What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-10-26 · 420 added, 493 removed, 672 unchanged (58% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 30, 2020

December 31, 2019

As of March 31, 2021

As of December 31, 2020

(In millions of dollars, except share

2 unchanged sentences

Cash and cash equivalents

Short-term investments

Trade receivables, net

4 unchanged sentences

Operating lease assets

Deferred tax assets, net

Intangible assets, net

6 unchanged sentences

Long-term portion of operating lease liabilities

Pension and other postretirement benefits

Net liabilities of Salaried VEBA

5 unchanged sentences

Stockholders’ equity:

Preferred stock, 5,000,000 shares authorized at both September 30, 2020 and December 31, 2019;

no shares were issued and outstanding at September 30, 2020 and December 31, 2019

Common stock, par value $ 0.01 , 90,000,000 shares authorized at both September 30, 2020 and at December 31, 2019;

22,647,455 shares issued and 15,812,169 shares outstanding at September 30, 2020;

22,550,827 shares issued and 15,868,304 shares outstanding at December 31, 2019

Preferred stock, 5,000,000 shares authorized at both March 31, 2021 and

December 31, 2020;

no shares were issued and outstanding at

March 31, 2021 and December 31, 2020

Common stock, par value $ 0.01 , 90,000,000 shares authorized at both

March 31, 2021 and December 31, 2020;

22,683,224 shares issued and

15,847,938 shares outstanding at March 31, 2021;

22,647,455 shares

issued and 15,812,169 shares outstanding at December 31, 2020

Additional paid in capital

Retained earnings

Treasury stock, at cost, 6,835,286 shares at September 30, 2020 and 6,682,523 shares at December 31, 2019, respectively

Treasury stock, at cost, 6,835,286 shares at both March 31, 2021 and

December 31, 2020

Accumulated other comprehensive loss

3 unchanged sentences

STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)

Quarter Ended

Nine Months Ended

September 30,

Quarter Ended March 31,

(In millions of dollars, except share and per share amounts)

3 unchanged sentences

Selling, general, administrative, research and development

Restructuring costs

Other operating charges (income), net

Restructuring benefit

Total costs and expenses

Operating income

Other income (expense):

Other expense:

Interest expense

Other expense, net – Note 11

(Loss) income before income taxes

Income before income taxes

Income tax benefit (provision)

4 unchanged sentences

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

Quarter Ended

Nine Months Ended

September 30,

Quarter Ended March 31,

(In millions of dollars)

3 unchanged sentences

Cash flow hedges

Fair value hedges

Foreign currency translation

4 unchanged sentences

STATEMENTS OF CONSOLIDATED STOCKHOLDERS ’ EQUITY (UNAUDITED)

Nine Months Ended September 30, 2020

Quarter Ended March 31, 2021

Outstanding 1,2

3 unchanged sentences

BALANCE, December 31, 2020

Other comprehensive loss, net of tax

Common shares issued (including impacts from Long-Term Incentive programs)

Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares

Repurchase of common stock 2

Cash dividends declared 3

Amortization of unearned equity compensation

BALANCE, March 31, 2020

Other comprehensive income, net of tax

Common shares issued (including impacts from Long-Term Incentive programs)

Cash dividends declared 3

Amortization of unearned equity compensation

BALANCE, June 30, 2020

Other comprehensive income, net of tax

Common shares issued (including impacts from

Long-Term Incentive programs)

Cancellation of shares to cover employees' tax

withholdings upon vesting of non-vested shares

Cash dividends declared 3

Amortization of unearned equity compensation

BALANCE, September 30, 2020

At September 30, 2020, 309,181 shares were available for awards under the Kaiser Aluminum Corporation 2016 Equity and Incentive Compensation Plan (“2016 Plan”).

Weighted-average repurchase price (dollars per share) for the quarter ended March 31, 2020 was $ 81.94 .

There were no repurchases of common stock during the quarters ended June 30, 2020 and September 30, 2020.

At September 30, 2020, $ 93.1 million remained available to repurchase our common shares pursuant to the stock repurchase program.

Dividends declared per common share was $ 0.67 for each of the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020.

BALANCE, March 31, 2021

At March 31, 2021, 232,320 shares were available for awards under the Kaiser Aluminum Corporation 2016 Equity and Incentive Compensation Plan (“2016 Plan”).

There were no repurchases of common stock during the quarter ended March 31, 2021.

At March 31, 2021, $ 93.1 million remained available to repurchase our common shares pursuant to the stock repurchase program.

Dividends declared per common share was $ 0.72 for the quarter ended March 31, 2021.

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

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STATEMENTS OF CONSOLIDATED STOCKHOLDERS ’ EQUITY CONTINUED (UNAUDITED)

Nine Months Ended September 30, 2019

Quarter Ended March 31, 2020

Paid in Capital

Comprehensive

1 unchanged sentence

BALANCE, December 31, 2019

Other comprehensive income, net of tax

Common shares issued (including impacts from Long-Term Incentive programs)

Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares

Repurchase of common stock 1

Cash dividends declared 2

Amortization of unearned equity compensation

BALANCE, March 31, 2019

Other comprehensive loss, net of tax

Common shares issued (including impacts from Long-Term Incentive programs)

Cancellation of shares to cover employees' tax withholdings upon vesting of non-vested shares

Repurchase of common stock 1

Cash dividends declared 2

Amortization of unearned equity compensation

BALANCE, June 30, 2019

Other comprehensive loss, net of tax

Issuance of non-vested shares to non-employee directors

Common shares issued (including impacts from

Long-Term Incentive programs)

Cancellation of shares to cover employees' tax

withholdings upon vesting of non-vested shares

Repurchase of common stock 1

1 unchanged sentence

Amortization of unearned equity compensation

BALANCE, September 30, 2019

Weighted-average repurchase price (dollars per share) for the quarters ended March 31, 2019, June 30, 2019 and September 30, 2019 was $ 98.55 , $ 95.00 and $ 92.95 , respectively.

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

BALANCE, March 31, 2020

Weighted-average repurchase price (dollars per share) for the quarter ended March 31, 2020 was $ 81.94 .

Dividends declared per common share was $ 0.67 for the quarter ended March 31, 2020.

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

1 unchanged sentence

STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

Nine Months Ended

September 30,

Quarter Ended March 31,

(In millions of dollars)

7 unchanged sentences

Gain on disposition of short-term investments

Non-cash asset impairment charge

Loss (gain) on disposition of property, plant and equipment

Other non-cash changes in assets and liabilities

Changes in operating assets and liabilities:

Loss on disposition of property, plant and equipment

Changes in operating assets and liabilities, net of effects of acquisition:

Trade and other receivables

5 unchanged sentences

Long-term assets and liabilities, net

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities 1 :

Capital expenditures

Cash payment for acquisition of Warrick Rolling Mill

Purchase of short-term investments

Purchase of equity securities

Proceeds from disposition of short-term investments

Proceeds from disposition of property, plant and equipment

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities 1 :

Issuance of 6.50% Senior Notes

Cash paid for debt issuance costs

Repayment of finance lease

3 unchanged sentences

Cash dividends and dividend equivalents paid

Net cash provided by (used in) financing activities

Net increase in cash, cash equivalents and restricted cash during the period

Net cash used in financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash during the period

Cash, cash equivalents and restricted cash at beginning of period

4 unchanged sentences

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

Basis of Presentation, Economic Conditions and Recent Accounting Pronouncements

Basis of Presentation and Recent Accounting Pronouncements

Supplemental Balance Sheet Information

Business Combinations, Goodwill and Intangible Assets

Employee Benefits

12 unchanged sentences

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Basis of Presentation, Economic Conditions and Recent Accounting Pronouncements

Basis of Presentation and Recent Accounting Pronouncements

This Quarterly Report on Form 10-Q (this “Report”) should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

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The financial information as of December 31, 2020 is derived from our audited consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Coronavirus Disease 2019 ( “ COVID-19 ” ) Pandemic.

Beginning in March 2020, the COVID-19 pandemic significantly impacted our industry, causing demand for our products, primarily in our aerospace and automotive end markets, to decline.

We instituted operational measures in response to financial impacts caused by the reduced demand.

In March 2020, we suspended repurchases of our common stock.

During the quarter ended June 30, 2020, we:

(i) began limiting capital spending to critical sustaining projects (see Note 2 for discussion of idled projects);

(ii) early settled firm commitments with corresponding fair value hedges and reduced forecasts with respect to purchase transactions with corresponding cash flow hedges (see Note 5);

(iii) settled all outstanding available for sale securities (see Note 5);

(iv) issued $ 350.0 million of new unsecured senior notes (see Note 6);

and (v) initiated a plan of restructuring (see Note 9).

For additional discussion related to the COVID-19 pandemic, see Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 1A.

Risk Factors, both of which are included in this Report.

We have reclassified certain amounts in prior-period financial statements to conform to the current period's presentation.

On the Consolidated Balance Sheets, prior period presentation of the Canadian pension plan in Long-term liabilities is now reflected in Pension and other postretirement benefits.

On the Statements of Consolidated Cash Flows, prior period presentation of Other non-cash changes in assets and liabilities is now reflected in Changes in operating assets and liabilities within the following categories:

(i) Prepaid expenses and other current assets;

(ii) Accrued liabilities;

and (iii) Long-term assets and liabilities, net.

Use of Estimates in the Preparation of Financial Statements.

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accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of our consolidated financial position and results of operations.

The severity, magnitude and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing and difficult to predict.

Therefore, our accounting estimates and assumptions may change over time in response to the COVID-19 pandemic and may change materially in future periods.

We adjust the amount of revenue recognized on all products, regardless of timing of revenue recognition, for variable price consideration, which could include metal market price adjustments, volume related adjustments and sales discounts.

For the quarter and nine months ended September 30, 2020, we recognized $ 15.0 million in Net sales from performance obligations satisfied in prior periods related to variable consideration from customers.

Supply Chain Financing .

Upon our acquisition of the Warrick Rolling Mill (as defined in Note 4 below), we became party to several supply chain financing arrangements, in which we may sell certain of our customers’ trade accounts receivable to such customers’ financial institutions without recourse.

We sell our undivided interests in certain of these receivables at our discretion when we determine that the cost of these arrangements is less than the cost of servicing our receivables with existing debt.

Under the terms of the agreements, we retain no rights or interest, have no obligations with respect to the sold receivables and do not service the receivables after the sale.

As such, these transactions are being accounted for as a sale.

Discount fees related to the sale of trade accounts receivable under supply chain financing arrangements will be included in Other expense, net.

There were no such discount fees recognized during the quarter ended March 31, 2021.

Adoption of New Accounting Pronouncements

Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), was issued in June 2016.

Under ASU 2016-13, existing guidance on reporting credit losses for trade and other receivables and available for sale debt securities have been replaced with a new forward-looking “expected loss” model that has resulted in the earlier recognition of allowances for losses.

Our adoption of ASU 2016-13 during the quarter ended March 31, 2020 using the modified retrospective transition approach did not result in a material impact on our consolidated financial statements.

As part of our assessment of the adequacy of our allowances for credit losses, we consider a number of factors including, but not limited to, customer credit ratings, bankruptcy filings, published or estimated credit default rates, age of receivables, expected loss rates and collateral exposures.

2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), was issued in August 2018.

Under ASU 2018-15, requirements for capitalizing implementation costs incurred in a hosting arrangement (cloud

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

computing) that is a service contract are to be aligned with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

We adopted ASU 2018-15 during the quarter ended March 31, 2020 using the prospective transition approach .

The implementation costs we capitalized during the nine months ended September 30, 2020 we re included in both Prepaid expenses and other current assets and Other assets in our Consolidated Balance Sheets.

