AK Steel Holding (AKS)

Customers

In conducting its steel operations, the Company principally directs its marketing efforts toward those customers who require the highest quality flat-rolled steel with precise “just-in-time” delivery and technical support. Management believes that the Company’s enhanced product quality and delivery capabilities, and its emphasis on customer technical support and product planning, are critical factors in its ability to serve this segment of the market.

The Company’s flat-rolled carbon steel products are sold primarily to automotive manufacturers and to customers in the appliance, industrial machinery and equipment, and construction markets, consisting principally of manufacturers of home appliances, and heating, ventilation and air conditioning equipment. The Company also sells coated, cold rolled, and hot rolled carbon steel products to distributors, service centers and converters who may further process these products prior to reselling them. To the extent necessary, the Company carries increased inventory levels to meet the requirements of certain of its customers for “just-in-time” delivery.

The Company sells its stainless steel products to manufacturers and their suppliers in the automotive industry, to manufacturers of food handling, chemical processing, pollution control, medical and health equipment and to distributors and service centers. The Company sells electrical steels, which are iron-silicon alloys with unique magnetic properties, primarily to manufacturers of power transmission and distribution transformers and electrical motors and generators.

The Company’s automotive sales declined to approximately 40% of the Company’s total sales in 2007, compared to 41% in 2006. The relative decline in automotive sales is principally the result of an increase in revenues for electrical and stainless products as a result of higher prices and sales of higher-end electrical products. The Company’s appliance, industrial machinery and equipment, and construction market sales decreased to 26% of the Company’s total sales in 2007, compared to 29% in 2006. This decline is the result of weak appliance and housing market conditions and also reflects an increase in revenues in the distributors, service center and converters market. The following table sets forth the percentage of the Company’s net sales attributable to various markets:

1

Table of Contents

AK Steel is a major supplier to the domestic automotive industry, including foreign-based manufacturers with plants in the United States. The Company’s sales to General Motors Corporation, the Company’s largest customer, accounted for approximately 13% of its net sales in 2005, and less than 10% in 2007 and 2006. No other customer accounted for more than 10% of the Company’s net sales during 2007, 2006 or 2005. The Company’s relationship with General Motors is solely that of a supplier in the ordinary course of business. If General Motors were to elect to source more of its purchases of steel from other steel producers in the future, management believes that any material change in purchases would be phased in over a multi-year period. Management further believes that such a decrease in sales to General Motors would be offset, to a material extent, by sales to new customers and increased sales to other existing customers. If, however, these expectations prove incorrect, the Company’s operating results could be materially adversely affected by a significant decrease in sales to General Motors.

The Company is a party to contracts with all of its major automotive and most of its appliance industry customers. The term of most of these contracts is one year. These contracts set forth prices to be paid for each product during their term. Approximately 70% of the Company’s shipments to contract customers permit price adjustments to reflect changes in prevailing market conditions or certain energy and raw material costs. Approximately 60% of the Company’s shipments of flat-rolled steel products in 2007 were made to contract customers, and the balance of the Company’s shipments were made in the spot market at prevailing prices at the time of sale.

Customers

In conducting its steel operations, the Company principally directs its marketing efforts toward those customers who require the highest quality flat-rolled steel with precise “just-in-time” delivery and technical support. Management believes that the Company’s enhanced product quality and delivery capabilities, and its emphasis on customer technical support and product planning, are critical factors in its ability to serve this segment of the market.

The Company’s flat-rolled carbon steel products are sold primarily to automotive manufacturers and to customers in the appliance, industrial machinery and equipment, and construction markets, consisting principally of manufacturers of home appliances, and heating, ventilation and air conditioning equipment. The Company also sells coated, cold rolled, and hot rolled carbon steel products to distributors, service centers and converters who may further process these products prior to reselling them. To the extent necessary, the Company carries increased inventory levels to meet the requirements of certain of its customers for “just-in-time” delivery.

The Company sells its stainless steel products primarily to manufacturers and their suppliers in the automotive industry, to manufacturers of food handling, chemical processing, pollution control, medical and health equipment and to distributors and service centers. The Company sells electrical steels, which are iron-silicon alloys with unique magnetic properties, primarily to manufacturers of power transmission and distribution transformers, electrical motors and generators, and lighting ballasts.

