Kaiser Aluminum
Annual Report 2017

Plain-text annual report

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, 2017 [ ] 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 þ NooIndicate 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 submit andpost 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, to thebest 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. oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer þAccelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company)Smaller reporting company o Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. 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, 2017) was approximately $1.5 billion.As of February 15, 2018, there were 16,757,781 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 2018 annual meeting ofstockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.TABLE OF CONTENTSPART I Item 1.Business 1Item 1A.Risk Factors 9Item 1B.Unresolved Staff Comments 19Item 2.Properties 19Item 3.Legal Proceedings 20Item 4.Mine Safety Disclosures 20 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21Item 6.Selected Financial Data 23Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations 24Item 7A.Quantitative and Qualitative Disclosures About Market Risk 41Item 8.Financial Statements and Supplementary Data 43Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 101Item 9A.Controls and Procedures 101Item 9B.Other Information 101 PART III Item 10.Directors, Executive Officers and Corporate Governance 102Item 11.Executive Compensation 102Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 102Item 13.Certain Relationships and Related Transactions and Director Independence 102Item 14.Principal Accountant Fees and Services 102 PART IV Item 15.Exhibits and Financial Statement Schedules 103 SIGNATURES 107 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."Risk Factors," and Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations." These forward-looking statementscan be identified by the use of forward-looking terminology such as "believes," "expects," "may," "estimates," "will," "should," "plans" or "anticipates," or thenegative of 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 uncertaintiesand that actual results may vary from those in the forward-looking statements as a result of various factors. These factors include: the effectiveness ofmanagement’s strategies and decisions; general economic and business conditions, including cyclicality and other conditions in the aerospace, automotiveand other end markets we serve; developments in technology; new or modified statutory or regulatory requirements; changing prices and market conditions;and other factors discussed in Item 1A. "Risk Factors" and elsewhere in this Report. No assurance can be given that these are all of the factors that could causeactual results to vary materially from 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 toupdate any information contained in this Report or to publicly release any revisions to any forward-looking statements that may be made to reflect events orcircumstances that 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 atthe SEC'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 aremade available free of charge on our website at http://www.kaiseraluminum.com as soon as reasonably practicable after we file or furnish the materials withthe SEC. News releases, announcements of upcoming earnings calls and events in which our management participates or hosts with members of theinvestment community and an archive of webcasts of such earnings calls and investor events and related investor presentations, are also available on ourwebsite. Information on our website 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 endmarket applications: aerospace and high strength ("Aero/HS products"); automotive ("Automotive Extrusions"); general engineering ("GE products"); andother industrial ("Other products"). Our fabricated aluminum mill products include flat-rolled (plate and sheet), extruded (rod, bar, hollows and shapes), drawn(rod, bar, pipe and tube) and certain cast aluminum products. Our products are differentiated based on the metallurgy and physical properties of the metal andthe special characteristics that are required for particular end uses. We strategically choose to serve technically challenging applications for which we candeploy our core metallurgical and process technology capabilities to produce highly engineered mill products with characteristics that present opportunitiesfor us to receive premium pricing and to create long-term profitable growth.With respect to the global market for flat-rolled aluminum mill products, our focus is on heat treat plate and sheet for applications that require higherstrength and other desired product attributes that cannot be achieved by common alloy rolled products. The primary end market applications of flat-rolledheat treat plate and sheet are Aero/HS products (which we sell globally) and GE products (which we predominantly sell within North America). We do notsupply sheet for automotive applications, and have chosen not to supply sheet for beverage/food can applications nor common alloy rolled products forconstruction or other applications. 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 highstrength, machinability or other specific properties where we can create and maintain a defensible competitive position because of our technical expertise,strong production capability and high product quality. We primarily serve North American demand for extruded mill products. Building and constructionapplications, the largest segment of North American aluminum extrusion market, rarely require extruded products with specialized properties. Since we havestrategically chosen to deploy our 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 marketapplications. Our 11 extrusion/drawing facilities, 10 of which are in the United States and one of which is in Canada, serve primarily aerospace, automotiveor general engineering applications. Our consolidated Net sales in 2017 totaled approximately $1.4 billion on approximately 625.7 million pounds shippedfrom these 12 focused facilities. We employed approximately 2,770 people at December 31, 2017.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,or recycled, aluminum, our main raw material, at prices that fluctuate on a monthly basis, and our pricing policies generally allow us to pass the underlyingcost of metal 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, the pass through of metal price movements can lag by several months, with a favorable impact to us when metal prices decline and an adverseimpact to us when metal prices increase. Additionally, we sometimes enter into firm-price customer sales agreements that specify a firm underlying metalprice plus a conversion price. Spot sales with lagged metal price pass through and firm-price sales agreements create metal price exposure for us, which wemitigate through a hedging program with 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 51% of our shipments is sold direct to manufacturers ortier one suppliers and approximately 49% is sold to metal service centers. In our served markets, we seek to be the supplier of choice by pursuing "Best inClass" customer satisfaction driven by quality, availability, service and delivery performance. We strive to differentiate our product portfolio through ourbroad product offering and our KaiserSelect® products, which are engineered and manufactured to deliver enhanced product characteristics with improvedconsistency, so as to result 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 a supplier of choice by tightly integrating the managementof our operations across multiple production facilities, product lines and target markets. Additionally, our strategy to be a supplier of choice and low costproducer is facilitated by a culture of continuous improvement that is facilitated by the Kaiser Production System ("KPS"), an integrated application of toolssuch as Lean Manufacturing, Six Sigma and Total Productive Manufacturing. Using KPS, we seek to continuously reduce our own manufacturing costs andeliminate waste throughout the value chain.We strive to strengthen our competitive position through strategic capital investment. Significant investments over the past decade have positioned uswell with increased capacity and expanded manufacturing capabilities. Past investments at Trentwood more than doubled our capacity and expanded ourmanufacturing capability to produce thick gauge heat treat plate in order to capitalize on significant demand growth for Aero/HS products. Similarly, our pastinvestments to add capacity and improve capabilities across our automotive manufacturing platform have enabled and continue to enable sales growth ofAutomotive Extrusions.Recent capital projects have focused on further improving product quality and manufacturing cost efficiency which we believe are critical to maintainingand strengthening our position in an increasingly competitive market environment over the coming decade. As an example, as we continue to implement themulti-year modernization project at Trentwood, we are upgrading equipment throughout the process flow to reduce conversion costs, increase efficiency andfurther improve our competitive cost position on all products produced at Trentwood. To differentiate our product quality, the modernization will alsoreplace legacy equipment and improve the process flow for thin gauge heat treat plate to achieve KaiserSelect® quality enhancements for both Aero/HSproducts and GE products. Additionally, because further expansion of Trentwood’s manufacturing capacity is a byproduct of the manufacturing efficiencyimprovements of this modernization project, we expect the project will allow us to continue to grow sales at a pace equal to or greater than the growth inTrentwood’s served markets.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 aluminumindustry. From 2000 to 2010, as a result of a strategic reassessment of our competitive positions in the upstream and downstream portions of the aluminumindustry, we divested or closed our non-strategic bauxite mining, alumina refining, and primary aluminum operations and focused on downstream operationswhere we had a competitive advantage. Consequently, we no longer participate in commodity segments within the aluminum industry and focus solely onthe production of semi-fabricated specialty aluminum products for major suppliers and manufacturers for applications in our chosen aerospace/high strength,automotive, general engineering and other end-markets.Business OperationsConsistent with the manner in which our chief operating decision maker reviews and evaluates our business, our semi-fabricated products business istreated as a single operating segment, which we refer to as the Fabricated Products segment. In addition to the Fabricated Products segment, we have onebusiness unit, All Other, which provides general and administrative support for our operations. For purposes of segment reporting under United Statesgenerally accepted accounting principles ("GAAP"), we treat the Fabricated Products segment as its own reportable segment. All Other is not considered areportable segment.Fabricated Products SegmentOverviewOur Fabricated Products segment focuses on producing rolled, extruded and drawn aluminum products used principally for aerospace and defense,automotive and general engineering products that include consumer durables, electronics, electrical and machinery and equipment applications. Foradditional information regarding net sales, total assets and long-lived assets of the Fabricated Products segment and by geographic area, and operatingincome (loss) of the Fabricated Products segment, see Note 15 of Notes to Consolidated Financial Statements included in this Report.The table below provides shipment and sales information for our fabricated aluminum products by end market application (in millions of dollars exceptfor shipment information and percentages): Year EndedDecember 31, 2017 2016 2015Shipments (mm lbs): Aero/HS products 233.0 37% 243.2 40% 243.5 40%Automotive Extrusions 101.0 16% 92.9 15% 93.5 15%GE products 264.7 43% 249.9 41% 231.4 38%Other products 27.0 4% 28.3 4% 47.0 7% 625.7 100% 614.3 100% 615.4 100%Sales: Aero/HS products $653.7 47% $675.4 51% $695.5 50%Automotive Extrusions 217.3 15% 188.8 14% 199.2 14%GE products 476.2 34% 420.1 32% 426.1 31%Other products 50.3 4% 46.3 3% 71.1 5% $1,397.5 100% $1,330.6 100% $1,391.9 100%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 andbillet used for a wide variety of end uses in the global aerospace and defense industries. Typical applications are structural aircraft components that mustperform consistently under extreme variations in temperature and pressure due to frequent take-offs, landings and changes in altitude. Required physicalproperties include high tensile strength,3superior fatigue resistance and exceptional durability even in harsh environments. We use high-strength 2000- and 7000-series alloys and apply a variety ofthermal practices to manufacture our Aero/HS products to meet the demanding specifications required for such safety-critical applications. While competingmaterials such as titanium and composites have displaced aluminum for certain applications on several newer aircraft designs, aluminum continues to be thematerial used most extensively for structural aerospace and defense applications because it is light weight, can meet demanding performance requirementsand is cost effective relative to other materials. Overall, the aerospace and defense industries' consumption of fabricated aluminum products is driven byfactors that include airframe build rates, the mix of aircraft models being built and defense spending. Unanticipated changes in build rates and mix of aircraftmodels being built can trigger restocking or destocking throughout the long aerospace supply chain, temporarily impacting demand for our Aero/HSproducts. Growth in demand for aerospace plate has exceeded demand growth for other forms of Aero/HS products as aircraft manufacturers have migrated tomonolithic component design, where a single piece of aluminum, usually a plate, is heavily machined to form a desired part rather than creating the same partby assembling sub-components made of aluminum sheet, extrusions or forgings that are affixed to one another using rivets, bolts or welds. As moreapplications convert to monolithic design, we expect aerospace plate demand to continue to grow at a pace higher than our other Aero/HS products.Automotive Extrusions. Automotive Extrusions consist of extruded aluminum products for many North American automotive applications. Examples ofthe variety of extruded products that we supply to the automotive industry include extruded products for the body-in-white structural components, bumpersystems, anti-lock braking systems and drawn tube for drive shafts. For some Automotive Extrusions, we perform limited fabrication, including sawing andcutting to length. Demand for Automotive Extrusions is determined based upon automotive build rates in North America and aluminum content. In recentyears, automotive original equipment manufacturers ("OEMs") and their suppliers have, at an increasing pace, been converting many automotive componentsthat historically were made of steel to aluminum to decrease weight without sacrificing structural integrity and safety performance and thereby achievegreater fuel efficiency standards mandated by stringent United States' Corporate Average Fuel Economy ("CAFE") regulations. We believe fuel efficiencystandards along with consumer preference for larger vehicles will continue to drive growth in demand for aluminum extruded components in passengervehicles as a replacement for the heavier weight of steel components. Our Automotive Extrusions are designed and produced to provide specific mechanicalproperties and performance attributes required in automotive applications across a broad mix of North American OEMs and automotive platforms. We believethat these attributes are not easily replicated 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 ofuses and applications, many of which involve further fabrication for numerous transportation and other industrial end market applications where machiningof plate, rod and bar is intensive. For example, our GE products are used to produce armor for military vehicles, ordnances, manufacturing cells forsemiconductor production, numerous electronic devices, after-market motor sport parts, tooling plate, parts for machinery and equipment, bolts, screws, nailsand rivets. Demand growth and cyclicality for GE products tend to mirror broad economic patterns and industrial activity in North America. Demand is alsoimpacted by the destocking and restocking 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. Demandfor Other 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 thedesired physical properties. Both processes start by heating aluminum, a rolling ingot or extrusion billet, to an elevated temperature at which the metal ismalleable and then applying pressure in a manner that both forces the metal into a desired shape and begins the "working" of the metal to enhance its strengthand related properties.Flat Rolling. Our manufacturing process for aluminum flat-rolled products uses ingot, a large rectangular slab of aluminum, as the starter material. Theingot is processed through a series of rolling operations that can be done at elevated (hot) or room (cold) temperatures. Finishing steps may include heattreatment, annealing, stretching, leveling or slitting to achieve the desired metallurgical, dimensional and/or performance characteristics. Aluminum flat-rolled products are manufactured in a variety of alloys, a range of tempers (hardness), gauges (thickness) and widths and various finishes. Flat-rolledaluminum semi-finished products are classified as sheet (under 0.25 inches in thickness) or plate (0.25 inches or greater in thickness).4Extrusion/Drawing. Our extrusion process begins with a cast billet, which is an aluminum cylinder of varying length and diameter. After heating the billetto make the metal malleable, it is placed into an extrusion press and squeezed (extruded) through a die that gives the material the desired two-dimensionalcross section. The material can be quenched as it leaves the press, or processed through a post-extrusion heat treatment cycle, to control the material’sphysical properties. The extrusion is straightened, typically by stretching, and then cut to length before being hardened in aging ovens. Drawing is afabrication operation in which extruded tubes and rods are pulled through a die, or drawn. The primary purpose of drawing is to reduce the diameter and wallthickness while improving physical properties and dimensions. Material may go through multiple drawing steps to achieve the final dimensionalspecifications. Extruded and drawn semi-fabricated products are manufactured in a variety of alloys 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 orbillet, we purchase primary aluminum, recycled scrap aluminum segregated by alloys and other metals (including copper, zinc and magnesium) that arenecessary to create various aluminum alloys. We also recycle internally generated scrap from our own manufacturing processes. Initially in solid form,aluminum is heated in a vessel to a temperature at which it melts. While in molten form, additional metals (aluminum alloyed scrap, alloy metals, primaryaluminum or high purity aluminum) are introduced to achieve the proper mixture of chemical elements for a particular alloy. When the desired chemicalcomposition of the molten metal has been achieved, it is poured into a mold in which the molten metal cools in a controlled manner and solidifies into arolling ingot or extrusion billet. The size of the mold determines the dimensions of the rolling ingot or extrusion billet. Our casting operations at our facilitiesin Kalamazoo, Michigan, London, Ontario, Los Angeles, California, Newark, Ohio and Sherman, Texas produce extrusion billet for their operations and forour 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, 2017 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 endmarket applications to most efficiently and effectively serve the needs of our customers. We centralize purchasing of our primary and scrap, or recycled,aluminum requirements and related alloying agents in order to better manage price, credit and other benefits. Our sales force and the management thereof arealso significantly integrated as many customers purchase a number of different products that are produced at different plant facilities. We believe thatintegration of our operations allows us to capture efficiencies while allowing our facilities to remain highly focused on their specific processes and endmarket applications.5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 istypically based on the Average Midwest Transaction Price ("Midwest Price"), which reflects the primary aluminum supply/demand dynamics in NorthAmerica. Scrap aluminum is typically purchased at a discount to the Midwest Price but can require additional processing. The average Midwest Price iscomprised of the average London Metal Exchange ("LME") plus average Midwest premium. The average LME and the average Midwest premium for 2017,2016 and 2015 were $0.89 + $0.09, $0.73 + $0.07 and $0.75 + $0.13, respectively.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, Tennesseefacility.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 theMidwest Price. Our pricing of fabricated aluminum products is generally intended to lock in a conversion margin (representing the value added from thefabrication process(es)) and to pass metal price fluctuation through to our customers. In order to meet our objective to be metal price neutral, we manage therisk of fluctuations in the price of aluminum through our pricing policies and use of financial derivatives. Our three principal pricing mechanisms are asfollows:•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 thespot price of primary aluminum (LME plus Midwest premium) in effect at the time of shipment to a customer. Spot prices for these products changeregularly based on competitive dynamics. Fluctuation in the underlying aluminum price is a significant factor influencing changes in competitivespot prices. Through spot pricing, we generally can pass metal price risk through to customers. For some of our higher value added revenue productssold on a spot basis, however, the pass through of metal price movements can lag by several months, with a favorable impact to us when metal pricesdecline and an adverse impact to us when metal prices increase. We, from time to time, enter into hedging transactions with third parties to minimizethe impact to us of metal 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 thatincorporates a monthly index-based price for primary aluminum, such as Platt’s Midwest price for primary aluminum. Index-based pricing typicallyallows us to pass metal price risk through to the customer and applies to virtually all of our Automotive Extrusions sales and the majority of ourAero/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. Weare able to limit exposure to metal price risks created by firm-price customer sales contracts by using third-party hedging instruments. Totalfabricated product shipments for which we were subject to price risk were, in millions of pounds, 185.6, 213.7 and 204.6 during 2017, 2016 and2015, respectively.All hedging activities are managed centrally to minimize transaction costs, monitor consolidated net exposures and respond promptly to changes inmarket 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 MiddleEast. 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 aremade primarily under long-term agreements as well as on an order-by-order basis. We serve this market with a North American sales force focused on Aero/HSand GE products and direct sales representatives in Western Europe and China.6Automotive Extrusions. Our Automotive Extrusions are sold primarily to tier one automotive suppliers. Almost all sales of Automotive Extrusions occurthrough 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 GEand Aero/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.CustomersIn 2017, our Fabricated Products segment had over 725 customers. Our two largest customers, Reliance Steel & Aluminum Co. ("Reliance") and TheBoeing Company ("Boeing") accounted for approximately 27% and 12%, respectively, of our net sales in 2017. While the loss of Reliance or Boeing ascustomers could have 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 acustomer is remote. See Note 15 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 atTrentwood. 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 laboratoryand a scanning 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 androlling experiments. The casting unit is also capable of casting full size billets and ingots for processing on the production extrusion presses and rollingmills. See Note 1 of 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 focusedon controlling the manufacturing process to improve product quality, ensure consistency and enhance one or more specific product attributes. This hasresulted in the creation 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 to be 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 otheroperations. 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 15 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 heattreat plate and sheet and extruded/drawn products that allow us to apply our core metallurgical and process technology capabilities to produce highlyengineered products with differentiated characteristics. We seek to further differentiate ourselves from our competitors by providing a broad product offeringand striving to deliver "Best in Class" customer satisfaction.Our primary competitors in the global market for Aero/HS products are Arconic, Inc., Constellium N.V. and Aleris Corporation. In serving our NorthAmerican customers for both Automotive Extrusions and GE products, our primary competitors are Arconic, Inc. and Sapa AS, and for certain of theseproducts, we also compete with smaller, regional participants. In North America, we also compete with general engineering heat treat plate products importedfrom South Africa,7Europe and China. Some of our competitors are substantially larger, have greater financial resources and may have other strategic advantages.Because many of our products are used in safety critical applications, our customers have demanding standards for product quality and consistency thatmake it difficult to become a qualified supplier. Suppliers must pass a rigorous qualification process to sell to both airframe and automotive manufacturersand must also make significant investments in infrastructure and specialized equipment to supply products for these high strength applications. Further,sophisticated manufacturing processes make it difficult to become a qualified supplier, even with proper equipment. For example, producing heat treat plateand sheet products, particularly for aerospace applications, requires technological expertise that only a few companies have developed through significantinvestment in research and development and decades of operating experience.EmployeesAt December 31, 2017, we employed approximately 2,770 people, of which approximately 2,710 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, 2017. As indicated below, union affiliations are with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrialand Service Workers International Union, AFL-CIO, CLC ("USW"), International Association of Machinists ("IAM") and International Brotherhood ofTeamsters ("Teamsters"). See Note 15 of Notes to Consolidated Financial Statements in this Report for additional information about concentration of laborsubject to collective bargaining agreements. ContractLocation Union Expiration DateChandler, Arizona (Extrusion) Non-union —Chandler, Arizona (Tube) USW Apr 20181Florence, Alabama USW Mar 2020Jackson, Tennessee Non-union —Kalamazoo, Michigan USW Feb 2021London, Ontario (Canada) USW Canada Feb 20181Los Angeles, California Teamsters Apr 20181Newark, Ohio USW Sep 2020Richland, Washington Non-union —Richmond, Virginia (Bellwood) USW/IAM Nov 2020/Nov 2020Sherman, Texas IAM Apr 2022Spokane, Washington (Trentwood) USW Sep 2020____________________1. We are currently in the process of negotiating the labor agreement covering employees at our London, Ontario facility and will start negotiations at ourChandler, Arizona, and Los Angeles, California facilities within the next three months. See Note 15 of Notes to Consolidated Financial Statements inItem 8. “Financial Statements and Supplementary Data” of this Report for additional information about concentration of labor subject to collectivebargaining agreements.Environmental MattersWe are subject to a number of environmental laws and regulations, to potential fines or penalties assessed for alleged breaches of the environmental lawsand regulations 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 undiscountedestimate of costs reasonably expected to be incurred based on presently enacted laws and regulations, existing requirements, currently available facts,existing technology and our assessment of the likely remediation actions to be taken. See Note 9 of Notes to Consolidated Financial Statements included inthis Report.8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 purposeof engaging in market development and commercialization and distribution of our products in Asia.•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 facility andcertain of the assets and liabilities associated with our Fabricated Products segment’s operations in the State of Washington) and owns 100%of the ownership interest of:•Kaiser Aluminum Washington, LLC, a Delaware limited liability company, which holds certain of the assets and liabilities associatedwith our Fabricated Products segment’s operations in the State of Washington.•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 distributionof our 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 andcommercialization and distribution of our products in Europe.Item 1A. Risk FactorsThis Item may contain statements which constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of1995. See "Forward-Looking Statements" at the outset of Part I of this Report for cautionary information with respect to such forward-looking statements.Such cautionary information should be read as applying to all forward-looking statements wherever they appear in this Report. Forward-lookingstatements are not guarantees of future performance and involve significant risks and uncertainties. Actual results may vary from those in forward-lookingstatements as a result of a number of factors including those we discuss in this Item and elsewhere in this Report. In addition to the factors discussedelsewhere in this Report, the risks described below are those that we believe are material to our company. The occurrence of any of the events discussedbelow could significantly and adversely affect our business, prospects, financial position, results of operations and cash flows as well as the trading priceof 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 thanwe do. Additionally, some competitors may operate more facilities than we do, be geographically closer to our customers than we are, employ more efficientor advanced technologies than we do, or have other strategic advantages. To the extent that our competitors have existing facilities or locate new productionfacilities in developing economies, their facilities may have a manufacturing cost advantage compared to our facilities, which are all located in NorthAmerica. Foreign competitors may sell products similar to our products at lower prices as a result of lower manufacturing costs, currency exchange rates thatperiodically favor foreign competition or dumping those products in North America in violation of existing trade laws. Additionally, new parties maybecome capable of manufacturing similar products and qualifying them with our customers. The capability and incremental capacity for such products thatthese new competitors introduce to the market could lead to further competitive pricing pressure. We may not be able to compete by differentiating ourselvesbased on the quality, availability and delivery of our products or our customer service. We also may not be able to adequately reduce our selling prices or ourcosts to levels competitive with new or foreign competitors. Increased competition9could cause a reduction in our shipment volumes, our product pricing or both shipment volumes and product pricing, any one of which could have anadverse effect on our financial position, results of operations and cash flows.We depend on a core group of significant customers.In 2017, Reliance and Boeing were our two largest customers, representing approximately 27% and 12%, respectively, of our net sales. Our five largestcustomers in total accounted for approximately 53% of our 2017 net sales. Most of these customers have one or more sizable sales agreements with us. If oneor more of these customers experienced a prolonged period of adverse demand, depressed business activity or financial distress, if any of these customersbreached or sought relief from its contractual obligations under its sales agreements with us or if any of these customer relationships otherwise ended ormaterially deteriorated and such lost business was not successfully replaced, our financial position, results of operations and cash flows could be adverselyaffected.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 andfreight. Further, cost cutting initiatives that many of our customers have adopted generally result in downward pressure on pricing. If we are unable togenerate sufficient productivity improvements and cost savings in the future to offset reductions in our selling prices and increases in our costs that wecannot pass through to our customers, 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 cashflows could be adversely affected by numerous factors in the politically and economically diverse jurisdictions: (i) from which our input materials aresourced; (ii) in which we operate; (iii) in which our customers operate; or (iv) in which our products are consumed or further fabricated. Such factors includebut are not limited to:•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;•inflation relative to the U.S. and related fluctuations in currency and interest rates;•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. Notwithstanding a secular growth trend over the past fifteenyears, the aerospace industry has historically been highly cyclical. Numerous factors that influence demand for new commercial aircraft could result incancellations or deferrals of aircraft orders and a global decrease in new commercial aircraft deliveries. These factors include but are not limited to: (i)declines or reduced growth trends in global travel and airline passenger traffic; (ii) replacement of older aircraft and fuel inefficient aircraft; (iii) changingairline strategies affecting preferences for jumbo aircraft models as opposed to single-aisle aircraft models; (iv) airline industry profitability; (v) the state ofthe U.S. and global economies; (vi) concerns regarding terrorism or the threat of terrorism; (vii) concerns regarding pandemics of infectious disease; and (viii)safety concerns with newly introduced aircraft. Despite existing backlogs, adverse developments in any one or more of these influencing factors may lead toreduced demand for new aircraft that utilize our products, which could adversely affect our financial position, results of operations and cash flows.10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 their end uses. In particular, our Aero/HS products undergonumerous stages 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 whenwe sell our Aero/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 productsmay increase prior to demand for our customers' products or may decrease when our customers experience or anticipate softening demand for theirproducts. Our customers typically respond to reduced demand for their products by depleting their inventory until their inventory falls to a new desiredlevel. This causes a greater reduction in demand for our products than our customers experience for their products. Further, the reduction in demand for ourproducts can be exacerbated if our customers' inventory levels had been higher than normal, if production is delayed for specific commercial airframe models,if our customers previously had purchased products from us at committed sales contract volumes that exceeded their actual need or for other reasons. Theamplified reduction in demand for our products while our customers consume their inventory to meet their business needs (destocking) may adversely affectour financial position, results of operations and 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. andforeign governments are faced with competing national priorities, there can be significant pressure to reduce defense spending, which could reduce thedemand for our products 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 andcontinues to evaluate the further use of titanium, composites and carbon fiber materials as alternatives to aluminum to reduce aircraft weight and increase fuelefficiency. Additionally, while the automotive industry has continued to increase use of aluminum in vehicle production to reduce vehicle weight andachieve government-mandated fuel efficiency standards, manufacturers may revert to steel or other materials for certain applications and rely on improveddrivetrain technology, more efficient engines, aerodynamics or other measures to achieve fuel efficiency goals. 