated aluminum products are primary aluminum and scrap, or recycled, aluminum. The price of primary aluminum fluctuatesin response to global supply and demand, and scrap aluminum is priced at a discount to primary aluminum that loosens and tightens in response to regionalaluminum scrap supply and demand. The timing and magnitude of changes in the market price of primary and scrap aluminum are largely unpredictable. Ourpricing structures for fabricated aluminum products generally allow us to pass underlying metal price fluctuations through to our customers so that we canminimize our exposure to metal price risk. However, competitive dynamics for certain of our high value added products may limit the amount or delay the timingof selling price increases on our products to recover our increased aluminum costs, resulting in a time lag during which we may be partially exposed to metal pricerisk. If these events were to occur, they could have an adverse effect on our financial position, results of operations and cash flows. In addition, if the market pricefor primary aluminum were to remain high for an extended period of time, the corresponding increase in our selling price for our fabricated products may causesome of our customers to switch to other materials in lieu of our products, causing sales of our fabricated aluminum products to decrease, which could adverselyaffect our financial position, results of operations and cash flows.12Volatile pricing for commodities, including aluminum, certain alloying metals, natural gas and electricity, can cause our liquidity to decline and lead to non-cash charges in periods of declining commodity pricing.We execute a hedging strategy to reduce the risk to our business from the volatility of prices for aluminum, certain alloying metals, natural gas andelectricity. Large price declines for these commodities could cause us to incur sizable non-cash mark to market losses on our hedge positions. Also, a market pricedecline for aluminum could result in a non-cash lower-of-cost-or-market inventory charge. Besides non-cash losses, lower commodity prices could reduce ourliquidity due to lower borrowing availability under our revolving credit facility (caused by lower market value of our inventory which serves as collateral for thefacility) and potential cash required for margin calls on our hedge positions. Non-cash losses and reduced liquidity could have an adverse effect on our financialposition, results of operations and cash flows. Our hedging programs may limit the income and cash flows we would otherwise expect to receive if our hedging program were not in place and may otherwiseaffect our business.In the ordinary course of business, we enter into hedging transactions to limit our exposure to risks relating to changes in the market prices of primaryaluminum, certain alloying metals, natural gas and electricity, as well as fluctuations in foreign currency exchange rates. To the extent that market prices orexchange rates at the expiration of these hedging transactions would have been more favorable to us than the fixed prices or rates established by these hedgingtransactions, our income and cash flows will be lower than they otherwise would have been. As noted above, our liquidity could also be adversely affected to theextent we incur margin calls from our hedging counterparties due to the market price of the underlying commodity or the foreign currency exchange rates deviatingadversely from fixed, floor or ceiling prices or rates established by our outstanding hedging transactions. Our failure to satisfy certain covenants in the underlyinghedging documents or the occurrence of an event of default thereunder could also trigger margin calls that could adversely impact our liquidity, financial position,results of operations and cash flows. Our hedging programs also expose us to the creditworthiness of our hedging counterparties, which is inherently difficult toassess and can change quickly and dramatically. Non-performance by a hedging counterparty could have an adverse effect on our financial position, results ofoperations and cash flows.Covenants and events of default in our debt instruments could limit our ability to undertake certain types of transactions and adversely affect our liquidity.Our revolving credit facility and the indenture governing our 5.875% Senior Notes due 2024 ("5.875% Senior Notes") contain a number of restrictive covenantsthat impose operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions onour ability to:• incur additional indebtedness and guarantee indebtedness;• pay dividends or make other distributions or repurchase or redeem capital stock;• prepay, redeem or repurchase certain debt;• issue certain preferred stock or similar equity securities;• make loans and investments;• sell assets;• incur liens;• enter into transactions with affiliates;• alter the businesses we conduct;• enter into agreements restricting our subsidiaries' ability to pay dividends; and• consolidate, merge or sell all or substantially all of our assets.In addition, restrictive covenants in our revolving credit facility require us in certain circumstances to maintain specified financial ratios and satisfy otherfinancial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control and we may be unable to meet them.A breach of the covenants or restrictions under our revolving credit facility or under the indenture governing the 5.875% Senior Notes could result in an eventof default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt. A payment default or an acceleration followingan event of default under our revolving credit facility or our indenture for our 5.875% Senior Notes could trigger an event of default under the other indebtednessobligation as well13as any other debt to which a cross-acceleration or cross-default provision applies, which could result in the principal of and the accrued and unpaid interest on allsuch debt becoming due and payable. In addition, an event of default under our revolving credit facility could permit the lenders under our revolving credit facilityto terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay any amounts due and payable under our revolvingcredit facility, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event our lenders or noteholders accelerate therepayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. As a result of these restrictions, we may be:• limited in how we conduct our business and grow in accordance with our strategy;• unable to raise additional debt or equity financing to operate during general economic or business downturns; or• unable to compete effectively or to take advantage of new business opportunities.In addition, our financial results, our level of indebtedness and our credit ratings could adversely affect the availability and terms of any additional orreplacement financing.More detailed descriptions of our revolving credit facility and the indenture governing our 5.875% Senior Notes are included in filings made by us with theSEC, along with the documents themselves, which provide the full text of these covenants.Restrictive covenants in our debt instruments contain significant qualifications and exceptions.While our revolving credit facility and the indenture governing the 5.875% Senior Notes place limitations on our ability to pay dividends or make otherdistributions, repurchase or redeem capital stock, make loans and investments and incur additional indebtedness, investors should be aware that these limitationsare subject to significant qualifications and exceptions. The aggregate amount of payments made or incremental debt incurred in compliance with these limitationscould be substantial.As indicated above, more detailed descriptions of our revolving credit facility and the indenture governing our 5.875% Senior Notes are included in filingsmade by us with the SEC, along with the documents themselves, which provide the full text of these covenants.Servicing our debt requires a significant amount of cash and we may not have sufficient cash flow from our business to pay our debt.Our ability to make scheduled interest and principal payments on our debt obligations or to refinance such obligations depends on our financial condition andoperating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and otherfactors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the interest, principal, andpremium, if any, on our indebtedness.If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced toreduce or delay investments and capital expenditures, dispose of material assets or operations, restructure or refinance our indebtedness, or seek additional debt orequity capital. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, thosealternative actions may not allow us to meet our scheduled debt service obligations. Our revolving credit facility and the indenture governing the 5.875% SeniorNotes restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or certain forms of equitycapital to be used to repay other indebtedness when it becomes due. We may not be able to consummate asset dispositions or to obtain proceeds in an amountsufficient to meet any debt service obligations then due.If we cannot make scheduled payments on our debt, we will be in default and holders of the 5.875% Senior Notes could declare all outstanding principal andinterest to be due and payable, the lenders under our revolving credit facility could terminate their commitments to loan money, the lenders could foreclose againstthe assets securing their borrowings and we could be forced into bankruptcy or liquidation.We are a holding company and depend on our subsidiaries for cash to meet our obligations and pay any dividends.We are a holding company and conduct all of our operations through our subsidiaries, certain of which are not guarantors of our 5.875% Senior Notes or ourrevolving credit facility. Accordingly, repayments of our 5.875% Senior Notes and amounts due under our revolving credit facility are dependent on the generationof cash flow by our subsidiaries and their ability to make14such cash available to us by dividend, loan, debt repayment, or otherwise. Our subsidiaries that are not guarantors of our revolving credit facility or the 5.875%Senior Notes have no obligation to pay amounts due on the revolving credit facility or the 5.875% Senior Notes or to make funds available for that purpose. Oursubsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each of oursubsidiaries is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. Inthe event that we do not receive distributions from our subsidiaries, we may be unable to make required interest and principal payments on our revolving creditfacility, the 5.875% Senior Notes, or other indebtedness.Our inability to receive distributions from our subsidiaries, otherwise generate sufficient cash flows to satisfy our debt obligations, or refinance ourindebtedness on commercially reasonable terms or at all, would adversely affect our financial position and results of operations.Our failure to maintain satisfactory labor relations could adversely affect our business.At December 31, 2016 , approximately 63% of our employees were represented by labor unions under labor contracts with varying durations and expirationdates. Employees at our Trentwood and Newark, Ohio facilities are represented by the USW under a single contract that extends through September 2020. TheUSW also represents employees at five other facilities, two of which have contracts expiring in 2017. As part of any labor negotiation, the future wages, healthcarebenefits and any excise taxes that may result therefrom, and other benefits that we agree to, could adversely affect our future financial position, results ofoperations and cash flows. In addition, negotiations could divert management attention, result in unsatisfactory terms and conditions, fail in coming to anyagreement at all, or result in strikes, work stoppages, or other union-initiated work actions, any of which could have an adverse effect on our financial position,results of operations and cash flows. Moreover, the existence of labor agreements may not prevent such union-initiated work actions.Our participation in multi-employer union pension plans may have an adverse effect on our financial performance.We participate in several multi-employer pension plans pursuant to our collective bargaining agreements. Our contribution amounts to these plans wereestablished by collective bargaining and, along with benefit levels and related items, will be issues in our future collective bargaining negotiations. Based on themost recent information available to us, we believe some of these plans are underfunded and may require increased contributions from participating employers tofill the funding shortfall in the future. An employer that withdraws or partially withdraws from a multi-employer pension plan may incur a withdrawal liability forthe portion of the plan’s underfunding that is allocable to the withdrawing employer under very complex actuarial and allocation rules. The failure of awithdrawing employer to fund these obligations can increase the burden of the remaining participating employers to make up the funding shortfall, which couldhave an adverse effect on our financial position, results of operations and cash flows. The increase or decrease in our contributions to these multi-employer pensionplans will depend on our future collective bargaining, actions taken by trustees who manage the plans, actions of other participating employers, governmentregulations, and the actual return on assets held in the plans, among other factors.Our annual variable payment obligations to two voluntary employees beneficiary associations ("VEBAs") are linked with our profitability, which means thatnot all of our earnings will be available to our stockholders.We make annual payments to two VEBAs calculated in part on our profitability. Our obligation to the VEBA that provides benefits for eligible retireesrepresented by certain unions and their surviving spouse and eligible dependents terminates on September 30, 2017, and our final contribution will be capped at$12.8 million for the nine months ending September 30, 2017. Our obligation to the VEBA that provides benefits for certain other eligible retirees, their survivingspouse and eligible dependents has no express termination date and is capped at $2.9 million per year. As a result of these variable payment obligations, our cashflows may be reduced and not all of our earnings will be available to our stockholders.The USW has director nomination rights through which it may influence us, and interests of the USW may not align with our interests or the interests of ourstockholders, debt holders and other stakeholders.Pursuant to agreements we have with the USW, the USW has the right, subject to certain limitations, to nominate candidates which, if elected, would constitute40% of our Board of Directors through December 31, 2020. As a result, the directors nominated by the USW have a significant voice in the decisions of our Boardof Directors. It is possible that the USW may seek to extend the term of the agreement and its right to nominate board members beyond 2020.15Environmental compliance, clean up and damage claims may decrease our cash flow and adversely affect our business.We are subject to numerous environmental laws and regulations with respect to, among other things: air and water emissions and discharges; the generation,storage, treatment, transportation and disposal of solid and hazardous waste; and the release of hazardous or toxic substances, pollutants and contaminants into theenvironment. Compliance with these environmental laws is and will continue to be costly.From time to time, we may incur fines, penalties and expenses for alleged breaches of environmental laws and may be obligated to conduct investigations orperform environmental clean up activities with respect to our continuing operations and certain of our former operations. We may also be subject to claims fromgovernmental authorities or third parties related to alleged injuries to the environment, human health or natural resources, including claims with respect to wastedisposal sites, the clean up of sites currently or formerly used by us or exposure of individuals to hazardous materials. Any investigation, clean-up or otherremediation costs, fines or penalties, or costs to resolve third-party claims, may be significant and could have an adverse effect on our financial position, results ofoperations and cash flows.We have accrued and will accrue for costs relating to the above matters that are reasonably expected to be incurred based on available information. However, itis possible that actual costs may exceed, perhaps significantly, the amounts expected or accrued, or that such expenditures may occur sooner than anticipated. Inaddition, new laws or regulations or changes to existing laws and regulations may be enacted, including government mandated green initiatives and limitations oncarbon emissions, that increase the cost or complexity of compliance. Actual costs that exceed previously accrued costs or occur sooner than anticipated and newor amended laws and regulations may adversely affect our financial position, results of operations and cash flows.Governmental regulation relating to greenhouse gas emissions may subject us to significant new costs and restrictions on our operations .Laws enacted by Congress or policies of the EPA could regulate greenhouse gas emissions through cap-and-trade systems, carbon taxes or other programsunder which emitters would be required to buy allowances to offset emissions of greenhouse gas, pay carbon based taxes, make significant capital investments,alter manufacturing practices or curtail production. In addition, several states, including the state of Washington, in which we have manufacturing operations, haveconsidered and continue to consider various greenhouse gas regulation and reduction programs through legislative proposals, executive orders and ballotinitiatives. Certain of our manufacturing plants use significant amounts of electricity and natural gas and certain of our plants emit amounts of greenhouse gasabove certain minimum thresholds that have or may be imposed. Greenhouse gas regulations could restrict our access to natural gas and limit our ability to usenatural gas and increase the price we pay for natural gas and electricity, any one of which could significantly increase our costs, reduce our competitiveness in aglobal economy or otherwise adversely affect our business, operations or financial results. It is too early to predict how existing or future regulation will affect ourbusiness, operations or financial results.We may be subject to risks relating to our information technology systems.We rely on information technology systems to process, transmit and store electronic information and manage and operate our business. A breach in cybersecurity could expose us, our customers, our suppliers and our employees to risks of misuse of confidential information. A breach could also result in manipulationand destruction of data, production downtimes and operations disruptions, which in turn could adversely affect our reputation, competitive position, business orresults of operations. The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means.In addition, from time to time we may implement new technology systems or replace and/or upgrade our current information technology systems. Theseupgrades or replacements may not improve our productivity to the levels anticipated and may subject us to inherent costs and risks associated with implementing,replacing and updating these systems, including potential disruption of our internal control structure, substantial capital expenditures, demands on managementtime and other risks of delays or difficulties in transitioning to new systems or of integrating new systems into other existing systems. Our inability to preventinformation technology system disruptions or to mitigate the impact of such disruptions could have an adverse effect on us.We may not be able to utilize all of our net operating loss carryforwards.We have net operating loss carryforwards and other significant U.S. tax attributes to offset future taxable income in the United States. Our ability to fully utilizethese tax attributes, however, could be limited to the extent they expire before we fully16utilize them or if federal or certain state tax laws are changed to reduce or eliminate our ability to use net operating loss carryforwards to offset income taxes.Additionally, a change in our ownership, specifically a change in ownership of more than 50% during any period of 36 consecutive months ("ownershipchange") as determined under the Internal Revenue Code of 1986 ("Code"), could reduce our ability to fully use our net operating loss carryforwards and othersignificant tax attributes. To prevent an unintended ownership change that could compromise our tax attributes, at the 2016 annual meeting, our stockholdersapproved an amendment to our certificate of incorporation to implement new stock transfer restrictions ("Successor Transfer Restrictions") to replace restrictionsthat were scheduled to expire in July 2016. The Successor Transfer Restrictions will expire on May 26, 2019.Our stockholders also ratified a tax asset protection rights plan ("Tax Asset Rights Plan") at our 2016 annual meeting. The Tax Asset Rights Plan, which willexpire on April 7, 2019, was designed to preserve our ability to fully utilize our net operating loss carryforwards and other significant tax attributes to offset futuretaxable income. Neither the Tax Asset Rights Plan nor the Successor Transfer Restrictions, however, completely protects us from an ownership change that couldlimit our use of our net operating loss carryforwards and other valuable tax attributes.After our net operating loss carryforwards and other significant tax attributes are fully utilized or if they become unavailable to us before we fully utilize them,our future income will not be shielded from federal and state income taxation and the funds otherwise available for general corporate purposes would be reduced.We could engage in or approve transactions involving our common shares that inadvertently impair the use of our federal income tax attributes.Section 382 of the Code affects our ability to use our federal income tax attributes, including our net operating loss carryforwards, following a more than 50%change in ownership during any period of 36 consecutive months, an ownership change, as determined under the Code. Certain transactions may be included in thecalculation of an ownership change, including transactions involving our repurchase or issuance of our common shares. When we engage in or approve anytransaction involving our common shares that may be included in the calculation of an ownership change, our practice is to first perform the calculations necessaryto confirm that our ability to use our federal income tax attributes will not be affected. These calculations are complex and reflect certain necessary assumptions.Accordingly, it is possible that we could approve or engage in a transaction involving our common shares that causes an ownership change and inadvertentlyimpairs the use of our federal income tax attributes.The Tax Asset Rights Plan and Successor Transfer Restrictions implemented by us to protect our tax attributes could hinder the market for our common stock.To reduce the risk that an ownership change would jeopardize the preservation of our U.S. federal income tax attributes, including net operating losscarryforwards, for purposes of Sections 382 and 383 of the Code, we adopted the Tax Asset Rights Plan and implemented the Successor Transfer Restrictions asdiscussed above. Like the previous transfer restrictions contained in our certificate of incorporation, the Tax Asset Rights Plan and the Successor TransferRestrictions may make our stock less attractive to large institutional holders, discourage potential acquirers from attempting to take over our company, limit theprice that investors might be willing to pay for shares of our common stock and otherwise hinder the market for our common stock.The Successor Transfer Restrictions implemented by us to protect our tax attributes may void transactions in our common stock effected by 5% stockholders.The Successor Transfer Restrictions in our certificate of incorporation restrict the transfer of our equity securities if, as a result of the transfer, either any personwould become the owner of 4.99% or more of our stock as determined under Section 382 of the Code ("5% stockholder") or the percentage stock ownership of any5% stockholder would be increased. The Successor Transfer Restrictions are subject to exceptions set forth in our certificate of incorporation and will expire inaccordance with their terms on May 26, 2019. Any transfer that violates the Successor Transfer Restrictions is void and will be unwound as provided in ourcertificate of incorporation.We could engage in or approve transactions involving our common shares that adversely affect significant stockholders.Under the Successor Transfer Restrictions in our certificate of incorporation, prior to May 26, 2019, our 5% stockholders are, in effect, required, and under theTax Asset Rights Plan, prior to April 7, 2019, encouraged, to seek the approval of, or a determination by, our Board of Directors before they engage in certaintransactions involving our common stock. We could engage in or approve transactions involving our common stock that limit our ability to approve futuretransactions involving our common stock by our 5% stockholders without impairing the use of our federal income tax attributes. In addition, we could17engage in or approve transactions involving our common stock that cause stockholders owning less than 5% to become 5% stockholders, resulting in thosestockholders' having to seek the approval of, or a determination by, our Board of Directors before they could engage in certain future transactions involving ourcommon stock. For example, share repurchases reduce the number of our common shares outstanding and could cause a stockholder holding less than 5% tobecome a 5% stockholder even though it has not acquired any additional shares.The ownership of our stock is concentrated, with a few owners who may, individually or collectively, exert significant influence over us.Certain investment funds, advisers and organizations each own greater than 5% of our outstanding common stock as of December 31, 2016 . As a result, any ofthem could have significant influence over matters requiring stockholder approval, including the composition of our Board of Directors. Further, to the extent thatthe substantial stockholders were to act in concert, they could potentially control any action taken by our stockholders. This concentration of ownership could alsofacilitate or hinder proxy contests, tender offers, open market purchase programs, mergers or other purchases of our common stock that might otherwise givestockholders the opportunity to realize a premium over the then prevailing market price of our common stock or cause the market price of our common stock todecline. We cannot assure you that the interests of our major stockholders will not conflict with our interests or the interests of our other investors.Payment of dividends may not continue in the future and our payment of dividends and stock repurchases are subject to restrictions.Our Board of Directors has declared a cash dividend for each quarter since the summer of 2007. In addition, our Board of Directors has authorized a stockrepurchase program. The future declaration and payment of dividends and the ongoing purchase of our shares, if any, are at the discretion of the Board of Directorsand will depend on a number of factors, including our financial and operating results, financial position and anticipated cash requirements. We can give noassurance that dividends will be declared and paid or that dividends will not be reduced in the future. Additionally, our revolving credit facility and the indenturefor our 5.875% Senior Notes impose limitations on our ability to pay dividends and repurchase our common shares.Delaware law and our governing documents may impede or discourage a takeover, which could adversely affect the value of our common stock.Provisions of Delaware law and our certificate of incorporation and bylaws may discourage a change of control of our company or deter tender offers for ourcommon stock. We are currently subject to anti-takeover provisions under Delaware law. These anti-takeover provisions impose various impediments to the abilityof a third party to acquire control of us. Additionally, provisions of our certificate of incorporation and bylaws impose various procedural and other requirements,which could make it more difficult for stockholders to effect certain corporate actions. For example, our certificate of incorporation authorizes our Board ofDirectors to determine the rights, preferences and privileges and restrictions of unissued shares of preferred stock without any vote or action by our stockholders.As a result, our Board of Directors can authorize and issue shares of preferred stock with voting or conversion rights that could adversely affect the voting or otherrights of holders of common stock. Our certificate of incorporation also divides our Board of Directors into three classes of directors who serve for staggeredterms. A significant effect of a classified Board of Directors may be to deter hostile takeover attempts because an acquirer could experience delays in replacing amajority of directors. Moreover, stockholders are not permitted to call a special meeting. Prior to May 26, 2019, the Successor Transfer Restrictions in ourcertificate of incorporation will restrict certain transactions in our common stock involving 5% stockholders or parties who would become 5% stockholders as aresult of the transaction. The general effect of the Successor Transfer Restrictions, which were put in place to reduce the risk that an ownership change wouldjeopardize the preservation of our U.S. federal income tax attributes, including net operating loss carryforwards, is to ensure that an ownership change cannot occurin any 36-month period without the consent of our Board of Directors. These rights and provisions may have the effect of delaying or deterring a change of controlof our company and may limit the price that investors might be willing to pay in the future for shares of our common stock.In addition, to reduce the risk that an ownership change could limit our ability to fully utilize our net operating loss carryforwards and other significant taxattributes to offset future taxable income, our stockholders ratified the adoption of the Tax Asset Rights Plan, which will expire on April 7, 2019. Like the rightsand provisions described above, including the Successor Transfer Restrictions in our certificate of incorporation, the Tax Asset Rights Plan could have the effect ofdelaying or deterring a change of control of our company and may limit the price that investors might be willing to pay in the future for shares of our commonstock.18In addition to the risks discussed above, we are subject to a variety of other risks as a publicly traded U.S. manufacturing company.As a publicly traded U.S. manufacturing company, we are subject to a variety of other risks, each of which could adversely affect our financial position, resultsof operations or cash flows, or the price of our common stock. These risks include but are not limited to:•the ongoing effects of global economic uncertainty;•regulations that subject us to additional capital or margin requirements or other restrictions that make it more difficult to hedge risks associated with ourbusiness or increase the cost of our hedging activities;•the ability to attract and retain key management and other personnel and develop effective succession plans;•compliance with a wide variety of health and safety laws and regulations and changes to such laws and regulations;•disputes, legal proceedings, or investigations, whether meritorious or not, with respect to a variety of matters, including matters related to personal injury,employees, taxes, contracts and product liability;•pursuing growth through acquisitions, including the ability to identify acceptable acquisition candidates, finance and consummate acquisitions onfavorable terms and successfully integrate acquired assets or businesses;•protection of intellectual property, including patents, trademarks, trade secrets and copyrights, from infringement by others and the potential defense ofclaims, whether meritorious or not, alleging the unauthorized use of the intellectual property of others;•taxation by multiple jurisdictions and the impact of such taxation on effective tax rate and the amount of taxes paid;•modifications to the Affordable Care Act and any new or repealed legislation related to health care;•compliance with Section 404 of the Sarbanes-Oxley Act of 2002, including the potential impact of compliance failures; and•the failure to meet the expectations of investors, including as a result of factors beyond the control of an individual company.Item 1B. Unresolved Staff CommentsNone.19Item 2. PropertiesInformation regarding the location, size and ownership of our principal production facilities as of December 31, 2016 is below:Location Square footage Owned or LeasedChandler, Arizona (Extrusion) 115,000 Owned/Leased 1Chandler, Arizona (Tube) 93,000 Owned/Leased 1Florence, Alabama 252,000 OwnedJackson, Tennessee 310,000 OwnedKalamazoo, Michigan 465,000 Leased 2London, Ontario (Canada) 311,000 OwnedLos Angeles, California 183,000 OwnedNewark, Ohio 1,293,000 OwnedRichland, Washington 45,000 Leased 3Richmond, Virginia (Bellwood) 449,000 OwnedSherman, Texas 360,000 OwnedSpokane, Washington (Trentwood) 2,874,000 Owned/Leased 4Total 6,750,000 ___________________________________1. The Chandler, Arizona (Extrusion) and Chandler, Arizona (Tube) facilities are each subject to a land lease with a lease term that expires in 2023 and 2033,respectively, subject to certain extension rights held by us. The facilities are owned by us and are not subject to any leases.2. The Kalamazoo, Michigan facility is subject to a lease with a 2033 expiration date, subject to certain extension rights held by us.3. The Richland, Washington facility is subject to a lease with a 2021 expiration date.4. The Spokane, Washington facility consists of 2,753,000 square feet, which is owned by us, and 121,000 square feet, which is subject to a lease with a 2020expiration date and a renewal option subject to certain terms and conditions.Production facilities and equipment are generally in good condition and suitable for their intended uses. For additional information regarding our productionfacilities, see the table under Item 1. Business "Business Operations - Fabricated Products Segment - Types of Manufacturing Processes Employed" of this Report.Our corporate headquarters, located in Foothill Ranch, California, consists of 36,000 square feet at December 31, 2016 and is subject to a lease that expiresin 2019.Item 3. Legal ProceedingsNone.Item 4. Mine Safety DisclosuresNot applicable.20PART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket InformationOur outstanding common stock is traded on the Nasdaq Global Select Market under the ticker symbol "KALU."The following table sets forth the high and low transaction prices of our common stock for each quarterly period for fiscal years 2016 and 2015 : High LowFiscal 2016 First quarter $85.96 $70.14Second quarter $96.06 $80.75Third quarter $94.65 $80.44Fourth quarter $88.68 $69.41Fiscal 2015 First quarter $78.39 $68.42Second quarter $86.16 $75.60Third quarter $88.92 $77.92Fourth quarter $88.70 $75.61HoldersAs of February 15, 2017 , there were approximately 614 holders of record of our common stock.DividendsWe have been paying a quarterly cash dividend since the second quarter of 2007 to holders of our common stock, including holders of restricted stock, andhave increased the dividend for the last five consecutive years. Nevertheless, as in the past, the future declaration and payment of dividends, if any, will be at thediscretion of our Board of Directors and will depend on a number of factors, including our financial and operating results, financial position and anticipated cashrequirements and contractual restrictions under our revolving credit facility, the indenture for our 5.875% Senior Notes due 2024, or other indebtedness we mayincur in the future. We can give no assurance that dividends will be declared and paid in the future. See Note 3 of Notes to Consolidated Financial Statements inthis Report for additional information about restrictions on dividend payments.We also pay quarterly dividend equivalents to the holders of certain restricted stock units and to the holders of performance shares granted prior to 2014 withrespect to the target number of underlying shares of common stock (constituting approximately one-half of the maximum payout). Holders of performance sharesgranted beginning in 2014 are not paid a quarterly dividend equivalent, but instead are entitled to receive, in connection with the issuance of underlying shares ofcommon stock in respect of performance shares that ultimately vest, a one-time payment equal to the dividends such holder would have received if the number ofsuch shares of common stock so issued had been held of record by such holder from the date of grant of such performance shares through the date of such issuance.Total cash dividends (and dividend equivalents) paid in 2016 , 2015 and 2014 were $1.80 per share (or $32.4 million ), $1.60 per share (or $28.1 million ) and$1.40 per share (or $25.4 million ), respectively.On January 17, 2017 , we announced that our Board of Directors approved the declaration of a quarterly cash dividend of $ 0.50 per common share, or $8.8million (including dividend equivalents), which was paid on February 15, 2017 to stockholders of record at the close of business on January 27, 2017 .21Stock Performance GraphThe following graph compares the cumulative total shareholder return on our common stock with: (i) the Russell 2000 ® index, (ii) the S&P SmallCap 600 ®index and (iii) the S&P SmallCap 600 ® Materials index. We are a component of each of these indices. The graph assumes: (i) an initial investment of $100 as ofDecember 31, 2011 and (ii) reinvestment of all dividends. The performance graph is not necessarily indicative of the future performance of our stock price.Issuer Repurchases of Equity SecuritiesThe following table provides information regarding our repurchases of our common shares during the quarter ended December 31, 2016 : Amended and Restated 2006 Equity andPerformance Incentive Plan Stock Repurchase Plan Total Number ofShares Purchased 1 Average Price perShare Total Number ofShares Purchased 2 Average Price perShare Maximum DollarValue of Shares thatMay Yet BePurchased Under theProgram (millions) 2October 1, 2016 - October 31, 2016 — $— 82,765 $74.29 $103.4November 1, 2016 - November 30, 2016 — — 104,364 76.75 $95.4December 1, 2016 - December 31, 2016 557 77.69 86,405 80.10 $88.4Total 557 $77.69 273,534 $77.06 N/A22_________________________________________ 1. Under our Amended and Restated 2006 Equity and Performance Incentive Plan and our 2016 Equity and Incentive Compensation Plan, participants may elect tohave us withhold common shares to satisfy minimum statutory tax withholding obligations arising from the recognition of income and the vesting of restrictedstock, restricted stock units and performance shares. When we withhold these shares, we are required to remit to the appropriate taxing authorities the marketprice of the shares withheld by us on the date of withholding. The withholding of common shares by us could be deemed a purchase of such common shares. Allsuch shares withheld by us were canceled on the applicable vesting dates or dates on which income to the employees was recognized, and the number of shareswithheld was determined based on the closing price per common share as reported on the Nasdaq Global Select Market on such dates.2. In April 2015, our Board of Directors authorized an additional $100.0 million for repurchases of our common stock. Of the amounts so authorized, $88.4 millionremained available for further share repurchases as of December 31, 2016 . Repurchase transactions will occur at such times and prices as management deemsappropriate and will be funded with our excess liquidity after giving consideration to internal and external growth opportunities and future cash flows.Repurchases may be in open-market transactions or in privately negotiated transactions and the program may be modified or terminated by our Board of Directorsat any time.Item 6. Selected Financial DataThe following table represents our selected financial data. The table should be read in conjunction with Item 7. "Management’s Discussion and Analysis ofFinancial Condition and Results of Operations" and Item 8. "Financial Statements and Supplementary Data" of this Report (in millions of dollars, exceptshipments, average realized sales price and per share amounts): Year Ended December 31, 2016 2015 2014 2013 2012Shipments (mm lbs) 614.3 615.4 588.8 563.7 585.9Net sales $1,330.6 $1,391.9 $1,356.1 $1,297.5 $1,360.1Net income (loss) 1 $91.7 $(236.6) $71.8 $104.8 $85.8Net income (loss) per share - Basic $5.15 $(13.76) $4.02 $5.56 $4.49Net income (loss) per share - Diluted $5.09 $(13.76) $3.86 $5.44 $4.45Cash dividends declared per common share $1.80 $1.60 $1.40 $1.20 $1.00Capital expenditures $76.1 $63.1 $59.4 $70.4 $44.1Depreciation and amortization expense $36.0 $32.4 $31.1 $28.1 $26.5_____________________1. Net income (loss) includes the impact of removing the net assets of the voluntary employees beneficiary association that provides benefits for eligible retireesrepresented by certain unions and their surviving spouses and eligible dependents ("Union VEBA") and related deferred tax liabilities from our ConsolidatedBalance Sheets during the first quarter of 2015. See Note 6 of Notes to Consolidated Financial Statements included in this Report for further details. December 31, 2016 2015 2014 2013 2012Assets: Fabricated Products $969.4 $904.7 $878.9 $852.5 $771.2 All Other 1 474.1 342.2 860.1 911.7 972.6Total assets 1, 2 $1,443.5 $1,246.9 $1,739.0 $1,764.2 $1,743.8Cash and short-term investments $286.2 $102.5 $291.7 $299.0 $358.4Long-term borrowings (at face value), includingamounts due within one year $375.0 $197.8 $400.0 $400.0 $400.023_____________________1. Our retrospective adoption of Accounting Standards Update 2015-03 in the first quarter of 2016 resulted in a $3.2 million, $4.7 million, $6.7 million and $8.7million reclassification of debt issuance costs from Total assets to Total liabilities as of December 31, 2015, 2014, 2013 and 2012, respectively. See Note 1 ofNotes to Consolidated Financial Statements included in this Report for further details.2. The 2015 Total assets reflect the removal of the Union VEBA net assets from our Consolidated Balance Sheets during the first quarter of 2015. See Note 6 ofNotes to Consolidated Financial Statements included in this Report for further details.Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsManagement’s discussion and analysis of financial condition and results of operations ("MD&A") is designed to provide a reader of our financial statementswith a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect ourfuture results. Our MD&A is presented in the following sections:•Management Review of 2016 and Outlook for the Future;•Results of Operations;•Certain Information Related to Our Significant Tax Attributes;•Liquidity and Capital Resources;•Contractual Obligations, Commercial Commitments and Off-Balance Sheet and Other Arrangements;•Critical Accounting Estimates and Policies; and•New Accounting Pronouncements.Our MD&A should be read in conjunction with the consolidated financial statements and related notes included in Item 8. "Financial Statements andSupplementary Data" of this Report.In the discussion of operating results below, we refer to certain items 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 notrecur 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 areworthy 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 bothin 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 pricesand currency exchange rates, lower of cost or market inventory write-downs, the impact of discount rate changes on workers' compensation liabilities, legacyenvironmental expenses related to predecessor operations and gains or losses related to our voluntary employee beneficiary associations ("VEBAs"). For areconciliation of operating income (loss) excluding non-run-rate items to operating income (loss), see "Results of Operations - Segment and Business UnitInformation " below.We also provide information regarding value added revenue, which represents Net sales less the hedged cost of alloyed metal. Hedged Cost of Alloyed Metal isour Midwest Transaction Price of aluminum ("Midwest Price"), which reflects the primary aluminum supply/demand dynamics in North America, plus the cost ofalloying elements plus any realized gains and/or losses on settled hedges related to the metal sold in the referenced period. Value added revenue (including averagerealized value added revenue and value added revenue of the product categories of our Fabricated Products segment) is disclosed for the benefit of readers of ourfinancial statements. Our intent is to allow users of the financial statements to consider our Net sales information both with and without the metal cost componentthereof. For a reconciliation of value added revenue to Net sales, see "Results of Operations - Segment and Business Unit Information " below.Management Review of 2016 and Outlook for the FutureOur full year 2016 results reflected favorable market conditions, with solid demand for our aerospace and high strength products ("Aero/HS products"),automotive applications ("Automotive Extrusions") and general engineering products ("GE products") and low contained metal costs for most of the year thatenabled favorable sales margins on certain of our high value added revenue products.24Although we benefited from solid demand and low contained metal costs, our strong operating performance was the primary driver of our results. Strong salesacross our broad product offering were supported by our Best-In-Class customer satisfaction and by previous investments for quality, capacity and efficiency.Previous investments also facilitated improved manufacturing performance as our underlying manufacturing cost efficiency was a step-change improvement in2016, with record performance at several manufacturing locations. Additionally, major initiatives by our metal purchasing group and our manufacturing operationsto increase utilization of recycled aluminum scrap resulted in lower input raw material costs.During the year, we continued to execute on our capital investment program to further enhance quality and efficiency, expand capacity and sustain our strongcompetitive manufacturing capabilities. Our total capital spending in 2016 of approximately $76.1 million was focused on:•the $150.0 million five-year efficiency and modernization project at our Spokane, Washington ("Trentwood") rolling mill; and•additional investments to support automotive growth, including a new extrusion press and related equipment at our Sherman, Texas facility.The Trentwood efficiency and modernization project commenced in late 2015 to further advance our competitive cost position on all products produced atTrentwood, maintain our quality leadership position and expand our heat treat plate capacity to meet continued long-term demand growth. In addition, a significantportion of the investment will be focused on modernizing the legacy equipment and process flow for thin gauge plate to achieve KaiserSelect® qualityenhancements for these aerospace and general engineering products. Our investment activity at Trentwood in 2016 and further significant activity in 2017 willprovide Trentwood with additional capacity and enhanced cost and quality capabilities to address anticipated sales in 2018 and beyond.The capacity provided by the new press line at our Sherman, Texas facility, combined with an extrusion press line we installed at our London, Ontario facilityin 2015, allows us to meet the growing demand for our automotive applications.In addition to investments we made to support further organic growth, we returned $65.7 million to stockholders through share repurchases and dividends. Wehave increased our quarterly dividend in each of the last five consecutive years, and again, in early 2017, we increased our quarterly dividend an additional 11% to$0.50 per share.Consistent with our priorities for capital deployment, we will continue to invest proactively in initiatives for organic growth and asset integrity, seekcomplementary inorganic growth opportunities to create additional value for our stockholders and return cash to stockholders through quarterly dividends andshare repurchases.OutlookAero/HS Products. While we expect end-user demand growth for our Aero/HS products to be strong over the next three years with a solid nine-year backlogand steady commercial aircraft order rates, we expect destocking in 2017 as the commercial aerospace supply chain adjusts inventory to revised productionforecasts for larger airframes. Accordingly, we expect industry demand for our end market applications to decline approximately 5% in 2017 as destocking morethan offsets real demand growth.We view the decline in 2017 industry demand as a temporary pause in the steady, long-term demand growth trajectory for our Aerospace/HS products. Withcontinued growth in commercial aerospace builds, recovering growth for business jets and solid growth for military aircraft due to the Joint Strike Fighter andinternational demand for prior generation aircraft, we expect to emerge from 2017 with industry demand approaching 10% annual growth in both 2018 and 2019for our Aero/HS products.We are very well-positioned in the marketplace, and, despite the supply chain destocking, we expect our strong competitive position to support 2017 shipmentsfor these applications similar to 2016. However, as we have seen in prior periods of soft industry demand, we expect competitive price pressure on our non-contract business.Automotive Extrusions. For our Automotive Extrusions, we expect that North American build rates will be down approximately 1% to 2% in 2017 compared to2016, before returning to a pace in 2018 and 2019 similar to the 2016 level. However, we expect that industry demand growth for our applications will continue ata robust 6% compound annual growth rate as aluminum extrusion content increases across multiple automotive platforms to facilitate light-weighting of the vehiclefleet.As our sales for newer applications, including chassis, structures and crash management systems, have grown, our sales outlook has become more platform-specific. In 2016, our sales fell short of our expectation because of delays in the launch of25several new platforms containing our products. In 2017, while we expect double-digit growth in shipments, we anticipate single-digit growth in value addedrevenue as our product mix evolves to more lower value-added parts for the newer applications and some mature applications such as high value added drive shaftparts are redesigned.Looking longer term, we expect to continue to enjoy strong growth for aluminum extrusion content in this attractive market and remain very well-positionedwith the automotive extrusion capacity, capability, and a solid market presence to capture these growth opportunities.GE Products. We have experienced positive growth for our GE products over the past two years driven by improving, broad-based industrial demand for ourapplications. We are cautiously optimistic about continued strong demand in 2017. However, we anticipate sales margin compression on our higher value addedproducts as we continue to experience competitive price pressure from import products and see metal costs rising from lower levels experienced in 2016.Other Products. We expect to continue to redirect our resources and production capacity to focus on strategic Aero/HS products, Automotive Extrusions andGE products, and away from our other industrial products ("Other products").Overall. As we proceed with our multi-year Trentwood efficiency and modernization project, we have significant construction activity and planned equipmentoutages in the first half of 2017. Many of these planned activities are scheduled to be conducted simultaneously to minimize disruption. However, we anticipatethat our manufacturing efficiency during the first nine months of 2017 will fall short of our record 2016 performance level as a result of reduced throughput due tothese equipment outages and related disruption to our operations.We expect 2017 to be a challenging year with headwinds from the commercial aerospace supply chain inventory overhang, competitive price pressure, risingmetal costs and scheduled construction and equipment outages at Trentwood. While we believe our strong market presence will enable us to maintain strongshipment volume, in the first half we expect a 1%-3% decline in value added revenue compared to the first half of 2016 due to planned equipment downtime andthe compression of sales margins by as much as 150-250 basis points year-over-year due to competitive price pressure combined with rising contained metal costs.Planned major maintenance primarily related to the Trentwood efficiency and modernization project is also expected to be approximately $5.0 million higher in thefirst half 2017. By the end of 2017, however, we expect these headwinds will be largely behind us, and the project-related work at Trentwood this year will furtherenhance our competitive position and enable us to address strong demand anticipated in 2018 and 2019.Results of OperationsFiscal 2016 Summary•Our reported operating income for 2016 was $177.8 million , including items that we consider to be non-run-rate, which netted to a benefit of $7.3million. See " Segment and Business Unit Information " below for further discussion of our operating income before non-run-rate items.•Net income for 2016 was $91.7 million , as reported. Adjusting for the non-run-rate items as discussed above, adjusted net income was $87.1 million. See" Segment and Business Unit Information " below for additional discussion of non-run-rate items.•We had combined cash balances, short-term investments and net borrowing availability under our revolving credit facility (with no borrowings thereunderoutstanding) of approximately $561.5 million as of December 31, 2016 .•We invested $76.1 million in capital spending. See " Liquidity and Capital Resources – Capital Expenditures and Investments " below.•We paid a variable cash contribution to the VEBAs with respect to 2015 of $19.5 million and expect to pay $20.0 million to the VEBAs for the variablecontribution with respect to 2016.•We issued $375.0 million principal amount of 5.875% Senior Notes due May 2024 ("5.875% Senior Notes") in May 2016, resulting in proceeds of $368.2million, net of $6.8 million of transaction fees. Our exchange offer registration statement in connection with this issuance was declared effective by theSecurities and Exchange Commission in September 2016 and 100% of the outstanding principal amount of the original notes was tendered in exchangefor an equal aggregate principal amount of registered exchange notes.•We redeemed all our outstanding 8.25% Senior Notes due 2020 ("8.25% Senior Notes") on June 1, 2016 resulting in a cash outflow for principal,redemption premium and accrued interest of $214.2 million .26•In the second quarter of 2016, we adopted a tax asset protection rights plan ("Tax Asset Rights Plan"), which was ratified by our stockholders at our 2016annual meeting, and declared a dividend of one preferred share purchase right for each outstanding share of our common stock.•We paid a total of approximately $32.4 million , or $1.80 per common share, in cash dividends to stockholders, including holders of restricted stock, anddividend equivalents to holders of certain restricted stock units and to the holders of performance shares granted prior to 2014 with respect to the targetnumber of underlying common shares (constituting approximately one-half of the maximum payout).•We repurchased 443,838 shares of common stock in 2016 for a total cost of $34.9 million pursuant to a stock repurchase program authorized by ourBoard of Directors.Consolidated Selected Operational and Financial InformationThe following data should be read in conjunction with our consolidated financial statements and the notes thereto included in Item 8. "Financial Statements andSupplementary Data" of this Report. See Note 12 of Notes to Consolidated Financial Statements included in this Report for further information regardingsegments.Net Sales. We reported Net sales for 2016 of $1,330.6 million , compared to $1,391.9 million for 2015 and $1,356.1 million for 2014 . The decrease in Netsales during 2016 compared to 2015 primarily reflected a 4% decrease in total average realized sales price per pound due to a $0.13/lb, or 13%, decrease in averageHedged Cost of Alloyed Metal prices per pound, partially offset by a $0.04/lb, or 3%, increase in average value added revenue per pound. The increase in averagevalue added revenue per pound reflected benefits of pricing improvements on some Aero/HS products and the benefit from lower contained metal prices on somehigh value added products. Fabricated Products segment shipment volume declined slightly in 2016 compared to 2015 as lower shipments of Other products werelargely offset by an increase in shipments of GE products. Additionally, Aero/HS products and Automotive Extrusions declined slightly compared to 2015. See thetable in " Segment and Business Unit Information " below for further details.The increase in Net sales during 2015 compared to 2014 reflected a 5% increase in Fabricated Products segment shipment volume, partially offset by a 2%decrease in average realized sales price per pound. The increase in Fabricated Products segment shipment volume was primarily due to a 15.0 million pound, or19%, increase in Automotive Extrusions shipment volume, an 8.0 million pound, or 4%, increase in GE products shipment volume and a 7.0 million pound, or 3%,increase in Aero/HS products shipment volume. The increase in Automotive Extrusions shipments reflected launches of new programs at each of our automotivefacilities, including a significant ramp up of programs on the new aluminum-intensive Ford F-150 platform, as well as strong demand for certain other large vehiclemodels that we supply. The decrease in average realized sales price per pound reflected an 8% decrease in average Hedged Cost of Alloyed Metal prices perpound, partially offset by a 3% increase in average value added revenue per pound. The increase in average value added revenue per pound reflected spot pricingimprovements on some Aero/HS and GE products, the benefit from lower contained metal prices on some high value added products and a more favorableshipment mix of Aero/HS and GE products sold. See the table in " Segment and Business Unit 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 businessconducted by the Fabricated Products segment passes aluminum price changes directly onto customers and (ii) our hedging activities in support of the FabricatedProducts 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 otheritems for 2016 totaled $1,019.5 million , or 77% of Net sales, compared to $1,115.4 million , or 80% of Net sales, in 2015 and $1,117.5 million , or 82% of Netsales, in 2014 . The decrease during 2016 compared to 2015 of $95.9 million was comprised of a decrease of $84.4 million related to lower Hedged Cost ofAlloyed Metal and a decrease of $11.5 million in net manufacturing conversion and other costs. Virtually all of the $84.4 million decrease in Hedged Cost ofAlloyed Metal was due to lower hedged metal prices. The $11.5 million decrease in net manufacturing conversion and other costs reflected: (i) a $14.0 millionreduction in controllable manufacturing conversion costs from efficiency improvements; (ii) a $12.6 million reduction in costs resulting from coordinated efforts toincrease utilization of recycled scrap aluminum in lieu of more expensive primary aluminum and alloying raw materials; and (iii) a decrease of $2.3 million fromlower energy pricing. Offsetting these favorable conversion cost factors were: (i) $7.7 million of incremental costs related to a change in product mix; (ii) a $4.2million increase in workers' compensation and benefits costs and (iii) $5.4 million of LIFO and other charges. See " Segment and Business Unit Information "below for a further discussion of the comparative results of operations for 2016 and 2015.27The $2.1 million decrease from 2014 to 2015 was comprised of a $21.6 million decrease in Hedged Cost of Alloyed Metal, partially offset by $19.5 million ofhigher net manufacturing conversion and other costs. Of the $21.6 million decrease in Hedged Cost of Alloyed Metal, $49.9 million was due to lower hedged metalprices, partially offset by $28.3 million due to higher shipment volume, as discussed in " Net Sales " above. The $19.5 million increase in net manufacturingconversion and other costs reflected $11.5 million of higher conversion costs due to the impact of higher shipment volume, $7.1 million due to highermanufacturing costs largely related to start-ups of automotive programs and higher overhead costs to support automotive growth, and approximately $0.9 millionof other costs. See " Segment and Business Unit Information " below for a further discussion of the comparative results of operations for 2015 and 2014.Lower of Cost or Market Inventory Write-Down . See Note 1 of Notes to Consolidated Financial Statements included in this Report for information on ourinventory lower of cost or market value adjustments.Unrealized (Gain) Loss on Derivative Instruments. Unrealized (gain) loss on derivative instruments is primarily due to changes in underlying commodity pricesas well as derivative settlements and are related to our operational hedges. These hedges are intended to mitigate our exposure to changes in prices for certainproducts sold and consumed by us and, to a lesser extent, to mitigate our exposure to changes in foreign currency exchange rates. Unrealized (gain) loss onderivative instruments was $(18.7) million , $3.4 million and $10.4 million for 2016 , 2015 and 2014 , respectively. Unrealized gain in 2016 was comprised of a$10.8 million gain on aluminum hedge positions and a $7.9 million gain on natural gas hedge positions. See Note 10 of Notes to Consolidated Financial Statementsincluded in this Report for details on the unrealized loss (gain) on derivative instruments for 2015 and 2014.Depreciation and Amortization. Depreciation and amortization for 2016 was $36.0 million compared to $32.4 million for 2015 and $31.1 million for 2014 .Approximately $3.6 million of the increase in Depreciation and amortization in 2016 compared to 2015 was due to various construction-in-progress projects beingplaced in service during 2016 and the second half of 2015 related to capital upgrades at several of our extrusion facilities to support automotive programs that willlaunch over the next few years and other manufacturing cost efficiency and quality initiatives. Approximately $1.3 million of the increase in Depreciation andamortization expense in 2015 compared to 2014 was due to various construction-in-progress projects being placed in service during 2015 such as the capitalupgrades and other initiatives discussed above.Selling, General, Administrative, Research and Development ("SG&A and R&D"). SG&A and R&D expense totaled $105.0 million in 2016 compared to $88.1million in 2015 . The increase in 2016 was due primarily to increases of: (i) $9.1 million in our short-term incentive compensation based on improved performancemeasures; (ii) $2.3 million in our long-term incentive compensation; (iii) $1.3 million in professional fees and services; (iv) $1.4 million in managementdevelopment; and (v) a combined increase in workers' compensation, environmental costs and salaries and benefits of approximately $1.7 million. The increase inSG&A and R&D was also due to $1.2 million of insurance settlement proceeds we received during 2015.SG&A and R&D expense totaled $88.1 million in 2015 compared to $81.4 million in 2014 . The increase in 2015 was due primarily to an increase of $3.7million in employee incentive compensation and $2.5 million in salaries and benefits.Net Periodic Postretirement Benefit Cost (Income) Relating to VEBAs. The VEBAs are comprised of: (i) a VEBA that provides benefits for eligible retireesrepresented by certain unions and their surviving spouses and eligible dependents ("Union VEBA"); and (ii) a VEBA that provides healthcare related benefits forcertain other retirees and their spouse and eligible dependents ("Salaried VEBA"). Net periodic postretirement benefit cost (income) relating to the VEBAs totaled$3.4 million , $2.4 million and $(23.7) million in 2016 , 2015 and 2014 , respectively. The 2016 and 2015 cost reflected only the cost associated with the SalariedVEBA. The net periodic postretirement benefit cost relating to the Salaried VEBA was $0.6 million in 2014, which was netted against the net periodicpostretirement benefit income of the Union VEBA in 2014. The increase in the Salaried VEBA cost in 2016 and 2015 was due primarily to the actuarial impact ofincreased obligations related to changes in the annual healthcare reimbursement benefit for participants in the Salaried VEBA. The increase in cost in 2015 wasdue primarily to the removal of the net assets of the Union VEBA and related deferred tax liabilities from our consolidated financial statements during the quarterended March 31, 2015. See Note 6 of Notes to Consolidated Financial Statements included in this Report for additional information regarding the VEBAs.(Gain) Loss on Removal of Union VEBA Net Assets . Loss on removal of Union VEBA net assets in 2015 represented the removal of the Union VEBA’s planassets, related deferred tax liabilities and accumulated other comprehensive loss from our consolidated financial statements during the quarter ended March 31,2015 as a result of the definitive expiration of our obligation to make annual variable contributions to the Union VEBA for any period after September 2017. The2015 loss on removal of Union VEBA net assets of $493.4 million included: (i) a $16.8 million accrual for the 2015 variable contribution, of which $16.7 millionwas paid in the first quarter of 2016; (ii) an estimated $17.1 million accrual for the 2016 variable contribution, all of which was reported within Other accruedliabilities as of December 31, 2016 and is to be paid in 2017; and (iii) an estimated $12.8 million accrual for the 2017 variable contribution, all of which wasreported within Long-term28liabilities as of December 31, 2016 and is to be paid in 2018. The final cash payment amounts are subject to change until the close of each respective calendar year.The estimated liability for the remaining variable cash contributions will be adjusted quarterly based on our most current projections of cash flow (as defined) withthe changes reflected in our Operating income (loss). See Note 6 of Notes to Consolidated Financial Statements included in this Report for further details.Other Operating Charges, Net. Other operating charges, net, were $2.8 million , $0.1 million and $1.5 million for 2016 , 2015 and 2014 , respectively. The2016 amount primarily reflected a non-cash impairment charge of $2.6 million related to a write-off of one of our customer relationship intangible assets. See Note4 of Notes to Consolidated Financial Statements included in this Report for further details. The 2015 and 2014 amounts reflected impairment charges related toproperty, plant and equipment.Interest Expense. Interest expense represents cash and non-cash interest expense incurred on our revolving credit facility, our 5.875% Senior Notes, our 8.25%Senior Notes, which were redeemed on June 1, 2016, and our 4.5% Cash Convertible Senior Notes ("Convertible Notes"), which were settled on April 1, 2015, netof capitalized interest. Interest expense was $20.3 million , $24.1 million and $37.5 million for 2016 , 2015 and 2014 , respectively, net of $2.9 million , $1.8million and $2.5 million of interest expense capitalized as part of construction-in-progress, respectively, for the three periods. Non-cash amortization of thediscount on our Convertible Notes accounted for $2.4 million and $9.1 million of the total interest expense in 2015 and 2014 , respectively.Other (Expense) Income, Net. See Note 14 of Notes to Consolidated Financial Statements included in this Report for details.Income Tax (Provision) Benefit. The income tax provision for 2016 was $55.5 million , resulting in an effective tax rate of 37.7% . There was no materialdifference between the effective tax rate and the projected blended statutory tax rate for 2016.The income tax benefit for 2015 was $135.2 million , resulting in an effective tax rate of 36.4%. The difference between the effective tax rate and the projectedblended statutory tax rate for 2015 was primarily due to: (i) a decrease in unrecognized tax benefits, including interest and penalties, of $1.8 million, resulting in a0.5% increase in the effective tax rate; (ii) state tax rate and apportionment changes in various states resulting in an increase of $4.7 million, which resulted in a1.3% decrease in the effective tax rate; and (iii) an increase in the valuation allowance for Federal and certain state net operating losses of $2.0 million, whichresulted in a 0.5% decrease to the effective tax rate.The income tax provision for 2014 was $35.3 million , resulting in an effective tax rate of 33.0%. The difference between the effective tax rate and theprojected blended statutory tax rate for 2014 was primarily due to: (i) a decrease in unrecognized tax benefits, including interest and penalties, of $2.3 million,resulting in a 2.1% decrease in the effective tax rate; (ii) a lower state tax rate in various states resulting in a decrease of $1.6 million, which resulted in a 1.5%decrease in the effective tax rate; and (iii) a decrease in the valuation allowance for certain state net operating losses of $0.7 million, which resulted in a 0.6%decrease to the effective tax rate.Segment and Business Unit InformationConsistent with the manner in which our chief operating decision maker reviews and evaluates our business, we have one operating segment, which we refer toas Fabricated Products, that produces semi-fabricated specialty aluminum products, such as aluminum plate and sheet and extruded and drawn products, for thefollowing end market applications: Aero/HS products, Automotive Extrusions, GE products and Other products.We also have a business unit, All Other, which provides general and administrative support for our operations. For purposes of segment reporting under UnitedStates generally accepted accounting principles ("GAAP"), we treat the Fabricated Products segment as a reportable segment. All Other is not considered areportable segment.The following data should be read in conjunction with our consolidated financial statements and the notes thereto included in this Report. See Note 12 of Notesto Consolidated Financial Statements included in this Report for further information regarding segments.29Fabricated ProductsThe table below provides selected operational and financial information for our Fabricated Products segment for each period presented (in millions of dollars): Year EndedDecember 31, 2016 2015 2014Segment operating income $229.6 $190.8 $151.4Impact to segment operating income of non-run-rate items: Adjustments to plant-level LIFO 1 (0.6) 7.0 (4.0)Mark-to-market gain (loss) on derivative instruments 18.7 (3.4) (10.4)Non-cash lower of cost or market inventory write-down 2 (4.9) (2.6) —Workers’ compensation benefit (cost) due to discounting 0.3 (0.2) —Asset impairment charges (2.8) (0.1) (1.5)Environmental expenses 3 (0.1) (1.7) (1.2)Total non-run-rate items 10.6 (1.0) (17.1)Segment operating income excluding non-run-rate items $219.0 $191.8 $168.5_____________________1. 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 annualLIFO basis in accordance with GAAP on a consolidated basis. This amount represents the conversion from GAAP LIFO applied on a consolidated basis forthe Fabricated Products segment to monthly LIFO applied on a plant-by-plant basis.2. The $4.9 million lower of cost or market inventory write-down in 2016 was due primarily to a decrease in our net realizable value of inventory (less a normalprofit margin). The $2.6 million lower of cost or market inventory write-down in 2015 was due primarily to declining metal prices.3. Non-run-rate environmental expenses within Fabricated Products are related to activities that occurred at operating facilities prior to July 6, 2006, while suchfacilities were occupied by a predecessor. See Note 9 of Notes to Consolidated Financial Statements included in this Report for additional information relatingto the environmental expenses.As noted above, operating income excluding non-run-rate items for 2016 was $27.2 million higher than operating income excluding such items for 2015. Theincrease primarily reflected: (i) a $15.3 million favorable sales impact; (ii) improvement in controllable manufacturing conversion costs of $14.0 million; (iii)$12.6 million of favorable impact from coordinated efforts by our metal procurement group and manufacturing operations to increase utilization of recycled scrapaluminum in lieu of more expensive primary aluminum and alloying raw materials; and (iv) a $2.3 million benefit from lower energy prices. These favorableimpacts were partially offset by: (i) a $5.3 million increase in incentive compensation expense due to year-over-year improvement in key performance metrics andfinancial results; (ii) a $3.7 million increase in workers' compensation expense; (iii) an increase of $4.6 million in overhead and other benefits and costs; and (iv)$3.5 million of higher depreciation expense. The favorable sales impact reflected expanded sales margins due to price improvements on certain Aero/HS products,as well as lower contained metal prices on certain high value added products.Operating income excluding non-run-rate items for 2015 was $23.3 million higher than operating income excluding such items for 2014. Higher operatingincome excluding non-run-rate items primarily reflected a positive sales impact, partially offset by higher: (i) manufacturing conversion and other costs; (ii)overhead cost; (iii) other costs and (iv) depreciation expense. The positive sales impact of $33.7 million was due primarily to increased shipments of AutomotiveExtrusions, GE products and Aero/HS products and improved sales margins on certain Aero/HS and GE products reflecting improved spot pricing and lowercontained metal costs. The $1.2 million increase in manufacturing conversion and other costs was due to approximately $5.2 million of inefficiencies in ourautomotive operations as we ramped up on several new automotive programs and responded to unexpectedly strong and volatile demand, as discussed in furtherdetail in " Consolidated Results of Operations " above, largely offset by the improved manufacturing cost efficiencies in our operations other than automotive,including benefits derived from recent investments at Trentwood. Overhead cost increased $5.4 million due to additional resources to support sizable growth instrategic end markets and increased wages. Other costs increased $3.0 million due primarily to higher employee incentive compensation. Depreciation expenseincreased $1.3 million.30The table below provides shipment and value added revenue information (in millions of dollars except shipments and value added revenue per pound) for eachof the product categories (which are based on end market applications) of our Fabricated Products segment for each period presented: Year Ended December 31, 2016 2015 2014Aero/HS Products: Shipments (mmlbs) 243.2 243.5 236.9 $ $ / lb $ $ / lb $ $ / lbNet sales $675.4 $2.78 $695.5 $2.86 $686.3 $2.90Less: Hedged Cost of Alloyed Metal (208.5) (0.86) (246.4) (1.02) (256.1) (1.08)Value added revenue $466.9 $1.92 $449.1 $1.84 $430.2 $1.82 Automotive Extrusions: Shipments (mmlbs) 92.9 93.5 78.5 $ $ / lb $ $ / lb $ $ / lbNet sales $188.8 $2.03 $199.2 $2.13 $173.5 $2.21Less: Hedged Cost of Alloyed Metal (77.0) (0.83) (88.7) (0.95) (82.6) (1.05)Value added revenue $111.8 $1.20 $110.5 $1.18 $90.9 $1.16 GE Products: Shipments (mmlbs) 249.9 231.4 223.4 $ $ / lb $ $ / lb $ $ / lbNet sales $420.1 $1.68 $426.1 $1.84 $419.5 $1.88Less: Hedged Cost of Alloyed Metal (208.9) (0.83) (226.1) (0.98) (237.6) (1.07)Value added revenue $211.2 $0.85 $200.0 $0.86 $181.9 $0.81 Other Products: Shipments (mmlbs) 28.3 47.0 50.0 $ $ / lb $ $ / lb $ $ / lbNet sales $46.3 $1.64 $71.1 $1.51 $76.8 $1.54Less: Hedged Cost of Alloyed Metal (23.2) (0.82) (40.8) (0.87) (47.3) (0.95)Value added revenue $23.1 $0.82 $30.3 $0.64 $29.5 $0.59 Total: Shipments (mmlbs) 614.3 615.4 588.8 $ $ / lb $ $ / lb $ $ / lbNet sales $1,330.6 $2.17 $1,391.9 $2.26 $1,356.1 $2.30Less: Hedged Cost of Alloyed Metal (517.6) (0.85) (602.0) (0.98) (623.6) (1.06)Value added revenue $813.0 $1.32 $789.9 $1.28 $732.5 $1.24For 2016 , Net sales of Fabricated Products decreased by $61.3 million to $1,330.6 million , as compared to 2015 , primarily reflecting a 4% decrease in totalaverage realized sales price per pound and a slight decrease in Fabricated Products segment shipping. See " Consolidated Selected Operational and FinancialInformation " above for further discussion.The increase in Net sales of Fabricated Products during 2015 compared to 2014 was due primarily to a 5% increase in Fabricated Products segment shipmentvolume, partially offset by a 2% decrease in average realized sales price per pound. See " Consolidated Selected Operational and Financial Information " abovefor further discussion.31All OtherAll Other provides support for our operations and incurs general and administrative expenses that are not allocated to the Fabricated Products segment. AllOther 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 foreach period presented (in millions of dollars): Year EndedDecember 31, 2016 2015 2014Operating loss $(51.8) $(536.7) $(13.5)Impact to operating loss of non-run-rate items: Net periodic postretirement benefit (cost) income relating to the VEBAs 1 (3.4) (2.4) 23.7Gain (loss) on removal of Union VEBA net assets 1 0.1 (493.4) —Environmental expense adjustments 2 — 0.4 0.4Total non-run-rate items (3.3) (495.4) 24.1Operating loss excluding non-run-rate items $(48.5) $(41.3) $(37.6)_______________________1. See Note 6 of Notes to Consolidated Financial Statements included in this Report for additional information relating to the VEBAs.2. Non-run-rate environmental expense adjustments within All Other is related to activities that occurred at non-operating facilities prior to July 6, 2006, whilesuch facilities were occupied by a predecessor. See Note 9 of Notes to Consolidated Financial Statements included in