The Official Newsletter of The Rail Road Company

America’s New SM Vol. 25, No. 1 Spring 2011 Indiana Rail Road Marks Silver Anniversary First INRD train rolled in spring of 1986

INDIANAPOLIS—It was the culmination of more than and capital investment on this line over the urgent needs of a decade of behind-the-scenes research, planning their core system.” and relationship building. On March 18, 1986, Early manifestations of that potential included entrepreneur Thomas Hoback closed the sale of development of property around the Senate Avenue 110 miles of route alienated by the Central Terminal on the near southside of . The Railroad between Indianapolis and Sullivan, railroad inaugurated a transload and bulk storage Indiana. facility for lumber and fertilizer and created a new A former coal marketing executive in destination for merchandise freight to balance the the rail and utility industry, Hoback had dominance of coal. been looking for an opportunity to create a The effort to diversify Indiana Rail Road’s small, independent railroad since the 1970s. traffic base was advanced by the first acquisition; His opportunity came in the period following industry in 1990, the railroad purchased an additional 45 miles of route deregulation in the 1980s, when the country’s large railroads west of Sullivan, Ind., extending its reach to diverse industry began selling off marginal secondary lines to upstart in southeastern Illinois, including the Marathon refinery in operators. Hoback had intensely studied the Illinois Robinson, Hershey Foods and the Mont Eagle Mills grain Central’s line from Effingham, Illinois to Indianapolis, complex. An emphasis on marketing paid valuable divdends; carload freight which bisected the rich coalfields of southwest Indiana and served the volumes and earnings began a robust and steady climb, doubling twice city known as the “Crossroads of America.” The new railroad came with an within the company’s firstfive years of operation. existing anchor customer, Indianapolis Power & Light. Although the railroad was marketable, its infrastructure was all but “I knew that if we did nothing other than serve IP&L, we’d be viable,” worn out, a common conditon of secondary lines by the 1970s and 80s says Hoback, “but it was also apparent to us that there was an abundance of after decades of deferred maintenance. Heavy coal trains had taken a toll on unexplored potential for this line. The previous owner had a more onerous the track after a year of operation, resulting in two costly derailments. An cost structure, and they were never able to prioritize marketing opportunites intensive five-year capital plan was launched in 1995, focused on renewing (Continued on p.4)

25 years of changing colors. Left: A trio of INRD’s first second-hand locomotives idles on the service track at Indianapolis in 1986. (Gary Dolzall); Center: A mix of “gray fleet” power switches Indianapolis Power & Light in 1999. (Chris Burger); Right: The newest addition to the fleet, engine 9025 wears a special silver livery for the 25th anniversary celebration. (Mike Stickel) 1 Inside: Reflections at milepost 25, p. 2 • Capital Investment Preview, p. 2 • Indiana Rail Road’s Biggest Losers, p. 3 From the President: Reflections at Milepost 25

