System-Wide Weekly Update #13

8 July 2004

The CWR crew returned to the DM&E yesterday, Wednesday the 7^th, and has installed another 3 miles of rail in the past two days. We expect to complete the CWR installation on Tuesday or Wednesday, the 12^th or 13^th, of next week and then the crew will begin installing ties between the MN/SD state line and Lake Preston. This will complete the RJ Corman portion of this year’s capital program. The Corman tie installation is expected to last about 6 weeks. They are scheduled to install approximately 35,000 ties.

The DM&E east tie crew and the surfacing crews have been working in the RRIF areas to remove slow orders so the transportation department can more efficiently move our revenue freight when the outages and windows are removed each evening. We have been able to reduce the number of slow orders on the Huron and Tracy subs by about 50% over the past few weeks and expect that trend to continue throughout the harvest season, even as production crews continue their work. The reduction in slow orders has helped the transportation department clear up a backlog of customer orders.

¨ Equipment problems are most notable on two of our production tampers on the IC&E. This has been corrected and now we expect our surfacing production to be increasing as we start to make “final” surfacing passes behind the tie and CWR crews

¨ A large shipment of ties has finally been received and is now being unloaded on the DM&E property, alleviating fears that we would not receive our last 30,000 ties. These ties are being unloaded between Verdi and Volga with the aid of the Brandt truck. The last ties needed for the DM&E will be delivered within the next two weeks and then we will be in position to finish the tie shipments for the IC&E for the reminder of their capital needs.

¨ 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.

¨ The Birmingham Diamonds and transfer switch are now pre-assembled with a scheduled installation date of July 13^th. This 24-hour track outage has been coordinated with the UPRR, BNSF, NS, KCS, and our own operating department.

¨ Sanborn siding was put into service on June 24^th and has been helping transportation with congestion problems in that area. Significant progress is now being made on the track work on the Cobden siding and the new east switch for the Elkton siding will be installed today on the Minnesota South Dakota state line.