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 couldadversely affect our financial position, results of operations and cash flows.Our customers may reduce their demand for our products if the government loosens CAFE standards or if oil prices remain low for a protracted period oftime.Efficient use of fossil fuels partially drives demand for aluminum in transportation applications. The U.S. Environmental Protection Agency ("EPA") andother federal regulatory agencies have generally sought to limit growth of fossil fuel usage by establishing stricter fuel efficiency standards. However, thecurrent leaders of the EPA and other federal agencies oppose the environmental agendas of prior administrations and could relax these previously establishedfuel efficiency standards. Additionally, in periods of lower oil prices, the economic benefits of replacing older aircraft and automobiles with more fuel-efficient models are less compelling. A relaxation of fuel efficiency standards by the EPA or an extended period of moderate oil prices could reduce demandfor new aircraft and automobiles, which could adversely affect the demand for our products and have an adverse effect on our financial position, results ofoperations 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,light trucks, SUVs and heavy duty vehicles and trailers in North America. The automotive industry is highly cyclical, as new vehicle demand is dependent onconsumer spending and is tied closely to the overall strength of the North American economy. Even with the automotive industry’s growing use of aluminumto reduce vehicle weight, weak demand for, or lower production of, new cars, light trucks, SUVs and heavy duty vehicles and trailers could adversely affectthe demand for our products and have an adverse effect on our financial position, results of operations and cash flows.11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 aluminumAutomotive Extrusions that we supply. The loss of business with respect to, or a lack of commercial success of, one or more particular vehicle models forwhich we are a significant supplier could have an adverse impact on our financial position, results of operations and cash flows.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 orother complications, which could adversely impact our ability to serve our customers, our reputation, our costs of production and, ultimately, our financialposition, 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,labor disruptions, transportation interruptions and supply interruptions. Operational interruptions could significantly curtail the production capacity of afacility for a period of time. We have redundant capacity and capability to produce many of our extruded products within our manufacturing platform tomitigate our business risk from such interruptions, but interruptions at Trentwood where our production of plate and sheet is concentrated, could significantlycompromise our ability to meet our customers’ needs. Delayed delivery of our products to customers who require on-time delivery from us may causecustomers to purchase alternative products at a higher cost, reschedule their own production or incur other incremental costs. Customers may be able topursue financial claims against us for their incremental costs, and we may incur costs to correct such problems in addition to any liability resulting from suchclaims. Interruptions may also harm our reputation among actual and potential customers, potentially resulting in a loss of business. To the extent theselosses are not covered by insurance, our financial position, results of operations and cash flows could 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 andheightened competitive price pressure makes it increasingly important for us to be a low cost producer. Although we have undertaken and expect to continueto undertake productivity enhancement and cost reduction initiatives, including significant investments in our facilities to improve our manufacturingefficiency, cost and product quality, we cannot make assurances that we will complete all of these initiatives, that we will fully realize the estimated costsavings from such activities, that short-to-medium term improvements from new efficiencies and lower cost structure achieved will become permanent or thatwe will be able to continue to reduce cost 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 of operations after such projects have been completed can be complicated and costly. If we are unable to fully complete these projects, if the actual costsfor these projects exceed our expectations, if the start-up phase after completion is more complicated than anticipated or if the capacity and other benefits ofthese projects are 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 recycled scrap aluminum. The pricing of primary and recycledscrap aluminum fluctuates in response to global supply and demand. Additionally, recycled scrap aluminum is generally priced at a discount to primaryaluminum that loosens and tightens in response to regional aluminum scrap supply and demand. The timing and magnitude of changes in market pricing forprimary and scrap aluminum are largely unpredictable. Our pricing structures for fabricated aluminum products generally allow us to pass fluctuations in theprice of primary aluminum through to our customers so that we can minimize our exposure to metal price risk. However, competitive dynamics for certain ofour high value added products may limit the amount or delay the timing of 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 price risk. If these events were to occur, they could have an adverse effect on ourfinancial position, results of12operations and cash flows. In addition, if the market price for primary aluminum were to remain high for an extended period of time, the correspondingincrease in our selling price for our fabricated products may cause some of our customers to switch to other materials in lieu of our products, causing sales ofour fabricated aluminum products to decrease, which could adversely affect our financial position, results of operations and cash flows.Our business could be adversely affected by the pricing and availability of recycled scrap aluminum.We can efficiently use certain forms of recycled scrap aluminum in lieu of primary aluminum and alloying metals in our operations because recycled scrapaluminum trades at a discount to primary aluminum. The size of the discount to primary aluminum depends on regional scrap aluminum supply and demanddynamics. Larger discounts, generally available in periods of ample regional scrap aluminum supply relative to demand, enhance the economic advantage tous of using recycled scrap aluminum in lieu of primary aluminum and alloying metals. The timing and magnitude of changes in scrap discounts relative toprimary aluminum are largely unpredictable. If the availability of recycled scrap aluminum in our regional markets were to tighten, scrap discounts relative toprimary aluminum could decline and the amount of recycled scrap aluminum we could procure for use in our operations could decline, either of which couldhave an adverse effect on our financial position, results of operations and cash flows.Volatile pricing for commodities, including aluminum, certain alloying metals, natural gas and electricity, can cause our liquidity to decline and lead tonon-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 marketprice decline for aluminum could result in a non-cash lower-of-cost-or-market inventory charge. Besides non-cash losses, lower commodity prices couldreduce our liquidity due to lower borrowing availability under our revolving credit facility (caused by lower market value of our inventory which serves ascollateral for the facility) and due to potential cash required for margin calls on our hedge positions. Non-cash losses and reduced liquidity could have anadverse effect on our financial position, 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 mayotherwise affect 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 thesehedging transactions, our income and cash flows will be lower than they otherwise would have been. As noted above, our liquidity could also be adverselyaffected to the extent we incur margin calls from our hedging counterparties due to the market price of the underlying commodity or the foreign currencyexchange rates deviating adversely from fixed, floor or ceiling prices or rates established by our outstanding hedging transactions. Our failure to satisfycertain covenants in the underlying hedging documents or the occurrence of an event of default thereunder could also trigger margin calls that couldadversely impact our liquidity, financial position, results of operations and cash flows. Our hedging programs also expose us to the creditworthiness of ourhedging counterparties, which is inherently difficult to assess and can change quickly and dramatically. Non-performance by a hedging counterparty couldhave an adverse effect on our financial position, results of operations 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 restrictivecovenants that 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 on our 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;13•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 anevent of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt. A payment default or an accelerationfollowing an event of default under our revolving credit facility or our indenture for our 5.875% Senior Notes could trigger an event of default under theother indebtedness obligation as well as any other debt to which a cross-acceleration or cross-default provision applies, which could result in the principal ofand the accrued and unpaid interest on all such debt becoming due and payable. In addition, an event of default under our revolving credit facility couldpermit the lenders under our revolving credit facility to terminate all commitments to extend further credit under that facility. Furthermore, if we were unableto repay any amounts due and payable under our revolving credit facility, those lenders could proceed against the collateral granted to them to secure thatindebtedness. In the event our lenders or noteholders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets torepay 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 withthe SEC, 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 theselimitations are subject to significant qualifications and exceptions. The aggregate amount of payments made or incremental debt incurred in compliance withthese limitations could be substantial.As indicated above, more detailed descriptions of our revolving credit facility and the indenture governing our 5.875% Senior Notes are included infilings made 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 financialcondition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative,regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to paythe interest, principal and premium, 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 beforced to reduce or delay investments and capital expenditures, dispose of material assets or operations, restructure or refinance our indebtedness or seekadditional debt or equity 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, those alternative14actions may not allow us to meet our scheduled debt service obligations. Our revolving credit facility and the indenture governing the 5.875% Senior Notesrestrict 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 principaland interest to be due and payable, the lenders under our revolving credit facility could terminate their commitments to loan money, the lenders couldforeclose against the 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 orour revolving credit facility. Accordingly, repayments of our 5.875% Senior Notes and amounts due under our revolving credit facility are dependent on thegeneration of cash flow by our subsidiaries and their ability to make such cash available to us by dividend, loan, debt repayment or otherwise. Oursubsidiaries 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 creditfacility or the 5.875% Senior Notes or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, makedistributions to enable us to make payments in respect of our indebtedness. Each of our subsidiaries is a distinct legal entity and, under certain circumstances,legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. In the event that we do not receive distributions from oursubsidiaries, we may be unable to make required interest and principal payments on our revolving credit facility, the 5.875% Senior Notes or otherindebtedness.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, 2017, approximately 63% of our employees were represented by labor unions under labor contracts with varying durations andexpiration dates. Employees at Trentwood and our Newark, Ohio facility are represented by the USW under a single contract that extends through September2020. The USW also represents employees at five other facilities, two of which have contracts expiring in 2018. As part of any labor negotiation, the futurewages, healthcare benefits and excise taxes that may result therefrom, and other benefits that we agree to, could adversely affect our future financial position,results of operations and cash flows. In addition, negotiations could divert management attention, result in unsatisfactory terms and conditions, fail incoming to any agreement at all or result in strikes, work stoppages or other union-initiated work actions, any of which could have an adverse effect on ourfinancial 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 onthe most recent information available to us, we believe some of these plans are underfunded and may require increased contributions from participatingemployers to fill the funding shortfall in the future. An employer that withdraws or partially withdraws from a multi-employer pension plan may incur awithdrawal liability for the portion of the plan’s underfunding that is allocable to the withdrawing employer under very complex actuarial and allocationrules. The failure of a withdrawing employer to fund these obligations can increase the burden of the remaining participating employers to make up thefunding shortfall, which could have an adverse effect on our financial position, results of operations and cash flows. The increase or decrease in ourcontributions to these multi-employer pension plans will depend on our future collective bargaining, actions taken by trustees who manage the plans, actionsof other participating employers, government regulations and the actual return on assets held in the plans, among other factors.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, wouldconstitute 40% of our Board of Directors through December 31, 2020. As a result, the directors15nominated by the USW have a significant voice in the decisions of our Board of Directors. It is possible that the USW may seek to extend the term of theagreement and its right to nominate board members beyond 2020.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; thegeneration, storage, treatment, transportation and disposal of solid and hazardous waste; and the release of hazardous or toxic substances, pollutants andcontaminants into the environment. Compliance with these environmental laws is and will continue to be costly.We have accrued and will accrue for costs that are reasonably expected to be incurred based on available information with respect to fines, penalties andexpenses for alleged breaches of environmental laws and investigations and environmental clean up activities with respect to our continuing operations andcertain of our former operations. However, actual costs could exceed accrued amounts, perhaps significantly, and such expenditures could occur sooner thananticipated, which could adversely affect our financial position, results of operations and cash flows.Additionally, we may be subject to new claims from governmental authorities or third parties related to alleged injuries to the environment, human healthor natural resources, including claims with respect to waste disposal sites, the clean up of sites currently or formerly used by us or exposure of individuals tohazardous materials. New laws or regulations or changes to existing laws and regulations may also be enacted, including government mandated greeninitiatives and limitations on carbon emissions that increase the cost or complexity of compliance. Costs related to any new investigation, clean-up or otherremediation, fines or penalties, resolution of third-party claims or compliance with new or amended laws and regulations may be significant and could havean adverse effect on 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 the U.S. Congress or policies of the EPA could regulate greenhouse gas emissions through cap-and-trade systems, carbon taxes or otherprograms under which emitters would be required to buy allowances to offset emissions of greenhouse gas, pay carbon based taxes, make significant capitalinvestments, alter manufacturing practices or curtail production. In addition, several states, including the state of Washington, in which we havemanufacturing operations, have considered and continue to consider various greenhouse gas regulation and reduction programs through legislativeproposals, executive orders and ballot initiatives. Certain of our manufacturing plants use significant amounts of electricity and natural gas and certain of ourplants emit amounts of greenhouse gas above certain minimum thresholds that have or may be imposed. Greenhouse gas regulations could restrict our accessto natural gas and limit our ability to use natural gas and increase the price we pay for natural gas and electricity, any one of which could significantlyincrease our costs, reduce our competitiveness in the global economy or otherwise adversely affect our business, 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 inmanipulation and destruction of data, production downtimes and operations disruptions, which in turn could adversely affect our reputation, competitiveposition, business or results of operations. The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by othermeans.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 withimplementing, replacing and updating these systems, including potential disruption of our internal control structure, substantial capital expenditures,demands on management time and other risks of delays or difficulties in transitioning to new systems or of integrating new systems into other existingsystems. Our inability to prevent information 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.Our ability to utilize our net operating loss carryforwards and other tax attributes could be limited to the extent they expire before we fully utilize them orif changes in federal or certain state tax laws reduce or eliminate our ability to use them to offset income taxes. Additionally, a change in our ownership,specifically a change in ownership of more than 50% during any period16of 36 consecutive months ("ownership change"), as determined under the Internal Revenue Code of 1986 ("Code"), could reduce our ability to fully use ournet operating loss carryforwards and other significant tax attributes. To prevent an unintended ownership change that could compromise our tax attributes, our stockholders have (a) approved an amendment to ourcertificate of incorporation to implement stock transfer restrictions ("Transfer Restrictions") that will expire on May 26, 2019 and (b) ratified a tax assetprotection rights plan ("Tax Asset Rights Plan"), which will expire on April 7, 2019. While both were designed to preserve our ability to fully utilize our netoperating loss carryforwards and other significant tax attributes to offset future taxable income, neither the Transfer Restrictions nor the Tax Asset RightsPlan completely protects us from an ownership change that could limit 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 utilizethem, our future income will not be shielded from federal and state income taxation and the funds otherwise available for general corporate purposes wouldbe 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 than50% change in ownership during any period of 36 consecutive months, an ownership change, as determined under the Code. Certain transactions may beincluded in the calculation of an ownership change, including transactions involving our repurchase or issuance of our common shares. When we engage inor approve any transaction involving our common shares that may be included in the calculation of an ownership change, our practice is to first perform thecalculations necessary to confirm that our ability to use our federal income tax attributes will not be affected. These calculations are complex and reflectcertain necessary assumptions. Accordingly, it is possible that we could approve or engage in a transaction involving our common shares that causes anownership change and inadvertently impairs the use of our federal income tax attributes.The Tax Asset Rights Plan and 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 Transfer Restrictions asdiscussed above. The Tax Asset Rights Plan and the Transfer Restrictions may make our stock less attractive to large institutional holders, discouragepotential acquirers from attempting to take over our company, limit the price that investors might be willing to pay for shares of our common stock andotherwise hinder the market for our common stock.The Transfer Restrictions implemented by us to protect our tax attributes may void transactions in our common stock effected by 5% stockholders.The Transfer Restrictions in our certificate of incorporation restrict the transfer of our equity securities if, as a result of the transfer, either any person wouldbecome 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 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 Transfer Restrictions is void and will be unwound as provided in our certificate ofincorporation.We could engage in or approve transactions involving our common shares that adversely affect significant stockholders.Under the Transfer Restrictions in our certificate of incorporation, prior to May 26, 2019, our 5% stockholders are, in effect, required, and under the TaxAsset 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 couldengage 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 involvingour common stock. For example, share repurchases reduce the number of our common shares outstanding and could cause a stockholder holding less than4.99% of our stock as determined under Section 382 of the Code to become a 5% stockholder even though it has not acquired any additional shares.17The ownership of our stock is concentrated, with a few owners who, individually or collectively, could 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, 2017. As a result,any of them could have significant influence over matters requiring stockholder approval, including the composition of our Board of Directors. Further, tothe extent that the substantial stockholders were to act in concert, they could potentially control any action taken by our stockholders. This concentration ofownership could also facilitate or hinder proxy contests, tender offers, open market purchase programs, mergers or other purchases of our common stock thatmight otherwise give stockholders the opportunity to realize a premium over the then prevailing market price of our common stock or cause the market priceof our common stock to decline. We cannot make assurances that the interests of our major stockholders will not conflict with our interests or the interests ofour 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 purchase of our shares under the repurchase program, if any, are at thediscretion of the Board of Directors and will depend on a number of factors, including our financial and operating results, financial position and anticipatedcash requirements. Additionally, our revolving credit facility and the indenture for our 5.875% Senior Notes impose limitations on our ability to paydividends and repurchase our common shares. We can give no assurance that dividends will be declared and paid, that dividends will not be reduced or thatpurchases of our shares pursuant to our repurchase program will occur in the future.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 forour common stock. We are currently subject to anti-takeover provisions under Delaware law. These anti-takeover provisions impose various impediments tothe ability of a third party to acquire control of us. Additionally, provisions of our certificate of incorporation and bylaws impose various procedural andother requirements, which could make it more difficult for stockholders to effect certain corporate actions. For example, our certificate of incorporationauthorizes our Board of Directors to determine the rights, preferences and privileges and restrictions of unissued shares of preferred stock without any vote oraction by our stockholders. As a result, our Board of Directors can authorize and issue shares of preferred stock with voting or conversion rights that couldadversely affect the voting or other rights of holders of common stock. Our certificate of incorporation also divides our Board of Directors into three classes ofdirectors who serve for staggered terms. A significant effect of a classified Board of Directors may be to deter hostile takeover attempts because an acquirercould experience delays in replacing a majority of directors. Moreover, stockholders are not permitted to call a special meeting.In addition, while the Transfer Restrictions in our certificate of incorporation and the Tax Asset Rights Plan are designed to reduce the risk that anownership change could limit our ability to fully utilize our net operating loss carryforwards and other significant tax attributes to offset future taxableincome, both could have the effect of delaying or deterring a change of control of our company and may limit the price that investors might be willing to payfor shares of our common stock. The Tax Asset Rights Plan will expire on April 7, 2019, and the Transfer Restrictions will expire on May 26, 2019.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,results of operations or cash flows, or the price of our common stock. These risks include but are not limited to:•the 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 withour business 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;18•disputes, legal proceedings or investigations, whether meritorious or not, with respect to a variety of matters, including matters related to personalinjury, 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 defenseof claims, 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;•changes in tax laws and regulations;•new or modified legislation related to health care;•compliance with Section 404 of the Sarbanes-Oxley Act of 2002, including the potential impact of compliance failures; and•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.Item 2. PropertiesInformation regarding the location, size and ownership of our principal production facilities as of December 31, 2017 is below:Location Square footage Owned or LeasedChandler, Arizona (Extrusion) 115,000 Owned/Leased1Chandler, Arizona (Tube) 93,000 Owned/Leased1Florence, Alabama 252,000 OwnedJackson, Tennessee 310,000 OwnedKalamazoo, Michigan 465,000 Leased2London, Ontario (Canada) 311,000 OwnedLos Angeles, California 183,000 OwnedNewark, Ohio 1,293,000 OwnedRichland, Washington 45,000 Leased3Richmond, Virginia (Bellwood) 449,000 OwnedSherman, Texas 360,000 OwnedSpokane, Washington (Trentwood) 2,874,000 Owned/Leased4Total 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 and2033, 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. Trentwood 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 2020 expiration date and arenewal option subject to certain terms and conditions.19Production facilities and equipment are generally in good condition and suitable for their intended uses. For additional information regarding ourproduction facilities, see the table under Item 1. Business "Business Operations - Fabricated Products Segment - Manufacturing Processes" of this Report.Our corporate headquarters, located in Foothill Ranch, California, consists of 36,000 square feet at December 31, 2017 and is subject to a lease thatexpires in 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 sales prices of our common stock for each quarterly period for fiscal years 2017 and 2016: High LowFiscal 2017 First quarter $86.37 $74.56Second quarter $88.97 $76.73Third quarter $104.02 $88.60Fourth quarter $109.13 $90.93Fiscal 2016 First quarter $85.96 $70.14Second quarter $96.06 $80.75Third quarter $94.65 $80.44Fourth quarter $88.68 $69.41HoldersAs of February 15, 2018, there were approximately 576 holders of record of our common stock.DividendsSee Note 13 and Note 18 of Notes to Consolidated Financial Statements included in this Report for information regarding dividends paid in 2017, 2016and 2015, and declared subsequent to December 31, 2017.We have consistently paid a quarterly cash dividend since the second quarter of 2007 to holders of our common stock, including holders of restrictedstock, and have increased the dividend in each year since 2011. Nevertheless, as in the past, the future declaration and payment of dividends, if any, will be atthe discretion of our Board of Directors and will depend on a number of factors, including our financial and operating results, financial position andanticipated cash requirements and contractual restrictions under our revolving credit facility, the indenture for our 5.875% Senior Notes or otherindebtedness we may incur in the future. We can give no assurance that dividends will be declared and paid in the future. See Note 8 of Notes toConsolidated Financial Statements included in this Report for additional information about restrictions on dividend payments contained in the revolvingcredit facility and in the indenture for our 5.875% Senior Notes.We also pay quarterly dividend equivalents to the holders of certain restricted stock units. Holders of performance shares are not paid a quarterly dividendequivalent, but instead are entitled to receive, in connection with the issuance of underlying shares of common stock for performance shares that ultimatelyvest, a one-time payment equal to the dividends such holder would have received if the number of such shares of common stock so issued had been held ofrecord by such holder from the date of grant of such performance shares through the date of such issuance.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 SmallCap600® 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 of December 31, 2012 and (ii) reinvestment of all dividends. The performance graph is not necessarily indicative of the future performance of ourstock price.Issuer Repurchases of Equity SecuritiesThe following table provides information regarding our repurchases of our common shares during the quarter ended December 31, 2017: Amended and Restated 2016 Equity andPerformance Incentive Plan Stock Repurchase Plan Total Number ofShares Purchased1 Average Price perShare Total Number ofShares Purchased2 Average Price perShare Maximum DollarValue of Shares thatMay Yet BePurchased Underthe Program(millions)2October 1, 2017 - October 31, 2017 300 $99.18 15,077 $99.58 $121.9November 1, 2017 - November 30, 2017 — — 76,211 95.66 $114.7December 1, 2017 - December 31, 2017 — — 41,085 99.96 $110.5Total 300 $99.18 132,373 $97.44 N/A22_________________________________________ 1. Under our equity incentive plans, participants may elect to have us withhold common shares to satisfy minimum statutory tax withholding obligationsarising from the recognition of income and the vesting of restricted stock, restricted stock units and performance shares. When we withhold these shares, weare required to remit to the appropriate taxing authorities the market price of the shares withheld by us on the date of withholding. The withholding ofcommon shares by us could be deemed a purchase of such common shares. All such shares withheld by us were canceled on the applicable vesting dates ordates on which income to the employees was recognized, and the number of shares withheld was determined based on the closing price per common shareas reported on the Nasdaq Global Select Market on such dates.2. On April 16, 2015, we announced that our Board of Directors authorized us to repurchase an indeterminate number of shares of our common stock at anaggregate market value of up to $100.0 million. On April 17, 2017, we announced that our Board of Directors authorized us to repurchase an indeterminatenumber of shares of our common stock at an aggregate market value of up to $100.0 million. The April 2017 authorization was in addition to the sharerepurchase amount authorized in April 2015. Neither plan has an expiration date.