un it like a business, not like a rail- Staggers laid the groundwork for new entrepre- in running this railroad like a business. Dad was road.” Those are words that my neurs to take over underperforming segments onto something. “Rfather ingrained in me. Dad was a of large railroads, reorganize them, recapitalize Besides his words of wisdom, I’ve also lifelong railroader, his career spanning duties them and renew their viability. taken to heart that the difference between being from telegrapher to chief dispatcher on the Santa That was the path that led to what is now a railroad and not being a railroad isn’t locomo- Fe Railway’s Illinois Division, one of the busi- The Indiana Rail Road Company. Inspired by the tives, track, signals or any of the outwardly vis- est stretches of railroad in the world. During his wisdom my dad shared with me years earlier, I ible characteristics—it’s customers. years in railroading, he saw many artificial bar- was able to pull together $6 million in capital— Back in 1986, it took an extraordinary leap riers that impeded good roughly $11 million of faith for a customer to do business with a service, efficiency and in today’s dollars—to small, upstart railroad. We’ve earned trust—and cost management. He “Our success has been acquire 110 miles of increased business—from our shippers by keep- told me that if you could mainline from the Il- ing promises, delivering safe, reliable, precise just run the railroad like fundamentally rooted linois Central Railroad service and adding value to their operations. a business and not like between Indianapolis Nothing has ever made me more satisfied than a railroad, things would in running this railroad and Sullivan, Indiana. putting new business and more freight onto our be different. The purchase agree- railroad, because it’s a sign that we’ve done a job His words stayed like a business.” ment was signed in worthy of winning increased confidence from with me. After I gradu- December of 1985, and our customers. ated from college and we closed the sale and I can assure you that we’ll continue the ro- began my own railroad career, I set my sights moved our first train on March 18, 1986, a quar- bust reinvestment of earnings and commitment on someday working in the industry not just as ter century ago. to service that have transformed this railroad un- a manager, but as an entrepreneur. That wasn’t It’s difficult to fathom that 25 years have der our ownership and management. We’re not an easy proposition—there are few, if any, busi- elapsed since we turned the first wheel. It’s here merely to move trains. We’re here to build a nesses more capital intensive than railroading. even more mind bending to see what has been business. You don’t simply decide to hang out your shingle achieved in those 25 years. Until the great eco- Thank you for our first—and, more impor- and go to work. nomic recession of 2008, our company had sus- tantly, our next— 25 years. But in the decade following the mid-1970s, tained an annual growth rate exceeding 13 per- the industry was in transition. Major bankrupt- cent! I’d venture to say that not since the early cies (brought about largely by those artificial 1900s had any railroad been considered a growth impediments I mentioned earlier) led to deregu- company. Thomas G. Hoback lation, in the form of the Staggers Act of 1980. Our success has been fundamentally rooted President and Chief Executive Officer Major capital projects planned for year 25 Watch for upcoming bulletins with info on schedule and service adjustments

INDIANAPOLIS—The Indiana Rail Road is projecting. Company has approved record levels of “We will be approaching 20 million gross capital investment to renew and improve ton miles annually over the core of our route infrastructure and enhance efficiency. The system, due largely to increased heavy haul railroad will embark on a $65 million capital business generated by the southern Indiana plan over the next five years. coal market, as well as growth in our other At the urging of the company’s board categories.” He noted that the plan calls for of directors, the first two years have been three bridge renewals and 21 miles of rail combined in an accelerated 2011 program. replacement. Train velocity will be enhanced Indiana Rail Road president and chief by resulting increases in track speeds as well executive officer Thomas Hoback says that as the creation of 13 miles of CTC territory. the record investment is reflective of sharply A new locomotive servicing facility is Above: Switch panels are unloaded near Van Yard increased levels of business that the company also planned near Jasonville, Ind. in Terre Haute as 2011 capital projects accelerate into full swing. 2 INRD now serving Tulgetske hired as Powell joins INRD Indy’s Perry K Trainmaster as policy analyst steam plant INDIANAPOLIS—Ed Tulgetske has been INDIANAPOLIS—Eric Powell has joined INDIANAPOLIS—INRD gained a major hired to the position of Trainmaster. Tulgetske the Indiana Rail Road Company as a public customer January 1 with the inauguration of will oversee train and terminal operations based policy analyst. Powell will focus much of his coal service to Citizens Thermal Energy’s at Senate Avenue Terminal in Indianapolis. attention on issues related to energy policy and Perry K steam plant. Located on the near southwest side of downtown Indianapolis, Perry K is now receiving coal shipped from Bear Run Mine in Sullivan County. Perry K, purchased by Citizens Thermal owner Citizens Gas from Indianapolis Power & Light in March 2000, provides steam heat and hot water for more than 200 commercial buildings and industries downtown—the second-largest steam system in the U.S. The Perry K plant was built as an electrical generating station in the 1800s and converted to steam production in 1905. It also provides chilled water to cool more than 60 downtown facilities, including Lucas Oil Stadium and a host of other landmarks.