The corresponding cash flows related to these arrangements we re included in Net cash provided by operating activities in our Statements of Consolidated Cash Flows.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify the accounting for income taxes by eliminating certain exceptions and implementing additional requirements which result in a more consistent application of Accounting Standards Codification (“ASC”) 740 Income Taxes.

Most amendments within ASU 2019-12 are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

Our adoption of ASU 2019-12 during the quarter ended March 31, 2021 did not result in a material impact on our consolidated financial statements.

Accounting Pronouncements Issued But Not Yet Adopted

2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), was issued in December 2019.

Under ASU 2019-12, the accounting for income taxes is simplified by eliminating certain exceptions and implementing additional requirements which result in a more consistent application of ASC 740 Income Taxes .

We are currently in the process of evaluating the impact of adopting ASU 2019-12 in 2021, but do not expect it to have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) and also issued subsequent amendments to the initial guidance (collectively, “Topic 848”).

Topic 848 is effective for all entities as of March 12, 2020 through December 31, 2022 and provides optional guidance for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued.

We will adopt Topic 848 when our relevant contracts are modified upon transition to alternative reference rates.

We do not expect our adoption of Topic 848 to have a material impact on our consolidated financial statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

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Supplemental Balance Sheet Information

September 30, 2020

December 31, 2019

As of March 31, 2021

As of December 31, 2020

(In millions of dollars)

Cash and Cash Equivalents

Cash and money market funds

Commercial paper

Trade Receivables, Net

13 unchanged sentences

Property, plant and equipment, gross

Accumulated depreciation

Accumulated depreciation and amortization

Assets held for sale

2 unchanged sentences

Uncleared cash disbursements

Accrued income taxes and taxes payable

Accrued income taxes and other taxes payable

Accrued annual contribution to Salaried VEBA

6 unchanged sentences

Other long-term liabilities

At September 30, 2020, the stated last-in, first-out (“LIFO”) value of our inventory exceeded its current cost by $ 4.2 million.

At December 31, 2019, the current cost of our inventory exceeded its stated LIFO value by $ 11.9 million.

Based on market conditions during the nine months ended September 30, 2020, we temporarily idled projects within Construction in progress totaling $ 19.9 million as of September 30, 2020, all of which are expected to resume at a future date.

Of the workers’ compensation accrual for September 30, 2020 and December 31, 2019, $ 29.5 million and $ 26.6 million, respectively, related to our estimate for unpaid claim liabilities, gross of insurance recoverables, and was calculated using a

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

discount rate of 0.50 % and 1.75 % , respectively.

The undiscounted estimate of unpaid claim liabilities , gross of insurance recoverables , was $ 30.4 million and $ 29.2 million as of September 30, 2020 and December 31, 2019 , respectively.

At March 31, 2021 and December 31, 2020 the current cost of our inventory exceeded its stated last-in, first-out (“LIFO”) value by $ 24.0 million and $ 8.4 million , respectively.

We treated inventory acquired in conjunction with the Warrick Rolling Mill acquisition (as defined in Note 4 below) as current year purchases within our existing single LIFO pool.

Based on market conditions during the quarter ended March 31, 2021, $ 20.1 million within Construction in progress as of March 31, 2021 related to temporarily idled projects, all of which are expected to resume at a future date.

We determine whether an agreement is a lease at inception.

1 unchanged sentence

Our leases have remaining lease terms of approximately one to 60 years , some of which may include options to extend the lease for up to 60 years and some of which may include options to terminate the lease within one year .

None of our options to extend or terminate are reasonably certain of being exercised, and are therefore not included in our determination of lease assets and liabilities.

For purposes of calculating lease liabilities, these options are included within the lease term when it has become reasonably certain

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

that we will exercise such options .

Short-term leases with an initial term of 12 months or less are not recorded on our Consolidated Balance Sheets.

As most of our leases do not provide an implicit rate, we use information available at the lease commencement date in determining an incremental borrowing rate when calculating our operating lease assets and operating lease liabilities.

In determining the inputs to the incremental borrowing rate calculation, we make judgments about the value of the leased asset, our credit rating and the lease term, including the probability of our exercising options to extend or terminate the underlying lease.

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Our lease agreements do not contain any material restrictive covenants.

The following table presents lease terms and discount rates as of September 30, 2020:

The following table presents lease terms and discount rates as of March 31, 2021:

Finance Leases

2 unchanged sentences

Weighted-average discount rate

The following table summarizes the classification of lease assets and lease liabilities on our Consolidated Balance Sheets as of the periods presented (in millions of dollars):

The following table summarizes the classification of lease assets and lease liabilities on our Consolidated Balance Sheets (in millions of dollars):

Classification

September 30, 2020

December 31, 2019

As of March 31, 2021

As of December 31, 2020

Operating lease assets

12 unchanged sentences

Total lease liabilities

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

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

Quarter Ended

Nine Months Ended

September 30,

The following table summarizes the components of lease cost on our Statements of Consolidated Income (in millions of dollars):

Quarter Ended March 31,

Operating lease cost

4 unchanged sentences

Total lease cost

The following table presents the maturity of our lease liabilities as of September 30, 2020 (in millions of dollars):

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The following table presents the maturity of our lease liabilities as of March 31, 2021 (in millions of dollars):

Maturity of Lease Liabilities

2 unchanged sentences

Remainder of 2021

2025 and thereafter

Total minimum lease payments

Present value

Business Combinations, Goodwill and Intangible Assets

Warrick Rolling Mill Acquisition .

On March 31, 2021, we acquired Alcoa Warrick LLC and certain assets comprising the aluminum casting and rolling mill facility located in Warrick County, Indiana (collectively, the “Warrick Rolling Mill”) for a purchase price of $ 670.0 million.

The Warrick Rolling Mill is a leading producer of can stock for the beverage and food packaging industry in North America.

The transaction provides us with non-cyclical end market diversification and re-entry into the packaging end market.

Acquisition-related costs incurred and expensed during the quarter ended March 31, 2021 were $ 11.0 million, primarily related to legal and consulting fees and included within Selling, general, administrative, research and development (“SG&A and R& D”) .

The preliminary purchase consideration to allocate was determined as follows (in millions of dollars):

Contract purchase price

Preliminary working capital adjustment

Initial outstanding indebtedness – Other postretirement benefits liabilities

Cash paid at acquisition close on March 31, 2021

Estimate of post-close adjustments

Total preliminary purchase consideration to allocate

The preliminary purchase consideration to allocate is subject to customary post-closing adjustments, estimates of which are included in the table above.

We prepared an initial allocation of the purchase consideration as of the acquisition date based on our understanding of the fair value of the acquired assets and assumed liabilities.

As we continue to obtain additional information supporting the final valuation of inventories, property, plant and equipment, intangible assets and long-term liabilities, we will refine the estimates of fair value and may revise our allocation of the purchase consideration.

We expect to finalize the valuation of the assets and liabilities, as well as the post-closing adjustments as soon as practicable, but in any event no later than one year from the acquisition date.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed at the acquisition date (in millions of dollars):

Trade receivables

Other receivables

Inventories, including step up

Property, plant and equipment

Operating lease assets

Intangible assets

Accounts payable

Accrued salaries, wages and related expenses

Other accrued liabilities

Long-term portion of operating lease liabilities

Pension and other postretirement benefits

Long-term liabilities

Preliminary allocated purchase consideration

Intangible Assets.

The following table presents the components of acquired intangible assets and their estimated useful lives as of the date of acquisition (in millions of dollars):

Favorable lease contract

Favorable commodity contracts

Customer relationships

Goodwill related to the Warrick Rolling Mill acquisition is primarily attributable to the assembled workforce and is expected to be deductible for income tax purposes.

The following table presents the changes to goodwill during the quarter ended March 31, 2021 (in millions of dollars):

Gross Carrying Value

Accumulated Impairment Loss

Net Carrying Value

Balance as of December 31, 2020

Warrick Rolling Mill acquisition

Balance as of March 31, 2021

Results of the Warrick Rolling Mill.

The acquisition of the Warrick Rolling Mill was completed after the close of business on March 31, 2021.

As such, there are no amounts to be included in our Statements of Consolidated Income.

Certain Unaudited Pro Forma Information.

The following unaudited pro forma financial information presents what our results would have been had the Warrick Rolling Mill been acquired on January 1, 2020.

The unaudited pro forma information includes adjustments and consequential tax effects related to:

(i) amortization and depreciation for intangible assets and property, plant and equipment acquired;

(ii) the effects of certain reclassifications and conforming accounting policies;

and (iii) acquisition-related transaction costs.

The unaudited pro forma information presented below is for informational purposes only and is not necessarily indicative of our consolidated results of operations of the consolidated business had the acquisition occurred at the beginning of fiscal year 2020 or of the results of our future operations of the consolidated business.

Quarter Ended March 31,

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The Warrick Rolling Mill has historically purchased aluminum and electrical power from Alcoa Corporation's smelter in Warrick County, Indiana.

Alcoa Corporation’s Warrick smelter historically sold the aluminum to the Warrick Rolling Mill at smelter cost and electrical power from Alcoa Corporation's power plant in Warrick County, Indiana at negotiated prices between the parties.

As part of the acquisition of the Warrick Rolling Mill, we negotiated pricing for aluminum and electrical power with Alcoa Corporation at alternative rates which more closely align with market pricing.

The table above does not reflect the cost of aluminum and electrical power under these negotiated rates.

Employee Benefits

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Most of our production facilities have similar programs for both hourly and salaried employees.

As of September 30, 2020, we had a liability of $ 3.7 million recorded within Accrued salaries, wages and related expenses for estimated probable future payments relating to the nine month performance period of our 2020 STI Plan.

As of March 31, 2021, we had a liability of $ 2.7 million recorded within Accrued salaries, wages and related expenses for estimated probable future payments relating to the three month performance period of our 2021 STI Plan.

Pension and Similar Benefit Plans.

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Assets of our deferred compensation plan are included in Other assets, classified within Level 2 of the fair value hierarchy and are measured and recorded at fair value based on their quoted market prices.

The fair value of these assets at September 30, 2020 and December 31, 2019 was $ 9.1 million and $ 8.1 million, respectively.

The fair value of these assets at March 31, 2021 and December 31, 2020 was $ 9.5 million and $ 9.6 million, respectively.

Offsetting liabilities relating to the deferred compensation plan are included in Other accrued liabilities and Long-term liabilities.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Salaried VEBA Postretirement Obligation.

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We account for the Salaried VEBA as a defined benefit plan in our financial statements.

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

Quarter Ended

Nine Months Ended

September 30,

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Warrick Rolling Mill Pension and Other Postretirement Benefits .

In conjunction with the Warrick Rolling Mill acquisition, we assumed certain defined benefit pension obligations for certain union employees hired prior to January 1, 2020 and other postretirement benefit (“OPEB”) obligations relating to retiree medical and life insurance benefits for certain union employees hired prior to July 1, 2010, and were active union employees of the Warrick Rolling Mill on March 31, 2021 and we agreed to establish new plans with respect to each.

Pension and OPEB liabilities and expenses are determined using actuarial methodologies and incorporate significant assumptions, including the interest rate used to discount the future estimated liability, the expected long-term rate of return on plan assets and several assumptions relating to the employee workforce (salary increases, health care cost trend rates, retirement age and mortality).

The following data presents the key assumptions used and the amounts reflected in our consolidated financial statements with respect to the Warrick Rolling Mill’s pension plan and OPEB.

We used a March 31 measurement date for both of the plans.

The following table presents the assumptions used to determine the Warrick Rolling Mill pension and OPEB obligations:

Warrick Pension Plan

As of March 31, 2021

Discount rate

Expected long-term return on plan assets

Trend rate (initial)

Trend rate (ultimate)

Years to reach ultimate trend

Rate of compensation increase

The accumulated benefit obligation at March 31, 2021 for the Warrick Rolling Mill’s pension plan and OPEB was $ 6.7 million and $ 78.0 million, respectively, of which $ 1.0 million was recorded within Other accrued liabilities.