The Company’s automotive sales declined to approximately 41% of the Company’s total sales in 2006 compared to 45% in 2005. This decline resulted principally from an increase in revenues from non-automotive sales. This non-automotive revenue increase was caused primarily by higher prices for electrical and certain other high-end, non-automotive products and an increased volume of electrical product sales. The Company’s appliance, industrial machinery and equipment, and construction market sales increased to 29% of the Company’s total sales in 2006, principally as the result of increased contract pricing for its electrical steel and other products in these markets. The following table sets forth the percentage of the Company’s net sales attributable to various markets:

1

Table of Contents

AK Steel is a major supplier to the domestic automotive industry, including foreign-based manufacturers with plants in the United States. The Company’s shipments to General Motors Corporation, the Company’s largest customer, accounted for approximately 9%, 13% and 15% of its net sales in 2006, 2005 and 2004, respectively. No other customer accounted for more than 10% of the Company’s net sales during 2006, 2005 or 2004. The Company’s relationship with General Motors is solely that of a supplier in the ordinary course of business. If General Motors were to elect to source more of its purchases of steel from other steel producers in the future, management believes that any material change in purchases would be phased in over a multi-year period. Management further believes that such a decrease in sales to General Motors would be offset, to a material extent, by sales to new customers and increased sales to other existing customers. If, however, these expectations prove incorrect, the Company’s operating results could be materially adversely affected by a significant decrease in sales to General Motors.

The Company is a party to contracts with all of its major automotive and most of its appliance industry customers. The term of most of these contracts is currently one year. These contracts set forth prices to be paid for each product during their term. Approximately 50% of the Company’s shipments to contract customers now permit price adjustments to reflect changes in prevailing market conditions or energy and raw material costs. Approximately 65% of the Company’s shipments of flat-rolled steel products in 2006 were made to contract customers, and the balance of the Company’s shipments were made in the spot market at prevailing prices at the time of sale.

Customers

In conducting its steel operations, the Company’s marketing efforts are directed principally toward those customers who require the highest quality flat-rolled steel with precise “just-in-time” delivery and technical support. Management believes that the Company’s enhanced product quality and delivery capabilities, and its emphasis on customer technical support and product planning, are critical factors in its ability to serve this segment of the market.

The Company’s flat-rolled carbon steel products are sold primarily to automotive manufacturers and to customers in the appliance, industrial machinery and equipment, and construction markets, consisting principally of manufacturers of home appliances, heating, ventilation and air conditioning equipment and lighting products. Coated, cold rolled, and hot rolled carbon steel products are also sold to distributors, service centers and converters who may further process these products prior to reselling them. To the extent necessary, the Company carries increased inventory levels to meet the requirements of certain of its customers for “just-in-time” delivery.

The Company sells its stainless steel products primarily to customers in the automotive industry, to manufacturers of food handling, chemical processing, pollution control, medical and health equipment and to distributors and service centers. Electrical steels, which are iron-silicon alloys with unique magnetic properties, are sold primarily to manufacturers of power transmission and distribution transformers, electrical motors and generators, and lighting ballasts.

In 2005, the Company experienced record sales revenues. This performance was driven by an increase in sales to most of its markets, including the automotive, appliance, industrial machinery and equipment, and construction markets. Such sales increases were primarily the result of three factors. First, the Company had record shipments. Second, the Company succeeded in negotiating increased pricing for its contract business. Third, the Company experienced volume and price increases for its electrical steel products, driven by strong demand. These factors were somewhat mitigated by a reduction in selling prices in the spot market, primarily distributors and service center markets, as the result of increased competitive market conditions in 2005. Principally, as a result of the greater price increases in the Company’s electrical and other high-end non-automotive markets, the Company’s automotive sales declined to approximately 45% of the Company’s total sales in 2005 compared to 48% in 2004. The Company’s appliance, industrial machinery and equipment, and construction market sales increased to 25% of the Company’s total sales in 2005, principally as the result of increased contract pricing, including for its electrical steel products. The following table sets forth the percentage of the Company’s net sales attributable to various markets:

1

Table of Contents

AK Steel is a major supplier to the domestic automotive industry, including foreign manufacturers with plants in the United States. Shipments to General Motors Corporation, the Company’s largest customer, accounted for approximately 13%, 15% and 20% of its net sales in 2005, 2004 and 2003, respectively. Sales to Ford Motor Company accounted for approximately 9%, 8% and 10% of the Company’s net sales during the same respective three-year period. No other customer accounted for more than 10% of the Company’s net sales during 2005, 2004 or 2003. The Company’s relationship with General Motors and Ford is solely that of a supplier in the ordinary course of business. If these companies should elect to source more of their purchases of steel from other steel producers in the future, management believes that any material change in purchases would be phased in over a multi-year period. Management further believes that such a decrease in sales to one or both of these companies would be offset, to a material extent, by sales to new customers and increased sales to other existing customers. If, however, these expectations prove incorrect, the Company’s operating results could be materially adversely affected.