this Report for additional informationrelating to the environmental income.All Other operating loss excluding non-run-rate items for 2016 was $7.2 million higher than in 2015 due primarily to: (i) an increase of $5.7 million inemployee incentive compensation expense and (ii) a combined increase in workers' compensation, environmental costs and salaries and benefits of approximately$1.3 million.All Other operating loss excluding non-run-rate items for 2015 was $3.7 million higher than in 2014. The increase was due primarily to an increase of $1.5million in employee long-term incentive compensation expense and $1.9 million in salaries and benefits.Certain Information Related to Our Significant Tax AttributesWe have significant federal income tax attributes, including sizable net operating loss carryforwards. Under Section 382(l)(5) ("Section 382") of the InternalRevenue Code of 1986 ("Code"), our ability to use our federal income tax attributes following a more than 50% change in ownership during any period of 36consecutive months, all as determined under the Code (an "ownership change"), would be limited annually to an amount equal to the product of: (i) the aggregatevalue of our outstanding common shares immediately prior to the ownership change and (ii) the applicable federal long-term tax exempt rate in effect on the dateof the ownership change.To preserve our ability to fully use our net operating loss carryforwards and other significant tax attributes, we have: (i) adopted the Tax Asset Rights Plan(defined in Note 5 ), which is designed to deter transfers of our common stock that could result in an ownership change pursuant to Section 382 and (ii)implemented the Successor Transfer Restrictions (defined in Note 5 ), which restrict transfers of our stock by any person who owns, or would become an owner of,4.99% or more of our stock as determined under Section 382. See Note 5 of Notes to Consolidated Financial Statements included in this Report for additionalinformation relating to the Tax Asset Rights Plan and the Successor Transfer Restrictions.32Liquidity and Capital ResourcesSummaryThe following table summarizes our liquidity at the dates presented (in millions of dollars): December 31, 2016 December 31, 2015Available cash and cash equivalents$55.2 $72.5Short-term investments231.0 30.0Net borrowing availability under Revolving Credit Facility after letters of credit275.3 280.8Total liquidity$561.5 $383.3Cash equivalents consist primarily of money market accounts and investments which, when purchased, have a maturity of 90 days or less. We place our cash inbank deposits and money market funds with high credit quality financial institutions, which invest primarily in commercial paper and time deposits of primequality, short-term repurchase agreements and U.S. government agency notes. Short-term investments represent holdings in investment-grade commercial paperand corporate bonds with a maturity of greater than 90 days.In addition to our unrestricted cash and cash equivalents described above, we have restricted cash of $12.2 million that is pledged or held as collateral inconnection with workers’ compensation requirements and certain other agreements. From time to time, such restricted funds could be returned to us or we could berequired to pledge additional cash (see Note 2 of Notes to Consolidated Financial Statements included in this Report).We and certain of our subsidiaries have a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the other financial institutions partythereto ("Revolving Credit Facility") (see Note 3 of Notes to Consolidated Financial Statements included in this Report). There were no borrowings under ourRevolving Credit Facility as of December 31, 2016 or December 31, 2015 .Cash FlowsThe following table summarizes our cash flows from operating, investing and financing activities for each period presented (in millions of dollars): Year EndedDecember 31, 2016 2015 2014Total cash provided by (used in): Operating activities: Fabricated Products $235.4 $226.4 $199.5All Other (71.1) (67.6) (75.4)Total cash provided by operating activities $164.3 $158.8 $124.1Investing activities: Fabricated Products $(75.8) $(62.4) $(58.5)All Other (200.6) 82.8 13.8Total cash (used in) provided by investing activities $(276.4) $20.4 $(44.7)Financing activities: Fabricated Products $— $— $—All Other 94.8 (284.4) (71.2)Total cash provided by (used in) financing activities $94.8 $(284.4) $(71.2)33Operating ActivitiesFabricated Products – In 2016 , Fabricated Products segment operating activities provided $235.4 million of cash. Cash provided in 2016 was primarily relatedto: (i) $229.6 million of operating income; (ii) adjustments for non-cash items and depreciation and amortization of $21.9 million; (iii) a lower of cost or marketinventory write-down of $4.9 million ; (iv) a decrease in inventory of $13.1 million; and (v) a net increase in other operating assets and liabilities of $10.5 million.Cash provided by operating activities was partially offset by an increase in accounts receivable of $26.7 million due primarily to the timing of sales and increase inmetal price.In 2015, Fabricated Products segment operating activities provided $226.4 million of cash. Cash provided in 2015 was primarily related to: (i) $190.8 million ofoperating income; (ii) adjustments for non-cash items and depreciation and amortization of $37.5 million; and (iii) a decrease in accounts receivable of $17.0million, partially offset by: (iv) an increase in inventory of $4.9 million (net of a $2.6 million lower of cost or market charge) due primarily to increased shipmentvolume; and (v) a decrease in accounts payable of $12.4 million due to the timing of payments and decreasing price of aluminum.In 2014, Fabricated Products segment operating activities provided $199.5 million of cash. Cash provided in 2014 was primarily related to: (i) $151.4 million ofoperating income; (ii) adjustments for non-cash items and depreciation and amortization of $46.4 million; and (iii) an increase in accounts payable of $20.7 milliondue to an increase in general business activities and the timing of payments. Cash provided in 2014 was partially offset by: (i) an increase in accounts receivable of$7.7 million; (ii) a $5.0 million decrease in other accrued liabilities due primarily to a decrease in accrued salaries and wages; and (iii) a $6.1 million decrease inlong-term liabilities due primarily to a decrease in workers' compensation and environmental accruals.For additional information regarding Fabricated Products operating income excluding non-run-rate items, see "Results of Operations - Segment and BusinessUnit Information " above.All Other – Cash outflow from All Other operating activities in 2016 consisted primarily of payments relating to: (i) general and administrative costs of $27.4million; (ii) an annual variable cash contribution to the VEBAs of $19.5 million with respect to the 2015 year; (iii) our short-term incentive program in the amountof $3.6 million; and (iv) interest on the 5.875% and 8.25% Senior Notes and Revolving Credit Facility of $20.6 million.Cash outflow from All Other operating activities in 2015 consisted primarily of payments relating to: (i) general and administrative costs of $25.9 million; (ii)an annual variable cash contribution to the VEBAs of $13.7 million with respect to the 2014 year; (iii) our short-term incentive program in the amount of $3.4million; (iv) interest on the Convertible Notes, 8.25% Senior Notes and Revolving Credit Facility of $22.1 million; and (v) a loss of $2.5 million on the repurchaseof our 8.25% Senior Notes.Cash outflow from All Other operating activities in 2014 consisted primarily of payments relating to: (i) general and administrative costs of $29.9 million; (ii)an annual variable cash contribution to the VEBAs of $16.0 million with respect to 2013; (iii) our short-term incentive program in the amount of $4.3 million; and(iv) interest on the Convertible Notes, 8.25% Senior Notes and Revolving Credit Facility of $25.6 million.Investing ActivitiesFabricated Products – Cash used in investing activities for Fabricated Products was $75.8 million in 2016 , compared to $62.4 million of cash used in 2015 and$58.5 million of cash used in 2014. Cash used in 2016 , 2015 and 2014 was substantially related to capital expenditures. See " Capital Expenditures andInvestments " below for additional information.All Other – Cash used in investing activities during 2016 of $200.6 million primarily consisted of $200.1 million net cash outflow in conducting investmentactivities with respect to our available for sale securities and capital expenditures of $0.5 million. Cash provided by investing activities during 2015 of $82.8million primarily consisted of proceeds from the disposition of available for sale securities. A portion of the proceeds was used to settle the Convertible Notes onApril 1, 2015. Cash provided by investing activities during 2014 of $13.8 million consisted primarily of $14.7 million net cash inflow in conducting investmentactivities with respect to our available for sale securities, partially offset by $0.9 million of capital expenditures.Financing ActivitiesFabricated Products – No cash was used in financing activities for Fabricated Products in 2016 , 2015 or 2014 .All Other – Cash provided by financing activities in 2016 was $94.8 million , representing $375.0 million in proceeds from the issuance of our 5.875% SeniorNotes and $1.2 million in proceeds from the exercise of stock options, partially offset by: (i) $206.0 million for the redemption of the 8.25% Senior Notes; (ii)$32.4 million of cash dividends paid to our stockholders,34including holders of restricted stock, and dividend equivalents paid to holders of certain restricted stock units and to holders of performance shares granted prior to2014, with respect to the target number of underlying shares of common stock (constituting approximately one-half of the maximum payout); (iii) $33.3 million ofcash used to repurchase our common stock under our stock repurchase program; (iv) $6.8 million of debt issuance costs; and (v) $2.9 million of cash used torepurchase our common stock to satisfy withholding taxes resulting from the vesting of employee restricted stock, restricted stock units and performance shares.Cash used in financing activities in 2015 was $284.4 million, representing: (i) net cash outlay of $175.0 million to settle the Convertible Notes; (ii) $49.2million of cash used to repurchase our common stock under our stock repurchase program; (iii) $28.1 million of cash dividends paid to our stockholders, includingholders of restricted stock, and dividend equivalents paid to holders of certain restricted stock units and to holders of performance shares granted prior to 2014,with respect to the target number of underlying shares of common stock (constituting approximately one-half of the maximum payout); (iv) a $30.0 millionpayment related to the repurchase of $27.2 million aggregate principal amount of our 8.25% Senior Notes; (v) $2.8 million of cash used to repurchase our commonstock to satisfy withholding taxes resulting from the vesting of employee restricted stock, restricted stock units and performance shares; and (vi) $0.6 million ofcash paid for financing costs related to the renewal of our Revolving Credit Facility. Cash used in financing activities in 2015 was partially offset by $1.3 millionof additional tax benefit in connection with the vesting of employee non-vested shares, restricted stock units and performance shares.Cash used in financing activities in 2014 was $71.2 million, representing: (i) $44.1 million of cash used to repurchase our common stock under our stockrepurchase program; (ii) $25.4 million of cash dividends paid to our stockholders, including holders of restricted stock, and dividend equivalents paid to holders ofcertain restricted stock units and to holders of performance shares granted prior to 2014, with respect to the target number of underlying shares of common stock(constituting approximately one-half of the maximum payout); and (iii) $2.4 million of cash used to repurchase our common stock to satisfy withholding taxesresulting from the vesting of employee restricted stock, restricted stock units and performance shares. Cash used in financing activities in 2014 was partially offsetby $0.8 million of additional tax benefit in connection with the vesting of employee non-vested shares, restricted stock units and performance shares.Sources of LiquidityWe believe our available cash and cash equivalents, short-term investments, borrowing availability under the Revolving Credit Facility and funds generatedfrom operations are our most significant sources of liquidity. We believe these sources will be sufficient to finance our cash requirements and our planned capitalexpenditures and investments for at least the next 12 months. Nevertheless, our ability to fund our working capital requirements, planned capital expenditures andinvestments, debt service obligations and variable cash contributions to the VEBAs will depend upon our future operating performance (which will be affected byprevailing economic conditions) and financial, business and other factors, some of which are beyond our control.The Revolving Credit Facility matures in December 2020 and provides for borrowings up to $300.0 million (subject to borrowing base limitations), of which upto a maximum of $20.0 million may be utilized for letters of credit. The Revolving Credit Facility may, subject to certain conditions and the agreement of lendersthereunder, be increased up to $400.0 million .The table below summarizes recent availability and usage of our Revolving Credit Facility (in millions of dollars except for borrowing rate): February 15, 2017 December 31, 2016Revolving Credit Facility borrowing commitment$300.0 $300.0 Borrowing base availability$297.8 $283.0Less: Outstanding borrowings under Revolving Credit Facility— —Less: Outstanding letters of credit under Revolving Credit Facility(7.7) (7.7)Net remaining borrowing availability$290.1 $275.3Borrowing rate (if applicable) 14.00% 4.00%_______________________1. Such borrowing rate, if applicable, represents the interest rate for any overnight borrowings under the Revolving Credit Facility.35We do not believe that covenants contained in the Revolving Credit Facility are reasonably likely to limit our ability to raise additional debt or equity should wechoose to do so during the next 12 months, nor do we believe it is likely that during the next 12 months we will trigger the availability threshold that would requiremeasuring and maintaining a fixed charge coverage ratio.See Note 3 of Notes to Consolidated Financial Statements included in this Report for a description of our Revolving Credit Facility.DebtSee "Contractual Obligations, Commercial Commitments and Off-Balance Sheet and Other Arrangements - Contractual Obligations and CommercialCommitments " below for mandatory principal and cash interest payments on the outstanding borrowings under the 5.875% Senior Notes. See Note 3 of Notes toConsolidated Financial Statements included in this Report for further details with respect to the 5.875% Senior Notes and the redemption of our 8.25% SeniorNotes.We do not believe that covenants in the indenture governing the 5.875% Senior Notes are reasonably likely to limit our ability to obtain additional debt orequity financing should we choose to do so during the next 12 months.Capital Expenditures and InvestmentsIn anticipation of an increasingly competitive market environment, we strategically allocate our capital spending on projects to maintain and improve ourcompetitive position. Objectives are to target significant improvement in our manufacturing cost efficiency and product quality. Capacity expansion typically is anadditional benefit of most projects focused on cost and quality.The most significant example is our Trentwood efficiency and modernization project, a multi-year, $150.0 million capital investment initiative that upgradesequipment throughout the Trentwood process flow to reduce conversion costs and increase efficiency, further improving our competitive cost position on all ofTrentwood’s products. A significant portion of this investment will focus on modernizing our legacy equipment and process flow for thin gauge plate to achieveKaiserSelect® quality enhancements for both Aero/HS and GE products. Although the primary purpose of this project is to improve cost efficiency and productquality, activity in 2016 and further significant project activity in 2017 will also position Trentwood with additional manufacturing capacity to address anticipatedsales growth in 2018 and beyond. The project was announced in 2015, represented a significant portion of our capital expenditures during 2016 and will be asizable portion of our capital spending in 2017.Total capital expenditures were $76.1 million , $63.1 million and $59.4 million for 2016 , 2015 and 2014 , respectively. The majority of our capital spendingduring 2016 was focused on the Trentwood efficiency and modernization project and investments to support automotive growth, including a new extrusion pressand related equipment at our Sherman, Texas facility. Capital spending during 2015 and 2014 included a new casting complex at our Trentwood facility to expandour rolling ingot capacity and reduce costs, spending to further expand heat treat plate capacity at Trentwood, and investments to support our automotive growth,including: (i) upgrades to existing extrusion presses at several of our automotive-focused facilities; (ii) a new extrusion press at our London, Ontario facility; and(iii) initial spending on the extrusion press at our Sherman, Texas facility. The remainder of our capital spending in 2016 , 2015 and 2014 was spread among ourmanufacturing locations on projects expected to reduce operating costs, improve quality, increase capacity or enhance operational security.In 2017, we anticipate capital spending will be approximately $80.0 million for purposes of continued spending on the Trentwood efficiency and modernizationproject and sustaining capital spending throughout the manufacturing platform. Capital investment will be funded using cash generated from operations, availablecash and cash equivalents, short-term investments, borrowings under the Revolving Credit Facility and/or other third-party financing arrangements. The level ofanticipated capital expenditures may be adjusted from time to time depending on our business plans, our price outlook for fabricated aluminum products, ourability to maintain adequate liquidity and other factors. No assurance can be provided as to the timing of any such expenditures or the operational benefits expectedtherefrom.DividendsSee Note 11 of Notes to Consolidated Financial Statements included in this Report for information regarding dividends paid during 2016 , 2015 and 2014 . SeeItem 5 of this Report for disclosure regarding the future declaration and payment of dividends.36Repurchases of Common StockSee Note 11 of Notes to Consolidated Financial Statements included in this Report for information regarding repurchases of common stock in 2016 and 2015and the amounts authorized and available for future repurchases of common stock under our stock repurchase program.See Note 8 of Notes to Consolidated Financial Statements included in this Report for information regarding minimum statutory tax withholding obligationsarising during 2016 , 2015 and 2014 in connection with the vesting of non-vested shares, restricted stock units and performance shares.Restrictions Related to Equity CapitalAs discussed in "Certain Information Related to Our Significant Tax Attributes" above and elsewhere in this Report, to preserve our ability to fully use our netoperating loss carryforwards and other significant tax attributes, we have: (i) adopted the Tax Asset Rights Plan (defined in Note 5 ), which is designed to detertransfers of our common stock that could result in an ownership change pursuant to Section 382 and (ii) implemented the Successor Transfer Restrictions (definedin Note 5 ), which restrict transfers of our stock by any person who owns, or would become an owner of, 4.99% or more of our stock as determined under Section382. The Tax Asset Rights Plan will expire on April 7, 2019, and the Successor Transfer Restrictions will expire on May 26, 2019. See Note 5 of Notes toConsolidated Financial Statements included in this Report for additional information relating to the Tax Asset Rights Plan and the Successor Transfer Restrictions.Environmental Commitments and ContingenciesSee Note 9 of Notes to Consolidated Financial Statements included in this Report for information regarding our environmental commitments and contingencies.Contractual Obligations, Commercial Commitments and Off-Balance Sheet ArrangementsContractual Obligations and Commercial CommitmentsWe are obligated to make future payments under various contracts such as long-term purchase obligations and lease agreements. We have grouped thesecontractual obligations into operating activities, investing activities and financing activities in the same manner as they are classified in our Statements ofConsolidated Cash Flows included in Item 8. "Financial Statements and Supplemental Data" in order to provide a better understanding of the nature of theobligations and to provide a basis for comparison to historical information.The following table and discussion provide a summary of our significant contractual obligations and commercial commitments at December 31, 2016 (inmillions of dollars): Payments Due by Period Total 2017 2018 2019 2020 2021 2022 andThereafterOn-Balance Sheet: Principal and interest on 5.875% Senior Notes $540.2 $22.0 $22.0 $22.0 $22.0 $22.0 $430.2Standby letters of credit 8.1 6.6 1.5 — — — —Uncertain tax liabilities 0.9 — — — — — —Deferred compensation plan liability 8.2 — — — — — —Capital leases 0.3 0.1 0.1 0.1 — — —VEBA variable contributions 32.8 20.0 12.8 — — — —Off-Balance Sheet: VEBA administrative fees 1.2 0.3 0.3 0.3 0.3 — —Purchase obligations 281.7 254.5 13.6 10.0 1.4 1.1 1.1Operating leases 44.9 6.1 5.4 5.1 2.8 2.4 23.1Commitment fees on Revolving Credit Facility 4.3 1.1 1.1 1.1 1.0 — —Total contractual obligations $922.6 $310.7 $56.8 $38.6 $27.5 $25.5 $454.437Principal and Interest on 5.875% Senior Notes. Cash outlays related to our 5.875% Senior Notes consist of our principal obligations and interest obligationsbased on scheduled interest payments.Standby Letters of Credit . Of the $8.1 million of standby letters of credit, $0.4 million are cash collateralized and $7.7 million represents letters of credit issuedunder our Revolving Credit Facility. The letters of credit provide financial assurance of our payment of obligations, primarily related to workers' compensation andenvironmental compliance. The specific timing of payments with respect to such matters is uncertain. The letters of credit generally automatically renew every 12months and terminate when the underlying obligations no longer require assurance or upon the maturity of our Revolving Credit Facility in September 2020 (forthose letters of credit issued under that facility).Uncertain Tax Liabilities . At December 31, 2016 , we had uncertain tax positions which ultimately could result in tax payments. As the amount of ultimate taxpayments beyond 2017 is contingent on the tax authorities’ assessment, it is not practical to present annual payment information.Deferred Compensation Plan Liability . The deferred compensation liability amount relates to our deferred compensation plan for certain key employees. Asthe distribution amount is contingent upon investment performance, vesting and other eligibility requirements, including retirement dates, it is not practical topresent annual payment information.Capital Leases. Capital project spending included in the preceding table represents non-cancelable capital commitments as of December 31, 2016 . We expectcapital projects to be funded through available cash generated from our operations, cash and cash equivalents, short-term investments, borrowings under ourRevolving Credit Facility and/or other third-party financing arrangements.VEBA Obligations . Our primary contractual obligations to the VEBAs are: (i) an annual variable cash contribution to the Salaried VEBA capped at $2.9million per year; (ii) the variable cash contribution to the Union VEBA, estimated to be $17.1 million, to be made in the first quarter of 2017 with respect to the2016 calendar year; (iii) the final cash contribution to the Union VEBA to be made in the first quarter of 2018 with respect to the first nine months of 2017, whichwe currently estimate at the maximum payout of $12.8 million but which remains subject to change; and (iv) annual administration fees to the VEBAs. See Note 6of Notes to Consolidated Financial Statements included in this Report for additional information regarding the VEBAs.Purchase Obligations. Cash outlays for purchase obligations consist primarily of commitments to purchase aluminum, energy and equipment. We have variouscontracts with suppliers of aluminum that require us to purchase minimum quantities of aluminum in future years at a price to be determined at the time ofpurchase based primarily on the underlying metal price at that time. Amounts included in the table are based on minimum quantities at the metal price atDecember 31, 2016 . We believe the minimum quantities are lower than our current requirements for aluminum. Actual quantities and actual metal prices at thetime of purchase could be different. Physical delivery commitments with energy companies are in place to cover our exposure to fluctuations in electricity andnatural gas prices and are based on fixed contractual rates and quantities. Equipment purchase obligations are based on scheduled payments to equipmentmanufacturers.Operating Leases . Operating leases represent multi-year obligations for certain manufacturing facilities, warehouses, office space and equipment.Commitment Fees on Revolving Credit Facility . Future commitment fees on our Revolving Credit Facility are estimated based on the amount of unused creditunder the facility at December 31, 2016 and assuming no extension of terms beyond the current maturity date of our Revolving Credit Facility, which is inDecember 2020. No borrowings were outstanding under our Revolving Credit Facility either throughout the year or as of December 31, 2016 .Other Off-Balance Sheet ArrangementsIn addition to our off-balance sheet items discussed in the contractual obligations and commercial commitments section above:•See Note 7 of Notes to Consolidated Financial Statements included in this Report for information regarding our participation in multi-employer pensionplans.•See Note 8 of Notes to Consolidated Financial Statements included in this Report for information regarding our long-term employee incentive plans.Additional equity awards are expected to be made to employees and non-employee directors in 2017 and future years.38Critical Accounting Estimates and PoliciesOur consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we are required tomake assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue and expenses and therelated disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to berelevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimatesand judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannotbe determined with certainty, actual results could differ from our assumptions and estimates and such differences could be material.In addition to the accounting estimates we discuss in Note 1 of Notes to Consolidated Financial Statements included in this Report, management believes thatthe following accounting estimates are critical to aid in fully understanding and evaluating our reported financial results and require management’s most difficult,subjective or complex judgments, resulting from the need to make estimates about the effects of matters that are inherently uncertain. Management has reviewedthese critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.Description Judgments and Uncertainties Potential Effect If Actual ResultsDiffer From AssumptionsSelf-insured workers' compensation liabilities. We are primarily self-insured for workers' compensation benefitsprovided to employees. Workers' compensation liabilities areestimated for incurred-but-not-reported claims based on judgment,using our historical claims data and information and analysisprovided by actuarial and claim advisors, our insurance carriers andother professionals. We account for accrued liability relating toworkers' compensation claims on a discounted basis. The accounting for our self-insuredworkers' compensation plan involvesestimates and judgments to determineour ultimate liability related to reportedclaims and incurred-but-not-reportedclaims. We consider our historicalexperience, severity factors, actuarialanalysis and existing stop loss insurancein estimating our ultimate insuranceliability. In addition, since recordedobligations represent the present value ofexpected payments over the life of theclaims, decreases in the discount rate(used to compute the present value of thepayments) would cause the estimatedobligations to increase. Conversely, anincrease in the discount rate would causethe estimated present value of expectedpayments to decrease. If our workers'compensation claim trends were to differsignificantly from our historic claimsexperience and as the discount ratechanges, we would make acorresponding adjustment to our workers'compensation accruals. The rate used to discount futureestimated workers' compensationliabilities is determined based on theU.S. Treasury bond rate with a five-year maturity date which resemblesthe remaining estimated life of theworkers' compensation claims. Achange in the discount rate of 1/4 of1% would impact the workers'compensation liability and operatingincome by approximately $0.3million.39Description Judgments and Uncertainties Potential Effect If Actual ResultsDiffer From AssumptionsIncome Tax. We have substantial tax attributes available to offset the impact offuture income taxes. We have a process for determining the need fora valuation allowance with respect to these attributes. The processincludes an extensive review of both positive and negative evidenceincluding our earnings history, future earnings, adverse recentoccurrences, carryforward periods, an assessment of the industry andthe impact of the timing differences.We expect to record a full statutory tax provision in future periodsand, therefore, the benefit of any tax attributes realized will onlyaffect future balance sheets and statements of cash flows.In accordance with GAAP, financial statements for interim periodsinclude an income tax provision based on the effective tax rateexpected to be incurred in the current year. Inherent within the completion of ourassessment of the need for a valuationallowance, we make significantjudgments and estimates with respect tofuture operating results, timing of thereversal of deferred tax assets and currentmarket and industry factors. In order todetermine the effective tax rate to applyto interim periods, estimates andjudgments are made (by taxablejurisdiction) as to the amount of taxableincome that may be generated, theavailability of deductions and creditsexpected and the availability of netoperating loss carryforwards or other taxattributes to offset taxable income.Making such estimates and judgments issubject to inherent uncertainties giventhe difficulty of predicting future taxrates, market conditions, customerrequirements, the cost for key inputssuch as energy and primary aluminum,overall operating efficiency and otherfactors. However, if, among other things:(i) actual results vary from our forecastsdue to one or more of the factors citedabove or elsewhere in this Report;(ii) income is distributed differently thanexpected among tax jurisdictions; (iii)one or more material events ortransactions occur which were notcontemplated; or (iv) certain expecteddeductions, credits or carryforwards arenot available, it is possible that theeffective tax rate for a year could varymaterially from the assessments used toprepare the interim consolidated financialstatements. See Note 5 of Notes toConsolidated Financial Statementsincluded in this Report for additionaldiscussion of these matters. Although we believe that thejudgments and estimates discussedherein are reasonable, actual resultscould differ and we may be exposedto losses or gains that could bematerial. A change in our effectivetax rate by 1% would have had animpact of approximately$1.5 million to Net income for theyear ended December 31, 2016. 40Description Judgments and Uncertainties Potential Effect If Actual ResultsDiffer From AssumptionsAcquisitions, Goodwill and Intangible Assets. We accounted for acquisitions using the acquisition method ofaccounting, which requires the assets acquired and liabilitiesassumed to be recorded at the date of acquisition at their respectiveestimated fair values.We recognize goodwill as of the acquisition date, as a residual overthe fair values of the identifiable net assets acquired. Goodwill istested for impairment on an annual basis as well as on an interimbasis as events and changes in circumstances occur.Definite-lived intangible assets acquired are amortized over theestimated useful lives of the respective assets, to reflect the pattern inwhich the economic benefits of the intangible assets are consumed.In the event the pattern cannot be reliably determined, we use astraight-line amortization method. Whenever events or changes incircumstances indicate that the carrying amount of the intangibleassets may not be recoverable, the intangible assets will be reviewedfor impairment. The judgments made in determining theestimated fair value assigned to eachclass of assets acquired and liabilitiesassumed, as well as asset lives, cansignificantly impact our results ofoperations. Fair values and useful livesare determined based on, among otherfactors, the expected future period ofbenefit of the asset, the variouscharacteristics of the asset, projectedcash flows and the rate used indiscounting those cash flows. As thedetermination of an asset’s fair value anduseful life involves management makingcertain estimates and because theseestimates form the basis for thedetermination of whether or not animpairment charge should be recorded,these estimates are considered to becritical accounting estimates. We do not believe there is areasonable likelihood that there willbe a material change in theestimates or assumptions we use toestimate the fair value of goodwilland intangible assets. Additionally,as of December 31, 2016, we do notbelieve any of our reporting unitsare at risk of failing step one of thetwo-step goodwill impairment test.However, if actual results are notconsistent with our estimates andassumptions used in estimatingfuture cash flows and fair valuesassigned to each class of assetsacquired and liabilities assumed, wemay be exposed to losses fromimpairment charges that could bematerial. 