Our expected minimum contributions to the Warrick Rolling Mill pension plan and OPEB in 2021 is $ 0.1 million and $ 0.7 million, respectively.

The following table presents the minimum net benefits expected to be paid (in millions of dollars):

Year Ended December 31,

Warrick pension plan benefit payments

Warrick OPEB plan benefit payments

Total net benefits

The following table presents the total expense related to all postretirement benefit plans (in millions of dollars):

Quarter Ended March 31,

Defined contribution plans 1

2 unchanged sentences

Net periodic postretirement benefit cost relating to Salaried VEBA 2

Substantially all of the expense related to employee benefits are in Cost of products sold, excluding depreciation and amortization and other items (“COGS”) with the remaining balance in Selling, general, administrative, research and development (“SG&A and R&D”).

Substantially all of the expense related to employee benefits are in Cost of products sold, excluding depreciation and amortization and other items (“Cost of products sold” or “COGS”) with the remaining balance in SG&A and R&D.

The deferred compensation plan and the current service cost component of Net periodic postretirement benefit cost relating to Salaried VEBA are included within our Statements of Consolidated Income in SG&A and R&D for all periods presented.

All other components of Net periodic postretirement benefit cost relating to Salaried VEBA are included within Other expense, net, on our Statements of Consolidated Income.

Components of Net Periodic Benefit Cost.

Components of Net Periodic Postretirement Benefit Cost.

Our results of operations included the following impacts associated with our Canadian pension plan and the Salaried VEBA:

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(iv) amortization of prior service costs associated with plan amendments;

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NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

and (v) amortization of net actuarial differences.

Net periodic benefit cost related to our Canadian pension plan was not material for the quarters and nine months ended September 30, 2020 and September 30, 2019.

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

Quarter Ended

Nine Months Ended

September 30,

Net periodic benefit cost related to our Canadian pension plan was not material for the quarter ended March 31, 2021 .

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

Quarter Ended March 31,

Salaried VEBA 1 :

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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Derivatives, Hedging Programs and Other Financial Instruments

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Hedging transactions are executed centrally on behalf of all of our operations to minimize transaction costs, monitor consolidated net exposures and allow for increased responsiveness to changes in market factors.

Our derivative activities are overseen by a committee (“Hedging Committee”), which is composed of our chief executive officer, chief financial officer, chief accounting officer, vice president of metal management, vice president of economic analysis and strategic planning and other officers and employees selected by the chief executive officer.

Our derivative activities are overseen by a committee (“Hedging Committee”), which is composed of our chief executive officer, chief financial officer, chief accounting officer, vice president of treasury, risk and procurement and other officers and employees selected by the chief executive officer.

The Hedging Committee meets regularly to review commodity price exposure, derivative positions and strategy.

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We manage this risk by allocating hedging transactions among multiple counterparties, using options as part of our hedging activities or both.

The aggregate fair value of our derivative instruments that were in a net liability position was $ 4.3 million and $ 7.2 million at September 30, 2020 and December 31, 2019, respectively, and we had no collateral posted as of those dates.

The aggregate fair value of our derivative instruments that were in a net liability position was $ 0.2 million and $ 2.7 million at March 31, 2021 and December 31, 2020, respectively, and we had no collateral posted as of those dates.

Additionally, our firm-price customer sales commitments create incremental customer credit risk related to metal price movements.

Under certain circumstances, we mitigate this risk by periodically requiring cash collateral from them, which we classify as deferred revenue and include as a component of Other accrued liabilities.

There was no cash collateral posted from our customers as of September 30, 2020, compared to $ 0.2 million as of December 31, 2019.

We had no cash collateral posted from our customers at both March 31, 2021 and December 31, 2020.

For more information about concentration risks concerning customers and suppliers, see Note 15.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Cash Flow Hedges

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We use third-party hedging instruments to limit exposure to metal price risk related to the metal pass through lag on some of our products and firm-price customer sales contracts.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Alloying Metals Hedges .

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

The following table summarizes the volume of our derivative and/or physical delivery commitments with energy companies in place to cover our exposure to price fluctuations of our expected variable priced energy purchases as of March 31, 2021:

Fair Value Hedges

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For derivative instruments that are not designated as hedging instruments, the gain or loss on these derivatives is recognized within COGS or Other expense, net, depending on whether it relates to commodity risk or foreign currency risk, respectively.

During the quarter ended September 30, 2020, we declassified all outstanding Alloying Metals hedges from their initial designation as cash flow hedges.

As such, all unrealized gain or loss on these derivatives subsequent to declassification was recognized within COGS.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Notional Amount of Derivative Contracts

The following table summarizes our derivative positions at September 30, 2020:

The following table summarizes our derivative positions at March 31, 2021:

Maturity Period

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4/21 through 12/21

Natural Gas 2

Maturity Period

2 unchanged sentences

4/21 through 12/24

Electricity 3

Maturity Period

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4/21 through 12/22

Maturity Period

Notional Amount of Contracts (euro)

Fixed price forward contracts

12/20 through 1/21

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

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NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

As of September 30, 2020, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 81 % of the expected natural gas purchases for the remainder of 2020, 91 % of the expected natural gas purchases for 2021, 94 % of the expected natural gas purchases for 2022, 93 % of the expected natural gas purchases for 2023, 84 % of the expected natural gas purchases for 2024 and 25 % of the expected natural gas purchases for both 2025 and 2026.

As of September 30, 2020, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 57 % of our expected electricity purchases for the remainder of 2020, 60 % of our expected electricity purchases for 2021 and 50 % of our expected electricity purchases for 2022.

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

Quarter Ended September 30,

Nine Months Ended September 30,

The following table summarizes the amount of (gain) loss included on our Statements of Consolidated Income associated with all derivative contracts (in millions of dollars):

Quarter Ended March 31,

Statements of Consolidated

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Cash flow hedges

Cost of products sold

Fair value hedges

Depreciation and amortization

Fair value hedges

Other expense, net

Loss recognized in our Statements of Consolidated Income related to cash flow hedges:

Alloying metals (effective hedges)

Alloying metals (reclassification from AOCI due to forecasted transactions no longer probable of occurring)

Total loss recognized in our Statements of Consolidated Income related to cash flow hedges

(Gain) loss recognized in our Statements of Consolidated Income related to fair value hedges:

(Gain) loss recognized in our Statements of Consolidated Income related to cash flow hedges:

Cost of products sold

Alloying Metals

Cost of products sold

Total (gain) loss recognized in our Statements of Consolidated Income related to cash flow hedges

Loss (gain) recognized in our Statements of Consolidated Income related to fair value hedges:

Foreign exchange contracts

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Depreciation and amortization

Reclassification from AOCI related to early termination of firm commitment

Other expense, net

Net settlement related to early termination of forward contracts

Other expense, net

Total loss recognized in our Statements of Consolidated Income related to fair value hedges

Loss (gain) recognized in our Statements of Consolidated Income related to non-designated hedges:

Alloying metals – Realized loss

Gain recognized in our Statements of Consolidated Income related to non-designated hedges:

Alloying Metals – Unrealized gain

Total (gain) loss recognized in our Statements of Consolidated Income related to non-designated hedges:

Cost of products sold

Total gain recognized in our Statements of Consolidated Income related to non-designated hedges:

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Fair Values of D erivative Contracts

Fair Values of Derivative Contracts

The fair values of our derivative contracts are based upon trades in liquid markets.

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We reflect the fair value of our derivative contracts on a gross basis on our Consolidated Balance Sheets.

The following table presents the fair value of our derivative financial instruments as of the periods presented (in millions of dollars):

September 30, 2020

December 31, 2019

The following table presents the fair value of our derivative financial instruments (in millions of dollars):

As of March 31, 2021

As of December 31, 2020

Cash Flow Hedges:

Fixed price purchase contracts

Fixed price sales contracts

Midwest premium swap contracts

Alloying Metals –

Fixed price purchase contracts

Natural gas – Fixed price purchase contracts

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Total non-designated hedges

The following table presents the total amounts of derivative assets and liabilities on our Consolidated Balance Sheets as of the periods presented (in millions of dollars):

September 30, 2020

December 31, 2019

The following table presents the total amounts of derivative assets and liabilities on our Consolidated Balance Sheets (in millions of dollars):

As of March 31, 2021

As of December 31, 2020

Derivative assets:

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Fair Value of Other Financial Instruments

Cash and Cash Equivalents.

See Note 2 for components of cash and cash equivalents.

Available for Sale Securities .

Prior to June 30, 2020, we held commercial paper debt securities that were accounted for as available for sale securities and presented as either cash equivalents or short-term investments on our Consolidated Balance Sheets depending on their time-to-maturity upon initial investment.

At December 31, 2019, the fair value input of our available for sale securities, which were classified within Level 2 of the fair value hierarchy, was calculated based on broker quotes.

The amortized cost of available for sale securities approximated their fair value.

When applicable, we review our debt investment portfolio for credit loss

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

at least quarterly or when there are changes in credit risk or other potential valuation concerns .

B ased on market conditions during the nine months ended September 30, 2020 , we settled all remaining outstanding available for sale securities upon maturity .

The following table classifies our other financial assets under the appropriate level of the fair value hierarchy as of September 30, 2020 (in millions of dollars):

Cash and cash equivalents

The following table classifies our other financial assets under the appropriate level of the fair value hierarchy as of December 31, 2019 (in millions of dollars):

Cash and cash equivalents

Short-term investments

All Other Financial Assets and Liabilities.

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In April 2020 and May 2020, we issued $ 300.0 million and $ 50.0 million, respectively, aggregate principal amounts of our 6.50 % unsecured senior notes due May 1, 2025 at 100 % and 101 %, respectively, of the principal amounts (“6.50% Senior Notes”).

The restrictions and covenants related to our 6.50% Senior Notes are similar to those governing our pre‑existing 4.625% unsecured senior notes due March 1, 2028 (“4.625% Senior Notes”).

The unamortized amount of debt issuance costs relating to the 6.50% Senior Notes as of September 30, 2020 was $ 5.6 million.

Interest expense, including amortization of debt issuance costs and debt premium, relating to the 6.50% Senior Notes was $ 6.0 million and $ 10.2 million for the quarter and nine months ended September 30, 2020, respectively.

Interest accrues on the 6.50% Senior Notes beginning April 28, 2020 at a rate of 6.50 % per annum and is payable semiannually on May 1 and November 1 of each year.

The first interest payment date is November 1, 2020 .

The effective interest rate of the 6.50% Senior Notes is approximately 6.8 % per annum, taking into account the amortization of premium and debt issuance costs.

The 6.50% Senior Notes were offered and sold in transactions not required to be registered under the Securities Act of 1933 and are not entitled to any registration rights.

The fair value of the outstanding 6.50% Senior Notes, which are Level 1 liabilities calculated based on pricing from trades around the balance sheet date, was approximately $ 361.5 million at September 30, 2020.

The 6.50% Senior Notes are unsecured obligations and are guaranteed by each of our existing and future domestic subsidiaries that is a borrower or guarantor under the revolving credit facility (see Revolving Credit Facility below).

We may redeem the 6.50% Senior Notes at our option in whole or part at any time on or after May 1, 2022 at redemption prices (expressed as percentages of principal amount) of 103.250 %, declining to 101.625 % and 100.000 % on or after May 1, 2023 and May 1, 2024, respectively, in each case plus any accrued and unpaid interest to the applicable redemption date.

At any time prior to May 1, 2022, we may also redeem up to 40.0 % of the 6.50% Senior Notes using the net proceeds from certain equity offerings at a redemption price equal to 106.500 % of the principal amount plus any accrued and unpaid interest.

