System-Wide Weekly Update #24

1 October 2004

This past week has again been another very productive week on both properties as crews and managers make the final year-end preparations to complete all projects by the end of this very aggressive production season.

The IC&E crews have been busy doing final surfacing across the entire system as well as installing the final 5,000 ties in the Quad Cities terminal area. Other crews have been doing final crossing surface work in the Calmar area in preparation for the completion of that project. The CWR crew will begin their final effort of the year on the Kansas City sub to install rail in 28 curves between Ottumwa and Polo next week. This effort will last until nearly Thanksgiving. Also preparation has been made in the Liberty Missouri area for the installation of 10,000 ties on track 1 yet this year, which we expect to get started toward the end of October. This along with the subsequent surfacing may very well be the last project completed on the IC&E this year.

Bruce Wold’s utility crew in the Quad Cities area installed the cross- overs north of Nahant and put them in service two weeks ago. They will assemble and install the cross-overs at Sampson Street in Muscatine next week. They have also installed several crossing surfaces in the Quad Cities area. This crew will travel to Moravia to install that connection toward the middle of October.

The DM&E crews have been concentrating on the final tie installation on both ends of the Huron sub. Both of these projects expect to be completed by the middle of October, allowing for final ballasting and surfacing after that. Over the past two weeks, two sections of track on the DM&E have been raised to the 40 MPH level. These are the first locations CWR was installed this year. The first location is near Cobden on the Tracy sub, and the second location, near Arlington, was just raised to 40 MPH earlier this week. The final section of CWR between MP 228 and MP 267 is expected to be brought up to this speed by year’s end.

Surfacing across the rest of the DM&E system is progressing well and we expect to get all scheduled projects completed by the end of the year.

The Cobden siding is providing immediate help for the transportation department. Engineering forces are making excellent progress on the Florence connection and siding. The siding is expected to be in service by the week of October 25^th. Providing the BN completes their portion of the project, the connection will be in service by the end of the October.

Bridge crews on the DM&E continue to make excellent progress and the Sioux River Bridge is now expected to be completed at least 2 weeks ahead of schedule.

¨ Equipment problems that have plagued some of the crews, both Company and Contractor, seem to be behind us. This has improved the productivity of all crews over the past few weeks.

¨ The last shipment of ties for the DM&E project is on the property, leaving only the ties for the Florence connection left to be delivered. All ties have been delivered and unloaded on the IC&E.

¨ Both of our major ballast suppliers have been challenged by this year’s aggressive schedule, but they are both catching up with their stockpiles and we still expect to meet our aggressive ballasting requirements and surfacing goals.