41Description Judgments and Uncertainties Potential Effect If Actual ResultsDiffer From AssumptionsSalaried VEBA. At December 31, 2016, our financial statements include the SalariedVEBA, which we are required to reflect on our financial statementsas a defined benefit postretirement plan, despite our limited legalobligations to the Salaried VEBA in regards to that plan. Liabilitiesand expenses for postretirement benefits are determined usingactuarial methodologies and incorporate significant assumptions,including the rate used to discount the future estimated liability, thelong-term rate of return ("LTRR") on plan assets and severalassumptions relating to the employee workforce (i.e. retirement ageand mortality). The most significant assumptions used in determiningthe estimated year-end obligations include the assumed discount rateand the LTRR.In addition to the above assumptions used in the actuarial valuation,changes in plan provisions could also have a material impact on thenet funded status of the Salaried VEBA. Our obligation to theSalaried VEBA is to pay an annual variable contribution amountbased on the level of our cash flow. The funding status of theSalaried VEBA has no impact on our annual variable contributionamount. We have no control over any aspect of the plan. We rely oninformation provided to us by the Salaried VEBA administrator withrespect to specific plan provisions such as annual benefits expectedto be paid. See Note 6 of Notes to Consolidated Financial Statementsincluded in this Report for additional information on our benefitplans. Since the recorded obligation representsthe present value of expectedpostretirement benefit payments over thelife of the plan, decreases in the discountrate (used to compute the present valueof the payments) would cause theestimated obligation to increase.Conversely, an increase in the discountrate would cause the estimated presentvalue of the obligation to decline. The LTRR on plan assets reflects anassumption regarding what the amount ofearnings would be on existing plan assets(before considering any futurecontributions to the plan). Increases inthe assumed LTRR would cause theprojected value of plan assets available tosatisfy postretirement obligations toincrease, yielding a reduced net expenseof these obligations. A reduction in theLTRR would reduce the amount ofprojected net assets available to satisfypostretirement obligations and, thus,cause the net expense of theseobligations to increase. A change in plan provisions could causethe estimated obligations to change. Anincrease in annual benefits expected to bepaid would increase the estimatedpresent value of the obligations andconversely, a decrease in annual benefitsexpected to be paid would decrease theestimated present value of theobligations. The rate used to discount futureestimated liabilities is determinedtaking into consideration the ratesavailable at year-end on debtinstruments that could be used tosettle the obligations of the plan. Inrelation to the Salaried VEBA, achange in the discount rate of 1/4 of1% would impact the accumulatedpostretirement benefit obligation byapproximately $1.9 million, impactservice and interest costs by $0.1million and have an immaterialimpact on 2017 expense. The LTRRon plan assets is estimated byconsidering historical returns andexpected returns on current andprojected asset allocations. Achange in the assumption for LTRRon plan assets of 1/4 of 1% wouldimpact expense by approximately$0.1 million in 2017.New Accounting PronouncementsFor a discussion of all recently adopted and recently issued but not yet adopted accounting pronouncements, see Note 1 of Notes to Consolidated FinancialStatements included in this Report.42Item 7A. Quantitative and Qualitative Disclosures About Market RiskOur operating results are sensitive to changes in the prices of primary aluminum and fabricated aluminum products and also depend to a significant degreeupon the volume and mix of all products sold. As discussed more fully in Note 10 of Notes to Consolidated Financial Statements included in this Report, we havehistorically utilized hedging transactions to lock in a specified price or range of prices for certain products which we sell or consume in our production process andto mitigate our exposure to changes in energy prices and foreign currency exchange rates.AluminumSee Note 10 of Notes to Consolidated Financial Statements included in this Report for a discussion of our pricing of fabricated aluminum, firm-pricearrangements and third-party hedging instruments.In 2016 , 2015 and 2014 , settlements of derivative contracts covering 213.7 million pounds, 204.6 million pounds and 138.3 million pounds, respectively,hedged Fabricated Products shipments sold on pricing terms that created metal price risk for us. At December 31, 2016 , we had derivative contracts with respect toapproximately 114.3 million pounds, 25.9 million pounds and 8.4 million pounds to hedge sales to be made in 2017 , 2018 and 2019 , respectively, on pricingterms that create metal price risk for us.Based on the aluminum derivative positions held by us to hedge firm-price customer sales agreements, we estimate that a $0.10 per pound decrease in theLondon Metal Exchange ("LME") market price of aluminum as of December 31, 2016 and December 31, 2015 , with all other variables held constant, would haveresulted in an unrealized mark-to-market loss of $14.8 million and $12.9 million , respectively, with corresponding changes to the net fair value of our aluminumderivative positions. Additionally, we estimate that a $0.01 per pound decrease in the Midwest premium for aluminum as of December 31, 2016 and December 31,2015 , with all other variables held constant, would have resulted in an unrealized mark-to-market loss of $1.5 million and $0.8 million , respectively.Alloying MetalsWe are exposed to the risk of fluctuating prices of certain alloying metals, especially copper and zinc, to the extent that changes in their prices do not highlycorrelate with price changes for aluminum. Copper, zinc and certain other metals are used in our remelt operations to cast rolling ingot and extrusion billet with theproper chemistry for our products. From time to time, we enter into forward contract swaps with third parties to mitigate our risk from fluctuations in the prices ofalloying metals, including copper and zinc. As of December 31, 2016 , we had forward swap contracts with settlement dates designed to align with the timing ofscheduled purchases of zinc ("Alloy Hedges") by our manufacturing facilities. Our Alloy Hedges are designated and qualify as cash flow hedges. See Note 10 ofNotes to Consolidated Financial Statements included in this Report for additional information relating to these Alloy Hedges. We estimate that a $.10 per pounddecrease in the LME market price of zinc as of December 31, 2016 , with all other variables held constant, would have resulted in an unrealized mark-to marketloss of $0.4 million with corresponding changes to the net fair value of our Alloy Hedges.EnergyWe 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 hedgingtransactions and/or physical delivery commitments with third parties to mitigate our risk from fluctuations in natural gas and electricity prices.As of December 31, 2016 , we had derivative and/or physical delivery commitments with energy companies in place to cover our exposure to fluctuations innatural gas prices for approximately 73% , 72% and 49% of the expected natural gas purchases for 2017 , 2018 and 2019 , respectively. We estimate that a $1.00per mmbtu decrease in natural gas prices as of December 31, 2016 and December 31, 2015 would have resulted in an unrealized mark-to-market loss of $5.0million and $7.0 million , respectively, with corresponding changes to the net fair value of our natural gas derivative positions.Additionally, as of December 31, 2016 , we had physical delivery commitments with energy companies, in place to cover our exposure to fluctuations inelectricity prices for approximately 54% , 54% and 36% of the expected electricity purchases for 2017 , 2018 and 2019 .43Foreign CurrencyOur primary foreign exchange exposure is the operating costs of our London, Ontario facility. A 10% change in the Canadian dollar exchange rate is estimatedto have an annual operating cost impact of $1.5 million . Additionally, as of December 31, 2016 , we had cash commitments outstanding for equipment purchasesdenominated in euros, of which we have hedged our exposure to currency exchange rate fluctuations by entering into foreign currency forward contracts withsettlement dates designed to line up with the timing of scheduled payments to the foreign equipment manufacturers. With the exception of two forward contractsthat became ineffective in the fourth quarter of 2016, our foreign currency derivative instruments are designated and qualify as cash flow hedges; therefore,periodic gains and losses related to market value adjustments are deferred in Accumulated other comprehensive loss until depreciation on the underlyingequipment commences. Periodic gains and losses related to market value adjustments on non-designated foreign currency forward contracts are recorded withinOther (expense) income, net. See Note 10 of Notes to Consolidated Financial Statements included in this Report for additional information relating to these foreigncurrency forward contracts. As of December 31, 2016 , we hedged our equipment purchase transactions denominated in euros using forward contracts withsettlement dates through August 2017 . We estimate that a 10% decrease in the December 31, 2016 exchange rate of euros to US dollars would have resulted in anunrealized mark-to-market loss of $0.1 million .44KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESItem 8. Financial Statements and Supplementary DataReport of Independent Registered Public Accounting Firm46 Consolidated Balance Sheets47 Statements of Consolidated Income (Loss)48 Statements of Consolidated Comprehensive Income (Loss)49 Statements of Consolidated Stockholders’ Equity50 Statements of Consolidated Cash Flows51 Notes to Consolidated Financial Statements5245KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders ofKaiser Aluminum CorporationFoothill Ranch, CaliforniaWe have audited the accompanying consolidated balance sheets of Kaiser Aluminum Corporation and Subsidiary Companies (the “Company”) as of December 31,2016 and 2015, and the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity, and cash flows for each of the threeyears in the period ended December 31, 2016. We also have audited the Company’s internal control over financial reporting as of December 31, 2016, based oncriteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. TheCompany’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for itsassessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on internal control overfinancial reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control overfinancial reporting based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement and whethereffective internal control over financial reporting was maintained, in all material respects. Our audits of the consolidated financial statements included examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimatesmade by management, and evaluating the overall consolidated financial statement presentation. Our audit of internal control over financial reporting includedobtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures, as we considered necessary in thecircumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive and principalfinancial officers, or persons performing similar functions, and effected by the Company’s board of directors, management, and other personnel to providereasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordancewith accounting principles generally accepted in the United States of America (“generally accepted accounting principles”). A company’s internal control overfinancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation ofconsolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being madeonly in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls,material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of theinternal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or thatthe degree of compliance with the policies or procedures may deteriorate.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2016 and 2015, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2016, in conformitywith generally accepted accounting principles. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financialreporting as of December 31, 2016, based on the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of SponsoringOrganizations of the Treadway Commission./s/ DELOITTE & TOUCHE LLPCosta Mesa, CaliforniaFebruary 22, 201746KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESCONSOLIDATED BALANCE SHEETS December 31, 2016 December 31, 2015 (In millions of dollars, except share and pershare amounts)ASSETS Current assets: Cash and cash equivalents $55.2 $72.5Short-term investments 231.0 30.0Receivables: Trade receivables – net 137.7 116.7Other 11.9 6.1Inventories 201.6 219.6Prepaid expenses and other current assets 1 18.5 56.7Total current assets 655.9 501.6Property, plant and equipment – net 530.9 495.4Deferred tax assets – net 1, 2 159.7 162.6Intangible assets – net 26.4 30.5Goodwill 37.2 37.2Other assets 1 33.4 19.6Total $1,443.5 $1,246.9LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $75.8 $76.7Accrued salaries, wages and related expenses 49.1 39.8Other accrued liabilities 39.9 52.7Short-term capital leases 0.2 0.1Total current liabilities 165.0 169.3Net liabilities of Salaried VEBA 28.6 19.0Deferred tax liabilities 3.3 2.1Long-term liabilities 73.2 87.5Long-term debt 1 368.7 194.6Total liabilities 638.8 472.5Commitments and contingencies – Note 9 Stockholders’ equity: Preferred stock, 5,000,000 shares authorized at both December 31, 2016 and December 31, 2015; no shares were issued andoutstanding at December 31, 2016 and December 31, 2015 — —Common stock, par value $0.01, 90,000,000 shares authorized at both December 31, 2016 and December 31, 2015;22,332,732 shares issued and 17,651,461 shares outstanding at December 31, 2016; 22,291,180 shares issued and18,053,747 shares outstanding at December 31, 2015 0.2 0.2Additional paid in capital 2 1,047.4 1,036.5Retained earnings 2 75.2 15.9Treasury stock, at cost, 4,681,271 shares at December 31, 2016 and 4,237,433 shares at December 31, 2015 (281.4) (246.5)Accumulated other comprehensive loss (36.7) (31.7)Total stockholders’ equity 804.7 774.4Total $1,443.5 $1,246.9____________1. See Note 1 for discussion of our adoption of ASU 2015-03 and ASU 2015-17 (as defined in Note 1 ).2. See Note 5 and Note 8 for discussion of our adoption of ASU 2016-09 (as defined in Note 1 ).The accompanying notes to consolidated financial statements are an integral part of these statements.47KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESSTATEMENTS OF CONSOLIDATED INCOME (LOSS) Year Ended December 31, 2016 2015 2014 (In millions of dollars, except share and per share amounts)Net sales $1,330.6 $1,391.9 $1,356.1Costs and expenses: Cost of products sold: Cost of products sold, excluding depreciation and amortization and other items 1,019.5 1,115.4 1,117.5Lower of cost or market inventory write-down 4.9 2.6 —Unrealized (gain) loss on derivative instruments (18.7) 3.4 10.4Depreciation and amortization 36.0 32.4 31.1Selling, general, administrative, research and development: Selling, general, administrative, research and development 105.0 88.1 81.4Net periodic postretirement benefit cost (income) relating to VEBAs – Note 6 3.4 2.4 (23.7)(Gain) loss on removal of Union VEBA net assets – Note 6 (0.1) 493.4 —Total selling, general, administrative, research and development 108.3 583.9 57.7Other operating charges, net 2.8 0.1 1.5Total costs and expenses 1,152.8 1,737.8 1,218.2Operating income (loss) 177.8 (345.9) 137.9Other (expense) income: Interest expense (20.3) (24.1) (37.5)Other (expense) income, net – Note 14 (10.3) (1.8) 6.7Income (loss) before income taxes 147.2 (371.8) 107.1Income tax (provision) benefit (55.5) 135.2 (35.3)Net income (loss) $91.7 $(236.6) $71.8 Net income (loss) per common share: Basic $5.15 $(13.76) $4.02Diluted $5.09 $(13.76) $3.86Weighted-average number of common shares outstanding (in thousands): Basic 17,813 17,201 17,818Diluted 18,033 17,201 18,593 Dividends declared per common share $1.80 $1.60 $1.40The accompanying notes to consolidated financial statements are an integral part of these statements.48KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESSTATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) Year Ended December 31, 2016 2015 2014 (In millions of dollars) Net income (loss) $91.7 $(236.6) $71.8Other comprehensive (loss) income, net of tax – Note 15: Defined benefit pension plan and VEBAs (5.8) 65.1 (75.6)Available for sale securities 0.9 (0.3) (0.2)Foreign currency cash flow hedges 0.1 (0.2) —Alloy Hedges (0.1) — —Foreign currency translation (0.1) (0.2) 0.4Other comprehensive (loss) income, net of tax (5.0) 64.4 (75.4)Comprehensive income (loss) $86.7 $(172.2) $(3.6)The accompanying notes to consolidated financial statements are an integral part of these statements.49KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESSTATEMENTS OF CONSOLIDATED STOCKHOLDERS’ EQUITY CommonSharesOutstanding CommonStock Additional PaidInCapital RetainedEarnings TreasuryStock AccumulatedOtherComprehensive(Loss) Income Total (In millions of dollars, except share and per share amounts)BALANCE, December 31, 2013 18,147,017 $0.2 $1,023.1 $233.8 $(152.2) $(20.7) $1,084.2Net income — — — 71.8 — — 71.8Other comprehensive loss, net of tax — — — — — (75.4) (75.4)Issuance of non-vested shares to employees and non-employee directors 119,799 — — — — — —Issuance of common shares to non-employeedirectors 2,969 — 0.2 — — — 0.2Issuance of common shares to employees uponvesting of restricted stock units and performanceshares 44,895 — — — — — —Cancellation of employee non-vested shares (40,503) — — — — — —Cancellation of shares to cover employees’ taxwithholdings upon vesting of non-vested shares (33,696) — (2.4) — — — (2.4)Repurchase of common stock (633,230) — — — (44.9) — (44.9)Cash dividends on common stock ($1.40 per share) — — — (25.4) — — (25.4)Excess tax benefit upon vesting of non-vested sharesand dividend payment on unvested shares expectedto vest — — 0.8 — — — 0.8Amortization of unearned equity compensation — — 6.8 — — — 6.8Dividends on unvested equity awards that werecanceled — — — 0.2 — — 0.2BALANCE, December 31, 2014 17,607,251 $0.2 $1,028.5 $280.4 $(197.1) $(96.1) $1,015.9Net loss — $— $— $(236.6) $— $— $(236.6)Other comprehensive income, net of tax — — — — — 64.4 64.4Issuance of non-vested shares to employees and non-employee directors 62,285 — — — — — —Issuance of common shares to non-employeedirectors 2,436 — 0.2 — — — 0.2Issuance of common shares to employees uponvesting of restricted stock units and performanceshares 52,106 — — — — — —Cancellation of employee non-vested shares (987) — — — — — —Cancellation of shares to cover employees’ taxwithholdings upon vesting of non-vested shares (37,009) — (2.8) — — — (2.8)Repurchase of common stock (647,520) — — — (49.4) — (49.4)Issuance of stock related to warrants 1,015,185 — — — — — —Cash dividends on common stock ($1.60 per share) — — — (28.1) — — (28.1)Excess tax benefit upon vesting of non-vested sharesand dividend payment on unvested shares expectedto vest — — 1.3 — — — 1.3Amortization of unearned equity compensation — — 9.3 — — — 9.3Dividends on unvested equity awards that werecanceled — — — 0.2 — — 0.2BALANCE, December 31, 2015 18,053,747 0.2 1,036.5 15.9 (246.5) (31.7) 774.4 Cumulative-effect adjustment 1 — — 0.8 (0.1) — — 0.7BALANCE, January 1, 2016 18,053,747 $0.2 $1,037.3 $15.8 $(246.5) $(31.7) $775.1Net income — $— $— $91.7 $— $— $91.7Other comprehensive loss, net of tax — — — — — (5.0) (5.0)Issuance of non-vested shares to employees and non-employee directors 9,702 — — — — — —Issuance of common shares to non-employeedirectors 1,474 — 0.1 — — — 0.1Issuance of common shares to employees uponoption exercises and vesting of restricted stock unitsand performance shares 66,810 — 1.2 — — — 1.2Cancellation of employee non-vested shares (379) — — — — — —Cancellation of shares to cover employees’ taxwithholdings upon vesting of non-vested shares (36,055) — (2.9) — — — (2.9)Repurchase of common stock (443,838) — — — (34.9) — (34.9)Cash dividends on common stock ($1.80 per share) — — — (32.4) — — (32.4)Amortization of unearned equity compensation — — 11.7 — — — 11.7Dividends on unvested equity awards that werecanceled — — — 0.1 — — 0.1BALANCE, December 31, 2016 17,651,461 $0.2 $1,047.4 $75.2 $(281.4) $(36.7) $804.7____________1 See Note 5 and Note 8 for discussion of our adoption of ASU 2016-09 (as defined in Note 1 ).The accompanying notes to consolidated financial statements are an integral part of these statements.50KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESSTATEMENTS OF CONSOLIDATED CASH FLOWS Year Ended December 31, 2016 2015 2014 (In millions of dollars)Cash flows from operating activities: Net income (loss) $91.7 $(236.6) $71.8Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation of property, plant and equipment 34.5 30.8 29.5Amortization of definite-lived intangible assets 1.5 1.6 1.6Amortization of debt discount and debt issuance costs 1.1 4.3 11.8Deferred income taxes 1 57.4 (131.7) 34.3Excess tax benefit upon vesting of non-vested shares and dividend payment on unvested sharesexpected to vest 2 — (1.3) (0.8)Non-cash equity compensation 2 11.8 9.5 7.0Lower of cost or market inventory write-down 4.9 2.6 —Non-cash unrealized (gain) loss on derivative instruments (18.7) 3.4 6.8Non-cash impairment charges 2.8 0.1 1.5Loss on extinguishment of debt 3 11.1 2.5 —Loss on disposition of property, plant and equipment 0.2 0.3 0.2Loss on disposition of available for sale securities — — 0.1Non-cash defined benefit net periodic benefit cost (income) 4 3.7 2.8 (23.5)Non-cash loss on removal of Union VEBA, net 4 — 446.7 —Other non-cash changes in assets and liabilities 1.2 0.6 0.6Changes in operating assets and liabilities: Trade and other receivables (26.8) 17.4 (7.0)Inventories, excluding lower of cost or market write-down 5 13.1 (7.5) (0.3)Prepaid expenses and other current assets 5,6 (8.0) 0.5 (0.6)Accounts payable 3.4 (13.6) 20.3Accrued liabilities 4,6 26.2 12.8 (6.0)Annual variable cash contributions to VEBAs 4 (19.5) (13.7) (16.0)Long-term assets and liabilities, net 4,5,6 (27.3) 27.3 (7.2)Net cash provided by operating activities 164.3 158.8 124.1Cash flows from investing activities 7 : Capital expenditures (76.1) (63.1) (59.4)Purchase of available for sale securities (255.3) (0.5) (93.5)Proceeds from disposition of available for sale securities 55.0 84.0 108.2Net cash (used in) provided by investing activities (276.4) 20.4 (44.7)Cash flows from financing activities 7 : Repayment of principal and redemption premium of 8.25% Senior Notes 3 (206.0) (30.0) —Issuance of 5.875% Senior Notes 375.0 — —Repayment of Convertible Notes 3 — (175.0) —Proceeds from cash-settled call options related to settlement of Convertible Notes 3 — 94.9 —Payment for conversion premium related to settlement of Convertible Notes 3 — (94.9) —Cash paid for debt issuance costs (6.8) (0.6) —Proceeds from stock option exercises 1.2 — —Repayment of capital lease — — (0.1)Excess tax benefit upon vesting of non-vested shares and dividend payment on unvested sharesexpected to vest — 1.3 0.8Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares (2.9) (2.8) (2.4)Repurchase of common stock (33.3) (49.2) (44.1)Cash dividends paid to stockholders (32.4) (28.1) (25.4)Net cash provided by (used in) financing activities 94.8 (284.4) (71.2)Net (decrease) increase in cash and cash equivalents during the period (17.3) (105.2) 8.2Cash and cash equivalents at beginning of period 72.5 177.7 169.5Cash and cash equivalents at end of period $55.2 $72.5 $177.7_____________1. See Note 1 for discussion of our adoption of ASU 2015-17.2. See Note 5 and Note 8 for discussion of our adoption of ASU 2016-09.3. See Note 3 for more information relating to the 8.25% Senior Notes (defined in Note 3 ) and the Convertible Notes.4. See Note 6 for the impact of removing the Union VEBA (defined in Note 6 ) net assets.5. See Note 2 for the impact of reclassifying repair parts to other current and other long-term assets.6. Excludes the reclassification of derivatives relating to the Convertible Notes (defined in Note 3 ) from long-term to current at December 31, 2014 as theamounts had no impact on cash flow - see Note 3 and Note 10 .7. See Note 13 for supplemental disclosure on non-cash transactions.The accompanying notes to consolidated financial statements are an integral part of these statements.51KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Summary of Significant Accounting PoliciesIn this Annual Report on Form 10-K (this "Report"), unless the context otherwise requires, references in these notes to consolidated financial statements 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, suchas 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 intoone operating segment, Fabricated Products. See Note 12 for additional information regarding our reportable segment and business unit.Principles of Consolidation and Basis of Presentation. The consolidated financial statements include the accounts of our wholly owned subsidiaries and areprepared in accordance with United States generally accepted accounting principles ("GAAP") and the rules and regulations of the Securities and ExchangeCommission ("SEC"). Intercompany balances and transactions are eliminated.Use of Estimates in the Preparation of Financial Statements. The preparation of financial statements in accordance with GAAP requires the use of estimatesand assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financialstatements are published and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates andassumptions are inherent in the preparation of our consolidated financial statements; accordingly, it is possible that the actual results could differ from theseestimates and assumptions, which could have a material effect on the reported amounts of our consolidated financial position and results of operations.Recognition of Sales. Sales are generally recognized on a gross basis when all of the following criteria are met: (i) persuasive evidence of an arrangementexists; (ii) title, ownership and risk of loss has passed to the customer; (iii) the price to the customer is fixed or determinable; and (iv) collection of the resultingreceivable is reasonably assured. A provision for estimated sales returns from and allowances to customers is made in the same period as the related revenues arerecognized, based on historical experience or the specific identification of an event necessitating a reserve.Stock-Based Compensation. Stock-based compensation in the form of service-based awards is provided to executive officers, certain employees and non-employee directors and is accounted for at fair value. We measure the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award and the number of awards expected to ultimately vest. The grant-date fair value is determined based on the stock price on the date ofgrant, adjusted for expected dividends to be paid during the vesting period.We also grant performance-based awards to executive officers and other key employees. Performance awards granted in 2014 and 2015 are subject toperformance conditions pertaining to total shareholder return and are valued on the date of grant using a Monte Carlo valuation model. The key assumptions inapplying this model are an expected volatility and a risk-free interest rate. Performance shares granted in 2016 have performance conditions pertaining to totalshareholder return, which are valued as described above, as well as performance conditions pertaining to our cost performance, which are valued based on thestock price at the date of grant. For more information on our stock-based compensation, see Note 8 .The cost of service-based awards, including time-vested restricted stock and performance shares, is recognized as an expense over the requisite service periodof the award on a straight-line basis. For performance shares with performance conditions pertaining to our cost performance, the related expense is updatedquarterly by adjusting the estimated number of shares expected to vest based on the most probable outcome of the performance condition (see Note 8 ).Shipping and Handling Costs. Shipping and handling costs are recorded as a component of Cost of products sold, excluding depreciation, amortization andother items.Advertising Costs. Advertising costs, which are included in Selling, general, administrative, research and development ("SG&A and R&D"), are expensed asincurred. Advertising costs for 2016 , 2015 and 2014 were $0.4 million , $1.2 million and $0.6 million , respectively.52Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSResearch and Development Costs. Research and development costs, which are included in SG&A and R&D, are expensed as incurred. Research anddevelopment costs for 2016 , 2015 and 2014 were $10.2 million , $9.5 million and $8.9 million , respectively.Major Maintenance Activities. All major maintenance costs are accounted for using the direct expensing method.Cash and Cash Equivalents. We consider only those short-term, highly liquid investments which, when purchased, have maturities of 90 days or less to be cashequivalents. Our cash equivalents consist primarily of funds in commercial paper, money market funds and other highly liquid investments, which are classifiedwithin Level 1 of the fair value hierarchy with the exception of commercial paper, which is classified within Level 2 of the fair value hierarchy (see Fair ValueMeasurements below).Restricted Cash. We are required to keep on deposit certain amounts that are pledged or held as collateral relating to workers’ compensation and otheragreements. We account for such deposits as restricted cash (see Note 2 ). From time to time, such restricted funds could be returned to us or we could be requiredto pledge additional cash.Trade Receivables and Allowance for Doubtful Accounts. Trade receivables primarily consist of amounts billed to customers for products sold. Accountsreceivable are generally due within 30 to 60 days . For the majority of our receivables, we establish an allowance for doubtful accounts based upon collectionexperience and other factors. On certain other receivables where we are aware of a specific customer’s inability or reluctance to pay, an allowance for doubtfulaccounts is established against amounts due, to reduce the net receivable balance to the amount we reasonably expect to collect. However, if circumstances change,our estimate of the recoverability of accounts receivable could be different. Circumstances that could affect our estimates include, but are not limited to, customercredit issues and general economic conditions. Accounts are written off once deemed to be uncollectible. Any subsequent cash collections relating to accounts thathave been previously written off are typically recorded as a reduction to total bad debt expense in the period of payment. Write-offs for 2016 , 2015 and 2014 wereimmaterial to the consolidated financial statements.Inventories. Inventories are stated at the lower of cost or market value. On March 31, 2016 and December 31, 2015, we recorded a lower of cost or marketinventory write-down of $4.9 million and $2.6 million , respectively, as a result of a decrease in our net realizable value of inventory. The net realizable valuereflected commitments as of those dates from customers to purchase our inventory at prices that exceeded the Midwest Transaction Price ("Midwest Price"), whichreflects the primary aluminum supply/demand dynamics in North America, reduced by an approximate normal profit margin. The net realizable value as ofDecember 31, 2015 also reflected a reduction in the Midwest Price. There were no additional lower of cost or market inventory adjustments during the remainderof 2016.Finished products, work-in-process and raw material inventories are stated on the last-in, first-out ("LIFO") basis. At December 31, 2016 and December 31,2015 , after inventory write-down adjustments, the stated LIFO value of our inventory represented its net realizable value (less a normal profit margin) andexceeded the current cost of our inventory by $8.5 million and $24.1 million , respectively. Other inventories are stated on the first-in, first-out basis and consist ofoperating supplies, which are materials and supplies to be consumed during the production process. Inventory costs consist of material, labor and manufacturingoverhead, 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 December 31, 2016 and December 31, 2015 were included in the Fabricated Products segment (see Note 2 for the components ofinventories).Replacement Parts. Replacement parts consist of preventative maintenance and capital spare parts, which are stated on the first-in, first-out basis (see Note 2 foradditional detail).Property, Plant and Equipment – Net. Property, plant and equipment is recorded at cost (see Note 2 ). Construction in progress is included within Property,plant and equipment – net on the Consolidated Balance Sheets. Interest related to the construction of qualifying assets is capitalized as part of the constructioncosts. The aggregate amount of interest capitalized is limited to the interest expense incurred in the period. The amount of interest expense capitalized asconstruction in progress was $2.9 million , $1.8 million and $2.5 million during 2016 , 2015 and 2014 , respectively.Depreciation is computed using the straight-line method at rates based on the estimated useful lives of the various classes of assets. Capital lease assets andleasehold improvements are depreciated on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term. The principal estimateduseful lives are as follows:53Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS Range (in years)Land improvements3-25Buildings and leasehold improvements15-45Machinery and equipment1-24Capital lease assets3-5Depreciation expense is not included in Cost of products sold, excluding depreciation and amortization and other items , but is included in Depreciation andamortization on the Statements of Consolidated Income (Loss).Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset orgroup of assets may not be recoverable. We regularly assess whether events and circumstances with the potential to trigger impairment have occurred and rely on anumber of factors, including operating results, business plans, economic projections and anticipated future cash flow, to make such assessments. We use anestimate of the future undiscounted cash flows of the related asset or asset group over the estimated remaining life of such asset(s) in measuring whether theasset(s) are recoverable. Measurement of the amount of impairment, if any, is based on the difference between the carrying value of the asset(s) and the estimatedfair value of such asset(s). Fair value is determined through a series of standard valuation techniques.We recorded impairment charges of $0.2 million , $0.1 million and $1.5 million in 2016 , 2015 , and 2014 , respectively, to reflect the scrap value of idledassets we determined not to deploy for future use. Asset impairment charges are included in Other operating charges, net in the Statements of Consolidated Income(Loss) and are included in the Fabricated Products segment.We concluded that none of our other non-financial assets and liabilities subject to fair value assessments on a non-recurring basis required a materialadjustment to the carrying amount of such assets and liabilities during the years ended December 31, 2016 and December 31, 2015 .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 initiallymeasured at the lesser of the assets' carrying amount and the fair value less costs to sell.Available for Sale Securities. We account for investments in certain marketable debt securities as available for sale securities. Such securities are recorded atfair value (see Note 10 ), with net unrealized gains and losses, net of income taxes, reflected in Accumulated other comprehensive income (loss) as a component ofStockholders' equity. Realized gains and losses from the sale of marketable debt securities, if any, are determined on a specific identification basis. Debtinvestment securities with an original maturity of 90 days or less are classified as Cash and cash equivalents (see Note 2 ). Debt investment securities with anoriginal maturity of greater than 90 days are presented as Short-term investments on the Consolidated Balance Sheets. In addition to debt investment securities, wealso hold assets in various investment funds managed by a third-party trust in connection with our deferred compensation program (see Note 6 ).Debt Issuance Costs. Costs incurred in connection with debt financing are deferred and amortized over the estimated term of the related borrowing. Suchamortization is included in Interest expense and may be capitalized as part of construction in progress (see Note 2 and Note 3 ). See New AccountingPronouncements section below for changes in our balance sheet classification of debt issuance costs at December 31, 2016 and December 31, 2015 .Goodwill and Intangible Assets. Goodwill is tested for impairment during the fourth quarter on an annual basis, as well as on an interim basis, as warranted, atthe time of relevant events and changes in circumstances. Intangible assets with definite lives are initially recognized at fair value and subsequently amortized overthe estimated useful lives to reflect the pattern in which the economic benefits of the intangible assets are consumed. In the event the pattern cannot be reliablydetermined, we use a straight-line amortization method. Whenever events or changes in circumstances indicate that the carrying amount of the intangible assetsmay not be recoverable, the intangible assets are reviewed for impairment. See Note 4 for a discussion of the non-cash impairment charge taken on one of ourcustomer relationship intangible assets during 2016 . We concluded there was no impairment of the carrying value of goodwill at December 31, 2016 orDecember 31, 2015 (see Note 4 ).Leases. For leases that contain predetermined fixed escalations of the minimum rent, we recognize the related rent expense on a straight-line basis from the datewe take possession of the property to the end of the initial lease term. We record any difference between the straight-line rent amounts and the amount payableunder the lease as part of deferred rent in Other accrued liabilities or Long-term liabilities, as appropriate. Deferred rent for all periods presented was not material.54Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSConditional Asset Retirement Obligations ( " CAROs " ). We have CAROs at several of our Fabricated Products facilities. Our CAROs can be separated intotwo primary categories: (i) legal obligations related to the removal and disposal of asbestos and (ii) asset retirement obligations related to future lease terminations.The majority of our CAROs relate to the first category and consist of incremental costs that would be associated with the removal and disposal of asbestos (all ofwhich is believed to be fully contained and encapsulated within walls, floors, ceilings or piping) of certain of our older facilities if such facilities were to undergomajor renovation or be demolished. We estimate incremental costs for special handling, removal and disposal costs of materials that may or will give rise toCAROs and then discount the expected costs back to the current year using a credit-adjusted, risk-free rate. When it is unclear when or if CAROs will be triggered,we use probability weighting for possible timing scenarios to determine the probability-weighted liability amounts that should be recognized in our consolidatedfinancial statements (see Note 9 ).Self Insurance of Workers' Compensation and Employee Healthcare Liabilities . We self-insure the majority of the costs of workers' compensation benefits andemployee healthcare benefits and rely on insurance coverage to protect us from large losses on individual claims. Workers' compensation liabilities are based on acombination of estimates for: (i) incurred-but-not-reported claims and (ii) the ultimate expense of incurred claims. Such estimates are based on judgment, using ourhistorical claims data and information and analysis provided by actuarial and claims advisors, our insurance carriers and other professionals. Our undiscountedworkers' compensation liabilities were estimated at $26.8 million and $23.5 million at December 31, 2016 and December 31, 2015 , respectively. However, weaccount for our workers' compensation accrued liability on a discounted basis, using a discount rate of 2.00% at December 31, 2016 and 1.75% at December 31,2015 . Accrued liabilities for employee healthcare benefits, which are estimates of unpaid incurred medical and prescription drug costs as provided by ourhealthcare administrators, were $3.6 million and $3.2 million at December 31, 2016 and December 31, 2015 , respectively.Environmental Contingencies. With respect to environmental loss contingencies, we record a loss contingency whenever a contingency is probable andreasonably estimable (see Note 9 ). Accruals for estimated losses from environmental remediation obligations are generally recognized no later than the completionof the remedial feasibility study. Such accruals are adjusted as information develops or circumstances change. Costs of future expenditures for environmentalremediation obligations are not discounted to their present value. Accruals for expected environmental costs are included in Other accrued liabilities or Long-termliabilities, as appropriate (see Note 2 ). Environmental expense relating to continuing operations is included in Cost of products sold, excluding depreciation andamortization and other items in the Statements of Consolidated Income (Loss). Environmental expense relating to non-operating locations is included in SG&Aand R&D in the Statements of Consolidated Income (Loss).Derivative Financial Instruments. Hedging transactions using derivative financial instruments are primarily designed to mitigate our exposure to changes in themarket price of aluminum, alloying metals and energy and, to a lesser extent, to mitigate our exposure to changes in foreign currency exchange rates. From time totime, we also enter into hedging arrangements in connection with financing transactions to mitigate financial risks.We do not utilize derivative financial instruments for trading or other speculative purposes. Our derivative activities are initiated within guidelines establishedby management and approved by our Board of Directors. Hedging transactions are executed centrally on behalf of all of our operations to minimize transactioncosts, monitor consolidated net exposures and allow for increased responsiveness to changes in market factors.We recognize derivative instruments as assets or liabilities in our Consolidated Balance Sheets and measure these instruments at fair value by "marking-to-market" all of our hedging positions at each period's end (see Note 10 ). Because we do not meet the documentation requirements for hedge (deferral) accountingrelated to aluminum and energy derivatives, unrealized and realized gains and losses associated with these hedges are reflected as a reduction or increase,respectively, in: (i) Unrealized (gain) loss on derivative instruments and (ii) Cost of products sold, excluding depreciation and amortization and other items.Unrealized and realized gains and losses relating to hedges of financing transactions are reflected as a component of Other (expense) income (see Note 14 ).From time to time, we enter into foreign currency forward contracts to protect the value of anticipated foreign currency expenses associated with cashcommitments for equipment purchases. These derivative instruments are designated and qualify for cash flow hedge accounting and are adjusted to current marketvalues each reporting period. Both realized and unrealized periodic gains and losses of derivative instruments designated as cash flow hedges are deferred inAccumulated other comprehensive loss until depreciation on the underlying equipment commences. Upon commencement, realized gains and losses are recordedin Net income (loss) as an adjustment to depreciation expense in the period in which depreciation is recognized on the underlying equipment. Additionally, weenter into forward swap contracts ("Alloy Hedges") to limit our55Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSeconomic (i.e. cash exposure) to future price increases of alloying metals, such as zinc and/or copper, used as raw materials in our fabrication operations. TheseAlloy Hedges are designated and qualify for cash flow hedge accounting and are adjusted to current market values each reporting period. The effective portion ofthe fair value on these Alloy Hedges is recorded within Other comprehensive income (loss) and is reclassified into the Statements of Consolidated Income (Loss)during the month of settlement to Cost of products sold. Depending on the time to maturity and asset or liability position, the carrying values of cash flow hedgesare included in Prepaid expenses and other current assets, Other assets, Other accrued liabilities or Long-term liabilities. We report the effective portion of our cashflow hedges in the same financial statement line item as changes in the fair value of the hedged item.Fair Value Measurements. We apply the provisions of Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures , inmeasuring the fair value of our derivative contracts and plan assets invested by certain of our employee benefit plans (see Note 6 and Note 10 ).Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at themeasurement date. The fair value hierarchy consists of three broad levels and is described below:•Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.•Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including:quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active;inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from orcorroborated by observable market data by correlation or other means.•Level 3 – Inputs that are both significant to the fair value measurement and unobservable.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 extentpossible 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 underlyinginputs that are significant to the fair value measurement of financial instruments to determine if a transfer among hierarchy levels is appropriate. We historicallyhave not had significant transfers into or out of each hierarchy level.Financial assets and liabilities that we measure at fair value as required by GAAP include: (i) our derivative instruments; (ii) the plan assets of the SalariedVEBA (defined in Note 6 ) and our Canadian defined benefit pension plan measured annually at December 31; and (iii) available for sale securities, consisting ofdebt investment securities and investments related to our deferred compensation plan (see Note 6 ). We record our remaining financial assets and liabilities atcarrying value.The majority of our non-financial assets and liabilities, which include goodwill, intangible assets, inventories and property, plant and equipment, are notrequired to be measured at fair value on a recurring basis. However, if certain triggering events occur (or at least annually for goodwill), an evaluation of theaffected non-financial asset or liability is required, potentially resulting in an adjustment to the carrying amount of such asset or liability.Foreign Currency. Certain of our foreign subsidiaries use the local currency as their functional currency; the assets and liabilities of these foreign subsidiariesare translated at exchange rates in effect at the balance sheet date; and our statement of income (loss) is translated at weighted-average monthly rates of exchangeprevailing during the year. Resulting translation adjustments are recorded directly to a separate component of stockholders’ equity. Where the U.S. dollar is thefunctional currency of a foreign facility or subsidiary, re-measurement adjustments are recorded in Other (expense) income.Income Taxes. Deferred income taxes reflect the future tax effect of temporary differences between the carrying amount of assets and liabilities for financialand income tax reporting and are measured by applying statutory tax rates in effect for the year during which the differences are expected to reverse. In accordancewith ASC Topic 740, Income Taxes , we use a "more likely than not" threshold for recognition of tax attributes that are subject to uncertainties and measure anyreserves in respect of such expected benefits based on their probability. Deferred tax assets are reduced by a valuation allowance to the extent it is more likely thannot that the deferred tax assets will not be realized (see Note 5 ).56Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNet Income (Loss) per Share. Basic net income (loss) per share is computed by dividing distributed and undistributed net income (loss) allocable to commonshares by the weighted-average number of common shares outstanding during the applicable period. The basic weighted-average number of common sharesoutstanding during the period excludes unvested share-based payment awards. Diluted net income (loss) per share was calculated under the treasury stock methodfor 2016 , 2015 and 2014 , which in all years was more dilutive than the two-class method (see Note 11 ).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 thatreflects 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 ASUNo. 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 forall 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 (Topic605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to StaffAnnouncements at the March 3, 2016 EITF Meeting ; (iii) ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvementsand Practical Expedients ; and (iv) ASU No. 2016-20, Revenue from Contracts with Customers (Topic 606): Technical Corrections and Improvements to Topic606. We expect to adopt ASU 2014-09, including its subsequent amendments discussed above, using the modified retrospective transition approach for the fiscalyear ending December 31, 2018. Based on our initial assessment, we have concluded that revenue from certain contracts will continue to be recognized at a pointin time, while revenue from other contracts, primarily for our aerospace/high strength and automotive end market applications, will be required to be recognizedover time. We are currently assessing the impact that over-time recognition will have on our consolidated financial statements.ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"), was issued inApril 2015. ASU 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in an entity's balance sheet as a direct deduction fromthe carrying amount of that debt liability, consistent with debt discounts, instead of being presented as a deferred charge in the balance sheet. The recognition andmeasurement guidance for debt issuance costs is not affected by ASU 2015-03. Our retrospective adoption of this ASU in the first quarter of 2016 resulted in areclassification of $3.2 million of debt issuance costs related to our 8.25% Senior Notes (as defined in Note 3 ) from Other assets to Long-term debt as ofDecember 31, 2015.ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"), was issued in November 2015. ASU 2015-17requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as non-current on the balance sheet. This ASU does not,however, change the existing requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount.During the first quarter of 2016, we early adopted this ASU on a prospective basis. As such, prior periods were not retrospectively adjusted.ASU No. 2016-02, Leases (Topic 842): Amendments to the Financial Accounting Standards Board Accounting Standards Codification ("ASU 2016-02"), wasissued 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 thanleases 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 operatingor 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 adoptionof this ASU in 2019 to have a material impact on our consolidated financial statements.ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), wasissued in March 2016. ASU 2016-09 eliminates additional paid in capital ("APIC") pools and requires excess tax benefits and tax deficiencies to be recorded in theincome statement when the awards vest or are settled. The accounting for an employee's use of shares to satisfy the employer's statutory income tax withholdingobligation and the accounting for forfeitures is also changing. We early adopted ASU 2016-09 during the first quarter of 2016. See Note 5 and Note 8 for adiscussion on the impact of our adoption of ASU 2016-09.We do not anticipate any material impact on our consolidated financial statements upon the adoption of the following accounting pronouncements issued during2016 and 2017: (i) ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and FinancialLiabilities ; (ii) ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ; (iii) ASU No.2016-15,57Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSStatement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments ; (iv) ASU No. 2016-18, Statement of Cash Flows (Topic 230):Restricted Cash; and (v) ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.There were no material impacts on our consolidated financial statements resulting from our adoption in the first quarter of 2016 of the following accountingpronouncements: (i) ASU No. 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in aCloud Computing Arrangement ; (ii) ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate NetAsset Value per Share (or Its Equivalent) ; and (iii) ASU No. 2015-15, Interest - Imputation of Interest (Subtopic 835-30) - Presentation and SubsequentMeasurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements .2. Supplemental Balance Sheet Information December 31, 2016 December 31, 2015 (In millions of dollars)Cash and Cash Equivalents Cash and money market funds $37.9 $40.3Commercial paper 17.3 32.2Total $55.2 $72.5 Trade Receivables – Net Billed trade receivables $138.2 $116.8Unbilled trade receivables 0.3 0.7Trade receivables, gross 138.5 117.5Allowance for doubtful receivables (0.8) (0.8)Trade receivables – net $137.7 $116.7 Inventories Finished products $73.8 $79.5Work-in-process 71.7 63.6Raw materials 51.1 53.4Operating supplies 1 5.0 23.1Total $201.6 $219.6 58Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2016 December 31, 2015 (In millions of dollars)Prepaid Expenses and Other Current Assets Current replacement parts 1 $7.6 $—Current derivative assets – Note 10 5.0 1.5Current deferred tax assets – Note 1 — 49.6Prepaid insurance 1.9 1.9Short-term restricted cash 0.3 0.3Other 3.7 3.4Total $18.5 $56.7 Property, Plant and Equipment – Net Land and improvements $22.7 $22.7Buildings and leasehold improvements 88.6 71.8Machinery and equipment 615.1 549.0Construction in progress 34.8 48.5Property, plant and equipment – gross 761.2 692.0Accumulated depreciation (230.6) (196.9)Assets held for sale 0.3 0.3Property, plant and equipment – net $530.9 $495.4 Other Assets Restricted cash $12.2 $10.9Long-term replacement parts 1 11.2 —Debt issuance costs on Revolving Credit Facility 1.0 1.3Deferred compensation plan assets 8.2 7.3Derivative assets – Note 10 0.8 0.1Total $33.4 $19.6 Other Accrued Liabilities Current derivative liabilities – Note 10 $0.8 $14.1Uncleared cash disbursements 5.8 8.0Accrued income taxes and other taxes payable 4.3 3.1Accrued annual contribution to VEBAs – Note 6 20.0 19.6Short-term environmental accrual – Note 9 1.4 1.6Accrued interest 2.9 1.5Short-term deferred revenue 0.2 1.2Other 4.5 3.6Total $39.9 $52.7 59Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2016 December 31, 2015 (In millions of dollars)Long-Term Liabilities Derivative liabilities – Note 10 $1.0 $2.1Income tax liabilities 0.9 0.7Workers’ compensation accruals 25.0 21.7Long-term environmental accrual – Note 9 15.8 17.0Long-term asset retirement obligations 5.3 4.8Long-term deferred revenue – Note 1 0.1 0.3Deferred compensation liability 8.2 7.7Long-term capital leases 0.2 0.1Long-term portion of contingent contribution to Union VEBA – Note 6 12.8 29.9Other long-term liabilities 3.9 3.2Total $73.2 $87.5____________1. As replacement parts have become more significant due to our recent major investments in machinery and equipment, we have reclassified a portion of other inventories asof December 31, 2016 to other current and other long-term assets based on expected utilization of the replacement parts.3. Debt and Credit FacilitySenior Notes5.875% 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 December 31, 2016 was $6.3 million . Interest expense, includingamortization of debt issuance costs, relating to the 5.875% Senior Notes was $14.5 million for the year ended December 31, 2016 . A portion of the interest relatingto 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.All outstanding 5.875% Senior Notes are registered and freely transferable. The fair value of the outstanding 5.875% Senior Notes, which are Level 1 liabilities,was calculated based on broker quotes and was approximately $390.8 million at December 31, 2016 .The 5.875% Senior Notes are unsecured obligations and are guaranteed by certain of our domestic subsidiaries that own virtually all of our operating assets andthrough which we conduct the vast majority of our business. See Note 16 for condensed guarantor and non-guarantor financial information.The indenture governing the 5.875% Senior Notes places limitations on our and certain of our subsidiaries' ability to, among other things, incur liens,consolidate, merge or sell all or substantially all of our and certain of our subsidiaries' assets, incur or guarantee additional indebtedness, enter into transactionswith affiliates and to make "restricted payments" (as defined in the indenture to include certain loans, investments, dividend payments, share repurchases andprepayments, redemptions or repurchases of certain indebtedness). Certain types and amounts of restricted payments are allowed by various provisions of theindenture. In particular, the indenture provisions permit us to make restricted payments in any amount if, after giving effect to such restricted payments, our"consolidated net indebtedness" as a ratio of "EBITDA" (each term as defined in the indenture) is less than 2.75:1.00 .We may redeem the 5.875% Senior Notes at our option in whole or part at any time on or after May 15, 2019 at a redemption price of 104.406% of theprincipal amount, declining to 102.938% , 101.469% and 100% of the principal amount on or after May 15, 2020, May 15, 2021 and May 15, 2022, respectively,in each case plus any accrued and unpaid interest. At any time prior to May 15, 2019, we may also redeem some or all of the 5.875% Senior Notes at a redemptionprice equal to 100% of the principal amount, together with any accrued and unpaid interest, plus a "make-whole premium."60Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSHolders of the 5.875% Senior Notes have the right to require us to repurchase the 5.875% Senior Notes at a price equal to 101% of the principal amount plusany accrued and unpaid interest following the occurrence of both: (i) a change of control and (ii) a ratings decline by one or both of the two major rating agencieswithin 60 days after the earlier of a change of control or the public notice of an upcoming change of control. A change of control includes: (i) certain ownershipchanges; (ii) certain recapitalizations, mergers and dispositions; (iii) certain changes in the composition of our Board of Directors; and (iv) stockholder approval ofany plan or proposal for the liquidation or dissolution of us. We may also be required to offer to repurchase the 5.875% Senior Notes at 100% of the principalamount, plus any accrued and unpaid interest, with the proceeds of certain asset sales.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").During 2015, we repurchased $27.2 million aggregate principal amount of our 8.25% Senior Notes for 107.5% of the principal amount plus $0.8 million of accruedinterest for a total net cash outflow of $30.0 million and a loss of $2.5 million recognized within Other (expense) income, net on our Statements of ConsolidatedIncome (Loss). On June 1, 2016, we redeemed in full the remaining $197.8 million principal balance of our 8.25% Senior Notes at a redemption price of 104.125%of the principal amount. Upon the redemption of the 8.25% Senior Notes, our cash outflow for principal, redemption premium and accrued interest totaled $214.2million . The $8.2 million redemption premium and $2.9 million write-off of unamortized debt issuance costs were included in Other expense, net on ourStatements of Consolidated Income (Loss) (see Note 14 for details). The effective interest rate of the 8.25% Senior Notes was approximately 8.6% per annum,taking into account the amortization of debt issuance costs. Interest expense, including amortization of debt issuance costs, relating to the 8.25% Senior Notes was$7.1 million , $18.8 million , and $19.4 million for 2016 , 2015 , and 2014 , respectively. A portion of the interest relating to the 8.25% Senior Notes wascapitalized as construction in progress.The fair value of the outstanding 8.25% Senior Notes, which are Level 1 liabilities, was calculated based on broker quotes and was approximately $207.3million at December 31, 2015 .Cash Convertible Senior NotesOn April 1, 2015, we settled our 4.5% unsecured cash convertible senior notes ("Convertible Notes"). The net cash outflow was $178.9 million , reflectingprincipal of $175.0 million and the final coupon payment of $3.9 million . We also paid a conversion premium ("Bifurcated Conversion Feature") of $94.9 millionto holders of the Convertible Notes, which was completely offset by settlement proceeds of a hedge that we entered into ("Option Assets") in connection with theissuance of our Convertible Notes.The effective interest rate for the term of the Convertible Notes was approximately 11% , taking into account the amortization of the original issuance discountand debt issuance costs. The following table provides additional information regarding the Convertible Notes (in millions of dollars): Year Ended December 31, 2015 2014Contractual coupon interest$2.0 $7.9Amortization of discount2.4 9.1Amortization of debt issuance costs0.3 1.1Total interest expense 1$4.7 $18.1_______________1. A portion of the interest relating to the Convertible Notes was capitalized as construction in progress.61Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSRevolving Credit FacilityOur 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 1, 2020. Joining the Company as borrowers ("Co-Borrowers") are four of our wholly-owned domestic operating subsidiaries: Kaiser Aluminum Investments Company, Kaiser Aluminum Fabricated Products, LLC, Kaiser Aluminum Washington,LLC and Kaiser Aluminum Alexco, LLC.The Revolving Credit Facility is secured by a first priority lien on substantially all of the accounts receivable, inventory and certain other related assets andproceeds of the Co-Borrowers, as well as certain machinery and equipment. Under the Revolving Credit Facility, we are able to borrow from time to time anaggregate commitment amount equal to the lesser of $300.0 million and a borrowing base comprised of: (i) 85% of eligible accounts receivable; (ii) the lesser of(a) 75% of eligible inventory and (b) 85% of the net orderly liquidation value of eligible inventory as determined in the most recent inventory appraisal ordered bythe administrative agent; and (iii) certain eligible machinery and equipment supporting up to $60.0 million of borrowing availability, reduced by certain reserves,all as specified in the Revolving Credit Facility. Up to a maximum of $20.0 million of availability under the Revolving Credit Facility may be utilized for letters ofcredit.Borrowings under the Revolving Credit Facility bear interest at a rate equal to either a base prime rate or LIBOR, at our option, plus, in each case, a specifiedvariable percentage determined by reference to the then-remaining borrowing availability under the Revolving Credit Facility. The funding commitment of theRevolving Credit Facility may be increased up to $400.0 million , subject to certain conditions and the agreement of lenders thereunder.We had $283.0 million of borrowing availability under the Revolving Credit Facility at December 31, 2016 , based on the borrowing base determination then ineffect. At December 31, 2016 , there were no borrowings under the Revolving Credit Facility and $7.7 million was used to support outstanding letters of credit,leaving $275.3 million of net borrowing availability. The interest rate applicable to any overnight borrowings under the Revolving Credit Facility would have been4.00% at December 31, 2016 .Amounts owed under the Revolving Credit Facility may be accelerated upon the occurrence of various events of default including, without limitation, thefailure to make principal or interest payments when due and breaches of covenants, representations and warranties set forth therein. The Revolving Credit Facilityplaces limitations on our ability and certain of our subsidiaries to, among other things, grant liens, engage in mergers, sell assets, incur debt, enter into sale andleaseback transactions, make investments, undertake transactions with affiliates, prepay certain debt, pay dividends and repurchase shares. We are allowed toprepay debt, pay dividends and repurchase shares in any amount if, after giving effect to such payment, $52.5 million or more would be available for us to borrowunder the Revolving Credit Facility, or if after giving effect to such payment, $45.0 million or more would be available to us to borrow under the Revolving CreditFacility and we maintain a fixed charge coverage ratio at or above 1.15:1.0 . In addition, we are required to maintain a fixed charge coverage ratio on aconsolidated basis at or above 1.0:1.0 if borrowing availability under the Revolving Credit Facility is less than $30.0 million .4. Goodwill and Intangible AssetsGoodwill. We had goodwill of $37.2 million at both December 31, 2016 and December 31, 2015 . Such 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. During our annual goodwill impairment test inthe quarter ending December 31, 2016 , we performed a quantitative impairment test and determined that no impairment of our goodwill was required.Intangible Assets. In 2016 and 2015 , our identifiable intangible assets were related to customer relationships. The original cost of these customer relationshipswas $38.5 million and accumulated amortization and net book value were $9.5 million and $26.4 million , respectively, at December 31, 2016 , and $8.0 millionand $30.5 million , respectively, at December 31, 2015 .The end of a customer relationship during the quarter ended September 30, 2016 triggered an evaluation of one of our customer relationship intangible assets.The evaluation indicated that the carrying value of this customer relationship intangible asset exceeded its estimated fair value as determined by future discountedcash flows. As such, we recorded a non-cash impairment charge of $2.6 million during the quarter ended September 30, 2016 within Other operating charges, net.Other than the impairment discussed above, we identified no other indicators of impairment associated with the remainder of our intangible assets during theyear ended December 31, 2016 .62Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSAmortization expense relating to definite-lived intangible assets is recorded in the Fabricated Products segment. Such expense was $1.5 million for 2016 and$1.6 million for both 2015 and 2014 . The expected amortization of intangible assets for each of the next five calendar years is $1.4 million and $19.4 million foryears thereafter.5. Income Tax MattersTax (Provision) Benefit . Income (loss) before income taxes by geographic area was as follows (in millions of dollars): Year Ended December 31, 2016 2015 2014Domestic$143.6 $(373.6) $102.1Foreign3.6 1.8 5.0Income (loss) before income taxes$147.2 $(371.8) $107.1Income taxes are classified as either domestic or foreign, based on whether payment is made or due to the United States or a foreign country. Certain incomeclassified as foreign is also subject to domestic income taxes.Income tax (provision) benefit consisted of (in millions of dollars): Federal Foreign State Total2016 Current$2.7 $0.6 $(1.5) $1.8Deferred(47.8) (1.2) (4.7) (53.7)Expense applied to increase Additional paid in capital/ Othercomprehensive income(3.2) (0.1) (0.3) (3.6)Income tax provision$(48.3) $(0.7) $(6.5) $(55.5)2015 Current$0.7 $2.1 $0.4 $3.2Deferred93.2 (1.2) 1.8 93.8Benefit applied to decrease Additional paid in capital/ Othercomprehensive income33.5 0.4 4.3 38.2Income tax benefit$127.4 $1.3 $6.5 $135.22014 Current$(1.0) $1.0 $(0.6) $(0.6)Deferred6.4 0.3 5.1 11.8Expense applied to increase Additional paid in capital/Othercomprehensive income(41.6) (0.5) (4.4) (46.5)Income tax (provision) benefit$(36.2) $0.8 $0.1 $(35.3)63Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSA reconciliation between the (provision for) benefit from income taxes and the amount computed by applying the federal statutory income tax rate toincome (loss) before income taxes is as follows (in millions of dollars): Year Ended December 31, 2016 2015 2014Amount of federal income tax (provision) benefit based on the statutory rate$(51.5) $130.1 $(37.5)(Increase) decrease in federal valuation allowances(0.3) (0.6) —Non-deductible compensation expense0.3 (0.2) (0.1)Non-deductible expense(0.3) (0.3) (0.3)State income tax (provision) benefit, net of federal benefit 1(4.2) 4.2 —Foreign income tax benefit0.5 0.1 0.3Expiration of statute of limitations— 1.7 2.3Advance pricing agreement— (0.2) —Competent Authority settlement— 0.4 —Income tax (provision) benefit$(55.5) $135.2 $(35.3)___________________________1. State income taxes were $4.1 million in 2016, but were offset by a $0.2 million decrease due to lower tax rates in various states and a $0.3 million increase inthe valuation allowance relating to certain state net operating losses. The state income tax benefit was $10.3 million in 2015, but was offset by a $3.1 millionincrease due to state tax rate and state law changes enacted during the current year and a $3.0 million increase relating to the expiration of certain current andfuture state net operating losses. State income taxes were $2.3 million in 2014, but were offset by a $1.6 million decrease due to lower tax rates in variousstates and a $0.7 million decrease in the valuation allowance relating to certain state net operating losses.Deferred Income Taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and amounts used for income tax purposes. The components of our net deferred income tax assets were as follows (in millions ofdollars): Year Ended December 31, 2016 2015Deferred income tax assets: Loss and credit carryforwards$191.8 $255.7VEBAs (see Note 6)23.2 25.9Other assets39.8 38.7Valuation allowances(15.7) (21.2)Total deferred income tax assets239.1 299.1Deferred income tax liabilities: Property, plant and equipment(82.7) (79.6)Inventories— (9.4)Total deferred income tax liabilities(82.7) (89.0)Net deferred income tax assets 1$156.4 $210.1__________________________1. Of the total net deferred income tax assets of $156.4 million , $159.7 million was presented as Deferred tax assets, net and $3.3 million was presented asDeferred tax liabilities on the Consolidated Balance Sheet as of December 31, 2016 . Of the total net deferred income tax assets of $210.1 million , $49.6million was included in Prepaid expenses and other current assets and $162.6 million was presented as Deferred tax assets, net and $2.1 million was presentedas Deferred tax liabilities on the Consolidated Balance Sheet as of December 31, 2015 .64Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSTax Attributes. At December 31, 2016 , we had $414.1 million of net operating loss ("NOL") carryforwards available to reduce future cash payments forincome taxes in the United States. The NOL carryforwards expire periodically through 2030. We also had $26.8 million of alternative minimum tax creditcarryforwards with an indefinite life, available to offset regular federal income tax requirements.In assessing the realizability of deferred tax assets, management considers whether it is "more likely than not" that some portion or all of the deferred tax assetswill not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which thosetemporary differences become deductible. Management considers taxable income in carryback years, the scheduled reversal of deferred tax liabilities, tax planningstrategies and projected future taxable income in making this assessment. Due to uncertainties surrounding the realization of some of our deferred tax assets,primarily including state NOL carryforwards sustained during the prior years and expiring tax benefits, we have a valuation allowance against our deferred taxassets. When recognized, the tax benefits relating to any reversal of this valuation allowance will be recorded as a reduction of income tax expense. The (decrease)increase in the valuation allowance was $(5.5) million , $2.0 million and $(0.7) million in 2016 , 2015 and 2014, respectively.The decrease in the valuation allowance for 2016 was primarily due to the expiration of state NOL carryforwards and the related reversal of their valuationallowances. The increase in the valuation allowance in 2015 was primarily due to unutilized state NOL carryforwards and Federal Separate Return Limitation Yearlosses that were expected to expire. The decrease in the valuation allowance for 2014 was primarily due to the projected utilization of state NOL carryforwards.Other . We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions.Our tax returns for certain past years are still subject to examination by taxing authorities and the use of NOL carryforwards in future periods could trigger areview of attributes and other tax matters in years that are not otherwise subject to examination.We have gross unrecognized benefits relating to uncertain tax positions. A reconciliation of changes in the gross unrecognized tax benefits is as follows (inmillions of dollars): Year Ended December 31, 2016 2015 2014Gross unrecognized tax benefits at beginning of period $1.7 $2.2 $3.8Gross increases for tax positions of prior years 0.1 0.1 —Gross decrease for tax positions relating to lapse of a statute of limitation — (0.6) (1.4)Foreign currency translation — — (0.2)Gross unrecognized tax benefits at end of period $1.8 $1.7 $2.2If and when the $1.8 million , $1.7 million and $2.2 million of gross unrecognized tax benefits at December 31, 2016 , December 31, 2015 and December 31,2014 , respectively, are recognized, $0.7 million , $0.6 million and $1.1 million will be reflected, respectively, in our income tax provision and thus affect theeffective tax rate in future periods.The change during 2016 was primarily due to a change in tax positions. The change in gross unrecognized tax benefits during 2015 was primarily due to theexpiration of statutes. The change during 2014 was due to the expiration of statutes and foreign currency fluctuations.In addition, we recognize interest and penalties related to unrecognized tax benefits in the income tax provision. We had $0.2 million accrued for interest andpenalties at both December 31, 2016 and December 31, 2015 . Of these amounts, none were recorded as current liabilities and included in Other accrued liabilitieson the Consolidated Balance Sheets at December 31, 2016 and December 31, 2015 . There was no change to interest and penalty in 2016. We recognized a $1.2million and $0.9 million change to interest and penalty in our tax provision in 2015 and 2014 , respectively.In connection with the gross unrecognized tax benefits (including interest and penalties) denominated in foreign currency, we incurred a foreign currencytranslation adjustment in 2015 and 2014. During 2015 and 2014 , the foreign currency impact on such liabilities resulted in currency translation adjustments of $0.1million and $0.3 million , respectively, which increased Other comprehensive income.We do not expect our gross unrecognized tax benefits to significantly change within the next 12 months .65Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , was issued and earlyadopted in March 2016. ASU 2016-09 eliminates APIC pools and requires excess tax benefits and tax deficiencies to be recorded in the income statement when theawards vest or are settled. In addition, modified retrospective adoption of ASC 2016-09 eliminates the requirement that excess tax benefits be realized (i.e., througha reduction in income taxes payable) before we can recognize them and therefore, we have recorded a cumulative-effect adjustment of $0.7 million throughRetained earnings and Deferred tax assets - net during the first quarter of 2016 to record excess tax benefits not previously recognized.Tax Asset Protection Rights Agreement . On April 7, 2016, our Board of Directors adopted a tax asset protection rights plan ("Tax Asset Rights Plan") designedto preserve our ability to utilize our NOL carryforwards and other significant tax attributes (collectively, "Tax Benefits") to offset future taxable income in theUnited States, and declared a dividend of one preferred share purchase right ("Right") for each outstanding share of our common stock. Our stockholders ratifiedthe Tax Asset Rights Plan at our 2016 Annual Meeting of Stockholders on May 26, 2016.In general, the Tax Asset Rights Plan imposes a significant penalty upon any person or group that acquires beneficial ownership (defined generally as direct orconstructive ownership as determined under Section 382 of the Code) of 4.99% or more of our outstanding common stock without the approval of our Board ofDirectors. Any Rights held by a person or group that acquires a percentage of common stock in excess of that threshold ("Acquiring Person") are void and may notbe exercised.If the Rights become exercisable, each Right would allow its holder to purchase from us one one-hundredth of a share of our Series A Junior ParticipatingPreferred Stock ("Series A Preferred Stock") for a purchase price of $400.00 . Each fractional share of Series A Preferred Stock would give the stockholderapproximately the same dividend, voting and liquidation rights as does one share of our common stock. Prior to exercise, however, a Right does not give its holderany dividend, voting or liquidation rights.The Rights will not be exercisable until the earlier of: (i) 10 days after a public announcement by us that a person or group has become an Acquiring Person and(ii) 10 business days (or a later date determined by our Board of Directors) after a person or group begins a tender or exchange offer that, if completed, wouldresult in that person or group becoming an Acquiring Person.Until the date that the Rights become exercisable ("Distribution Date"), our common stock certificates will also evidence the Rights and will contain a notationto that effect. Any transfer of shares of our common stock prior to the Distribution Date will constitute a transfer of the associated Rights. After the DistributionDate, the Rights will separate from our common stock and be evidenced by Right certificates, which we will mail to all holders of Rights that have not becomevoid.After the Distribution Date, if a person or group already is or becomes an Acquiring Person, all holders of Rights, except the Acquiring Person, may exercisetheir Rights upon payment of the purchase price to purchase shares of our common stock (or other securities or assets as determined by the Board) with a marketvalue of two times the purchase price ("Flip-in Event"). After the Distribution Date, if a Flip-in Event has already occurred and we are acquired in a merger orsimilar transaction, all holders of Rights except the Acquiring Person may exercise their Rights upon payment of the purchase price, to purchase shares of theacquiring or other appropriate entity with a market value of two times the purchase price of the Rights. Rights may be exercised to purchase Series A PreferredStock only after the Distribution Date occurs and prior to the occurrence of a Flip-in Event as described above. A Distribution Date resulting from thecommencement of a tender offer or exchange offer as described in (ii) above could precede the occurrence of a Flip-in Event, in which case the Rights could beexercised to purchase Series A Preferred Stock. A Distribution Date resulting from any occurrence described in (i) above would necessarily follow the occurrenceof a Flip-in Event, in which case the Rights could be exercised to purchase shares of common stock (or other securities or assets) as described above.The Rights will expire on the earliest of: (i) April 7, 2019 or such earlier date as of which our Board of Directors determines that the Tax Assets Rights Plan isno longer necessary for the preservation of our Tax Benefits; (ii) the time at which the Rights are redeemed; (iii) the time at which the Rights are exchanged; (iv)the effective time of the repeal of Section 382 of the Internal Revenue Code of 1986 ("Code") if the Board determines that the Tax Assets Rights Plan is no longernecessary for the preservation of our Tax Benefits; and (v) the first day of a taxable year to which our Board of Directors determines that no Tax Benefits may becarried forward.Successor Transfer Restrictions . In addition to ratifying our Tax Asset Rights Plan, at our 2016 Annual Meeting of Stockholders, our stockholders approved anamendment to our certificate of incorporation to implement stock transfer restrictions designed to preserve our ability to fully utilize our Tax Benefits ("SuccessorTransfer Restrictions") to replace66Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSsimilar restrictions that were scheduled to expire in July 2016. In general terms, absent a waiver by our Board of Directors, the Successor Transfer Restrictionsrestrict the transfer of our equity securities if, as a result of the transfer, either any person would become the owner of 4.99% or more of our stock as determinedunder Section 382 of the Code ("5% Stockholder") or the percentage stock ownership of any 5% Stockholder would be increased. Any transfer that violates theSuccessor Transfer Restrictions is void and will be unwound as provided in our certificate of incorporation.The Successor Transfer Restrictions expire on the earliest of: (i) May 26, 2019; (ii) the effective date of the repeal of Section 382 of the Code if our Board ofDirectors determines that the Successor Transfer Restrictions are no longer necessary for the preservation of our Tax Benefits; and (iii) the first day of a taxableyear to which our Board of Directors determines that no Tax Benefits may be carried forward.6. Employee BenefitsEmployee Plans. Employee benefit plans include:•A defined contribution 401(k) savings plan for hourly bargaining unit employees at nine of our production facilities based on the specific collectivebargaining agreement at each facility. For active bargaining unit employees at three of these production facilities, we are required to make fixed ratecontributions. For active bargaining unit employees at one of these production facilities, we are required to match certain employee contributions. Foractive bargaining unit employees at three of these production facilities, we are required to make both fixed rate contributions and concurrent matches. Foractive bargaining unit employees at two remaining production facilities, we are not required to make any contributions. Fixed rate contributions either:(i) range from (in whole dollars) $800 to $2,400 per employee per year, depending on the employee’s age, or (ii) vary between 2% to 10% of theemployees’ compensation depending on their age and years of service for employees hired prior to January 1, 2004 or is a fixed 2% annual contributionfor employees hired on or after January 1, 2004. We contributed a total of $1.8 million and $1.9 million to such plan during 2016 and 2015, respectively.