4.625% Senior Notes.

In November 2019, we issued $ 500.0 million principal amount of 4.625 % unsecured senior notes due March 1, 2028 at 100 % of the principal amount.

The unamortized amount of debt issuance costs as of September 30, 2020 was $ 6.7 million .

Interest expense, including amortization of debt issuance costs, relating to the 4.625% Senior Notes was $ 6.0 million and $ 18.0 million for the quarter and nine months ended September 30, 2020, respectively.

The effective interest rate of the 4.625% Senior Notes was approximately 4.8 % per annum, taking into account the amortization of debt issuance costs.

The fair value of the

The unamortized amount of debt issuance costs relating to the 6.50% Senior Notes as of March 31, 2021 was

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

outstanding 4.625% Senior Notes, which are Level 1 liabilities, was approximately $ 468.3 million and $ 513.5 million at September 30, 2020 and December 31, 2019, respectively.

$ 5.0 million .

Interest expense, including amortization of debt issuance costs and debt premium , relating to the 6.50% Senior Notes was $ 6.0 million for the quarter ended March 31, 2021 .

The effective interest rate of the 6.50% Senior Notes is approximately 6.8 % per annum, taking into account the amortization of premium and debt issuance costs.

The fair value of the outstanding 6.50% Senior Notes, which are Level 1 liabilities calculated based on pricing from trades around the balance sheet date, was approximately $ 371.3 million and $ 376.8 million at March 31, 2021 and December 31, 2020 , respectively.

4.625% Senior Notes.

In May 2016, we issued $ 375.0 million principal amount of 5.875 % unsecured senior notes due May 15, 2024 (“5.875% Senior Notes”) at 100 % of the principal amount.

On December 18, 2019, we redeemed in full all outstanding 5.875% Senior Notes at a redemption price of 104.406 % of the principal amount.

In November 2019, we issued $ 500.0 million principal amount of 4.625 % unsecured senior notes due March 1, 2028 at 100 % of the principal amount (“ 4.625 % Senior Notes”).

The unamortized amount of debt issuance costs as of March 31, 2021 was $ 6.3 million.

Interest expense, including amortization of debt issuance costs, relating to the 4.625% Senior Notes was $ 6.0 million for both quarters ended March 31, 2021 and March 31, 2020.

The effective interest rate of the 4.625% Senior Notes was approximately 4.8 % per annum, taking into account the amortization of debt issuance costs.

Interest expense, including amortization of debt issuance costs, relating to the 5.875% Senior Notes was $ 5.7 million and $ 17.1 million for the quarter and nine months ended September 30, 2019, respectively.

The amount of interest expense capitalized as construction in progress was $ 0.3 million and $ 0.4 million during the quarters ended September 30, 2020 and September 30, 2019, respectively.

The amount of interest expense capitalized as construction in progress was $ 0.8 million and $ 1.3 million during the nine months ended September 30, 2020 and September 30, 2019, respectively.

The fair value of the outstanding 4.625% Senior Notes, which are Level 1 liabilities, was approximately $ 511.7 million and $ 521.3 million at March 31, 2021 and December 31, 2020, respectively.

The amount of interest expense capitalized as construction in progress was $ 0.1 million and $ 0.3 million during the quarters ended March 31, 2021 and March 31, 2020, respectively.

Revolving Credit Facility

Our credit agreement with Wells Fargo Bank, National Association, as administrative agent, and the other financial institutions party thereto (“Revolving Credit Facility”) provides us with a $ 375.0 million funding commitment through October 2024.

The table below summarizes availability and usage of our Revolving Credit Facility as determined by a borrowing base calculated as of September 30, 2020 (in millions of dollars except for borrowing rate):

The following table summarizes availability and usage of our Revolving Credit Facility as determined by a borrowing base calculated as of March 31, 2021 (in millions of dollars except for borrowing rate):

Revolving Credit Facility borrowing commitment

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We have established procedures for regularly evaluating environmental loss contingencies.

Our environmental accruals represent our undiscounted estimate of costs reasonably expected to be incurred based on presently enacted laws and regulations, existing requirements, currently available facts, existing technology and our assessment of the likely remediation actions to be taken.

Our environmental accruals represent our undiscounted estimate of costs reasonably expected to be incurred based on presently enacted laws and regulations, currently available facts, existing requirements, existing technology and our assessment of the likely remediation actions to be taken.

We continue to pursue remediation activities, primarily to address the historical use of oils containing polychlorinated biphenyls (“PCBs”) at our Spokane, Washington (“Trentwood”) facility.

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We have completed a number of sections of the work plan and have received satisfactory completion approval from Ecology on those sections.

Additionally, in cooperation with Ecology, to determine the treatability and evaluate the feasibility of removing PCBs from ground water under the Trentwood facility, we constructed an experimental treatment facility and began treatment operations in 2015.

During the quarter ended September 30, 2020, we increased our environmental accrual by $ 3.8 million based on a minimum cost estimate to implement a full‑scale experimental treatment facility for ground water PCB contaminants.

As the long-term success of the new methodology cannot be reasonably determined at this time, it is possible we may need to make upward adjustments to our related accruals and cost estimates as the long-term results become available.

In cooperation with Ecology, we constructed an experimental treatment facility to determine the treatability and evaluate the feasibility of removing PCBs from ground water under the Trentwood facility.

In 2015, we began treatment operations involving a walnut shell filtration system, which we optimized for maximum PCB capture during 2020.

Furthermore, based on advancements in technology, we signed an Amended Agreed Order with Ecology in 2020 to evaluate and implement new technologies for PCB removal from groundwater on a pilot basis.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

During 2013, at the request of the Ohio Environmental Protection Agency (“OEPA”), we initiated an investigational study of the Newark, Ohio (“Newark”) facility related to historical on-site waste disposal.

In the fourth quarter of 2018, we submitted our remedial investigation study to the OEPA, which is subject to their review and approval.

Following OEPA approval of the remedial investigational study, we will then prepare the final feasibility study and update estimates for probable and estimable remediation, if any.

The actual and final cost for remediation will not be fully determinable until a final feasibility study is submitted and accepted by the OEPA and work plans are prepared, which is expected to occur in the next 12 to 24 months.

During 2020, following the issuance of information requests under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), to which we responded, United States Environmental Protection Agency (“USEPA”) issued a general notice letter to us alleging that we are a potentially responsible party under CERCLA for response and other potential remedial actions concerning property owned by us near our former smelter site in Mead, Spokane County, Washington.

On February 21, 2020, we responded to the general notice letter and we continue to have discussions with USEPA regarding potential resolution of the matter.

On August 6, 2020, we entered into an administrative settlement agreement and an order on consent for removal actions, the first phase of which is estimated to be complete within the next three months .

Final resolution is not yet certain, however, based on currently available facts and our assessment of the likely remediation actions to be taken, we established a provision of $ 1.9 million during the nine months ended September 30, 2020, of which a $ 1.2 million environmental accrual remained as of September 30, 2020.

It is possible we may need to make upward adjustments to our related accruals and cost estimates in the future upon reaching a final resolution with the USEPA.

At September 30, 2020, our environmental accrual of $ 20.7 million represented our estimate of the incremental remediation cost based on:

The primary technology we are evaluating is Ultraviolet Light Advanced Oxidation Process.

Pursuant to a consent agreement with the Ohio Environmental Protection Agency (“OEPA”), we initiated an investigational study of our Newark facility related to historical on-site waste disposal.

During the quarter ended December 31, 2018, we submitted our remedial investigation study to the OEPA for review and approval.

The final remedial investigation report was approved by the OEPA during the quarter ended December 31, 2020.

We are currently preparing the required feasibility study, which we expect to submit to the OEPA for review during the quarter ending June 30, 2021.

The actual and final remediation cost estimates will not be fully determinable until the feasibility study has been accepted by the OEPA and the selected remediation design work plans are completed, which we expect to occur in the next 7 to 13 months.

At March 31, 2021, our environmental accrual of $ 18.0 million represented our estimate of the incremental remediation cost based on:

(i) proposed alternatives in the final feasibility study related to the Trentwood facility;

(ii) currently available facts with respect to our Newark facility;

and (iii) facts related to certain other locations owned or formerly owned by us, including our property in Mead, Spokane County, Washington.

and (iii) facts related to certain other locations owned or formerly owned by us.

In accordance with approved and proposed remediation action plans, we expect that the implementation and ongoing monitoring could occur over a period of 30 or more years.

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It is reasonably possible that our recorded estimate will change in the next 12 months.

Warrick Rolling Mill Potential CARO Liability.

We identified potential conditional asset retirement obligations (“CAROs”) related to the future removal and disposal of asbestos that is contained within the Warrick Rolling Mill facility.

We believe that the asbestos is appropriately contained in accordance with current environmental regulations.

If the facility were demolished or subject to renovation activities that disturb the asbestos, certain environmental regulations are in place which specify the manner in which the asbestos must be handled and disposed.

We are required to record the fair value of CAROs if they can be reasonably estimated.

As of March 31, 2021, we are in the process of evaluating and determining the fair value of a potential CARO, if any, acquired as part of the Warrick Rolling Mill acquisition.

No liability has been recorded on our accompanying Consolidated Balance Sheets as the liability is currently indeterminable.

We may conclude at a future date that a CARO exists and we could be required to record a liability for the related obligations in amounts that are material to our consolidated financial statements.

While we do not currently expect that the CARO liability will be material to our consolidated financial statements, there can be no assurance as to the existence of a CARO obligation and corresponding liabilities that we may be required to record in the future.

Other Contingencies.

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Accumulated Other Comprehensive Loss

The following table presents the changes in the accumulated balances for each component of AOCI for the periods presented (in millions of dollars):

Quarter Ended

September 30,

Nine Months Ended

September 30,

The following table presents the changes in the accumulated balances for each component of AOCI (in millions of dollars):

Quarter Ended March 31,

Defined Benefit Pension Plan and Salaried VEBA:

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Net gain reclassified from AOCI to Net income

Other comprehensive income (loss), net of tax

Other comprehensive loss, net of tax

Ending balance

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Net unrealized gain (loss) on cash flow hedges

Reclassification of unrealized loss upon settlement of cash flow hedges 4

Reclassification due to forecasted transactions no longer probable of occurring 4

income tax expense 2

Net loss reclassified from AOCI to Net income

Reclassification of unrealized (gain) loss upon settlement of cash flow hedges 4

income tax benefit (expense) 2

Net (gain) loss reclassified from AOCI to Net income

Other comprehensive income (loss), net of tax

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Excluded component amortized from OCI to Net income

Reclassification due to cancellation of firm commitment 5

income tax expense 2

Net loss reclassified from AOCI to Net income

Other comprehensive income, net of tax

Other comprehensive loss, net of tax

Ending balance

1 unchanged sentence

Beginning balance

Other comprehensive income, net of tax

Other comprehensive loss, net of tax

Ending balance

Total AOCI ending balance

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

Income tax amounts reclassified out of AOCI were included as a component of Income tax benefit (provision).

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Amounts amortized out of AOCI relating to Salaried VEBA adjustments were included within Other expense , n et , as a component of Net periodic postretirement benefit cost relating to Salaried VEBA.

Income tax amounts reclassified out of AOCI were included as a component of Income tax benefit (provision).

Amounts reclassified out of AOCI relating to sales of available for sale securities were included as a component of Other expense, net.

We use the specific identification method to determine the amount reclassified out of AOCI.

As of September 30, 2020, we estimate a net mark-to-market loss before tax of $ 0.6 million in AOCI will be reclassified into Net income upon settlement within the next 12 months.

As of September 30, 2020, the amount in AOCI that will be reclassified into Net income within the next 12 months was immaterial.