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 Analysisof Financial Condition and Results of Operations" and Item 8. "Financial Statements and Supplementary Data" of this Report (in millions of dollars, exceptshipments and per share amounts): Year Ended December 31, 2017 2016 2015 2014 2013Shipments (mm lbs) 625.7 614.3 615.4 588.8 563.7Net sales $1,397.5 $1,330.6 $1,391.9 $1,356.1 $1,297.5Net income (loss)1 $45.4 $91.7 $(236.6) $71.8 $104.8Net income (loss) per share - Basic $2.67 $5.15 $(13.76) $4.02 $5.56Net income (loss) per share - Diluted $2.63 $5.09 $(13.76) $3.86 $5.44Cash dividends declared per common share $2.00 $1.80 $1.60 $1.40 $1.20Capital expenditures $75.5 $76.1 $63.1 $59.4 $70.4Depreciation and amortization expense $39.7 $36.0 $32.4 $31.1 $28.1_____________________1. Net income (loss) for 2017 included goodwill impairment and the impact of the Tax Cuts and Jobs Act (see Note 3 and Note 12, respectively, of Notes toConsolidated Financial Statements included in this Report for further details). Net income (loss) for 2015 included the impact of removing the net assetsof the voluntary employees' beneficiary association that provides benefits for eligible retirees represented by certain unions and their surviving spousesand eligible dependents ("Union VEBA") and related deferred tax liabilities from our Consolidated Balance Sheets. See Note 4 of Notes to ConsolidatedFinancial Statements included in this Report for further details. December 31, 2017 2016 2015 2014 2013Assets: Fabricated Products $1,046.8 $969.4 $904.7 $878.9 $852.5 All Other 338.4 474.1 342.2 860.1 911.7Total assets1 $1,385.2 $1,443.5 $1,246.9 $1,739.0 $1,764.2Cash and short-term investments $234.8 $286.2 $102.5 $291.7 $299.0Long-term borrowings (at face value), includingamounts due within one year $375.0 $375.0 $197.8 $400.0 $400.023_____________________1. The 2015 Total assets reflected the removal of the Union VEBA net assets from our Consolidated Balance Sheets during the first quarter of 2015. SeeNote 4 of Notes 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 financialstatements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors thatmay affect our future results. Our MD&A is presented in the following sections:•Management Review of 2017 and Outlook for the Future;•Results of Operations;•Liquidity and Capital Resources;•Contractual Obligations, Commercial Commitments and Off-Balance Sheet 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.This information contains certain non-GAAP financial measures. A non-GAAP financial measure is defined as a numerical measure of a company’sfinancial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented inaccordance with generally accepted accounting principles ("GAAP") in the statements of income, balance sheets or statements of cash flows of the company.Pursuant to the requirements of Regulation G, Conditions for Use of Non-GAAP Financial Measures, we have provided a reconciliation of non-GAAPfinancial measures to the most directly comparable financial measure in the accompanying tables. The non-GAAP financial measures used within thispresentation are value added revenue, operating income excluding non-run-rate items and ratios related thereto. These measures are presented becausemanagement uses this information to monitor and evaluate financial results and trends and believes this information to also be useful for investors.In the discussion of operating results below, we refer to certain items as "non-run-rate items." For purposes of such discussion, non-run-rate items are itemsthat, while they may recur from period-to-period: (i) are particularly material to results; (ii) affect costs primarily as a result of external market factors; and(iii) may not recur in future periods if the same level of underlying performance were to occur. Non-run-rate items are part of our business and operatingenvironment but are worthy of being highlighted for the benefit of readers of our financial statements. Our intent is to allow users of the financial statementsto consider our results both in light of and separately from items such as unrealized mark-to-market gains or losses on derivatives related to fluctuations inunderlying metal and energy prices and currency exchange rates, lower of cost or market inventory write-downs, non-cash impairments, the impact ofdiscount rate changes on workers' compensation liabilities, legacy environmental expenses related to predecessor operations and gains or losses related to ourvoluntary employee beneficiary associations ("VEBAs"). For a reconciliation of operating income (loss) excluding non-run-rate items to operating income(loss), see "Results of Operations - Segment and Business Unit Information" below.To allow users of our financial statements to consider the impact of metal cost on our Net sales, we disclose Net sales as well as "value added revenue,"which is Net sales less the Hedged Cost of Alloyed Metal. As used in this discussion, "Hedged Cost of Alloyed Metal" is the cost of our metal inputs at theMidwest Transaction Price of aluminum ("Midwest Price") plus the cost of alloying elements and any realized gains and/or losses on settled hedges related tothe metal sold in the referenced period. The Midwest Price reflects supply and demand dynamics for primary aluminum in North America. For a reconciliationof value added revenue to Net sales, see "Results of Operations - Segment and Business Unit Information" below.24Management Review of 2017 and Outlook for the FutureReviewFor the full year 2017, we had strong operating performance and achieved record shipments, despite headwinds from aerospace supply chain destocking,lower-than-anticipated automotive build rates, competitive price pressure and construction-related disruptions at our rolling mill in Spokane, Washington("Trentwood").Growth in overall shipments was driven by strong demand for our general engineering and automotive applications that more than offset tempereddemand for aerospace applications due to supply chain destocking. Value added revenue declined from the prior year as a result of the leaner mix and theimpact of price pressure on higher value added revenue products. Sales margins were compressed on high value added products as competitive price pressureprevented pass through of the increasing contained metal costs. Favorable scrap raw material prices and our initiatives to achieve more efficient raw materialutilization partially offset the impact from reduced sales margins.Despite the inefficiencies at Trentwood resulting from construction-related project work, overall manufacturing cost efficiency continued to improve asstrong performance across our manufacturing platform more than offset Trentwood inefficiencies. Considering the extent of construction-related disruption atTrentwood during the year, our 2017 manufacturing efficiency improvement was a significant accomplishment, particularly given the step-change and recordlevel we achieved in 2016.During the year, we continued to execute on our capital investment program to further enhance quality and efficiency, expand capacity and sustain strongcompetitive manufacturing capabilities. Our $75.5 million capital spending in 2017 was primarily focused on modernizing the hot line and light gauge heattreat plate equipment at Trentwood. The 2017 project work around the hot line and thin gauge heat treat plate equipment led to significant construction-related downtime, but will also have a very positive impact on quality, cost and capacity in the future. Additional capital investments will be made as wecomplete the $150.0 million five-year modernization program.In addition to investments to support further organic growth, during the year we returned $114.5 million of cash to shareholders through quarterlydividends and share repurchases. Consistent with our capital deployment priorities, we have steadily increased our quarterly dividend over the past sevenyears, increasing it 11% to $0.50 per share in early 2017 and an additional 10% to $0.55 per share in early 2018.Going forward, we will continue to invest in organic growth and asset integrity initiatives. In addition, we will seek complementary inorganic growthopportunities to create additional value for our shareholders. Furthermore, we will continue to return cash to shareholders through quarterly dividends anddisciplined share repurchases.OutlookAs we look to our aerospace/high strength applications ("Aero/HS products"), we expect improving demand in 2018 and 2019 as supply chain destockingruns its course in 2018 and as airframe manufacturers continue to ramp-up build rates to address the large nine-year order backlog. In addition, the newdefense budget strengthens the demand for the F-35 Joint Strike Fighter program and other military applications. We are very well-positioned in themarketplace and, with supply chain destocking moderating as we proceed through the year, we expect mid-single-digit year-over-year growth in our 2018shipments for these applications. However, we continue to expect higher contained metal costs and competitive price pressure to continue in 2018.For our automotive extrusion applications ("Automotive Extrusions"), North American build rates are expected to improve 1%-2% year-over-yearfollowing the 4% decline in builds in 2017. We expect mid-single digit year-over-year growth in 2018 for our automotive shipments and value addedrevenue.We have generated a 6% compound annual growth rate in both our shipments and value added revenue for general engineering applications ("GEproducts") over the past three years driven by improving, broad-based industrial demand. We are cautiously optimistic about underlying demand for our GEproducts as we look forward. However, as we have previously discussed, we continue to experience price pressure on our high value-added products fromboth imports and increasing metal costs.Overall for the full year 2018, we anticipate mid-single-digit growth in total shipments and value added revenue compared to 2017. Major maintenancecosts in 2018 are expected to be similar to 2017. Capital investment over the next three years, from 2018 through 2020, will remain focused on continuedimprovement in quality and cost efficiency. Total annual spending is expected to be approximately $80.0 million, with sustaining capital reinvestmentexpected to be equivalent to approximately 75% of our annual depreciation expense.25As we proceed through 2018 and look longer-term, we anticipate improving results driven by growing demand for our Aero/HS products, AutomotiveExtrusions and GE products and continued improvement in underlying manufacturing cost efficiency.Results of OperationsFiscal 2017 Summary•Our reported operating income for 2017 was $150.7 million, including items that we consider to be non-run-rate, which netted to a charge of $8.4million. See "Segment and Business Unit Information" below for further discussion of our operating income before non-run-rate items.•We recorded incremental income tax expense of $37.2 million due to tax law changes enacted in December 2017, which, among other things,reduced the federal corporate income tax rate from 35% to 21%. The tax rate reduction required that we reduce the carrying value of our deferred taxassets related to our net operating loss carryforwards and caused the majority of the incremental tax expense.•Our liquidity was approximately $526.7 million as of December 31, 2017, comprised of our cash balances, short-term investments and net borrowingavailability under our revolving credit facility (on which there were no outstanding borrowings).•We invested $75.5 million in capital spending for further growth, manufacturing efficiency, quality and operational security. See "Liquidity andCapital Resources - Capital Expenditures and Investments" below.•In 2017, we paid $2.9 million to the Salaried VEBA and $17.1 million to the Union VEBA for our cash contributions with respect to 2016. In 2018,we expect to pay another $2.9 million to the Salaried VEBA with respect to 2017 and $12.8 million to the Union VEBA with respect to the ninemonths ended September 30, 2017. This $12.8 million payment will be our final cash contribution to the Union VEBA.•We paid a total of approximately $35.0 million, or $2.00 per common share, in cash dividends to stockholders, including holders of restricted stock,and dividend equivalents to holders of certain restricted stock units.•We repurchased 938,680 shares of common stock in 2017 for a total cost of $77.8 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. "FinancialStatements and Supplementary Data" of this Report. See Note 15 of Notes to Consolidated Financial Statements included in this Report for furtherinformation regarding segments.Net Sales. We reported Net sales for 2017 of $1,397.5 million, compared to $1,330.6 million for 2016 and $1,391.9 million for 2015. The increase in Netsales during 2017 compared to 2016 primarily reflected a 2% increase in Fabricated Products segment shipment volume and a 3% increase in averagerealized sales price per pound. Fabricated Products segment shipment volume increased due primarily to: (i) a 8.1 million pound, or 9%, increase inAutomotive Extrusions primarily related to significantly higher bumper shipments and (ii) a 14.8 million pound, or 6%, increase in GE products reflectingthe continued solid underlying demand for our general engineering applications, partially offset by a 10.2 million pound, or 4%, decrease in Aero/HSproducts due to: (i) aerospace supply chain destocking and (ii) temporary plate capacity constraints due to the installation of upgraded equipment andcontrols at Trentwood. The increase in average realized sales price per pound reflected a 0.12/lb, or 14%, increase in average Hedged Cost of Alloyed Metalprices per pound, partially offset by a 0.06/lb, or 5%, decrease in average value added revenue per pound. The decrease in average value added revenue perpound reflected competitive price pressure on spot sales of Aero/HS and GE products and a leaner value added product mix with less volume of Aero/HSproducts and more volume of Automotive Extrusions and GE products. See the table in "Segment and Business Unit Information" below for further details.The decrease in Net sales 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 average Hedged Cost of Alloyed Metal prices per pound, partially offset by a $0.04/lb, or 3%, increase in average value addedrevenue per pound. The increase in average value added revenue per pound reflected benefits of pricing improvements on some Aero/HS products and thebenefit from lower contained metal prices on some high value added products. Fabricated Products segment shipment volume declined slightly in 2016compared to 2015 as lower shipments of other industrial products ("Other products") were largely offset by an increase in shipments of GE26products. Additionally, Aero/HS products and Automotive Extrusions declined slightly compared to 2015. See the table in "Segment and Business UnitInformation" below for further details.Cost of Products Sold, Excluding Depreciation and Amortization and Other Items. Cost of products sold, excluding depreciation and amortization andother items for 2017 totaled $1,105.3 million, or 79% of Net sales, compared to $1,019.5 million, or 77% of Net sales, in 2016 and $1,115.4 million, or 80%of Net sales, in 2015. The increase during 2017 compared to 2016 of $85.8 million was comprised of a $93.6 million increase in Hedged Cost of AlloyedMetal, partially offset by a $7.8 million reduction in net manufacturing conversion and other costs. The reduction in net manufacturing conversion and othercosts reflected: (i) a $10.9 million favorable impact from efficient raw material usage, primarily due to favorable scrap aluminum pricing and (ii) $1.6 millionof lower energy pricing, partially offset by: (i) $3.2 million of higher planned major maintenance expense and (ii) a net $1.5 million manufacturing costincrease as incremental conversion costs associated with higher shipment volume in 2017 were mitigated by favorable manufacturing cost efficiency. Of the$93.6 million increase in Hedged Cost of Alloyed Metal, $83.9 million was due to higher hedged metal prices and $9.7 million was due to higher shipmentvolume, as discussed in "Net Sales" above. See "Segment and Business Unit Information" below for a further discussion of the comparative results ofoperations for 2017 and 2016.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 of AlloyedMetal 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 of AlloyedMetal 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 coordinatedefforts to increase utilization of recycled scrap aluminum in lieu of more expensive primary aluminum and alloying raw materials; and (iii) a decrease of $2.3million from lower energy pricing. Offsetting these favorable conversion cost factors were: (i) $7.7 million of incremental costs related to a change in productmix; (ii) a $4.2 million increase in workers' compensation and benefits costs; and (iii) $5.4 million of LIFO and other charges. See "Segment and BusinessUnit Information" below for a further discussion of the comparative results of operations for 2016 and 2015.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, which is included in Cost of products sold, isprimarily due to changes in underlying commodity prices as well as derivative settlements and are related to our operational hedges. These hedges areintended to mitigate our exposure to changes in prices for certain products sold and consumed by us and, to a lesser extent, to mitigate our exposure tochanges in foreign currency exchange rates. Unrealized (gain) loss on derivative instruments was $(19.4) million, $(18.7) million and $3.4 million for 2017,2016 and 2015, respectively. Unrealized gain in 2017 was comprised of a $20.9 million gain on aluminum hedge positions offset by a $1.4 million loss onnatural gas hedge positions and $0.1 million loss on electricity hedge positions. See Note 7 of Notes to Consolidated Financial Statements included in thisReport for details on the unrealized (gain) loss on derivative instruments for 2016 and 2015.Depreciation and Amortization. Depreciation and amortization for 2017 was $39.7 million compared to $36.0 million for 2016 and $32.4 million for2015. The $3.7 million increase in Depreciation and amortization in 2017 compared to 2016 was due primarily to various construction-in-progress projectsbeing placed in service during 2017 and the second half of 2016 related to capital upgrades at several of our extrusion facilities to support automotiveprograms that will launch over the next few years and other manufacturing cost efficiency and quality initiatives. Approximately $3.6 million of the increasein Depreciation and amortization expense in 2016 compared to 2015 was due to various construction-in-progress projects being placed in service during2016 and the second half of 2015 related to capital upgrades at several of our extrusion facilities.Selling, General, Administrative, Research and Development ("SG&A and R&D"). SG&A and R&D expense totaled $97.5 million in 2017 compared to$105.0 million in 2016. The decrease was due primarily to: (i) a $6.2 million decrease in short-term incentive compensation expense based on performancefactors and modifiers; (ii) a $2.0 million decrease in salaries and benefits; and (iii) $0.6 million decrease in professional fees and services, partially offset byan increase of $1.3 million in long-term incentive compensation expense.SG&A and R&D expense totaled $105.0 million in 2016 compared to $88.1 million in 2015. The increase in 2016 was due primarily to increases of: (i)$9.1 million in our short-term incentive compensation expense; (ii) $2.3 million in our long-term incentive compensation expense; (iii) $1.3 million inprofessional fees and services; (iv) $1.4 million in management development; and (v) approximately $1.7 million in expenses for workers' compensation,environmental costs and salaries and benefits. The increase in SG&A and R&D was also due to $1.2 million of insurance settlement proceeds we receivedduring 2015.27Net Periodic Postretirement Benefit Cost Relating to Salaried VEBA. See Note 4 of Notes to Consolidated Financial Statements included in this Reportfor additional information regarding the Salaried VEBA.(Gain) Loss on Removal of Union VEBA Net Assets. See Note 4 of Notes to Consolidated Financial Statements included in this Report for details on theLoss on removal of Union VEBA net assets in 2015 and our estimated liability for the final remaining variable cash contribution to be paid in 2018.Goodwill Impairment. See Note 3 of Notes to Consolidated Financial Statements included in this Report for further details.Other Operating Charges, Net. See Note 3 of Notes to Consolidated Financial Statements included in this Report for further details.Interest Expense. Interest expense represents cash and non-cash interest expense incurred on our revolving credit facility, our 5.875% senior notes due2024 ("5.875% Senior Notes"), our 8.25% senior notes due 2020 ("8.25% Senior Notes"), which were redeemed on June 1, 2016, and our 4.5% cashconvertible senior notes due 2015 ("Convertible Notes"), which were settled on April 1, 2015, net of capitalized interest. Interest expense was $22.2 million,$20.3 million and $24.1 million for 2017, 2016 and 2015, respectively, net of $2.2 million, $2.9 million and $1.8 million of interest expense capitalized aspart of construction-in-progress, respectively, for the three periods. Non-cash amortization of the discount on the Convertible Notes accounted for $2.4million of the total interest expense in 2015.Other Income (Expense), Net. See Note 11 of Notes to Consolidated Financial Statements included in this Report for details.Income Tax (Provision) Benefit. The income tax provision for 2017 was $87.6 million, resulting in an effective tax rate of 65.9%. The difference betweenthe effective tax rate and the projected blended statutory tax rate for 2017 was primarily due to the passage of H.R.1, commonly referred to as the Tax Cutsand Jobs Act ("Tax Act"). Incremental income tax expense related to the Tax Act included: (i) $29.0 million (or 21.8% of taxable income) related to the writedown of deferred tax assets to reflect the new 21% federal corporate tax rate; (ii) $5.9 million (or 4.5% of taxable income) for transition and withholding taxassociated with foreign undistributed earnings, including $2.2 million of foreign withholding tax since our earnings in Canada are no longer permanentlyreinvested; and (iii) $2.3 million (or 1.7% of taxable income) for certain executive compensation that can no longer be deducted under the Tax Act (see Note12 of Notes to Consolidated Financial Statements included in this Report for further discussion on the Tax Act).The income tax provision for 2016 was $55.5 million, resulting in an effective tax rate of 37.7%. There was no material difference between the effectivetax 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 theprojected blended statutory tax rate for 2015 was primarily due to: (i) a decrease in unrecognized tax benefits, including interest and penalties, of $1.8million (or 0.5% of taxable income); (ii) state tax rate and apportionment changes in various states resulting in an increase of $4.7 million (or 1.3% of taxableincome); and (iii) an increase in the valuation allowance for federal and certain state net operating losses of $2.0 million (or 0.5% of taxable income).As a result of the Tax Act, our long-term effective tax rate is estimated to be in the mid 20% range on a go-forward basis.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 werefer to as Fabricated Products, that produces semi-fabricated specialty aluminum products, such as aluminum plate and sheet and extruded and drawnproducts, for the following 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 underUnited States generally accepted accounting principles ("GAAP"), we treat the Fabricated Products segment as a reportable segment. All Other is notconsidered a reportable segment.The following data should be read in conjunction with our consolidated financial statements and the notes thereto included in this Report. See Note 15 ofNotes to Consolidated Financial Statements included in this Report for further information regarding segments.28Fabricated ProductsThe table below provides selected operational and financial information for our Fabricated Products segment for each period presented (in millions ofdollars): Year EndedDecember 31, 2017 2016 2015Segment operating income $201.3 $229.6 $190.8Impact to segment operating income of non-run-rate items: Adjustments to plant-level LIFO1 (3.8) (0.6) 7.0Mark-to-market gain (loss) on derivative instruments 19.4 18.7 (3.4)Non-cash lower of cost or market inventory write-down2 — (4.9) (2.6)Workers’ compensation benefit (cost) due to discounting — 0.3 (0.2)Goodwill impairment3 (18.4) — —Asset impairment charges (0.8) (2.8) (0.1)Environmental expenses4 (0.3) (0.1) (1.7)Total non-run-rate items (3.9) 10.6 (1.0)Segment operating income excluding non-run-rate items $205.2 $219.0 $191.8_____________________1. We manage our Fabricated Products segment business on a monthly LIFO basis at each plant, but report inventory externally on an annual LIFO basis inaccordance with GAAP on a consolidated basis. This amount represents the conversion from GAAP LIFO applied on a consolidated basis for theFabricated 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 anormal profit margin). The $2.6 million lower of cost or market inventory write-down in 2015 was due primarily to declining metal prices.3. See Note 3 of Notes to Consolidated Financial Statements included in this Report for additional information relating to the impairment of goodwill andone of our customer relationship intangible assets.4. Non-run-rate environmental expenses within Fabricated Products are related to activities that occurred at 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 additionalinformation relating to the environmental expenses.As noted above, segment operating income excluding non-run-rate items for 2017 was $13.8 million lower than segment operating income excludingsuch items for 2016. Lower operating income excluding non-run-rate items reflected: (i) a $20.5 million unfavorable sales impact due primarily to a leanerproduct mix and compressed sales margins, partially offset by favorable price spreads for scrap raw material purchases; (ii) $3.6 million of higher depreciationand amortization expense; and (iii) $3.2 million of higher planned major maintenance expense, partially offset by: (i) a $4.7 million improvement in netmanufacturing conversion and other costs; (ii) a $5.0 million decrease in overhead and other benefits and costs; (iii) a $2.2 million decrease in incentivecompensation expense; and (iv) $1.6 million of lower energy pricing.Segment operating income excluding non-run-rate items for 2016 was $27.2 million higher than segment operating income excluding such items for2015. The increase primarily reflected: (i) a $15.3 million favorable sales impact; (ii) a $14.0 million improvement in controllable manufacturing conversioncosts; (iii) $12.6 million of favorable impact from coordinated efforts by our metal procurement group and manufacturing operations to increase utilization ofrecycled scrap aluminum in lieu of more expensive primary aluminum and alloying raw materials; and (iv) a $2.3 million benefit from lower energy prices.These favorable impacts were partially offset by: (i) a $5.3 million increase in incentive compensation expense; (ii) a $3.7 million increase in workers'compensation expense; (iii) a $4.6 million increase in overhead and other benefits and costs; and (iv) $3.5 million of higher depreciation expense. Thefavorable sales impact reflected expanded sales margins due to price improvements on certain Aero/HS products, as well as lower contained metal prices oncertain high value added products.29The table below provides our Fabricated Products segment shipment and value added revenue information (in millions of dollars, except shipments andvalue added revenue per pound) by end market applications for each period presented: Year Ended December 31, 2017 2016 2015Aero/HS Products: Shipments (mmlbs) 233.0 243.2 243.5 $ $ / lb $ $ / lb $ $ / lbNet sales $653.7 $2.81 $675.4 $2.78 $695.5 $2.86Less: Hedged Cost of Alloyed Metal (223.4) (0.96) (208.5) (0.86) (246.4) (1.02)Value added revenue $430.3 $1.85 $466.9 $1.92 $449.1 $1.84 Automotive Extrusions: Shipments (mmlbs) 101.0 92.9 93.5 $ $ / lb $ $ / lb $ $ / lbNet sales $217.3 $2.15 $188.8 $2.03 $199.2 $2.13Less: Hedged Cost of Alloyed Metal (99.6) (0.98) (77.0) (0.83) (88.7) (0.95)Value added revenue $117.7 $1.17 $111.8 $1.20 $110.5 $1.18 GE Products: Shipments (mmlbs) 264.7 249.9 231.4 $ $ / lb $ $ / lb $ $ / lbNet sales $476.2 $1.80 $420.1 $1.68 $426.1 $1.84Less: Hedged Cost of Alloyed Metal (261.2) (0.99) (208.9) (0.83) (226.1) (0.98)Value added revenue $215.0 $0.81 $211.2 $0.85 $200.0 $0.86 Other Products: Shipments (mmlbs) 27.0 28.3 47.0 $ $ / lb $ $ / lb $ $ / lbNet sales $50.3 $1.86 $46.3 $1.64 $71.1 $1.51Less: Hedged Cost of Alloyed Metal (27.0) (1.00) (23.2) (0.82) (40.8) (0.87)Value added revenue $23.3 $0.86 $23.1 $0.82 $30.3 $0.64 Total: Shipments (mmlbs) 625.7 614.3 615.4 $ $ / lb $ $ / lb $ $ / lbNet sales $1,397.5 $2.23 $1,330.6 $2.17 $1,391.9 $2.26Less: Hedged Cost of Alloyed Metal (611.2) (0.97) (517.6) (0.85) (602.0) (0.98)Value added revenue $786.3 $1.26 $813.0 $1.32 $789.9 $1.28For 2017, Net sales of Fabricated Products increased by $66.9 million to $1,397.5 million, as compared to 2016, primarily reflecting a 3% increase intotal average realized sales price per pound and a 2% increase in Fabricated Products segment shipments. See "Consolidated Selected Operational andFinancial Information" above for further discussion.The decrease in Net sales of Fabricated Products during 2016 compared to 2015 was due primarily to a 4% decrease in total average realized sales priceper pound and a slight decrease in Fabricated Products segment shipments. See "Consolidated Selected Operational and Financial Information" above forfurther discussion.30All OtherAll Other provides support for our operations and incurs general and administrative expenses that are not allocated to the Fabricated Products segment.All Other is not considered a reportable segment. The table below presents the impact of non-run-rate items to operating loss within the All Other businessunit for each period presented (in millions of dollars): Year EndedDecember 31, 2017 2016 2015Operating loss $(50.6) $(51.8) $(536.7)Impact to operating loss of non-run-rate items: Net periodic postretirement benefit cost relating to Salaried VEBA1 (4.5) (3.4) (2.4)Gain (loss) on removal of Union VEBA net assets1 — 0.1 (493.4)Environmental expense adjustments2 — — 0.4Total non-run-rate items (4.5) (3.3) (495.4)Operating loss excluding non-run-rate items $(46.1) $(48.5) $(41.3)_______________________1. See Note 4 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,while such facilities were occupied by a predecessor. See Note 9 of Notes to Consolidated Financial Statements included in this Report for additionalinformation relating to the environmental expenses.All Other operating loss excluding non-run-rate items for 2017 was $2.4 million lower than in 2016 due primarily to a decrease in employee incentivecompensation expense.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 ofapproximately $1.3 million.Liquidity and Capital ResourcesSummaryThe following table summarizes our liquidity at the dates presented (in millions of dollars): December 31, 2017 December 31, 2016Available cash and cash equivalents$51.1 $55.2Short-term investments183.7 231.0Net borrowing availability under Revolving Credit Facility after letters of credit291.9 275.3Total liquidity$526.7 $561.5Cash equivalents consist primarily of money market accounts and investments which, when purchased, have a maturity of 90 days or less. We place ourcash in bank deposits and money market funds with high credit quality financial institutions, which invest primarily in commercial paper and time depositsof prime quality, short-term repurchase agreements and U.S. government agency notes. Short-term investments represent holdings in investment-gradecommercial paper with a maturity of greater than 90 days.In addition to our unrestricted cash and cash equivalents described above, we had restricted cash of $12.9 million at December 31, 2017 that was pledgedor held as collateral in connection with workers’ compensation requirements and certain other agreements. From time to time, such restricted funds could bereturned to us or we could be required to pledge additional cash (see Note 14 of Notes to Consolidated Financial Statements included in this Report).31We and certain of our subsidiaries have a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the other financial institutionsparty thereto ("Revolving Credit Facility") (see Note 8 of Notes to Consolidated Financial Statements included in this Report). There were no borrowingsunder our Revolving Credit Facility as of December 31, 2017 or December 31, 2016.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, 2017 2016 2015Total cash provided by (used in): Operating activities: Fabricated Products $221.2 $235.6 $227.3All Other (79.7) (70.0) (67.6)Total cash provided by operating activities $141.5 $165.6 $159.7Investing activities: Fabricated Products $(74.7) $(75.8) $(62.4)All Other 49.2 (200.6) 82.8Total cash (used in) provided by investing activities $(25.5) $(276.4) $20.4Financing activities: Fabricated Products $(0.4) $— $—All Other (119.0) 94.8 (284.4)Total cash (used in) provided by financing activities $(119.4) $94.8 $(284.4)Operating ActivitiesFabricated Products – In 2017, Fabricated Products segment operating activities provided $221.2 million of cash. Cash provided in 2017 was primarilyrelated to: (i) $201.3 million of operating income; (ii) depreciation and amortization of $39.0 million; (iii) non-cash impairment charges of $19.2 million;(iv) an increase in accounts payable of $11.5 million driven predominantly by the timing of metal purchases and increase in metal price; and (v) an increasein other non-cash items of $6.7 million. Cash provided by operating activities was partially offset by: (i) an increase in accounts receivables of $27.9 milliondue primarily to the timing of sales and increase in metal price; (ii) unrealized gain on derivative instruments of $19.4 million; (iii) an increase in inventoryof $6.3 million; and (iv) an increase in prepaid expenses and other current assets of $1.6 million.In 2016, Fabricated Products segment operating activities provided $235.6 million of cash. Cash provided in 2016 was primarily related to: (i) $229.6million of operating income; (ii) adjustments for non-cash items and depreciation and amortization of $21.9 million; (iii) a lower of cost or market inventorywrite-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 $10.3 million. Cashprovided 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 $227.3 million of cash. Cash provided in 2015 was primarily related to: (i) $190.8million of operating income; (ii) adjustments for non-cash items and depreciation and amortization of $37.5 million; and (iii) a decrease in accountsreceivable of $17.0 million, partially offset by: (iv) an increase in inventory of $4.9 million (net of a $2.6 million lower of cost or market charge) dueprimarily to increased shipment volume; and (v) a decrease in accounts payable of $12.4 million due to the timing of payments and decreasing price ofaluminum.For additional information regarding Fabricated Products operating income excluding non-run-rate items, see "Results of Operations - Segment andBusiness Unit Information" above.All Other – Cash outflow from All Other operating activities in 2017 consisted primarily of payments relating to: (i) general and administrative costs of$29.7 million; (ii) an annual variable cash contribution to the VEBAs of $20.0 million with respect to the 2016 year; (iii) our short-term incentive program inthe amount of $6.7 million; and (iv) interest on the 5.875% Senior Notes and Revolving Credit Facility of $23.3 million.32Cash outflow from All Other operating activities in 2016 consisted primarily of payments relating to: (i) general and administrative costs of $27.4 million;(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 amount of$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$3.4 million; (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 therepurchase of our 8.25% Senior Notes.Investing ActivitiesFabricated Products – Cash used in investing activities for Fabricated Products was $74.7 million in 2017, compared to $75.8 million of cash used in2016 and $62.4 million of cash used in 2015. Cash used in 2017 primarily consisted of capital expenditures of $75.2 million, partially offset by net proceedsfrom the disposal of property, plant and equipment of $0.6 million. Cash used in 2016 and 2015 was substantially related to capital expenditures. See"Capital Expenditures and Investments" below for additional information.All Other – Cash provided by investing activities during 2017 of $49.2 million primarily consisted of proceeds from the disposition of available for salesecurities of $296.9 million, partially offset by purchases of available for sale securities of $247.4 million and capital expenditures of $0.3 million. Cash usedin investing activities during 2016 of $200.6 million primarily consisted of $200.1 million net cash outflow in conducting investment activities with respectto our available for sale securities and capital expenditures of $0.5 million. Cash provided by investing activities during 2015 of $82.8 million primarilyconsisted of proceeds from the disposition of available for sale securities. A portion of the proceeds was used to settle the Convertible Notes on April 1, 2015.Financing ActivitiesFabricated Products – Cash used in financing activities was insignificant during 2017, 2016 or 2015.All Other – Cash used in financing activities in 2017 was $119.0 million, representing: (i) $79.5 million of cash used to repurchase our common stockunder our stock repurchase program; (ii) $35.0 million of cash dividends paid to stockholders, including the holders of restricted stock, and in dividendequivalents to the holders of certain restricted stock units; and (iii) $4.5 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 provided by financing activities in 2016 was $94.8 million, representing $375.0 million in proceeds from the issuance of our 5.875% Senior Notesand $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) $32.4million of cash dividends paid to our stockholders, including holders of restricted stock, and dividend equivalents paid to holders of certain restricted stockunits and to holders of performance shares granted prior to 2014, with respect to the target number of underlying shares of common stock (constitutingapproximately one-half of the maximum payout); (iii) $33.3 million of cash 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 to repurchase our common stock to satisfy withholding taxes resulting from the vestingof 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,including holders of restricted stock, and dividend equivalents paid to holders of certain restricted stock units and to holders of performance shares grantedprior 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 million payment related to the repurchase of $27.2 million aggregate principal amount of our 8.25% Senior Notes; (v) $2.8 million of cash used torepurchase our common stock to satisfy withholding taxes resulting from the vesting of employee restricted stock, restricted stock units and performanceshares; and (vi) $0.6 million of cash paid for financing costs related to the renewal of our Revolving Credit Facility. Cash used in financing activities in 2015was partially offset by $1.3 million of additional tax benefit in connection with the vesting of employee non-vested shares, restricted stock units andperformance shares.33Sources of LiquidityWe believe our available cash and cash equivalents, short-term investments, borrowing availability under the Revolving Credit Facility and fundsgenerated from operations are our most significant sources of liquidity. While we believe these sources will be sufficient to finance our working capitalrequirements, planned capital expenditures and investments, debt service obligations and other cash requirements for at least the next twelve months, ourability to fund such cash requirements will depend upon our future operating performance (which will be affected by prevailing economic conditions) andfinancial, 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), ofwhich up to a maximum of $20.0 million may be utilized for letters of credit. The Revolving Credit Facility may, subject to certain conditions and theagreement of lenders thereunder, 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, 2018 December 31, 2017Revolving Credit Facility borrowing commitment$300.0 $300.0 Borrowing base availability$291.9 $300.0Less: Outstanding borrowings under Revolving Credit Facility— —Less: Outstanding letters of credit under Revolving Credit Facility8.1 (8.1)Net remaining borrowing availability$300.0 $291.9Borrowing rate (if applicable)14.75% 4.75%_______________________1. Such borrowing rate, if applicable, represents the interest rate for any overnight borrowings under the Revolving Credit Facility.We do not believe that covenants contained in the Revolving Credit Facility are reasonably likely to limit our ability to raise additional debt or equityshould we choose 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 thresholdthat would require measuring and maintaining a fixed charge coverage ratio.See Note 8 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 Arrangements - Contractual Obligations and Commercial Commitments"below for mandatory principal and cash interest payments on the outstanding borrowings under the 5.875% Senior Notes. See Note 8 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%Senior Notes.