What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-01 compared with 2021-02-26 · 553 added, 499 removed, 1035 unchanged (50% of the section changed)

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets

Statements of Consolidated Income

Statements of Consolidated Comprehensive Income

Statements of Consolidated (Loss) Income

Statements of Consolidated Comprehensive (Loss) Income

Statements of Consolidated Stockholders’ Equity

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Kaiser Aluminum Corporation and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

We have audited the accompanying consolidated balance sheets of Kaiser Aluminum Corporation and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of (loss) income, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Update No.

2016-02, Leases (Topic 842) .

As described in Management’s Annual Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Warrick, which was acquired on March 31, 2021.

Total assets (excluding goodwill and intangible assets) and total revenues subject to Warrick’s internal control over financial reporting represented approximately 34% and 44% of consolidated total assets and total revenues as of and for the year ended December 31, 2021, respectively.

Accordingly, our audit did not include the internal control over financial reporting at Warrick.

Basis for Opinion

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(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

and (3) provide reasonable assurance regarding

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONTINUED)

prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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The Company records an environmental loss contingency whenever a contingency is probable and reasonably estimable.

At December 31, 2020, the Company’s $18.7 million accrual for expected environmental costs is included in other accrued liabilities and long-term liabilities and represents the Company’s undiscounted estimate of costs reasonably expected to be incurred based on presently enacted laws and

At December 31, 2021, the Company’s

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONTINUED)

regulations, existing requirements, currently available facts, existing technology and its assessment of the likely remediation actions to be taken.

$16.8 million accrual for expected environmental costs is included in other accrued liabilities and long-term liabilities and represents the Company’s undiscounted estimate of costs reasonably expected to be incurred based on presently enacted laws and regulations, existing requirements, currently available facts, existing technology and its assessment of the likely remediation actions to be taken.

We identified environmental contingencies as a critical audit matter because auditing management’s estimate of the costs reasonably expected to be incurred for environmental contingencies involved especially subjective judgment and an increased extent of audit procedures, including the need to involve environmental specialists.

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Actual costs incurred to date and the progress of management’s remediation activities.

Business Combinations, Goodwill and Intangible Assets — Refer to Notes 1 and 4 to the financial statements

Critical Audit Matter Description

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

The Company accounted for the acquisitions under the acquisition method of accounting for business combinations.

Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, resulting in intangible assets of $50.0 million and goodwill of $20.5 million.

Management estimated the fair value of the intangible assets using the income approach valuation methodology, which was based on the Company’s best estimates of the expected future period of benefit of the asset, the various characteristics of the asset, long-term forecasts of the business, market prices, projected cash flows and the rate used in the discounting of those cash flows.

Determining the fair value of the intangible assets acquired required significant judgment, including the amount and timing of expected future cash flows and the selected discount rates.

We identified the assumptions related to estimating the amount and timing of expected future cash flows and discount rates to be a critical audit matter given the inherent judgment involved in estimating these amounts.

Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures applied to the amount and timing of expected future cash flows and the selection of the discount rates for intangibles included the following, among others:

We tested the effectiveness of controls over the valuation of intangibles, including management’s controls over the amount and timing of expected future cash flows and the selection of discount rates.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONTINUED)

We assessed the reasonableness of management’s forecasts of future cash flows by performing inquiries of appropriate individuals outside of the finance organization, comparing the projections to historical results, contractual agreements, certain peer companies, third-party industry forecasts, and internal communications to management and board of directors.

With the assistance of our fair value specialists, we evaluated the reasonableness of (1) the valuation methodology and (2) the discount rates utilized, including testing the source information underlying the determination of the discount rates, testing the mathematical accuracy of the calculation, and developing a range of independent estimates and comparing those to the discount rates selected by management.

We evaluated whether the estimated future cash flows were consistent with evidence obtained in other areas of the audit.

/s/ Deloitte & Touche LLP

Costa Mesa, California

February 25, 2021

March 1, 2022

We have served as the Company’s auditor since 2002.

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As of December 31,

(In millions of dollars, except

share and per share amounts)

(In millions of dollars, except share

and per share amounts)

Current assets:

Cash and cash equivalents

Short-term investments

Trade receivables, net

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Long-term portion of operating lease liabilities

Pension and other postretirement benefits

Net liabilities of Salaried VEBA

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December 31, 2020;

no shares were issued and outstanding at December 31, 2020

and December 31, 2019

Common stock, par value $ 0.01 , 90,000,000 shares authorized at both December 31, 2020

and December 31, 2019;

22,647,455 shares issued and 15,812,169 shares outstanding at

December 31, 2020;

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

December 31, 2019

no shares were issued and outstanding at

December 31, 2021 and December 31, 2020

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

December 31, 2021 and December 31, 2020;

22,700,404 shares issued and

15,865,118 shares outstanding at December 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 December 31, 2020 and 6,682,523 shares at

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

December 31, 2020

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KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED INCOME

STATEMENTS OF CONSOLIDATED (LOSS) INCOME

Year Ended December 31,

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Goodwill impairment

Restructuring costs

Other operating (income) charges, net

Restructuring (benefit) costs

Other operating charges (income), net

Total costs and expenses

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Interest expense

Other expense, net – Note 13

Income before income taxes

Income tax provision

Net income per common share:

Other expense, net – Notes 9 and 13

(Loss) income before income taxes

Income tax benefit (provision)

Net (loss) income

Net (loss) income per common share:

Weighted-average number of common shares outstanding (in thousands):

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KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

STATEMENTS OF CONSOLIDATED COMPREHENSIVE (LOSS) INCOME

Year Ended December 31,

(In millions of dollars)

Other comprehensive income (loss), net of tax – Note 11:

Net (loss) income

Other comprehensive (loss) income, net of tax – Note 11:

Defined benefit pension plan and Salaried VEBA

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Foreign currency translation

Other comprehensive income (loss), net of tax

Comprehensive income

Other comprehensive income, net of tax

Comprehensive (loss) income

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

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BALANCE, December 31, 2018

Cumulative-effect adjustment 1

BALANCE, January 1, 2018

Other comprehensive loss, net of tax

Other comprehensive income, net of tax

Common shares issued (including impacts from

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withholdings upon vesting of non-vested shares

Repurchase of common stock 2

Cash dividends declared 2

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BALANCE, December 31, 2021

Cumulative-effect adjustment relates to our adoption of Accounting Standards Update (“ASU”) No.

2014-09, Revenue from Contracts with Customers (Topic 606) and ASU No.

2016-01, Financial Instruments – Overall (Subtopic 825-10) .

Weighted-average repurchase price (dollars per share) for the years ended December 31, 2020, December 31, 2019 and December 31, 2018 was $ 81.94 , $ 96.18 and $ 100.28 , respectively.

Weighted-average repurchase price (dollars per share) was $ 81.94 for the year ended December 31, 2020 and $ 96.18 for the year ended December 31, 2019.

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

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Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation of property, plant and equipment

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Loss on extinguishment of debt

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

Gain on disposition of short-term investments

(Gain) loss on disposition of property, plant and equipment

Loss (gain) on disposition of short-term investments

Non-cash defined benefit net periodic postretirement benefit cost

Other non-cash changes in assets and liabilities

Changes in operating assets and liabilities:

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

Trade and other receivables

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Accrued liabilities

Annual variable cash contributions to VEBAs

Annual variable cash contributions to Salaried VEBA

Long-term assets and liabilities, net

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Proceeds from disposition of short-term investments

Cash payment for acquisition of Imperial Machine & Tool Co., net of cash received

Cash payment for acquisition of Warrick, net of cash received – Note 4

Proceeds from disposal 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 :

Repayment of principal and redemption premium of 6.50 % Senior Notes

Repayment of principal and redemption premium of 5.875 % Senior Notes

Issuance of 4.50 % Senior Notes

Issuance of 4.625 % Senior Notes

Issuance of 6.50 % Senior Notes

Cash paid for debt issuance costs

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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 provided by 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

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Commitments and Contingencies

Accumulated Other Comprehensive (Loss) Income

Accumulated Other Comprehensive Loss

Restructuring

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Income Tax Matters

Net Income Per Share

Net (Loss) Income Per Share

Supplemental Cash Flow Information

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Summary of Significant Accounting Policies

In this Annual Report on Form 10-K (this “Report”), unless the context otherwise requires, references in these notes to consolidated financial statements to “Kaiser Aluminum Corporation,” “we,” “us,” “our,” “the Company” and “our Company” refer collectively to Kaiser Aluminum Corporation and its subsidiaries.

In this Annual Report on Form 10-K (this “Report”), unless the context otherwise requires, references in these notes to consolidated financial statements to “Kaiser Aluminum Corporation,” “Kaiser,” “we,” “us,” “our,” “the Company” and “our Company” refer collectively to Kaiser Aluminum Corporation and its subsidiaries.

Organization and Nature of Operations.

Kaiser Aluminum Corporation specializes in the production of semi-fabricated specialty aluminum mill products, such as aluminum plate and sheet and extruded and drawn products, for the following end market applications:

Kaiser Aluminum Corporation specializes in the production of semi-fabricated specialty aluminum mill products, such as aluminum plate and sheet, bare and coated coil and extruded and drawn products, for the following end market applications:

(i) aerospace and high strength (“Aero/HS products”);

(ii) automotive (“Automotive Extrusions”);

(iii) general engineering (“GE products”);

and (iv) and other industrial (“Other products”).

(ii) beverage and food packaging (“Packaging”);

(iii) automotive (“Automotive Extrusions”);

(iv) general engineering (“GE products”);

and (v) other industrial (“Other products”).

Our business is organized into one operating segment.

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Intercompany balances and transactions are eliminated.

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 8 );

(iii) settled all outstanding available for sale securities (see Note 8);

(iv) issued $ 350.0 million of new unsecured senior notes (see Note 9);

and (v) initiated a plan of restructuring (see Note 12).

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.

The severity, magnitude and duration, as well as the economic consequences of the Coronavirus Disease 2019 (“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.

Supply Chain Financing .

Upon our acquisition of Warrick (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.

During 2021, we sold trade accounts receivable totaling $1,102.8 million , related to these supply chain financing arrangements, of which our customers’ financial institutions applied discount fees totaling $ 6.2 million.

To the extent discount fees related to the sale of trade accounts receivable under supply chain financing arrangements are not reimbursed by our customers, they are included in Other expense, net.

As of December 31, 2021, we had been and/or expected to be fully reimbursed by our customers for these discount fees.

Fair Value Measurements.

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We also review the underlying inputs that are significant to the fair value measurement of financial instruments to determine if a transfer among hierarchy levels is appropriate.

We historically have not had significant transfers into or out of each hierarchy level.

Financial assets and liabilities that we measure at fair value each period include our derivative instruments, equity investments related to our deferred compensation plan and debt investment securities classified as available for sale securities (see Note 5 and Note 8).

Additionally, we measure at fair value once each year at December 31 our Canadian defined benefit pension plan and the plan assets of the Salaried VEBA (defined in Note 5).

Financial assets and liabilities that we measure at fair value each period include our derivative instruments and equity investments related to our deferred compensation plan (see Note 5 and Note 8).

Additionally, we measure at fair value once each year at December 31 the plan assets of our defined benefit pension and postretirement plans including the Salaried VEBA (defined in Note 5).

In determining the fair value of the plan assets at an annual period end, we utilize primarily the results of valuations supplied by the investment advisors responsible for managing the assets of each plan, which we independently review for reasonableness.

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Goodwill is tested for impairment during the fourth quarter on an annual basis, as well as on an interim basis, as warranted, at the time of relevant events and changes in circumstances.

