System-Wide Weekly Update #10

17 June 2004

This week has been another hectic one on the DM&E as the engineering department between Huron and New Ulm worked diligently to stay ahead of CWR, tie and surfacing crews in their respective areas. The two new 136# switches for the Balaton elevator were installed this week on the DM&E leaving ten more to be installed in the project area. Along with this several crossings were installed and the tie, CWR and surfacing crews have made excellent progress. There have now been over 54 miles of the CWR already laid and over 100,000 of the ties installed. Along with that there has been nearly 100,000 tons of ballast dumped and 225 miles of track surfaced. The amount of work that has been completed this year is already more than is done in a normal production season. The DM&E portion of the 2004 CWR program is scheduled to be completed by the 15^th of July and the IC&E portion will begin at that time and run through the end of the year. The tie and surfacing programs on both properties will continue full throttle until the end of July and then will taper off thru the end of the year. One of the main obstacles over the past week has been the weather. The crews across both systems have been forced to delay production in several instances because of severe weather.

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

¨ A large shipment of ties has finally gotten shipped and are close to our property alleviating fears that we would not receive our last 30,000 ties

¨ Ballast continues to be provided for surfacing projects at record paces and the new air operated ballast cars are proving to be extremely helpful for the engineering employees

¨ We have started assembling the Birmingham Diamonds this week with assembly expected to be completed by the end of next week and installation still scheduled during 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.