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 debtor equity financing should we choose to do so during the next 12 months.Capital Expenditures and InvestmentsWe strive to strengthen our competitive position through strategic capital investment. Significant investments over the past decade have positioned uswell with increased capacity and expanded manufacturing capabilities while more recent capital projects have focused on further improving product qualityand manufacturing cost efficiency, which we believe are critical to maintaining and strengthening our position in an increasingly competitive marketenvironment over the coming decade.The Trentwood efficiency and modernization initiative is a multi-year, $150.0 million capital investment initiative to upgrade equipment throughout theTrentwood process flow to reduce conversion costs, increase efficiency and further improve our competitive cost position on all of Trentwood's products. Todifferentiate our product quality, the modernization will also replace legacy equipment and improve the process flow for thin gauge plate to achieveKaiserSelect® quality enhancements for34both Aero/HS and GE products. A byproduct of the manufacturing efficiency improvements from upgrades completed during 2017 is incrementalmanufacturing capacity to enable sales growth in 2018 and beyond. The Trentwood modernization initiative was announced in December 2015 and will spanseveral years. As of December 31, 2017, approximately 40% of the total $150.0 million capital investment remained to be spent.Total capital expenditures were $75.5 million, $76.1 million and $63.1 million for 2017, 2016 and 2015, respectively. A significant portion of our capitalspending during 2017 and 2016 was related to the Trentwood modernization project. Additionally, in all three years, we invested to support our automotivegrowth initiative, including upgrades to existing extrusion presses at several of our automotive-focused facilities, a new extrusion press at our London,Ontario facility in 2015 and a new extrusion press and related equipment at our Sherman, Texas facility in 2015 and 2016. The remainder of our capitalspending in all three years was allocated among our manufacturing locations on projects expected to reduce operating costs, improve quality, increasecapacity or enhance operational security.We anticipate our capital spending in 2018 will be approximately $80.0 million and include continued spending on the Trentwood modernization andspending at multiple locations for efficiency improvements and operational security. Capital investment will be funded using cash generated fromoperations, available cash and cash equivalents, short-term investments, borrowings under the Revolving Credit Facility and/or other third-party financingarrangements. The level of anticipated capital expenditures may be adjusted from time to time depending on our business plans, our price outlook forfabricated aluminum products, our ability to maintain adequate liquidity and other factors. No assurance can be provided as to the timing of any suchexpenditures or the operational benefits expected therefrom.DividendsSee Note 13 and Note 18 of Notes to Consolidated Financial Statements included in this Report for information regarding dividends paid during 2017,2016 and 2015, and declared subsequent to December 31, 2017. See Item 5 of this Report for disclosure regarding the future declaration and payment ofdividends.Repurchases of Common StockSee Note 13 of Notes to Consolidated Financial Statements included in this Report for information regarding repurchases of common stock in 2017 and2016 and the amounts authorized and available for future repurchases of common stock under our stock repurchase program.See Note 6 of Notes to Consolidated Financial Statements included in this Report for information regarding minimum statutory tax withholdingobligations arising during 2017, 2016 and 2015 in connection with the vesting of non-vested shares, restricted stock units and performance shares.Restrictions Related to Equity CapitalAs discussed elsewhere in this Report, to preserve our ability to fully use our net operating loss carryforwards and other significant tax attributes, we have:(i) adopted a tax asset protection rights plan ("Tax Asset Rights Plan"), which is designed to deter transfers of our common stock that could result in anownership change pursuant to Section 382 of the Internal Revenue Code of 1986 ("Code") and (ii) implemented stock transfer restrictions ("TransferRestrictions"), 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 underSection 382 of the Code. The Tax Asset Rights Plan will expire on April 7, 2019, and the Transfer Restrictions will expire on May 26, 2019.Environmental Commitments and ContingenciesSee Note 9 of Notes to Consolidated Financial Statements included in this Report for information regarding our environmental commitments andcontingencies.35Contractual Obligations, Commercial Commitments and Off-Balance Sheet ArrangementsContractual Obligations and Commercial CommitmentsThe following table and discussion provide a summary of our significant contractual obligations and commercial commitments at December 31, 2017 (inmillions of dollars): Payments Due by Period Total 2018 2019 2020 2021 2022 2023 andThereafterOn-Balance Sheet: Principal and interest on 5.875% Senior Notes $518.2 $22.0 $22.0 $22.0 $22.0 $22.0 $408.2Standby letters of credit 8.4 7.2 1.2 — — — —Uncertain tax liabilities 0.6 — — — — — —Deferred compensation plan liability 9.8 — — — — — —Capital leases 1.2 0.6 0.5 0.1 — — —VEBA variable contributions 15.7 15.7 — — — — —Off-Balance Sheet: VEBA administrative fees 0.9 0.3 0.3 0.3 — — —Purchase obligations 449.6 426.5 13.9 7.0 1.1 1.0 0.1Operating leases 39.7 5.7 5.2 3.1 2.5 2.2 21.0Commitment fees on Revolving Credit Facility 3.2 1.1 1.1 1.0 — — —Total contractual obligations $1,047.3 $479.1 $44.2 $33.5 $25.6 $25.2 $429.3Principal and Interest on 5.875% Senior Notes. Cash outlays related to our 5.875% Senior Notes consist of our principal obligations and interestobligations based on scheduled interest payments.Standby Letters of Credit. Of the $8.4 million of standby letters of credit, $0.3 million are cash collateralized and $8.1 million represents letters of creditissued under our Revolving Credit Facility. The letters of credit provide financial assurance of our payment of obligations, primarily related to workers'compensation and environmental compliance. The specific timing of payments with respect to such matters is uncertain. The letters of credit generallyautomatically renew every 12 months and terminate when the underlying obligations no longer require assurance or upon the maturity of our RevolvingCredit Facility in September 2020 (for those letters of credit issued under that facility).Uncertain Tax Liabilities. At December 31, 2017, we had uncertain tax positions which ultimately could result in tax payments. As the amount ofultimate tax payments beyond 2018 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.As the distribution amount is contingent upon investment performance, vesting and other eligibility requirements, including retirement dates, it is notpractical to present annual payment information.Capital Leases. Capital lease spending represents non-cancelable capital commitments as of December 31, 2017. We expect capital leases to be fundedthrough available cash generated from our operations, cash and cash equivalents, short-term investments, borrowings under our Revolving Credit Facilityand/or other third-party financing arrangements.VEBA Obligations. See Note 4 of Notes to Consolidated Financial Statements included in this Report for additional information regarding our variablecash contributions to the VEBAs.36Purchase Obligations. Cash outlays for purchase obligations consist primarily of commitments to purchase aluminum, energy and equipment. We havevarious contracts with suppliers of aluminum that require us to purchase minimum quantities of aluminum in future years at a price to be determined at thetime of purchase based primarily on the underlying metal price at that time. Amounts included in the table are based on minimum quantities at the metalprice at December 31, 2017. We believe the minimum quantities are lower than our current requirements for aluminum. Actual quantities and actual metalprices at the time of purchase could be different. Physical delivery commitments with energy companies are in place to cover our exposure to fluctuations inelectricity and natural gas prices and are based on fixed contractual rates and quantities. Equipment purchase obligations are based on scheduled payments toequipment manufacturers.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 unusedcredit under the facility at December 31, 2017 and assuming no extension of terms beyond the current maturity date of our Revolving Credit Facility, whichis in December 2020. No borrowings were outstanding under our Revolving Credit Facility either throughout the year or as of December 31, 2017.Other Off-Balance Sheet ArrangementsIn addition to our off-balance sheet items discussed in the contractual obligations and commercial commitments section above:•See Note 5 of Notes to Consolidated Financial Statements included in this Report for information regarding our participation in multi-employerpension plans.•See Note 6 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 2018 and future years.Critical Accounting Estimates and PoliciesOur consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we arerequired to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue andexpenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors thatmanagement believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accountingpolicies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, becausefuture events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates and such differences couldbe material.In addition to the accounting estimates we discuss in Note 1 of Notes to Consolidated Financial Statements included in this Report, management believesthat the following accounting estimates are critical to aid in fully understanding and evaluating our reported financial results and require management’s mostdifficult, subjective or complex judgments, resulting from the need to make estimates about the effects of matters that are inherently uncertain. Managementhas reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.37Description Judgments and Uncertainties Potential Effect If Actual ResultsDiffer From Assumptions Self-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 carriersand other professionals. We account for accrued liability relatingto workers' 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 lossinsurance in estimating our ultimateinsurance liability. In addition, sincerecorded obligations represent thepresent value of expected paymentsover the life of the claims, decreases inthe discount rate (used to compute thepresent value of the payments) wouldcause the estimated obligations toincrease. Conversely, an increase in thediscount rate would cause the estimatedpresent value of expected payments todecrease. If our workers' compensationclaim trends were to differ significantlyfrom our historic claims experience andas the discount rate changes, we wouldmake a corresponding adjustment to ourworkers' compensation accruals. The rate used to discount futureestimated workers' compensationliabilities is determined based onthe U.S. Treasury bond rate with afive-year maturity date whichresembles the remaining estimatedlife of the workers' compensationclaims. A change in the discountrate of 1/4 of 1% would impact theworkers' compensation liabilityand operating income byapproximately $0.2 million.38Description Judgments and Uncertainties Potential Effect If Actual ResultsDiffer From Assumptions Income Tax. We have substantial tax attributes available to offset the impact offuture income taxes. We have a process for determining the needfor a valuation allowance with respect to these attributes. Theprocess includes an extensive review of both positive and negativeevidence including our earnings history, future earnings, adverserecent occurrences, carryforward periods, an assessment of theindustry and the 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.See Note 12 of Notes to Consolidated Financial Statementsincluded in this Report for discussion around uncertainties andprovisional amounts recorded relating to the Tax Act. 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 andcurrent market and industry factors. Inorder to determine the effective tax rateto apply to interim periods, estimatesand judgments 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 judgmentsis subject to inherent uncertaintiesgiven the difficulty of predicting futuretax rates, market conditions, customerrequirements, the cost for key inputssuch as energy and primary aluminum,overall operating efficiency and otherfactors. However, if, among otherthings: (i) actual results vary from ourforecasts due to one or more of thefactors cited above or elsewhere in thisReport; (ii) income is distributeddifferently than expected among taxjurisdictions; (iii) one or more materialevents or transactions occur which werenot contemplated; or (iv) certainexpected deductions, credits orcarryforwards are not available, it ispossible that the effective tax rate for ayear could vary materially from theassessments used to prepare the interimconsolidated financial statements. SeeNote 12 of Notes to ConsolidatedFinancial Statements included in thisReport for additional discussion ofthese matters. Although we believe that thejudgments and estimates discussedherein are reasonable, actual resultscould differ and we may beexposed to losses or gains thatcould be material. A change in oureffective tax rate by 1% wouldhave had an impact ofapproximately $1.3 million to Netincome for the year endedDecember 31, 2017. 39Description Judgments and Uncertainties Potential Effect If Actual ResultsDiffer From Assumptions Acquisitions, Goodwill and Intangible Assets. We account for acquisitions using the acquisition method ofaccounting, which requires the assets acquired and liabilitiesassumed to be recorded at the date of acquisition at theirrespective estimated fair values.We recognize goodwill as of the acquisition date, as a residualover the fair values of the identifiable net assets acquired.Goodwill is tested for impairment on an annual basis as well as onan interim basis as events and changes in circumstances occur.In January 2017, we prospectively adopted Accounting StandardsUpdate ("ASU") No. 2017-04, Intangibles - Goodwill andOther (Topic 350): Simplifying the Test for Goodwill Impairment,which eliminates the second step of the two-step goodwillimpairment test that required companies to determine the fairvalue of individual assets and liabilities of a reporting unit tomeasure goodwill impairment.Definite-lived intangible assets acquired are amortized over theestimated useful lives of the respective assets, to reflect the patternin which the economic benefits of the intangible assets areconsumed. In the event the pattern cannot be reliably determined,we use a straight-line amortization method. Whenever events orchanges in circumstances indicate that the carrying amount of theintangible assets may not be recoverable, the intangible assets willbe reviewed for 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 valueand useful life involves managementmaking certain estimates and becausethese estimates 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 therewill be a material change in theestimates or assumptions we use toestimate the fair value of goodwilland intangible assets.Additionally, as of December 31,2017, we do not believe any of ourreporting units are at risk of failingthe 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,we may be exposed to losses fromimpairment charges that could bematerial. 40Description Judgments and Uncertainties Potential Effect If Actual ResultsDiffer From Assumptions Salaried VEBA. At December 31, 2017, our financial statements include theSalaried VEBA, which we are required to reflect on our financialstatements as a defined benefit postretirement plan, despite ourlimited legal obligations to the Salaried VEBA in regards to thatplan. Liabilities and expenses for postretirement benefits aredetermined using actuarial methodologies and incorporatesignificant assumptions, including the rate used to discount thefuture estimated liability, the long-term rate of return ("LTRR") onplan assets and several assumptions relating to the employeeworkforce (i.e., retirement age and mortality). The most significantassumptions used in determining the estimated year-endobligations include the assumed discount rate and the LTRR.In addition to the above assumptions used in the actuarialvaluation, changes in plan provisions could also have a materialimpact on the net funded status of the Salaried VEBA. Ourobligation to the Salaried VEBA is to pay an annual variablecontribution amount based on the level of our cash flow. Thefunding status of the Salaried VEBA has no impact on our annualvariable contribution amount. We have no control over any aspectof the plan. We rely on information provided to us by the SalariedVEBA administrator with respect to specific plan provisions suchas annual benefits expected to be paid. See Note 4 of Notes toConsolidated Financial Statements included in this Report foradditional information on our benefit plans. Since the recorded obligation representsthe present value of expectedpostretirement benefit payments overthe life of the plan, decreases in thediscount rate (used to compute thepresent value of the payments) wouldcause the estimated obligation toincrease. Conversely, an increase in thediscount rate would cause the estimatedpresent value of the obligation todecline. The LTRR on plan assets reflects anassumption regarding what the amountof earnings would be on existing planassets (before considering any futurecontributions to the plan). Increases inthe assumed LTRR would cause theprojected value of plan assets availableto satisfy postretirement obligations toincrease, yielding a reduced netexpense of these obligations. Areduction in the LTRR would reducethe amount of projected net assetsavailable to satisfy postretirementobligations and, thus, cause the netexpense of these obligations toincrease. A change in plan provisions couldcause the estimated obligations tochange. An increase in annual benefitsexpected to be paid would increase theestimated present value of theobligations and conversely, a decreasein annual benefits expected to be paidwould decrease the estimated presentvalue of the obligations. 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.In relation to the Salaried VEBA, achange in the discount rate of 1/4of 1% would impact theaccumulated postretirement benefitobligation by approximately $2.2million, impact service and interestcosts by $0.1 million and have animmaterial impact on 2018expense. The LTRR on plan assetsis estimated by consideringhistorical returns and expectedreturns on current and projectedasset allocations. A change in theassumption for LTRR on planassets of 1/4 of 1% would impactexpense by approximately$0.1 million in 2018.New Accounting PronouncementsFor a discussion of all recently adopted and recently issued but not yet adopted accounting pronouncements, see Note 1 of Notes to ConsolidatedFinancial Statements included in this Report.Item 7A. Quantitative and Qualitative Disclosures About Market RiskOur operating results are sensitive to changes in the prices of primary aluminum, certain alloying metals, natural gas and electricity, and also depend to asignificant degree upon the volume and mix of all products sold. As discussed more fully in Note 7 of Notes to Consolidated Financial Statements includedin this Report, we have historically utilized hedging transactions41to lock in a specified price or range of prices for certain products which we sell or consume in our production process, and to mitigate our exposure tochanges in energy prices.AluminumSee Note 7 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 2017, 2016 and 2015, settlements of derivative contracts covering 185.6 million pounds, 213.7 million pounds and 204.6 million pounds,respectively, hedged Fabricated Products shipments sold on pricing terms that created metal price risk for us. At December 31, 2017, we had derivativecontracts with respect to approximately 114.4 million pounds and 47.6 million pounds to hedge sales to be made in 2018 and 2019, respectively, on pricingterms that create metal price risk for us, and 1.0 million pounds to hedge such sales to be made in each of 2020 and 2021.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, 2017 and December 31, 2016, with all other variables held constant, wouldhave resulted in an unrealized mark-to-market loss of $16.4 million and $14.8 million, respectively, with corresponding changes to the net fair value of ouraluminum derivative positions. Additionally, we estimate that a $0.01 per pound decrease in the Midwest premium for aluminum as of December 31, 2017and December 31, 2016, with all other variables held constant, would have resulted in an unrealized mark-to-market loss of $1.6 million and $1.5 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 nothighly correlate with price changes for aluminum. Copper, zinc and certain other metals are used in our remelt operations to cast rolling ingot and extrusionbillet with the proper chemistry for our products. From time to time, we enter into forward contract swaps with third parties to mitigate our risk fromfluctuations in the prices of alloying metals, including copper and zinc. As of December 31, 2017, we had forward swap contracts with settlement datesdesigned to align with the timing of scheduled purchases of zinc and copper ("Alloy Hedges") by our manufacturing facilities. Our Alloy Hedges aredesignated and qualify as cash flow hedges. See Note 7 of Notes to Consolidated Financial Statements included in this Report for additional informationrelating to these Alloy Hedges. We estimate that a $0.10 per pound decrease in the LME market price of zinc as of December 31, 2017 and December 31,2016, with all other variables held constant, would have resulted in an unrealized mark-to market loss of $0.2 million and $0.4 million, respectively. Weestimate that a $0.10 per pound decrease in the Commodity Exchange, Inc. market price of copper as of December 31, 2017, with all other variables heldconstant, would have resulted in an unrealized mark-to market loss of $0.1 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 firm prices with third parties to mitigate our risk from fluctuations in natural gas and electricityprices. See Note 7 of Notes to Consolidated Financial Statements included in this Report for information regarding the volume of our derivative and physicaldelivery commitments with energy companies in place to cover our exposure to fluctuations in natural gas and electricity prices as of December 31, 2017.We estimate that a $1.00 per mmbtu decrease in natural gas prices as of December 31, 2017 and December 31, 2016 would have resulted in an unrealizedmark-to-market loss of $3.6 million and $5.0 million, respectively, with corresponding changes to the net fair value of our natural gas derivative positions.We estimate that a $5.00 per Mwh decrease in electricity prices as of December 31, 2017 would have resulted in an unrealized mark-to-market loss of $0.7million, with corresponding changes to the net fair value of our electricity derivative positions.Foreign CurrencyOur primary foreign exchange exposure is the operating costs of our London, Ontario facility. A 10% change in the Canadian dollar exchange rate isestimated to have an annual operating cost impact of $1.7 million.42KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESItem 8. Financial Statements and Supplementary DataReport of Independent Registered Public Accounting Firm 44 Consolidated Balance Sheets 46 Statements of Consolidated Income (Loss) 47 Statements of Consolidated Comprehensive Income (Loss) 48 Statements of Consolidated Stockholders’ Equity 49 Statements of Consolidated Cash Flows 50 Notes to Consolidated Financial Statements 5143REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders ofKaiser Aluminum CorporationFoothill Ranch, CaliforniaOpinions on the Consolidated Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Kaiser Aluminum Corporation and Subsidiary Companies (the "Company") as ofDecember 31, 2017 and 2016, the related consolidated statements of income (loss), comprehensive income (loss), stockholders' equity, and cash flows foreach of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the "consolidated financial statements"). Wealso have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control -Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).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, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, inconformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all materialrespects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework(2013) issued by COSO.Basis for OpinionsThe Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report onInternal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on theCompany’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company AccountingOversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities lawsand the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internalcontrol over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financialstatements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidenceregarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used andsignificant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internalcontrol over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance with authorizations of management and directors44REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONTINUED)of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on the consolidated financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ DELOITTE & TOUCHE LLPCosta Mesa, CaliforniaFebruary 22, 2018We have served as the Company's auditor since 2002.45KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESCONSOLIDATED BALANCE SHEETS December 31, 2017 December 31, 2016 (In millions of dollars, except share and pershare amounts)ASSETS Current assets: Cash and cash equivalents $51.1 $55.2Short-term investments 183.7 231.0Receivables: Trade receivables, net 165.0 137.7Other 15.5 11.9Inventories 207.9 201.6Prepaid expenses and other current assets 33.4 18.5Total current assets 656.6 655.9Property, plant and equipment, net 571.4 530.9Deferred tax assets, net 72.0 159.7Intangible assets, net 25.0 26.4Goodwill 18.8 37.2Other assets 41.4 33.4Total $1,385.2 $1,443.5LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $90.0 $75.8Accrued salaries, wages and related expenses 42.6 49.1Other accrued liabilities 40.5 40.1Total current liabilities 173.1 165.0Net liabilities of Salaried VEBA 31.9 28.6Deferred tax liabilities 4.3 3.3Long-term liabilities 60.0 73.2Long-term debt 369.6 368.7Total liabilities 638.9 638.8Commitments and contingencies – Note 9 Stockholders’ equity: Preferred stock, 5,000,000 shares authorized at both December 31, 2017 and December 31, 2016; no shares were issued andoutstanding at December 31, 2017 and December 31, 2016 — —Common stock, par value $0.01, 90,000,000 shares authorized at both December 31, 2017 and December 31, 2016;22,393,537 shares issued and 16,773,586 shares outstanding at December 31, 2017; 22,332,732 shares issued and17,651,461 shares outstanding at December 31, 2016 0.2 0.2Additional paid in capital 1,055.9 1,047.4Retained earnings 85.5 75.2Treasury stock, at cost, 5,619,951 shares at December 31, 2017 and 4,681,271 shares at December 31, 2016 (358.6) (281.4)Accumulated other comprehensive loss (36.7) (36.7)Total stockholders’ equity 746.3 804.7Total $1,385.2 $1,443.5The accompanying notes to consolidated financial statements are an integral part of these statements.46KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESSTATEMENTS OF CONSOLIDATED INCOME (LOSS) Year Ended December 31, 2017 2016 2015 (In millions of dollars, except share and per share amounts)Net sales $1,397.5 $1,330.6 $1,391.9Costs and expenses: Cost of products sold: Cost of products sold, excluding depreciation and amortization and other items 1,105.3 1,019.5 1,115.4Lower of cost or market inventory write-down — 4.9 2.6Unrealized (gain) loss on derivative instruments (19.4) (18.7) 3.4Depreciation and amortization 39.7 36.0 32.4Selling, general, administrative, research and development: Selling, general, administrative, research and development 97.5 105.0 88.1Net periodic postretirement benefit cost relating to Salaried VEBA 4.5 3.4 2.4(Gain) loss on removal of Union VEBA net assets – Note 4 — (0.1) 493.4Total selling, general, administrative, research and development 102.0 108.3 583.9Goodwill impairment 18.4 — —Other operating charges, net 0.8 2.8 0.1Total costs and expenses 1,246.8 1,152.8 1,737.8Operating income (loss) 150.7 177.8 (345.9)Other (expense) income: Interest expense (22.2) (20.3) (24.1)Other income (expense), net – Note 11 4.5 (10.3) (1.8)Income (loss) before income taxes 133.0 147.2 (371.8)Income tax (provision) benefit (87.6) (55.5) 135.2Net income (loss) $45.4 $91.7 $(236.6) Net income (loss) per common share: Basic $2.67 $5.15 $(13.76)Diluted $2.63 $5.09 $(13.76)Weighted-average number of common shares outstanding (in thousands): Basic 16,996 17,813 17,201Diluted 17,259 18,033 17,201 Dividends declared per common share $2.00 $1.80 $1.60The accompanying notes to consolidated financial statements are an integral part of these statements.47KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESSTATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) Year Ended December 31, 2017 2016 2015 (In millions of dollars)Net income (loss) $45.4 $91.7 $(236.6)Other comprehensive (loss) income, net of tax – Note 10: Defined benefit pension plan and VEBAs (1.4) (5.8) 65.1Available for sale securities 0.5 0.9 (0.3)Other 0.9 (0.1) (0.4)Other comprehensive (loss) income, net of tax — (5.0) 64.4Comprehensive income (loss) $45.4 $86.7 $(172.2)The accompanying notes to consolidated financial statements are an integral part of these statements.48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, 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 andnon-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 and restrictedshares and dividend equivalents on restrictedstock units and performance shares — — — (28.1) — — (28.1)Excess tax benefit upon vesting of non-vestedshares and dividend payment on unvested sharesexpected to 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) $774.4Cumulative-effect adjustment — — 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 andnon-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 stockunits and 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 and restrictedshares and dividend equivalents on restrictedstock units and performance shares — — — (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 Net income — $— $— $45.4 $— $— $45.4Issuance of non-vested shares to non-employeedirectors 11,817 — — — — — —Issuance of common shares to non-employeedirectors 2,282 — 0.2 — — — 0.2Issuance of common shares to employees uponvesting of restricted stock units and performanceshares 103,652 — — — — — —Cancellation of employee non-vested shares (451) — — — — — —Cancellation of shares to cover employees’ taxwithholdings upon vesting of non-vested shares (56,495) — (4.5) — — — (4.5)Tax