System-Wide Monthly Update #9

13, September 2006

The 2006 capital program has received a $25 million dollar boost with the recent approval of an extended capital program on the west end of the DM&E. This project includes nearly 90,000 ties, over 60 miles of CWR, about 50 new premium turnouts, and new bridge decks and sub structure from Wall to Rapid City and from Rapid City to Colony. The project, when fully financed and completed, will total nearly $50 million. For the 2006 season however, we have been approved to spend up to $25 million. This will bring the total capital for 2006 in the engineering department to a staggering $75 million.

¨ All three major CWR projects that involved new rail have been completed earlier this year. Those projects were 10 miles of rail near Springfield Minnesota on the DM&E, 14 miles of CWR south of Austin Minnesota on the IC&E, and 11 miles of CWR near Bellevue also on the IC&E. The last of these projects, the one near Bellevue, was completed in early June. Another CWR project, a 17 mile project that involves used CWR supplied by the UP railroad, will be completed in the third and fourth quarters north of Kansas City. Now, with the added capital, a fifth CWR project has been authorized, one that utilizes 30 track miles of new and used 112# and 115# CWR. This is scheduled to be installed between Wall and Rapid City this year and next. More rail updates on “rail page”

¨ The curve patch program, which consists of over 10 miles of new and used CWR is progressing well, with the Mason City and Kansas City sub portions of the project being completed just this week by the LA Colo and IC&E tie/steel crew respectively. The IC&E will spend the remainder of the year on curves on the River and Marquette subs and the scheduled completion for the rest of these curves is between Thanksgiving and Christmas.

¨ We have moved the location of the siding on the east end of the Mason City sub from just east of Calmar to just west of Ossian, a distance of only a few miles. Final grading and sub-ballasting is being completed now with the siding expected to be in service on or before Thanksgiving.

¨ Several of the 40 new turnouts that are scheduled to be installed on the two properties in 2006 have been installed thus far. Other turnouts are scheduled to be installed soon and the last for the year are being delivered to project areas as this web site is updated. More details on the “rail page”.

¨ Nearly all of the 150,000 ties originally scheduled for installation in this year’s capital program have already been installed on the two properties, with the IC&E being completely done with their tie projects for 2006 and the DM&E being nearly completed. The recent influx of capital money has enabled us to increase our tie installation numbers by more than 90,000 for 2006, all on the DM&E. These ties will all be installed west of Wall and north of Rapid City. More details on all of the tie projects will be on the “tie update” page.

¨ There will be several major bridge projects on the two properties this year with the most notable being the redecking and rail renewal on Bridge # 1500, the Missouri River bridge in Pierre SD. More information on bridge projects are included on the “Bridge page”.

¨ Surfacing estimates for 2006 are over 850 miles with over 180,000 tons of ballast used. A progress report on the surfacing schedule is on the “surfacing page”.