Ed Tulgetske Eric Powell

A native of Tawas City, Michigan, Ed worked transportation infrastructure. for eleven years at Lake State Railway Co., Powell is a Ball State University graduate beginning in 1999. He started as a conductor and spent the last 13 years handling a variety and was later promoted to manager of safety of public and media relations duties for the and operating practices. Ed is looking forward Indianapolis Motor Speedway. Prior to that, to the next chapter in his railroad career and he worked in communications capacities for managing safe, reliable service for customers Indianapolis Raceway Park and the Indiana Perry K steam plant, downtown Indianapolis in the Indianapolis area. House of Representatives.

INRD Biggest Losers win with big health improvements

PALESTINE, Ill.—For INRD employees, by excess weight. losing has never felt so good. A yearlong Runners-up in the contest health and wellness campaign modeled after included Tom and Charlene Johnson, TV’s “The Biggest Loser” wrapped up with 30 percent lost; Eddie and Tammy remarkable results and a workforce feeling Turpin, 29 percent lost; Mike Engel revitalized. and Chris Rund, 7.6 percent lost; Collectively, INRD employees shed more Mark Pfeiffer and Tammy Turpin than 330 pounds and lowered blood pressure for individual goals met; and Jacky by 225 points. At the head of the pack were Hardy and Eddie Turpin for most See more about our corporate wellness Kieffer and Tonya Allen, who won the blood pressure points lowered. initiatives at YouTube.com/IndianaRailRoad distinction of Biggest Losers with a total of Congratulations and good health 31 percent of body weight lost. Not only did to all of INRD’s Biggest Losers. A the couple take home a $2,000 grand prize, follow-up Biggest Loser program is Kieffer Allen and his wife Tonya (not pictured) won the $2,000 their change in lifestyle also helped stave off already underway. grand prize for being INRD’s “Biggest Losers.” A second looming health complications brought about installment of the popular contest is already underway. 3 The Indiana Rail Road Company 101 West Ohio Street, Suite 1600 Indianapolis, Indiana 46204

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(Continued from p. 1) the aging rail, some of which was 70 years old. INRD is renewing and strengthening track and Veteran employees commonly recall this major bridge infrastructure to meet a projected increase rail replacement project as a turning point in the in transportation business of more than 50 company’s history. percent over the next five years, much of it the With renewed infrastructure, Indiana Rail result of America’s demand for energy-related Road also had renewed outlook for growth. commodities. The late 1990s through 2005 brought a number These developments, along with a recovering of high-profile marketing victories. The most economy being led by the manufacturing sector, significant was celebrated on January 6, 2001, all point toward the possibility of Indiana Rail when INRD delivered its first shipment of Road’s 25th year being one for the record books western coal to Ameren’s Newton Generating as well as the history books. Hoback is quick Station. Especially poignant was the fact that to put the picture into proper Ameren had the confidence to choose regional perspective, however. INRD over Class 1 Illinois Central and invested “It will always be about more than $8 million to build a new connection the customer,” he points out. to INRD’s main line. “It always has for us, and it Growth took a different turn in the spring always will be. That’s the of 2006, when INRD made another major underpinning of our success, acquisition—the Indiana assets of Canadian and that’s what will drive our Pacific Railway, 92 miles of mainline and continued success in the next trackage rights to the Ohio River and the 25 years.” Gateway. The acquisition drove revenue carloadings to a pre-recession peak of roughly Indiana Lt. Governor 165,000. Becky Skillman helped Today, the future looks no less robust INRD president Tom Hoback for Indiana Rail Road. With record-setting unveil a new poster painting capital investment on the near horizon and a by Mitch Markovitz (right) transformational extension to Bear Run mine— before a gathering of INRD customers, friends and VIPs (above) gathered at the Senate Avenue the largest mine east of the Mississippi River— corporate annex May 20 to officially celebrate the railroad’s silver anniversary. 4