UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                                    FORM 10-Q
(Mark one)
[x]   QUARTERLY  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the quarterly period ended              March 31, 2004
                                     -----------------------------------------

                                      OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934
      For the transition period from                                  to
                                     --------------------------------    -----

Commission File Number: 1-10520


                            HEARTLAND PARTNERS, L.P.
------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


            Delaware                                   36-3606475
------------------------------------------------------------------------------
(State or Other Jurisdiction of           (I.R.S. Employer Identification No.)
 Incorporation or Organization)

     330 North Jefferson Court, Chicago, Illinois                     60661
------------------------------------------------------------------------------
      (Address of Principal Executive Offices)                      (Zip Code)


                                  312/575-0400
------------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)


------------------------------------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
                                   Yes   X             No
                                       -----              -----

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).  Yes             No  X
                                                    -----          -----



                                       1


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004



                                TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION


Item 1.      Financial Statements

                   Consolidated Balance Sheets...............................3

                   Consolidated Statements of Operations.....................4

                   Consolidated Statements of Cash Flows.....................5

                   Notes to Consolidated Financial Statements................6

Item 2.      Management's Discussion and Analysis of Financial Condition
             and Results of Operations......................................15

Item 3.      Quantitative and Qualitative Disclosures About Market Risk.....30

Item 4.      Controls and Procedures........................................30


PART II.  OTHER INFORMATION


Item 1.      Legal Proceedings..............................................31

Item 2.      Changes in Securities, Use of Proceeds and Issuer
                 Purchases of Equity Securities.............................31

Item 3.      Defaults Upon Senior Securities................................31

Item 4.      Submission of Matters to a Vote of Securities Holders..........31

Item 5.      Other Information..............................................31

Item 6.      Exhibits and Reports on Form 8-K...............................32

                   Signature................................................33

                   Index to Exhibits........................................34




                                       2


                                     PART I

                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                            HEARTLAND PARTNERS, L.P.
                           CONSOLIDATED BALANCE SHEETS

                             (dollars in thousands)
                                   (Unaudited)



                                                         March 31,        December 31,
                                                           2004               2003
                                                      --------------     --------------
Assets:
                                                                   
Cash and cash equivalents                             $        4,109     $        3,926
Accounts receivable (net of allowance of $316
  at March 31, 2004 and December 31, 2003)                        45                233
Due from affiliate (net of allowance of $5,133 at
  March 31, 2004 and December 31, 2003)                        4,601              4,601
Prepaid and other assets                                         746                501
                                                      --------------     --------------
       Total                                                   9,501              9,261
                                                      --------------     --------------

Property:
Land                                                             383                491
Furniture, fixtures and equipment                                465                517
   Less accumulated depreciation                                 242                282
                                                      --------------     --------------
Net land, furniture, fixtures and equipment                      606                726
Land held for sale, scattered land parcels                       614                621
Land held for sale, former development properties              1,654              1,838
Capitalized predevelopment costs                               4,188              4,545
                                                      --------------     --------------
       Net properties                                          7,062              7,730
                                                      --------------     --------------

Total assets                                          $       16,563     $       16,991
                                                      ==============     ==============

Liabilities:
Accounts payable and accrued expenses                 $          861     $        1,829
Accrued real estate taxes                                        295                362
Allowance for claims and liabilities                           4,027              3,970
Unearned rents and deferred income                               946              1,327
Other liabilities                                                  6                 12
                                                      --------------     --------------

       Total liabilities                                       6,135              7,500
                                                      --------------     --------------

Partners' capital:
General Partner                                                    7                 (2)
Class A Limited Partners - 2,142 units
  authorized and issued and  2,092 outstanding at
  March 31, 2004 and December 31, 2003                           880                 --
Class B Limited Partner                                        9,541              9,493
                                                      --------------     --------------
       Total partners' capital                                10,428              9,491
                                                      --------------     --------------

Total liabilities and partners' capital               $       16,563     $       16,991
                                                      ==============     ==============


The accompanying notes are an integral part of these financial statements.


