The door for modern Precision Railroading first opened wide when a gentleman named Ed Moyers came into our Chairman Gil Lamphere's office. Ed explained that he was the Vice President of the Peoria Paducah Railroad and had never been promoted in his life. Gil was told by Ed that he had, "these crazy ideas about how to run a railroad" and that his bosses would tell him, "go home, take a shower, go to bed, and not come to work in the morning if he still had those crazy ideas in his head."

Ed had with him a handwritten 25-page, single-spaced business plan to consolidate several rail lines in Mississippi and Louisiana to be called MidSouth Rail. It was the beginning of a partnership that would lead to transformation stories across the entire North American railroad industry. Ed and Gil together acquired MidSouth and within three years MidSouth had an unheard of operating ratio (operating expenses/net revenues) ("O.R.") of 58%.

Two years later, building on the operational success at MidSouth, Ed and Gil moved to acquire one of the worst performing Class I railroads, Illinois Central. There they built a team that included MidRail's current operating partners Henry Chidgey, Ron Lane, and the former CSX CEO, Hunter Harrison. It was a major Class I railroad with an abysmal O.R. of 93%. Two years later, the team transformed Illinois Central, lowering its O.R. to 66% and further dropping it to 59.9% while winning the Gold E. H. Harriman award for safety.

After 10 years of leadership under this team, IC was merged into the Canadian National in 1999. Then the CEO of IC, Hunter Harrison, implemented a similar transformation plan at CN, leading its O.R. to drop below 64% and the market value to rise from $8.0 billion to $32.8 billion. Ed Moyers and Henry Chidgey went out to turn around the Southern Pacific, which after two years of transformation was sold to the Union Pacific for $4.0 billion. After his retirement in 2009, Hunter Harrison moved over to the Canadian Pacific in 2012 and repeated the CN operating results. To date, our operating partners have generated over $30.0 billion for shareholders by implementing Precision Railroading techniques.

It took 20 years for other railroads to notice what had started at MidSouth. Some railroads adopted parts of it. Some did not. Some embraced it while others did not understand it or ignored it.

Now, our focus is on a different size segment. It is the space between Class I, II, and the shippers. It is fertile. It is small and midsized. It presents unusual investment return potential. It is MidRail. When "it is too big for the little guys and too small for the big guys," MidRail can help make the ideas happen.