Overview

The DM&E Railroad Corporation encompasses over 2,500 miles of track serving over 200 communities across eight states. Roughly 1,000 employees drive the system. DM&E manages over 7,000 rail cars and operates nearly 200 locomotives. Sioux Falls is headquarters for the entire system. DM&E is a member of the Canadian Pacific (CP) family.

The DM&E includes the IC&E network. For legal and regulatory historical reasons, the rail system was comprised of three entities (the DM&E Railroad, the IC&E Railroad, and Cedar American Rail Holdings) and operated as a single system under common management by Cedar American. On December 26, 2008, following federal approval by the Surface Transportation Board, the DM&E and IC&E were consolidated into the DM&E.

Dakota, Minnesota & Eastern Railroad began operations in 1986. Today it is one of the largest regional (Class II) railroads in the United States, with 1,103 miles of track located principally in South Dakota and Minnesota. The DM&E’s mainline extends from the Mississippi River at Winona, Minnesota, across southern Minnesota and central South Dakota to Rapid City. In 1996, DM&E acquired more than 200 miles of track from Union Pacific extending from Colony, Wyoming, through Rapid City to Crawford, Nebraska. Of the 1,103 miles, 908 miles are owned by the DM&E and the remainder are operated under long-term trackage rights agreements.

Iowa Chicago & Eastern Railroad began operations is 2002 with 1,400 miles of track in Illinois, Iowa, Minnesota, Missouri and Wisconsin. IC&E's main lines extend from Chicago, Illinois, to Kansas City, Missouri, and from Sabula, Iowa along the Mississippi River northwesterly to Minneapolis-St. Paul using trackage rights over the Canadian Pacific from La Crescent, Minnesota, to the Twin Cities. Branch lines (known as the "Corn Lines") extend from Marquette, Iowa, west to Mason City and Sheldon, and from Austin, Minnesota, to Jackson and to Rosemount.

Canadian Pacific officially gained control of the DM&E on October 30, 2008, after a year-long federal regulatory process. The acquisition was announced September 4, 2007, and closing held October 4, 2007. The acquisition concluded a competitive process to find the best approach to advance the DM&E’s Powder River Basin (PRB) project. To date, the CP has not decided if it will build the PRB project. As one of North America’s safest railroads, CP serves over 900 communities in the United States and Canada, reaching ports of both the Atlantic and Pacific oceans. As a member of the CP network, there are new and exciting opportunities for DM&E customers and communities. DM&E is owned by the SOO Line Holding company, a Delaware Corporation and indirect subsidiary of Canadian Pacific Railway Corporation.

History

1983 - 1985	Chicago & NorthWestern (C&NW) Railroad files to abandon a South Dakota segment of what is today the DM&E Railroad. U.S. Senator Larry Pressler, South Dakota, opposes the abandonment and wins the case before the Interstate Commerce Commission in 1985. Later in 1985, Senator Pressler strikes a deal with C&NW leading to the creation of DM&E as an alternative to abandonment.
September 1986	DM&E is formed through the acquisition of 826 miles of rail infrastructure and 139 miles of trackage rights, and certain buildings, locomotives, vehicles, equipment and inventory from the C&NW. C&NW operated the railroad for over 75 years. Lombard Investments, Inc.’s affiliated investor group provides the equity capital for the transaction and controlled DM&E until Oct. 4, 2007.
June 1994	DM&E completes the restructuring of certain operating agreements, and a subsequent recapitalization.
1995 - 1996	DM&E issues revenue bonds with the South Dakota Railroad Authority and borrowed under a bank facility to finance the upgrade of approximately 100 miles of its mainline track between Wessington and Pierre, South Dakota.
May 1996	DM&E acquires the Colony Line from the Union Pacific.
February 1998	DM&E files its application with the federal Surface Transportation Board (STB) seeking authority to construct approximately 260 miles of new railroad line, primarily in southwestern South Dakota and northeastern Wyoming, to access low-sulfur western coal reserves for movement to Midwestern and Eastern utilities (the "PRB Project").
December 1998	STB issues a decision stating the PRB Project meets the statutory transportation related requirements and is consistent with the criteria for a Certificate of Public Convenience and Necessity.
November 2001	STB publishes a favorable final Environmental Impact Statement (EIS) on the PRB Project.
January 2002	STB issues its decision granting approval to the PRB Project.
February 2002	IC&E executes a definitive Asset Purchase Agreement to acquire the assets of IMRL railroad.
July 2002	IC&E begins operations of the former IMRL.
March 2003	STB grants common control to the DM&E of the IC&E.
February 2006	After approval of a supplemental EIS, the STB gives final approval for the PRB Project to proceed.
August 2006	DM&E creates a new company, Wyoming Dakota Railroad Properties, Inc., to act as a subsidiary for the construction and operation of the PRB Project.
September 2007	DM&E announces it has entered into an agreement that will result in a merger of its operations with the Canadian Pacific Railway Limited (CP).
October 2007	CP completes its transaction to acquire the DM&E and its subsidiaries.
September 2008	STB approves CP’s acquisition of control of the DM&E and its subsidiaries.
October 2008	Canadian Pacific officially assumes control of the DM&E and its subsidiaries.
December 2008	STB approves the consolidation of the DM&E and IC&E.

