System-Wide Weekly Update #14

15 July 2004

This was an extremely eventful week on both properties with a great many projects getting completed and many more getting started in full gear.

On the IC&E, the Birmingham diamonds were replaced between Tuesday at 0600 and Wednesday at 1000. This was accomplished with cooperation between the UPRR, NS, BN and the KCS to give our engineering forces the necessary track outage. Two RJ Corman derailment divisions were on hand to assist with the placement of the pre-assembled diamonds into the area that had been prepared by digging out the old fill material to a depth of 48” and then filling with 24” of asphalt and then ballast. This construction method has been proven throughout the industry for railroad crossing locations where heavy traffic occurs and should give us years of trouble free service. The transfer switch at this location will be installed soon. All of the track material was constructed by Rail Products and Fabrication from Seattle, Washington and pre-assembled on site by IC&E forces over the last couple weeks. An excellent job by all!!!

Elsewhere on the IC&E, the tie gang completed the installation of joint ties west of Mason City and will now assist with switch installation and curve rail replacement for the remainder of they year. The LA Colo CWR crew will start in Calmar on Monday the 19^th and will install about 15 track miles of CWR in this location over the next several weeks.

The Utility crew in the Quad City area has installed several road crossings so far with several more to go before they install new crossovers at Davenport and Muscatine. There will also be a significant amount of yard ties installed by this crew.

On the DM&E the most significant item was the fact that the CWR was completed. This concludes the 67 mile project on the DM&E for 2004 and leaves us with only 23 more miles to install on the IC&E during the remainder of the year. In conjunction with the CWR project, three more switches were installed this week, one in Lake Benton and two in Tyler. This will leave only 2 more switches in Tyler to complete the switch installation portion of the CWR project, however, there will still be at least 14 other switches to be installed with siding and customer expansion projects.

¨ Equipment problems seem to be mostly behind us and the production on all crews has been improving indicating that.

¨ 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.

¨ Because of the high business levels, we have been struggling somewhat with ballast moves, however, with the end of the CWR outages on the DM&E, we expect our ballast deliveries to increase over the next several weeks.

¨ Sanborn siding was put into service on June 24^th and has been helping transportation with congestion problems in that area. Track work on the Cobden siding is completed to the point of waiting for our wetlands approval. We will be working on the Elkton and De Smet siding extensions in the interim and hope to have all three of these projects completed by late August.