                                       3


                            HEARTLAND PARTNERS, L. P.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                   (dollars in thousands except per unit data)
                                   (Unaudited)


                                         For the Three Months Ended March 31,

                                                 2004           2003
                                              ----------     ----------
Income:
Property sales                                $    3,115     $   11,117
Less: Cost of property sales                         744          3,817
                                              ----------     ----------

Gross profit on property sales                     2,371          7,300
                                              ----------     ----------

Operating Expenses:
Selling expenses                                     341            608
General and administrative
  expenses                                           826            780
Interest expense                                      17            114
Real estate taxes                                     71             81
Environmental expenses and other charges             486            117
                                              ----------     ----------

Total operating expenses                           1,741          1,700
                                              ----------     ----------

Operating income                                     630          5,600

Other Income and (Expenses):
Portfolio income                                       5              7
Rental income                                        397             58
Other income                                          20              7
Depreciation                                         (12)           (17)
Management fee                                      (103)          (103)
                                              ----------     ----------

Total other income (expense)                         307            (48)
                                              ----------     ----------

Net income                                    $      937     $    5,552
                                              ==========     ==========

Net income allocated to General partner       $        9     $       56
                                              ==========     ==========
Net income allocated to
  Class B limited partner                     $       48     $       28
                                              ==========     ==========
Net income allocated to
  Class A limited partners                    $      880     $    5,468
                                              ==========     ==========
Net income per Class A
  Limited partnership unit                    $     0.42     $     2.61
                                              ==========     ==========
Weighted average number of Class A limited
  partnership units outstanding                    2,092          2,092
                                              ==========     ==========



The accompanying notes are an integral part of these financial statements.


                                       4


                            HEARTLAND PARTNERS, L. P.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (dollars in thousands)
                                   (Unaudited)




                                                                            For the Three Months Ended March 31,
                                                                                   2004           2003
                                                                                ----------     ----------
Cash Flow from Operating Activities:
                                                                                         
Net income                                                                      $      937     $    5,552
Adjustments reconciling net income to net cash
  provided by operating activities:
Land write off to cost of sales                                                        108            581
Depreciation                                                                            12             17
Net change in allowance for claims and liabilities                                      57             --
Net change in assets and liabilities:
   Decrease in accounts receivable                                                     188             20
   Decrease in housing inventories, net                                                 --          3,649
   Decrease in land held for sale, scattered land parcels                                7              8
   Decrease (increase) in land held for sale, former development properties            184           (104)
   Decrease (increase) in capitalized predevelopment costs, net                        357         (1,394)
   Decrease in accounts payable and accrued liabilities                               (968)        (2,067)
   Net change in other assets and liabilities                                         (699)          (273)
                                                                                ----------     ----------

Net cash provided by operating activities                                              183          5,989
                                                                                ----------     ----------

Cash Flow from Financing Activities:
Advances on notes payable                                                               --            429
Payoffs on notes payable                                                                --         (4,075)
Decrease in restricted cash                                                             --             40
                                                                                ----------     ----------

Net cash used in financing activities                                                   --         (3,606)
                                                                                ----------     ----------

Net increase in cash                                                                   183          2,383

Cash at beginning of period                                                          3,926            709
                                                                                ----------     ----------

Cash at end of period                                                           $    4,109     $    3,092
                                                                                ==========     ==========

Non-cash Activities:
Write off of furniture, fixtures and equipment and
  the related accumulated depreciation                                          $       52     $       --
                                                                                ==========     ==========


The accompanying notes are an integral part of these financial statements.


                                       5


                            HEARTLAND PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    FOR THE THREE MONTHS ENDED MARCH 31, 2004

                                   (Unaudited)

These unaudited consolidated financial statements of Heartland Partners, L.P., a
Delaware limited partnership, and its subsidiaries (collectively, "Heartland" or
the "Company"), have been prepared pursuant to the Securities and Exchange
Commission ("SEC") rules and regulations and should be read in conjunction with
the financial statements and notes thereto included in the Company's 2003 Annual
Report on Form 10-K (the "2003 Form 10-K"). The following Notes to Consolidated
Financial Statements highlight significant changes to the notes included in the
2003 Form 10-K and present interim disclosures as required by the SEC. The
accompanying consolidated financial statements reflect, in the opinion of
management, all adjustments necessary for a fair presentation of the interim
financial statements. All such adjustments are of a normal and recurring nature.
Certain reclassifications have been made to the prior periods' financial
statements in order to conform with current period presentation.