effect of cumulative-effect adjustment relatedto prior year adoption of ASU 2016-09 — — — 0.3 — — 0.3Repurchase of common stock (938,680) — — — (77.8) — (77.8)Cancellation of treasury stock — — (0.2) (0.4) 0.6 — —Cash dividends on common stock and restrictedshares and dividend equivalents on restrictedstock units — — — (35.0) — — (35.0)Amortization of unearned equity compensation — — 13.0 — — — 13.0BALANCE, December 31, 2017 16,773,586 $0.2 $1,055.9 $85.5 $(358.6) $(36.7) $746.3The accompanying notes to consolidated financial statements are an integral part of these statements.49KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESSTATEMENTS OF CONSOLIDATED CASH FLOWS Year Ended December 31, 2017 2016 2015 (In millions of dollars)Cash flows from operating activities: Net income (loss) $45.4 $91.7 $(236.6)Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation of property, plant and equipment 38.3 34.5 30.8Amortization of definite-lived intangible assets 1.4 1.5 1.6Amortization of debt discount and debt issuance costs 1.2 1.1 4.3Deferred income taxes 89.0 57.4 (131.7)Excess tax benefit upon vesting of non-vested shares and dividend payment on unvested shares expectedto vest — — (1.3)Non-cash compensation 13.3 11.8 9.5Lower of cost or market inventory write-down — 4.9 2.6Non-cash unrealized (gain) loss on derivative instruments (19.4) (18.7) 3.4Non-cash impairment charges 19.2 2.8 0.1Loss on extinguishment of debt — 11.1 2.5(Gain) loss on disposition of property, plant and equipment (0.5) 0.2 0.3Gain on disposition of available for sale securities (2.3) — —Non-cash defined benefit net periodic benefit cost 4.8 3.7 2.8Non-cash loss on removal of Union VEBA, net — — 446.7Other non-cash changes in assets and liabilities 3.9 1.2 0.6Changes in operating assets and liabilities: Trade and other receivables (30.9) (26.8) 17.4Inventories, excluding lower of cost or market write-down (6.3) 13.1 (7.5)Prepaid expenses and other current assets (1.7) (8.0) 0.5Accounts payable 13.0 3.4 (13.6)Accrued liabilities (4.7) 26.2 12.8Annual variable cash contributions to VEBAs (20.0) (19.5) (13.7)Long-term assets and liabilities, net (2.2) (26.0) 28.2Net cash provided by operating activities 141.5 165.6 159.7Cash flows from investing activities1: Capital expenditures (75.5) (76.1) (63.1)Purchase of available for sale securities (247.5) (255.3) (0.5)Proceeds from disposition of available for sale securities 296.9 55.0 84.0Proceeds from disposal of property, plant and equipment 0.6 — —Net cash (used in) provided by investing activities (25.5) (276.4) 20.4Cash flows from financing activities1: Repayment of principal and redemption premium of 8.25% Senior Notes — (206.0) (30.0)Issuance of 5.875% Senior Notes — 375.0 —Repayment of Convertible Notes — — (175.0)Proceeds from cash-settled call options related to settlement of Convertible Notes — — 94.9Payment for conversion premium related to settlement of Convertible Notes — — (94.9)Cash paid for debt issuance costs — (6.8) (0.6)Proceeds from stock option exercises — 1.2 —Repayment of capital lease (0.4) — —Excess tax benefit upon vesting of non-vested shares and dividend payment on unvested shares expectedto vest — — 1.3Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares (4.5) (2.9) (2.8)Repurchase of common stock (79.5) (33.3) (49.2)Cash dividends and dividend equivalents paid (35.0) (32.4) (28.1)Net cash (used in) provided by financing activities (119.4) 94.8 (284.4)Net decrease in cash, cash equivalents and restricted cash during the period (3.4) (16.0) (104.3)Cash, cash equivalents and restricted cash at beginning of period 67.7 83.7 188.0Cash, cash equivalents and restricted cash at end of period $64.3 $67.7 $83.7_____________1. See Note 14 for supplemental disclosure on non-cash transactions.The accompanying notes to consolidated financial statements are an integral part of these statements.50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 itssubsidiaries.Organization and Nature of Operations. Kaiser Aluminum Corporation specializes in the production of semi-fabricated specialty aluminum millproducts, such as aluminum plate and sheet and extruded and drawn products, for the following end market applications: aerospace and high strength("Aero/HS products"), automotive applications ("Automotive Extrusions"), general engineering ("GE products") and other industrial ("Other products"). Ourbusiness is organized into one operating segment, Fabricated Products. See Note 15 for additional information regarding our reportable segment and businessunit.Principles of Consolidation and Basis of Presentation. The consolidated financial statements include the accounts of our wholly owned subsidiaries andare prepared in accordance with United States generally accepted accounting principles ("GAAP") and the rules and regulations of the Securities andExchange Commission ("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 ofestimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the datethe financial statements are published and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to suchestimates and assumptions are inherent in the preparation of our consolidated financial statements; accordingly, it is possible that the actual results coulddiffer from these estimates and assumptions, which could have a material effect on the reported amounts of our consolidated financial position and results ofoperations.Foreign Currency. Certain of our foreign subsidiaries use the local currency as their functional currency; the assets and liabilities of these foreignsubsidiaries are translated at exchange rates in effect at the balance sheet date; and our statement of income (loss) is translated at weighted-average monthlyrates of exchange prevailing during the year. Resulting translation adjustments are recorded directly to a separate component of stockholders’ equity. Wherethe U.S. dollar is the functional currency of a foreign facility or subsidiary, re-measurement adjustments are recorded in Other income (expense), net.Fair Value Measurements. We apply the fair value hierarchy established by GAAP for the recognition and measurement of certain financial assets andliabilities. 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 valuemeasurement. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservableinputs to the extent possible and consider counterparty risk in our assessment of fair value.The fair values of financial assets and liabilities are evaluated and measured on a recurring basis. As part of that evaluation process, we review theunderlying inputs that are significant to the fair value measurement of financial instruments to determine if a transfer among hierarchy levels is appropriate.We historically have not had significant transfers into or out of each hierarchy level.Financial assets and liabilities that we measure at fair value each period include our derivative instruments and available for sale securities, consisting ofdebt investment securities and investments related to our deferred compensation plan (see Note 4). Additionally, we measure at fair value once each year atDecember 31 the plan assets of the Salaried VEBA (defined in Note 4) and our Canadian defined benefit pension plan. We record our remaining financialassets and liabilities at carrying value.For a majority of our non-financial assets and liabilities, which include goodwill, intangible assets, inventories and property, plant and equipment, we arenot required to measure their fair value on a recurring basis. However, if certain triggering events occur (or at least annually for goodwill), an evaluation ofthe affected non-financial asset or liability will be required, which could result in a reduction to the carrying amount of such asset or liability. Other than theimpairment charges discussed below in Property, Plant and Equipment, Net and Goodwill and Intangible Assets, we concluded that none of our other non-financial assets and liabilities subject to fair value assessments on a non-recurring basis required a material adjustment to the carrying amount of such assetsand liabilities during the years ended December 31, 2017 and December 31, 2016.51Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCash and Cash Equivalents. We consider only those short-term, highly liquid investments which, when purchased, have maturities of 90 days or less to becash equivalents. Our cash equivalents consist primarily of funds in commercial paper, money market funds and other highly liquid investments, which areclassified within Level 1 of the fair value hierarchy with the exception of commercial paper, which is classified within Level 2 of the fair value hierarchy (seeNote 7).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 14). From time to time, such restricted funds could be returned to us or we could berequired to pledge additional cash.Available for Sale Securities. We account for investments in certain marketable debt securities as available for sale securities. Such securities are recordedat fair value (see Note 7), with net unrealized gains and losses, net of income taxes, reflected in Accumulated other comprehensive income (loss) as acomponent of Stockholders' equity. Realized gains and losses from the sale of marketable debt securities, if any, are determined on a specific identificationbasis. Debt investment securities with an original maturity of 90 days or less are classified as Cash and cash equivalents (see Note 2). Debt investmentsecurities with an original maturity of greater than 90 days are presented as Short-term investments on the Consolidated Balance Sheets. In addition to debtinvestment securities, we also hold assets in various investment funds managed by a third-party trust in connection with our deferred compensation program(see Note 4).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 90 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 circumstanceschange, our estimate of the recoverability of accounts receivable could be different. Circumstances that could affect our estimates include, but are not limitedto, customer credit issues and general economic conditions. Accounts are written off once deemed to be uncollectible. Any subsequent cash collectionsrelating to accounts that have been previously written off are typically recorded as a reduction to total bad debt expense in the period of payment. Write-offsfor 2017, 2016 and 2015 were immaterial to the consolidated financial statements.Inventories. Inventories are stated at the lower of cost or market value. On March 31, 2016, we recorded a lower of cost or market inventory write-down of$4.9 million, as a result of a decrease in our net realizable value of inventory. The net realizable value reflected commitments as of that date from customersto purchase our inventory at prices that exceeded the Midwest Transaction Price ("Midwest Price"), which reflects the primary aluminum supply/demanddynamics in North America, reduced by an approximate normal profit margin. There were no additional lower of cost or market inventory adjustments sincethe quarter ended March 31, 2016.Finished products, work-in-process and raw material inventories are stated on the last-in, first-out ("LIFO") basis. AtDecember 31, 2017, the current cost of our inventory exceeded its stated LIFO value by $24.3 million. The stated LIFO value of our inventory represented itsnet realizable value (less a normal profit margin) and exceeded the current cost of our inventory by $8.5 million at December 31, 2016. Other inventories arestated on the first-in, first-out basis and consist of operating supplies, which are materials and supplies to be consumed during the production process.Inventory costs consist of material, labor and manufacturing overhead, including depreciation. Abnormal costs, such as idle facility expenses, freight,handling costs and spoilage, are accounted for as current period charges. All of our inventories at December 31, 2017 and December 31, 2016 were includedin the Fabricated Products segment (see Note 2 for the components of inventories).Replacement Parts. Replacement parts consist of preventative maintenance and capital spare parts, which are stated on the first-in, first-out basis.Replacement parts are recorded within Prepaid expenses and other current assets or Other assets depending on whether or not the expected utilization of thereplacement parts is to occur within the current operating cycle.Property, Plant and Equipment, Net. Property, plant and equipment, net is recorded at cost and includes construction in progress (see Note 2). Interestrelated to the construction of qualifying assets is capitalized as part of the construction costs. The amount of interest expense capitalized as construction inprogress was $2.2 million, $2.9 million and $1.8 million during 2017, 2016 and 2015, respectively.52Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDepreciation is computed using the straight-line method at rates based on the estimated useful lives of the various classes of assets. Capital lease assetsand leasehold improvements are depreciated on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term. The principalestimated useful lives are as follows: 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 Depreciationand amortization.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 relyon a number of factors, including operating results, business plans, economic projections and anticipated future cash flow, to make such assessments. We usean estimate of the future undiscounted cash flows of the related asset or asset group over the estimated remaining life of such asset(s) in measuring whetherthe asset(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 theestimated fair value of such asset(s). Fair value is determined through a series of standard valuation techniques.We recorded impairment charges of $0.8 million, $0.2 million and $0.1 million in 2017, 2016 and 2015, 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 ConsolidatedIncome (Loss) and are included in the Fabricated Products segment.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.Goodwill and Intangible Assets. Goodwill is tested for impairment during the fourth quarter on an annual basis, as well as on an interim basis, aswarranted, at the time of relevant events and changes in circumstances. Intangible assets with definite lives are initially recognized at fair value andsubsequently amortized over the estimated useful lives to reflect the pattern in which the economic benefits of the intangible assets are consumed. In theevent the pattern cannot be reliably determined, we use a straight-line amortization method. Whenever events or changes in circumstances indicate that thecarrying amount of the intangible assets may not be recoverable, the intangible assets are reviewed for impairment. See Note 3 for a discussion of thegoodwill impairment charge recorded during 2017 related to the operations at our Chandler, Arizona (Extrusion) facility, as well as the non-cash impairmentcharge recorded during 2016 related to one of our customer relationship intangible assets.Derivative Financial Instruments. Consistent with guidelines established by management and approved by our Board of Directors, we use derivativefinancial instruments to mitigate our exposure to changes in the market price of aluminum, alloying metals, and energy and, to a lesser extent, foreigncurrency exchange rates. We do not use derivative financial instruments for trading or other speculative purposes. Hedging transactions are executedcentrally on behalf of all of our operations to minimize transaction costs, monitor consolidated net exposures and respond promptly to changes in marketfactors.We reflect the fair value of all of our derivative instruments on our Consolidated Balance Sheets (see Note 7). The carrying values of hedges settlingwithin one year are included in Prepaid expenses and other current assets or Other accrued liabilities. Carrying values for hedges settling beyond one year areincluded in Other assets or Long-term liabilities.We do not meet the documentation requirements for hedge (deferral) accounting related to aluminum and energy derivatives. Accordingly, we recordunrealized gain or loss associated with these hedges in the Statements of Consolidated Income (Loss) within Unrealized (gain) loss on derivative instruments.As such derivatives settle, we reverse any previously recorded unrealized gain or loss associated with these hedges and record the realized gain or loss withinCost of products sold, excluding depreciation and amortization and other items.53Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSForward swap contracts for zinc and copper ("Alloy Hedges") used in our fabrication operations are designated and qualify as cash flow hedges.Unrealized gain and loss associated with the Alloy Hedges are deferred in Other comprehensive income, net of tax. As Alloy Hedges settle, we reverse anyunrealized gain or loss previously recorded within Other comprehensive income, net of tax associated with settling Alloy Hedges and record the realized gainor loss within Cost of products sold, excluding depreciation and amortization and other items.Self Insurance of Workers' Compensation and Employee Healthcare Liabilities. We self-insure the majority of the costs of workers' compensation benefitsand employee healthcare benefits and rely on insurance coverage to protect us from large losses on individual claims. Workers' compensation liabilities arebased on a combination of estimates for: (i) incurred-but-not-reported claims and (ii) the ultimate expense of incurred claims. Such estimates are based onjudgment, using our historical claims data and information and analysis provided by actuarial and claims advisors, our insurance carriers and otherprofessionals. Our undiscounted workers' compensation liabilities were estimated at $24.8 million and $26.8 million at December 31, 2017 and December 31,2016, respectively. However, we account for our workers' compensation accrued liability on a discounted basis, using a discount rate of 2.25% atDecember 31, 2017 and 2.00% at December 31, 2016. Accrued liabilities for employee healthcare benefits, which are estimates of unpaid incurred medicaland prescription drug costs as provided by our healthcare administrators, were $3.5 million and $3.6 million at December 31, 2017 and December 31, 2016,respectively.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 8).Conditional 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 leaseterminations. The majority of our CAROs relate to the first category and consist of incremental costs that would be associated with the removal and disposalof asbestos (all of which is believed to be fully contained and encapsulated within walls, floors, ceilings or piping) of certain of our older facilities if suchfacilities were to undergo major renovation or be demolished. We estimate incremental costs for special handling, removal and disposal costs of materials thatmay or will give rise to CAROs and then discount the expected costs back to the current year using a credit-adjusted, risk-free rate. When it is unclear when orif CAROs will be triggered, we use probability weighting for possible timing scenarios to determine the probability-weighted liability amounts that shouldbe recognized in our consolidated financial statements (see Note 9).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 thecompletion of the remedial feasibility study. Such accruals are adjusted as information develops or circumstances change. Costs of future expenditures forenvironmental remediation obligations are not discounted to their present value. Accruals for expected environmental costs are included in Other accruedliabilities or Long-term liabilities, as appropriate (see Note 2). Environmental expense relating to continuing operations is included in Cost of products sold,excluding depreciation and amortization and other items in the Statements of Consolidated Income (Loss). Environmental expense relating to non-operatinglocations is included in Selling, general, administrative, research and development ("SG&A and R&D") in the Statements of Consolidated Income (Loss).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 theresulting receivable is reasonably assured. A provision for estimated sales returns from and allowances to customers is made in the same period as the relatedrevenues are recognized, based on historical experience or the specific identification of an event necessitating a reserve.Shipping and Handling Costs. Shipping and handling costs are recorded as a component of Cost of products sold, excluding depreciation, amortizationand other items.Advertising Costs. Advertising costs, which are included in SG&A and R&D, are expensed as incurred. Advertising costs for 2017, 2016 and 2015 were$0.7 million, $0.4 million and $1.2 million, respectively.Research and Development Costs. Research and development costs, which are included in SG&A and R&D, are expensed as incurred. Research anddevelopment costs for 2017, 2016 and 2015 were $10.0 million, $10.2 million and $9.5 million, respectively.54Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSMajor Maintenance Activities. All major maintenance costs are accounted for using the direct expensing method.Leases. For leases that contain predetermined fixed escalations of the minimum rent, we recognize the related rent expense on a straight-line basis from thedate we 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 amountpayable under the lease as part of deferred rent in Other accrued liabilities or Long-term liabilities, as appropriate. Deferred rent for all periods presented wasnot material.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 thegrant-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 onthe date of grant, adjusted for expected dividends or dividend equivalents to be paid during the vesting period.We also grant performance-based awards to executive officers and other key employees. The methodology used to value these performance-based awardsis based on the nature of the performance conditions within those awards. Awards that are subject to performance conditions pertaining to total shareholderreturn are valued on the date of grant using a Monte Carlo valuation model. The key assumptions in applying this model are an expected volatility and arisk-free interest rate. Awards with performance conditions pertaining to our cost performance and awards with performance conditions pertaining to oureconomic value added performance are valued based on our stock price at the date of grant. For more information on our stock-based compensation, see Note6.The cost of service-based awards, including time-vested restricted stock and performance shares, is recognized as an expense over the requisite serviceperiod of the award on a straight-line basis. Adjustments to expense related to forfeitures are recorded in the period in which they occur. For performanceshares with performance conditions pertaining to our cost performance and economic value added performance, the related expense is updated quarterly byadjusting the estimated number of shares expected to vest based on the most probable outcome of the performance condition (see Note 6).Income Taxes. Deferred income taxes reflect the future tax effect of temporary differences between the carrying amount of assets and liabilities forfinancial and 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 accordance with Accounting Standards Codification ("ASC") Topic 740, Income Taxes ("ASC 740"), we use a "more likely than not" threshold forrecognition of tax attributes that are subject to uncertainties and measure any reserves 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 than not that the deferred tax assets will not be realized (see Note 12).New Accounting Pronouncements. Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU2014-09"), 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 amountthat reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, ASU 2014-09 was amendedby ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU 2014-09 byone year for all entities and permits early adoption on a limited basis. ASU 2014-09 was subsequently amended by five additional pronouncements that areapplicable to us: (i) ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; (ii) ASUNo. 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting StandardsUpdates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting; (iii) ASU No. 2016-12, Revenue from Contracts withCustomers (Topic 606): Narrow-Scope Improvements and Practical Expedients; (iv) ASU No. 2016-20, Revenue from Contracts with Customers (Topic 606):Technical Corrections and Improvements to Topic 606; and (v) ASU No. 2017-14, Income Statement - Reporting Comprehensive Income (Topic 220),Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606).The primary change to our accounting policies of adopting ASU 2014-09 and its subsequent amendments discussed above (together "ASC 606") willrelate to the timing of revenue recognition. Previously, we recognized revenue upon the transfer of risks and title, which was typically not until the productshipped or reached its destination. We will continue to recognize revenue upon product shipment or delivery under ASC 606 for "point-in-time" sales (undercertain contracts). However, upon adopting ASC 606, contract sales for a majority of our Aero/HS products and a substantial portion of our AutomotiveExtrusions will convert from point-in-time to over-time recognition. On these contract sales, we will accelerate revenue recognition throughout theproduction process.55Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSWe do not believe adopting ASC 606 will result in: (i) a change in the number of distinct performance obligations within our contractual arrangements;(ii) a change in our current capitalization and deferral policies; (iii) a change in our accounting for contract acquisition and fulfillment costs; (iv) additionalcontract liability balances; or (v) the adjustment of the amount of promised consideration from our customers for the effects of significant financingcomponents. Additionally, we plan to account for shipping and handling activities that occur after the customer has obtained control of a product asfulfillment activities (i.e., an expense) rather than as a promised service (i.e., a revenue element).As of December 31, 2017: (i) our review of our customer contracts was complete; (ii) our systems were modified to track information needed to apply ASC606; and (iii) our employees were trained on the changes to revenue recognition policies and work procedures. We will adopt ASC 606 effective January 1,2018 by recognizing a cumulative-effect adjustment to increase the 2018 opening balance of Retained earnings for the tax-adjusted gross profit of over-timeproducts that were either in work-in-process, in finished goods or in transit to our customers as of December 31, 2017. We expect our adoption of ASC 606 toresult in a cumulative-effect adjustment relating to the early recognition of approximately $55.6 million of Net sales based on the application of guidance tocontracts not completed at the date of adoption. The cumulative-effect adjustment will be recorded in our opening balance sheet for the year ended December31, 2018 as: (i) a Contract asset of $55.6 million; (ii) a reduction in Inventories of $42.2 million; (iii) a reduction in Deferred tax assets, net of $3.3 million;and (iv) an increase in Retained earnings of $10.1 million. We believe the impact of adopting ASC 606 will predominantly relate to the timing of revenuerecognition and we do not expect it to have a material impact to our quarter-over-quarter or year-over-year results. However, changes in product mix and thestage of product completion at the end of each quarter could result in some unanticipated variability.ASU No. 2016-02, Leases (Topic 842): Amendments to the Financial Accounting Standards Board Accounting Standards Codification ("ASU 2016-02"),was issued in February 2016. Under ASU 2016-02, lessees will need to recognize a right-of-use asset and a lease liability for virtually all of their leases (otherthan leases that meet the definition of a short-term lease). For income statement purposes, a dual model was retained, requiring leases to be classified as eitheroperating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loadedexpense pattern (similar to current capital leases). ASU 2016-02 becomes effective for us in the first quarter of 2019. We are currently assessing the impactand expect the adoption of this ASU in 2019 to have a material impact on our consolidated financial statements.ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"), was issued inAugust 2017. The amendments under ASU 2017-12 refine and expand hedge accounting requirements for both financial (e.g., interest rate) and commodityrisks. Its provisions create more transparency around how economic results are presented, both on the face of the financial statements and in the related notes.It also makes certain targeted improvements to simplify the application of hedge accounting guidance. We do not expect to record a cumulative effectadjustment as a result of early adopting ASU 2017-12 in the first quarter of 2018; however, we plan to designate a significant portion of our commodityhedges as cash flow hedges beginning January 1, 2018. We therefore expect to significantly reduce or eliminate the mark-to-market adjustments that havehistorically been recorded within Unrealized (gain) loss on derivative instruments. These adjustments will instead be recorded within Accumulated othercomprehensive loss beginning in the first quarter of 2018.We do not anticipate any material impact on our consolidated financial statements upon the adoption of the following accounting pronouncements: (i)ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities; (ii) ASUNo. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments; (iii) ASU No. 2017-07,Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost;and (iv) ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.There were no material impacts on our consolidated financial statements resulting from our early adoption in the first quarter of 2017 of the followingaccounting pronouncements: (i) ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments; (ii)ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash; and (iii) ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350):Simplifying the Test for Goodwill Impairment.56Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS2. Supplemental Balance Sheet Information December 31, 2017 December 31, 2016 (In millions of dollars)Cash and Cash Equivalents Cash and money market funds $23.5 $37.9Commercial paper 27.6 17.3Total $51.1 $55.2 Trade Receivables, net Billed trade receivables $165.9 $138.2Unbilled trade receivables 0.3 0.3Trade receivables, gross 166.2 138.5Allowance for doubtful receivables (1.2) (0.8)Trade receivables, net $165.0 $137.7 Inventories Finished products $63.8 $73.8Work-in-process 78.3 71.7Raw materials 61.3 51.1Operating supplies 4.5 5.0Total $207.9 $201.6 Property, Plant and Equipment, net Land and improvements $21.1 $22.7Buildings and leasehold improvements 92.1 88.6Machinery and equipment 689.1 615.1Construction in progress 35.1 34.8Property, plant and equipment – gross 837.4 761.2Accumulated depreciation (267.9) (230.6)Assets held for sale 1.9 0.3Property, plant and equipment, net $571.4 $530.9 Other Accrued Liabilities Uncleared cash disbursements $7.3 $5.8Accrued income taxes and other taxes payable 6.8 4.3Accrued annual contribution to VEBAs – Note 4 15.7 20.0Accrued interest 2.9 2.9Other 7.8 7.1Total $40.5 $40.1 57Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2017 December 31, 2016 (In millions of dollars)Long-Term Liabilities Workers’ compensation accruals $22.6 $25.0Long-term environmental accrual – Note 9 15.8 15.8Long-term portion of contingent contribution to Union VEBA – Note 4 — 12.8Other long-term liabilities 21.6 19.6Total $60.0 $73.23. Goodwill and Intangible AssetsGoodwill. Goodwill is related to our acquisitions of the Chandler, Arizona (Extrusion) facility and the Florence, Alabama facility and is included in theFabricated Products segment. The carrying value of our goodwill was $18.8 million as of December 31, 2017 and $37.2 million at both the beginning and theend of the year ended December 31, 2016. The carrying value as of December 31, 2017 included accumulated impairment of $18.4 million. There was noaccumulated impairment reflected in the carrying values at both the beginning and the end of the year ended December 31, 2016.Several factors identified in a qualitative review in the quarter ended June 30, 2017 indicated that long-term demand for hard alloy extruded shapesproduced at the Chandler, Arizona (Extrusion) facility was less than previously assumed. Such factors included: (i) reduced build rates of wide bodycommercial aircraft; (ii) continued low build rates for business jets; and (iii) additional substitution away from hard alloy extruded shapes in favor ofcomposites, titanium and/or aerospace aluminum plate in the manufacture of commercial aircraft. After testing for goodwill impairment applying Level 3inputs and a combination of an income approach using the estimated discounted cash flow and a market-based valuation methodology, we impaired thecarrying value of the goodwill related to our Chandler, Arizona (Extrusion) facility by $18.4 million as of June 30, 2017. As this goodwill is deductible forincome tax purposes, the deferred tax effects were included in the impairment charge and income tax provision.During our annual goodwill impairment test in the quarter ending December 31, 2017, we performed a quantitative impairment test and determined thatno additional impairment of our goodwill was required.Intangible Assets. In 2017 and 2016, our identifiable intangible assets related to acquired finite-lived customer relationships. Information regarding thegross carrying amount and accumulated amortization of these intangible assets was as follows as of each period presented: December 31, 2017 December 31, 2016 (In millions of dollars)Gross carrying amount $34.7 $34.7Accumulated amortization (9.7) (8.3)Net carrying amount $25.0 $26.4We recorded a $2.6 million non-cash impairment charge within Other operating charges, net during the quarter ended September 30, 2016 due to the lossof a customer. We identified no other indicators of impairment associated with the remainder of our intangible assets during the years ended December 31,2017, December 31, 2016 or December 31, 2015.Amortization expense relating to definite-lived intangible assets is recorded in the Fabricated Products segment over a weighted-average useful life of 25years. Such expense was $1.4 million for 2017, $1.5 million for 2016, and $1.6 million for 2015. The expected amortization of intangible assets for each ofthe next five calendar years is $1.4 million and $18.0 million for years thereafter.58Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS4. 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.For active bargaining unit employees at three of these production facilities, we are required to make both fixed rate contributions and concurrentmatches. For active bargaining unit employees at two remaining production facilities, we are not required to make any contributions. Fixed ratecontributions either: (i) range from (in whole dollars) $800 to $2,400 per employee per year, depending on the employee’s age, or (ii) vary between2% to 10% of the employees’ compensation depending on their age and years of service for employees hired prior to January 1, 2004 or is a fixed2% annual contribution for employees hired on or after January 1, 2004.•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 ofservice to employees hired prior to January 1, 2004. All new hires on or after January 1, 2004 receive a fixed 2% contribution annually.