•A defined contribution 401(k) savings plan for salaried and certain hourly employees providing for a concurrent match of up to 4% of certaincontributions made by employees plus an annual contribution of between 2% and 10% of their compensation depending on their age and years of serviceto employees hired prior to January 1, 2004. All new hires on or after January 1, 2004 receive a fixed 2% contribution annually. We contributed a total of$7.2 million and $6.7 million to such plan during 2016 and 2015, respectively.•A defined benefit plan for salaried employees at our London, Ontario facility, with annual contributions based on each salaried employee’s age and yearsof service. At December 31, 2016 , approximately 63% of the plan assets were invested in equity securities and 32% of plan assets were invested in fixedincome securities. The remaining plan assets were invested in short-term securities. Our investment committee reviews and evaluates the investmentportfolio. The asset mix target allocation on the long-term investments is approximately 65% in equity securities, 30% in fixed income securities and theremaining assets in short-term securities. The plan assets of our Canadian pension plan are managed by advisors selected by us, with the investmentportfolio subject to periodic review and evaluation by our investment committee. The investment of assets in the Canadian pension plan is based upon theobjective of maintaining a diversified portfolio of investments in order to minimize concentration of credit and market risks (such as interest rate,currency, equity price and liquidity risks). The degree of risk and risk tolerance take into account the obligation structure of the plan, the anticipateddemand for funds and the maturity profiles required from the investment portfolio in light of these demands.•A non-qualified, unfunded, unsecured plan of deferred compensation for key employees who would otherwise suffer a loss of benefits under our definedcontribution plan as a result of the limitations imposed by the Code. Despite the plan being an unfunded plan, we make an annual contribution to a rabbitrust to fulfill future funding obligations, as contemplated by the terms of the plan. The assets in the trust are at all times subject to the claims of ourgeneral creditors and no participant has a claim to any assets of the trust. Plan participants are eligible to receive distributions from the trust subject tovesting and other eligibility requirements. Assets in the rabbi trust relating to the deferred compensation plan are accounted for as available for salesecurities and are included in Other assets on the Consolidated Balance Sheets (see Note 2 ). Liabilities relating to the deferred compensation plan areincluded in Long-term liabilities on the Consolidated Balance Sheets (see Note 2 ).•An employment agreement with our chief executive officer extending through December 31, 2018. We also provide certain members of seniormanagement, including each of our named executive officers, with benefits related to67Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSterminations of employment in specified circumstances, including in connection with a change in control, by us without cause and by the executive officerwith good reason.VEBA Postretirement Obligations. Certain eligible retirees participate in a voluntary employees' beneficiary association ("VEBA") that provides healthcare andmedical cost reimbursement benefits for eligible retirees represented by certain unions and their surviving spouse and eligible dependents ("Union VEBA") or aVEBA that provides healthcare related benefits for certain other eligible retirees and their surviving spouse and eligible dependents ("Salaried VEBA" and,together with the Union VEBA, "VEBAs"). The Union VEBA covers certain qualifying bargaining unit retirees and future retirees. The Salaried VEBA coverscertain retirees who retired prior to the 2004 termination of the prior plan and employees who were hired prior to February 2002 and have subsequently retired orwill retire with the requisite age and service. The Union VEBA is managed by four trustees, two of which are appointed by us and two of which are appointed bythe United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC ("USW"). TheSalaried VEBA is managed by trustees who are independent of us. The assets of each of the VEBAs are managed by independent fiduciaries appointed by thatVEBA's trustees and are not under our control.Our primary financial obligation to the VEBAs is to make an annual variable cash contribution. The formula determining the annual variable contributionamount is 10% of the first $20.0 million of annual cash flow (as defined; in general terms, the principal elements of cash flow are earnings before interest expense,provision for income taxes and depreciation and amortization less cash payments for, among other things, interest, income taxes and capital expenditures), plus20% of annual cash flow (as defined) in excess of $20.0 million . Such variable cash contribution to the VEBAs is limited (with no carryover to future years) to theextent that the payments would cause our liquidity to be less than $50.0 million and may not exceed $20.0 million annually. The payments are allocated betweenthe Union VEBA and the Salaried VEBA at 85.5% and 14.5% , respectively. The variable cash contribution obligation to the Union VEBA expires in September2017, while the obligation to the Salaried VEBA has no express termination date. As of December 31, 2016 , we determined that the variable contribution for 2016was $20.0 million (comprised of $17.1 million to the Union VEBA and $2.9 million to the Salaried VEBA), and recorded such amount within Other accruedliabilities (see Note 2 ). These obligations will be paid during the first quarter of 2017 . The variable contribution relating to 2015 in the amount of $19.5 millionwas paid in 2016 . We account for the Salaried VEBA as a defined benefit plan in our financial statements.In the quarter ended March 31, 2015, after determining that our obligation to make annual variable contributions to the Union VEBA would expire as ofSeptember 2017, we terminated defined benefit plan accounting for the Union VEBA. This resulted in a non-cash loss of $307.8 million , net of a $184.4 milliontax benefit, as we removed the Union VEBA net assets and related deferred tax liabilities from our Consolidated Balance Sheet and accrued amounts estimated tobe paid through the expiration of our obligation. The final cash contribution to the Union VEBA to be made in the first quarter of 2018 with respect to the first ninemonths of 2017, which we currently estimate at $12.8 million but which remains subject to change, was recorded within Long-term liabilities as of December 31,2016 (see Note 2 ). We review the estimated liability quarterly and reflect any changes in our Operating income (loss).Key Assumptions. The following data presents the key assumptions used and the amounts reflected in our consolidated financial statements with respect to ourCanadian pension plan and the VEBAs. We use a December 31 measurement date for all of the plans.Assumptions used to determine benefit obligations as of the periods presented were as follows: Canadian Pension Plan Salaried VEBA December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015Discount rate 3.80% 4.10% 3.60% 3.90%Rate of compensation increase 3.00% 3.00% — —68Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSKey assumptions made in computing the net obligation of the Salaried VEBA and in total include:With respect to Salaried VEBA assets:•Based on the information received from the Salaried VEBA at December 31, 2016 and at December 31, 2015 , the Salaried VEBA assets were invested invarious managed proprietary funds.•Our variable payment, if any, is treated as a funding/contribution policy and not counted as a Salaried VEBA asset at December 31 for actuarial purposes.With respect to Salaried VEBA obligations:•The accumulated postretirement benefit obligation ("APBO") for the Salaried VEBA was computed based on the level of benefits being provided by it atDecember 31, 2016 and December 31, 2015 .•Since the Salaried VEBA was paying a fixed annual amount to its constituents at both December 31, 2016 and December 31, 2015 , no future cost trendrate increase has been assumed in computing the APBO for the Salaried VEBA.Assumptions used to determine net periodic benefit cost (income) for the years ended December 31 were: Canadian Pension Plan VEBAs 2016 2015 2014 2016 2015 2014 SalariedVEBA SalariedVEBA SalariedVEBA UnionVEBADiscount rate 4.10% 4.00% 4.90% 3.90% 3.60% 4.20% 4.70%Expected long-term return on plan assets 1 4.45% 5.10% 4.75% 7.75% 7.75% 7.75% 6.75%Rate of compensation increase 3.00% 3.00% 3.00% — — — —Initial medical trend rate — — — — — — 7.50%Ultimate medical trend rate — — — — — — 5.00%_____________________1. The expected long-term rate of return assumption is based on the targeted investment portfolios provided to us by the trustee of the applicable VEBA.69Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSBenefit Obligations and Funded Status. The following table presents the benefit obligations and funded status of our Canadian pension and the VEBAs as ofDecember 31, 2016 and December 31, 2015 and the corresponding amounts that are included in our Consolidated Balance Sheets (in millions of dollars): Canadian Pension Plan VEBAs 2016 2015 2016 2015Change in benefit obligation: Obligation at beginning of year $6.1 $7.0 $77.9 $470.9Removal of Union VEBA — — — (391.5)Foreign currency translation adjustment 0.2 (1.0) — —Service cost 0.3 0.2 — —Interest cost 0.3 0.2 2.9 2.7Prior service cost 1 — — 8.4 13.2Actuarial loss (gain) 2 0.3 (0.1) 4.1 (11.2)Benefits paid by Company (0.2) (0.2) — —Benefits paid by VEBAs — — (6.5) (6.2)Obligation at end of year 3 7.0 6.1 86.8 77.9 Change in plan assets: Fair market value of plan assets at beginning of year 5.7 6.3 58.9 793.8Removal of Union VEBA 4 — — — (778.3)Foreign currency translation adjustment 0.2 (1.0) — —Actual return on assets 0.1 0.3 2.9 0.1Employer/Company contributions 4,5 0.3 0.3 2.9 49.5Benefits paid by Company (0.2) (0.2) — —Benefits paid by VEBAs — — (6.5) (6.2)Fair market value of plan assets at end of year 6.1 5.7 58.2 58.9Net funded status 6 $(0.9) $(0.4) $(28.6) $(19.0)_____________________________1. The prior service cost relating to the Salaried VEBA in both 2016 and 2015 resulted from increases in the annual healthcare reimbursement benefit starting in2017 and 2016, respectively, for plan participants.2. The actuarial loss relating to the Salaried VEBA in 2016 was comprised of: (i) a $2.3 million loss due to changes in census information; (ii) a $2.2 million lossdue to a reduction in the discount rate; offset by (iii) a $0.4 million gain due to a change in the projected utilization rate.The actuarial gain relating to the Salaried VEBA in 2015 was comprised of: (i) a $5.5 million gain due to projected lower benefit utilization; (ii) a $2.0million gain due to an increase in the discount rate; and (iii) a $3.7 million gain due to updated actuarial mortality rates.3. For the Canadian pension plan, the benefit obligation is the projected benefit obligation. For the Salaried VEBA, the benefit obligation is the accumulatedpostretirement benefit obligation.4. Removal of Union VEBA and Employer/Company contributions in 2015 each included $46.7 million of accrued variable cash contribution, of which: (i)$16.8 million related to the Union VEBA accrual for the variable contributions for 2015, of which $16.7 million was paid in the first quarter of 2016; (ii)$17.1 million , reported within Other accrued liabilities as of December 31, 2016, related to the Union VEBA accrual for the variable contributions for 2016(all of which will be paid in 2017); and (iii) $12.8 million , reported within Long-term liabilities as of December 31, 2016, related to the Union VEBA accrualfor the variable contributions for 2017 (to be paid in 2018).70Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS5. In addition to the $46.7 million discussed above, Employer/Company contributions included $2.8 million of accrued variable cash contribution related to theSalaried VEBA for the 2015 year, which was paid during the first quarter of 2016.6. Net funded status of $28.6 million and $19.0 million relating to the Salaried VEBA at December 31, 2016 and December 31, 2015 , respectively, waspresented as Net liabilities of Salaried VEBA on the Consolidated Balance Sheet.The accumulated benefit obligation for the Canadian defined benefit pension plan was $6.4 million and $5.4 million at December 31, 2016 and December 31,2015 , respectively. We expect to contribute $0.4 million to the Canadian pension plan in 2017 .As of December 31, 2016 , the net benefits expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter are asfollows (in millions of dollars): Benefit Payments Due by Period 2017 2018 2019 2020 2021 2022-2026Canadian pension plan benefit payments$0.2 $0.3 $0.3 $0.3 $0.3 $1.5Salaried VEBA benefit payments 17.0 7.0 6.9 6.8 6.7 30.4Total net benefits$7.2 $7.3 $7.2 $7.1 $7.0 $31.9__________________________________1. Such amounts are based on benefit amounts and certain key assumptions obtained from the Salaried VEBA.The amount of loss included in the Consolidated Balance Sheets (within Accumulated other comprehensive loss) associated with our Canadian defined benefitpension plan and the VEBAs (before tax) that had not yet been reflected in net periodic benefit cost (income) was as follows at December 31 (in millions ofdollars): Canadian Pension Plan Salaried VEBA 2016 2015 2016 2015Accumulated net actuarial loss $(1.5) $(1.0) $(18.3) $(13.6)Transition assets 0.1 0.1 — —Prior service cost — — (40.2) (35.9)Cumulative loss reflected in Accumulated other comprehensive loss $(1.4) $(0.9) $(58.5) $(49.5)The amount in Accumulated other comprehensive loss that has not yet been recognized as a component of net periodic postretirement benefit cost (income) atDecember 31, 2016 that is expected to be recognized in 2017 for the Canadian pension plan was nominal at December 31, 2016 . For the Salaried VEBA, suchamounts were $4.5 million at December 31, 2016 . Of the $4.5 million relating to the Salaried VEBA, $4.0 million is related to amortization of prior service costand $0.5 million is related to amortization of net actuarial loss. See the Statement of Comprehensive Income (Loss) for reclassification adjustments of othercomprehensive income (loss) that were recognized as components of net periodic benefit cost (income) for 2016 , 2015 and 2014 .Fair Value of Plan Assets. The plan assets of our Canadian pension plan and the Salaried VEBA are measured annually on December 31 and reflected in ourConsolidated 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 valuationssupplied by the investment advisors responsible for managing the assets of each plan, which we independently review for reasonableness. Valuation of certainCanadian pension plan and Salaried VEBA assets are based on the net asset value ("NAV") of shares held by the plans at year-end using the NAV practicalexpedient.With respect to the Salaried VEBA, the investment advisors providing the valuations are engaged by the Salaried VEBA trustees. Certain Salaried VEBA planassets are valued based upon unadjusted quoted market prices in active markets that are accessible at the measurement date for identical, unrestricted assets (e.g.,liquid securities listed on an exchange). Such assets are classified within Level 1 of the fair value hierarchy. Valuation of other Salaried VEBA invested plan assetsis based on significant observable inputs (e.g., valuations derived from actual market transactions, broker-dealer supplied valuations, or correlations between agiven U.S. market and a non-U.S. security). Valuation model inputs can generally be verified and71Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSvaluation techniques do not involve significant judgment. The fair values of such financial instruments are classified within Level 2 of the fair value hierarchy.In addition to the Canadian pension plan and Salaried VEBA, we also hold assets in various investment funds at certain registered investment companies inconnection with our deferred compensation program. Such assets are accounted for as available for sale securities within Level 2 of the fair value hierarchy and aremeasured and recorded at fair value based on their quoted market prices (see Note 1 ).The following table presents the fair value of plan assets, classified under the appropriate level of the fair value hierarchy, as of each period presented (inmillions of dollars): Level 1 Level 2 Level 3 TotalAs of December 31, 2016: Plan Assets in the Fair Value Hierarchy: Salaried VEBA – Fixed income investment funds in registered investment companies 1$— $17.9 $— $17.9Cash and money market investments 23.3 — — 3.3Diversified investment funds in registered investment companies 312.8 — — 12.8Total Salaried VEBA assets in the fair value hierarchy$16.1 $17.9 $— $34.0Deferred compensation program – Diversified investment funds in registered investmentcompanies 3— 8.2 — 8.2Total plan assets in the fair value hierarchy$16.1 $26.1 $— $42.2 Plan Assets Measured at NAV 4 : Salaried VEBA – Equity investment funds in registered investment companies 5 21.3Canadian pension plan – Diversified investment funds in registered investmentcompanies 3 6.1Total plan assets at fair value $69.6 As of December 31, 2015: Plan Assets in the Fair Value Hierarchy: Salaried VEBA – Fixed income investment funds in registered investment companies 1$— $15.7 $— $15.7Cash and money market investments 21.9 — — 1.9Diversified investment funds in registered investment companies 314.7 — — 14.7Total Salaried VEBA assets in the fair value hierarchy$16.6 $15.7 $— $32.3Deferred compensation program – Diversified investment funds in registered investmentcompanies 3— 7.3 — 7.3Total plan assets in the fair value hierarchy$16.6 $23.0 $— $39.6 Plan Assets Measured at NAV 4 : Salaried VEBA – Equity investment funds in registered investment companies 5 23.8Canadian pension plan – Diversified investment funds in registered investmentcompanies 3 5.7Total plan assets at fair value $69.172Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS_________________________1. This category represents investments in various fixed income funds with multiple registered investment companies. Such funds invest in diversified portfolios,including: (i) marketable fixed income securities, such as (a) U.S. Treasury and other government and agency securities, (b) municipal bonds, (c) mortgage-backed securities, (d) asset-backed securities, (e) corporate bonds, notes and debentures in various sectors, (f) preferred and common stock, (g) investments inaffiliated and other investment companies, (h) short-term investments and other net assets, and (i) repurchase agreements and reverse repurchase agreements;(ii) other commingled investments; (iii) investment grade debt; (iv) fixed income instruments which may be represented by options, future contracts or swapagreements; and (v) cash and cash equivalents.2. This category represents cash and investments in various money market funds.3. The plan assets are invested in investment funds that hold a diversified portfolio of: (i) U.S and international debt and equity securities; (ii) fixed incomesecurities such as corporate bonds and government bonds; (iii) mortgage-related securities; and (iv) cash and cash equivalents.4. The market value of these funds has not been categorized in the fair value hierarchy and is being presented in the table above to permit a reconciliation of thefair value hierarchy to the Consolidated Balance Sheets. Equity investment funds measured at fair value using the NAV practical expedient are managed by aninvestment adviser registered with the SEC under the Investment Advisers Act of 1940 and can be redeemed with five business days notice on the 15th (or lastbusiness day prior to the 15th) and on the last business day of each month. A business day is every day that the New York Stock Exchange is open. Diversifiedinvestment funds measured at fair value using the NAV practical expedient are unitized mutual funds without externally published net asset values, which canbe redeemed daily without restriction.5. This category represents investments in equity funds that invest in portfolios comprised of: (i) equity and equity-related securities of U.S. and non-U.S. issuersacross all market capitalizations; (ii) common stock in investment trust funds; and (iii) other short-term investments.Components of Net Periodic Benefit Cost (Income). Our results of operations included the following impacts associated with the Canadian defined benefit planand the VEBAs: (a) charges for service rendered by employees; (b) a charge for accretion of interest; (c) a benefit for the return on plan assets; and (d) amortizationof net gains or losses on assets, prior service costs associated with plan amendments and actuarial differences. The following table presents the components of netperiodic benefit cost (income) for the years ended December 31 (in millions of dollars): Canadian Pension Plan VEBAs 2016 2015 2014 2016 2015 2014Service cost 1 $0.3 $0.3 $0.2 $— $— $2.2Interest cost 0.3 0.3 0.3 2.9 2.7 16.7Expected return on plan assets (0.3) (0.3) (0.3) (4.1) (4.3) (51.4)Amortization of prior service cost 2 — — — 4.1 3.0 10.6Amortization of net actuarial loss (gain) — 0.1 0.1 0.5 1.0 (1.8)Net periodic benefit cost (income) $0.3 $0.4 $0.3 $3.4 $2.4 $(23.7)__________________________1. The service cost related to the Salaried VEBA 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.73Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following tables present the total charges (income) related to all benefit plans for the periods presented (in millions of dollars): Year Ended December 31, 2016 2015 2014Included within Fabricated Products: Canadian pension plan $0.3 $0.4 $0.3Deferred compensation plan 0.2 0.1 0.2Defined contribution plans 8.1 7.8 7.3Multiemployer pension plans 1 4.7 4.4 4.0Total Fabricated Products 2 $13.3 $12.7 $11.8 Included within All Other: Net periodic postretirement benefit cost (income) relating to VEBAs 3.4 2.4 (23.7)(Gain) loss on removal of Union VEBA net assets (0.1) 493.4 —Deferred compensation plan 0.7 0.3 0.7Defined contribution plans 0.8 0.8 0.8Total All Other 3 $4.8 $496.9 $(22.2) Total $18.1 $509.6 $(10.4)___________________________1. See Note 7 for more information on our multiemployer defined benefit pension plans.2. Substantially all of the Fabricated Products segment’s charges related to employee benefits were in Cost of products sold, excluding depreciation andamortization and other items with the remaining balance in SG&A and R&D.3. Charges (income) related to VEBAs is included within the Statements of Consolidated Income (Loss) as Net periodic postretirement benefit cost (income)relating to VEBAs with the remaining balance in SG&A and R&D.7. Multiemployer Pension PlansOverview. We contribute to multiemployer defined benefit pension plans under the terms of collective bargaining agreements that cover our union-representedemployees at certain facilities. At December 31, 2016 , approximately 53% of our total employees were union-represented employees at facilities participating inthese multiemployer pension plans. We currently estimate that contributions will range from $3.0 million to $5.0 million per year through 2017 .The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:•Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.•If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.•If we choose to stop participating in some of our multiemployer plans, we may be required to pay those plans an amount based on the underfunded statusof the plan, referred to as a withdrawal liability.74Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSOur participation in multiemployer pension plans for the year ended December 31, 2016 is outlined in the table below:Pension Fund EmployerIdentificationNumber Pension Protection ActZone Status 1 FIP/RP StatusPending/Implementedin 2016 2 Contributions of the Company SurchargeImposed in2016 Expiration Date ofCollective-BargainingAgreements 2016 2015 2014 2016 2015 (in millions of dollars) Steelworkers PensionTrust (USW) 3 236648508 Green Green No $3.7 $3.5 $3.1 No Mar2017-Sep2020Other Funds 4 1.0 0.9 0.9 $4.7 $4.4 $4.0 ________________ 1. The most recent Pension Protection Act zone status available in 2016 and 2015 for the Steelworkers Pension Trust is for the plan's year-end at December 31,2015 and December 31, 2014 , respectively. The zone status is based on information that we received from the plan and is certified by the plan's actuary.Among other factors, plans in the green zone are at least 80 percent funded.2. The "FIP/RP Status Pending/Implemented" column indicates if a Financial Improvement Plan (FIP) or a Rehabilitation Plan (RP) is either pending or has beenimplemented for the plan under the Pension Protection Act.3. We are party to three USW collective bargaining agreements that require contributions to the Steelworkers Pension Trust. As of December 31, 2016 , USWcollective bargaining agreements covering employees at the Newark, Ohio ("Newark") and Spokane, Washington ("Trentwood") facilities covered 85% of ourUSW-represented employees and expire in September 2020. Our monthly contributions per hour worked by each bargaining unit employee at the Newark andTrentwood facilities are (in whole dollars) $1.50 and will increase to $1.75 in 2019. The union contracts covering employees at the Richmond, Virginiafacility and Florence, Alabama facility cover 11% and 4% of our USW-represented employees, respectively, and expire in November 2017 and March 2017,respectively.4. Other Funds consists of plans that are not individually significant.We were not listed in any of the plans' Forms 5500 or the Canada-Wide Industrial Pension Plan financial statements as providing more than 5% of the totalcontributions for any of the plan years disclosed. At December 31, 2016 , Forms 5500 were not available for the plan years ending in 2016 . Further, there were nosignificant changes to the number of employees covered by our multiemployer plans that would affect the period-to-period comparability of the contributions forthe years presented.8. Employee Incentive PlansShort-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 ofcommon 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 AdjustedEBITDA targets are determined based on the economic value added ("EVA") of our Fabricated Products business. Most of our production facilities have similarprograms for both hourly and salaried employees. As of December 31, 2016 , we had a liability of $24.4 million recorded within Accrued salaries, wages andrelated expenses for estimated probable future payments relating to the 12-month performance period of our 2016 STI Plans.Long-Term Incentive Programs ("LTI Programs")General . Prior to May 26, 2016, executive officers and other key employees of the Company, as well as non-employee directors of the Company, were eligibleto participate in the Kaiser Aluminum Corporation Amended and Restated 2006 Equity and Performance Incentive Plan ("2006 Plan"). Subject to certainadjustments that may be required from time to time to prevent dilution or enlargement of the rights of participants under the 2006 Plan, a total of 2,722,222common shares were authorized for issuance under the 2006 Plan.75Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSOn May 26, 2016, our stockholders approved the Kaiser Aluminum Corporation 2016 Equity and Incentive Compensation Plan ("2016 Plan"), which replacedand succeeded in its entirety the 2006 Plan. No grants will be made under the 2006 Plan on or after May 26, 2016, but outstanding awards granted under the 2006Plan will continue unaffected.Effective May 26, 2016, executive officers and other key employees of the Company, as well as non-employee directors of the Company and certain personswho provide services to us that are equivalent to those typically provided by an employee, are eligible to participate in the 2016 Plan. Subject to certainadjustments that may be required from time to time to prevent dilution or enlargement of the rights of participants under the 2016 Plan, the number of shares ofcommon stock available for awards is limited to 1,045,000 shares, minus, (i) one share for every one share subject to an award granted under the 2006 Planbetween December 31, 2015 and the effective date of the 2016 Plan, plus (ii) any shares of our common stock that become available under the 2016 Plan as a resultof forfeiture, cancellation, expiration, or cash settlement of awards. At December 31, 2016 , 922,995 shares were available for awards under the 2016 Plan.Non-vested Common Shares and Restricted Stock Units. We grant non-vested common shares to our non-employee directors and non-vested common sharesand restricted stock units to our executive officers and other key employees. The restricted stock units have rights similar to the rights of non-vested commonshares and each restricted stock unit that becomes vested entitles the recipient to receive one common share. For both non-vested common shares and restrictedstock units, the service period is generally one year for non-employee directors and three years for executive officers and other key employees.In addition to non-vested common shares and restricted stock units, we grant performance shares to executive officers and other key employees. Eachperformance share that becomes vested entitles the recipient to receive one common share. Performance shares granted in 2014 and 2015 ("TSR-BasedPerformance Shares") are subject to performance conditions pertaining to our total shareholder return ("TSR") over a three -year performance period compared tothe TSR of a specified group of peer companies. The number of TSR-Based Performance Shares that will ultimately vest under both the 2014-2016 and 2015-2017LTI Programs and result in the issuance of common shares ranges between 0% to 200% of the target number of underlying common shares (constitutingapproximately one-half of the maximum payout) and depends on the percentile ranking of our TSR compared to the group of peer companies. Performance sharesgranted in 2016 consist of TSR-Based Performance Shares and performance shares subject to performance requirements ("CP-Based Performance Shares")pertaining to our cost performance as set forth in the 2016-2018 LTI Program. The number of CP-Based Performance Shares that will ultimately vest and result inthe issuance of common shares ranges between 0% to 200% of the target number of underlying common shares (constituting approximately one-half of themaximum payout) and depends on the average annual cost performance achieved for the specified three -year performance period.During the first quarter of 2016, a portion of the performance shares granted in 2013 ("EVA-Based Performance Shares") under the 2013-2015 LTI Programvested (see "Summary of Activity" below). The EVA-Based Performance Shares were subject to performance conditions pertaining to our EVA performance,measured over the three -year performance period. The number of EVA-Based Performance Shares that vested and resulted in the issuance of common shares wasdependent on the average annual EVA achieved for the specified three -year performance period.The vesting of performance shares resulting in the issuance and delivery of common shares, if any, under the, 2014-2016, 2015-2017 and 2016-2018 LTIPrograms will occur in 2017, 2018 and 2019 respectively.ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , was issued and earlyadopted in March 2016. ASU 2016-09 eliminates the requirement to estimate and apply a forfeiture rate to reduce stock compensation expense during the vestingperiod and, instead, account for forfeitures as they occur. ASU 2016-09 requires that this change be adopted using the modified retrospective approach. As such,we recorded a cumulative-effect adjustment of $0.8 million during the first quarter of 2016 to reduce our Retained earnings and increase our Additional paid incapital balances both as of December 31, 2015. Additionally, ASU 2016-09 addresses the presentation of excess tax benefits and employee taxes paid on thestatement of cash flows. We are now required to present excess tax benefits as an operating activity (combined with other income tax cash flows) on the statementof cash flows rather than as a financing activity, and we adopted this change prospectively during the first quarter of 2016. ASU 2016-09 also requires thepresentation of employee taxes as a financing activity on the statement of cash flows, which is where we had previously classified these items. This change,therefore, did not impact our financial statements.76Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNon-Cash Compensation Expense. Non-cash compensation expense relating to all awards under the 2006 Plan and the 2016 Plan is included in SG&A andR&D. Non-cash compensation expense by type of award under LTI Programs was as follows for each period presented (in millions of dollars): Year Ended December 31, 2016 2015 2014Non-vested common shares and restricted stock units$4.7 $4.4 $3.9TSR-Based Performance Shares5.4 4.0 1.9CP-Based Performance Shares1.3 — —EVA-Based Performance Shares0.3 0.9 1.0Total non-cash compensation expense$11.7 $9.3 $6.8The following table presents the allocation of the charges detailed above, by segment (in millions of dollars): Year Ended December 31, 2016 2015 2014Fabricated Products$4.2 $3.5 $3.2All Other7.5 5.8 3.6Total non-cash compensation expense$11.7 $9.3 $6.8Recognized tax benefits relating to non-cash compensation expense were $4.4 million , $3.5 million and $2.5 million for 2016 , 2015 and 2014 , respectively.Unrecognized Gross Compensation Cost Data. The following table presents unrecognized gross compensation cost data by type of award as of December 31,2016 : Unrecognized Gross Compensation Costs (inmillions of dollars) Expected Period (in years) Over Which theRemaining Gross Compensation Costs Will BeRecognizedNon-vested common shares and restricted stock units$5.9 1.7TSR-Based Performance Shares$6.3 1.6CP-Based Performance Shares$3.4 2.277Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSSummary of Activity. A summary of the activity with respect to non-vested common shares, restricted stock units, TSR-Based Performance Shares, CP-BasedPerformance Shares and EVA-Based Performance Shares for the year ended December 31, 2016 is as follows: Non-VestedCommon Shares RestrictedStock Units TSR-Based PerformanceShares CP-Based PerformanceShares EVA-Based PerformanceShares Shares Weighted-AverageGrant-DateFairValue perShare Units Weighted-AverageGrant-DateFairValue perUnit Shares Weighted-Average Grant-DateFair Value perShare Shares Weighted-Average Grant-DateFair Value perShare Shares Weighted-Average Grant-DateFair Value perShareOutstanding atDecember 31,2015156,553 $67.20 5,521 $66.64 299,877 $89.43 — $— 155,105 $57.76Granted 19,702 86.11 59,105 75.29 95,974 93.02 63,983 80.46 — —Vested(51,218) 65.59 (2,097) 63.02 — — — — (49,611) 57.76Forfeited 1(379) 69.18 (729) 74.49 (1,326) 90.53 (305) 80.46 — —Canceled 1— — — — — — — — (105,494) 57.76Outstanding atDecember 31,2016114,658 $69.51 61,800 $74.94 394,525 $90.30 63,678 $80.46 — $—_____________________1. For TSR-Based Performance Shares, CP-Based Performance Shares and EVA-Based Performance Shares, the number of shares granted and forfeited arepresented at their maximum payout; and the number of shares canceled includes the number of shares that did not vest due to EVA performance resultsfalling below those required for maximum payout. Non-vested common shares and 1,900 restricted stock units granted in 2016 were granted under the2016 Plan.The weighted-average grant-date fair value per share for shares granted by type of award was as follows for each period presented: Year Ended December 31, 2016 2015 2014Non-vested common shares$86.11 $72.09 $66.42Restricted stock units$75.29 $69.83 $67.42TSR-Based Performance Shares$93.02 $95.68 $83.18CP-Based Performance Shares$80.46 $— $—Stock Options. As of December 31, 2015 , we had 16,645 fully-vested outstanding stock options exercisable to purchase common shares at $80.01 per share andhaving a remaining contractual life of 15 months . During the year ended December 31, 2016 , 15,102 options were exercised and no options were granted orforfeited, resulting in 1,543 fully-vested stock options outstanding as of December 31, 2016 with a remaining contractual life of 3 months .Under each of the 2006 Plan and 2016 Plan, participants may elect to have us withhold common shares to satisfy minimum statutory tax withholdingobligations arising in connection with the exercise of stock options and vesting of non-vested shares, restricted stock units and performance shares. We cancel anysuch shares withheld on the applicable vesting dates or earlier dates when service requirements are satisfied, which correspond to the times at which income to theemployee is recognized. When we withhold these common shares, we are required to remit to the appropriate taxing authorities the fair value of the shareswithheld as of the vesting date. During 2016 , 2015 and 2014 , 36,055 , 37,009 and 33,696 common shares, respectively, were withheld and canceled for thispurpose. The withholding of common shares by us could be deemed a purchase of the common shares.78Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS9. Commitments and ContingenciesCommitments. 