Current Operations

The system transports over 300,000 carloads of freight yearly through the upper Midwest. The principal commodities handled include grain and grain products, coal, chemicals, bentonite and cement, steel products, scrap materials, and forest products. Much of the system’s traffic base is comprised of bulk commodity traffic. However, both its customer and commodity base are diversified, and it is generally the most cost-competitive transportation option for its customers.

Structure and Management. DM&E is organized broadly into five functional departments: (1) Transportation (train operations), (2) Mechanical (locomotive and car maintenance), (3) Engineering (track maintenance), (4) Finance & Accounting, and (5) Marketing.

System Map. The following map depicts the DM&E and PRB project, as well as the complete CP network:

Management

Key Management Team

Name	Birth Date	Date of Hire	Title
Vern W. Graham	10/15/51	11/05/08	President
Kurt V. Feaster	04/07/52	12/14/92	Senior Vice President of Finance, Chief Financial Officer
J. Ed Terbell	05/27/52	05/16/05	Executive Vice President of Operations
John K. Brooks	01/13/71	07/30/02	Vice President of Marketing and Sales
Randy H. Henke	01/18/54	06/01/06	Vice President of Engineering / Powder River Basin Design and Construction
Clyde F. Mittleider	12/01/55	06/16/87	Chief Transportation Officer
Traci J. Lund	01/19/73	11/04/02	Director of Human Resources
Herb M. Jones	08/02/58	02/10/05	Director of Government Affairs

Management Team Background

Vern W. Graham was appointed President of the DM&E in 2008 after helming the CP/DM&E transition as Vice President of Transition. Mr. Graham’s career began in 1973 with the Milwaukee Road as a Maintenance of Way extra gang laborer, and he ascended through the ranks to Roadmaster and Trainmaster. In 1985, Mr. Graham joined the SOO Line as a Senior Trainmaster. Since joining CP in 1999, Mr. Graham has served as General Manager of Field Operations (1999), Assistant Vice President Engineering Operations (2001), and Vice President Engineering Operations (2003). Mr. Graham is a member of several associations including the American Railroad Engineering & Maintenance Association, American Association of Railroad Superintendents, Heavy Axle Load & Engineering Research Committee, Railway Technology Working Committee of Transportation Technology Center Inc, and North American Chief Engineers.

Kurt V. Feaster joined the DM&E in 1992 as Chief Financial Officer and today is also Senior Vice President of Finance for the company. Prior to joining the DM&E, Mr. Feaster was CFO of the Wheeling & Lake Erie Railway (1990-1992) and Montana Rail Link (1987-1990). Mr. Feaster was Deputy Director of the Railroad Accounting Principles Board (a special U.S. Congressional agency). Prior to service with the federal agency, he held various positions with the Soo Line, Bessemer and Lake Erie, Duluth, Missabe and Iron Range, and Elgin, Joliet and Eastern Railroads. Mr. Feaster is a CPA and has a Bachelor of Science degree in Business Administration from Illinois State University and a Master’s Degree in Business Administration from the University of Illinois and has taught accounting courses for the University of Minnesota (Duluth and Minneapolis campuses) and the University of Pittsburgh.