As of March 31, 2021, we estimate a net mark-to-market loss before tax of $ 13.3 million in AOCI will be reclassified into Net income upon settlement within the next 12 months.

Restructuring

During the nine months ended September 30, 2020, global restrictions on air travel and other changes in global travel patterns as a result of the COVID-19 pandemic negatively impacted short and mid-term commercial aerospace demand within our aerospace and high strength (“Aero/HS products”) end market applications.

We therefore initiated a restructuring plan that consisted of a reduction in force during the quarter ended June 30, 2020.

During the quarter ended September 30, 2020, we initiated additional reduction in force measures under the restructuring plan as a result of the continued negative impacts from the COVID-19 pandemic.

Employee costs related to the restructuring plan were included within Restructuring costs in our Statements of Consolidated Income and consisted of severance, voluntary buyout packages, outplacement services, estimated medical costs and associated payroll costs .

Substantially all of the costs associated with the restructuring efforts initiated during the quarters ended June 30, 2020 and September 30, 2020 were incurred and expensed as of June 30, 2020 and September 30, 2020, respectively.

In order to align our projected operational requirements with reduced short and mid-term commercial aerospace demand as a result of the Coronavirus Disease 2019 (“COVID-19”) pandemic, we initiated a restructuring plan during the quarter ended June 30, 2020, which consisted primarily of reduction in force measures (“2020 Plan”).

Employee costs related to the 2020 Plan were included within Restructuring costs in our Statements of Consolidated Income and consisted of severance, voluntary buyout packages, outplacement services, estimated medical costs and associated payroll costs .

Substantially all of the costs associated with the restructuring efforts initiated under the 2020 Plan were incurred and expensed as of December 31, 2020.

We have incurred total Restructuring costs of $ 6.8 million under the 2020 Plan through the quarter ended March 31, 2021.

Cash payments associated with the restructuring plan are estimated to extend through 2022.

The following table summarizes the activity relating to our restructuring plan liabilities (in millions of dollars):

Nine Months Ended

September 30, 2020

Beginning balance

Restructuring costs

Cash payments and other adjustments

Ending balance

The following table summarizes the changes to our 2020 Plan liabilities during the quarter ended March 31, 2021 (in millions of dollars):

Quarter Ended March 31, 2021

Balance as of December 31, 2020

Cash payments

Other adjustments 1

Balance as of March 31, 2021

In March 2021, we revised our production forecast for 2021, thereby reducing the estimated number of headcount reductions necessary as compared with our initial restructuring plan.

As such, included in Other adjustments is a reduction to our estimated restructuring liability of $ 0.7 million with an offset to Restructuring costs to accommodate the revised headcount requirements.

Other Expense , Net

Other expense , net, consisted of the following for the periods presented (in millions of dollars):

Quarter Ended

September 30,

Nine Months Ended

September 30,

Other expense , net, consisted of the following (in millions of dollars):

Quarter Ended March 31,

Interest income

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Realized gain on available for sale securities

Unrealized gain on equity securities

All other income (expense), net

Unrealized loss on equity securities

All other, net

Other expense, net

Income Tax Matters

The income tax benefit (provision) consisted of the following (in millions of dollars):

Quarter Ended March 31,

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Income Tax Matters

The (benefit) provision for in come taxes consisted of the following for the periods presented (in millions of dollars):

Quarter Ended

September 30,

Nine Months Ended

September 30,

The income tax (benefit) provision for the quarters ended September 30, 2020 and September 30, 2019 was ($ 0.7 ) million and $ 8.7 million, respectively, reflecting an effective tax rate of 222 % and 26 %, respectively.

The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended September 30, 2020 was primarily due to a decrease of $ 0.7 million (or 211 % of taxable income) for a change in forecasted earnings and its impact on the annual effective tax rate, partially offset by an increase of $ 0.1 million (or 22 % of taxable income) to the valuation allowance for certain state net operating losses.

The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended September 30, 2019 was primarily due to an increase of $ 0.5 million (or 2 % of taxable income) related to non-deductible compensation expense.

The income tax provision for the nine months ended September 30, 2020 and September 30, 2019 was $ 10.2 million and $ 25.8 million, respectively, reflecting an effective tax rate of 31 % and 26 % respectively.

The difference between the effective tax rate and the projected blended statutory tax rate for the nine months ended September 30, 2020 was primarily due to:

(i) an increase of $ 1.2 million (or 4 % of taxable income) related to non-deductible compensation expense and (ii) an increase of $ 1.3 million (or 4 % of taxable income) to the valuation allowance for certain state net operating losses, partially offset by a decrease of $ 0.7 million (or 2 % of taxable income) for the recognition of excess tax benefits from stock-based compensation.

The difference between the effective tax rate and the projected blended statutory tax rate for the nine months ended September 30, 2019 was primarily due to:

(i) an increase of $ 1.5 million (or 2 % of taxable income) related to non-deductible compensation expense and (ii) an increase of $ 0.6 million (or 1 % of taxable income) to the valuation allowance for certain state net operating losses, partially offset by a decrease of $ 0.6 million (or 1 % of taxable income) for the recognition of excess tax benefits from stock-based compensation.

Our gross unrecognized benefits relating to uncertain tax positions were $ 3.9 million and $ 4.1 million at September 30, 2020 and December 31, 2019, respectively, of which, $ 0.4 million and $ 0.9 million would be recorded through our income tax provision and thus impact the effective tax rate at September 30, 2020 and December 31, 2019, respectively, if the gross unrecognized tax benefits were to be recognized.

The income tax benefit (provision) for the quarters ended March 31, 2021 and March 31, 2020 was $ 0.3 million and ($ 9.6 ) million, respectively, reflecting an effective tax rate of ( 6 % ) and 25 %, respectively.

The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended March 31, 2021 was primarily due to:

(i) a decrease of $ 0.6 million (or 15 % of taxable income) for a change in state tax rate due to the Warrick Rolling Mill acquisition;

(ii) a decrease of $ 0.4 million (or 10 % of taxable income) to the valuation allowance for certain state net operating losses;

and (iii) a decrease of $ 0.2 million (or 6 % of taxable income) for the recognition of excess tax benefits from stock-based compensation.

There was no material difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended March 31, 2020.

Our gross unrecognized benefits relating to uncertain tax positions were $ 4.0 million and $ 3.8 million at March 31, 2021 and December 31, 2020, respectively, of which, $ 1.5 million would be recorded through our income tax provision and thus impact the effective tax rate at both March 31, 2021 and December 31, 2020, respectively, if the gross unrecognized tax benefits were to be recognized.

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

On March 27, 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act to provide certain relief as a result of the COVID-19 pandemic.

We continue to evaluate if and how provisions in the CARES Act will impact our consolidated financial statements.

Net Income Per Share

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The basic weighted-average number of common shares outstanding during the period excludes non-vested share-based payment awards.

Diluted net income per share was calculated under the treasury stock method for the quarters and nine months ended September 30, 2020 and September 30, 2019, which in both periods was more dilutive than the two-class method.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The following table sets forth the computation of basic and diluted net income per share for the periods presented (in millions of dollars, except share and per share amounts):

Quarter Ended

September 30,

Nine Months Ended

September 30,

Diluted net income per share was calculated under the treasury stock method for the quarter ended March 31, 2021 and March 31, 2020, which in both periods was more dilutive than the two-class method.

The following table sets forth the computation of basic and diluted net income per share (in millions of dollars, except share and per share amounts):

Quarter Ended March 31,

Denominator – Weighted-average common shares outstanding (in thousands):

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Net income per common share, Diluted:

Quantities in the following discussion are denoted in whole shares.

During the quarter and nine months ended September 30, 2020, approximately 69,000 shares and 41,000 shares, respectively, were excluded from the weighted-average diluted shares computation as their inclusion would have been anti-dilutive.

During both the quarter and nine months ended September 30, 2019, approximately 7,000 shares were excluded from the weighted-average diluted shares computation as their inclusion would have been anti-dilutive.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Quantities in the following discussion are denoted i n whole shares .

During the quarter s ended March 31, 2021 and March 31, 2020 , approximately 22,000 shares and 2,000 shares , respectively, were excluded from the weighted-average diluted shares computation as their inclusion would have been anti-dilutive.

Supplemental Cash Flow Information

Nine Months Ended

September 30,

Quarter Ended March 31,

(In millions of dollars)

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Unpaid purchases of property and equipment

Stock repurchases not yet settled

Supplemental lease disclosures:

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Finance lease liabilities arising from obtaining finance lease assets

September 30, 2020

September 30, 2019

As of March 31,

(In millions of dollars)

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Cash and cash equivalents

Restricted cash included in Prepaid expenses and other current assets 1

Restricted cash included in Other assets 1

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From time to time, such restricted funds could be returned to us or we could be required to pledge additional cash.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Business, Product and Geographical Area Information

Our primary line of business is the production of semi-fabricated specialty aluminum mill products, such as aluminum plate and sheet and extruded and drawn products, primarily used in Aero/HS products, automotive (“Automotive Extrusions”), general engineering (“GE products”) and other industrial (“Other products”).

Our primary line of business is the production of semi-fabricated specialty aluminum mill products, such as aluminum plate and sheet and extruded and drawn products, primarily used in aerospace and high strength (“Aero/HS products”), automotive (“Automotive Extrusions”), general engineering (“GE products”) and other industrial (“Other products”).

Our acquisition of the Warrick Rolling Mill on March 31, 2021 (see Note 4) will expand our end market applications to include aluminum beverage and food packaging.

We operate 13 focused production facilities in the United States and one in Canada.

Our chief operating decision maker reviews and evaluates our business as a single operating segment.

The following table presents Net sales by end market applications and by timing of control transfer for the periods presented (in millions of dollars):

Quarter Ended

September 30,

Nine Months Ended

September 30,

The following table presents Net sales by end market applications and by timing of control transfer (in millions of dollars):

Quarter Ended March 31,

Aero/HS products

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Total net sales

As corrected from $ 115.9 million of products transferred at a point in time and $ 259.0 million of products transferred over time.

As corrected from $ 378.7 million of products transferred at a point in time and $ 766.7 million of products transferred over time.

The following table presents geographic information for income taxes paid for the periods presented (in millions of dollars):

Quarter Ended

Nine Months Ended

September 30,

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The following table presents geographic information for income taxes paid (in millions of dollars):

Quarter Ended March 31,

Income taxes paid:

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Dividend Declaration.

On October 13, 2020 , we announced that our Board of Directors declared a cash dividend of $ 0.67 per common share.

As such, we expect to pay approximately $ 10.8 million (including dividend equivalents) on or about November 13, 2020 to stockholders of record and the holders of certain restricted stock units at the close of business on October 23, 2020 .

On April 13, 2021 , we announced that our Board of Directors declared a quarterly cash dividend of $ 0.72 per common share.

As such, we expect to pay approximately $ 11.6 million (including dividend equivalents) on or about May 14, 2021 to stockholders of record and the holders of certain restricted stock units at the close of business on April 23, 2021 .

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

This Item should be read in conjunction with Part I, Item 1.

“ Financial Statements ” of this Quarterly Report on Form 10-Q (this “ Report ” ).

This Report contains statements which constitute “ forward-looking statements ” within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-Looking Statements

This Quarterly Report on Form 10-Q (“Report”) contains statements which constitute “ forward-looking statements ” within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements appear throughout this Report and can be identified by the use of forward-looking terminology such as “ believes, ” “ expects, ” “ may, ” “ estimates, ” “ will, ” “ should, ” “ plans ” or “ anticipates, ” or the negative of the foregoing or other variations of comparable terminology, or by discussions of strategy.

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No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements.

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.

Our MD&A is presented in the following sections:

Highlights of the Quarter Ended September 30, 2020;

Results of Operations;

Liquidity and Capital Resources;

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

Critical Accounting Estimates and Policies;

New Accounting Pronouncements;

Available Information.

