System-Wide Weekly Update #8

3 June 2004

This week crews on both properties have been assembling switches and crossings in anticipation of installation with the respective CWR projects on both properties. The DM&E and IC&E railroads still have 55 miles of CWR to be laid and 16 switches in conjunction with that rail laying. Besides those 16 switches, there are at least 21 other new switches of varying sizes going in over both properties during the course of the year. The CWR, Tie and Surfacing projects are all progressing very well and all are on, if not ahead of schedule. The added siding work will be completed as we get openings in our tie and surfacing programs and we expect all of the siding projects, except Florence to be completed in the third quarter. This should help with the grain harvest congestion. Slow orders continue to be removed on the Owatonna sub on the IC&E and the Huron sub on the DM&E to further help with traffic movements. Engineering crews on both properties have been working long, hard hours, sometimes 7 days a week, in preparation and during the CWR installation process.

¨ Equipment continues to be very reliable with only minor breakdowns reported.

¨ Some relief has been noted for the gondola supply and we have started receiving ties and bridge material as well as being able to ship out scrap material recovered from the CWR projects.

¨ All new, air operated ballast cars are in service with only a very few minor problems being noted.

¨ Birmingham Diamonds have been unloaded with assembly scheduled for the week of June 14^th and installation the week of July 12^th.

¨ Progress is being made on the three additional siding projects that were recently approved. These projects are: 1) an extension of 4000’ at Elkton 2) rebuilding the Sanborn siding and 3) an extension of nearly 4000’ at De Smet.