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 10 ).Rental expenses were $8.5 million , $8.2 million and $7.4 million for 2016 , 2015 and 2014 , respectively. There are renewal options in various operating leasessubject to certain terms and conditions. Minimum rental commitments under operating leases at December 31, 2016 were as follows (in millions of dollars): Year Ended December 31, 2017 2018 2019 2020 2021 2022 andThereafterMinimum rental commitments $6.1 $5.4 $5.1 $2.8 $2.4 $23.1CAROs. The inputs in estimating the fair value of CAROs include: (i) the timing of when any such CARO cash flows may be incurred; (ii) incremental costsassociated with special handling or treatment of CARO materials; and (iii) the credit-adjusted risk-free rate applicable at the time additional CARO cash flows areestimated; all of which are considered Level 3 inputs as they involve significant judgment from us.The following table summarizes the activity relating to our CARO liabilities (in millions of dollars): Year Ended December 31, 2016 2015 2014Beginning balance $4.9 $4.8 $4.4Liabilities incurred during the period — — —Liabilities settled during the period (0.1) (0.2) —Accretion expense 0.5 0.3 0.4Adjustment to accretion expense due to revisions to estimated cash flow and timing ofexpenditure 1 0.2 — —Ending balance $5.5 $4.9 $4.8__________________________________________ 1. The adjustments in 2016 did not have a material impact on the basic and diluted net income per share for 2016. The estimated fair value of CARO liabilities at December 31, 2016 and December 31, 2015 were both based upon the application of a weighted-average credit-adjusted risk-free rate of 8.6% . CAROs are included in Other accrued liabilities or Long-term liabilities, as appropriate (see Note 2 ).Environmental Contingencies. We are subject to a number of environmental laws and regulations, to potential fines or penalties assessed for alleged breaches ofsuch laws and regulations and to potential claims based upon such laws and regulations. We are also subject to legacy environmental contingencies related toactivities 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 proceduresfor regularly evaluating environmental loss contingencies. Our environmental accruals represent our undiscounted estimate of costs reasonably expected to beincurred based on presently enacted laws and regulations, existing requirements, currently available facts, existing technology and our assessment of the likelyremediation actions to be taken.In 2012, we submitted a final feasibility study to the Washington State Department of Ecology ("Washington State Ecology") that included recommendationsfor remediation alternatives primarily to address the historical use of oils containing polychlorinated biphenyls ("PCBs") at our Trentwood facility. We also signedan amended work order in 2012 with Washington State Ecology allowing certain remediation activities to begin, including the initiation of a treatability study inregards to proposed PCB remediation methods. We began implementation of certain approved sections of the work plan in 2013 and throughout 2014, completinga number of these sections in 2014 and receiving approval from Washington State Ecology on completed sections. In cooperation with Washington State Ecology,in 2015 we constructed a pilot test facility to determine the treatability and evaluate the feasibility of removing PCBs from ground water under the Trentwoodfacility. We initiated and79Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSbegan operating the treatment test facility in the first half of 2016. As the success of the new methodology cannot be reasonably determined at this time, it ispossible we may need to make upward adjustments to our related accruals as facts and cost estimates regarding the groundwater treatment method and theoperation 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 facility related tohistorical on-site waste disposal. Since 2014, we completed a number of preliminary steps in the preparation of completing the final risk assessment and feasibilitystudy, 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 willestablish and update estimates for probable and estimable remediation, if any. The actual and final cost for remediation will not be fully determinable until a finalfeasibility study is submitted and accepted by the OEPA and work plans are prepared, which is expected to occur in the next 12 to 18 months .The following table presents the changes in our environmental accrual, which was primarily included in Long-term liabilities (in millions of dollars): Year Ended December 31, 2016 2015 2014Beginning balance $18.6 $19.3 $22.8Additional accruals 0.1 1.3 0.8Less expenditures (1.5) (2.0) (4.3)Ending balance $17.2 $18.6 $19.3At December 31, 2016 , our environmental accrual of $17.2 million represented our estimate of the incremental remediation cost based on: (i) proposedalternatives in the final feasibility study related to the Trentwood facility; (ii) currently available facts with respect to our Newark facility; and (iii) facts related tocertain other locations owned or formerly owned by us. In accordance with approved and proposed remediation action plans, we expect that the implementationand 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 theimplementation of remediation are obtained, alternative technologies are developed and/or other factors change, there may be revisions to management’s estimatesand actual costs may exceed the current environmental accruals. We believe at this time that it is reasonably possible that undiscounted costs associated with theseenvironmental matters may exceed current accruals by amounts that could be, in the aggregate, up to an estimated $12.3 million over the remediation period. Wereduced the amount by which the reasonably possible amount exceeded the accrued amount from $24.7 million to $12.3 million during the quarter endedSeptember 30, 2016 following a review of remediation work completed at our Trentwood facility and accepted by Washington State Ecology. It is reasonablypossible 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 currentoperations. We evaluate such matters on a case-by-case basis and our policy is to vigorously contest any such claims we believe are without merit. We accrue for alegal liability when it is both probable that a liability has been incurred and the amount of the loss is reasonably estimable. Quarterly, in addition to when changesin facts and circumstances require it, we review and adjust these accruals to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel andother information and events pertaining to a particular case. While uncertainties are inherent in the final outcome of such matters and it is presently impossible todetermine the actual cost that may ultimately be incurred, we believe that we have sufficiently accrued for such matters and that the ultimate resolution of pendingmatters will not have a material impact on our consolidated financial position, operating results or liquidity.80Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS10. Derivative Financial Instruments and Related Hedging ProgramsOverview . In conducting our business, we enter into derivative transactions, including forward contracts and options, to limit our economic (i.e. cash) exposureresulting from: (i) metal price risk related to our sale of fabricated aluminum products and the purchase of metal used as raw material for our fabricationoperations; (ii) energy price risk relating to fluctuating prices of natural gas and electricity used in our production processes; (iii) foreign currency requirementswith respect to our foreign subsidiaries and cash commitments for equipment purchases denominated in foreign currency; and (iv) from time to time, financial risksin connection with financing transactions.Our derivative activities are overseen by a hedging committee ("Hedging Committee"), which is composed of our chief executive officer, chief operatingofficer, chief financial officer, chief accounting officer, treasurer and vice president of commodity risk management and other officers and employees selected bythe chief executive officer. The Hedging Committee meets regularly to review derivative positions and strategy and reports to our Board of Directors on the scopeof its activities.We are exposed to counterparty credit risk on all of our derivative instruments, which we manage by monitoring the credit quality of our counterparties andallocating our hedging positions among multiple counterparties to limit exposure to any single entity. Our counterparties are major, investment grade financialinstitutions or trading companies. Hedging transactions are governed by negotiated reciprocal credit lines, which require collateral to be posted above specifiedcredit 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. Belowspecified 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 managethis risk by allocating hedging transactions among multiple counterparties, using options as part of our hedging activities, or both. The aggregate fair value of ourderivative instruments that were in a net liability position was $0.1 million and $14.6 million at December 31, 2016 and December 31, 2015 , respectively, and wehad no collateral posted as of those dates.Additionally, our firm-price customer sales commitments create incremental customer credit risk related to metal price movements. Under certaincircumstances, we mitigate this risk by periodically requiring cash collateral from them, which we classify as deferred revenue and include as a component ofOther accrued liabilities on our Consolidated Balance Sheets. At December 31, 2016 , we had no cash collateral posted with any of our customers. For moreinformation about concentration risks concerning customers and suppliers, see Note 12 .Notional Amount of Derivative Contracts . The following table summarizes the notional amounts of our material derivative positions at December 31, 2016 :Aluminum Maturity Period(month/year) Notional Amount ofContracts (mmlbs)Fixed price purchase contracts 1/17 through 12/19 149.0Fixed price sales contracts 1/17 through 1/17 0.4Midwest premium swap contracts 1 1/17 through 12/19 147.9Alloying Metals Maturity Period(month/year) Notional Amount ofContracts (mmlbs)Fixed price purchase contracts 1/17 through 12/17 4.0Natural Gas 2 Maturity Period(month/year) Notional Amount ofContracts (mmbtu)Fixed price purchase contracts 1/17 through 12/19 5,040,00081Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSEuro Maturity Period(month/year) Notional Amount of contracts(euro)Fixed price purchase contracts 1/17 through 8/17 1,593,700Fixed price sales contracts 1/17 through 1/17 633,600_________________________1. Regional premiums represent the premium over the London Metal Exchange price for primary aluminum which is incurred on our purchases of primaryaluminum.2. As of December 31, 2016 , we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in pricesfor approximately 73% , 72% and 49% of the expected natural gas purchases for 2017 , 2018 and 2019 , respectively.We have physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 54% , 54% and 36% ofthe expected electricity purchases for 2017 , 2018 and 2019 , respectively.Realized and Unrealized Gain (Loss). Realized and unrealized gain (loss) associated with all derivative contracts consisted of the following for each periodpresented (in millions of dollars): Year Ended December 31, 2016 2015 2014Included in Other Comprehensive Income (Loss): Unrealized gain (loss): Foreign currency cash flow hedge $— $(0.3) $—Alloy Hedges (0.1) — —Included in Statement of Consolidated Income (Loss): Realized (loss) gain: Aluminum (2.0) (27.3) 6.9Natural gas (5.0) (5.4) 1.0Foreign currency (0.1) — —Electricity — (1.9) (0.1)Total realized (loss) gain 1 : $(7.1) $(34.6) $7.8Unrealized gain (loss): Aluminum $10.8 $(4.6) $(2.6)Natural gas 7.9 (0.5) (6.0)Electricity — 1.7 (1.8)Subtotal 2 18.7 (3.4) (10.4)Hedges related to Convertible Notes: Option Assets — — 5.2Bifurcated Conversion Feature — — (1.6)Subtotal 3 — — 3.6Total unrealized gain (loss) $18.7 $(3.4) $(6.8)______________________1. Realized (loss) gain on hedges of operational risk are recorded within Cost of products sold, excluding depreciation, amortization and other items.2. Unrealized gain (loss) on hedges of operational risk are recorded within Unrealized gain (loss) on derivative instruments.3. Unrealized gain (loss) on financial derivatives related to the Convertible Notes, which settled in April 2015, were recorded within Other (expense) income,net.82Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNon-Designated Hedges of Operational Risks . Our pricing of fabricated aluminum products is generally intended to lock in a conversion margin (representingthe 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 soldon 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 pricesdecline and an adverse impact to us when metal prices increase. Additionally, in certain instances, we enter into firm-price arrangements with our customers forstipulated volumes to be delivered in the future. Because we generally purchase primary and secondary aluminum on a floating price basis, the lag in passingthrough 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 ourcustomers 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 themetal pass through lag on some of our products and firm-price customer sales contracts.We are also exposed to risk of fluctuating prices for natural gas and electricity. We, from time to time, in the ordinary course of business, enter into hedgingtransactions and/or physical delivery commitments with third parties to mitigate our risk from fluctuations in natural gas and electricity prices.Designated Foreign Currency Cash Flow Hedges . We are exposed to foreign currency exchange risk related to firm-price agreements for equipment purchasesfrom foreign manufacturers. Such agreements require that we make payments in foreign currency to the vendor over time based on milestone achievements. Weuse foreign currency forward contracts in order to mitigate the exposure to currency exchange rate fluctuations related to these purchases. The timing and amountsof the forward contract settlements are designed to line up with the timing and amounts of scheduled payments to the foreign equipment manufacturers and aretherefore expected to be highly effective hedges. During 2016 , we entered into forward contracts designated as cash flow hedges to purchase euros. As ofDecember 31, 2016 , we had open contracts with maturity dates between one month and eight months related to these foreign currency forward contracts. Thenotional amounts of these foreign currency forward contracts totaled 2.2 million euros at December 31, 2016 with a weighted average contract exchange rate of1.08 euro to US dollar. The effective portion of the fair value on these instruments is recorded within Other comprehensive income (loss) and is reclassified intothe Statements of Consolidated Income (Loss) on the same line item and the same period in which the underlying equipment is depreciated.Designated Alloying Metal Hedges . We enter into agreements with suppliers to purchase alloying metals (zinc and copper) used as raw materials in ourfabrication operations. Because we are unable to pass along the cost of these alloying metals to our customers, we are exposed to metal price risk. To limit oureconomic (i.e., cash) exposure to future prices increases of zinc and/or copper, we enter into Alloy Hedges with third-party financial institutions. Under these AlloyHedges, we are able to purchase the required alloying metals at predetermined/fixed prices at stated delivery dates. Our Alloy Hedges settle monthly andcorrespond to forecasted purchases of zinc and/or copper by our manufacturing facilities and are therefore expected to be highly effective hedges. During 2016 , weentered into Alloy Hedges designated as cash flow hedges to purchase zinc and as of December 31, 2016 , we had one open contract with a maturity date of 12months . The notional amounts of these Alloy Hedges totaled 4.0 million pounds at December 31, 2016 . The effective portion of the fair value on these AlloyHedges is recorded within Other comprehensive income (loss) and is reclassified into the Statements of Consolidated Income (Loss) during the month of settlementto Cost of products sold. We had no such reclassifications into Net income (loss) during 2016 and anticipate immaterial reclassifications for the next 12 months.For 2016 , we recorded an unrealized loss of $0.1 million on the effective portions of our designated Alloy Hedges, resulting in an ending loss in Accumulatedother comprehensive loss related to the cash flow hedges of $0.1 million at December 31, 2016 . We incurred no ineffectiveness on these hedges during 2016 .Fair Values of Derivative Contracts . The fair values of our derivative contracts are based upon trades in liquid markets. Valuation model inputs can beverified, and valuation techniques do not involve significant judgment. The fair values of such financial instruments are classified within Level 2 of the fair valuehierarchy. We, however, have historically had some derivative contracts that did not have observable market quotes. For these financial instruments, managementused significant unobservable inputs (e.g., information concerning regional premiums for swaps). Where appropriate, valuations were adjusted for various factors,such as bid/offer spreads. The fair values of these financial instruments are classified as Level 3 in the fair value hierarchy.83Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following table presents our derivative assets and liabilities, classified under the appropriate level of the fair value hierarchy, as of the period presented (inmillions of dollars): December 31, 2016 Level 1 Level 2 Level 3 TotalDERIVATIVE ASSETS: Non-Designated Hedges: Aluminum – Fixed price purchase contracts$— $3.3 $— $3.3Natural gas – Fixed price purchase contracts— 1.6 — 1.6Midwest premium swap contracts— 0.9 — 0.9Total derivative assets$— $5.8 $— $5.8 DERIVATIVE LIABILITIES: Non-Designated Hedges: Aluminum – Fixed price purchase contracts$— $(1.1) $— $(1.1)Fixed price sales contracts— — — —Midwest premium swap contracts— (0.2) — (0.2)Natural gas – Fixed price purchase contracts— (0.4) — (0.4) Designated Hedges: Alloying metals – Fixed price purchase contracts— (0.1) — (0.1)Total derivative liabilities$— $(1.8) $— $(1.8)84Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following table presents our derivative assets and liabilities, classified under the appropriate level of the fair value hierarchy, as of the period presented (inmillions of dollars): December 31, 2015 Level 1 Level 2 Level 3 TotalDERIVATIVE ASSETS: Non-Designated Hedges: Aluminum – Call option purchase contracts$— $0.2 $— $0.2Fixed price purchase contracts— 0.3 — 0.3Fixed price sales contracts— 0.2 — 0.2Midwest premium swap contracts— — 0.9 0.9Total derivative assets$— $0.7 $0.9 $1.6 DERIVATIVE LIABILITIES: Non-Designated Hedges: Aluminum – Fixed price purchase contracts$— $(8.9) $— $(8.9)Fixed price sales contracts— (0.1) — (0.1)Midwest premium swap contracts— — (0.3) (0.3)Natural gas – Fixed price purchase contracts— (6.7) — (6.7) Designated Hedges: Foreign currency – Euro forward purchase contracts— (0.2) — (0.2)Total derivative liabilities$— $(15.9) $(0.3) $(16.2)The aggregate fair value of our derivatives recorded on the Consolidated Balance Sheets at December 31, 2016 and December 31, 2015 was a net asset of $4.0million and net liability of $14.6 million , respectively. The decrease in the net liability position during 2016 was primarily due to changes in the underlyingcommodity and energy prices, as well as settlement of liability positions during the period. Changes in the fair value of our derivative contracts relating to non-designated hedges of operational activities are reflected in Operating income (loss).Prior to September 30, 2016, Midwest premium swap contracts represented financial instruments classified as Level 3 in the fair value hierarchy. Fair value wasdetermined using a forward curve based on the average pricing quotes from our trading counterparties less a discount factor based on the risk-free interest rate.During the quarter ended December 31, 2016, we began calculating the fair value of our Midwest premium swap contracts using quoted prices for similarinstruments traded on the Comex exchange, less a discount factor based on the risk-free interest rate, and transferred the fair value of these financial instruments toLevel 2 within the fair value hierarchy.85Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following table presents a reconciliation of activity for the Level 3 Midwest premium derivative contracts on a net basis (in millions of dollars): Year Ended December 31, 2016 2015Fair value measurement at beginning of period$0.6 $1.0Total realized/unrealized (loss) gain included in: Cost of goods sold, excluding depreciation and amortization and other items and Unrealized loss (gain) onderivative instruments(0.6) (3.9)Transactions involving Level 3 derivative contracts: Purchases(1.2) (4.0)Sales— —Issuances— —Settlements0.4 7.5Transactions involving Level 3 derivatives - net(0.8) 3.5Transfers out of Level 3 valuation hierarchy 10.8 —Fair value measurement at end of period$— $0.6 Total loss included in Unrealized loss (gain) on derivative instruments, attributable to the change in unrealizedgain/loss relating to derivative contracts held at December 31:$— $0.6_________________________1. Transfers out of the Level 3 hierarchy assumed to occur at the beginning of the fourth quarter.Offsetting Information . We enter into derivative contracts with counterparties, some of which are subject to enforceable master netting arrangements and someof which are not. We reflect the fair value of our derivative contracts on a gross basis on the Consolidated Balance Sheets (see Note 2 ). We had no cash collateralpledged or received with our counterparties as of both December 31, 2016 and December 31, 2015 .The following tables present offsetting information regarding our derivatives by type of counterparty as of December 31, 2016 (in millions of dollars): Gross Amounts ofRecognized Assets Gross Amounts Offsetin the ConsolidatedBalance Sheets Net Amounts of AssetsPresented in theConsolidated BalanceSheets Gross Amounts NotOffset in theConsolidated BalanceSheets Net AmountCounterparty(with netting agreements)$3.3 $— $3.3 $1.0 $2.3Counterparty(with partial netting agreements)2.5 — 2.5 0.7 1.8Total$5.8 $— $5.8 $1.7 $4.1 Gross Amounts ofRecognized Liabilities Gross Amounts Offset inthe ConsolidatedBalance Sheets Net Amounts ofLiabilities Presented inthe ConsolidatedBalance Sheets Gross Amounts NotOffset in theConsolidated BalanceSheets Net AmountCounterparty(with netting agreements)$(1.0) $— $(1.0) $(1.0) $—Counterparty(with partial netting agreements)(0.8) — (0.8) (0.7) (0.1)Total$(1.8) $— $(1.8) $(1.7) $(0.1)86Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following tables present offsetting information regarding our derivatives by type of counterparty as of December 31, 2015 (in millions of dollars): Gross Amounts ofRecognized Assets Gross Amounts Offsetin the ConsolidatedBalance Sheets Net Amounts of AssetsPresented in theConsolidated BalanceSheets Gross Amounts NotOffset in theConsolidated BalanceSheets Net AmountCounterparty(with netting agreements)$1.3 $— $1.3 $1.3 $—Counterparty(with partial netting agreements)0.3 — 0.3 0.3 —Total$1.6 $— $1.6 $1.6 $— Gross Amounts ofRecognized Liabilities Gross Amounts Offset inthe ConsolidatedBalance Sheets Net Amounts ofLiabilities Presented inthe ConsolidatedBalance Sheets Gross Amounts NotOffset in theConsolidated BalanceSheets Net AmountCounterparty(with netting agreements)$(8.5) $— $(8.5) $(1.3) $(7.2)Counterparty(with partial netting agreements)(7.7) — (7.7) (0.3) (7.4)Total$(16.2) $— $(16.2) $(1.6) $(14.6)Fair Value of Other Financial InstrumentsAvailable for Sale Securities. We hold debt investment securities that are accounted for as available for sale securities. The fair value of the debt investmentsecurities, which consist of commercial paper and corporate bonds, is determined based on valuation models that use observable market data. At December 31,2016 , all of our short-term investments had maturity dates within 10 months . We review our debt investment portfolio for other-than-temporary impairment atleast quarterly or when there are changes in credit risk or other potential valuation concerns. At December 31, 2016 and December 31, 2015 , the total unrealizedloss, net of tax, included in Accumulated other comprehensive (loss) income was immaterial and was not other-than-temporarily impaired. We believe that it isprobable that the principal and interest will be collected in accordance with the contractual terms, and that the unrealized losses on these securities were due tochanges in normal market fluctuations, and were not due to increased credit risk or other valuation concerns. The fair value input of our available for salesecurities, which are classified within Level 2 of the fair value hierarchy, is calculated based on broker quotes. The amortized cost for available for sale securitiesapproximates their fair value.All Other Financial Assets and Liabilities. We believe that the fair value of our cash and cash equivalents, accounts receivable, accounts payable and accruedliabilities approximate their respective carrying values due to their short maturities and nominal credit risk. See Note 2 for components of cash and cashequivalents.The following table presents our other financial assets, classified under the appropriate level of the fair value hierarchy, as of December 31, 2016 (in millions ofdollars): Level 1 Level 2 Level 3 TotalCash and cash equivalents$37.9 $17.3 $— $55.2Short-term investments— 231.0 — 231.0Total$37.9 $248.3 $— $286.287Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following table presents our other financial assets, classified under the appropriate level of the fair value hierarchy, as of December 31, 2015 (in millions ofdollars): Level 1 Level 2 Level 3 TotalCash and cash equivalents$40.3 $32.2 $— $72.5Short-term investments— 30.0 — 30.0Total$40.3 $62.2 $— $102.511. Net Income (Loss) Per Share and Stockholders' EquityNet Income (Loss) Per Share . Basic and diluted net income (loss) per share for 2016 , 2015 and 2014 were calculated as follows (in millions of dollars, exceptshare and per share amounts): Year Ended December 31, 2016 2015 2014Numerator: Net income (loss) $91.7 $(236.6) $71.8Denominator – Weighted-average common shares outstanding (in thousands): Basic 1 17,813 17,201 17,818Add: dilutive effect of non-vested common shares, restricted stock units and performanceshares 220 — 179Add: dilutive effect of warrants 2 — — 596Diluted 3 18,033 17,201 18,593 Net income (loss) per common share, Basic: $5.15 $(13.76) $4.02Net income (loss) per common share, Diluted: $5.09 $(13.76) $3.86_____________1. The basic weighted-average number of common shares outstanding during the periods presented excludes non-vested common shares, restricted stock unitsand performance shares.2. Net-share-settled warrants ("Warrants") relating to approximately 3.7 million notional common shares of our common stock were outstanding at December 31,2014 at an exercise price of approximately $60.70 per share, and were settled during a period from July 1, 2015 through December 18, 2015. In total, weissued 1,015,185 shares of our common stock in connection with the Warrants and paid a de minimis amount in cash to the holders for fractional shares at theend of the settlement period.3. The diluted weighted-average number of common shares outstanding during the periods presented was calculated using the treasury method. There were 1,543 and 16,645 fully-vested options outstanding at December 31, 2016 and December 31, 2015 , respectively, in each case exercisable topurchase common shares at $80.01 per share.88Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following securities were excluded from the weighted-average diluted shares computation for 2016 , 2015 and 2014 as their inclusion would have beenanti-dilutive (in thousands of shares): Year Ended December 31, 2016 2015 2014Options to purchase common shares — — 17Non-vested common shares, restricted stock units and performance shares 50 302 —Warrants — 639 —Total excluded 50 941 17Dividends . During 2016 , 2015 and 2014 , we paid a total of approximately $32.4 million ( $1.80 per common share), $28.1 million ( $1.60 per common share)and $25.4 million ( $1.40 per common share), respectively, in cash dividends to stockholders, including the holders of restricted stock, and dividend equivalents tothe holders of certain restricted stock units and to the holders of performance shares granted prior to 2014 with respect to the target number of underlying commonshares (constituting approximately one-half of the maximum payout).Treasury Stock. From time to time, we repurchase shares pursuant to a stock repurchase program authorized by our Board of Directors. Repurchase transactionswill occur at such times and prices as management deems appropriate and will be funded with our excess liquidity after giving consideration to, among otherthings, internal and external growth opportunities and future cash flows. Repurchases may be in open-market transactions or in privately negotiated transactionsand the program may be modified or terminated by our Board of Directors at any time. Repurchases of our common stock pursuant to the stock repurchaseprogram is recorded as Treasury stock and consisted of the following for each period presented: Year Ended December 31, 2016 2015 2014Number of common shares repurchased 443,838 647,520 633,230Weighted-average repurchase price (dollars per share) $78.59 $76.35 $70.87Total cost of repurchased common shares (in millions of dollars) $34.9 $49.4 $44.9At December 31, 2016 and December 31, 2015 , $88.4 million and $123.3 million , respectively, were available to repurchase our common shares pursuant tothe stock repurchase program.Preferred Stock . In connection with the Tax Asset Rights Plan, our Board of Directors declared a dividend, payable April 22, 2016, of one Right for eachoutstanding share of our common stock. In general, if the Rights become exercisable, each Right would allow its holder to purchase one one-hundredth of a shareof our Series A Preferred Stock. The authorized number of shares of Series A Preferred Stock is 900,000 . For more information regarding the Rights, see Note 5 .12. Segment and Geographical Area InformationOur primary line of business is the production of semi-fabricated specialty aluminum products, such as aluminum plate and sheet and extruded and drawnproducts, primarily used in Aero/HS products, Automotive Extrusions, GE products, and Other products. We operate 11 focused production facilities in the UnitedStates and one in Canada. Consistent with the manner in which our chief operating decision maker reviews and evaluates our business, the Fabricated Productsbusiness is treated as a single operating segment. At December 31, 2016 , approximately 63% of our employees were covered by collective bargaining agreementsand approximately 6% of our employees were covered by collective bargaining agreements with expiration dates occurring within one year from December 31,2016 .In addition to the Fabricated Products segment, we have a business unit, All Other, which provides general and administrative support for our operations. Forpurposes of segment reporting under GAAP, we treat the Fabricated Products segment as a reportable segment. All Other is not considered a reportable segment.The accounting policies of the Fabricated Products segment are the same as those described in Note 1 . Segment results are evaluated internally bymanagement before any allocation of corporate overhead and without any charge for income taxes, interest expense, or other net operating charges.89Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following tables provide financial information by reporting segment and business unit for each period or as of each period end, as applicable (in millions ofdollars): Year Ended December 31, 2016 2015 2014Net sales: Fabricated Products$1,330.6 $1,391.9 $1,356.1Segment operating income (loss): Fabricated Products 1,2229.6 190.8 151.4All Other 3(51.8) (536.7) (13.5)Total operating income (loss)177.8 (345.9) 137.9Interest expense(20.3) (24.1) (37.5)Other (expense) income, net(10.3) (1.8) 6.7Income (loss) before income taxes$147.2 $(371.8) $107.1Depreciation and amortization: Fabricated Products$35.4 $31.9 $30.6All Other0.6 0.5 0.5Total depreciation and amortization$36.0 $32.4 $31.1Capital expenditures: Fabricated Products$75.6 $62.4 $58.5All Other0.5 0.7 0.9Total capital expenditures$76.1 $63.1 $59.4__________________1. Fabricated Products segment operating income during 2016 included a $2.6 million non-cash impairment charge relating to the write-off of a customerrelationship intangible asset (see Note 4 ). Also included in the Fabricated Products segment operating income were lower of cost or market inventory write-downs of $4.9 million and $2.6 million during 2016 and 2015 , respectively.2. Fabricated Products segment results for 2016 , 2015 and 2014 included a non-cash mark-to-market gain (loss) on primary aluminum, natural gas, electricityand foreign currency hedging activities totaling $18.7 million , $(3.4) million and $(10.4) million , respectively. See Note 10 for further discussion regardingmark-to-market matters.3. Operating loss of All Other included net periodic postretirement benefit cost (income) of $3.4 million , $2.4 million and $(23.7) million for 2016 , 2015 and2014 , respectively. Additionally, operating (income) loss of All Other included (Gain) loss on removal of Union VEBA net assets of $(0.1) million and$493.4 million during the year ended December 31, 2016 and December 31, 2015 , respectively. See Note 6 for further details. December 31, 2016 December 31, 2015Assets: Fabricated Products$969.4 $904.7All Other 1474.1 342.2Total assets$1,443.5 $1,246.9__________________1. Assets in All Other represent primarily all of our cash and cash equivalents, short-term investments, financial derivative assets, net assets of VEBAs (see Note6 and Note 10 ) and net deferred income tax assets.90Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNet sales by end market applications for the Fabricated Products segment were as follows (in millions of dollars): Year Ended December 31, 2016 2015 2014Net sales: Aero/HS products$675.4 $695.5 $686.3Automotive Extrusions188.8 199.2 173.5GE products420.1 426.1 419.5Other products46.3 71.1 76.8Total net sales$1,330.6 $1,391.9 $1,356.1Geographic information for net sales based on country of origin, income taxes paid and long-lived assets were as follows (in millions of dollars): Year Ended December 31, 2016 2015 2014Net sales to unaffiliated customers: Fabricated Products – United States$1,278.6 $1,321.3 $1,254.0Canada52.0 70.6 102.1Total net sales$1,330.6 $1,391.9 $1,356.1Income taxes paid: Fabricated Products – United States$0.7 $0.6 $2.1Canada0.5 1.7 1.4Total income taxes paid$1.2 $2.3 $3.5 December 31, 2016 2015Long-lived assets: 1 Fabricated Products – United States$494.7 $459.6Canada31.4 30.9Total Fabricated Products long-lived assets526.1 490.5All Other – United States4.8 4.9Total All Other long-lived assets4.8 4.9Total long-lived assets$530.9 $495.4__________________1. Long-lived assets represent Property, plant and equipment – net.The aggregate foreign currency transaction gain (loss) included in determining net income (loss) were immaterial for 2016 , 2015 and 2014 .For the years ended December 31, 2016 , December 31, 2015 and December 31, 2014 , one customer represented 26% , 25% and 22% , respectively, ofFabricated Products Net sales. For each of the years ended December 31, 2016 , December 31, 2015 , and December 31, 2014 , a second customer represented 10%of Fabricated Products Net sales.91Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSOne individual customer accounted for 18% and two individual customers each accounted for 12% of the trade receivables balance at December 31, 2016 .Two individual customers each accounted for 17% of the trade receivables balance at December 31, 2015 .Information for export sales and primary aluminum supply from our major suppliers were as follows: Year Ended December 31, 2016 2015 2014Percentage of Net sales: Export sales19% 19% 19% Percentage of total annual primary aluminum supply (lbs): Supply from our top five major suppliers84% 86% 71%Supply from our largest supplier32% 28% 30%Supply from our second and third largest suppliers32% 36% 25%13. Supplemental Cash Flow Information Year Ended December 31, 2016 2015 2014 (in millions of dollars)Interest paid$17.7 $22.1 $25.6Non-cash investing and financing activities: Stock repurchases not yet settled (accrued in accounts payable)$1.8 $0.2 $0.8Unpaid purchases of property and equipment$4.6 $10.5 $1.8Purchases of property and equipment through capital leasing arrangements$0.2 $— $—14. Other (Expense) Income, NetOther (expense) income, net consisted of the following for each period presented (in millions of dollars): Year Ended December 31, 2016 2015 2014Interest income$0.1 $0.4 $1.0Unrealized gain on financial derivatives 1— — 3.6Realized gain on investments0.8 0.8 1.0Loss on extinguishment of debt 2(11.1) — —All other, net 3(0.1) (3.0) 1.1Other (expense) income, net$(10.3) $(1.8) $6.7____________1. Reflects our net unrealized gain related to the Option Assets and Bifurcated Conversion Feature, which are discussed in Note 3 . See Note 1 for a discussion ofour accounting policy for such instruments.2. Represents the loss on extinguishment of our 8.25% Senior Notes during the year ended December 31, 2016 which includes an $8.2 million premium paid toredeem the notes and a $2.9 million write-off of unamortized debt issuance costs associated with the notes.3. See Note 3 for a discussion of the loss we recognized on our repurchase of 8.25% Senior Notes during the year ended December 31, 2015.92Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS15. Accumulated Other Comprehensive (Loss) IncomeThe following table presents the changes in the accumulated balances for each component of Accumulated other comprehensive (loss) income ("AOCI") foreach period presented (in millions of dollars): Year Ended December 31, 2016 2015 2014Defined benefit pension plan and VEBAs: Beginning balance $(31.3) $(96.4) $(20.8)Actuarial loss arising during the period (5.7) (12.9) (39.0)Less: income tax benefit 2.1 4.9 14.5Net actuarial loss arising during the period (3.6) (8.0) (24.5)Prior service (cost) credit arising during the period (8.3) 6.8 (90.5)Less: income tax benefit (expense) 3.1 (2.6) 33.8Net prior service (cost) credit arising during the period (5.2) 4.2 (56.7)Amortization of net actuarial loss (gain) 1 0.5 1.1 (1.8)Amortization of prior service cost 1 4.1 3.0 10.6Removal of obligation relating to Union VEBA — 106.6 —Less: income tax expense 2 (1.7) (41.8) (3.2)Net amortization and reclassification from AOCI to Net income (loss) 2.9 68.9 5.6Translation impact on Canadian pension plan AOCI balance 0.1 — —Other comprehensive (loss) income, net of tax (5.8) 65.1 (75.6)Ending balance $(37.1) $(31.3) $(96.4) Available for sale securities: Beginning balance $(0.1) $0.2 $0.4Unrealized gain (loss) on available for sale securities 1.9 (0.1) (0.2)Less: income tax (expense) benefit (0.7) — 0.1Net gain (loss) on available for sale securities 1.2 (0.1) (0.1)Gain reclassified from AOCI to Net income (loss) 3 (0.5) (0.4) (0.1)Less: income tax benefit 2 0.2 0.2 —Net gain reclassified from AOCI to Net income (loss) (0.3) (0.2) (0.1)Other comprehensive income (loss), net of tax 0.9 (0.3) (0.2)Ending balance $0.8 $(0.1) $0.2 Foreign currency cash flow hedges: Beginning balance $(0.2) $— $—Unrealized loss on foreign currency cash flow hedges — (0.3) —Less: income tax benefit — 0.1 —Net loss on foreign currency cash flow hedges — (0.2) —Loss reclassified from AOCI to Net income (loss) 4 0.1 — —Less: income tax (expense) benefit 2 — — —Net loss reclassified from AOCI to Net income (loss) 0.1 — —Other comprehensive income (loss), net of tax 0.1 (0.2) —Ending balance $(0.1) $(0.2) $— 93Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2016 2015 2014Alloy Hedges: Beginning balance $— $— $—Unrealized loss on Alloy Hedges (0.1) — —Less: income tax (expense) benefit — — —Other comprehensive loss, net of tax (0.1) — —Ending balance $(0.1) $— $— Foreign currency translation: Beginning balance $(0.1) $0.1 $(0.3)(Loss) gain on foreign currency translation (0.1) (0.2) 0.4Less: income tax (expense) benefit — — —Other comprehensive (loss) income, net of tax (0.1) (0.2) 0.4Ending balance $(0.2) $(0.1) $0.1 Total AOCI ending balance $(36.7) $(31.7) $(96.1)____________1. Amounts reclassified out of AOCI relating to VEBA adjustments were included as a component of Net periodic postretirement benefit cost (income) relatingto VEBAs.2. Income tax amounts reclassified out of AOCI were included as a component of Income tax (provision) benefit.