1.    Organization

Organization and Purpose; Recent Asset Sales

Heartland was formed on October 6, 1988. Heartland's existence will continue
until December 31, 2065, unless extended or dissolved pursuant to the provisions
of Heartland's partnership agreement. Heartland was originally organized to
engage in the ownership, purchasing, development, leasing, marketing,
construction and sale of real estate properties. In 2003, Heartland sold several
properties in its real estate portfolio, paid off certain of its liabilities and
distributed some of the proceeds thereof to its partners in accordance with the
terms of its partnership agreement. Heartland is now attempting to sell its
remaining real estate holdings, pursuing recovery on claims it has against local
government units in Wisconsin and foreclosing on the Company's Class B Interest
held by a wholly owned subsidiary of Heartland Technology, Inc. that secures
outstanding loans from the Company to Heartland Technology, Inc. that Heartland
Technology, Inc. has indicated it will be unable to repay. The Company is
additionally undertaking to resolve and pay or make provisions for its remaining
liabilities, most of which are actual or contingent environmental liabilities.
The amount and timing of future cash distributions will depend on generation of
cash from sales and claims, resolution of liabilities and associated costs. The
Company's 2003 distributions were greater than in any past year. Unitholders
should not expect the same level of distributions on an annual basis as occurred
in 2003.

HTI Interests, LLC, a Delaware limited liability company and sole general
partner of Heartland (the "General Partner" or "HTII"), is owned 99.9% by
Heartland Technology, Inc., a Delaware corporation formerly known as Milwaukee
Land Company ("HTI"), and 0.1% by HTI Principals, Inc., a Delaware corporation
owned by two current members and three former members of HTI's board of
directors. CMC Heartland Partners, a Delaware general partnership ("CMC"), is an
operating general partnership owned 99.99% by Heartland and 0.01% by HTII.


                                       6


                            HEARTLAND PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


The following table sets forth certain entities formed by Heartland since its
inception that currently hold real estate and other assets, the date and purpose
of formation, development location and ownership:




                                             YEAR
               COMPANY                       FORMED                   BUSINESS PURPOSE

                                                  
Heartland Development Corporation ("HDC")     1993      General Partner of CMC Heartland Partners I,
                                                         Limited Partnership
CMC Heartland Partners III, LLC   ("CMCIII")  1997      Owned Kinzie Station Phase I, owns Kinzie Station
                                                         Phase II
CMC Heartland Partners IV, LLC    ("CMCIV")   1998      Owns approximately 7 acres in Fife, Washington
CMC Heartland Partners VII, LLC   ("CMCVII")  1997      Owned lots and homes in the Longleaf Country Club



COMPANY        DEVELOPMENT LOCATION                   OWNERSHIP

HDC            Not Applicable                         100% (1)
CMCIII         Chicago, Illinois                      100% (2)
CMCIV          Fife, Washington                       100% (2)
CMCVII         Southern Pines, North Carolina         100% (2)


(1) Stock wholly owned by Heartland.
(2) Membership interest owned by CMC.


2.    Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include the accounts of Heartland; CMC,
its 99.99% owned operating partnership; HDC, 100% owned by Heartland; CMCIII,
CMCIV, CMCVII, each 100% owned by CMC. All intercompany transactions have been
eliminated in consolidation.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses are reasonable estimates of their fair values
because of the short maturity of these financial instruments.

Revenue Recognition

Land sales are recognized when the Company has received an adequate cash down
payment and all other conditions necessary for profit recognition have been
satisfied.


                                       7


                            HEARTLAND PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Property

Properties are carried at their historical cost. Expenditures which
significantly improve the values or extend useful lives of the properties are
capitalized. Predevelopment costs including real estate taxes that are directly
identified with a specific development project are capitalized. Interest and
related debt issuance costs are capitalized to qualifying real estate
inventories as incurred, in accordance with Statement of Financial Accounting
Standards No. 34, "Capitalization of Interest Costs", and charged to cost of
sales as revenue from land sales are recognized. Repairs and maintenance are
charged to expense as incurred. Depreciation is provided for financial statement
purposes over the estimated useful life of the respective assets ranging from
seven (7) years for office equipment and fixtures to forty (40) years for
building and improvements using the straight-line method.