•A defined benefit plan for salaried employees at our London, Ontario facility, with annual contributions based on each salaried employee’s age andyears of service. At December 31, 2017, approximately 63% of the plan assets were invested in equity securities and 33% of plan assets wereinvested in fixed income securities. The remaining plan assets were invested in short-term securities. Our investment committee reviews andevaluates the investment portfolio. The asset mix target allocation on the long-term investments is approximately 65% in equity securities, 30% infixed income securities and 5% in short-term securities. The plan assets of our Canadian pension plan are managed by advisors selected by us, withthe investment portfolio subject to periodic review and evaluation by our investment committee. The investment of assets in the Canadian pensionplan is based upon the objective 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 theplan, the anticipated demand 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 ourdefined contribution plan as a result of the limitations imposed by the Internal Revenue Code of 1986 ("Code"). Despite the plan being an unfundedplan, we make an annual contribution to a rabbi trust to fulfill future funding obligations, as contemplated by the terms of the plan. The assets in thetrust are at all times subject to the claims of our general creditors and no participant has a claim to any assets of the trust. Plan participants areeligible to receive distributions from the trust subject to vesting and other eligibility requirements. Assets in the rabbi trust relating to the deferredcompensation plan are accounted for as available for sale securities and are included in Other assets on the Consolidated Balance Sheets (see "FairValue of Plan Assets" below). Liabilities relating to the deferred compensation plan are included in Long-term liabilities on the ConsolidatedBalance Sheets.•An employment agreement with our chief executive officer extending through July 15, 2020. We also provide certain members of seniormanagement, including each of our named executive officers, with benefits related to terminations of employment in specified circumstances,including in connection with a change in control, by us without cause and by the executive officer with good reason.Salaried VEBA Postretirement Obligation. Certain retirees who retired prior to 2004 and certain employees who were hired prior to February 2002 andhave subsequently retired or will retire with the requisite age and service, along with their surviving spouses and eligible dependents, are eligible toparticipate in a voluntary employees' beneficiary association ("VEBA") that provides healthcare cost, medical cost and long-term care insurance costreimbursement benefits ("Salaried VEBA"). The Salaried VEBA is managed by trustees who determine the level and type of benefits to offer to its participantsand who appoint an independent fiduciary to manage the assets of the Salaried VEBA. The Salaried VEBA trustees are independent of us and not under ourcontrol. However, because we have an ongoing obligation with no express termination date to make annual variable cash contributions to the SalariedVEBA, we account for it as a defined benefit plan in our financial statements.Our annual cash contribution payable to the Salaried VEBA varies from a minimum of zero to a maximum of $2.9 million, depending on our annual cashflow. We paid the maximum of $2.9 million to the Salaried VEBA in 2017 and we determined59Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSthat in 2018 we will also pay the maximum of $2.9 million as our variable cash contribution. Such amount was calculated with respect to the 2017 calendaryear and recorded within Other accrued liabilities as of December 31, 2017 (see Note 2). It will be paid during the first quarter of 2018.Union VEBA Postretirement Obligation. Certain other eligible retirees represented by certain unions along with their surviving spouses and eligibledependents participate in a separate VEBA ("Union VEBA") that provides healthcare and medical cost reimbursement benefits. We had an obligation to makevariable cash contributions to the Union VEBA with respect to periods through September 30, 2017. Our final cash contribution for the nine months endedSeptember 30, 2017, totaling $12.8 million, will be paid during the first quarter of 2018 and was recorded within Other accrued liabilities (see Note 2). Thevariable contribution relating to 2016 in the amount of $17.1 million was paid in 2017.We terminated defined benefit plan accounting with respect to the Union VEBA in 2015, after determining that our obligation to make annual variablecontributions to the Union VEBA would expire as of September 2017. This resulted in a non-cash loss of $307.8 million, net of a $184.4 million tax benefit,as we removed the Union VEBA net assets and related deferred tax liabilities from our Consolidated Balance Sheet and accrued amounts estimated to be paidthrough the expiration of our obligation.Key Assumptions. The following data presents the key assumptions used and the amounts reflected in our consolidated financial statements with respect toour Canadian pension plan and the Salaried VEBA. 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, 2017 December 31, 2016 December 31, 2017 December 31, 2016Discount rate 3.40% 3.80% 3.20% 3.60%Rate of compensation increase 3.00% 3.00% — —Key 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, 2017 and at December 31, 2016, the Salaried VEBA assets wereinvested in various 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 actuarialpurposes.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 byit at December 31, 2017 and December 31, 2016.•Since the Salaried VEBA was paying a fixed annual amount to its participants at both December 31, 2017 and December 31, 2016, no future costtrend rate increase has been assumed in computing the APBO for the Salaried VEBA.Assumptions used to determine net periodic benefit cost for the years ended December 31 were: Canadian Pension Plan Salaried VEBA 2017 2016 2015 2017 2016 2015Discount rate 3.80% 4.10% 4.00% 3.60% 3.90% 3.60%Expected long-term return on plan assets1 4.45% 4.45% 5.10% 7.75% 7.75% 7.75%Rate of compensation increase 3.00% 3.00% 3.00% — — —60Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS_____________________1. The expected long-term rate of return assumption for the Salaried VEBA is based on the targeted investment portfolios provided to us by the trustee ofthe Salaried VEBA.Benefit Obligations and Funded Status. The following table presents the benefit obligations and funded status of our Canadian pension and the SalariedVEBA as of December 31, 2017 and December 31, 2016 and the corresponding amounts that are included in our Consolidated Balance Sheets (in millions ofdollars): Canadian Pension Plan Salaried VEBA 2017 2016 2017 2016Change in benefit obligation: Obligation at beginning of year $7.0 $6.1 $86.8 $77.9Foreign currency translation adjustment 0.5 0.2 — —Service cost 0.3 0.3 — —Interest cost 0.3 0.3 3.0 2.9Prior service cost1 — — 7.3 8.4Actuarial loss (gain)2 0.6 0.3 (0.5) 4.1Plan participants contributions 0.1 — — —Benefits paid by Company (0.3) (0.2) — —Benefits paid by Salaried VEBA — — (6.6) (6.5)Obligation at end of year3 8.5 7.0 90.0 86.8 Change in plan assets: Fair market value of plan assets at beginning of year 6.1 5.7 58.2 58.9Foreign currency translation adjustment 0.5 0.2 — —Actual return on assets 0.5 0.1 3.6 2.9Plan participants contributions 0.1 — — —Company contributions 0.4 0.3 2.9 2.9Benefits paid by Company (0.3) (0.2) — —Benefits paid by Salaried VEBA — — (6.6) (6.5)Fair market value of plan assets at end of year 7.3 6.1 58.1 58.2Net funded status4 $(1.2) $(0.9) $(31.9) $(28.6)_____________________________1. The prior service cost relating to the Salaried VEBA in both 2017 and 2016 resulted from increases in the annual healthcare reimbursement benefitstarting in 2018 and 2017, respectively, for plan participants.2. The actuarial gain relating to the Salaried VEBA in 2017 was comprised of: (i) a $2.5 million gain due to changes in census information; (ii) a $1.0million gain due to a change in the projected utilization rate; offset by (iii) a $3.0 million loss due to a change in the discount rate.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 $2.2million loss due to a reduction in the discount rate; offset by (iii) a $0.4 million gain due to a change in the projected utilization rate.3. For the Canadian pension plan, the benefit obligation is the projected benefit obligation. For the Salaried VEBA, the benefit obligation is the APBO.4. Net funded status of $31.9 million and $28.6 million relating to the Salaried VEBA at December 31, 2017 and December 31, 2016, respectively, waspresented as Net liabilities of Salaried VEBA on the Consolidated Balance Sheet.61Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe accumulated benefit obligation for the Canadian defined benefit pension plan was $7.9 million and $6.4 million at December 31, 2017 andDecember 31, 2016, respectively. We expect to contribute $0.5 million to the Canadian pension plan in 2018.As of December 31, 2017, the net benefits expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafterare as follows (in millions of dollars): Benefit Payments Due by Period 2018 2019 2020 2021 2022 2023-2027Canadian pension plan benefit payments$0.3 $0.3 $0.3 $0.4 $0.3 $1.9Salaried VEBA benefit payments17.5 7.3 7.2 7.0 6.8 30.3Total net benefits$7.8 $7.6 $7.5 $7.4 $7.1 $32.2__________________________________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 definedbenefit pension plan and the Salaried VEBA (before tax) that had not yet been reflected in net periodic benefit cost was as follows at December 31 (inmillions of dollars): Canadian Pension Plan Salaried VEBA 2017 2016 2017 2016Accumulated net actuarial loss $(1.9) $(1.5) $(17.5) $(18.3)Transition assets 0.1 0.1 — —Prior service cost — — (42.7) (40.2)Cumulative loss reflected in Accumulated other comprehensive loss $(1.8) $(1.4) $(60.2) $(58.5)The amount in Accumulated other comprehensive loss that has not yet been recognized as a component of net periodic postretirement benefit cost atDecember 31, 2017 that is expected to be recognized in 2018 for the Canadian pension plan was nominal at December 31, 2017. For the Salaried VEBA, suchamounts were $6.2 million at December 31, 2017. Of the $6.2 million relating to the Salaried VEBA, $5.4 million is related to amortization of prior servicecost and $0.8 million is related to amortization of net actuarial loss. See Note 10 for reclassification adjustments of other comprehensive (loss) income thatwere recognized as components of net periodic benefit cost for 2017, 2016 and 2015.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 inour Consolidated Balance Sheets at fair value. In determining the fair value of the plan assets at an annual period end, we utilize primarily the results ofvaluations supplied by the investment advisors responsible for managing the assets of each plan, which we independently review for reasonableness.Valuation of certain Canadian pension plan and Salaried VEBA assets are based on the net asset value ("NAV") of shares held by the plans at year-end usingthe NAV practical expedient.With respect to the Salaried VEBA, the investment advisors providing the valuations are engaged by the Salaried VEBA trustees. Certain Salaried VEBAplan assets are valued based upon unadjusted quoted market prices in active markets that are accessible at the measurement date for identical, unrestrictedassets (e.g., liquid securities listed on an exchange). Such assets are classified within Level 1 of the fair value hierarchy. Valuation of other Salaried VEBAinvested plan assets is based on significant observable inputs (e.g., valuations derived from actual market transactions, broker-dealer supplied valuations orcorrelations between a given U.S. market and a non-U.S. security). Valuation model inputs can generally be verified and valuation techniques do not involvesignificant 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 companiesin connection with our deferred compensation program. Such assets are accounted for as available for sale securities within Level 2 of the fair value hierarchyand are measured and recorded at fair value based on their quoted market prices (see Note 1).62Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe 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, 2017: Plan Assets in the Fair Value Hierarchy: Salaried VEBA – Cash and money market investments$1.3 $— $— $1.3Diversified investment funds in registered investment companies110.2 — — 10.2Total Salaried VEBA assets in the fair value hierarchy11.5 — — 11.5Deferred compensation program – Diversified investment funds in registeredinvestment companies1— 9.8 — 9.8Total plan assets in the fair value hierarchy$11.5 $9.8 $— $21.3 Plan Assets Measured at NAV 2: Salaried VEBA – Fixed income investment funds in registered investmentcompanies3 $19.4Salaried VEBA – Equity investment funds in registered investment companies4 24.3Canadian pension plan – Diversified investment funds in registered investmentcompanies1 7.3Total plan assets at fair value $72.3 As of December 31, 2016: Plan Assets in the Fair Value Hierarchy: Salaried VEBA – Cash and money market investments$3.3 $— $— $3.3Diversified investment funds in registered investment companies112.8 — — 12.8Total Salaried VEBA assets in the fair value hierarchy16.1 — — 16.1Deferred compensation program – Diversified investment funds in registeredinvestment companies1— 8.2 — 8.2Total plan assets in the fair value hierarchy$16.1 $8.2 $— $24.3 Plan Assets Measured at NAV 2: Salaried VEBA – Fixed income investment funds in registered investmentcompanies3 $17.9Salaried VEBA – Equity investment funds in registered investment companies4 21.3Canadian pension plan – Diversified investment funds in registered investmentcompanies1 6.1Total plan assets at fair value $69.6_________________________1. 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.2. 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 reconciliationof the fair value hierarchy to the Consolidated Balance Sheets. Equity investment funds measured at fair value using the NAV practical expedient aremanaged by an investment adviser registered with the SEC63Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSunder the Investment Advisers Act of 1940 and can be redeemed with five business days notice on the 15th (or last business day prior to the 15th) and onthe last business day of each month. A business day is every day that the New York Stock Exchange is open. Diversified investment funds measured atfair value using the NAV practical expedient are unitized mutual funds without externally published net asset values, which can be redeemed dailywithout restriction.3. This category represents investments in various fixed income funds with multiple registered investment companies. Such funds invest in diversifiedportfolios, 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 in affiliated and other investment companies, (h) short-term investments and other net assets, and (i) repurchase agreements and reverserepurchase agreements; (ii) other commingled investments; (iii) investment grade debt; (iv) fixed income instruments which may be represented byoptions, future contracts or swap agreements; and (v) cash and cash equivalents. In the prior year, the $17.9 million balance as of December 31, 2016 inthe table above was presented within the Level 2 category and has been restated in the current year to properly reflect the balance within the NAVcategory.4. 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.issuers across all market capitalizations; (ii) common stock in investment trust funds; and (iii) other short-term investments.Components of Net Periodic Benefit Cost. Our results of operations included the following impacts associated with the Canadian defined benefit plan andthe Salaried VEBA: (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) amortization of net gains or losses on assets, prior service costs associated with plan amendments and actuarial differences. The following table presentsthe components of net periodic benefit cost for the years ended December 31 (in millions of dollars): Canadian Pension Plan Salaried VEBA 2017 2016 2015 2017 2016 2015Service cost1 $0.3 $0.3 $0.3 $— $— $—Interest cost 0.3 0.3 0.3 3.0 2.9 2.7Expected return on plan assets (0.3) (0.3) (0.3) (4.1) (4.1) (4.3)Amortization of prior service cost2 — — — 4.7 4.1 3.0Amortization of net actuarial loss — — 0.1 0.9 0.5 1.0Net periodic benefit cost $0.3 $0.3 $0.4 $4.5 $3.4 $2.4__________________________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 planparticipants.64Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following tables present the total expense (income) related to all benefit plans for the periods presented (in millions of dollars): Year Ended December 31, 2017 2016 2015Included within Fabricated Products: Canadian pension plan $0.3 $0.3 $0.4Deferred compensation plan 0.4 0.2 0.1Defined contribution plans 8.1 8.1 7.8Multiemployer pension plans1 4.6 4.7 4.4Total Fabricated Products2 13.4 13.3 12.7 Included within All Other: Net periodic postretirement benefit cost relating to Salaried VEBA 4.5 3.4 2.4(Gain) loss on removal of Union VEBA net assets — (0.1) 493.4Deferred compensation plan 1.4 0.7 0.3Defined contribution plans 0.8 0.8 0.8Total All Other3 6.7 4.8 496.9 Total $20.1 $18.1 $509.6___________________________1. See Note 5 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. Expense (income) related to VEBAs is included within the Statements of Consolidated Income (Loss) as Net periodic postretirement benefit cost relatingto Salaried VEBA and (Gain) loss on removal of Union VEBA net assets. The remaining balance is reported in SG&A and R&D.5. Multiemployer Pension PlansOverview. We contribute to multiemployer defined benefit pension plans under the terms of collective bargaining agreements that cover our union-represented employees at certain facilities. At December 31, 2017, approximately 52% of our total employees were union-represented employees at facilitiesparticipating in these multiemployer pension plans. We currently estimate that contributions will range from $3.0 million to $5.0 million per year through2018.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 participatingemployers.•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 underfundedstatus of the plan, referred to as a withdrawal liability.65Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSOur participation in multiemployer pension plans for the year ended December 31, 2017 is outlined in the table below:Pension Fund EmployerIdentificationNumber Pension Protection ActZone Status1 FIP/RP StatusPending/Implementedin 20172 Contributions of the Company SurchargeImposed in2017 Expiration Date ofCollective-BargainingAgreements 2017 2016 2015 2017 2016 (in millions of dollars) Steelworkers PensionTrust (USW)3 236648508 Green Green No $3.5 $3.7 $3.5 No Mar2020-Nov2020Other Funds4 1.1 1.0 0.9 $4.6 $4.7 $4.4 ________________ 1. The most recent Pension Protection Act zone status available in 2017 and 2016 for the Steelworkers Pension Trust is for the plan's year-end atDecember 31, 2016 and December 31, 2015, respectively. The zone status is based on information that we received from the plan and is certified by theplan's actuary. Among other factors, plans in the green zone are at least 80% 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 hasbeen implemented for the plan under the Pension Protection Act.3. We are party to three collective bargaining agreements with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial andService Workers International Union, AFL-CIO,CLC ("USW") that require contributions to the Steelworkers Pension Trust. As of December 31, 2017,USW collective bargaining agreements covering employees at the Newark, Ohio ("Newark") and Spokane, Washington ("Trentwood") facilities covered85% of our USW-represented employees and expire in September 2020. Our monthly contributions per hour worked by each bargaining unit employee atthe Newark and Trentwood facilities are (in whole dollars) $1.50 and will increase to $1.75 in 2019. The union contracts covering employees at theRichmond, Virginia facility and Florence, Alabama facility cover 11% and 4% of our USW-represented employees, respectively, and expire in March2020 and November 2020, 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 thetotal contributions for any of the plan years disclosed. At December 31, 2017, financial statements and Forms 5500 were not available for the plan yearsending in 2017. Further, there were no significant changes to the number of employees covered by our multiemployer plans that would affect the period-to-period comparability of the contributions for the years presented.6. 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. TheAdjusted EBITDA targets are determined based on the return on adjusted net assets of our Fabricated Products business. Most of our production facilitieshave similar programs for both hourly and salaried employees. As of December 31, 2017, we had a liability of $17.4 million recorded within Accrued salaries,wages and related expenses for estimated probable future payments relating to the 12-month performance period of our 2017 STI Plans.Long-Term Incentive Programs ("LTI Programs")General. Executive officers and other key employees of the Company, as well as non-employee directors of the Company, are eligible to participate in theKaiser Aluminum Corporation 2016 Equity and Incentive Compensation Plan ("2016 Plan"). The 2016 Plan was approved by stockholders on May 26, 2016and replaced and succeeded in its entirety the Kaiser Aluminum Corporation Amended and Restated 2006 Equity and Performance Incentive Plan. AtDecember 31, 2017, 737,954 shares were available for awards under the 2016 Plan. We issue new shares of our common stock upon vesting under the 2016Plan.66Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNon-Vested Common Shares and Restricted Stock Units. We grant non-vested common shares to our non-employee directors and non-vested commonshares and restricted stock units to our executive officers and other key employees. The restricted stock units have rights similar to the rights of non-vestedcommon shares and each restricted stock unit that becomes vested entitles the recipient to receive one common share or a cash amount equaling the value ofone common share. For both non-vested common shares and restricted stock units, the service period is generally one year for non-employee directors andthree years for executive officers and other key employees.Performance Shares. In addition to non-vested common shares and restricted stock units, we grant performance shares to executive officers and other keyemployees. Each performance share that becomes vested and earned entitles the recipient to receive one common share or a cash amount equaling the valueof one common share. During the first quarter of 2017, performance shares granted in 2014 under the 2014-2016 LTI Program vested (see "Summary ofActivity" below). The number of performance shares that vested resulted in the issuance of common shares was determined based on our total shareholderreturn ("TSR") compared to the TSR of a specified group of peer companies over a three-year performance period.Performance shares granted in 2015 are subject to performance conditions pertaining to our TSR relative to the TSR of a specified group of peercompanies over a three-year performance period ("TSR-Based Performance Shares").Performance shares granted in 2016 consist of TSR-Based Performance Shares and performance shares subject to performance requirements pertaining toour total controllable cost performance over a three-year performance period ("CP-Based Performance Shares").Performance shares granted in 2017 consist of TSR-Based Performance Shares, CP-Based Performance Shares and performance shares subject toperformance conditions pertaining to our economic value added ("EVA") performance, determined based on our adjusted pre-tax operating income in excessof a capital charge, over a three-year performance period ("EVA-Based Performance Shares").The number of performance shares under the 2015-2017, 2016-2018 and 2017-2019 LTI Programs that may be earned and result in the issuance ofcommon shares ranges between 0% to 200% of the target number of underlying common shares, which is approximately one-half of the maximum payout.The performance shares granted under the 2015-2017, 2016-2018 and 2017-2019 LTI Programs will vest in 2018, 2019 and 2020, respectively.Inputs and assumptions used in the Monte Carlo simulations to calculate the fair value at grant date of our TSR-Based Performance Shares were asfollows: Year Ended December 31, 2017 2016 2015Grant date fair value$97.88 $93.02 $95.68Grant date stock price$79.69 $80.46 $75.41Expected volatility of Kaiser Aluminum122.74% 17.81% 19.03%Expected volatility of peer companies144.19% 41.22% 33.73%Risk-free interest rate1.54% 1.01% 0.98%Dividend yield2.50% 2.24% 2.12%_____________________1. Expected volatility based on 2.8 years of daily closing share prices from the valuation date to the end of the performance period.67Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNon-Cash Compensation Expense. Non-cash compensation expense relating to all awards is included in SG&A and R&D. Non-cash compensationexpense by type of award under LTI Programs was as follows for each period presented (in millions of dollars): Year Ended December 31, 2017 2016 2015Non-vested common shares and restricted stock units$5.4 $4.7 $4.4TSR-Based Performance Shares4.8 5.4 4.0CP-Based Performance Shares2.7 1.3 —EVA-Based Performance Shares0.2 0.3 0.9Total non-cash compensation expense$13.1 $11.7 $9.3The following table presents the allocation of the charges detailed above, by segment (in millions of dollars): Year Ended December 31, 2017 2016 2015Fabricated Products$5.0 $4.2 $3.5All Other8.1 7.5 5.8Total non-cash compensation expense$13.1 $11.7 $9.3Recognized tax benefits relating to non-cash compensation expense were $4.9 million, $4.4 million and $3.5 million for 2017, 2016 and 2015,respectively.Unrecognized Gross Compensation Cost Data. The following table presents unrecognized gross compensation cost data by type of award as of December31, 2017: 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$8.1 2.5TSR-Based Performance Shares$4.3 1.6CP-Based Performance Shares$5.2 1.9EVA-Based Performance Shares$0.5 2.268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-Based Performance Shares and EVA-Based Performance Shares for the year ended December 31, 2017 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-AverageGrant-DateFairValue perShare Shares Weighted-AverageGrant-DateFairValue perShare Shares Weighted-AverageGrant-DateFairValue perShareOutstanding atDecember 31,2016114,658 $69.51 61,800 $74.94 394,525 $90.30 63,678 $80.46 — $—Granted 111,817 86.92 92,275 76.13 65,044 97.88 65,044 79.69 32,504 79.69Vested(46,689) 71.46 (9,570) 76.19 (94,082) 83.18 — — — —Forfeited 1(451) 69.83 (6,887) 77.44 (6,383) 95.85 (3,999) 79.93 (1,374) 79.69Canceled 1— — — — (55,288) 83.18 — — — —Outstanding atDecember 31,201779,335 $70.96 137,618 $75.81 303,816 $95.31 124,723 $80.08 31,130 $79.69_____________________1. For performance shares, the number of shares granted and forfeited are presented at their maximum payout; and the number of shares canceled includesthe number of shares that did not vest due to performance results falling below those required for maximum payout.The weighted-average grant-date fair value per share for shares granted by type of award was as follows for each period presented: Year Ended December 31, 2017 2016 2015Non-vested common shares$86.92 $86.11 $72.09Restricted stock units$76.13 $75.29 $69.83TSR-Based Performance Shares$97.88 $93.02 $95.68CP-Based Performance Shares$79.69 $80.46 $—EVA-Based Performance Shares$79.69 $— $—Stock Options. As of December 31, 2016, we had 1,543 fully-vested outstanding stock options exercisable to purchase common shares at $80.01 per share,all of which subsequently expired on April 2, 2017. No options were granted during the year ended December 31, 2017, and no options were outstanding asof December 31, 2017.Participants may elect to have us withhold common shares to satisfy minimum statutory tax withholding obligations arising in connection with theexercise of stock options and vesting of non-vested shares, restricted stock units and performance shares. We cancel any such shares withheld on theapplicable vesting dates or earlier dates when service requirements are satisfied, which correspond to the times at which income to the employee isrecognized. When we withhold these common shares, we are required to remit to the appropriate taxing authorities the fair value of the shares withheld as ofthe vesting date. During 2017, 2016 and 2015, 56,495, 36,055 and 37,009 common shares, respectively, were withheld and canceled for this purpose. Thewithholding of common shares by us could be deemed a purchase of the common shares.69Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS7. Derivatives, Hedging Programs and Other Financial InstrumentsOverview. In conducting our business, we enter into derivative transactions, including forward contracts and options, to limit our exposure to: (i) metalprice risk related to our sale of fabricated aluminum products and the purchase of metal used as raw material for our fabrication operations; (ii) energy pricerisk relating to fluctuating prices of natural gas and electricity used in our production processes; and (iii) foreign currency requirements with respect to ourforeign subsidiaries and cash commitments for equipment purchases denominated in foreign currency.Our derivative activities are overseen by a hedging committee ("Hedging Committee"), which is composed of our chief executive officer, chief operatingofficer, chief financial officer, chief accounting officer, treasurer and other officers and employees selected by the chief executive officer. The HedgingCommittee meets regularly to review commodity price exposure, derivative positions and strategy. Management reviews the scope of the HedgingCommittee's activities with our Board of Directors.We are exposed to counterparty credit risk on all of our derivative instruments, which we manage by monitoring the credit quality of our counterpartiesand allocating our hedging positions among multiple counterparties to limit exposure to any single entity. Our counterparties are major investment gradefinancial institutions or trading companies. Hedging transactions are governed by negotiated reciprocal credit lines, which generally require collateral to beposted above specified credit thresholds. We believe the risk of loss is remote and contained due to counterparty credit quality, our diversification practiceand 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. Wemanage this risk by allocating hedging transactions among multiple counterparties, using options as part of our hedging activities or both. The aggregate fairvalue of our derivative instruments that were in a net liability position was insignificant at both December 31, 2017 and December 31, 2016, and we had nocollateral 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. At December 31, 2017, we had no cash collateral posted from any of our customers. For more information about concentration risksconcerning customers and suppliers, see Note 15.Notional Amount of Derivative Contracts. The following table summarizes our derivative positions at December 31, 2017:Aluminum Maturity Period(month/year) Notional Amount ofcontracts (mmlbs)Fixed price purchase contracts 1/18 through 12/21 165.3Fixed price sales contracts 5/18 through 11/19 1.4Midwest premium swap contracts1 1/18 through 12/21 163.9Alloying Metals Maturity Period(month/year) Notional Amount ofcontracts (mmlbs)Fixed price purchase contracts 1/18 through 6/18 2.7Natural Gas2 Maturity Period(month/year) Notional Amount ofcontracts (mmbtu)Fixed price purchase contracts 1/18 through 12/20 3,600,00070Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSElectricity3 Maturity Period(month/year) Notional Amount ofcontracts (Mwh)Fixed price purchase contracts 1/20 through 12/20 131,760Euro Maturity Period(month/year) Notional Amount ofcontracts (euro)Fixed price purchase contracts 1/18 through 4/18 301,304_________________________1. Regional premiums represent the premium over the London Metal Exchange price for primary aluminum which is incurred on our purchases of primaryaluminum.2. As of December 31, 2017, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations inprices for approximately 70% of the expected natural gas purchases for both 2018 and 2019, and 55% of the expected natural gas purchases for 2020.3. As of December 31, 2017, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations inprices for approximately 55% of the expected electricity purchases for both 2018 and 2019, and 46% of the expected electricity purchases for 2020.Non-Designated Hedges of Operational Risks. Our pricing of fabricated aluminum products is generally intended to lock in a conversion margin(representing the value added from the fabrication process(es)) and to pass through metal price fluctuations to our customers. For some of our higher valueadded products sold on a spot basis, the pass through of metal price movements can sometimes lag by as much as several months, with a favorable impact tous when metal prices decline and an adverse impact to us when metal prices increase. Additionally, in certain instances, we enter into firm-price arrangementswith our customers for stipulated volumes to be delivered in the future. Because we generally purchase primary and secondary aluminum on a floating pricebasis, the lag in passing through metal price movements to customers on some of our higher value added products sold on a spot basis and the volume that wehave committed to sell to our customers under a firm-price arrangement create metal price risk for us. We use third-party hedging instruments to limitexposure to metal price risk related to the metal pass through lag on some of our products and firm-price customer sales contracts.We are exposed to risk of fluctuating prices for natural gas and electricity. We, from time to time, in the ordinary course of business, enter into hedgingtransactions and/or physical delivery commitments with third parties to mitigate our risk from fluctuations in natural gas and electricity prices.We are also exposed to foreign currency exchange risk related to firm-price agreements for equipment purchases from foreign manufacturers. We useforeign currency forward contracts designed to line up with the timing and amounts of scheduled payments to the foreign equipment manufacturers tomitigate our exposure to currency exchange rate fluctuations on these purchases. Realized and unrealized periodic gains and losses of non-designated foreigncurrency forward contracts are reflected as a reduction or increase in Other income (expense), net.Designated Alloying Metal Hedges. We enter into agreements with suppliers to purchase alloying metals (zinc and copper) used as raw materials in ourfabrication operations at fluctuating prices that we are unable to pass along to our customers. We mitigate our exposure to metal price risk by entering intoAlloy Hedges with third-party financial institutions at predetermined/fixed prices at stated delivery dates. Our Alloy Hedges are expected to be highlyeffective because monthly settlements correspond to forecasted physical purchases of alloying metals by our manufacturing facilities. The effective portionof the fair value on these Alloy Hedges is recorded within Other comprehensive income, net of tax, and is reclassified into the Statements of ConsolidatedIncome (Loss) during the month of settlement to Cost of products sold (see Note 10). As of December 31, 2017, we estimate the net gain of $0.5 million willbe reclassified from Accumulated other comprehensive income into Net income within the next 6 months. We incurred no ineffectiveness on these hedgesduring 2017.71Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSRealized and Unrealized Gain (Loss). Realized and unrealized gain (loss) included on the Statements