AK Steel Holding (AKS)

OPEB Liability

On October 8, 2007, the Company announced that it had reached a settlement of litigation filed on behalf of approximately 5,000 retirees (or their surviving spouses) of its Middletown Works by which the Company has agreed to contribute a total of $663.0 over three years to a Voluntary Employees Beneficiary Association trust (the “VEBA”) which will assume the responsibility for continuing to provide health and welfare benefits to the retirees in exchange for a complete release by the retirees of the Company’s liability and responsibility with respect to such benefits. That settlement is subject to approval by the district court presiding over the litigation. A more-detailed discussion of the Middletown Works retiree litigation and settlement is contained in Note 9 and Part II, Item 1, Legal Proceedings. Assuming that the settlement is ultimately approved by the court, the Company believes that it has substantially reduced the potential for significant future increases in the amount of its “Pension and other postretirement benefit obligations.” The Company’s obligation to provide healthcare benefits to its retirees other than the Middletown Works retirees has been substantially capped through negotiations with the various unions which represented the retirees while they were employed at the Company. Some of those caps already are effective, with the balance becoming effective by the end of 2009. Thus, the collective result of (a) transferring to a VEBA the obligation to provide healthcare benefits to the Middletown Works retirees, and (b) the caps on the obligation to provide healthcare benefits to virtually all of the Company’s other retirees is that the Company’s “Pension and other postretirement benefit obligations” should not increase significantly in the future due to future increases in health care costs. More limited increases (or decreases), however, still could result from future plan changes or changes in the assumptions which underlie the calculation of the Company’s future healthcare benefit obligations, such as with respect to future retirement dates and/or the anticipated mortality rate of retirees. The Company anticipates making its initial contribution of $468.0 to the VEBA in the first quarter of 2008.