For properties held for sale, an impairment loss is recognized when the fair
value of the property, less the estimated cost to sell, is less than the
carrying amount of the property. No event occurred during the first three months
of 2004 that resulted in an impairment loss being recognized.

3.    Notes Payable

Effective February 11, 2004, CMC executed documents for a line of credit
agreement in the amount of $2,000,000 with LaSalle National Bank ("LNB"). At
March 31, 2004, Heartland, as collateral, had granted LNB a first lien on
certain parcels of land in Chicago, Illinois which had a carrying value of
$5,457,000 and no funds had been advanced to the Company by LNB against the line
of credit. The line of credit interest rate is the prime rate of LNB plus 1.5%
(5.5% at March 31, 2004). LNB also requires the Company to maintain net worth
(defined as assets minus liabilities) of $5,500,000, maintain net income of
$1,000,000 during any fiscal year beginning with the year ended December 31,
2003, not make any advances or distributions to Unitholders or members from
funds borrowed under the line of credit, and adhere to various other covenants
described in the Secured Revolving Note document. The Company was in
default under the line of credit agreement because it did not meet the net
income covenant in 2003. However, a waiver of this default was received from
LNB on May 14, 2004.  The line of credit matures December 1, 2004.

As of March 31, 2004 and December 31 2003, Heartland's total consolidated
indebtedness was zero. There can be no assurance that the amounts available from
internally generated funds, cash on hand, disposition of the remaining assets of
the Company will be sufficient to fund Heartland's anticipated operations.
Heartland may be required to seek additional capital in the form of bank
financing. No assurance can be given that such bank financing will be available
or, if available, will be on terms favorable to Heartland. If Heartland is not
successful in obtaining sufficient capital to fund the implementation of its
liquidation strategy and for other expenditures, properties might be sold for
far less than their value. Any such discounted sale could adversely affect
Heartland's future financial condition and results of operations. However,
management does not intend to discount the sale of properties for far less than
their value.


                                       8


                            HEARTLAND PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

4.    Real Estate Sale Activities

Property sales during the three months ended March 31, 2004 totaled $3,115,000
which consists of approximately 2 acres of land in the Kinzie Station
development in Chicago, Illinois for $1,597,000, 6 acres of land at Petit Point
located near Milwaukee, Wisconsin for $1,155,000, and various land held for sale
parcels for approximately $363,000.

Property sales during the three months ended March 31, 2003 totaled $11,117,000
which consisted of 3 acres of land in Kinzie Station North for $9,850,000, 11
acres of land at Plankinton Yard located near Milwaukee, Wisconsin for $383,000,
3 units in Longleaf for $686,000 and various land held for sale parcels for
$198,000.

At March 31, 2004 the Company had remaining property at Kinzie Station in
Chicago, Illinois, approximately 4 acres, a 7-acre parcel in Fife, Washington, a
20 acre property in Glendale, Wisconsin and approximately 13,640 acres of land
scattered over 12 states. In addition, although the Company conveyed its
property in Menomonee Valley located in Milwaukee, Wisconsin to the
Redevelopment Authority of the City of Milwaukee ("RACM") in 2003, it retained
the right to appeal the purchase price and to seek additional consideration. In
April 2004 the Company filed suit against RACM in the Milwaukee County Circuit
Court appealing the compensation paid by RACM in the July 2003 condemnation of
Heartland's property.

5.    Related Party Transactions

Management Agreement

Heartland has a management agreement with HTII pursuant to which Heartland is
required to pay HTII an annual management fee in the amount of $413,000 for the
years end December 31, 2004 and 2003. The management agreement terminates on
June 27, 2005. The fee for the three months ended March 31, 2004 has been paid
in full.


Conflicts of Interest of General Partner and its Officers and Directors

The officers and directors of HTI, the officers of Heartland and the managers of
HTII; including Lawrence S. Adelson, Chairman of the Board, President and Chief
Executive Officer of HTI and Chief Executive Officer of Heartland and Richard P.
Brandstatter, President of the Company, will not devote their entire business
time to the affairs of Heartland. The Heartland Partnership Agreement provides
that (i) whenever a conflict of interest exists or arises between the General
Partner or any of its affiliates, on the one hand, and Heartland, or any
Unitholder on the other hand, or (ii) whenever the Heartland Partnership
Agreement or any other agreement contemplated therein provides that the General
Partner shall act in a manner which is, or provide terms which are, fair and
reasonable to Heartland, or any Unitholder, the General Partner shall resolve
such conflict of interest, take such action or provide such terms, considering
in each case the relative interests of each party (including its own interest)


                                       9


                            HEARTLAND PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

to such conflict, agreement, transaction or situation and the benefits and
burdens relating to such interests, any customary or accepted industry
practices, and any applicable generally accepted accounting practices or
principles. Thus, unlike the strict duty of a fiduciary who must act solely in
the best interests of his beneficiary, the Heartland Partnership Agreement
permits the General Partner to consider the interests of all parties to a
conflict of interest, including the General Partner. The Heartland Partnership
Agreement also provides that, in certain circumstances, the General Partner will
act in its sole discretion, in good faith or pursuant to other appropriate
standards. The General Partner has sole authority over the timing and amount of
distributions as well as dissolution of the partnership.

Claims Against HTI Purchased by Heartland

On April 16, 2004, the Company purchased the claims that an unrelated third
party had against HTI, the former general partner of Heartland, for $70,000. The
Company bought these claims because it believes the value was reasonable and to
preserve an orderly liquidation of HTI given HTI's ownership of the limited
liability companies which hold the Company's Class B and General Partner
interests.

Other

A senior partner of a law firm who provides services to the Company owns
approximately 7.5% of the stock of HTI.  Lawrence S. Adelson also owns 119,500
shares of HTI.  Furthermore, Lawrence S. Adelson,  C.E.O.  of the Company and
Richard P. Brandstatter, President of the Company, are employees and directors
of HTI.

6.    Legal Proceedings and Contingencies

At March 31, 2004 and December 31, 2003, Heartland's allowance for claims and
liabilities was approximately $4,027,000 and $3,970,000, respectively.

Edwin Jacobson

On August 19, 2002, the former President and Chief Executive Officer of CMC,
Edwin Jacobson, filed two lawsuits against the Company, CMC and certain officers
and/or managers of the General Partner. One of the lawsuits alleges CMC breached
the terms of his employment contract and that the officers and/or board members
wrongfully interfered with his contract. Mr. Jacobson is seeking compensatory
and punitive damages ($1,000,000 in salary and $11,000,000 in incentive
compensation). Mr. Jacobson asked the court to enforce his contract and enjoin
the Company from selling property or making distributions to the Unitholders
until the Company has appraised its properties and paid him according to the
terms of his employment contract. Mr. Jacobson's second lawsuit was for
defamation. On January 31, 2003, the Company filed motions to dismiss the
amended lawsuits. On May 29, 2003, the court dismissed, with prejudice, the
defamation lawsuit against the Company, CMC and certain officers and/or managers


                                       10


                            HEARTLAND PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

of the General Partner. At the same time, the court dismissed, with prejudice,
Mr. Jacobson's motion to enjoin the Company from selling its real estate. CMC
has filed a counterclaim alleging breach of fiduciary duty and a motion to
dismiss the tortious interference with a contract count. CMC is vigorously
defending itself against the remaining lawsuit and, in the opinion of
management, has valid defenses against the remaining lawsuit relating to the
Company's alleged breach of Mr. Jacobson's employment contract. At this time,
the probability that a liability will be incurred and the amount of any
potential liability cannot be determined. The Company's management is not able
to express an opinion on whether this action will or will not adversely affect
the Company's future financial condition or results of operations.