of Consolidated Income (Loss) associated with allderivative contracts consisted of the following for each period presented (in millions of dollars): Year Ended December 31, 2017 2016 2015Realized (gain) loss: Aluminum $(20.4) $2.0 $27.3Natural gas 0.7 5.0 5.4Alloy Hedges (0.9) — —Foreign currency (0.1) 0.1 —Electricity — — 1.9Total realized (gain) loss1 $(20.7) $7.1 $34.6 Unrealized (gain) loss: Aluminum $(20.9) $(10.8) $4.6Natural gas 1.4 (7.9) 0.5Electricity 0.1 — (1.7)Total unrealized (gain) loss2 $(19.4) $(18.7) $3.4______________________1. Recorded within Cost of products sold, excluding depreciation, amortization and other items within the Fabricated Products segment.2. Recorded within Unrealized (gain) loss on derivative instruments within the Fabricated Products segment.Fair Values of Derivative Contracts. The fair values of our derivative contracts are based upon trades in liquid markets. Valuation model inputs can beverified, and valuation techniques do not involve significant judgment. The fair values of such financial instruments are classified within Level 2 of the fairvalue hierarchy.72Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following table presents our financial instruments, classified under the appropriate level of the fair value hierarchy, as of the period presented (inmillions of dollars): December 31, 2017 Level 1 Level 2 Level 3 TotalDERIVATIVE ASSETS: Non-Designated Hedges: Aluminum – Fixed price purchase contracts$— $22.5 $— $22.5Midwest premium swap contracts— 1.7 — 1.7Natural gas – Fixed price purchase contracts— 0.2 — 0.2 Designated Hedges: Alloying metals – Fixed price purchase contracts— 0.9 — 0.9Total derivative assets1$— $25.3 $— $25.3 DERIVATIVE LIABILITIES: Non-Designated Hedges: Aluminum – Fixed price sales contracts$— $(0.1) $— $(0.1)Midwest premium swap contracts— (0.1) — (0.1)Natural gas – Fixed price purchase contracts— (0.5) — (0.5)Electricity – Fixed price purchase contracts— (0.1) — (0.1) Designated Hedges: Alloying metals – Fixed price purchase contracts— — — —Total derivative liabilities2$— $(0.8) $— $(0.8)______________________1. Of the $25.3 million in total derivative assets, $18.9 million and $6.4 million were recorded within Prepaid expenses and other current assets and Otherassets, respectively.2. Of the $0.8 million in total derivative liabilities, $0.3 million and $0.5 million were recorded within Other accrued liabilities and Long-term liabilities,respectively.73Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following table presents our financial instruments, classified under the appropriate level of the fair value hierarchy, as of the period presented (inmillions of dollars): December 31, 2016 Level 1 Level 2 Level 3 TotalDERIVATIVE ASSETS: Non-Designated Hedges: Aluminum – Fixed price purchase contracts$— $3.3 $— $3.3Midwest premium swap contracts— 0.9 — 0.9Natural gas – Fixed price purchase contracts— 1.6 — 1.6Total derivative assets1$— $5.8 $— $5.8 DERIVATIVE LIABILITIES: Non-Designated Hedges: Aluminum – Fixed price purchase contracts$— $(1.1) $— $(1.1)Midwest premium swap contracts— (0.2) — (0.2)Natural gas – Fixed price purchase contracts— (0.4) — (0.4) Designated Hedges: Alloying Metals – Fixed price purchase contracts— (0.1) — (0.1)Total derivative liabilities2$— $(1.8) $— $(1.8)______________________1. Of the $5.8 million in total derivative assets, $5.0 million and $0.8 million were recorded within Prepaid expenses and other current assets and Otherassets, respectively.2. Of the $1.8 million in total derivative liabilities, $0.8 million and $1.0 million were recorded within Other accrued liabilities and Long-term liabilities,respectively.The aggregate fair value of our derivatives recorded on the Consolidated Balance Sheets at December 31, 2017 and December 31, 2016 was a net asset of$24.5 million and net asset of $4.0 million, respectively. The increase in the net asset position during 2017 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 tonon-designated hedges of operational activities are reflected in Operating income (loss).Offsetting Information. We enter into derivative contracts with counterparties, some of which are subject to enforceable master netting arrangements andsome of which are not. We reflect the fair value of our derivative contracts on a gross basis on the Consolidated Balance Sheets.74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, 2017 (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)$25.3 $— $25.3 $0.8 $24.5Total$25.3 $— $25.3 $0.8 $24.5 Gross Amounts ofRecognized Liabilities Gross Amounts Offsetin the ConsolidatedBalance Sheets Net Amounts ofLiabilities Presented inthe ConsolidatedBalance Sheets Gross Amounts NotOffset in theConsolidated BalanceSheets Net AmountCounterparty(with netting agreements)$(0.8) $— $(0.8) $(0.8) $—Total$(0.8) $— $(0.8) $(0.8) $—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 $4.1 Gross Amounts ofRecognized Liabilities Gross Amounts Offsetin the ConsolidatedBalance Sheets Net Amounts ofLiabilities Presented inthe ConsolidatedBalance Sheets Gross Amounts NotOffset in theConsolidated BalanceSheets Net AmountCounterparty(with netting agreements)$(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)75Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFair 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 debtinvestment securities, which consist of commercial paper, is determined based on valuation models that use observable market data. At December 31, 2017,all of our short-term investments had maturity dates within 8 months. We review our debt investment portfolio for other-than-temporary impairment at leastquarterly or when there are changes in credit risk or other potential valuation concerns. At December 31, 2017 and December 31, 2016, the total unrealizedloss, net of tax, included in Accumulated other comprehensive loss 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 loss on these securities was due tonormal market fluctuations, and not due to increased credit risk or other valuation concerns. The fair value input of our available for sale securities, which areclassified within Level 2 of the fair value hierarchy, is calculated based on broker quotes. The amortized cost for available for sale securities approximatestheir fair value.All Other Financial Assets and Liabilities. We believe that the fair value of our cash and cash equivalents, accounts receivable, accounts payable andaccrued liabilities approximate their respective carrying values due to their short maturities and nominal credit risk. See Note 2 for components of cash andcash equivalents.The following table presents our other financial assets, classified under the appropriate level of the fair value hierarchy, as of December 31, 2017 (inmillions of dollars): Level 1 Level 2 Level 3 TotalCash and cash equivalents$23.5 $27.6 $— $51.1Short-term investments— 183.7 — 183.7Total$23.5 $211.3 $— $234.8The following table presents our other financial assets, classified under the appropriate level of the fair value hierarchy, as of December 31, 2016 (inmillions of dollars): 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 $— $286.28. 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% SeniorNotes") at 100% of the principal amount. The unamortized amount of debt issuance costs as of December 31, 2017 and December 31, 2016 was $5.4 millionand $6.3 million, respectively. Interest expense, including amortization of debt issuance costs, relating to the 5.875% Senior Notes was $22.9 million and$14.5 million for the year ended December 31, 2017 and December 31, 2016, respectively. A portion of the interest relating to the 5.875% Senior Notes wascapitalized as construction in progress. The effective interest rate of the 5.875% Senior Notes is approximately 6.1% per annum, taking into account theamortization 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 1liabilities, was approximately $399.9 million and $390.8 million at December 31, 2017 and December 31, 2016, respectively.The 5.875% Senior Notes are unsecured obligations and are guaranteed by certain of our domestic subsidiaries that own virtually all of our operatingassets and through 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 ability to, among other things: (i) incur liens; (ii) consolidate, merge or sellall or substantially all of our and certain of our subsidiaries' assets; (iii) incur or guarantee additional indebtedness; (iv) enter into transactions with affiliates;and (v) make "restricted payments" (as defined in the76Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSindenture to include certain loans, investments, dividend payments, share repurchases and prepayments and redemptions and repurchases of certainindebtedness). Many of these limitations also apply to certain of our subsidiaries. Additionally, the indenture limits the ability of certain of our subsidiariesto be subject to consensual restrictions on paying dividends to us, making loans to us, repaying indebtedness owed to us, or transferring assets to us. Certaintypes and amounts of restricted payments are allowed by various provisions of the indenture. In particular, the indenture provisions permit us to makerestricted payments in any amount if, after giving effect to such restricted payments, our "consolidated net indebtedness" as a ratio of "EBITDA" (each term asdefined 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% SeniorNotes at a redemption price equal to 100% of the principal amount, together with any accrued and unpaid interest, plus a "make-whole premium."Holders 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 amountplus any 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 ratingagencies within 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 ownership changes; (ii) certain recapitalizations, mergers and dispositions; (iii) certain changes in the composition of our Board of Directors; and(iv) stockholder approval of any plan or proposal for the liquidation or dissolution of us. We may also be required to offer to repurchase the 5.875% SeniorNotes at 100% of the principal amount, 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"),of which $197.8 million principal amount remained outstanding at December 31, 2015. On June 1, 2016, we redeemed in full all remaining 8.25% SeniorNotes at a redemption price of 104.125% of the principal amount. Interest expense, including amortization of debt issuance costs, relating to the 8.25%Senior Notes was $7.1 million and $18.8 million for 2016 and 2015, respectively. A portion of the interest relating to the 8.25% Senior Notes was capitalizedas construction in progress.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 of $94.9 million to holders of the ConvertibleNotes, which was completely offset by settlement proceeds of a hedge that we entered into in connection with the issuance 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 issuancediscount and debt issuance costs. The following table provides additional information regarding the Convertible Notes (in millions of dollars): Year Ended December 31, 2015Contractual coupon interest$2.0Amortization of discount2.4Amortization of debt issuance costs0.3Total interest expense1$4.7_______________1. A portion of the interest relating to the Convertible Notes was capitalized as construction in progress.77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 CreditFacility") provides us with a $300.0 million funding commitment through December 1, 2020. Joining the Company as borrowers ("Co-Borrowers") are threeof our wholly-owned domestic operating subsidiaries: Kaiser Aluminum Investments Company, Kaiser Aluminum Fabricated Products, LLC and KaiserAluminum Washington, LLC.The Revolving Credit Facility is secured by a first priority lien on substantially all of the accounts receivable, inventory and certain other related assetsand proceeds of the Co-Borrowers, as well as certain machinery and equipment. Under the Revolving Credit Facility, we are able to borrow from time to timean aggregate commitment amount equal to the lesser of $300.0 million and a borrowing base comprised of: (i) 85% of eligible accounts receivable; (ii) thelesser of (a) 75% of eligible inventory and (b) 85% of the net orderly liquidation value of eligible inventory as determined in the most recent inventoryappraisal ordered by the 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 CreditFacility may be utilized for letters of credit.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, aspecified variable percentage determined by reference to the then-remaining borrowing availability under the Revolving Credit Facility. The fundingcommitment of the Revolving Credit Facility may be increased up to $400.0 million, subject to certain conditions and the agreement of lenders thereunder.We had $300.0 million of total borrowing availability under the Revolving Credit Facility at December 31, 2017, based on the borrowing basedetermination then in effect. At December 31, 2017, there were no borrowings under the Revolving Credit Facility and $8.1 million was used to supportoutstanding letters of credit, leaving $291.9 million of net borrowing availability. The interest rate applicable to any overnight borrowings under theRevolving Credit Facility would have been 4.75% at December 31, 2017.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 CreditFacility places limitations on our ability and certain of our subsidiaries to, among other things, grant liens, engage in mergers, sell assets, incur debt, enterinto sale and leaseback transactions, make investments, undertake transactions with affiliates, prepay certain debt, pay dividends and repurchase shares. Weare allowed to prepay debt, pay dividends and repurchase shares in any amount if, after giving effect to such payment, $52.5 million or more would beavailable for us to borrow under the Revolving Credit Facility, or if after giving effect to such payment, $45.0 million or more would be available to us toborrow under the Revolving Credit Facility and we maintain a fixed charge coverage ratio at or above 1.15:1.0. In addition, we are required to maintain afixed charge coverage ratio on a consolidated basis at or above 1.0:1.0 if borrowing availability under the Revolving Credit Facility is less than $30.0million.9. 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 7 and Note 8).Rental expenses were $7.9 million, $8.5 million and $8.2 million for 2017, 2016 and 2015, respectively. There are renewal options in various operatingleases subject to certain terms and conditions. Minimum rental commitments under operating leases at December 31, 2017 were as follows (in millions ofdollars): Year Ended December 31, 2018 2019 2020 2021 2022 2023 andThereafterMinimum rental commitments $5.7 $5.2 $3.1 $2.5 $2.2 $21.0CAROs. The inputs in estimating the fair value of CAROs include: (i) the timing of when any such CARO cash flows may be incurred; (ii) incrementalcosts associated with special handling or treatment of CARO materials; and (iii) the credit-adjusted risk-free rate applicable at the time additional CARO cashflows are estimated; all of which are considered Level 3 inputs as they involve significant judgment from us.78Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following table summarizes the activity relating to our CARO liabilities (in millions of dollars): Year Ended December 31, 2017 2016 2015Beginning balance $5.5 $4.9 $4.8Liabilities incurred during the period — — —Liabilities settled during the period — (0.1) (0.2)Accretion expense 0.4 0.5 0.3Adjustment to accretion expense due to revisions to estimated cash flow and timing ofexpenditure1 — 0.2 —Ending balance $5.9 $5.5 $4.9__________________________________________ 1. The adjustments in 2016 had a de minimis impact on the basic and diluted net income per share for 2016. The estimated fair value of CARO liabilities at December 31, 2017 and December 31, 2016 were based upon the application of a weighted-average credit-adjusted risk-free rate of 8.7% and 8.6%, respectively. CAROs are included in Other accrued liabilities or Long-term liabilities, as appropriate.Environmental Contingencies. We are subject to a number of environmental laws and regulations, to potential fines or penalties assessed for allegedbreaches of such laws and regulations and to potential claims based upon such laws and regulations. We are also subject to legacy environmentalcontingencies related to activities that occurred at operating facilities within Fabricated Products prior to July 6, 2006 while such operating facilities werebeing operated by a predecessor, which represent the majority of our environmental accruals. The status of these environmental contingencies are discussedbelow. We have established procedures for regularly evaluating environmental loss contingencies. Our environmental accruals represent our undiscountedestimate of costs reasonably expected to be incurred based on presently enacted laws and regulations, existing requirements, currently available facts,existing technology and our assessment of the likely remediation actions to be taken.We continue to pursue remediation activities, primarily to address the historical use of oils containing polychlorinated biphenyls ("PCBs") at ourTrentwood facility. Our remediation efforts are in collaboration with the Washington State Department of Ecology ("Washington State Ecology"), to whichwe submitted a feasibility study in 2012 of remediation alternatives and from which we received permission to begin certain remediation activities pursuantto a signed work order. As we have finished a number of sections of the work plan, we have received approval from Washington State Ecology on satisfactorycompletion of those sections. Additionally, in cooperation with Washington State Ecology, to determine the treatability and evaluate the feasibility ofremoving PCBs from ground water under the Trentwood facility, we constructed a pilot test facility and began treatment operations at the test facility in thefirst half of 2016. As the success of the new methodology cannot be reasonably determined at this time, it is possible we may need to make upwardadjustments to our related accruals as facts and cost estimates regarding the groundwater treatment method and the operation of the treatment facility becomeavailable. During 2013, at the request of the Ohio Environmental Protection Agency ("OEPA"), we initiated an investigational study of our Newark facility related tohistorical on-site waste disposal. Since 2014, we have completed a number of preliminary steps in the preparation of completing the final risk assessment andfeasibility study, both of which are subject to review and approval by the OEPA. As work continues and progresses to a final risk assessment and feasibilitystudy, we will establish and update estimates for probable and estimable remediation, if any. The actual and final cost for remediation will not be fullydeterminable until a final feasibility study is submitted and accepted by the OEPA and work plans are prepared, which is expected to occur in the next 18 to24 months.79Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe 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, 2017 2016 2015Beginning balance $17.2 $18.6 $19.3Additional accruals 0.3 0.1 1.3Less: expenditures (0.9) (1.5) (2.0)Ending balance $16.6 $17.2 $18.6At December 31, 2017, our environmental accrual of $16.6 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) factsrelated to certain other locations owned or formerly owned by us. In accordance with approved and proposed remediation action plans, we expect that theimplementation and ongoing monitoring could occur over a period of 30 or more years.As additional facts are developed, feasibility studies are completed, draft remediation plans are modified, necessary regulatory approvals for theimplementation of remediation are obtained, alternative technologies are developed and/or other factors change, there may be revisions to management’sestimates and actual costs may exceed the current environmental accruals. We believe at this time that it is reasonably possible that undiscounted costsassociated with these environmental matters may exceed current accruals by amounts that could be, in the aggregate, up to an estimated $12.5 million overthe remediation period. It is reasonably possible that our recorded estimate will change in the next 12 months.Other Contingencies. We are party to various lawsuits, claims, investigations and administrative proceedings that arise in connection with past andcurrent operations. 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. Weaccrue for a legal liability when it is both probable that a liability has been incurred and the amount of the loss is reasonably estimable. Quarterly, in additionto when changes in facts and circumstances require it, we review and adjust these accruals to reflect the impacts of negotiations, settlements, rulings, adviceof legal counsel and other information and events pertaining to a particular case. While uncertainties are inherent in the final outcome of such matters and itis presently impossible to determine the actual cost that may ultimately be incurred, we believe that we have sufficiently accrued for such matters and that theultimate resolution of pending matters 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. Accumulated Other Comprehensive (Loss) IncomeThe following table presents the changes in the accumulated balances for each component of Accumulated other comprehensive (loss) income ("AOCI")for each period presented (in millions of dollars): Year Ended December 31, 2017 2016 2015Defined benefit pension plan and VEBAs: Beginning balance $(37.1) $(31.3) $(96.4)Actuarial loss arising during the period (0.3) (5.7) (12.9)Less: income tax benefit 0.1 2.1 4.9Net actuarial loss arising during the period (0.2) (3.6) (8.0)Prior service (cost) credit arising during the period (7.3) (8.3) 6.8Less: income tax benefit (expense) 2.7 3.1 (2.6)Net prior service (cost) credit arising during the period (4.6) (5.2) 4.2Amortization of net actuarial loss1 0.9 0.5 1.1Amortization of prior service cost1 4.7 4.1 3.0Removal of obligation relating to Union VEBA — — 106.6Less: income tax expense2 (2.1) (1.7) (41.8)Net amortization and reclassification from AOCI to Net income (loss) 3.5 2.9 68.9Translation impact on Canadian pension plan AOCI balance (0.1) 0.1 —Other comprehensive (loss) income, net of tax (1.4) (5.8) 65.1Ending balance $(38.5) $(37.1) $(31.3) Available for sale securities: Beginning balance $0.8 $(0.1) $0.2Unrealized gain (loss) on available for sale securities 4.0 1.9 (0.1)Less: income tax expense (1.5) (0.7) —Net gain (loss) on available for sale securities 2.5 1.2 (0.1)Gain reclassified from AOCI to Net income (loss)3 (3.2) (0.5) (0.4)Less: income tax benefit2 1.2 0.2 0.2Net gain reclassified from AOCI to Net income (loss) (2.0) (0.3) (0.2)Other comprehensive income (loss), net of tax 0.5 0.9 (0.3)Ending balance $1.3 $0.8 $(0.1) Other: Beginning balance $(0.4) $(0.3) $0.1Unrealized gain (loss) 2.0 (0.2) (0.5)Less: income tax (expense) benefit (0.7) — 0.1Net gain (loss) 1.3 (0.2) (0.4)(Gain) loss reclassified from AOCI to Net income (loss) (0.6) 0.1 —Less: income tax benefit2 0.2 — —Net (gain) loss reclassified from AOCI to Net income (loss) (0.4) 0.1 —Other comprehensive income (loss), net of tax 0.9 (0.1) (0.4)Ending balance $0.5 $(0.4) $(0.3) Total AOCI ending balance $(36.7) $(36.7) $(31.7)81Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS____________1. Amounts amortized out of AOCI relating to Salaried VEBA adjustments were included as a component of Net periodic postretirement benefit costrelating to Salaried VEBA.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 income (expense), net. We usethe specific identification method to determine the amount reclassified out of AOCI.11. Other Income (Expense), NetOther income (expense), net consisted of the following for each period presented (in millions of dollars): Year Ended December 31, 2017 2016 2015Interest income$0.2 $0.1 $0.4Realized gain on investments3.4 0.8 0.8Loss on extinguishment of debt1— (11.1) —All other, net0.9 (0.1) (3.0)Other income (expense), net$4.5 $(10.3) $(1.8)____________1. Represents the loss on extinguishment of our 8.25% Senior Notes during the year ended December 31, 2016 which includes an $8.2 million premiumpaid to redeem the notes and a $2.9 million write-off of unamortized debt issuance costs associated with the notes.12. Income Tax MattersTax (Provision) Benefit. Income (loss) before income taxes by geographic area was as follows (in millions of dollars): Year Ended December 31, 2017 2016 2015Domestic$127.9 $143.6 $(373.6)Foreign5.1 3.6 1.8Income (loss) before income taxes$133.0 $147.2 $(371.8)Income taxes are classified as either domestic or foreign, based on whether payment is made or due to the United States or a foreign country. Certainincome classified as foreign is also subject to domestic income taxes.82Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSIncome tax (provision) benefit consisted of (in millions of dollars): Federal Foreign State Total2017 Current$3.1 $(0.8) $(1.0) $1.3Deferred(82.0) (1.0) (5.7) (88.7)Expense applied to increase Retained earnings/ Othercomprehensive income (loss)(0.1) (0.1) — (0.2)Income tax provision$(79.0) $(1.9) $(6.7) $(87.6)2016 Current$2.7 $0.6 $(1.5) $1.8Deferred(47.8) (1.2) (4.7) (53.7)Expense applied to increase Additional paid in capital/ Othercomprehensive income (loss)(3.2) (0.1) (0.3) (3.6)Income tax provision$(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 income (loss)33.5 0.4 4.3 38.2Income tax benefit$127.4 $1.3 $6.5 $135.2A reconciliation between the (provision for) benefit from income taxes and the amount computed by applying the federal statutory income tax rate toIncome (loss) before income taxes is as follows (in millions of dollars): Year Ended December 31, 2017 2016 2015Amount of federal income tax (provision) benefit based on the statutory rate$(46.5) $(51.5) $130.1(Increase) decrease in federal valuation allowances0.5 (0.3) (0.6)Non-deductible compensation (expense) benefit(2.3) 0.3 (0.2)Non-deductible (expense)— (0.3) (0.3)State income tax (provision) benefit, net of federal benefit 1(4.3) (4.2) 4.2Foreign income tax (expense) benefit(0.1) 0.5 0.1Foreign undistributed earnings(5.9) — —Expiration of statute of limitations— — 1.7Tax rate change(29.0) — —Advance pricing agreement— — (0.2)Competent Authority settlement— — 0.4Income tax (provision) benefit$(87.6) $(55.5) $135.2___________________________1. State income taxes were $4.0 million in 2017, but were increased by a $2.5 million change in tax rates, and offset by a $2.2 million decrease in thevaluation allowance relating to certain state net operating losses. The state income taxes were $4.1 million in 2016, but were offset by a $0.2 milliondecrease due to lower tax rates in various states and a $0.3 million increase in the valuation allowance relating to certain state net operating losses. Thestate income tax benefit was $10.3 million in 2015, but was offset by a $3.1 million increase due to state tax rate and state law changes and a $3.0million increase relating to the expiration of certain state net operating losses.83Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDeferred 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, 2017 2016Deferred income tax assets: Loss and credit carryforwards$98.7 $191.8VEBAs (see Note 4)11.6 23.2Other assets21.0 39.8Inventory9.3 —Valuation allowances(13.0) (15.7)Total deferred income tax assets127.6 239.1Deferred income tax liabilities: Property, plant and equipment(57.7) (82.7)Undistributed foreign earnings(2.2) —Total deferred income tax liabilities(59.9) (82.7)Net deferred income tax assets 1$67.7 $156.4__________________________1. Of the total net deferred income tax assets of $67.7 million, $72.0 million was presented as Deferred tax assets, net and $4.3 million was presented asDeferred tax liabilities on the Consolidated Balance Sheet as of December 31, 2017. Of the total net deferred income tax assets of $156.4 million, $159.7million was presented as Deferred tax assets, net and $3.3 million was presented as Deferred tax liabilities on the Consolidated Balance Sheet as ofDecember 31, 2016.Tax Attributes. At December 31, 2017, we had $275.1 million of net operating loss ("NOL") carryforwards available to reduce future cash payments forfederal income taxes in the United States. H.R.1, commonly referred to as the Tax Cut and Jobs Act ("Tax Act"), allows net operating losses generated prior toDecember 31, 2017 (including our NOL carryforwards) to be fully deducted against 100% of taxable income until fully utilized or expired (see "Tax Cuts andJobs Act" below for further discussion of the Tax Act). Our NOL carryforwards expire periodically through 2030.We also had $23.3 million of alternative minimum tax ("AMT") credit carryforwards available to offset regular federal income tax requirements. Since thecorporate AMT has been repealed in the Tax Act for tax years beginning after December 31, 2017, our AMT credit carryforwards that have not yet been usedare refundable in future years. We will use AMT credits to offset any regular income tax liability in years 2018 through 2020, with 50% of remaining AMTcredits refunded in each of the 2018, 2019, and 2020 tax years and all remaining credits refunded in tax year 2021 (see "Tax Cuts and Jobs Act" below forfurther discussion of the Tax Act).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 taxassets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods inwhich those temporary differences become deductible. Management considers taxable income in carryback years, the scheduled reversal of deferred taxliabilities, tax planning strategies and projected future taxable income in making this assessment. Due to uncertainties surrounding the realization of some ofour deferred tax assets, primarily including state NOL carryforwards sustained during the prior years and expiring tax benefits, we have a valuation allowanceagainst our deferred tax assets. When recognized, the tax benefits relating to any reversal of this valuation allowance will be recorded as a reduction ofincome tax expense. The (decrease) increase in the valuation allowance was $(2.7) million, $(5.5) million and $2.0 million in 2017, 2016 and 2015,respectively.The decrease in the valuation allowance for 2017 was primarily due to the expiration of state NOL carryforwards and the related reversal of their valuationallowances and the utilization of capital losses. The decrease in the valuation allowance for 2016 was primarily due to the expiration of state NOLcarryforwards and the related reversal of their valuation allowances. The increase in the valuation allowance in 2015 was primarily due to unutilized stateNOL carryforwards and Federal Separate Return Limitation Year losses that were expected to expire.84Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSOther. 