The Company is a party to contracts with all of its major automotive and most of its appliance industry customers and the term of most of these contracts is currently one year. These contracts set forth prices to be paid for each product category during their term. Approximately one-half of these contracts now permit price adjustments to reflect changes in prevailing market conditions or energy and raw material costs. Approximately 70% of the Company’s sales of flat-rolled steel products in 2005 were made to contract customers, and the balance of the Company’s sales were made in the spot market at prevailing prices at the time of sale. Contract customers in 2004 and 2003 represented approximately 70% and 75%, respectively, of total sales.

Customers

AK Steel’s flat-rolled carbon steel products are sold primarily to automotive manufacturers and to customers in the appliance, industrial machinery and equipment, and construction markets, consisting principally of manufacturers of home appliances, heating, ventilation and air conditioning equipment and lighting products. Coated, cold rolled, and hot rolled carbon steel products are also sold to distributors, service centers and converters who may further process these products prior to reselling them.

AK Steel sells its stainless steel products primarily to customers in the automotive industry, manufacturers of food handling, chemical processing, pollution control, medical and health equipment and distributors and service centers. Electrical steels, which are iron-silicon alloys with unique magnetic properties, are sold primarily to manufacturers of power transmission and distribution transformers, electrical motors and generators, and lighting ballasts.

In conducting its steel operations, AK Steel’s marketing efforts are principally directed toward those customers, such as automotive manufacturers, who require the highest quality flat-rolled steel with precise just-in-time delivery and technical support. Management believes that AK Steel’s enhanced product quality and delivery capabilities, and its emphasis on customer technical support and product planning, are critical factors in its ability to serve this segment of the market. During 2004, AK Steel experienced a significant increase in its sales to the spot market, primarily, distributors, service centers and converters, as the result of increased demand in the United States and around the globe which resulted in higher steel prices. In addition, selling prices also increased as the result of the implementation of surcharges in response to the unprecedented increase in raw material and energy costs. The Company was only able to implement a surcharge on a small portion of its contract sales in 2004, which then represented approximately 70% of its total sales. As a result of the increased

1

Table of Contents

prices in the spot market and resulting higher revenues, the Company’s automotive sales represented about 48% of its total sales, a decline from prior years. The following table sets forth the percentage of the Company’s net sales attributable to various markets:

AK Steel is a major supplier to the domestic automotive industry, including foreign manufacturers with plants in the United States. Shipments to General Motors Corporation, AK Steel’s largest customer, accounted for approximately 15%, 20% and 20% of its net sales in 2004, 2003 and 2002, respectively. Sales to Ford Motor Company accounted for approximately 8%, 10% and 9% of the Company’s net sales during the same respective three-year periods. No other customer accounted for more than 10% of net sales for any of these years. AK Steel’s relationship with General Motors and Ford is solely that of a supplier in the ordinary course of business. If these companies should elect to source more of their purchases of steel from other steel producers in the future, management believes that any material change in purchases would be phased in over a multi-year period. Management further believes that such a decrease in sales to one or both of these companies would be offset, to a material extent, by sales to new customers and increased sales to other existing customers. If, however, these expectations prove incorrect, the Company’s operating results could be materially adversely affected.

AK Steel is a party to contracts with all of its major automotive and most appliance industry customers, with most terms currently being one year. These contracts set forth prices to be paid for each product category during their term. Approximately one-half of these contracts now permit price adjustments to reflect changes in prevailing market conditions or energy and raw material costs. Approximately 70% of AK Steel’s sales of flat-rolled steel products in 2004 were made to contract customers, with the balance of sales made in the spot market at prevailing prices at the time of sale. Contract sales customers in 2003 and 2002 represented approximately 75% and 80%, respectively, of total sales.