Our MD&A should be read in conjunction with our consolidated financial statements and related notes included in Part I, Item 1.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Part I, Item 1.

“ Financial Statements ” of this Report and our consolidated financial statements and related notes included in Part II, Item 8.

“Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2020.

Non-GAAP Financial Measures

This information contains certain non-GAAP financial measures.

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For a reconciliation of Adjusted EBITDA to Net income, see “Results of Operations - Selected Operational and Financial Information ” below.

Reconciliations of certain forward-looking non-GAAP financial measures to comparable GAAP measures are not provided because certain items required for such reconciliations are outside of our control and/or cannot be reasonably predicted or provided without unreasonable effort.

Metal Pricing Policies

A fundamental part of our business model is to remain neutral to the impact from fluctuations in the market price for aluminum, thereby earning profit predominately from the conversion of aluminum into semi-fabricated mill products.

We refer to this as “ metal price neutrality.

” We purchase primary and scrap, or recycled, aluminum, our main raw material, at prices that fluctuate on a monthly basis, and our pricing policies generally allow us to pass the underlying cost of metal through to our customers so that we remain neutral to metal pricing.

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 underlying cost of metal through to our customers so that we remain neutral to metal pricing.

However, for some of our higher VAR products sold on a spot basis, competitive dynamics may limit the amount and/or delay the timing of selling price increases to recover our increased aluminum costs, resulting in a lag up to several months during which we may be exposed to metal price risk.

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Additionally, we sometimes enter into firm-price customer sales agreements that specify a firm underlying metal price plus a conversion price.

Spot sales with lagged metal price pass through and firm-price sales agreements create metal price exposure for us, which we mitigate through a hedging program with an objective to remain metal price neutral.

Spot sales with lagged metal price pass through and

firm-price sales agreements create metal price exposure for us, which we mitigate through a hedging program with an objective to remain metal price neutral.

Our pricing policies and hedging program are intended to significantly reduce or eliminate the impact on our profitability of fluctuations in underlying metal price so that our earnings are predominantly associated with the conversion of aluminum to semi‑fabricated mill products.

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For a reconciliation of VAR to Net sales, see “Results of Operations - Selected Operational and Financial Information ” below.

Business Overview

We manufacture and sell semi-fabricated specialty aluminum mill products for the following end market applications:

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Our 11 extrusion/drawing facilities, 10 of which are in the United States and one of which is in Canada, serve aerospace, automotive or general engineering applications.

Our newest facility, which we acquired in 2018, is located in Columbia, New Jersey, and focuses on multi-material advanced manufacturing methods and techniques, which include multi-axis computer numerical control (“CNC”) machining, additive manufacturing (“3D Printing”), welding and fabrication for demanding aerospace and defense, automotive, high tech and general industrial applications.

Our consolidated Net sales for the nine months ended September 30, 2020 totaled $900.7 million on 383.1 million pounds shipped from our facilities.

We employed approximately 2,585 people at September 30, 2020.

Additionally, we have a facility in Columbia, New Jersey that focuses on multi-material advanced manufacturing methods and techniques, which include multi-axis computer numerical control (“CNC”) machining, additive manufacturing (“3D Printing”), welding and fabrication for demanding aerospace and defense, automotive, high tech and general industrial applications.

Our consolidated Net sales for the quarter ended March 31, 2021 totaled $324.0 million on 136.9 million pounds shipped from our facilities.

We employed approximately 2,590 people at March 31, 2021.

We have long-standing relationships with our customers, which consist primarily of blue-chip companies including leading aerospace and automotive manufacturers, tier one aerospace and automotive suppliers and metal service centers.

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Demand for Automotive Extrusions is driven by factors that include automotive build rates in North America, aluminum content and the success and customer acceptance of automotive platforms our products are produced for, which may be significantly different than overall automotive build rates.

In recent years, automotive original equipment manufacturers (“OEMs”) and their suppliers have, at an increasing pace, been converting many automotive components that historically were made of steel to aluminum to decrease weight without sacrificing structural integrity and safety performance and thereby achieve greater fuel efficiency standards mandated by stringent United States’ Corporate Average Fuel Economy regulations.

In recent years, automotive original equipment manufacturers (“OEMs”) and their suppliers have,

at an increasing pace, been converting many automotive components that historically were made of steel to aluminum to decrease weight without sacrificing structural integrity and safety performance and thereby achieve greater fuel efficiency standards mandated by stringent United States ’ Corporate Average Fuel Economy regulations.

We believe fuel efficiency standards along with consumer preference for larger vehicles will continue to drive growth in demand for aluminum extruded components in passenger vehicles as a replacement for the heavier weight of steel components.

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Demand is also impacted by the destocking and restocking of inventory throughout the supply chain.

Beginning in March 2020, our industry, along with global economic conditions generally, have been significantly impacted by the COVID-19 pandemic.

Though the impact of the pandemic on our operations has varied by local conditions and applicable government mandates, a significant amount of automotive, aerospace and other customers have experienced reductions in sales and/or substantially curtailed their operations, thereby decreasing demand for our products.

The ultimate duration and impact of the pandemic on our and our customers’ operations is presently unclear.

Furthermore, the extent to which we or our customers may successfully mitigate the impact of the pandemic, if at all, is not presently ascertainable.

For additional risks relating to the COVID-19 pandemic, see Item 1A.

Risk Factors in Part II of this Report.

Highlights of the quarter ended September 30, 2020 include:

Strong rebound in Automotive Extrusions following auto supply chain shutdowns driven by the COVID-19 pandemic during the quarter ended June 30, 2020;

GE products remains strong despite normal seasonal demand weakness;

Commercial aerospace demand declined sharply on weaker business conditions, partially mitigated by continued strength in demand for defense applications;

Combined cash and cash equivalents and net borrowing availability under our Revolving Credit Facility was $1,003.4 million as of September 30, 2020;

We paid cash dividends and dividend equivalents of $0.67 per share or $10.8 million during the quarter ended September 30, 2020.

Warrick Rolling Mill Acquisition

On March 31, 2021, after the close of business, we completed our purchase of Alcoa Warrick LLC and certain assets comprising the aluminum casting and rolling mill facility located in Warrick County, Indiana (collectively, the “Warrick Rolling Mill”) from Alcoa Corporation.

This acquisition will provide us re-entry into the North American aluminum beverage and food packaging industry, which is a strong and growing non-cyclical end market driven by sustainability trends and the secular shift from plastic to aluminum.

We believe the addition of this non‑cyclical end market will be highly complementary to our existing aerospace, automotive and general engineering cyclical end markets and will provide excellent opportunities for long-term growth.

The acquisition of the Warrick Rolling Mill further demonstrates our strategy to serve technically challenging end market applications for which we can deploy our core metallurgical and process technology capabilities to produce highly engineered mill products with differentiated characteristics that present opportunities for us to receive premium pricing and to create long-term profitable growth.

Highlights of the quarter ended March 31, 2021 include:

Completed our $670.0 million purchase of the Warrick Rolling Mill from Alcoa Corporation;

For the quarter ended March 31, 2021, we reported Operating income of $16.9 million, VAR of $171.7 million and Adjusted EBITDA of $37.5 million, all of which excluded Warrick Rolling Mill results;

Automotive Extrusions experienced robust demand with multiple new programs successfully launched and underway;

GE products remains strong with solid underlying demand and re-stocking in the supply chain;

Commercial aerospace demand has stabilized but remains weak, while demand for defense applications remains strong;

Combined cash and cash equivalents and net borrowing availability under our revolving credit facility with Wells Fargo Bank, National Association, as administrative agent, and the other financial institutions party thereto (”Revolving Credit Facility”) was $495.2 million as of March 31, 2021;

We paid cash dividends and dividend equivalents of $0.72 per share or $11.7 million during the quarter ended March 31, 2021.

Results of Operations

Consolidated Results of Operations

Net sales totaled $255.7 million and $374.9 million for the quarters ended September 30, 2020 and September 30, 2019, respectively, reflecting a 45.3 million pound (29%) decrease in shipment volume and an $0.08/lb (3%) decrease in average realized sales price per pound.

The shipment volume decrease reflected:

(i) a 39.8 million pound (59%) decrease in Aero/HS products compared to the quarter ended September 30, 2019, primarily due to the impact of the COVID-19 pandemic on commercial aerospace demand;

(ii) a 3.7 million pound (63%) decrease in Other products reflecting our planned exit from non-strategic applications;

and (iii) a 3.0 million pound (5%) decrease in GE products reflecting seasonal demand weakness normally experienced in the second half of the year, partially offset by a 1.2 million pound (5%) increase in Automotive Extrusions reflecting new program launches that began to ramp up as the automotive supply chain returned to production following the shutdown during the prior quarter ended June 30, 2020 related to the COVID-19 pandemic.

The decrease in average realized sales price per pound reflected an $0.11/lb (11%) decrease in average Hedged Cost of Alloyed Metal price per pound, partially offset by a $0.03/lb (2%) increase in VAR per pound due to the mix within Aero/HS and GE products and approximately $15.0 million of additional Net sales associated with provisions under multi-year contracts with our customers, as discussed further in Note 1 of Notes to Consolidated Financial Statements included in this Report.

See the table in “ Selected Operational and Financial Information” below for further details.

Net sales totaled $900.7 million and $1,145.4 million for the nine months ended September 30, 2020 and September 30, 2019, respectively, reflecting an 89.4 million pound (19%) decrease in shipment volume and a $0.07/lb (3%) decrease in average realized sales price per pound.

Net sales totaled $324.0 million and $369.3 million for the quarters ended March 31, 2021 and March 31, 2020, respectively, reflecting an 18.7 million pound (12%) decrease in shipment volume.

The shipment volume decrease reflected:

(i) a 56.2 million pound (28%) decrease in Aero/HS products reflecting the impact of the pandemic on demand for our aerospace applications;

(ii) a 13.3 million pound (19%) decrease in Automotive Extrusions reflecting the impact of temporary automotive plant closures during the quarter ended June 30, 2020;

(iii) an 11.8 million pound (61%) decrease in Other products reflecting our planned exit from non-strategic applications;

and (iv) an 8.1 million pound (4%) decrease in GE products.

The decrease in average realized sales price per pound reflected a $0.13/lb (12%) decrease in average Hedged Cost of Alloyed Metal prices per pound, partially offset by a $0.06/lb (4%) increase in VAR per pound due primarily to the mix within Aero/HS and GE products.

(i) a 30.3 million pound (46%) decrease in Aero/HS products compared to the quarter ended March 31, 2020, primarily due to the impact of the COVID-19 pandemic on commercial aerospace demand and (ii) a 0.1 million pound (4%) decrease in Other products reflecting our planned exit from non-strategic applications, partially offset by:

(i) an 8.8 million pound (14%) increase in GE products reflecting the impacts of customer restocking and demand for semi-conductor and other applications and (ii) a 2.9 million pound (12%) increase in Automotive Extrusions reflecting new program launches.

The average realized sales price per pound reflected a $0.14/lb (14%) increase in average Hedged Cost of Alloyed Metal price per pound and a $0.14/lb (10%) decrease in VAR per pound due to the mix within Aero/HS and GE products.

See the table in “ Selected Operational and Financial Information” below for further details.

Cost of Products Sold, Excluding Depreciation and Amortization and Other Items.

Cost of products sold, excluding depreciation and amortization and other items for the quarter ended September 30, 2020 totaled $208.4 million, or 82% of Net sales, compared to $298.6 million, or 80% of Net sales, for the quarter ended September 30, 2019.

The decrease of $90.2 million reflected a $58.9 million decrease in Hedged Cost of Alloyed Metal and a $31.3 million decrease in net manufacturing conversion and other costs.