J. Ed Terbell joined the DM&E in 2005 as its Executive Vice President of Operations. Mr. Terbell has over 31 years of progressively responsible experience in the engineering, transportation and mechanical departments. Prior to joining DM&E, Mr. Terbell was General Manager for Canadian National. Mr. Terbell worked for Wisconsin Central for a combined 14 years as VP – General Manager, Division Manager and Chief Engineer. Prior to joining the Wisconsin Central, Mr. Terbell was active in numerous roles for the CN&W including Chief Engineer Construction, Assistant Division Manager Engineering and Manager Maintenance Operations. Mr. Terbell attended Northwest State University in Maryville, Missouri and the Executive Management program at the University of Michigan.

John K. Brooks serves as Vice President of Marketing and Sales for the DM&E. Mr. Brooks started his railroad marketing career with the Union Pacific in 1994. In 1997, he moved from there for an opportunity to fill a key marketing role with the DM&E’s predecessor, the IMRL Railroad, headquartered in Davenport, Iowa. When DM&E acquired the assets of IMRL and launched the IC&E in 2002, Mr. Brooks was recruited to stay on with the new railroad as senior marketing manager in Davenport, Iowa. His most recent position was AVP Marketing General Merchandise. In addition to the railroad’s baseline business, Mr. Brooks has been the leading force in the railroad’s PRB project coal marketing efforts. A native of Bettendorf, Iowa, Mr. Brooks received a Bachelor of Arts Degree in Finance from the University of Northern Iowa.

Randy H. Henke brings more than 29 years of domestic and international experience in engineering, operations, marketing and planning to the DM&E. Mr. Henke joined DM&E in 2006 as Vice President of Powder River Basin Design and Construction. At the beginning of 2009 he accepted the additional role of Vice President of Engineering. Before joining the DM&E Mr. Henke was Vice President and Division Manager for Alfred Benesch & Company where he managed the Wisconsin Division office and led the company railroad engineering practice. Prior railroad experience includes positions with the Chicago & NorthWestern, Wisconsin Central, English, Welch and Scottish Railway, and Canadian National. Mr. Henke earned his Bachelor of Science degree in Engineering from the University of Wisconsin.

Clyde F. Mittleider serves as the Chief Transportation Officer. Mr. Mittleider began his railroad career with the Milwaukee Road and Burlington Northern in 1976. He joined the DM&E in 1987 as a conductor and was promoted to Manager of Train Operations at Huron in December 1996. In 2002, Mr. Mittleider became the Superintendent-North at Mason City with territory extended from Mason City to Marquette, to St. Paul south to Savanna and into the Chicago area. Mr. Mittleider became the Assistant Chief Transportation Officer in April 2004 and was promoted to Chief Transportation Officer on August 16, 2005.

Traci J. Lund serves as the Director of Human Resources for DM&E, with the responsibilities of managing all employment, compensation and benefits, compliance and regulatory related areas. Ms. Lund joined the DM&E in 2002 and has over 15 years of progressively responsible experience in Human Resources. She earned Bachelor of Science degrees in Accounting and Business Administration with a Management Concentration from Huron University. Ms. Lund earned her certification as a Professional in Human Resources from the National Society for Human Resource Management in 1997 and retains her certification through ongoing education.

Herb M. Jones joined the DM&E in 2005 as Government Affairs Director. Mr. Jones has 20 years management experience in positions with both public and private sector entities. Prior to joining the DM&E, he served most recently as Deputy Assistant Secretary for Intergovernmental Affairs at the U.S. Department of Energy. A Miller, South Dakota native, Mr. Jones received a Bachelor of Science Degree in Political Science from the University of South Dakota.