Overview

For legal and regulatory historical reasons, our rail system is comprised of three entities (the DM&E Railroad, the IC&E Railroad, and Cedar American Rail Holdings) that are operated as a single system under common ownership and common management. Roughly 1,000 employees drive the system. 150 of those are Cedar American employees, which means they work for both operating railroads together, providing operations, marketing, IT, and other administration support. The two operating railroads account for the balance of the other 1,000 employees. The system collectively owns over 8,000 rail cars and about 200 locomotives. Sioux Falls is headquarters for the entire system.

DM&E 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.

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

On September 4, 2007, the DM&E announced it entered into an agreement that will result in a merger of its operations with Canadian Pacific Railway Limited (CP). Closing was held on October 4, 2007, and the merger is pending approval by the federal Surface Transportation Board (STB), which is expected to reach its decision by October 2008. Shares of the DM&E will be held by an independent voting trust until the STB review and approval process is complete.

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 that leads 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 had operated the railroad for over 75 years. Lombard Investments, Inc.’s affiliated investor group provides the equity capital for the transaction and controlled the Company 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 Powder River Basin.
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.

Current Operations

The system transports nearly 280,000 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. Cedar American Rail Holdings, DM&E and IC&E are 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. The senior management team has tremendous depth and a diverse experience base that provides for operational excellence, as well as long-term vision and strategic focus. The seasoned management team is led by Kevin V. Schieffer, who has been DM&E's CEO since 1996 and has been involved with the creation and development of the Company since 1983, three years prior to its start-up. After a 1983 abandonment battle, Mr. Schieffer, as an advisor to U.S. Senator Larry Pressler, worked with the Chicago & North Western Railroad in 1985 to develop the compromise agreement that led to the creation of the DM&E. He continued to be involved in significant C&NW/DM&E issues in the first decade of DM&E operations. As legal counsel for the Company in 1993 he led negotiations with C&NW that led to its successful re-financing and freight car fleet acquisition. He also negotiated the 1996 acquisition of the 203-mile Colony Line, which today runs north-south through Rapid City on DM&E's west end. In addition, the seven executive officers have over 170 years of combined experience in the railroad industry.

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

Management

Key Management Team

Name	Birth Date	Date of Hire	Title
Kevin V. Schieffer	02/26/58	11/07/96	President and Chief Executive Officer
Lynn A. Anderson	03/19/47	09/05/86	Senior Vice President of Marketing
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
Steven Scharnweber	09/23/51	10/31/95	Vice President of Engineering and Chief Engineer
Randy H. Henke	01/18/54	06/01/06	Vice President of Powder River Basin Design and Construction
Daniel L. Goodwin	12/08/46	01/06/97	Chief Mechanical Officer
Clyde F. Mittleider	12/01/55	06/16/87	Chief Transportation Officer

Management Team Background

Kevin V. Schieffer began his role as President and Chief Executive Officer of the DM&E in 1996, and is now the President and CEO of Cedar American Rail Holdings. Mr. Schieffer’s long history and close association with the Company started in 1983, three years prior to its start-up. Following a two-year abandonment fight, he initiated negotiations with the C&NW Railroad in 1985, which led to the creation of the DM&E the following year. From 1982 to 1987, Mr. Schieffer served as counsel to U.S. Senator Larry Pressler, South Dakota, for the Senate Commerce, Science and Transportation Committee, which involved various rail policy issues. From 1987 to 1991, he served as Senator Pressler’s Chief of Staff. He also taught at Georgetown University Law School as an Adjunct Professor of Law. Former President Bush appointed Mr. Schieffer as U.S. Attorney for South Dakota in 1991, in which he served until 1993. From 1993 to 1996, he served as chief legal counsel to the Company, during which time he was involved in the recapitalization of the Company in 1994, and the acquisition of the 203-mile Colony Line in 1996. Mr. Schieffer received his BA from the University of South Dakota (Phi Beta Kappa, University Scholar) and received his law degree from Georgetown University (International Law Review).

Lynn A. Anderson served as Vice President of Marketing, Strategic Planning and Public Affairs of the DM&E at its inception and is now the Senior Vice President of Marketing for Cedar American Rail Holdings. Mr. Anderson is also the Company’s Corporate Secretary. Prior to joining the DM&E, Mr. Anderson spent 15 years with the C&NW Railroad, lastly as General Manager – Grain Marketing and Pricing. Mr. Anderson has a Bachelor of Science degree in Industrial Administration from Iowa State University. Mr. Anderson is a graduate of the College of Transportation and Distribution in Chicago, is the past President of the Minnesota Regional Railroad Association, served 13 years on the Board of Directors of the Brookings Municipal Utilities and served on the Board of Directors of the South Dakota Chamber of Commerce and Industry. Mr. Anderson also serves on the Surface Transportation Board's National Grain Car Council. He is a registered practitioner before the Surface Transportation Board.

Kurt V. Feaster joined the DM&E in 1992 as Chief Financial Officer and today is also Senior Vice President of Finance for Cedar American Rail Holdings. 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 – Operations. Mr. Terbell has over 31 years of progressively responsible experience in the engineering, transportation and mechanical departments. Prior to joining the railroad, 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.

Steven O. Scharnweber joined the DM&E in October 1995 as its Manager of Track Maintenance and is now Vice President of Engineering and Chief Engineer of Cedar American Rail Holdings. Mr. Scharnweber has over 30 years of experience in the railway industry, principally with the C&NW in various engineering positions. He is a member of the American Railway Engineering and Maintenance of Way Association and the American Welding Society.

Randy H. Henke joined Cedar American Rail Holdings in 2006 with more than 29 years experience in engineering, operations, marketing and planning both domestically and internationally. He currently serves as the Vice President of Powder River Basin Design and Construction. Mr. Henke’s last position was as 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.

Daniel L. Goodwin joined the DM&E in January 1997 as its Chief Mechanical Officer and now is the CMO for Cedar American Rail Holdings. Mr. Goodwin has 33 years of experience in the railroad industry, most recently as Superintendent of Motive Power for the Wheeling & Lake Erie Railway Company. Mr. Goodwin also held various positions at the Norfolk & Western Railroad. Mr. Goodwin also teaches classes in electrical and mechanical training.

Clyde F. Mittleider serves as the Chief Transportation Officer for Cedar American Rail Holdings, with the responsibilities of managing the rail car fleet, DM&E/IC&E transportation, the dispatching center and crew office. 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. Mr. Mittleider 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.