811596--3/29/2007--KAISER_ALUMINUM

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{cost, regulation, environmental}

{condition, economic, financial}

{customer, product, revenue}

{cost, operation, labor}

{debt, indebtedness, cash}

{stock, price, share}

{stock, price, operating}

{provision, law, control}

{control, financial, internal}

{operation, natural, condition}

{regulation, change, law}

{cost, contract, operation}

{property, intellectual, protect}

{personnel, key, retain}

{acquisition, growth, future}

{loss, insurance, financial}

{tax, income, asset}

{operation, international, foreign}

{product, liability, claim}

{financial, litigation, operation}

We depend on a core group of significant customers. Our industry is very sensitive to foreign economic, regulatory and political factors that may adversely affect our business. The aerospace industry is cyclical and downturns in the aerospace industry, including downturns resulting from acts of terrorism, could adversely affect our revenues and profitability. Our customers may reduce their demand for aluminum products in favor of alternative materials. Downturns in the automotive industry could adversely affect our net sales and profitability. Because our products are often components of our customers products, reductions in demand for our products may be more severe than, and may occur prior to reductions in demand for, our customers products. Our business is subject to unplanned business interruptions which may adversely affect our performance. Covenants and events of default in our debt instruments could limit our ability to undertake certain types of transactions and adversely affect our liquidity. We depend on our subsidiaries for cash to meet our obligations and pay any dividends. We may not be able to successfully implement our productivity and cost reduction initiatives. Our profitability could be adversely affected by increases in the cost of raw materials. The price volatility of energy costs may adversely affect our profitability. Our hedging programs may limit the income and cash flows we would otherwise expect to receive if our hedging program were not in place. The expiration of the power agreement for Anglesey may adversely affect our cash flows and affect our hedging programs. Our ability to keep key management and other personnel in place and our ability to attract management and other personnel may affect our performance. Our production costs may increase and we may not sustain our sales and earnings if we fail to maintain satisfactory labor relations. Our business is regulated by a wide variety of health and safety laws and regulations and compliance may be costly and may adversely affect our results of operations. Environmental compliance, clean up and damage claims may decrease our cash flow and adversely affect our results of operations. Other legal proceedings or investigations or changes in the laws and regulations to which we are subject may adversely affect our results of operations. Product liability claims against us could result in significant costs or negatively affect our reputation and could adversely affect our results of operations. Our Trentwood expansion project may not be completed as scheduled. We may not be able to successfully execute our strategy of growth through acquisitions. In our 2005 Form 10-K, we have reported one material weakness relating to hedge accounting in our internal control over financial reporting, which resulted in the restatement of our financial statements, and one significant deficiency. We will be exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act of 2002. We may not be able to adequately protect proprietary rights to our technology. We may not be able to utilize all of our net operating loss carry-forwards. Our current common stock has a limited trading history and a small public float which may limit development of a market for our common stock and increase the likelihood of significant volatility in the market for our common stock. Our net sales, operating results and profitability may vary from period to period, which may lead to volatility in the trading price of our stock. Our annual variable payment obligation to the Union VEBA and Salaried VEBA are linked with our profitability, which means that not all of our earnings will be available to our stockholders. A significant percentage of our stock is held by the Union VEBA which may exert significant influence over us. The USW has director nomination rights through which it may influence us, and USW interests may not align with our interests or the interests of our other investors. We do not currently anticipate paying any dividends, and our payment of dividends and stock repurchases are subject to restriction. Our certificate of incorporation includes transfer restrictions that may void transactions in our common stock effected by 5% stockholders. Delaware law, our governing documents and the stock transfer restriction agreement we entered into as part of our Plan may impede or discourage a takeover, which could adversely affect the value of our common stock.

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811596--3/29/2007--KAISER_ALUMINUM_CORP