Of the $58.9 million decrease in Hedged Cost of Alloyed Metal, $47.0 million was due to lower shipment volume, as discussed above in “ Net Sales,” and $11.9 million was due to lower hedged metal prices .

The $31.3 million decrease in net manufacturing conversion and other costs reflected:

(i) a $39.1 million decrease related to lower sales and a reduction of manufacturing costs to meet reduced end market application demand and (ii) $7.0 million of lower benefits and overhead costs, partially offset by:

(i) an increase of $10.3 million in other manufacturing costs due to lower manufacturing efficiencies;

(ii) an increase of $3.5 million in environmental costs associated with on-going historical environmental cleanup;

and (iii) an increase of $1.0 million related to major maintenance.

See “ Selected Operational and Financial Information” below for a further discussion of the comparative results of operations for the quarters ended September 30, 2020 and September 30, 2019.

Cost of products sold, excluding depreciation and amortization and other items for the nine months ended September 30, 2020 totaled $719.5 million, or 80% of Net sales, compared to $917.2 million, or 80% of Net sales, for the nine months ended September 30, 2019.

The decrease of $197.7 million reflected a $147.9 million decrease in Hedged Cost of Alloyed Metal and a $49.8 million decrease in net manufacturing conversion and other costs.

Of the $147.9 million decrease in Hedged Cost of Alloyed Metal, $95.1 million was due to lower shipment volume, as discussed above in “ Net Sales,” and $52.8 million was due to lower hedged metal prices.

The $49.8 million decrease in net manufacturing conversion and other costs reflected:

(i) a $54.8 million decrease related to lower sales and a reduction of manufacturing costs to meet reduced end market application demand;

(ii) $11.8 million of lower benefits and overhead costs;

and (iii) a $5.3 million reduction in major maintenance, partially offset by:

(i) an increase of $18.0 million in other manufacturing costs due to lower manufacturing efficiencies and (ii) an increase of $3.3 million in environmental costs associated with on-going historical environmental cleanup.

See “ Selected Operational and Financial Information” below for a further discussion of the comparative results of operations for the nine months ended September 30, 2020 and September 30, 2019.

Cost of products sold, excluding depreciation and amortization and other items for the quarter ended March 31, 2021 totaled $262.5 million, or 81% of Net sales, compared to $286.6 million , or 78% of Net sales, for the quarter ended March 31, 2020.

The decrease of $24.1 million reflected:

(i) a $23.8 million decrease in net manufacturing conversion and other costs and (ii) a $0.3 million decrease in Hedged Cost of Alloyed Metal.

8 million decrease in net manufacturing conversion and other costs reflected :

(i) a $ 20.1 million decrease related to lower sales and a reduction of manufacturing costs to meet reduced end market application demand and (ii) $ 5.

2 million of lower benefits and overhead costs , partially offset by a $ 1.7 million increase in other manufacturing costs due to lower manufacturing efficiencies .

Of the $0.3 million decrease in Hedged Cost of Alloyed Metal, $18.3 million was due to lower shipment volume, as discussed above in “ Net Sales,” offset by $18.0 million due to higher hedged metal prices .

See “ Selected Operational and Financial Information ” below for a further discussion of the comparative results of operations for the quarters ended March 31, 2021 and March 31, 2020 .

Selling, General, Administrative, Research and Development ( “ SG&A and R&D ” ).

SG&A and R&D expense totaled $21.3 million and $23.3 million for the quarters ended September 30, 2020 and September 30, 2019, respectively, and $67.9 million and $75.7 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

The decrease during the quarter ended September 30, 2020 was due primarily to:

(i) a $1.1 million reduction in salaries and benefits and (ii) a $0.6 million reduction in employee incentive programs.

The decrease for the nine months ended September 30, 2020 compared with

September 30, 2019 was due primarily to:

(i) a $ 3.1 million reduction in employee incentive programs;

8 million reduction in salaries and benefits;

and (iii) a $ 2.2 million reduction in travel costs.

Restructuring Costs.

SG&A and R&D expense totaled $31.8 million and $23.9 million for the quarters ended March 31, 2021 and March 31, 2020, respectively.

The increase during the quarter ended March 31, 2021 was due primarily to a $10.5 million increase in legal and consulting expense primarily related to the Warrick Rolling Mill acquisition, partially offset by:

(i) a $1.1 million reduction in salaries and benefits and (ii) a $0.7 million reduction in travel expense.

Restructuring Benefit.

See Note 10 of Notes to Interim Consolidated Financial Statements included in this Report for further information regarding the restructuring plan.

Other Operating Charges (Income), Net .

Other operating charges (income), net, was $0.3 million of charges for the quarter ended September 30, 2020 and $0.8 million of income for the nine months ended September 30, 2020.

There were no Other operating (income) charges, net, for the quarter ended September 30, 2019 and $0.1 million of charges for the nine months ended September 30, 2019.

During the quarter ended September 30, 2020, we recognized $0.4 million of impairment charges related to property, plant and equipment, which was partially offset by $0.1 million of payroll subsidies received by our subsidiary Kaiser Aluminum Canada Limited (“KACL”) under the Canada Emergency Wage Subsidy (“CEWS”) Program.

During the nine months ended September 30, 2020, KACL recognized a total of $1.3 million of payroll subsidies under the CEWS Program, which was partially offset by a $0.5 million impairment charge related to property, plant and equipment.

Interest Expense.

Interest expense represents cash and non-cash interest expense incurred on our unsecured senior notes and our Revolving Credit Facility, net of capitalized interest.

Interest expense was $12.1 million and $5.8 million for the quarters ended September 30, 2020 and September 30, 2019, respectively, and $28.7 million and $17.3 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

Interest expense was $12.3 million and $6.1 million for the quarters ended March 31, 2021 and March 31, 2020, respectively.

See Note 7 of Notes to Interim Consolidated Financial Statements included in this Report for a discussion of:

(i) our debt and credit facilities that were in effect during each of the quarters and nine months ended September 30, 2020 and September 30, 2019 and (ii) interest expense capitalized as part of construction in progress.

(i) our debt and credit facilities that were in effect during each of the quarters ended March 31, 2021 and March 31, 2020 and (ii) interest expense capitalized as part of construction in progress.

Other Expense, Net.

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Interim results are not necessarily indicative of those for a full year.

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

Quarter Ended

September 30,

Nine Months Ended

September 30,

The table below provides selected operational and financial information (in millions of dollars):

Quarter Ended March 31,

Interest expense

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Non-run-rate items:

Restructuring charges

Restructuring benefit

Adjustments to plant-level LIFO 1

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Workers' compensation cost due to discounting

Non-cash asset impairment charge

Environmental expenses 3

Acquisition costs 4

Total non-run-rate items

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Mark-to-market (gain) loss on derivative instruments for 2021 and 2020 represents:

(i) the reversal of mark-to-market loss (gain) on commodity hedges entered into prior to the adoption of Accounting Standards Update (“ASU”) No.

(i) the reversal of mark-to-market (gain) loss on commodity hedges entered into prior to the adoption of Accounting Standards Update (“ASU”) No.

2017-12, Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”) and

settled in the periods presented above ;

(ii) loss (gain) on non-designated commodity hedges ;

and (iii) reclassifications out of Accumulated other comprehensive loss due to forecasted transactions no longer probable of occurring.

settled in the periods presented above and (ii) (gain) loss on non-designated commodity hedges .

Adjusted EBITDA reflects the realized gains and loss es related to these derivatives upon settlement.

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See Note 8 of Notes to Interim Consolidated Financial Statements included in this Report for additional information relating to the environmental expenses.

Adjusted EBITDA for the quarter ended September 30, 2020 was $26.5 million lower than Adjusted EBITDA for the quarter ended September 30, 2019, primarily reflecting:

(i) a $23.3 million sales impact inclusive of the $15.0 million as discussed in “Net sales” above and (ii) an $8.8 million reduction in operating leverage, partially offset by a $4.7 million increase due to our flexing of costs in line with reduced volume.

Adjusted EBITDA for the nine months ended September 30, 2020 was $36.4 million lower than Adjusted EBITDA for the nine months ended September 30, 2019 primarily reflecting:

(i) a $44.4 million sales impact and (ii) a $15.4 million reduction in operating leverage, partially offset by a $21.3 million reduction in overhead and benefits costs.

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

Quarter Ended

September 30,

Nine Months Ended

September 30,

Non-run-rate acquisition costs are acquisition-related transaction costs primarily comprised of legal and consulting fees.

Adjusted EBITDA for the quarter ended March 31, 2021 was $21.9 million lower than Adjusted EBITDA for the quarter ended March 31, 2020, primarily reflecting a $26.4 million sales impact, partially offset by a $5.7 million reduction in plant and corporate overhead.

The table below provides our shipment and VAR information (in millions of dollars, except shipments and VAR per pound) by end market applications:

Quarter Ended March 31,

Aero/HS Products:

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Hedged Cost of Alloyed Metal

Looking to the balance of the year, we reiterate our outlook for the second half of 2020 that we communicated during the quarter ended June 30, 2020.

We continue to anticipate total VAR to be down approximately 10% to 15% compared to the quarter ended June 30, 2020 driven by lower commercial aerospace and business jet sales, offset by continued strength in demand for our defense, automotive and general engineering applications with EBITDA as a percentage of VAR in the mid-teens.

We continue to anticipate a slow recovery for large commercial aerospace applications driven by longer than expected recertification of the Boeing 737 MAX, slower recovery in domestic and international air travel and destocking in the supply chain.

As a result, we expect our VAR for commercial aerospace applications to be down approximately 30% to 35% from our 2019 results.

This compares to the previously anticipated decline of approximately 20% to 25% year-over-year.

Longer term, consistent with the outlook published by Boeing and Airbus, we anticipate that it could be two to four years before large commercial aerospace demand returns to levels similar to 2019.

Demand for our defense applications remains strong and is expected to continue in 2021, driven by continued growth in the F‑35 joint strike fighter and other legacy and rotary military aircraft programs.

Strong demand for Automotive Extrusions is expected to continue to be driven by growth in aluminum content and North American vehicle build rates, currently projected to increase from 12.9 million vehicles in 2020 to over 15.2 million vehicles in 2021.

Overall, we are well positioned to continue to navigate challenging market conditions and capitalize on opportunities to further strengthen our prospects for long-term profitable growth.

Total liquidity remains strong at $1.0 billion and our disciplined capital allocation priorities and our financial guidelines remain unchanged.

Although there remains uncertainty as we look forward, at this time we believe that overall 2020 will be the trough and as business conditions improve, we expect to emerge from the current environment stronger and better positioned to compete over the longer-term.

Prior to the completion of the Warrick Rolling Mill acquisition, our outlook for the full year 2021 anticipated total VAR up 5% to 10% year-over-year and an EBITDA margin (Adjusted EBITDA as a percentage of VAR) comparable to 2020 driven by strong growth in Automotive Extrusions, defense applications and GE products.

With the Warrick Rolling Mill acquisition now completed,

we have updated the full year outlook for 2021 to reflect approximately $375 .0 million to $400 .0 million of additional VAR for the remainder of the year and reiterate our expectation of an EBITDA margin comparable to 2020.

We anticipate Aero/HS products demand to continue improving through the balance of the year driven by growth in defense related programs and business jet production.

Demand for our products related to large commercial airframe production appears to have stabilized with continued recovery through 2023 to 2024.

Demand for our Automotive Extrusions remains robust with multiple new programs successfully launched and underway.

We have experienced slight delays in some programs mainly due to the semiconductor chip shortage anticipated to continue through the first half of 2021.

If the shortage is not recoverable in the second half of 2021, Automotive Extrusions VAR for 2021 could be slightly lower than previously anticipated.