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 thespecific identification method to determine the amount reclassified out of AOCI.4. Amounts reclassified out of AOCI relating to foreign currency cash flow hedges were included as a component of Other (expense) income, net.16. Condensed Guarantor and Non-Guarantor Financial InformationDuring the quarter ended June 30, 2016, we issued $375.0 million aggregate principal amount of our 5.875% Senior Notes and redeemed in full the remainingprincipal balance of our 8.25% Senior Notes. The 5.875% Senior Notes were issued pursuant to an indenture dated May 12, 2016 ("2016 Indenture"), amongKaiser Aluminum Corporation ("Parent"), the subsidiary guarantors party thereto ("Guarantor Subsidiaries") and Wells Fargo Bank, National Association, astrustee ("Trustee"). The Guarantor Subsidiaries include Kaiser Aluminum Investments Company, Kaiser Aluminum Fabricated Products, LLC, Kaiser AluminumWashington, LLC and Kaiser Aluminum Alexco, LLC, all of which are 100% owned by the Parent. The guarantees are full and unconditional and joint and severalbut have customary releases in the following situations: (i) the sale of the Guarantor Subsidiary or all of its assets; (ii) the declaration of a Guarantor Subsidiary asan unrestricted subsidiary under the 2016 Indenture; (iii) the termination or release of the Guarantor Subsidiary's guarantee of certain other indebtedness; or (iv)our exercise of legal defeasance or covenant defeasance or the discharge of our obligations under the 2016 Indenture.The following condensed consolidating financial information as of December 31, 2016 and December 31, 2015 , and for the years ended December 31, 2016 ,December 31, 2015 and December 31, 2014 present: (i) the financial position, results of operation and cash flows for each of (a) Parent, (b) the GuarantorSubsidiaries on a combined basis and (c) the Non-Guarantor Subsidiaries on a combined basis; (ii) the "Consolidating Adjustments," which represent theadjustments necessary to eliminate the investments in our subsidiaries, other intercompany balances and other intercompany sales and cost of sales among Parent,the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries; and (iii) the resulting totals, reflecting information for us on a consolidated basis, as reported. Thecondensed consolidating financial information should be read in conjunction with the consolidated financial statements herein.94Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe "Non-Guarantor Subsidiaries" include Kaiser Aluminum Mill Products, Inc., Kaiser Aluminum Canada Limited, Trochus Insurance Company, DCOManagement, LLC, Kaiser Aluminum France, S.A.S. and Kaiser Aluminum Beijing Trading Company. Kaiser Aluminum Mill Products, Inc. was included in the"Guarantor Subsidiaries" under the indenture covering the 8.25% Senior Notes but is not a Guarantor Subsidiary under the 2016 Indenture. Historical periods havenot been restated to move Kaiser Aluminum Mill Products, Inc. from the Guarantor Subsidiaries category to the Non-Guarantor Subsidiaries category because theimpact of this change to the financial position, results of operation and cash flows with respect to the Guarantor Subsidiaries on a combined basis and the Non-Guarantor Subsidiaries on a combined basis is immaterial. DCO Management, LLC was dissolved in the fourth quarter of 2016 and ceased to exist as of January 1,2017.95Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONDENSED CONSOLIDATING BALANCE SHEET(In millions of dollars)December 31, 2016 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedASSETS Current assets: Cash and cash equivalents $— $52.9 $2.3 $— $55.2Short-term investments — 231.0 — — 231.0Receivables: Trade receivables – net — 133.1 4.6 — 137.7Intercompany receivables 85.8 0.1 0.6 (86.5) —Other — 11.4 0.5 — 11.9Inventories — 197.5 8.0 (3.9) 201.6Prepaid expenses and other current assets 0.1 18.0 0.9 (0.5) 18.5Total current assets 85.9 644.0 16.9 (90.9) 655.9Investments in and advances to subsidiaries 1,012.4 40.1 — (1,052.5) —Property, plant and equipment – net — 499.5 31.4 — 530.9Long-term intercompany receivables 80.2 — 4.9 (85.1) —Deferred tax assets – net — 154.9 — 4.8 159.7Intangible assets – net — 26.4 — — 26.4Goodwill — 37.2 — — 37.2Other assets — 33.4 — — 33.4Total $1,178.5 $1,435.5 $53.2 $(1,223.7) $1,443.5LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $2.2 $68.9 $4.7 $— $75.8Intercompany payable — 86.4 0.1 (86.5) —Accrued salaries, wages and related expenses — 47.2 1.9 — 49.1Other accrued liabilities 2.9 52.4 (0.7) (14.7) 39.9Short-term capital lease — 0.2 — — 0.2Total current liabilities 5.1 255.1 6.0 (101.2) 165.0Net liabilities of Salaried VEBA — 28.6 — — 28.6Deferred tax liabilities — — 3.3 — 3.3Long-term intercompany payable — 85.1 — (85.1) —Long-term liabilities — 70.5 2.7 — 73.2Long-term debt 368.7 — — — 368.7Total liabilities 373.8 439.3 12.0 (186.3) 638.8 Total stockholders’ equity 804.7 996.2 41.2 (1,037.4) 804.7Total $1,178.5 $1,435.5 $53.2 $(1,223.7) $1,443.596Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONDENSED CONSOLIDATING BALANCE SHEET(In millions of dollars)December 31, 2015 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedASSETS Current assets: Cash and cash equivalents $— $72.2 $0.3 $— $72.5Short-term investments — 30.0 — — 30.0Receivables: Trade receivables – net — 114.0 2.7 — 116.7Intercompany receivables — 111.2 1.1 (112.3) —Other — 3.8 2.3 — 6.1Inventories — 216.3 6.6 (3.3) 219.6Prepaid expenses and other current assets 0.2 56.2 1.7 (1.4) 56.7Total current assets 0.2 603.7 14.7 (117.0) 501.6Investments in and advances to subsidiaries 1,077.2 31.4 — (1,108.6) —Property, plant and equipment – net — 464.3 31.1 — 495.4Long-term intercompany receivables — — 3.1 (3.1) —Deferred tax assets – net — 155.6 — 7.0 162.6Intangible assets – net — 30.5 — — 30.5Goodwill — 37.2 — — 37.2Other assets — 19.5 0.1 — 19.6Total $1,077.4 $1,342.2 $49.0 $(1,221.7) $1,246.9LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $0.5 $73.6 $2.6 $— $76.7Intercompany payable 106.5 14.8 4.0 (125.3) —Accrued salaries, wages and related expenses — 38.3 1.5 — 39.8Other accrued liabilities 1.4 52.3 0.4 (1.4) 52.7Short-term capital lease — 0.1 — — 0.1Total current liabilities 108.4 179.1 8.5 (126.7) 169.3Net liabilities of Salaried VEBA — 19.0 — — 19.0Deferred tax liabilities — — 2.1 — 2.1Long-term intercompany payable — 3.1 — (3.1) —Long-term liabilities — 81.3 6.2 — 87.5Long-term debt 194.6 — — — 194.6Total liabilities 303.0 282.5 16.8 (129.8) 472.5 Total stockholders’ equity 774.4 1,059.7 32.2 (1,091.9) 774.4Total $1,077.4 $1,342.2 $49.0 $(1,221.7) $1,246.997Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME(In millions of dollars)Year Ended December 31, 2016 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedNet sales $— $1,301.6 $103.4 $(74.4) $1,330.6Costs and expenses: Cost of products sold: Cost of products sold, excluding depreciation andamortization and other items — 1,000.6 90.0 (71.1) 1,019.5Lower of cost or market inventory write-down — 4.9 — — 4.9Unrealized gain on derivative instruments — (18.7) — — (18.7)Depreciation and amortization — 34.0 2.0 — 36.0Selling, general, administrative, research anddevelopment: Selling, general, administrative, research anddevelopment 4.2 95.0 8.4 (2.6) 105.0Net periodic postretirement benefit cost relating toSalaried VEBA — 3.4 — — 3.4Gain on removal of Union VEBA net assets — (0.1) — — (0.1)Total selling, general, administrative, research anddevelopment 4.2 98.3 8.4 (2.6) 108.3Other operating charges, net — 2.8 — — 2.8Total costs and expenses 4.2 1,121.9 100.4 (73.7) 1,152.8Operating (loss) income (4.2) 179.7 3.0 (0.7) 177.8Other (expense) income: Interest (expense) income (21.6) 1.2 — 0.1 (20.3)Other (expense) income, net (11.1) 0.9 — (0.1) (10.3)(Loss) income before income taxes (36.9) 181.8 3.0 (0.7) 147.2Income tax provision — (69.0) (0.6) 14.1 (55.5)Earnings in equity of subsidiaries 128.6 1.7 — (130.3) —Net income $91.7 $114.5 $2.4 $(116.9) $91.7 Comprehensive income $86.7 $109.8 $2.1 $(111.9) $86.798Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME(In millions of dollars)Year Ended December 31, 2015 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedNet sales $— $1,361.6 $123.3 $(93.0) $1,391.9Costs and expenses: Cost of products sold: Cost of products sold, excluding depreciation andamortization and other items — 1,095.6 108.4 (88.6) 1,115.4Lower of cost or market inventory write-down — 2.6 — — 2.6Unrealized loss on derivative instruments — 3.4 — — 3.4Depreciation and amortization — 31.3 1.1 — 32.4Selling, general, administrative, research anddevelopment: Selling, general, administrative, research anddevelopment 4.3 76.5 9.3 (2.0) 88.1Net periodic postretirement benefit income relating toSalaried VEBA — 2.4 — — 2.4Loss on removal of Union VEBA net assets — 493.4 — — 493.4Total selling, general, administrative, research anddevelopment 4.3 572.3 9.3 (2.0) 583.9Other operating charges, net — 0.1 — — 0.1Total costs and expenses 4.3 1,705.3 118.8 (90.6) 1,737.8Operating (loss) income (4.3) (343.7) 4.5 (2.4) (345.9)Other income (expense): Interest expense (23.5) (0.9) — 0.3 (24.1)Other (expense) income, net (2.5) 3.5 (2.5) (0.3) (1.8)(Loss) income before income taxes (30.3) (341.1) 2.0 (2.4) (371.8)Income tax benefit — 122.5 1.3 11.4 135.2(Loss) earnings in equity of subsidiaries (206.3) 0.9 — 205.4 —Net (loss) income $(236.6) $(217.7) $3.3 $214.4 $(236.6) Comprehensive (loss) income $(172.2) $(153.5) $3.5 $150.0 $(172.2)99Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME(In millions of dollars)Year Ended December 31, 2014 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedNet sales $— $1,323.4 $133.9 $(101.2) $1,356.1Costs and expenses: Cost of products sold: Cost of products sold, excluding depreciation andamortization and other items — 1,098.3 117.8 (98.6) 1,117.5Unrealized loss on derivative instruments — 10.4 — — 10.4Depreciation and amortization — 30.0 1.1 — 31.1Selling, general, administrative, research anddevelopment: Selling, general, administrative, research anddevelopment 4.1 69.7 9.9 (2.3) 81.4Net periodic postretirement benefit income relating toVEBAs — (23.7) — — (23.7)Total selling, general, administrative, research anddevelopment 4.1 46.0 9.9 (2.3) 57.7Other operating charges, net — 1.5 — — 1.5Total costs and expenses 4.1 1,186.2 128.8 (100.9) 1,218.2Operating (loss) income (4.1) 137.2 5.1 (0.3) 137.9Other (expense) income: Interest expense (37.5) (0.6) — 0.6 (37.5)Other income, net 3.7 3.2 0.4 (0.6) 6.7(Loss) income before income taxes (37.9) 139.8 5.5 (0.3) 107.1Income tax (provision) benefit — (50.2) 0.8 14.1 (35.3)Earnings in equity of subsidiaries 109.7 6.0 — (115.7) —Net income $71.8 $95.6 $6.3 $(101.9) $71.8 Comprehensive (loss) income $(3.6) $19.9 $6.6 $(26.5) $(3.6)100Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS(In millions of dollars)Year Ended December 31, 2016 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedCash flows from operating activities: Net cash provided by operating activities $177.7 $177.3 $9.3 $(200.0) $164.3Cash flows from investing activities: Capital expenditures — (74.0) (2.1) — (76.1)Purchase of available for sale securities — (255.3) — — (255.3)Proceeds from disposition of available for sale securities — 55.0 — — 55.0Intercompany loans receivable 1 (166.0) 110.4 (1.3) 56.9 —Net cash used in investing activities (166.0) (163.9) (3.4) 56.9 (276.4)Cash flows from financing activities: Repayment of principal and redemption premium of 8.25%Senior Notes (206.0) — — — (206.0)Issuance of 5.875% Senior Notes 375.0 — — — 375.0Cash paid for debt issuance costs (6.8) — — — (6.8)Proceeds from stock option exercises 1.2 — — — 1.2Cancellation of shares to cover employees' taxwithholdings upon vesting of non-vested shares (2.9) — — — (2.9)Repurchase of common stock (33.3) — — — (33.3)Cash dividends paid to stockholders (32.4) — — — (32.4)Cash dividends paid to Parent — (200.0) — 200.0 —Intercompany loans payable 1 (106.5) 167.3 (3.9) (56.9) —Net cash (used in) provided by financing activities (11.7) (32.7) (3.9) 143.1 94.8Net (decrease) increase in cash and cash equivalents duringthe period — (19.3) 2.0 — (17.3)Cash and cash equivalents at beginning of period — 72.2 0.3 — 72.5Cash and cash equivalents at end of period $— $52.9 $2.3 $— $55.2________________1 As a result of the Parent's additional liquidity associated with the 5.875% Senior Notes (see Note 3 ), we classify all intercompany receivables and payables asIntercompany loans receivable and Intercompany loans payable, respectively, and therefore categorize changes in these balances within the investing andfinancing sections, respectively, of the Condensed Consolidating Statement of Cash Flows.101Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS(In millions of dollars)Year Ended December 31, 2015 Parent Guarantor Subsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedCash flows from operating activities: Net cash provided by (used in) operating activities $285.7 $(127.2) $0.3 $— $158.8Cash flows from investing activities: Capital expenditures — (47.9) (15.2) — (63.1)Purchase of available for sale securities — (0.5) — — (0.5)Proceeds from disposition of available for sale securities — 84.0 — — 84.0Net cash provided by (used in) investing activities — 35.6 (15.2) — 20.4Cash flows from financing activities: Repayment of principal and redemption premium of8.25% Senior Notes (30.0) — — — (30.0)Repayment of Convertible Notes (175.0) — — — (175.0)Proceeds from cash-settled call options related tosettlement of Convertible Notes 94.9 — — — 94.9Payment for conversion premium related to settlement ofConvertible Notes (94.9) — — — (94.9)Cash paid for debt issuance costs (0.6) — — — (0.6)Excess tax benefit upon vesting of non-vested shares anddividend payment on unvested shares expected to vest — 1.3 — — 1.3Cancellation of shares to cover employees' taxwithholdings upon vesting of non-vested shares (2.8) — — — (2.8)Repurchase of common stock (49.2) — — — (49.2)Cash dividends paid to stockholders (28.1) — — — (28.1)Intercompany loan — (12.8) 12.8 — —Net cash (used in) provided by financing activities (285.7) (11.5) 12.8 — (284.4)Net decrease in cash and cash equivalents during the period — (103.1) (2.1) — (105.2)Cash and cash equivalents at beginning of period — 175.3 2.4 — 177.7Cash and cash equivalents at end of period $— $72.2 $0.3 $— $72.5102Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS(In millions of dollars)Year Ended December 31, 2014 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedCash flows from operating activities: Net cash provided by operating activities $35.6 $351.8 $6.7 $(270.0) $124.1Cash flows from investing activities: Capital expenditures — (56.4) (3.0) — (59.4)Purchase of available for sale securities — (93.5) — — (93.5)Proceeds from disposition of available for sale securities — 108.2 — — 108.2Net cash used in investing activities — (41.7) (3.0) — (44.7)Cash flows from financing activities: Repayment of capital lease — (0.1) — — (0.1)Excess tax benefit upon vesting of non-vested shares anddividend payment on unvested shares expected to vest — 0.8 — — 0.8Cancellation of shares to cover employees' taxwithholdings upon vesting of non-vested shares (2.4) — — — (2.4)Repurchase of common stock (44.1) — — — (44.1)Cash dividends paid to stockholders (25.4) — — — (25.4)Cash dividends paid to Parent — (270.0) — 270.0 —Intercompany loan 31.3 (23.2) (8.1) — —Net cash used in financing activities (40.6) (292.5) (8.1) 270.0 (71.2)Net (decrease) increase in cash and cash equivalents duringthe period (5.0) 17.6 (4.4) — 8.2Cash and cash equivalents at beginning of period 5.0 157.7 6.8 — 169.5Cash and cash equivalents at end of period $— $175.3 $2.4 $— $177.7103Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS17. Quarterly Financial Data (Unaudited)The following tables present the unaudited financial data for each of the interim periods in 2016 and 2015 (in millions of dollars, except per share amounts): QuarterEnded31-Mar QuarterEnded30-Jun QuarterEnded30-Sep QuarterEnded31-Dec2016 Net sales $343.2 $334.9 $320.6 $331.9Cost of products sold, excluding depreciation, amortization and other items 262.0 250.4 254.7 252.4Lower of cost or market inventory write-down 4.9 — — —Unrealized gain on derivative instruments (4.0) (10.9) (2.0) (1.8)Gross profit 80.3 95.4 67.9 81.3Operating income 44.8 57.9 29.8 45.3Net income $26.3 $26.0 $14.9 $24.5Net income per common share, Basic $1.47 $1.45 $0.84 $1.39Net income per common share, Diluted $1.44 $1.43 $0.82 $1.37 QuarterEnded31-Mar 1 QuarterEnded30-Jun QuarterEnded30-Sep QuarterEnded31-Dec2015 Net sales $371.7 $367.2 $336.4 $316.6Cost of products sold, excluding depreciation, amortization and other items 302.3 294.8 267.3 251.0Lower of cost or market inventory write-down — — — 2.6Unrealized loss (gain) on derivative instruments 4.5 1.5 1.7 (4.3)Gross profit 64.9 70.9 67.4 67.3Operating (loss) income (458.6) 37.0 40.5 35.2Net (loss) income $(292.2) $20.2 $22.1 $13.3Net (loss) income per common share, Basic $(16.85) $1.19 $1.29 $0.76Net (loss) income per common share, Diluted $(16.85) $1.11 $1.21 $0.73_________________________1. The quarter ended March 31, 2015 includes the loss recognized on removal of the Union VEBA net assets. See Note 6 for additional information.18. Subsequent EventsDividend Declaration . On January 17, 2017 , we announced that our Board of Directors declared a quarterly cash dividend of $0.50 per common share, orapproximately $8.8 million (including dividend equivalents), which was paid on February 15, 2017 to stockholders of record at the close of business on January 27,2017 .104Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.Item 9A. Controls and ProceduresEvaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to bedisclosed in our reports under the Securities Exchange Act of 1934 is processed, recorded, summarized and reported within the time periods specified in theSecurities and Exchange Commission's rules and forms and that such information is accumulated and communicated to management, including the principalexecutive officer and principal financial officer, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls andprocedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance ofachieving the desired control objectives and management is required to apply our judgment in evaluating the cost-benefit relationship of possible controls andprocedures. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was performed as of the end of the periodcovered by this Report under the supervision of and with the participation of our management, including the principal executive officer and principal financialofficer. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures wereeffective as of December 31, 2016 at the reasonable assurance level.Management's Annual Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internalcontrol over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designedunder the supervision of our principal executive officer and principal financial officer and effected by our Board of Directors, management and other personnel, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withaccounting principles generally accepted in the United States and include those policies and procedures that:(1) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets;(2) Provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with accountingprinciples generally accepted in the United States and that our receipts and expenditures are being made only in accordance with authorizations of ourmanagement and Board of Directors; and(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have amaterial effect on our financial statements.Because of our inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determinedto be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we assessed theeffectiveness of our internal control over financial reporting as of December 31, 2016 , using the criteria set forth by the Committee of Sponsoring Organizations ofthe Treadway Commission in Internal Control - Integrated Framework as established in 2013. Based on that evaluation, our principal executive officer andprincipal financial officer concluded that our internal control over financial reporting was effective as of December 31, 2016 .Deloitte & Touche LLP, the independent registered public accounting firm that audited our consolidated financial statements for the year ended December 31,2016 included in Item 8. "Financial Statements and Supplementary Data" of this Report, has issued an audit report on the effectiveness of our internal control overfinancial reporting.Changes in Internal Controls Over Financial Reporting . We had no changes in our internal control over financial reporting during our most recently completedfiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Item 9B. Other InformationNone.105Part IIIItem 10. Directors, Executive Officers and Corporate GovernanceThe information required by this item is incorporated by reference to the information included under the captions "Executive Officers," "Proposals RequiringYour Vote – Proposal 1 – Election of Directors," "Section 16(a) Beneficial Ownership Reporting Compliance" and "Corporate Governance" in our proxy statementfor the 2017 annual meeting of stockholders.Item 11. Executive CompensationThe information required by this item is incorporated by reference to the information included under the captions "Executive Compensation," "DirectorCompensation" and "Corporate Governance – Board Committees – Compensation Committee – Compensation Committee Interlocks and Insider Participation" inour proxy statement for the 2017 annual meeting of stockholders.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item is incorporated by reference to the information included under the captions "Equity Compensation Plan Information" and"Principal Stockholders and Management Ownership" in our proxy statement for the 2017 annual meeting of stockholders.Item 13. Certain Relationships and Related Transactions and Director IndependenceThe information required by this item is incorporated by reference to the information included under the captions "Certain Relationships and RelatedTransactions" and "Corporate Governance – Director Independence" in our proxy statement for the 2017 annual meeting of stockholders.Item 14. Principal Accountant Fees and ServicesThe information required by this item is incorporated by reference to the information included under the caption "Independent Public Accountants" in ourproxy statement for the 2017 annual meeting of stockholders.106PART IVItem 15. Exhibits and Financial Statement Schedules1. Financial Statements Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Statements of Consolidated Income (Loss) Statements of Consolidated Comprehensive Income (Loss) Statements of Consolidated Stockholders’ Equity Statements of Consolidated Cash Flows Notes to Consolidated Financial Statements 2. Financial Statement SchedulesAll schedules are omitted because they are either inapplicable or the required information is included in the Consolidated Financial Statements or the notesthereto included in Item 8. "Financial Statements and Supplementary Data" and incorporated herein by reference.3. ExhibitsReference is made to the Index of Exhibits immediately preceding the exhibits hereto (beginning on page 109 ), which index is incorporated herein byreference.107SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalfby the undersigned, thereunto duly authorized. KAISER ALUMINUM CORPORATION /s/ Jack A. Hockema Jack A. Hockema Chief Executive Officer and ChairmanDate: February 22, 2017Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant andin the capacities and on the dates indicated./s/ Jack A. Hockema Chief Executive Officer,Chairman of the Board and Director(Principal Executive Officer) Date: February 22, 2017Jack A. Hockema /s/ Daniel J. Rinkenberger Executive Vice President and ChiefFinancial Officer(Principal Financial Officer) Date: February 22, 2017Daniel J. Rinkenberger /s/ Neal West Vice President and ChiefAccounting Officer(Principal Accounting Officer) Date: February 22, 2017Neal West /s/ Carolyn Bartholomew Director Date: February 22, 2017Carolyn Bartholomew Director David Foster Director L. Patrick Hassey /s/ Teresa A. Hopp Director Date: February 22, 2017Teresa A. Hopp /s/ Lauralee Martin Director Date: February 22, 2017Lauralee Martin /s/ Alfred E. Osborne, Jr., Ph.D. Director Date: February 22, 2017Alfred E. Osborne, Jr., Ph.D. Director Jack Quinn /s/ Thomas M. Van Leeuwen Director Date: February 22, 2017Thomas M. Van Leeuwen /s/ Brett E. Wilcox Director Date: February 22, 2017Brett E. Wilcox 108INDEX OF EXHIBITSExhibitNumber Description3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Registration Statementon Form 8-A, filed by the Company on July 6, 2006, File No. 000-52105). 3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company dated July 2, 2008 (incorporated byreference to Exhibit 3.2 to the Quarterly Report on Form 10-Q, filed by the Company on August 7, 2008, File No. 000-52105). 3.3 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company dated June 2, 2015 (incorporated byreference to Exhibit 3.1 to the Current Report on Form 8-K, filed by the Company on June 8, 2015, File No. 000-52105). 3.4 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company dated May 26, 2016 (incorporated byreference to Exhibit 3.1 to the Current Report on Form 8-K, filed by the Company on May 26, 2016, File No. 001-09447). 3.5 Certificate of Designation of Series A Junior Participating Preferred Stock of Kaiser Aluminum Corporation, as filed with the Secretary ofState of the State of Delaware on April 7, 2016 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed by theCompany on April 8, 2016, File No. 001-9447). 3.6 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form 8-A, filedby the Company on July 6, 2006, File No. 000-52105). 3.7 Amendment to Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K, filed by the Company on June 8, 2015, File No. 000-52105). 4.1 Indenture, dated May 12, 2016, by and among Kaiser Aluminum Corporation, each of the guarantors named therein and Wells Fargo Bank,National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed by the Company onMay 12, 2016, File No. 001-09447). 4.2 Form of 5.875% Senior Note due 2024 (included in Exhibit 4.2). 4.3 Tax Asset Protection Rights Agreement, dated as of April 7, 2016, between Kaiser Aluminum Corporation and Computershare Inc., asRights Agent (including the form of Certificate of Designation of Series A Junior Participating Preferred Stock attached as Exhibit Athereto, the form of Rights Certificate attached as Exhibit B thereto and the Summary of Rights to Purchase Preferred Stock attached asExhibit C thereto) (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed by the Company on April 8, 2016,File No. 001-9447). 10.1 Credit Agreement, dated as of December 1, 2015, among the Company, Kaiser Aluminum Investments Company, Kaiser AluminumFabricated Products, LLC, Kaiser Aluminum Washington, LLC and Kaiser Aluminum Alexco, LLC, certain financial institutions fromtime to time party thereto, as lenders, JPMorgan Chase Bank, N.A., as administrative agent, J.P. Morgan Securities LLC and Wells FargoCapital Finance, LLC, as joint bookrunners and joint lead arrangers, Wells Fargo Capital Finance, LLC, as documentation agent, and Bankof America, N.A., as syndication agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by theCompany on December 1, 2015, File No. 000-52105 ) . 10.2 Description of Compensation of Directors (incorporated by reference to Exhibit 10.11 to the Quarterly Report on Form 10-Q, filed by theCompany on April 25, 2014 File No. 000-52105) **10.3 Employment Agreement, dated as of December 31, 2015, between the Company and Jack A. Hockema (incorporated by reference toExhibit 10.1 to the Current Report on Form 8-K, filed by the Company on January 5, 2016, File No. 000-52105).109ExhibitNumber Description **10.4 Amendment to Restricted Stock Award Agreement, dated March 31, 2014, between the Company and Jack A. Hockema (incorporated byreference to Exhibit 10.6 to the Quarterly Report on Form 10-Q, filed by the Company on April 25, 2014, File No. 000-52105). **10.5 Amendment to Performance Shares Award Agreement, dated March 31, 2014, between the Company and Jack A. Hockema (incorporatedby reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q, filed by the Company on April 25, 2014, File No. 000-52105). **10.6 Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K, filed by theCompany on July 6, 2006, File No. 000-52105). **10.7 Form of Officer Indemnification Agreement (incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K, filed by theCompany on July 6, 2006, File No. 000-52105). **10.8 Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K,filed by the Company on July 6, 2006, File No. 000-52105). **10.9 Kaiser Aluminum Fabricated Products Restoration Plan (incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K,filed by the Company on July 6, 2006, File No. 000-52105). **10.10 Amendment to the Kaiser Aluminum Fabricated Products Restoration Plan (incorporated by reference to Exhibit 10.4 to the Current Reporton Form 8-K, filed by the Company on December 31, 2008, File No. 000-52105). 10.11 Letter agreement effective September 10, 2014 between the Company and the USW (incorporated by reference to Exhibit 10.1 to theCurrent Report on Form 8-K, filed by the Company on September 11, 2014, File No. 000-52105). 10.12 Amended and Restated Director Designation Agreement dated February 13, 2015 (incorporated by reference to Exhibit 10.1 to the CurrentReport on Form 8-K, filed by the Company on February 13, 2015, File No. 000-52105). **10.13 Form of Change in Control Severance Agreement for John M. Donnan, Keith A. Harvey, and Daniel J. Rinkenberger (incorporated byreference to Exhibit 10.33 to the Annual Report on Form 10-K for the period ended December 31, 2002, filed by the Company onMarch 31, 2003, File No. 001-9447). **10.14 Form of Change in Control Severance Agreement for John Barneson (incorporated by reference to Exhibit 10.32 to the Annual Report onForm 10-K for the period ended December 31, 2002, filed by the Company on March 31, 2003, File No. 001-9447). **10.15 Form of Amendment to the Change in Control Severance Agreement with John Barneson, John M. Donnan, Keith A. Harvey and Daniel J.Rinkenberger (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed by the Company on December 31, 2008,File No. 000-52105). **10.16 Kaiser Aluminum Corporation Amended and Restated 2006 Equity and Performance Incentive Plan (incorporated by reference to Exhibit10.7 to the Quarterly Report on Form 10-Q, filed by the Company on April 24, 2013, File No. 000-52105). **10.17 Kaiser Aluminum Corporation 2016 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the CurrentReport on Form 8-K, filed by the Company on May 26, 2016, File No. 001-09447). 110ExhibitNumber Description**10.18 2007 Form of Executive Officer Option Rights Award Agreement (incorporated by reference to Exhibit 10.3 to the Current Report onForm 8-K, filed by the Company on April 5, 2007, File No. 000-52105). **10.19 Form of Non-Employee Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to the Quarterly Report onForm 10-Q, filed by the Company on July 27, 2016, File No. 001-09447). **10.20 2014 Form of Executive Officer Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to the Current Report onForm 8-K, filed by the Company on March 7, 2014, File No. 000-52105). **10.21 2014 Form of Restricted Stock Award Agreement (Harvey) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K,filed by the Company on June 6, 2014, File No. 000-52105). **10.22 2014 Form of Executive Officer Performance Shares Award Agreement (incorporated by reference to Exhibit 10.3 to the Current Report onForm 8-K, filed by the Company on March 7, 2014, File No. 000-52105). **10.23 2014-2016 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed by the Companyon March 7, 2014, File No. 000-52105). **10.24 Description of 2014 Long-Term Incentive Umbrella Plan under the Kaiser Aluminum Corporation Amended and Restated 2006 Equity andPerformance Incentive Plan (incorporated by reference to Exhibit 10.9 to the Quarterly Report on Form 10-Q, filed by the Company onApril 25, 2014, File No. 000-52105). **10.25 2015 Form of Executive Officer Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to the Current Report onForm 8-K, filed by the Company on March 9, 2015, File No. 000-52105). **10.26 2015 and 2016 Form of Executive Officer Performance Shares Award Agreement (incorporated by reference to Exhibit 10.3 to the CurrentReport on Form 8-K, filed by the Company on March 9, 2015, File No. 000-52105). **10.27 2015-2017 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed by the Companyon March 9, 2015, File No. 000-52105). **10.28 Description of 2015 Long-Term Incentive Umbrella Plan under the Kaiser Aluminum Corporation Amended and Restated 2006 Equity andPerformance Incentive Plan (incorporated by reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q, filed by the Company onApril 30, 2015, File No. 000-52105). **10.29 2016 Short-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by the Company onMarch 10, 2016, File No. 000-52105). **10.30 2016 Form of Executive Officer Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the Current Reporton Form 8-K, filed by the Company on March 10, 2016, File No. 000-52105). **10.31 2016-2018 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed by the Companyon March 10, 2016, File No. 000-52105). **10.32 Description of 2016 Short-Term Incentive Umbrella Plan under the Kaiser Aluminum Corporation Amended and Restated 2006 Equity andPerformance Incentive Plan (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q, filed by the Company onApril 22, 2016, File No. 001-09447). 111ExhibitNumber Description**10.33 Description of 2016 Long-Term Incentive Umbrella Plan under the Kaiser Aluminum Corporation Amended and Restated 2006 Equity andPerformance Incentive Plan (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q, filed by the Company onApril 22, 2016, File No. 001-09447). *12.1 Statement Regarding Computation of Ratios. 21.1 Significant Subsidiaries of Kaiser Aluminum Corporation (incorporated by reference to Exhibit 21.1 to the Annual Report on Form 10-K,filed by the Company on February 18, 2014, File No. 000-52105). *23.1 Consent of Independent Registered Public Accounting Firm. *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 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 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *101.INS XBRL Instance *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_____________________________* Filed herewith. ** Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K.112Exhibit 12.1KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESCOMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(In millions of dollars, except for ratio of earnings to fixed charges) Year Ended December 31, 2016 2015 2014 2013 2012 Earnings: Income (loss) from continuing operations before taxes $147.2 $(371.8) $107.1 $143.2 $139.6Fixed charges 26.0 28.6 42.5 41.6 34.1Interest capitalized (2.9) (1.8) (2.5) (3.4) (1.7)Amortization of interest capitalized 1.1 1.0 0.9 0.8 0.7Earnings (loss) $171.4 $(344.0) $148.0 $182.2 $172.7 Fixed Charges: Interest expense, including amortization of discounts,debt issuance costs and interest component of rentexpense $20.3 $24.1 $37.5 $35.7 $29.1Interest capitalized 2.9 1.8 2.5 3.4 1.7Amount representative of the interest factor in rents 2.8 2.7 2.5 2.5 3.3Fixed charges $26.0 $28.6 $42.5 $41.6 $34.1 Ratio of earnings to fixed charges 6.6 N/A 3.5 4.4 5.1 Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statement No. 333-165869 on Form S-3 and Nos. 333-211641, 333-170513 and 333-135613 onForm S-8 of our report dated February 22, 2017 , relating to the consolidated financial statements of Kaiser Aluminum Corporation and the effectiveness of KaiserAluminum Corporation’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of Kaiser Aluminum Corporation for the yearended December 31, 2016./s/ DELOITTE & TOUCHE LLPCosta Mesa, CaliforniaFebruary 22, 2017Exhibit 31.1CERTIFICATION PURSUANT TO SECTION 302OF THE SARBANES-OXLEY ACT OF 2002I, Jack A. Hockema, certify that:1. I have reviewed this report on Form 10-K of Kaiser Aluminum Corporation;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly duringthe period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. /s/ Jack A. Hockema Jack A. Hockema Chief Executive Officer and Chairman (Principal Executive Officer)Date: February 22, 2017A signed original of this written statement required by Section 302 has been provided to Kaiser Aluminum Corporation and will be retained by KaiserAluminum Corporation and furnished to the Securities and Exchange Commission or its staff upon request.Exhibit 31.2CERTIFICATION PURSUANT TO SECTION 302OF THE SARBANES-OXLEY ACT OF 2002I, Daniel J. Rinkenberger, certify that:1. I have reviewed this report on Form 10-K of Kaiser Aluminum Corporation;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly duringthe period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. /s/ Daniel J. Rinkenberger Daniel J. Rinkenberger Executive Vice President and Chief Financial Officer (Principal Financial Officer)Date: February 22, 2017A signed original of this written statement required by Section 302 has been provided to Kaiser Aluminum Corporation and will be retained by KaiserAluminum Corporation and furnished to the Securities and Exchange Commission or its staff upon request.Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. 1350AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002February 22, 2017In connection with the Annual Report on Form 10-K by Kaiser Aluminum Corporation, a Delaware corporation (the “Company”), for the year endedDecember 31, 2016 (the “Report”), as filed on the date hereof with the Securities and Exchange Commission, the undersigned, Jack A. Hockema, Chief ExecutiveOfficer and Chairman of the Company, does hereby certify, pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, thatto such officer’s knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as ofthe dates and for the periods expressed in the Report.IN WITNESS WHEREOF, the undersigned has executed this certification as of the date first above written. /s/ Jack A. Hockema Jack A. Hockema Chief Executive Officer and Chairman (Principal Executive Officer)A signed original of this written statement required by Section 906 has been provided to Kaiser Aluminum Corporation and will be retained by KaiserAluminum Corporation and furnished to the Securities and Exchange Commission or its staff upon request.Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. 1350AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002February 22, 2017In connection with the Annual Report on Form 10-K by Kaiser Aluminum Corporation, a Delaware corporation (the “Company”), for the year endedDecember 31, 2016 (the “Report”), as filed on the date hereof with the Securities and Exchange Commission, the undersigned, Daniel J. Rinkenberger, ExecutiveVice President and Chief Financial Officer of the Company, does hereby certify, pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as ofthe dates and for the periods expressed in the Report.IN WITNESS WHEREOF, the undersigned has executed this certification as of the date first above written. /s/ Daniel J. Rinkenberger Daniel J. Rinkenberger Executive Vice President and Chief Financial Officer (Principal Financial Officer)A signed original of this written statement required by Section 906 has been provided to Kaiser Aluminum Corporation and will be retained by KaiserAluminum Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

Continue reading text version or see original annual report in PDF format above