Intangible asset fair values and useful lives are determined using the income approach valuation methodology, which is based on, among other factors, the expected future period of benefit of the asset, the various characteristics of the asset, long‑term forecasts of the business, market prices, projected cash flows and the rate used in discounting those cash flows.

Intangible assets with definite lives are initially recognized at fair value and subsequently amortized over the estimated useful lives to reflect the pattern in which the economic benefits of the intangible assets are consumed.

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See “ Property, Plant and Equipment, Net” below for a discussion of impairment charges on idled assets recorded during 2021, 2020 and 2019.

Government Grants.

From time-to-time, we receive grants from certain governmental agencies such as states and municipalities.

We recognize government grants when we have reasonable assurance that we will comply with any conditions attached to the grant and the grant will be received.

Government grants related to property, plant and equipment are presented as a reduction to the related asset’s carrying amount.

Grants related to compensation for costs already incurred or for immediate financial support, with no future related costs, are recognized as income in the period in which they are receivable.

During 2020, our subsidiary Kaiser Aluminum Canada Limited received $ 1.3 million of payroll subsidies under the Canada Emergency Wage Subsidy Program.

These subsidies were recorded within Other operating charges (income), net.

Cash and Cash Equivalents.

We consider only those short-term, highly liquid investments which, when purchased, have maturities of 90 days or less to be cash equivalents.

Our cash equivalents consist primarily of funds in commercial paper, money market funds and other highly liquid investments, which are classified within Level 1 of the fair value hierarchy with the exception of commercial paper, which is classified within Level 2 of the fair value hierarchy (see Note 8).

Our cash equivalents consist primarily of funds in money market funds, which are classified within Level 1 of the fair value hierarchy.

Restricted Cash.

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Available for Sale Securities.

We account for investments in certain marketable debt securities as available for sale securities.

Such securities are recorded at fair value (see Note 8), with net unrealized gains and losses, net of income taxes, reflected in Accumulated other comprehensive loss as a component of Stockholders’ equity.

Realized gains and losses from the sale of marketable debt securities, if any, are determined on a specific identification basis.

Debt investment securities with an original maturity of 90 days or less are classified as Cash and cash equivalents (see Note 2).

Debt investment securities with an original maturity of greater than 90 days are presented as Short-term investments on our Consolidated Balance Sheets.

In addition to debt investment securities, we also hold assets in various investment funds managed by a third-party trust in connection with our deferred compensation program (see Note 5).

We have historically accounted for investments in certain marketable debt securities with maturities of greater than 90 days as available for sale securities.

Such securities were recorded at fair value with net unrealized gains and losses, net of income taxes, reflected in Accumulated other comprehensive loss as a component of Stockholders’ equity.

Realized gains and losses from the sale of available for sale securities, if any, were determined on a specific identification basis.

We settled all outstanding available for sale securities during the year ended December 31, 2020.

Trade Receivables and Allowance for Credit Losses.

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During the year ended December 31, 2020, we decremented a prior year, lower cost LIFO layer, which resulted in a benefit of $ 0.2 million.

During the year ended December 31, 2019, we decremented a prior year, higher cost LIFO layer which resulted in a charge of $ 3.6 million.

Other inventories are stated on the FIFO basis and consist of operating supplies, which are materials and supplies to be consumed during the production process.

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Replacement parts are recorded within Prepaid expenses and other current assets or Other assets depending on whether or not the expected utilization of the replacement parts is to occur within the next 12 months.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property, Plant and Equipment, Net.

Property, plant and equipment, net, is recorded at cost and includes construction in progress (see Note 2).

Property, plant and equipment acquired in the Warrick acquisition was recorded at fair value as of the date of acquisition (see Note 4).

Interest related to the construction of qualifying assets is capitalized as part of the construction costs.

The amount of interest expense capitalized as construction in progress was $ 1.2 million, $ 1.0 million and $ 1.6 million during 2021, 2020 and 2019, respectively.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Depreciation is computed using the straight-line method at rates based on the estimated useful lives of the various classes of assets.

Finance lease assets and leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term.

Depreciable finance lease assets and leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term.

The estimated useful lives are as follows:

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Machinery and equipment

Finance lease assets

Depreciable finance lease assets

Depreciation expense is not included in Cost of products sold, but is included in Depreciation and amortization.

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We use an estimate of the future undiscounted cash flows of the related asset or asset group over the estimated remaining life of such asset(s) in measuring whether the asset(s) are recoverable.

We recorded impairment charges of $ 0.5 million, $ 0.9 million and $ 1.4 million in 2020, 2019 and 2018, respectively, to reflect the scrap value of idled assets we determined not to deploy for future use.

Asset impairment charges are included in Other operating (income) charges, net, in our Statements of Consolidated Income.

There were no impairment charges recorded in 2021.

We recorded impairment charges of $ 0.5 million and $ 0.9 million in 2020 and 2019, respectively, to reflect the scrap value of idled assets we determined not to deploy for future use.

Asset impairment charges are included in Other operating charges (income), net, in our Statements of Consolidated (Loss) Income.

We classify assets as held for sale only when an asset is being actively marketed and expected to sell within 12 months.

Assets held for sale are initially measured at the lesser of the assets’ carrying amount and the fair value less costs to sell.

Cloud Computing Implementation Costs.

We defer implementation costs associated with a software hosting arrangement that is a service contract.

We recognized $ 1.1 million and $ 0.4 million as of December 31, 2021 and December 31, 2020, respectively, within Prepaid expenses and other current assets and $ 6.7 million and $ 2.7 million as of December 31, 2021 and December 31, 2020, respectively, within Other assets related to hosted cloud‑computing software for our enterprise resource planning system refresh project.

We began amortizing the deferred implementation costs associated with this project in December 2021 and will amortize the development costs within Selling, general, administrative, research and development over nine years .

We recorded amortization expense associated with this project of $ 0.1 million in 2021 and no amortization expense in 2020.

We determine whether an agreement is a lease at inception.

We have operating and finance leases for equipment and real estate that primarily have fixed lease payments.

For purposes of calculating lease liabilities, options to extend or terminate a lease are included within the lease term when it is reasonably certain 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 right-of-use lease assets and liabilities.

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

Additionally, we make judgments around contractual asset substitution rights in determining whether a contract contains a lease.

We have lease agreements with lease and non-lease components, which are generally accounted for separately.

These non-lease components include items such as common area maintenance, taxes and insurance for our real estate leases, as well as maintenance charges related to our equipment leases.

We have, however, applied the practical expedient within Accounting Standards Update (“ASU”) No.

2016-02, Leases (Topic 842):

Amendments to the Financial Accounting Standards Board Accounting Standards Codification (“ASU 2016-02”), to not separate lease and non-lease components to our embedded supply system equipment leases and have therefore accounted for both lease and non‑lease components in determining the lease assets and liabilities.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Many of our equipment leases contain clauses that require us to return the equipment with certain functionality intact.

We account for these costs as residual value guarantees when the guarantee becomes probable of being owed.

Our lease agreements do not contain any material restrictive covenants.

Derivative Financial Instruments.

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Such estimates are based on judgment, using our historical claims data and information and analysis provided by actuarial and claims advisors, our insurance carriers and other professionals.

As of December 31, 2020, we revised our methodology of calculating our estimated workers’ compensation liabilities from a discounted basis to an undiscounted basis, resulting in a charge of $ 0.6 million and an ending liability of $ 29.8 million as of December 31, 2020.

Our estimate for unpaid claim liabilities, gross of insurance recoverables on an undiscounted basis was $ 29.2 million at December 31, 2019, of which we recorded $ 26.6 million using a discount rate of 1.75 % .

Accrued liabilities for employee healthcare benefits, which are estimates of unpaid incurred medical and prescription drug costs as provided by our healthcare administrators, were $ 9.0 million and $ 3.1 million at December 31, 2021 and December 31, 2020, respectively.

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(i) legal obligations related to the removal and disposal of asbestos and (ii) asset retirement obligations related to future lease terminations.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and encapsulated within walls, floors, roof, piping or equipment insulation) of certain of our older facilities if such facilities were to undergo major renovation or be demolished.

The majority of our CAROs relate to the first category and consist of incremental costs that would be associated with the removal and disposal of asbestos (all of which is believed to be fully contained and encapsulated within walls, floors, roof, piping or equipment insulation) of certain of our older facilities if such facilities were to undergo major renovation or be demolished.

We estimate incremental costs for special handling, removal and disposal costs of materials that may or will give rise to CAROs and then discount the expected costs back to the current year using a credit-adjusted, risk-free rate.

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Accruals for expected environmental costs are included in Other accrued liabilities or Long-term liabilities, as appropriate (see Note 2).

Environmental expense relating to continuing operations is included in Cost of products sold excluding depreciation and amortization and other items (“Cost of products sold” or “COGS”) in our Statements of Consolidated Income.

Environmental expense relating to non-operating locations is included in Selling, general, administrative, research and development (“SG&A and R&D”) in our Statements of Consolidated Income.

Environmental expense relating to non-operating locations is included in Selling, general, administrative, research and development (“SG&A and R&D”) in our Statements of Consolidated (Loss) Income.

Revenue Recognition.

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For products that have no alternative use and for which we have an enforceable right to payment (including a reasonable profit) throughout the production process, we recognize revenue over time.

In general, a majority of our Aero/HS products and our Automotive Extrusions are recognized over time, with the remainder of our products recognized at a point in time.

In general, revenue recognized over time primarily relates to our Aero/HS products and our Automotive Extrusions with the remainder of our products recognized at a point in time.

In limited circumstances, we have concluded that we are an agent in certain Packaging end market arrangements.

For these transactions, revenue has been recognized on a net basis.

For the majority of our business, contracts with customers begin when we acknowledge a purchase order for a specific customer order of product to be delivered in the near term.

These purchase orders are short term in nature, although they may reference a longer term “blanket purchase order” or a “terms and conditions” agreement, both of which may span multiple years.

These purchase orders are short term in nature, although they may reference a longer

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

term “ blanket purchase order ” or a “ terms and conditions ” agreement, both of which may span multiple years.

For revenue recognized at a point in time, transfer of control usually occurs upon shipment or upon customer receipt of the product, depending on shipping terms.

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Research and development costs for 2021, 2020 and 2019 were $ 9.3 million, $ 9.1 million and $ 10.5 million, respectively.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Major Maintenance Activities.

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Awards with certain other performance conditions (non-market-based awards) are valued based on our stock price at the date of grant.

Our non‑market-based awards have performance conditions pertaining to our cost performance, economic value added performance and adjusted EBITDA margin performance, which is measured by our adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as a percentage of value added revenue.

Our non‑market-based awards have performance conditions pertaining to our cost performance and adjusted EBITDA margin performance, which is measured by our adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as a percentage of value added revenue.

Holders of performance-based awards receive a one-time payment at the time of issuance of vested shares based on the total dividends they would have received if the vested shares had been held of record from the date of grant through the date of issuance.

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Adjustments to expense related to forfeitures are recorded in the period in which they occur.

For performance shares with performance conditions pertaining to our cost performance, economic value added performance and Adjusted EBITDA margin performance, the related expense is updated quarterly by adjusting the estimated number of shares expected to vest based on the most probable outcome of the performance condition (see Note 7).

For performance shares with performance conditions pertaining to our cost performance and Adjusted EBITDA margin performance, the related expense is updated quarterly by adjusting the estimated number of shares expected to vest based on the most probable outcome of the performance condition (see Note 7).

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Adoption of New Accounting Pronouncements

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.

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

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

Under ASU 2018-15, requirements for capitalizing implementation costs incurred in a hosting arrangement (cloud computing) that is a service contract are to be aligned with the 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 twelve months ended December 31, 2020 were 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 were included in Net cash provided by operating activities in our Statements of Consolidated Cash Flows.

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 .

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

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.

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.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”) was issued in October 2021.

Under ASU 2021-08, we are required to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASU No.

2014-09, Revenue from Contracts with Customers (Topic 606) .

We early adopted ASU 2021-08 during the quarter ended December 31, 2021 and applied the amendments retrospectively to the beginning of the year.

Our adoption of ASU 2021-08 did not result in a material impact on our consolidated financial statements.

Accounting Pronouncements Issued But Not Yet Adopted

In March 2020, the Financial Accounting Standards Board 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.

2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance (“ASU 2021-10”) was issued in November 2021.

Under ASU 2021-10, the accounting entities with transactions with a government that are accounted for by analogy to a grant or contribution accounting model are required to annually disclose certain information regarding the transaction including:

(i) nature and related accounting policy used;

(ii) line items on the balance sheet and income statement affected by the transactions;

(iii) amounts applicable to each line item;

and (iv) significant terms and conditions.

We are currently in the process of evaluating the impact of adopting ASU 2021-10 using a prospective approach, but do not expect it to have a material impact on our consolidated financial statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

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(In millions of dollars)

Cash and Cash Equivalents

Cash and money market funds

Commercial paper

Trade Receivables, net

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Accrued income taxes and other taxes payable

Accrued annual contribution to VEBAs – Note 5

Accrued annual contribution to Salaried VEBA – Note 5

Accrued interest

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Other long-term liabilities

Based on market conditions during the year ended December 31, 2020, we temporarily idled projects within Construction in progress totaling $ 20.0 million as of December 31, 2020, all of which are expected to resume at a future date.

We determine whether an agreement is a lease at inception.

We have operating and finance leases for equipment and real estate that primarily have fixed lease payments.

Based on market conditions, we temporarily idled projects within Construction in progress totaling $ 24.9 million and $ 20.0 million as of December 31, 2021 and December 31, 2020, respectively, all of which are expected to resume at a future date.

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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

determination of lease assets and liabilities.

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

Additionally, we make judgments around contractual asset substitution rights in determining whether a contract contains a lease.

We have lease agreements with lease and non-lease components, which are generally accounted for separately.

These non-lease components include items such as common area maintenance, taxes and insurance for our real estate leases, as well as maintenance charges related to our equipment leases.

We have, however, applied the practical expedient within ASU 2016-02 to not separate lease and non-lease components to our embedded supply system equipment leases and have therefore accounted for both lease and non‑lease components in determining the lease assets and liabilities.

Many of our equipment leases contain clauses that require us to return the equipment with certain functionality intact.

We account for these costs as residual value guarantees when the guarantee becomes probable of being owed.

Our lease agreements do not contain any material restrictive covenants.

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

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Weighted-average discount rate

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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Total lease liabilities

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

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

Year Ended December 31,

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Total lease cost

Total lease cost was $ 8.2 million for the year ended December 31, 2018.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Maturity of Lease Liabilities

Finance Leases

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Business Combinations, Goodwill and Intangible Assets

Pending Warrick Rolling Mill Acquisition .

On November 30, 2020, we entered into a purchase agreement with Alcoa Corporation to purchase 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 approximately $ 670.0 million, consisting of approximately $ 587.0 million in cash and approximately $ 83.0 million of assumed other post-employment benefits liabilities.

The transaction, anticipated to close on or about March 31, 2021, will provide us with non-cyclical end market diversification and entry into the packaging end market.

As of December 31, 2020, we incurred approximately $ 5.5 million of acquisition costs, primarily related to legal and advisory fees.

The acquisition of the Warrick Rolling Mill is subject to a number of closing conditions and there can be no assurance that such conditions will be satisfied or that we will be able to complete the Warrick Rolling Mill acquisition within the planned timeframe or at all.

Imperial Machine & Tool Co.

On September 19, 2018, we acquired Imperial Machine & Tool Co.

(“IMT”), located in Columbia, New Jersey, for $ 43.2 million in cash, net of cash received.

IMT specializes in multi-material advanced manufacturing methods and techniques, which include multi-axis computer numerical control machining, additive manufacturing (“3D Printing”), welding and fabrication for demanding aerospace and defense, automotive, high tech and general industrial applications.

The acquisition enhances our ability to address customer needs by broadening our capability to provide innovative solutions for demanding applications.

2019 Goodwill Impairment .

In conjunction with our acquisition of IMT, we added $ 25.2 million of goodwill after allocating the consideration paid, net of cash received, to all other identifiable assets.

The goodwill recorded reflected the value we expected from IMT’s 3D Printing line of business.

However, due to indications that opportunities for this type of disruptive technology were extending over a longer-term horizon than initially valued, during the fourth quarter of 2019, we made the strategic decision to prioritize our focus on IMT’s subtractive (machining) business opportunities while the 3D Printing market continues to mature.

Based on our revised strategy, we tested for goodwill impairment using Level 3 inputs and a combination of an income approach using the estimated discounted cash flow and a market-based valuation methodology.

Having determined that the carrying value of IMT exceeded its fair value as of November 30, 2019, we recognized an impairment charge of $ 25.2 million for the year ended December 31, 2019 within Operating income in our Statements of Consolidated Income.

As this goodwill is deductible for tax purposes, the deferred tax effects were included in the impairment charge and income tax provision.

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, “Warrick”) for a purchase price of $ 670.0 million.

Warrick is a leading producer of bare and coated aluminum coil used for can stock applications in 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 years ended December 31, 2021 and December 31, 2020 were $ 16.7 million and $ 5.5 million, respectively, primarily related to professional fees and included within SG&A and R&D.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the purchase consideration to allocate (in millions of dollars):

Contract purchase price

Working capital adjustment

Initial outstanding indebtedness – Other postretirement benefits liabilities

Cash paid at acquisition close on March 31, 2021

Estimated post-close adjustments

Preliminary purchase consideration to allocate

Revision to estimated post-close adjustments

Final purchase consideration to allocate

We accounted for the acquisition using the acquisition method of accounting, which requires the assets acquired and liabilities assumed to be recorded at the date of acquisition at their respective estimated fair values.

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

During the year ended December 31, 2021, we finalized the valuation and completed the purchase price allocation, which included the adjustments listed below.

The following table summarizes the finalized fair values of assets acquired and liabilities assumed (in millions of dollars):

Initial Allocation

Final Allocation

Trade receivables

Other receivables

Prepaid expenses and other current assets

Property, plant and equipment

Operating lease assets

Intangible assets

Other Assets 2

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

Total allocated purchase consideration

Goodwill is primarily attributable to the assembled workforce and is expected to be deductible for income tax purposes.

Other assets represents assets to be purchased or constructed by Alcoa Corporation (“Alcoa”) following the close of the acquisition and subsequently conveyed to us in connection with separating the rolling mill from the other businesses retained by Alcoa.

For the period from April 1, 2021 through December 31, 2021, Warrick contributed $1,141.2 million of net sales from continuing operations included in our Statements of Consolidated (Loss) Income for the year ended December 31, 2021.

Net (loss) income for the nine months ended December 31, 2021 is not provided as the Warrick results have been fully integrated and discrete financial information cannot be obtained without unreasonable effort.

The following unaudited pro forma financial information presents results assuming Warrick had 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.

Year Ended December 31,

Net income (loss)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Warrick rolling mill has historically purchased molten aluminum and electrical power from Alcoa’s smelter and power plant in Warrick County, Indiana.

Alcoa’s Warrick smelter historically sold the molten aluminum to the Warrick rolling mill at smelter cost and electrical power from Alcoa’s power plant at negotiated prices between the parties.

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

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

The following table presents the changes in the carrying value of our goodwill (in millions of dollars):

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Gross carrying value:

Accumulated impairment loss:

Beginning balance

Impairment loss

Warrick acquisition

Ending balance

Accumulated impairment loss

Net carrying value

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In conjunction with our 2018 acquisition of Imperial Machine & Tool Co (“IMT”), we added $ 25.2 million of goodwill after allocating the consideration paid, net of cash received, to all other identifiable assets.

As this goodwill is deductible for tax purposes, the deferred tax effects were included in the impairment charge and income tax provision.

Intangible Assets.

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Non-compete agreement

Favorable commodity contracts 2

Favorable lease contracts 2

As of December 31, 2020

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Non-compete agreement

Of the total acquired customer relationships, $ 32.0 million was purchased in conjunction with the Warrick acquisition and had a weighted average amortization period of 12 years.

The favorable lease and commodity contracts were purchased in conjunction with the Warrick acquisition.

We identified no indicators of impairment associated with our intangible assets during the years ended December 31, 2021, December 31, 2020 or December 31, 2019.

Amortization expense relating to definite-lived intangible assets was $ 2.9 million for 2020, $ 2.8 million for 2019 and $ 1.8 million for 2018.

The following table presents the expected amortization of intangible assets for each of the next five calendar years and thereafter as of December 31, 2020 (in millions of dollars):

Employee Benefits

Employee Plans.

Employee benefit plans include:

A defined contribution 401(k) savings plan for hourly bargaining unit employees at nine of our production facilities based on the specific collective bargaining agreement at each facility.

For active bargaining unit employees at three of these production facilities, we are required to make fixed rate contributions.

For active bargaining unit employees at one of these production facilities, we are required to match certain employee contributions.

For active bargaining unit employees at three of these production facilities, we are required to make both fixed rate contributions and concurrent matches.

For active bargaining unit employees at two remaining production facilities, we are not required to make any contributions.

Fixed rate contributions either:

(i) range from (in whole dollars) $ 800 to $ 2,400 per employee per year, depending on the employee’s age;

(ii) vary between 2 % to 10 % of the employees’ compensation depending on their age and years of service for employees hired prior to January 1, 2004;

or (iii) are fixed at a 2 % annual contribution for employees hired on or after January 1, 2004.

A defined contribution 401(k) savings plan for salaried and certain hourly employees providing for a concurrent match of up to 4 % of certain contributions made by employees plus an annual contribution between 2 % and 10 % of their compensation depending on their age and years of service to employees hired prior to January 1, 2004.

Certain salaried and hourly new hires on or after January 1, 2004 receive a fixed 2 % contribution annually.

A defined benefit pension plan for salaried employees at our London, Ontario facility, with annual contributions based on each salaried employee’s age and years of service.

At December 31, 2020, approximately 58 % of the plan assets were invested in equity securities, 35 % were invested in fixed income securities and 7 % were invested in short-term and other securities.

Our investment committee reviews and evaluates the investment portfolio.

The asset mix target allocation on the long-term investments is approximately 60 % in equity securities, 35 % in fixed income securities and 5 % in short-term

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The plan assets of our Canadian pension plan are managed by advisors selected by us, with the investment portfolio subject to periodic review and evaluation by our investment committee.

The investment of assets in the Canadian pension plan is based upon the objective of maintaining a diversified portfolio of investments in order to minimize concentration of credit and market risks (such as interest rate, currency, equity price and liquidity risks).

The degree of risk and risk tolerance take into account the obligation structure of the plan, the anticipated demand for funds and the maturity profiles required from the investment portfolio in light of these demands.

A non-qualified, unfunded, unsecured plan of deferred compensation for certain employees who would otherwise suffer a loss of benefits under our defined contribution plan as a result of the limitations imposed by the Internal Revenue Code of 1986.

Amortization expense relating to definite-lived intangible assets was $ 9.0 million, $ 2.9 million and $ 2.8 million for 2021, 2020 and 2019, respectively.

The following table presents the expected amortization of intangible assets for each of the next five calendar years and thereafter as of December 31, 2021 (in millions of dollars):

Employee Benefits

Defined Contribution Plans

We sponsor defined contribution 401(k) savings plans for certain hourly and salaried employees.

Employees may contribute a portion of their compensation to the plans and we match a specified percentage of these contributions in equivalent form of the investments elected by the employee.

Additionally, we make fixed annual contributions for certain hourly and salaried employees in varying amounts depending on hire date.

Deferred Compensation Plan

We sponsor a non-qualified, unfunded, unsecured plan of deferred compensation for certain employees who would otherwise suffer a loss of benefits under our defined contribution plan as a result of the limitations imposed by the Internal Revenue Code of 1986.

Despite the plan being an unfunded plan, we make an annual contribution to a rabbi trust to fulfill future funding obligations, as contemplated by the terms of the plan.

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Assets in the trust are accounted for as equity investments with changes in fair value recorded within Other expense, net (see Note 13).

Benefits for certain members of senior management, including certain of our named executive officers, related to terminations of employment in specified circumstances, including in connection with a change in control, by us without cause and by the executive officer with good reason.

Other Benefits

We provide other benefits for certain members of senior management, including certain of our named executive officers, related to terminations of employment in specified circumstances, including in connection with a change in control, by us without cause and by the executive officer with good reason.

Defined Benefit Plans

We sponsor defined benefit pension plans for certain hourly bargaining unit employees and salaried employees.

Pension benefits generally depend on length of service, job grade and remuneration.

Substantially all benefits are paid through pension trusts that are sufficiently funded to ensure that all plans can pay benefits to retirees as they become due.

We use a December 31 measurement date for our pension plans.

We sponsor a healthcare and life insurance postretirement benefit plan (“OPEB”) covering certain eligible retirees.

Generally, the medical plans are unfunded and pay a percentage of medical expenses, reduced by deductibles and other coverage.

Life benefits are generally provided by insurance contracts.

We use a December 31 measurement date for our OPEB plan.

Salaried VEBA Postretirement Obligation.

Certain retirees who retired prior to 2004 and certain employees who were hired prior to February 2002 and have subsequently retired or will retire with the requisite age and service, along with their surviving spouses and eligible dependents, are eligible to participate in a voluntary employees’ beneficiary association (“VEBA”) that provides healthcare cost, medical cost and long-term care insurance cost reimbursement benefits (“Salaried VEBA”).

The accumulated postretirement benefit obligation (“APBO”) for the Salaried VEBA was computed based on the level of benefits being provided.

Since the Salaried VEBA pays out a fixed annual amount to its participants, no future cost trend rate increase was assumed in computing the APBO for the Salaried VEBA.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have an ongoing obligation with no express termination date to make variable cash contributions up to a maximum of $ 2.9 million to the Salaried VEBA.

We determined that in the first quarter of 2021, we will pay approximately $ 1.7 million with respect to 2020.

Such amount was recorded within Other accrued liabilities as of December 31, 2020 (see Note 2).

The Salaried VEBA assets were invested in various managed funds based on information we received from the trustee of the Salaried VEBA.

Our variable payment, if any, is treated as a funding/contribution policy and not counted as a Salaried VEBA asset at the accrual date for actuarial purposes.

There was no required accrual for variable c ontributions as of December 31, 2021.

We paid $ 1.7 million with respect to 2020 during the first quarter of 2021.

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

Union VEBA Postretirement Obligation .

Certain other eligible retirees represented by certain unions, along with their surviving spouses and eligible dependents, participate in a separate VEBA (“Union VEBA”).

During the first quarter of 2018, we made a $ 12.8 million cash contribution to the Union VEBA with respect to the nine months ended September 30, 2017.

This was our final contribution.

We have no ongoing obligation to make further variable cash contributions to the Union VEBA.

We account for the Salaried VEBA as a defined benefit plan in our financial statements using a December 31 measurement date .

Key Assumptions.

The following data presents the key assumptions used and the amounts reflected in our consolidated financial statements with respect to our Canadian pension plan and the Salaried VEBA.

We use a December 31 measurement date for both of the plans.

The following table presents the assumptions used to determine benefit obligations:

Canadian Pension Plan

The following table presents the weighted average assumptions used to determine benefit obligations:

Salaried VEBA

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As of December 31,

Discount rate

Expected long-term return on plan assets

Rate of compensation increase

Key assumptions made in computing the net obligation of the Salaried VEBA and in total include:

With respect to Salaried VEBA assets:

Based on the information received from the Salaried VEBA at December 31, 2020 and at December 31, 2019, the Salaried VEBA assets were invested in various managed proprietary funds.

Our variable payment, if any, is treated as a funding/contribution policy and not counted as a Salaried VEBA asset at December 31 for actuarial purposes.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

With respect to Salaried VEBA obligations:

The accumulated postretirement benefit obligation (“APBO”) for the Salaried VEBA was computed based on the level of benefits being provided by it at December 31, 2020 and December 31, 2019.

Since the Salaried VEBA was paying a fixed annual amount to its participants at both December 31, 2020 and December 31, 2019, no future cost trend rate increase has been assumed in computing the APBO for the Salaried VEBA.

The following table presents the assumptions used to determine net periodic postretirement benefit cost:

Canadian Pension Plan

Beginning in 2021, the Warrick pension assumptions were weighted with the Canadian pension assumptions based on the total benefit obligations of each.

The following table presents the weighted average assumptions used to determine net periodic postretirement benefit cost:

Salaried VEBA

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Year Ended December 31,

Discount rate

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Rate of compensation increase

Beginning in 2021, the Warrick pension assumptions were weighted with the Canadian pension assumptions based on the total benefit obligations of each.

The expected long-term rate of return assumption for the Salaried VEBA is based on the targeted investment portfolios provided to us by the trustee of the Salaried VEBA.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Benefit Obligations and Funded Status.

The following table presents the benefit obligations and funded status of our Canadian pension plan and the Salaried VEBA and the corresponding amounts that are included in our Consolidated Balance Sheets (in millions of dollars):

Canadian Pension Plan

The following table presents the benefit obligations and funded status of our pension plans, OPEB and the Salaried VEBA and the corresponding amounts that are included in our Consolidated Balance Sheets (in millions of dollars):

Salaried VEBA

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As of December 31,

Change in benefit obligation:

Obligation at beginning of year

Obligation assumed through acquisition of Warrick

Foreign currency translation adjustment

Interest cost

Prior service (credit) cost 1

Actuarial loss 2

Benefits paid by Company

Benefits paid by Salaried VEBA

Prior service cost (credit) 1

Actuarial (gain) loss 2

Benefits paid

Obligation at end of year 3

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Company contributions

Benefits paid by Company

Benefits paid by Salaried VEBA

Benefits paid

Fair market value of plan assets at end of year

Net funded status 4

The prior service (credit) cost relating to the Salaried VEBA in both 2020 and 2019 resulted from (decreases) increases in the annual healthcare reimbursement benefit starting in 2020 and 2019, respectively, for plan participants.

The actuarial loss relating to the Salaried VEBA in 2020 was comprised of a $ 5.7 million loss due to a change in the discount rate offset by a $ 1.0 million gain due to changes in census information.

The actuarial loss relating to the Salaried VEBA in 2019 was comprised of:

(i) a $ 6.8 million loss due to a change in the discount rate and (ii) a $ 0.1 million loss due to changes in census information, partially offset by a $ 0.5 million gain due to a change in the projected utilization rate.

For the Canadian pension plan, the benefit obligation is the projected benefit obligation.

For the Salaried VEBA, the benefit obligation is the APBO.

Net funded status relating to the Canadian pension plan at December 31, 2020 and December 31, 2019 was included within Long term liabilities on our Consolidated Balance Sheets.

Net funded status relating to the Salaried VEBA at December 31, 2020 and December 31, 2019 was presented as Net liabilities of Salaried VEBA on our Consolidated Balance Sheets.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The accumulated benefit obligation for the Canadian pension plan was $ 9.2 million and $ 7.6 million at December 31, 2020 and December 31, 2019, respectively.

We expect to contribute $ 0.3 million to the Canadian pension plan in 2021.

Cumulative loss recognized in Accumulated Other Comprehensive:

Accumulated net actuarial loss

Prior service cost

The prior service cost (credit) relating to the Salaried VEBA in both 2021 and 2020 resulted from increases (decreases) in the annual healthcare reimbursement benefit in 2021 and 2020, respectively for plan participants.

The actuarial gain relating to the Salaried VEBA in 2021 was comprised of a $ 3.9 million gain due to changes in census information and a $ 3.0 million gain due to a change in the discount rate.

The actuarial loss relating to the Salaried VEBA in 2020 was comprised of a $ 5.7 million loss due to a change in the discount rate, partially offset by a $ 1.0 million gain due to changes in census information.

For the pension plans, the benefit obligation is the projected benefit obligation.

For the Salaried VEBA and OPEB, the benefit obligation is the APBO.

Net funded status relating to the pension plans and Salaried VEBA at December 31, 2021 and December 31, 2020 was included within Long term liabilities on our Consolidated Balance Sheets.

Of the Net funded status relating to the OPEB at December 31, 2021, $ 1.6 million was included within current liabilities and $ 81.9 million was included within Long term liabilities of on our Consolidated Balance Sheets.

The accumulated benefit obligation for the pension plans was $ 19.3 million and $ 9.2 million at December 31, 2021 and December 31, 2020, respectively.

We expect to contribute $ 8.6 million to the pension plans in 2022.

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

Year Ended December 31,

Canadian pension plan benefit payments

Pension benefit payments

Salaried VEBA benefit payments 1

OPEB payments

Total net benefits

Such amounts are based on benefit amounts and certain key assumptions obtained from the Salaried VEBA.

The following table presents the amount of loss included in our Consolidated Balance Sheets (within Accumulated other comprehensive loss) associated with our Canadian pension plan and the Salaried VEBA (before tax) that had not yet been reflected in net periodic postretirement benefit cost (in millions of dollars):

Canadian Pension Plan

Salaried VEBA

As of December 31,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Such amounts are based on benefit amounts and certain key assumptions obtained from the Salaried VEBA and will be paid out of the Salaried VEBA plan assets.

The following table presents the asset class allocation per our pension plan investment policy and the weighted average asset allocation at December 31, 2021:

As of December 31, 2021

Accumulated net actuarial loss

Prior service cost

Cumulative loss reflected in Accumulated other comprehensive loss

Other investments

Fair Value of Plan Assets.

The plan assets of our Canadian pension plan and the Salaried VEBA are measured annually on December 31 and reflected in our Consolidated Balance Sheets at fair value.

The plan assets of our pension plans and the Salaried VEBA are measured annually on December 31 and reflected in our Consolidated Balance Sheets at fair value.

Valuation of certain Canadian pension plan and Salaried VEBA assets are based on the net asset value (“NAV”) of shares held by the plans at year end using the NAV practical expedient.

With respect to the Salaried VEBA, the investment advisors providing the valuations are engaged by the Salaried VEBA trustees.

Certain Salaried VEBA plan assets are valued based upon unadjusted quoted market prices in active markets that are accessible at the measurement date for identical, unrestricted assets (e.g., liquid securities listed on an exchange).

Certain plan assets are valued based upon unadjusted quoted market prices in active markets that are accessible at the measurement date for identical, unrestricted assets (e.g., liquid securities listed on an exchange).

Such assets are classified within Level 1 of the fair value hierarchy.

Valuation of other Salaried VEBA invested plan assets is based on significant observable inputs (e.g., valuations derived from actual market transactions, broker-dealer supplied valuations or correlations between a given U.S.

Valuation of other plan invested assets are based on significant observable inputs (e.g., valuations derived from actual market transactions, broker-dealer supplied valuations or correlations between a given U.S.

market and a non-U.S.

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The fair values of such financial instruments are classified within Level 2 of the fair value hierarchy.

In addition to the Canadian pension plan and Salaried VEBA, we also hold assets in various investment funds at certain registered investment companies in connection with our deferred compensation program.

Such assets are presented within Level 2 of the fair value hierarchy and are measured and recorded at fair value based on their quoted market prices.

The remainder of plan assets are valued based on the net asset value (“NAV”) of shares held by the plans at year end using the NAV practical expedient.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

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Plan Assets in the Fair Value Hierarchy:

Salaried VEBA –

Cash and money market investments

Deferred compensation program – Diversified

investment funds in registered investment companies 1

Salaried VEBA – Equity investment funds in registered investment companies 1

Salaried VEBA – Fixed income investment funds in registered investment companies 2

Deferred compensation program – Diversified investment funds in registered investment companies 3

Total plan assets in the fair value hierarchy

Plan Assets Measured at NAV 4 :

Salaried VEBA – Fixed income investment funds

in registered investment companies 3

Salaried VEBA – Equity investment funds in

registered investment companies 4

Canadian pension plan – Diversified investment

funds in registered investment companies 1

Pension plans – Equity investment funds in registered investment companies 1

Pension plans – Fixed income investment funds in registered investment companies 2

Pension plans – Diversified investment funds in registered investment companies 3

Total plan assets at fair value

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Plan Assets in the Fair Value Hierarchy:

Salaried VEBA –

Cash and money market investments

Diversified investment funds in registered

investment companies 1

Total Salaried VEBA assets in the fair value hierarchy

Deferred compensation program – Diversified

investment funds in registered investment companies 1

Salaried VEBA – Cash and money market investments

Deferred compensation program – Diversified investment funds in registered investment companies 3

Total plan assets in the fair value hierarchy

Plan Assets Measured at NAV 4 :

Salaried VEBA – Fixed income investment funds

in registered investment companies 3

Salaried VEBA – Equity investment funds in

registered investment companies 4

Canadian pension plan – Diversified investment

funds in registered investment companies 1

Salaried VEBA – Equity investment funds in registered investment companies 1

Salaried VEBA – Fixed income investment funds in registered investment companies 2

Pension plans – Diversified investment funds in registered investment companies 3

Total plan assets at fair value

Equity investment funds in registered investment companies.

This category represents investments in equity funds that invest in portfolios comprised primarily of equity and equity-related securities of U.S.

issuers across all market capitalizations.

Fixed income investment funds in registered investment companies .

This category represents investments in various fixed income funds with multiple registered investment companies.

Such funds invest primarily in bonds, debentures, notes, securities with equity and fixed-income characteristics, cash equivalents, securities backed by mortgages and other assets, loans, pooled or collective investment vehicles made up of fixed‑income securities and other fixed-income obligations of banks, corporations and governmental authorities.

Diversified investment funds in registered investment companies .

The plan assets are invested in investment funds that hold a diversified portfolio of:

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and (iv) cash and cash equivalents.

Equity investment funds measured at fair value using the NAV practical expedient are managed by an investment adviser registered with the SEC under the Investment Advisers Act of 1940 and can be redeemed with five business days’ notice on the 15th (or last business day prior to the 15th) and on the last business day of each month.

A business day is every day that the New York Stock Exchange is open.

Diversified investment funds measured at fair value using the NAV practical expedient are unitized mutual funds without externally published net asset values, which can be redeemed daily without restriction.

This category represents investments in various fixed income funds with multiple registered investment companies.

Such funds invest primarily in bonds (including Eurodollar and Yankee bonds), debentures, notes, securities with equity and fixed-income characteristics (such as bonds with warrants attached, convertible bonds, hybrids and certain preferred securities), cash equivalents, securities backed by mortgages and other assets, loans, pooled or collective investment vehicles made up of fixed‑income securities and other fixed-income obligations of banks, corporations and governmental authorities.

This category represents investments in equity funds that invest in portfolios comprised primarily of equity and equity-related securities of U.S.

issuers across all market capitalizations.

The market value of these funds has not been categorized in the fair value hierarchy and is being presented in the table above to permit a reconciliation of the fair value hierarchy to our Consolidated Balance Sheets and are comprised primarily of unitized mutual funds without externally published net asset values, which can be redeemed daily without restriction.

As of December 31, 2020, equity investment funds measured at fair value using the NAV practical expedient were managed by an investment adviser registered with the SEC under the Investment Advisers Act of 1940 and were subject to certain exercise restrictions.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

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Year Ended December 31,

Canadian pension plan 1

Defined contribution plans 1

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Net periodic postretirement benefit cost relating to Salaried VEBA 2,3

Net periodic postretirement benefit cost relating to pension plans 4

Net periodic postretirement benefit cost relating to OPEB 4

Substantially all of these charges related to employee benefits are in Cost of products sold 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 is included within our Statements of Consolidated Income in SG&A and R&D for all periods presented.

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

Deferred compensation plan expense and the current service cost component of Net periodic postretirement benefit cost relating to Salaried VEBA are included within our Statements of Consolidated (Loss) 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, in our Statements of Consolidated (Loss) Income.

See Note 6 for more information on our multiemployer defined benefit pension plans.

The current service cost component of Net periodic postretirement benefit cost relating to both the pension plans and the OPEB plan are included within our Statements of Consolidated (Loss) Income in COGS for all periods presented.

All other components of Net periodic postretirement benefit cost relating to both the pension plans and the OPEB plan are included within Other expense, net, on our Statements of Consolidated (Loss) Income.

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:

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

(i) a charge for service rendered by employees;

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and (v) amortization of net actuarial differences.

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

Canadian Pension Plan

The following table presents the components of Net periodic postretirement benefit cost relating to our pension plans, OPEB plan and the Salaried VEBA (in millions of dollars):

Salaried VEBA

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Year Ended December 31,

Interest cost

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Net periodic postretirement benefit cost

Net periodic postretirement benefit cost for 2019 and 2020 included only the Canadian pension plan.

Net periodic postretirement benefit cost for the Warrick pension plan was included in 2021 from the acquisition date of March 31, 2021 through December 31 2021.

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.

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The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

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If we choose to stop participating in any of our multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents information about multiemployer pension plans in which we participate:

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Trust (USW) 3

Mar 2021 - Sep 2025

Sep 2025 - Nov 2026

Other Funds 4

The most recent Pension Protection Act zone status available in 2020 and 2019 for the Steelworkers Pension Trust is for the plan’s year end at December 31, 2019 and December 31, 2018, respectively.

The zone status is based on information that we received from the plan and is certified by the plan’s actuary.

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We were not listed in any of the plans’ Forms 5500 or the Canada-Wide Industrial Pension Plan financial statements as providing more than 5 % of the total contributions for any of the plan years disclosed.

At December 31, 2020, financial statements and Forms 5500 were not available for the plan years ending in 2020.

At December 31, 2021, financial statements and Forms 5500 were not available for the plan year ending in 2021.

Further, there were no significant changes to the number of employees covered by our multiemployer plans that would affect the period-to-period comparability of the contributions for the years presented.

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As of December 31, 2021, we had a liability of $ 9.3 million recorded within Accrued salaries, wages and related expenses for estimated probable future payments relating to the 12-month performance period of our 2021 STI Plans.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-Term Incentive Programs (“LTI Programs”)

Executive officers and other key employees of the Company, as well as non-employee directors of the Company, are eligible to participate in the Kaiser Aluminum Corporation 2021 Equity and Incentive Compensation Plan (“2021 Plan”).

The 2016 Plan was approved by stockholders on May 26, 2016 and replaced and succeeded in its entirety the Kaiser Aluminum Corporation Amended and Restated 2006 Equity and Performance Incentive Plan, except with regard to awards previously granted thereunder that continued to be outstanding.

The 2021 Plan was approved by stockholders on June 3, 2021 and replaced and succeeded in its entirety the Kaiser Aluminum Corporation Amended and Restated 2016 Equity and Performance Incentive Plan, except with regard to awards previously granted thereunder that continued to be outstanding.

At December 31, 2021, 716,496 shares were available for awards under the 2021 Plan.

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The service period is generally one year for RSAs granted to non-employee directors and three years for RSUs granted to executive officers and other key employees.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes activity relating to RSAs and RSUs for the year ended December 31, 2021:

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(ii) achieving targeted improvements to our total controllable cost performance over a three-year performance period;

(iii) achieving targeted improvements to our economic value added performance, determined based on our adjusted pre-tax operating income in excess of a capital charge, over a three-year performance period;

and/or (iv) achieving targeted improvements to our Adjusted EBITDA margin performance, measured by our Adjusted EBITDA as a percentage of value added revenue, over a three-year performance period.

and/or (iii) achieving targeted improvements to our Adjusted EBITDA margin performance, measured by our Adjusted EBITDA as a percentage of value added revenue, over a three-year performance period.

Each performance share that becomes vested and earned entitles the recipient to receive one common share or a cash amount equaling the value of one common share.

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Weighted average expected volatility based on 2.8 years of daily closing share prices from the valuation date to the end of the performance period.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes activity relating to performance shares for the year ended December 31, 2021:

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and the number of shares canceled includes the number of shares that did not vest due to performance results falling below those required for maximum payout.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Non-Cash Compensation Expense.

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Total non-cash compensation expense

Recognized tax benefits relating to non-cash compensation expense were $ 2.3 million, $ 2.4 million and $ 2.5 million for 2020, 2019 and 2018, respectively.

Recognized tax benefits relating to the non-cash compensation expense presented in the table above were $ 3.0 million, $ 2.3 million and $ 2.4 million for 2021, 2020 and 2019, respectively.

The aggregate fair value of awards that vested was $ 9.7 million, $ 12.4 million and $ 16.4 million for 2021, 2020 and 2019, respectively, which represents the market value of our common stock on the date that the awards vested.

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Performance shares

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Participants may elect to have us withhold common shares to satisfy minimum statutory tax withholding obligations arising in connection with the vesting of RSAs, RSUs and performance shares.

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In conducting our business, we enter into derivative transactions, including forward contracts and options, to limit our exposure to:

(i) metal price risk related to our sale of fabricated aluminum products and the purchase of metal used as raw material for our fabrication operations;

(i) metal price risk related to our sale of fabricated aluminum products and the purchase of metal, including primary and scrap, or recycled, aluminum, our main raw material, and certain alloys used as raw material for our fabrication operations;

(ii) energy price risk relating to fluctuating prices of natural gas and electricity used in our production processes;

and (iii) foreign currency requirements with respect to cash commitments for equipment purchases denominated in foreign currency.

and (iii) foreign currency requirements with respect to cash commitments for equipment purchases and/or other agreements denominated in foreign currency.

We do not use derivative financial instruments for trading or other speculative purposes.

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

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, 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.

Management reviews the scope of the Hedging Committee’s activities with our Board of Directors.

We are exposed to counterparty credit risk on all of our derivative instruments, which we manage by monitoring the credit quality of our counterparties and allocating our hedging positions among multiple counterparties to limit exposure to any single entity.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our counterparties are major investment grade financial institutions or trading companies.

Hedging transactions are governed by negotiated reciprocal credit lines, which generally require collateral to be posted above specified credit thresholds.

We believe the risk of loss is remote and contained due to counterparty credit quality, our diversification practice and collateral requirements.

In a majority of our hedging counterparty agreements, our counterparty offers us a credit line that adjusts up or down, depending on our liquidity.

Below specified liquidity thresholds, we may have to post collateral if the fair value of our net liability with such counterparty exceeds our reduced credit line.

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

The aggregate fair value of our derivative instruments that were in a net liability position was $ 2.7 million and $ 7.2 million at December 31, 2020 and December 31, 2019, respectively, and we had no collateral posted as of those dates.

We are exposed to counterparty credit risk on all of our derivative instruments, which we manage by monitoring the credit quality of our counterparties, allocating our hedging positions among multiple counterparties to limit exposure to any single entity, and using options as part of the hedging strategy.

Our counterparties are major investment grade financial institutions or trading companies and our hedging transactions are governed by negotiated reciprocal credit lines, which generally require collateral to be posted above specified credit thresholds which may adjust up or down, depending on our liquidity.

As a result, we believe the risk of loss is remote and contained.

The aggregate fair value of our derivative instruments that were in a net liability position was zero and $ 2.7 million at December 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.

At December 31, 2020, we had no cash collateral posted from our customers.

We had no cash collateral posted from our customers at December 31, 2021.

For more information about concentration risks concerning customers and suppliers, see Note 17.

Cash Flow Hedges

We designate forward swap contracts for aluminum, energy and, from time-to-time, zinc and copper (“Alloying Metals”), used in our fabrication operations as cash flow hedges.

Unrealized gains and losses associated with our cash flow hedges are deferred in Other comprehensive income (loss), net of tax, and reclassified to COGS when such hedges settle or when it is probable that the original forecasted transactions will not occur by the end of the originally specified time period.

We designate as cash flow hedges forward swap contracts for aluminum, energy and, from time-to-time, zinc and copper (“Alloying Metals”) used in our fabrication operations and foreign currency forward contracts for supplies and services for which payments are due in foreign currency.

Unrealized gains and losses associated with our cash flow hedges are deferred in Other comprehensive (loss) income, net of tax, and reclassified to COGS when such hedges settle or when it is probable that the original forecasted transactions will not occur by the end of the originally specified time period.

See Note 11 for the total amount of gain or loss on derivative instruments designated and qualifying as cash flow hedging instruments and fair value hedging instruments that was reported in Accumulated other comprehensive loss (“AOCI”), as well as the related reclassifications into earnings and tax effects.

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Aluminum Hedges .

Our pricing of fabricated aluminum products is generally intended to lock in a conversion margin (representing the value added from the fabrication process(es)) and to pass through metal price fluctuations to our customers.

For some of our higher value added products sold on a spot basis, the pass through of metal price movements can sometimes lag by as much as several months, with a favorable impact to us when metal prices decline and an adverse impact to us when metal prices increase.

For some of our higher value added products sold on a spot basis, the pass through of aluminum price movements can sometimes lag by as much as several months, with a favorable impact to us when aluminum prices decline and an adverse impact to us when aluminum prices increase.

Additionally, in certain instances, we enter into firm-price arrangements with our customers for stipulated volumes to be delivered in the future.

Because we generally purchase primary and secondary aluminum on a floating price basis, the lag in passing through metal price movements to customers on some of our higher value added products sold on a spot basis and the volume that we have committed to sell to our customers under a firm-price arrangement create metal price risk for us.

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

Because we generally purchase primary and secondary aluminum on a floating price basis, the lag in passing through aluminum price movements to customers on some of our higher value added products sold on a spot basis and the volume that we have committed to sell to our customers under a firm-price arrangement create aluminum price risk for us.

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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Alloying Metals Hedges .

We are exposed to risk of fluctuating prices for Alloying Metals used as raw materials in our fabrication operations.

We, from time to time, in the ordinary course of business, use third-party hedging instruments to mitigate our risk from price fluctuations in Alloying Metals.

We are exposed to risk of fluctuating prices for a lloying m etals used as raw materials in our fabrication operations.

We, from time to time, in the ordinary cou rse of business, enter into hedging transactions and/or physical delivery commitments with third parties to mitigate our risk from fluctuations in a lloying m etals prices that are not passed through pursuant to the terms of our customer contracts .

Energy Hedges .

We are exposed to risk of fluctuating prices for natural gas and electricity.

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

As of December 31, 2020, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 90 % of our expected natural gas purchases for 2021, 95 % of our expected natural gas purchases for 2022, 92 % of our expected natural gas purchases for 2023, 83 % of our expected natural gas purchases for 2024 and 25 % of our expected natural gas purchases for both 2025 and 2026.

As of December 31, 2020, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 92 % of our expected electricity purchases for 2021, 76 % of our expected electricity purchases for 2022 and 15 % of our expected electricity purchases for 2023.

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 that are not passed through pursuant to the terms of our customer contracts.

The following table summarizes the percentage of our expected variable priced purchases of metal alloys and energy for which we have executed derivative and/or physical delivery commitments in place to reduce price fluctuations for the next five years as of December 31, 2021:

We have contracts in place to cover the noted percentage of our requirements at a firm or predetermined price, however our primary supplier of magnesium declared force majeure and is supplying less than the full volume contracted and our magnesium cost will fluctuate for any shortfalls until our supplier’s capacity is fully restored.

Foreign Currency Hedges.

We are exposed to foreign currency exchange risk related to certain supply and service agreements with vendors for which payments are due in foreign currency.

We, from time to time, in the ordinary course of business, use foreign currency forward contracts in order to mitigate the exposure to currency exchange rate fluctuations related to these purchases.

Fair Value Hedges

We are exposed to foreign currency exchange risk related to firm-price commitments for equipment purchases from foreign manufacturers.

We, from time to time, in the ordinary course of business, use third-party hedging instruments to mitigate our exposure

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to currency exchange rate fluctuations on these purchases and designate such hedging instruments as fair value hedges.

We, from time to time, in the ordinary course of business, use third-party hedging instruments to mitigate our exposure to currency exchange rate fluctuations on these purchases and designate such hedging instruments as fair value hedges.

Gain or loss related to components excluded from the assessment of effectiveness from these fair value hedges is first recognized in AOCI and subsequently reclassified to Depreciation and amortization on a straight-line basis over the term of the hedge.

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Non-Designated Hedges of Operational Risks

From time-to-time, we enter into commodity and foreign currency exchange contracts that are not designated as hedging instruments to mitigate certain short-term commodity and currency impacts, as identified.

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.

From time-to-time, we enter into commodity contracts that are not designated as hedging instruments to mitigate certain short‑term commodity impacts, as identified.

The gain or loss on these derivatives is recognized within COGS.

Notional Amount of Derivative Contracts

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1/22 through 12/23

Fixed price sales contracts

1/21 through 11/21

Midwest premium swap contracts 1

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1/22 through 12/22

Fixed price sales contracts

1/21 through 12/21

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Maturity Period

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1/22 through 12/22

Maturity Period

Notional Amount of Contracts (euro)

Fixed price forward contracts

3/22 through 3/23

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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

Year Ended December 31,

Statements of Consolidated

Income Classification

Total of income and expense line items presented in our Statements of Consolidated Income in which the effects of hedges are recorded:

(Loss) Income Classification

Total of income and expense line items presented in our Statements of Consolidated (Loss) Income in which the effects of hedges are recorded:

Cash flow hedges

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Depreciation and amortization

Fair value hedges (early termination)

Fair value hedges

Other expense, net

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

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

Cost of products sold

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Cost of products sold

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:

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

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

Foreign exchange contracts

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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

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

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

Alloying Metals – Realized (gain) loss

Cost of products sold

Alloying Metals – Unrealized gain

Alloying Metals – Unrealized loss (gain)

Cost of products sold

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

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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

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Midwest premium swap contracts

Alloying Metals –

Fixed price purchase contracts

Natural gas – Fixed price purchase contracts

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

Based on market conditions during the year ended December 31, 2020, we settled all remaining outstanding available for sale securities upon maturity.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table classifies our other financial assets under the appropriate level of the fair value hierarchy as of December 31, 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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4.50% Senior Notes.

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”), as discussed below.

The unamortized amount of debt issuance costs relating to the 6.50% Senior Notes as of December 31, 2020 was $ 5.4 million.

In May 2021, we issued $ 550.0 million aggregate principal amount of 4.50% unsecured senior notes due June 1, 2031 at 100 % of the principal amount (“4.50% Senior Notes”).

The restrictions and covenants related to our 4.50% 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 as of December 31, 2021 relating to the 4.50% Senior Notes was $ 8.1 million.

Interest expense, including amortization of debt issuance costs and debt premium, relating to the 4.50% Senior Notes was $ 15.7 million for the year ended December 31, 2021.

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 was 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.

Interest accrues on the 4.50% Senior Notes beginning May 20, 2021 at a rate of 4.50 % per annum and is payable semiannually on June 1 and December 1 of each year.

The first interest payment date was December 1, 2021 .

The effective interest rate of the 4.50% Senior Notes is approximately 4.7 % per annum, taking into account the amortization of debt issuance costs.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The 4.50% 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.

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The 4.50% 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.

We may redeem the 4.50% Senior Notes at our option in whole or part at any time on or after June 1, 2026 at a redemption price (expressed as a percentage of principal amount) of 102.25 %, declining to 101.50 %, 100.75 % and 100 % on or after June 1, 2027, June 1, 2028 and June 1, 2029, respectively, in each case plus any accrued and unpaid interest.

At any time prior to June 1, 2026, we may also redeem some or all of the 4.50% Senior Notes at a redemption price equal to 100 % of the principal amount of the 4.50% Senior Notes redeemed, plus the “applicable premium” (as defined in the indenture) as of the redemption date and any accrued and unpaid interest thereon.

In addition, subject to the conditions set forth in the indenture, at any time prior to June 1, 2026, we may also redeem up to 40 % of the 4.50% Senior Notes using the net proceeds from certain equity offerings at a redemption price equal to 104.50 % of the principal amount plus any accrued and unpaid interest.

Holders of the 4.50 % Senior Notes have the right to require us to repurchase the 4.50 % Senior Notes at a price in cash equal to 101 % of the aggregate principal amount plus any accrued and unpaid interest following the occurrence of both:

(i) a change of control and (ii) a “ratings decline” (as defined in the indenture).

A change of control includes:

(i) the sale, lease or transfer of all or substantially all of our assets;

(ii) certain ownership changes;

(iii) certain recapitalizations, mergers and dispositions;

and (iv) stockholder approval of any plan or proposal for the liquidation or dissolution of us.

We may also be required to offer to repurchase the 4.50 % Senior Notes at 100 % of the principal amount, plus any accrued and unpaid interest, with the net proceeds of certain asset sales.

6.50% Senior Notes.

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”).

On May 21, 2021, we redeemed in full $ 350.0 million in aggregate principal amount of our 6.50% Senior Notes at a redemption price of 108.83 % of the principal amount plus $ 1.3 million of accrued and unpaid interest for a total net cash outflow of $ 382.2 million.

Upon redemption of the 6.50% Senior Notes, we recorded a loss on extinguishment of debt of $ 35.9 million within Other expense, net, on our Statements of Consolidated (Loss) Income, which included the premium payment of $ 30.9 million and a write-off of the remaining unamortized premium and debt issuance costs of $ 5.0 million (See Note 13 for details).

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

Interest expense, including amortization of debt issuance costs, relating to the 6.50% Senior Notes was $ 9.2 million and $ 16.2 million for the years ended December 31, 2021 and December 31, 2020, respectively .

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 $ 376.8 million at December 31, 2020.

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 December 31, 2021 was $ 5.6 million.

Interest expense, including amortization of debt issuance costs, relating to the 4.625% Senior Notes was $ 24.0 million and $ 2.4 million for the year December 31, 2020 and December 31, 2019 respectively.

Interest expense, including amortization of debt issuance costs, relating to the 4.625% Senior Notes was $ 24.0 million for both years ended December 31, 2021 and December 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.

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The 4.625% 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).

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The indenture governing the 4.625% Senior Notes (“indenture”) places limitations on our and our restricted subsidiaries’ ability to, among other things:

(i) incur liens;

(ii) consolidate, merge or sell all or substantially all of our and our restricted subsidiaries’ assets;

(iii) incur or guarantee additional indebtedness;

(iv) enter into transactions with affiliates;

and (v) make “restricted payments” (as defined in the indenture to include certain loans, investments, dividend payments, share repurchases and prepayments, redemptions and repurchases of certain indebtedness).

Certain types and amounts of restricted payments are allowed by various provisions of the indenture.

In particular, the indenture provisions permit us to make restricted payments in any amount if, after giving effect to such restricted payments, our “consolidated net debt ratio” (as defined in the indenture) equals or is less than 2.75 :1.00.

We may redeem the 4.625% Senior Notes at our option in whole or part at any time on or after March 1, 2023 at redemption prices (expressed as percentages of principal amount) of 102.313 %, declining to 101.156 % and 100 % on or after March 1, 2024 and March 1, 2025, respectively, in each case plus any accrued and unpaid interest to the applicable redemption date.

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In addition, subject to the conditions set forth in the indenture, at any time prior to March 1, 2023, we may also redeem up to 40.0 % of the 4.625% Senior Notes using the net proceeds from certain equity offerings at a redemption price equal to 104.625 % of the principal amount plus any accrued and unpaid interest.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Holders of the 4.625 % Senior Notes have the right to require us to repurchase the 4.625 % Senior Notes at a price in cash equal to 101 % of the aggregate principal amount plus any accrued and unpaid interest following the occurrence of both:

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We may also be required to offer to repurchase the 4.625 % Senior Notes at 100 % of the principal amount, plus any accrued and unpaid interest, with the net proceeds of certain asset sales.

The indenture governing the 4.625% Senior Notes (“indenture”) places limitations on our and our restricted subsidiaries’ ability to, among other things:

(i) incur liens;

(ii) consolidate, merge or sell all or substantially all of our and our restricted subsidiaries’ assets;

(iii) incur or guarantee additional indebtedness;

(iv) enter into transactions with affiliates;

Certain types and amounts of restricted payments are allowed by various provisions of the indenture.

5.875% Senior Notes.

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The effective interest rate of the 5.875% Senior Notes was approximately 6.1 % 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 $ 22.0 million and $ 22.9 million for the years ended December 31, 2019 and December 31, 2018, respectively.

Interest expense, including amortization of debt issuance costs, relating to the 5.875% Senior Notes was $ 22.0 million for the year ended December 31, 2019.

Revolving Credit Facility

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The Revolving Credit Facility provides us with a $ 375.0 million funding commitment through October 30, 2024.

Joining us as borrowers (“Co-Borrowers”) under the Revolving Credit Facility are three of our wholly owned domestic operating subsidiaries:

Joining us as borrowers (“Co-Borrowers”) under the Revolving Credit Facility are four of our wholly owned domestic operating subsidiaries:

(i) Kaiser Aluminum Investments Company;

(ii) Kaiser Aluminum Fabricated Products, LLC;

and (iii) Kaiser Aluminum Washington, LLC.

(iii) Kaiser Aluminum Washington, LLC;

and (iv) Kaiser Aluminum Warrick, LLC.

The Revolving Credit Facility replaces the previously existing facility that was due to mature in December 2020.

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At maturity, all principal amounts outstanding under the Revolving Credit Facility will be due and payable.

Borrowings under the Revolving Credit Facility bear interest at a rate equal to either a base prime rate or LIBOR, plus, in each case, a specified variable percentage determined by reference to the then-remaining borrowing availability under the Revolving Credit Facility.

The initial LIBOR applicable margin is 125 basis points.

Borrowings under the Revolving Credit Facility bear interest at a rate equal to either a base rate, as defined in the Revolving Credit Facility or the London Interbank Offered Rate (“LIBOR”), plus, in each case, a specified variable percentage determined by reference to the then-remaining borrowing availability under the Revolving Credit Facility.

The Applicable Margin for Base Rate Loans is 25 basis points, while the Applicable Margin for LIBOR Rate Loans is 125 basis points.

We will also pay a monthly commitment fee equal to 0.25 % per annum multiplied by the result of the aggregate amount of revolver commitments, less the average revolver usage during the immediately preceding month.

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Amounts owed under the Revolving Credit Facility may be accelerated upon the occurrence of various events of default, including, without limitation, the failure to make principal or interest payments when due and breaches of covenants, representations and warranties set forth therein.

The Revolving Credit Facility places limitations on our ability and the ability of certain of our subsidiaries to, among other things, grant liens, engage in mergers, sell assets, incur debt, enter into sale and leaseback transactions, make investments, undertake transactions with affiliates, prepay certain debt, pay dividends and repurchase shares.

The Revolving Credit Facility places limitations on our ability and the ability of certain of our subsidiaries to, among other things:

(i) grant liens;

(ii) engage in mergers;

(iii) sell assets;

(iv) incur debt;

(v) enter into sale and leaseback transactions;

(vi) make investments;

(vii) undertake transactions with affiliates;

(viii) prepay certain debt;

(ix) pay dividends;

and (x) repurchase shares.

We are allowed to prepay debt, pay dividends and repurchase shares in any amount if, in accordance with terms as defined in the Revolving Credit Facility, no “default” or “event of default” has occurred and is continuing or would result after giving effect to such action and, after giving effect to such proposed action, “excess availability” calculated on a pro forma basis is greater than a defined minimum level.

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At December 31, 2021, we were in compliance with all covenants contained in the Revolving Credit Facility.

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

Revolving Credit Facility borrowing commitment

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Remaining borrowing availability

Borrowing rate (if applicable) 1

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

Commitments and Contingencies

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CAROs are included in Other accrued liabilities or Long-term liabilities, as appropriate.

Environmental Contingencies.

We are subject to a number of environmental laws and regulations, to potential fines or penalties assessed for alleged breaches of such laws and regulations and to potential claims based upon such laws and regulations.

We are also subject to legacy environmental contingencies related to activities that occurred at operating facilities prior to July 6, 2006, which

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

represent the majority of our environmental accruals.

Warrick Rolling Mill Potential CARO Liability.

We identified potential 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 December 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 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.

Environmental Contingencies.

We are also subject to legacy environmental contingencies related to activities that occurred at operating facilities prior to July 6, 2006, which represent the majority of our environmental accruals.

The status of these environmental contingencies are discussed below.

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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 year ended December 31, 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.

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.

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

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.

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.

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

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 complete, which we expect to occur in the next 10 to 16 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, the 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.

In February 2020, we responded to the general notice letter and in August 2020, we entered into an administrative settlement agreement and an order on consent for removal actions (“EPA Order”).

We performed the required remediation actions in October 2020 and, following its field evaluation, the USEPA notified us that the remediation actions taken were deemed to have completed the requirements of the EPA Order.

As such, we have no remaining obligations or environmental accrual related to the EPA Order.

We are currently preparing the required feasibility study, which we expect to submit to the OEPA for review during the quarter ending September 30, 2022.

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 20 to 26 months.

The following table presents the changes in our environmental accrual, which was primarily included in Long-term liabilities (in millions of dollars):

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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 .

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As additional facts are developed, feasibility studies are completed, remediation plans are modified, necessary regulatory approvals for the implementation of remediation are obtained, alternative technologies are developed and/or other factors change, there may be revisions to management’s estimates and actual costs may exceed the current environmental accruals.

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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Contingencies.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accumulated Other Comprehensive (Loss) Income

Accumulated Other Comprehensive Loss

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

Year Ended December 31,

Defined Benefit Pension Plan and Salaried VEBA:

Pension and Other Postretirement Benefits:

Beginning balance

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Net actuarial gain (loss) arising during the period

Prior service credit (cost) arising during the period

income tax (expense) benefit

Net prior service credit (cost) arising during the period

Prior service (cost) credit arising during the period

income tax benefit (expense)

Net prior service (cost) credit arising during the period

Amortization of net actuarial loss 1

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income tax expense 2

Net amortization and reclassification from AOCI to Net income

Net amortization reclassified from AOCI to Net (loss) income

Translation impact on Canadian pension plan AOCI balance

Other comprehensive income, net of tax

Other comprehensive (loss) income, net of tax

Ending balance

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Unrealized gain on available for sale securities

income tax expense

income tax benefit (expense)

Net unrealized gain on available for sale securities

Reclassification of unrealized gain upon sale of

Reclassification of unrealized loss (gain) upon sale of

available for sale securities 3

income tax benefit 2

Net gain reclassified from AOCI to Net income

Other comprehensive loss, net of tax

Net loss (gain) reclassified from AOCI to Net (loss) income

Other comprehensive income (loss), net of tax

Ending balance

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Beginning balance

Unrealized loss on cash flow hedges

income tax benefit

Net unrealized loss on cash flow hedges

Reclassification of unrealized loss upon settlement

Unrealized gain (loss) on cash flow hedges

income tax (expense) benefit

Net unrealized gain (loss) on cash flow hedges

Reclassification of unrealized (gain) loss upon settlement

of cash flow hedges

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probable of occurring

income tax expense 2

Net loss reclassified from AOCI to Net income

Other comprehensive income (loss), net of tax

income tax benefit (expense) 2

Net (gain) loss reclassified from AOCI to Net (loss) income

Other comprehensive income, net of tax

Ending balance 4

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Beginning balance

Unrealized loss on fair value hedges

Unrealized gain (loss) on fair value hedges

income tax benefit

Net unrealized loss on fair value hedges

Excluded component amortized from OCI to Net income

Net unrealized gain (loss) on fair value hedges

Excluded component amortized from OCI to Net (loss) income

Reclassification due to cancellation of firm commitment

income tax expense 2

Net loss reclassified from AOCI to Net income

income tax benefit (expense) 2

Net loss reclassified from AOCI to Net (loss) income

Other comprehensive income, net of tax

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Beginning balance

Other comprehensive income (loss), net of tax

Other comprehensive income, net of tax

Ending balance

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 provision.

The beginning unrealized gain within Available for sale securities as of January 1, 2018 includes a $ 0.4 million cumulative‑effect adjustment from our adoption of ASU 2016-01, which required us to remove cumulative gains on equity investments related to our deferred compensation plan as they are no longer accounted for as available for sale securities (see Note 1 and Note 8 for additional details).

Amounts amortized out of AOCI related to pension and other postretirement benefits were included within Net periodic postretirement benefit cost (see Note 5).

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.

Amounts reclassified out of AOCI relating to cash flow hedges were included as a component of Cost of products sold.

As of December 31, 2020, we estimate a net mark-to-market loss before tax of $ 4.7 million in AOCI will be reclassified into Net income within the next 12 months.

As of December 31, 2021, we estimate a net mark-to-market gain before tax of $ 21.6 million in AOCI will be reclassified into Net (loss) income upon settlement within the next 12 months.

Restructuring

During the year ended December 31, 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 Aero/HS products end market applications.

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

As the economic impact of the COVID-19 pandemic is ever evolving, we made adjustments to our estimated headcount reductions during the quarters ended September 30, 2020 and December 31, 2020 that impacted our total expected cash requirements, including recalling employees that were previously on indefinite layoff.

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 year ended December 31, 2020 were incurred and expensed as of December 31, 2020.

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

In order to align our projected operational requirements with reduced short and mid-term commercial aerospace demand as a result of the 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 (benefit) costs in our Statements of Consolidated (Loss) 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.

As of December 31, 2021, we completed the 2020 Plan and do not anticipate incurring restructuring charges in connection with this plan in future periods.

We have incurred total restructuring costs of $ 6.7 million under the 2020 Plan through December 31, 2021.

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

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Ending balance

In December 2020, 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 $ 4.9 million with an offset to Restructuring costs to accommodate the revised headcount requirements.

In December 2020, March 2021 and May 2021, we revised our production forecasts, thereby reducing the estimated number of headcount reductions necessary as compared with our initial restructuring plan.

These reductions to accommodate the revised headcount requirements are included in Other adjustments with an offset to Restructuring (benefit) costs.

Other Expense, Net

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Interest income

Net periodic postretirement benefit cost relating to Salaried VEBA

Net periodic postretirement benefit cost

Realized gain on available for sale securities

Unrealized gain (loss) on equity securities

Loss on extinguishment of debt

Unrealized (loss) gain on equity securities

(Loss) gain on extinguishment of debt – Note 9

All other, net

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Income Tax Matters

The following table presents Income before income taxes by geographic area (in millions of dollars):

The following table presents (Loss) income before income taxes by geographic area (in millions of dollars):

Year Ended December 31,

Income before income taxes

Tax Provision .

(Loss) income before income taxes

Tax Benefit (Provision) .

Income taxes are classified as either domestic or foreign based on whether payment is made or due to the United States or a foreign country.

Certain income classified as foreign is also subject to domestic income taxes.

Income tax provision consisted of the following (in millions of dollars):

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

Year Ended December 31, 2021

Benefit (expense) applied to decrease (increase)

Retained earnings/Other comprehensive income

Income tax provision

Benefit applied to decrease Other comprehensive income

Income tax benefit (provision)

Year Ended December 31, 2020

Benefit (expense) applied to decrease (increase)

Retained earnings/Other comprehensive income

Benefit (expense) applied to decrease (increase) Other comprehensive income

Income tax provision

Year Ended December 31, 2019

Expense applied to increase Retained earnings/

Other comprehensive loss

Benefit (expense) applied to decrease (increase) Other comprehensive income

Income tax provision

The following table presents a reconciliation between the provision for income taxes and the amount computed by applying the federal statutory income tax rate to Income before income taxes (in millions of dollars):

The following table presents a reconciliation between the benefit (provision) for income taxes and the amount computed by applying the federal statutory income tax rate to (Loss) income before income taxes (in millions of dollars):

Year Ended December 31,

Amount of federal income tax provision based on the statutory rate

(Increase) decrease in federal valuation allowances

Amount of federal income tax benefit (provision) based on the statutory rate

Decrease (increase) in federal valuation allowances

Non-deductible compensation expense

Non-deductible benefit (expense)

State income tax provision, net of federal benefit 1

Non-deductible (expense) benefit

State income tax benefit (provision), net of federal benefit 1

Research and development credit

Gross increases for tax positions from current year

Gross decreases (increases) for tax positions from current year

Gross decreases (increases) for tax positions from prior years

Foreign income tax expense

Foreign undistributed (earnings) loss

Tax rate change

Income tax provision

State income taxes were $ 1.3 million in 2020, reflecting an increase of $ 3.7 million due to state net operating loss (“NOL”) carryforward expirations and tax rate true-ups in various states, partially offset by a $ 3.5 million decrease in the valuation allowance relating to certain state net operating losses.

State income taxes were $ 3.8 million in 2019, reflecting a decrease of

Foreign undistributed earnings

Income tax benefit (provision)

The state income tax benefit was $ 0.7 million in 2021, reflecting an increase of $ 1.3 million due to state net operating loss (“NOL”) carryforward expirations and tax rate true-ups in various states, offset by a $ 1.6 million decrease in the valuation allowance relating to certain state net operating losses.

State income taxes were $ 1.3 million in 2020, reflecting an increase of $ 3.7 million due to state NOL carryforward expirations and tax rate true-ups in various states, partially offset by a $ 3.5 million decrease in the valuation allowance relating to certain state net operating losses.

State income taxes were $ 3.8 million in 2019,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ 0.7 million due to lower tax rate true-ups in various states , partially offset by an increase of $ 1.4 million due to a change in the valuation allowance relating to certain state net operating losses.

The state income taxes were $ 4.5 million in 2018, reflecting an increase of $ 0.9 million due to higher tax rate true-ups in various states, partially offset by a $ 2.9 million decrease in the valuation allowance relating to certain state net operating losses.

reflecting a decrease of $ 0.7 million due to lower tax rate true-ups in various states, partially offset by an increase of $ 1.4 million due to a change in the valuation allowance relating to certain state net operating losses.

Deferred Income Taxes.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes.

The following table presents the components of our net deferred income tax assets (in millions of dollars):

The following table presents the components of our net deferred income tax liabilities (in millions of dollars):

As of December 31,

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Loss and credit carryforwards

Salaried VEBA (see Note 5)

Pension Benefits

Leased assets

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Total deferred income tax liabilities

Net deferred income tax (liabilities) assets 1

Of the total net deferred income tax assets of $ 7.3 million at December 31, 2019, $ 11.8 million was presented as Deferred tax assets, net, and $ 4.5 million was presented as Deferred tax liabilities.

Net deferred income tax liabilities

Tax Attributes.

At December 31, 2021, we had $ 187.1 million of NOL carryforwards available to reduce future cash payments for federal income taxes in the United States.

H.R.1, commonly referred to as the Tax Cut and Jobs Act, allows net operating losses generated prior to December 31, 2017 (including our NOL carryforwards) to be fully deducted against 100% of taxable income until fully utilized or expired.

Our NOL carryforwards expire periodically through 2030.

H.R.1, commonly referred to as the Tax Cut and Jobs Act, allows net operating losses (NOLs) generated prior to December 31, 2017 (including our NOL carryforwards) to be fully deducted against 100% of taxable income until fully utilized or expired.

NOL carryforwards generated after December 31, 2017 do not expire and can be carried forward indefinitely.

Deductions allowed for net operating losses arising in taxable years beginning after December 31, 2020 are limited to 80% of the excess (if any) of taxable income.

Our State NOL carryforwards expire periodically through 2030.

In addition, we had $ 8.8 million of federal research and development (“R&D”) credit carryforwards to offset regular federal income tax requirements.

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When recognized, the tax benefits relating to any reversal of this valuation allowance will be recorded as a reduction of income tax expense.

There was a decrease in the valuation allowance of $ 3.5 million in 2020, an increase in the valuation allowance of $ 1.5 million in 2019 and a decrease in the valuation allowance of $ 4.6 million in 2018.

There was a decrease in the valuation allowance of $ 1.8 million in 2021, a decrease in the valuation allowance of $ 3.5 million in 2020 and an increase in the valuation allowance of $ 1.5 million in 2019.

The decrease in the valuation allowance for 2021 was primarily due to the expiration of state NOL carryforwards and the related reversal of their valuation allowances.

The decrease in the valuation allowance for 2020 was primarily due to the expiration of state NOL carryforwards and the related reversal of their valuation allowances.

The increase in the valuation allowance for 2019 was primarily due to unutilized state NOL carryforwards and Federal Separate Return Limitation Year losses that were expected to expire.

The decrease in the valuation allowance for 2018 was primarily due to the expiration of state NOL carryforwards and the related reversal of their valuation allowances and the expiration of a capital loss carryforward.

We and our subsidiaries file income tax returns in the U.S.

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Our tax returns for certain past years are still subject to examination by taxing authorities and the use of NOL carryforwards in future periods could trigger a review of attributes and other tax matters in years that are not otherwise subject to examination.

In 2018, we made an accounting policy election to treat global intangible low-taxed income (“GILTI”) as a period cost.

We have gross unrecognized benefits relating to uncertain tax positions.

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In addition, we recognize interest and penalties related to unrecognized tax benefits in the income tax provision.

We had $ 0.3 million accrued for interest and penalties at both December 31, 2020 and December 31, 2019.

We had $0.2 million and $ 0.3 million accrued for interest and penalties at December 31, 2021 and December 31, 2020, respectively.

Of these amounts, no ne were considered current and, as such, were included in Long-term liabilities on our Consolidated Balance Sheets as of December 31, 2021 and December 31, 2020.

We recognized an increase in interest and penalty of $ 0.1 million in our tax provision in both 2019 and 2018.

We recognized an increase in interest and penalty of $ 0.1 million in our tax provision in 2019.

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

Net Income Per Share

Basic net income per share is computed by dividing distributed and undistributed net income allocable to common shares by the weighted-average number of common shares outstanding during the applicable period.

Net (Loss) Income Per Share

Basic net (loss) income per share is computed by dividing distributed and undistributed net (loss) income allocable to common shares by the weighted-average number of common shares outstanding during the applicable period.

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 2020, 2019 and 2018, which in all years was more dilutive than the two-class method.

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

Diluted net (loss) income per share was calculated under the treasury stock method for 2021, 2020 and 2019, which in all years was more dilutive than the two‑class method.

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

Year Ended December 31,

Net (loss) income

Denominator – Weighted-average common shares

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restricted stock units and performance shares 1

Net income per common share, Basic:

Net income per common share, Diluted:

Net (loss) income per common share, Basic:

Net (loss) income per common share, Diluted:

Quantities in the following discussion are denoted in whole shares.

For the year ended December 31, 2021, approximately 213,000 potentially dilutive shares were excluded from the computation of net loss per share as their effect would have been anti‑dilutive.

A total of 44,000 non-vested RSAs, RSUs and performance shares for the year ended December 31, 2020 were excluded from the weighted-average diluted shares computation as their inclusion would have been anti-dilutive.

No ne were excluded for the years ended December 31, 2019 and December 31, 2018.

No shares were excluded for the year ended December 31, 2019.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

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Unpaid purchases of property and equipment

Stock repurchases not yet settled

Supplemental lease disclosures:

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Business, Product and Geographical Area Information and Concentration of Risk

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, for the following end market applications:

(i) Aero/HS products;

(ii) Automotive Extrusions;

(iii) GE products;

and (iv) Other products.

Our primary line of business is the production of semi-fabricated specialty aluminum mill products, such as bare and coated coils, plate and sheet and extruded and drawn products, primarily used in our Aero/HS products, Packaging, Automotive Extrusions, GE products and Other products end markets.

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

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Total net sales

As corrected from $ 543.0 million of products transferred at a point in time and $ 1,042.9 million of products transferred over time.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

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Long-lived assets represent Property, plant and equipment, net.

The aggregate foreign currency transaction gain (loss) included in determining net income were immaterial for 2020, 2019 and 2018.

The aggregate foreign currency transaction gain (loss) included in determining net (loss) income were immaterial for 2021, 2020 and 2019.

Concentrations.

For the years ended December 31, 2021, December 31, 2020 and December 31, 2019, one customer represented 16 %, 26 % and 25 %, respectively, of Net sales and a second customer represented 15 %, 11 % and 17 %, respectively, of Net sales.

One individual customer accounted for 20 % and another individual customer accounted for 13 % of the accounts receivable balance at December 31, 2020.

One individual customer accounted for 16 %, a second individual customer accounted for 13 % and a third individual customer accounted for 11 % of the accounts receivable balance at December 31, 2021.

One individual customer accounted for 20 % and another individual customer accounted for 13 % of the accounts receivable balance at December 31, 2020.

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On January 13, 2022 , we announced that our Board of Directors declared a quarterly cash dividend of $ 0.77 per common share, or approximately $ 12.4 million (including dividend equivalents), representing a 7 % increase over the prior dividend declared during the quarter ended December 31, 2021.

The dividend was paid on February 12, 2021 to stockholders of record at the close of business on January 25, 2021 .

The dividend was paid on February 15, 2022 to stockholders of record and the holders of certain restricted stock units at the close of business on January 24, 2022 .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data