Strength in demand for our GE products continues to reflect strong underlying demand driven by growth in semiconductor and automotive applications, strong service center demand and restocking in the supply chain as lead-times from mills continue to extend.

The outlook for aluminum packaging is very promising with favorable demand and industry dynamics.

North American can demand was up 5% year-over-year in 2020 and projected to increase an additional 3% to 5% in 2021 and beyond.

Can stock demand is driven by sustainability trends and the secular shift from plastic to aluminum in the packaging industry and growing consumer preference for crafted beer and spiked seltzer.

In addition, capacity for beverage and food can stock has shifted from aluminum packaging into other end markets including Automotive Extrusions and other industrial applications.

As we look forward, we are well positioned for continued long-term growth with a diversified portfolio and strong secular growth trends in each of our served end markets:

• Packaging with sustainability-driven conversion from plastics in beverage and food can applications,

• Aero/HS products with a return in global passenger air travel,

• Automotive Extrusions with continued light weighting of vehicles to achieve fuel economy and

• GE products with strong demand for domestic supply of our broad offering of fabricated products.

We have identified multiple expansion opportunities to accelerate our growth in our served markets and we have solid liquidity and financial flexibility to support these opportunities for profitable growth.

Liquidity and Capital Resources

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

September 30,

The following table summarizes our liquidity (in millions of dollars):

As of March 31, 2021

As of December 31, 2020

Available cash and cash equivalents

Short-term investments

Borrowing availability under Revolving Credit Facility, net of letters of credit 1

Total liquidity

Borrowing availability under the Revolving Credit Facility as determined by a borrowing base calculated as of September 30, 2020 and December 31, 2019.

Borrowing availability under the Revolving Credit Facility as determined by a borrowing base calculated as of March 31, 2021 and December 31, 2020.

We place our cash in bank deposits and money market funds with high credit quality financial institutions.

Cash equivalents consist primarily of investment-grade commercial paper, money market accounts and investments which, when purchased, have a maturity of 90 days or less.

Short-term investments represent holdings in investment-grade commercial paper with a maturity at the time of purchase of greater than 90 days.

Due to the current economic situation, we have intentionally reduced our holdings in Short‑term investments.

See Note 13 of Notes to Interim Consolidated Financial Statements included in this Report for information regarding restricted cash at September 30, 2020.

We and certain of our subsidiaries have a credit agreement with Wells Fargo Bank, National Association, as administrative agent, and the other financial institutions party thereto (“Revolving Credit Facility”) (see Note 6 of Notes to Interim Consolidated Financial Statements included in this Report).

There were no borrowings under our Revolving Credit Facility as of September 30, 2020, or as of December 31, 2019.

The following table summarizes our cash flows from operating, investing and financing activities for each period presented (in millions of dollars):

Nine Months Ended September 30,

Total cash provided by (used in):

See Note 14 of Notes to Interim Consolidated Financial Statements included in this Report for information regarding restricted cash at March 31, 2021.

There were no borrowings under our Revolving Credit Facility (see Note 7 of Notes to Interim Consolidated Financial Statements included in this Report) as of March 31, 2021, or as of December 31, 2020.

The following table summarizes our cash flows from operating, investing and financing activities (in millions of dollars):

Quarter Ended March 31,

Total cash (used in) provided by:

Operating activities

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Financing activities

Cash provided by operating activities for the nine months ended September 30, 2020 reflected:

(i) a decrease in trade and other receivables of $43.4 million driven primarily by lower Net sales;

(ii) a decrease in accounts payable of $27.6 million driven predominantly by the volume of metal purchases;

and (iii) a reduction in contract assets of $19.8 million driven primarily by timing and volume of shipments related to revenue on products recognized over-time.

Cash provided by operating activities for the nine months ended September 30, 2019 reflected a decrease in inventory of $22.6 million, offset by a decrease in accounts payable of $21.9 million driven by decreases in the quantity and price of metal purchases.

See Statements of Consolidated Cash Flows included in this Report for further details on our cash flows from operating, investing and financing activities for the nine months ended September 30, 2020 and September 30, 2019.

Cash used in operating activities for the quarter ended March 31, 2021 reflected:

(i) an increase in accounts payable of $33.0 million driven predominantly by the volume of metal purchases;

(ii) an increase in trade and other receivables of $31.7 million driven primarily by improved Net sales;

(iii) an increase in inventory of $24.3 million;

and (iv) an increase in spending of $11.0 million for acquisition costs, primarily comprised of legal and consulting fees.

Cash provided by operating activities for the quarter ended March 31, 2020 reflected an increase in accounts payable of $21.7 million driven by increases in the quantity of metal purchases with an offsetting increase in inventory of $17.0 million partially to meet aerospace demand and partially due to our automotive customers temporarily curtailing operations late in the quarter.

See Statements of Consolidated Cash Flows included in this Report for further details on our cash flows from operating, investing and financing activities for the quarters ended March 31, 2021 and March 31, 2020.

Sources of Liquidity

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We do not believe that covenants contained in the Revolving Credit Facility are reasonably likely to limit our ability to raise additional debt or equity should 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 threshold that would require measuring and maintaining a fixed charge coverage ratio.

At October 16, 2020, there were no borrowings under the Revolving Credit Facility.

As of September 30, 2020, we recognized $4.8 million in employer payroll tax deferrals under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, of which, 50% will be paid in 2021 and 50% will be paid in 2022.

At May 3, 2021, there were no borrowings under the Revolving Credit Facility.

See Note 9 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for a description of our Revolving Credit Facility.

See “Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements – Contractual Obligations and Commercial Commitments ” included in Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2019 for mandatory principal and cash interest payments on our 4.625% unsecured senior notes and commitments under the Revolving Credit Facility.

The following table provides an update to our contractual obligations and commercial commitments table in Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2019 with respect to our 6.50% Senior Notes, consisting of mandatory principal and cash interest payments (in millions of dollars):

Payments Due by Period

Principal and interest on 6.50% Senior Notes

See Note 6 of Notes to Interim Consolidated Financial Statements included in this Report for further details with respect to the 6.50% Senior Notes.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020 for mandatory principal and cash interest payments on the outstanding borrowings.

We do not believe that covenants in the indentures governing the unsecured senior notes are likely to limit our ability to obtain additional debt or equity financing should we choose to do so during the next 12 months.

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We strive to strengthen our competitive position across our end markets through strategic capital investment.

Significant investments over the past decade have positioned us well with increased capacity and expanded manufacturing capabilities while more recent capital projects have focused on further enhancing manufacturing cost efficiency, improving product quality and promoting operational security, which we believe are critical to maintaining and strengthening our position in an increasingly competitive market environment.

A significant portion of our capital spending over the past several years related to the Trentwood modernization project, which has focused on equipment upgrades throughout the process flow to reduce conversion costs, increase efficiency and further improve our competitive cost position on all products produced at our Trentwood facility.

In addition, a significant portion of the investment has also focused on modernizing legacy equipment and the process flow for thin gauge plate to achieve KaiserSelect® quality enhancements for these Aero/HS and GE products.

A significant portion of our capital spending over the past several years related to the modernization project at our Trentwood facility, which focused on equipment upgrades throughout the process flow to reduce conversion costs, increase efficiency and further improve our competitive cost position on all products produced at our Trentwood facility.

In addition, a significant portion of the investment also focused on modernizing legacy equipment and the process flow for thin gauge plate to achieve KaiserSelect® quality enhancements for these Aero/HS and GE products.

These improvements have allowed us to gain incremental manufacturing capacity to enable future sales growth.

As a response to the COVID-19 pandemic and in order to preserve liquidity, in April 2020 we began limiting capital spending to critical sustaining projects only;

however, with ample liquidity and more visibility for our end markets, we will proactively initiate capital spending on a number of organic investment opportunities to further support our automotive growth and enhance efficiencies throughout our operations.

We anticipate that total capital spending for the year ended December 31, 2020 will be approximately $50.0 million to $60.0 million.

As a response to the COVID-19 pandemic and in order to preserve liquidity, in April 2020 we adjusted our capital spending plans to focus on critical sustaining projects and modest investment opportunities to further support our automotive growth and enhance efficiencies throughout our operations.

As such, our $375.0 million multi-year expansion and operational security investment project at our Trentwood facility has been deferred pending changes in market conditions and demand for our Aero/HS products.

Following the Warrick Rolling Mill acquisition, we anticipate that total capital spending in 2021 will be approximately $75.0 million to $85.0 million.

Capital investments will be funded using cash generated from operations, available cash and cash equivalents, short-term investments, borrowings under the Revolving Credit Facility and/or other third-party financing arrangements.

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Holders of performance shares are not paid a quarterly dividend equivalent, but instead are entitled to receive, in connection with the issuance of underlying shares of common stock for performance shares that ultimately vest, 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 of record by such holder from the date of grant of such performance shares through the date of such issuance.

See our Statements of Consolidated Stockholders’ Equity and Note 15 of Notes to Interim Consolidated Financial Statements included in this Report for information regarding dividends paid during the quarters ended September 30, 2020 and September 30, 2019, and declared subsequent to September 30, 2020.

See our Statements of Consolidated Stockholders’ Equity and Note 16 of Notes to Interim Consolidated Financial Statements included in this Report for information regarding dividends paid during the quarters ended March 31, 2021 and March 31, 2020, and declared subsequent to March 31, 2021.

Repurchases of Common Stock

In response to prevailing economic conditions, we suspended repurchases of common stock as of March 18, 2020.

See our Statements of Consolidated Stockholders’ Equity included in this Report for information regarding repurchases of common stock during the quarters and nine months ended September 30, 2020 and September 30, 2019 and the amount authorized and available for future repurchases of common stock under our stock repurchase program.

See our Statements of Consolidated Stockholders’ Equity included in this Report for information regarding minimum statutory tax withholding obligations arising during the quarters and nine months ended September 30, 2020 and September 30, 2019, in connection with the vesting of non-vested shares, restricted stock units and performance shares.

See our Statements of Consolidated Stockholders’ Equity included in this Report for information regarding repurchases of common stock during the quarters ended March 31, 2021 and March 31, 2020 and the amount authorized and available for future repurchases of common stock under our stock repurchase program.

See our Statements of Consolidated Stockholders’ Equity included in this Report for information regarding minimum statutory tax withholding obligations arising during the quarters ended March 31, 2021 and March 31, 2020, in connection with the vesting of non-vested shares, restricted stock units and performance shares.

Environmental Commitments and Contingencies

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Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements

During the nine months ended September 30, 2020, we granted additional stock-based awards to executive officers, certain key employees and non-employee directors under our equity incentive plan.

During the quarter ended March 31, 2021, we granted additional stock-based awards to executive officers, certain key employees and non-employee directors under our equity incentive plan.

Additional awards are expected to be made in future years.

See “ Debt ” above for an update to our contractual obligations as of December 31, 2019 with respect to our 6.50% Senior Notes .

During the quarter ended September 30, 2020, we cancelled equipment purchase commitments of $41.3 million that had been reported as purchase obligations within the contractual obligations and commercial commitments table under the 1-3 years category within Part II, Item 7.

"Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2019.

As of March 31, 2021, we assumed the contractual obligations and commercial commitments of the Warrick Rolling Mill.

These commitments related primarily to the purchase of aluminum and related alloys used in their production process in the ordinary course of business.

We anticipate spending for minimum volumes on these commitments of $400.0 million to $500.0 million during the remainder of 2021.

For updated maturities of lease liabilities, as well as net benefits expected to be paid for pension and other postretirement benefit obligations that include the Warrick Rolling Mill, see Note 3 and Note 5, respectively, of Notes to Interim Consolidated Financial Statements included in this Report.

Except as otherwise disclosed herein, there has been no material change in our contractual obligations, commercial commitments or off-balance sheet arrangements other than in the ordinary course of business since December 31, 2020.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements