Ties Weekly Update #18

12 August, 2004

CONTINUING EXCELLENT PRODUCTION

As of August 5, 2004, we have installed nearly 155,000 of the 235,000 ties now scheduled to be installed by November 24^th 2004. All crews are doing an excellent job and should complete all projects on or ahead of schedule.

¨ As of August, 220,000 ties have been delivered to our properties and are in the process of being unloaded by the Brandt truck.

¨ Considering the siding additions and extensions and the Florence connection, we now expect to install 235,000 ties this production season.

¨ Wes Risseeuw’s DM&E east tie gang has started installing ties in the Iroquois area and will continue this for the next several weeks.

¨ The LA Colo tie gang has completed their first three sections of tie installation on the IC&E and DM&E and will now focus on the CWR project on the IC&E. This crew has already installed ties between Austin and Owatonna on the IC&E, and between Owatonna and Mankato, and Sleepy Eye and Garvin on the DM&E. They still need to complete the tie installation between Garvin and the Minnesota/South Dakota state line later in the year.

¨ Foreman Steve Koser’s crew has completed the installation of 6,000 ties west of Mason City and will be traveling eastward to begin installing switches in the Calmar rail project area, then installing CWR on the IC&E’s curve patch program. They will spend most of the remainder of the year on this curve patch project, except for a short period of time when they will install about 5,000 ties in the Quad Cities area in September.

¨ Jim Nemec’s west tie gang has completed the section of ties between Rapid City and Hermosa. This tie crew is now on the lower Black Hills sub near Smithwick.

¨ The RJ Corman tie crew began installing ties on Friday the 16^th at Volga and has completed the tie installation between Volga and Lake Preston. They have now traveled back to Volga and will install ties heading eastward to the state line.