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 triggera review 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(in millions of dollars): Year Ended December 31, 2017 2016 2015Gross unrecognized tax benefits at beginning of period $1.8 $1.7 $2.2Gross increases for tax positions of prior years — 0.1 0.1Gross decreases for tax positions of prior years (0.3) — —Gross decrease for tax positions relating to lapse of a statute of limitation — — (0.6)Gross unrecognized tax benefits at end of period $1.5 $1.8 $1.7If and when the $1.5 million, $1.8 million and $1.7 million of gross unrecognized tax benefits at December 31, 2017, December 31, 2016 andDecember 31, 2015, respectively, are recognized, $0.4 million, $0.7 million and $0.6 million will be reflected, respectively, in our income tax provision andthus affect the effective tax rate in future periods.The change during 2017 was primarily due to a change in tax positions. The change in gross unrecognized tax benefits during 2016 was primarily due toa change in tax positions. The change in gross unrecognized tax benefits during 2015 was primarily due to the expiration of statutes.In addition, we recognize interest and penalties related to unrecognized tax benefits in the income tax provision. We had $0.1 million and $0.2 millionaccrued for interest and penalties at December 31, 2017 and December 31, 2016, respectively. Of these amounts, none were considered current and, as such,were included in Long-term liabilities on the Consolidated Balance Sheets at December 31, 2017 and December 31, 2016. We recognized a decrease ininterest and penalty of $0.1 million in our tax provision in 2017. There was no change to interest and penalty in 2016. We recognized decrease in interest andpenalty of $1.2 million in our tax provision in 2015.In connection with the gross unrecognized tax benefits (including interest and penalties) denominated in foreign currency, we incurred a foreign currencytranslation adjustment in 2015. During 2015, the foreign currency impact on such liabilities resulted in currency translation adjustments of $0.1 million,which increased Other comprehensive income.We do not expect our gross unrecognized tax benefits to significantly change within the next 12 months.Tax Cuts and Jobs Act. On December 22, 2017, the U.S. government enacted the Tax Act, which makes broad and complex changes to the U.S. tax code,including, but not limited to: (i) reducing the U.S. federal corporate tax rate from 35% to 21%; (ii) requiring companies to pay a one-time transition tax oncertain unrepatriated earnings of foreign subsidiaries; (iii) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (iv)requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (v) eliminating the corporate AMT andchanging how existing AMT credits can be realized; (vi) creating a new limitation on deductible interest expense; and (vii) changing rules related to uses andlimitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.The SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting underASC 740 (see Note 1). In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accountingunder ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine areasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included inthe financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before theenactment of the Tax Act.Our accounting for the following elements of the Tax Act is incomplete. However, we were able to make reasonable estimates of certain effects and,therefore, recorded provisional adjustments in the fourth quarter of 2017 as described below.85Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSReduction of US Federal Corporate Tax Rate. The Tax Act reduces the corporate tax rate to 21%, effective January 1, 2018. For certain of our deferred taxassets, we have recorded a provisional decrease of $29.0 million, with a corresponding net increase to deferred income tax expense for the year endedDecember 31, 2017. While we are able to make a reasonable estimate of the impact of the reduction in corporate rate, our estimate may be affected by otheranalyses related to the Tax Act, including, but not limited to, our calculation of deemed repatriation of deferred foreign income and the state tax effect ofadjustments made to federal temporary differences.Deemed Repatriation Transition Tax. The Deemed Repatriation Transition Tax ("Transition Tax") is a tax on previously untaxed accumulated and currentearnings and profits ("E&P") of certain of our foreign subsidiaries. To determine the amount of the Transition Tax, we must determine, in addition to otherfactors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. We were able tomake a reasonable estimate of the Transition Tax and recorded a provisional Transition Tax obligation of $3.7 million. In addition, we have accrued $2.2million for withholding tax since our earnings in Canada are no longer permanently reinvested. However, we are continuing to gather additional informationto more precisely compute the amount of the Transition Tax.Internal Revenue Code Section 162(m). The Tax Act modifies Section 162(m) of the Internal Revenue Code ("Section 162(m)") by: (i) expanding thescope of covered employees to include the chief financial officer; (ii) providing that any individual that becomes a covered employee for a taxable yearbeginning after December 31, 2016 would remain a covered employee for all future years; and (iii) eliminating the exceptions for commissions andperformance-based compensation from the $1.0 million deduction limit. These changes do not apply to compensation stemming from contracts entered intoon or before November 2, 2017, unless such contracts were materially modified on or after that date. Compensation agreements entered into and share-basedpayment awards granted after this date will be subject to the revised terms of Section 162(m). We were able to make a reasonable estimate of the Tax Actmodifications to Section 162(m) and recorded a provisional Section 162(m) obligation of $2.3 million. However, we are continuing to gather additionalinformation to more precisely compute the amount of the Section 162(m) limitation.13. Net Income (Loss) Per Share and Stockholders' EquityNet Income (Loss) Per Share. Basic net income (loss) per share is computed by dividing distributed and undistributed net income (loss) allocable tocommon shares by the weighted-average number of common shares outstanding during the applicable period. The basic weighted-average number ofcommon shares outstanding during the period excludes unvested share-based payment awards. Diluted net income (loss) per share was calculated under thetreasury stock method for 2017, 2016 and 2015, which in all years was more dilutive than the two-class method.The following table sets forth the computation of basic and diluted net income (loss) per share for the periods presented (in millions of dollars, exceptshare and per share amounts): Year Ended December 31, 2017 2016 2015Numerator: Net income (loss) $45.4 $91.7 $(236.6)Denominator – Weighted-average common shares outstanding (in thousands): Basic 16,996 17,813 17,201Add: dilutive effect of non-vested common shares, restricted stock units andperformance shares 263 220 —Diluted 17,259 18,033 17,201 Net income (loss) per common share, Basic: $2.67 $5.15 $(13.76)Net income (loss) per common share, Diluted: $2.63 $5.09 $(13.76)Net-share-settled warrants ("Warrants") relating to approximately 3.7 million notional common shares of our common stock at an exercise price ofapproximately $60.70 per share were settled during a period from July 1, 2015 through December 18, 2015. In total, we issued 1,015,185 shares of ourcommon stock in connection with the Warrants and paid a de minimis amount in cash to the holders for fractional shares at the end of the settlement period.86Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following securities were excluded from the weighted-average diluted shares computation for the periods presented as their inclusion would havebeen anti-dilutive (in thousands of shares): Year Ended December 31, 2017 2016 2015Non-vested common shares, restricted stock units and performance shares 52 50 302Warrants — — 639Total excluded 52 50 941Dividends. During 2017, 2016 and 2015, we paid a total of approximately $35.0 million ($2.00 per common share), $32.4 million ($1.80 per commonshare) and $28.1 million ($1.60 per common share), respectively, in cash dividends to stockholders, including the holders of restricted stock, and dividendequivalents to the holders of certain restricted stock units and performance shares.Treasury Stock. From time to time, we repurchase shares pursuant to a stock repurchase program authorized by our Board of Directors. Repurchasetransactions will occur at such times and prices as management deems appropriate and will be funded with our excess liquidity after giving consideration to,among other things, internal and external growth opportunities and future cash flows. Repurchases may be in open-market transactions or in privatelynegotiated transactions and the program may be modified or terminated by our Board of Directors at any time. Repurchases of our common stock pursuant tothe stock repurchase program is recorded as Treasury stock and consisted of the following for each period presented: Year Ended December 31, 2017 2016 2015Number of common shares repurchased 938,680 443,838 647,520Weighted-average repurchase price (dollars per share) $82.97 $78.59 $76.35Total cost of repurchased common shares (in millions of dollars) $77.8 $34.9 $49.4At December 31, 2017 and December 31, 2016, $110.5 million and $88.4 million, respectively, were available to repurchase our common shares pursuantto the stock repurchase program.Preferred Stock. In connection with a tax asset protection rights plan, our Board of Directors declared a dividend, payable April 22, 2016, of one right foreach outstanding share of our common stock. In general, if the rights become exercisable, each right would allow its holder to purchase one one-hundredth ofa share of our Series A Preferred Stock. The authorized number of shares of Series A Preferred Stock is 900,000.87Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS14. Supplemental Cash Flow Information Year Ended December 31, 2017 2016 2015 (in millions of dollars)Interest paid$21.1 $17.7 $22.1Non-cash investing and financing activities (included in Accounts payable): Unpaid purchases of property and equipment$7.4 $4.6 $10.5Stock repurchases not yet settled$0.1 $1.8 $0.2Acquisition of property and equipment through capital leasing arrangements$1.2 $0.2 $— December 31, 2017 2016 2015Components of cash, cash equivalents and restricted cash: Cash and cash equivalents$51.1 $55.2 $72.5Restricted cash included in Prepaid expenses and other current assets0.3 0.3 0.3Restricted cash included in Other assets12.9 12.2 10.9Total cash, cash equivalents and restricted cash shown in the Statements of Consolidated CashFlows$64.3 $67.7 $83.715. 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 theUnited States and one in Canada. Consistent with the manner in which our chief operating decision maker reviews and evaluates our business, the FabricatedProducts business is treated as a single operating segment. At December 31, 2017, approximately 63% of our employees were covered by collectivebargaining agreements and approximately 12% of our employees were covered by collective bargaining agreements with expiration dates occurring withinone year from December 31, 2017.In addition to the Fabricated Products segment, we have a business unit, All Other, which provides general and administrative support for our operations.For purposes of segment reporting under GAAP, we treat the Fabricated Products segment as a reportable segment. All Other is not considered a reportablesegment.The accounting policies of our 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.88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 (inmillions of dollars): Year Ended December 31, 2017 2016 2015Net sales: Fabricated Products$1,397.5 $1,330.6 $1,391.9Segment operating income (loss): Fabricated Products201.3 229.6 190.8All Other(50.6) (51.8) (536.7)Total operating income (loss)150.7 177.8 (345.9)Interest expense(22.2) (20.3) (24.1)Other income (expense) , net4.5 (10.3) (1.8)Income (loss) before income taxes$133.0 $147.2 $(371.8)Depreciation and amortization: Fabricated Products$39.0 $35.4 $31.9All Other0.7 0.6 0.5Total depreciation and amortization$39.7 $36.0 $32.4Capital expenditures: Fabricated Products$75.3 $75.6 $62.4All Other0.2 0.5 0.7Total capital expenditures$75.5 $76.1 $63.1 December 31, 2017 2016 2015Assets: Fabricated Products$1,046.8 $969.4 $904.7All Other1338.4 474.1 342.2Total assets$1,385.2 $1,443.5 $1,246.9__________________1. Assets in All Other represent primarily all of our cash, cash equivalents and restricted cash, short-term investments, financial derivative assets, deferredcompensation program assets and net deferred income tax assets.89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, 2017 2016 2015Net sales: Aero/HS products$653.7 $675.4 $695.5Automotive Extrusions217.3 188.8 199.2GE products476.2 420.1 426.1Other products50.3 46.3 71.1Total net sales$1,397.5 $1,330.6 $1,391.9Geographic 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, 2017 2016 2015Net sales to unaffiliated customers: Fabricated Products – Domestic$1,337.3 $1,278.6 $1,321.3Foreign160.2 52.0 70.6Total net sales$1,397.5 $1,330.6 $1,391.9Income taxes paid: Fabricated Products – Domestic$1.2 $0.7 $0.6Foreign0.1 0.5 1.7Total income taxes paid$1.3 $1.2 $2.3 December 31, 2017 2016 2015Long-lived assets:2 Fabricated Products – Domestic$536.6 $494.7 $459.6Foreign30.2 31.4 30.9Total Fabricated Products long-lived assets566.8 526.1 490.5All Other – Domestic4.6 4.8 4.9Total All Other long-lived assets4.6 4.8 4.9Total long-lived assets$571.4 $530.9 $495.4__________________1. Foreign net sales reflect sales shipped from our London, Ontario production facility.2. 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 2017, 2016 and 2015.For the years ended December 31, 2017, December 31, 2016 and December 31, 2015, one customer represented 27%, 26% and 25%, respectively, ofFabricated Products Net sales. For the year ended December 31, 2017, a second customer represented90Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS12% of Fabricated Products Net sales. For each of the years ended December 31, 2016, and December 31, 2015, a second customer represented 10% ofFabricated Products Net sales.One individual customer accounted for 22% and another individual customer accounted for 14% of the trade receivables balance at December 31, 2017.One individual customer accounted for 18% and two individual customers each accounted for 14% of the trade receivables balance at December 31, 2016.Information for export sales and primary aluminum supply from our major suppliers were as follows: Year Ended December 31, 2017 2016 2015Percentage of Net sales: Export sales18% 19% 19% Percentage of total annual primary aluminum supply (lbs): Supply from our top five major suppliers85% 84% 86%Supply from our largest supplier36% 32% 28%Supply from our second and third largest suppliers combined33% 32% 36%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 theremaining principal balance of our 8.25% Senior Notes. The 5.875% Senior Notes were issued by Kaiser Aluminum Corporation ("Parent") pursuant to anindenture dated May 12, 2016 ("Indenture") with Wells Fargo Bank, National Association, as trustee ("Trustee"). The obligations of the Parent under theIndenture are guaranteed by Kaiser Aluminum Investments Company, Kaiser Aluminum Fabricated Products, LLC and Kaiser Aluminum Washington, LLC,("Guarantor Subsidiaries"). An additional Guarantor Subsidiary, Kaiser Aluminum Alexco, LLC, merged with and into Kaiser Aluminum Fabricated Products,LLC during the first quarter of 2017. All Guarantor Subsidiaries are 100% owned by the Parent. The guarantees are full and unconditional and joint andseveral but have customary releases in the following situations: (i) the sale of the Guarantor Subsidiary or all of its assets; (ii) the declaration of a GuarantorSubsidiary as an unrestricted subsidiary under the Indenture; (iii) the termination or release of the Guarantor Subsidiary's guarantee of certain otherindebtedness; or (iv) our exercise of legal defeasance or covenant defeasance or the discharge of our obligations under the Indenture.The following condensed consolidating financial information as of December 31, 2017 and December 31, 2016, and for the years ended December 31,2017, December 31, 2016 and December 31, 2015 present: (i) the financial position, results of operation and cash flows for each of (a) Parent, (b) theGuarantor Subsidiaries on a combined basis and (c) the Non-Guarantor Subsidiaries on a combined basis; (ii) the "Consolidating Adjustments," whichrepresent the adjustments necessary to eliminate the investments in our subsidiaries, other intercompany balances and other intercompany sales and cost ofsales among Parent, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries; and (iii) the resulting totals, reflecting information for us on aconsolidated basis, as reported. The condensed consolidating financial information should be read in conjunction with the consolidated financial statementsherein.The "Non-Guarantor Subsidiaries" include Kaiser Aluminum Mill Products, Inc., Kaiser Aluminum Canada Limited, Trochus Insurance Company, DCOManagement, LLC (which was dissolved in the fourth quarter of 2016 and ceased to exist as of January 1, 2017), Kaiser Aluminum France, S.A.S. and KaiserAluminum Beijing Trading Company. Kaiser Aluminum Mill Products, Inc. was included in the "Guarantor Subsidiaries" under the indenture covering the8.25% Senior Notes but is not a Guarantor Subsidiary under the Indenture. Historical periods have not been restated to move Kaiser Aluminum Mill Products,Inc. from the Guarantor Subsidiaries category to the Non-Guarantor Subsidiaries category because the impact of this change to the financial position, resultsof operation and cash flows with respect to the Guarantor Subsidiaries on a combined basis and the Non-Guarantor Subsidiaries on a combined basis isimmaterial.91Table of ContentsKAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCONDENSED CONSOLIDATING BALANCE SHEET(In millions of dollars)December 31, 2017 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedASSETS Current assets: Cash and cash equivalents $— $48.4 $2.7 $— $51.1Short-term investments — 183.7 — — 183.7Receivables: Trade receivables, net — 160.1 4.9 — 165.0Intercompany receivables 22.8 0.1 0.7 (23.6) —Other — 14.7 0.8 — 15.5Inventories — 198.7 9.2 — 207.9Prepaid expenses and other current assets 0.1 32.9 0.4 — 33.4Total current assets 22.9 638.6 18.7 (23.6) 656.6Investments in and advances to subsidiaries 1,097.7 48.2 — (1,145.9) —Property, plant and equipment, net — 541.2 30.2 — 571.4Long-term intercompany receivables — — 12.4 (12.4) —Deferred tax assets, net — 67.3 — 4.7 72.0Intangible assets, net — 25.0 — — 25.0Goodwill — 18.8 — — 18.8Other assets — 41.4 — — 41.4Total $1,120.6 $1,380.5 $61.3 $(1,177.2) $1,385.2LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $1.9 $81.4 $6.7 $— $90.0Intercompany payable — 23.5 0.1 (23.6) —Accrued salaries, wages and related expenses — 41.0 1.6 — 42.6Other accrued liabilities 2.8 46.2 1.0 (9.5) 40.5Total current liabilities 4.7 192.1 9.4 (33.1) 173.1Net liabilities of Salaried VEBA — 31.9 — — 31.9Deferred tax liabilities — — 4.3 — 4.3Long-term intercompany payable — 12.4 — (12.4) —Long-term liabilities — 58.0 2.0 — 60.0Long-term debt 369.6 — — — 369.6Total liabilities 374.3 294.4 15.7 (45.5) 638.9 Total stockholders’ equity 746.3 1,086.1 45.6 (1,131.7) 746.3Total $1,120.6 $1,380.5 $61.3 $(1,177.2) $1,385.292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 52.6 (0.7) (14.7) 40.1Total 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) $1,443.593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, 2017 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedNet sales $— $1,365.3 $115.7 $(83.5) $1,397.5Costs and expenses: Cost of products sold: Cost of products sold, excluding depreciation andamortization and other items — 1,085.5 101.1 (81.3) 1,105.3Unrealized gain on derivative instruments — (19.4) — — (19.4)Depreciation and amortization — 37.5 2.2 — 39.7Selling, general, administrative, research anddevelopment: Selling, general, administrative, research anddevelopment 4.5 88.3 6.9 (2.2) 97.5Net periodic postretirement benefit cost relating toSalaried VEBA — 4.5 — — 4.5Total selling, general, administrative, research anddevelopment 4.5 92.8 6.9 (2.2) 102.0Goodwill impairment — 18.4 — — 18.4Other operating charges, net — 0.8 — — 0.8Total costs and expenses 4.5 1,215.6 110.2 (83.5) 1,246.8Operating (loss) income (4.5) 149.7 5.5 — 150.7Other (expense) income: Interest expense (20.7) (1.7) — 0.2 (22.2)Other income, net — 4.0 0.7 (0.2) 4.5(Loss) income before income taxes (25.2) 152.0 6.2 — 133.0Income tax provision — (95.2) (1.9) 9.5 (87.6)Earnings in equity of subsidiaries 70.6 4.3 — (74.9) —Net income $45.4 $61.1 $4.3 $(65.4) $45.4 Comprehensive income $45.4 $61.1 $4.3 $(65.4) $45.494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) $86.795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)96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, 2017 Parent GuarantorSubsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedCash flows from operating activities: Net cash (used in) provided by operating activities $(24.2) $156.9 $8.8 $— $141.5Cash flows from investing activities: Capital expenditures — (74.7) (0.8) — (75.5)Purchase of available for sale securities — (247.5) — — (247.5)Proceeds from disposition of available for sale securities — 296.9 — — 296.9Proceeds from disposal of property, plant and equipment — 0.6 — — 0.6Intercompany loans receivable 143.2 — (7.6) (135.6) —Net cash provided by (used in) investing activities 143.2 (24.7) (8.4) (135.6) (25.5)Cash flows from financing activities: Repayment of capital lease — (0.4) — — (0.4)Cancellation of shares to cover employees' taxwithholdings upon vesting of non-vested shares (4.5) — — — (4.5)Repurchase of common stock (79.5) — — — (79.5)Cash dividends and dividend equivalents paid (35.0) — — — (35.0)Intercompany loans payable — (135.6) — 135.6 —Net cash used in financing activities (119.0) (136.0) — 135.6 (119.4)Net (decrease) increase in cash and cash equivalentsduring the period — (3.8) 0.4 — (3.4)Cash, cash equivalents and restricted cash at beginning ofperiod — 65.1 2.6 — 67.7Cash, cash equivalents and restricted cash at end of period $— $61.3 $3.0 $— $64.397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 Guarantor Subsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedCash flows from operating activities: Net cash provided by operating activities $177.7 $178.7 $9.2 $(200.0) $165.6Cash 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 salesecurities — 55.0 — — 55.0Intercompany loans receivable1 (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 of8.25% 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 and dividend equivalents paid (32.4) — — — (32.4)Cash dividends paid to Parent — (200.0) — 200.0 —Intercompany loans payable1 (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 equivalentsduring the period — (17.9) 1.9 — (16.0)Cash, cash equivalents and restricted cash at beginningof period — 83.0 0.7 — 83.7Cash, cash equivalents and restricted cash at end ofperiod $— $65.1 $2.6 $— $67.7________________1 As a result of the Parent's additional liquidity associated with the 5.875% Senior Notes (see Note 8), we classify all intercompany receivables andpayables as Intercompany loans receivable and Intercompany loans payable, respectively, and therefore categorize changes in these balances within theinvesting and financing sections, respectively, of the Condensed Consolidating Statement of Cash Flows.98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 GuarantorSubsidiaries Non-GuarantorSubsidiaries ConsolidatingAdjustments ConsolidatedCash flows from operating activities: Net cash provided by (used in) operating activities $285.7 $(126.3) $0.3 $— $159.7Cash 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 sharesand dividend payment on unvested shares expected tovest — 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 and dividend equivalents paid (28.1) — — — (28.1)Intercompany loans payable — (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 theperiod — (102.2) (2.1) — (104.3)Cash, cash equivalents and restricted cash at beginning ofperiod — 185.2 2.8 — 188.0Cash, cash equivalents and restricted cash at end of period $— $83.0 $0.7 $— $83.799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 2017 and 2016 (in millions of dollars, except per shareamounts): QuarterEnded31-Mar QuarterEnded30-Jun QuarterEnded30-Sep QuarterEnded31-Dec2017 Net sales $355.3 $356.3 $332.8 $353.1Cost of products sold, excluding depreciation, amortization and other items $277.8 $277.7 $267.2 $282.6Unrealized (gain) loss on derivative instruments $(15.1) $11.9 $(10.8) $(5.4)Gross profit $92.6 $66.7 $76.4 $75.9Operating income $59.5 $11.4 $39.8 $40.0Net income (loss)1 $36.0 $4.7 $19.9 $(15.2)Net income (loss) per common share, Basic $2.07 $0.28 $1.18 $(0.90)Net income (loss) per common share, Diluted $2.04 $0.27 $1.16 $(0.90)Dividends declared per common share $0.50 $0.50 $0.50 $0.50________________1 The quarter ended June 30, 2017 reflected an $18.4 million goodwill impairment charge (see Note 3). The quarter ended December 31, 2017 included thetax provision effect of $37.2 million due to the Tax Act (see Note 12). 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 $1.37Dividends declared per common share $0.45 $0.45 $0.45 $0.4518. Subsequent EventsDividend Declaration. On January 16, 2018, we announced that our Board of Directors declared a quarterly cash dividend of $0.55 per common share, orapproximately $9.3 million (including dividend equivalents), which was paid on February 15, 2018 to stockholders of record at the close of business onJanuary 26, 2018.100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 requiredto be disclosed in our reports under the Securities Exchange Act of 1934 is processed, recorded, summarized and reported within the time periods specified inthe Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to management, including theprincipal executive officer and principal financial officer, to allow for timely decisions regarding required disclosure. In designing and evaluating thedisclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives and management is required to apply our judgment in evaluating the cost-benefitrelationship of possible controls and procedures. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures wasperformed as of the end of the period covered by this Report under the supervision of and with the participation of our management, including the principalexecutive officer and principal financial officer. Based on that evaluation, our principal executive officer and principal financial officer concluded that ourdisclosure controls and procedures were effective as of December 31, 2017 at the reasonable assurance level.Management's Annual Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequateinternal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reportingis designed under the supervision of our principal executive officer and principal financial officer and effected by our Board of Directors, management andother personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with accounting 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 withaccounting principles generally accepted in the United States and that our receipts and expenditures are being made only in accordance withauthorizations of our management 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 systemsdetermined to 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 assessedthe effectiveness of our internal control over financial reporting as of December 31, 2017, using the criteria set forth by the Committee of SponsoringOrganizations of the Treadway Commission in Internal Control - Integrated Framework as established in 2013. Based on that evaluation, our management,including our principal executive officer and principal financial officer, concluded that our internal control over financial reporting was effective as ofDecember 31, 2017.Deloitte & Touche LLP, the independent registered public accounting firm that audited our consolidated financial statements for the year endedDecember 31, 2017 included in Item 8. "Financial Statements and Supplementary Data" of this Report, has issued an attestation report on the effectiveness ofour internal control over financial reporting.Changes in Internal Controls Over Financial Reporting. We had no changes in our internal control over financial reporting during our most recentlycompleted fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Item 9B. Other InformationNone.101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," "ProposalsRequiring Your Vote – Proposal 1 – Election of Directors," "Section 16(a) Beneficial Ownership Reporting Compliance" and "Corporate Governance" in ourproxy statement for the 2018 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 InsiderParticipation" in our proxy statement for the 2018 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 PlanInformation" and "Principal Stockholders and Management Ownership" in our proxy statement for the 2018 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 2018 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" inour proxy statement for the 2018 annual meeting of stockholders.102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 thenotes thereto included in Item 8. "Financial Statements and Supplementary Data" and incorporated herein by reference.3. ExhibitsExhibitNumber Description3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the RegistrationStatement on 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 (incorporatedby reference 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 Secretaryof State of the State of Delaware on April 7, 2016 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filedby the Company 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,filed by 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 onForm 8-K, filed by the Company on June 8, 2015, File No. 000-52105). 103ExhibitNumber Description4.1 Indenture, dated May 12, 2016, by and among Kaiser Aluminum Corporation, each of the guarantors named therein and Wells FargoBank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed by theCompany on May 12, 2016, File No. 001-09447). 4.2 Form of 5.875% Senior Note due 2024 (included in Exhibit 4.1). 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 attachedas Exhibit 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 WellsFargo Capital Finance, LLC, as joint bookrunners and joint lead arrangers, Wells Fargo Capital Finance, LLC, as documentationagent, and Bank of America, N.A., as syndication agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K,filed by the Company on December 1, 2015, File No. 000-52105). 10.2 Description of Compensation of Directors (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed bythe Company on July 28, 2017 File No. 001-09447) **10.3 Employment Agreement, dated as of July 15, 2017, 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 July 17, 2017, File No. 001-09447). **10.4 Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K, filed bythe Company on July 6, 2006, File No. 000-52105). **10.5 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). **10.6 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). **10.7 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). **10.8 Amendment to the Kaiser Aluminum Fabricated Products Restoration Plan (incorporated by reference to Exhibit 10.4 to the CurrentReport on Form 8-K, filed by the Company on December 31, 2008, File No. 000-52105). 10.9 Amended and Restated Director Designation Agreement dated February 13, 2015 (incorporated by reference to Exhibit 10.1 to theCurrent Report on Form 8-K, filed by the Company on February 13, 2015, File No. 000-52105). **10.10 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). **10.11 Form of Change in Control Severance Agreement for John Barneson (incorporated by reference to Exhibit 10.32 to the Annual Reporton Form 10-K for the period ended December 31, 2002, filed by the Company on March 31, 2003, File No. 001-9447). **10.12 Form of Amendment to the Change in Control Severance Agreement with John Barneson, John M. Donnan, Keith A. Harvey andDaniel J. Rinkenberger (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed by the Company onDecember 31, 2008, File No. 000-52105). 104ExhibitNumber Description**10.13 Kaiser Aluminum Corporation Amended and Restated 2006 Equity and Performance Incentive Plan (incorporated by reference toExhibit 10.7 to the Quarterly Report on Form 10-Q, filed by the Company on April 24, 2013, File No. 000-52105). **10.14 Kaiser Aluminum Corporation 2016 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to theCurrent Report on Form 8-K, filed by the Company on May 26, 2016, File No. 001-09447). **10.15 Form of Non-Employee Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to the QuarterlyReport on Form 10-Q, filed by the Company on July 27, 2016, File No. 001-09447). **10.16 2015 Form of Executive Officer Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to the Current Reporton Form 8-K, filed by the Company on March 9, 2015, File No. 000-52105). **10.17 2015 and 2016 Form of Executive Officer Performance Shares Award Agreement (incorporated by reference to Exhibit 10.3 to theCurrent Report on Form 8-K, filed by the Company on March 9, 2015, File No. 000-52105). **10.18 2015-2017 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed by theCompany on March 9, 2015, File No. 000-52105). **10.19 Description of 2015 Long-Term Incentive Umbrella Plan under the Kaiser Aluminum Corporation Amended and Restated 2006Equity and Performance Incentive Plan (incorporated by reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q, filed by theCompany on April 30, 2015, File No. 000-52105). **10.20 2016 Form of Executive Officer Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the CurrentReport on Form 8-K, filed by the Company on March 10, 2016, File No. 000-52105). **10.21 Form of Amendment to 2016 Restricted Stock Unit Award Agreement with Jack Hockema and John Barneson (incorporated byreference to Exhibit 10.5 to the Current Report on Form 8-K, filed by the Company on March 9, 2017, File No. 001-09447). **10.22 2016-2018 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed by theCompany on March 10, 2016, File No. 000-52105). **10.23 Description of 2016 Long-Term Incentive Umbrella Plan under the Kaiser Aluminum Corporation Amended and Restated 2006Equity and Performance Incentive Plan (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q, filed by theCompany on April 22, 2016, File No. 001-09447). **10.24 2017 Short-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by the Companyon March 9, 2017, File No. 001-09447). **10.25 2017 Form of Executive Officer Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the CurrentReport on Form 8-K, filed by the Company on March 9, 2017, File No. 001-09447). **10.26 2017 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, 2017, File No. 001-09447). **10.27 Amended and Restated 2017-2019 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Quarterly Report onForm 10-Q, filed by the Company on July 28, 2017, File No. 001-09447). **10.28 Description of 2017 Short-Term Incentive Umbrella Plan under the Kaiser Aluminum Corporation 2016 Equity and IncentiveCompensation Plan (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q, filed by the Company on April21, 2017, File No. 001-09447). 105ExhibitNumber Description**10.29 Description of 2017 Long-Term Incentive Umbrella Plan under the Kaiser Aluminum Corporation 2016 Equity and IncentiveCompensation Plan (incorporated by reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q, filed by the Company on April21, 2017, 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 Form10-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.106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 itsbehalf by the undersigned, thereunto duly authorized. KAISER ALUMINUM CORPORATION /s/ Jack A. Hockema Jack A. Hockema Chief Executive Officer and ChairmanDate: February 22, 2018Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in 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, 2018Jack A. Hockema /s/ Daniel J. Rinkenberger Executive Vice President and ChiefFinancial Officer(Principal Financial Officer) Date: February 22, 2018Daniel J. Rinkenberger /s/ Neal West Vice President and ChiefAccounting Officer(Principal Accounting Officer) Date: February 22, 2018Neal West /s/ Carolyn Bartholomew Director Date: February 22, 2018Carolyn Bartholomew Director David Foster Director L. Patrick Hassey /s/ Teresa A. Hopp Director Date: February 22, 2018Teresa A. Hopp /s/ Lauralee Martin Director Date: February 22, 2018Lauralee Martin /s/ Alfred E. Osborne, Jr., Ph.D. Director Date: February 22, 2018Alfred E. Osborne, Jr., Ph.D. Director Jack Quinn /s/ Thomas M. Van Leeuwen Director Date: February 22, 2018Thomas M. Van Leeuwen /s/ Brett E. Wilcox Director Date: February 22, 2018Brett E. Wilcox 107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, 2017 2016 2015 2014 2013 Earnings: Income (loss) from continuing operations before taxes $133.0 $147.2 $(371.8) $107.1 $143.2Fixed charges 27.0 26.0 28.6 42.5 41.6Interest capitalized (2.2) (2.9) (1.8) (2.5) (3.4)Amortization of interest capitalized 1.4 1.1 1.0 0.9 0.8Earnings (loss) $159.2 $171.4 $(344.0) $148.0 $182.2 Fixed Charges: Interest expense, including amortization of discounts,debt issuance costs and interest component of rentexpense $22.2 $20.3 $24.1 $37.5 $35.7Interest capitalized 2.2 2.9 1.8 2.5 3.4Amount representative of the interest factor in rents 2.6 2.8 2.7 2.5 2.5Fixed charges $27.0 $26.0 $28.6 $42.5 $41.6 Ratio of earnings to fixed charges 5.9 6.6 N/A 3.5 4.4 Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statement Nos. 333-211641, 333-170513 and 333-135613 on Form S-8 of our report datedFebruary 22, 2018, relating to the consolidated financial statements of Kaiser Aluminum Corporation and the effectiveness of Kaiser Aluminum Corporation'sinternal control over financial reporting, appearing in this Annual Report on Form 10-K of Kaiser Aluminum Corporation for the year ended December 31,2017./s/ DELOITTE & TOUCHE LLPCosta Mesa, CaliforniaFebruary 22, 2018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 thestatements made, 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 thefinancial condition, 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 inExchange Act 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)) forthe registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the 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 change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant’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 reasonablylikely to adversely 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 controlover financial reporting. /s/ Jack A. Hockema Jack A. Hockema Chief Executive Officer and Chairman (Principal Executive Officer)Date: February 22, 2018A 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 thestatements made, 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 thefinancial condition, 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 inExchange Act 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)) forthe registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the 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 change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant’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 reasonablylikely to adversely 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 controlover financial reporting. /s/ Daniel J. Rinkenberger Daniel J. Rinkenberger Executive Vice President and Chief Financial Officer (Principal Financial Officer)Date: February 22, 2018A 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, 2018In connection with the Annual Report on Form 10-K by Kaiser Aluminum Corporation, a Delaware corporation (the “Company”), for the year endedDecember 31, 2017 (the “Report”), as filed on the date hereof with the Securities and Exchange Commission, the undersigned, Jack A. Hockema, ChiefExecutive Officer and Chairman of the Company, does hereby certify, pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-OxleyAct 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 asof the 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, 2018In connection with the Annual Report on Form 10-K by Kaiser Aluminum Corporation, a Delaware corporation (the “Company”), for the year endedDecember 31, 2017 (the “Report”), as filed on the date hereof with the Securities and Exchange Commission, the undersigned, Daniel J. Rinkenberger,Executive Vice President and Chief Financial Officer of the Company, does hereby certify, pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 ofthe 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 asof the 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