Borax

CMC owns a 4.99 acre site in Minneapolis, Minnesota that is impacted with
arsenic and lead. The Company filed suit against US Borax ("Borax") on July 23,
2003, in the United States District Court for the District of Minnesota for
contribution. Borax, which discontinued operations in 1968, is a former operator
of a pesticide/herbicide facility on the property. The matter has been stayed
pending agreement between the parties and the Minnesota Department of
Agriculture ("MDA") on the appropriate remediation for the site. Subject to a
public comment period, on March 15, 2004, the MDA approved a Response Action
Plan for the property owned by CMC. At March 31, 2004 and December 31, 2003,
Heartland's aggregate allowance for claims and liabilities for this site is
$3,415,000. The Company has also been informed that the United States
Environmental Protection Agency is considering a cleanup of arsenic soils in a
nearby residential neighborhood and may seek to recover cost of the cleanup from
CMC.

Other Environmental Matters

Under environmental laws, liability for hazardous substance contamination is
imposed on the current owners and operators of the contaminated site, as well as
the owner or the operator of the site at the time the hazardous substance was
disposed or otherwise released. In most cases, this liability is imposed without
regard to fault. Currently, the Company has known environmental liabilities
associated with certain of its properties arising out of the activities of its
predecessor or certain of its predecessor's lessees and may have further
material environmental liabilities as yet unknown. The majority of the Company's
known environmental liabilities stem from the use of petroleum products, such as
motor oil and diesel fuel, in the operation of a railroad or in operations
conducted by its predecessor's lessees.

The Montana Department of Environmental Quality ("DEQ") has asserted that the
Company is liable for some or all of the investigation and remediation of
certain properties in Montana sold by its predecessor's reorganization trustee
prior to the consummation of its predecessor's reorganization. The Company has
denied liability at certain of these sites based on the reorganization bar of
the Company's predecessor. The Company's potential liability for the
investigation and remediation of these sites was discussed in detail at a
meeting with DEQ in April 1997. While DEQ has not formally changed its position,


                                       11


                            HEARTLAND PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

DEQ has not elected to file suit. Since the Company cannot determine if it is
probable that a liability has been incurred and that the amount of any potential
liability cannot be reasonably estimated, management is not able to express an
opinion at this time whether the cost of the defense of this liability or the
environmental exposure in the event of the Company's liability will or will not
be material.

At three separate sites, the Company has been notified that releases arising out
of the operations of a lessee, former lessee or other third party have been
reported to government agencies. At each of these sites, the third party is
voluntarily cooperating with the appropriate agency by investigating the extent
of any such contamination and performing the appropriate remediation, if any.

In addition to the environmental matters set forth above, there may be other
properties, i), with environmental liabilities not yet known to the Company, or
ii), with potential environmental liabilities for which the Company has no
reasonable basis to estimate or, iii), which the Company believes the Company is
not reasonably likely to ultimately bear the liability, but the investigation or
remediation of which may require future expenditures. Management is not able to
express an opinion at this time whether the environmental expenditures for these
properties will or will not be material.

The Company has given notice to its insurers, which issued policies to the
Milwaukee Road railroad, of certain of the Company's environmental liabilities.
Due to the high deductibles on these policies, the Company has not yet demanded
that any insurer indemnify or defend the Company. Consequently, management has
not formed an opinion regarding the legal sufficiency of the Company's claims
for insurance coverage.

7.    Compensation and Benefits

Effective March 1, 2002, an employment agreement with Lawrence S. Adelson, Chief
Executive Officer of CMC, was approved by the HTII Board of Managers. The term
of the employment agreement is from March 1, 2002 to June 27, 2005 and his
salary is $200,000 per year. His incentive compensation is the economic (but not
tax) equivalent of ownership of 100,000 (non-voting) Heartland Class A
Partnership Units and is payable at the time of any distributions to the
Unitholders. The Phantom Units awarded under the incentive compensation plan are
accounted for in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and related Interpretations.
Compensation expense is recognized when the amount of the underlying
distribution is probable and estimable. No compensation expense related to these
Phantom Units has been recorded in the consolidated statements of operations for
the three months ended March 31, 2004. Compensation expense related to these
Phantom Units of $335,000 has been recognized in the consolidated statements of
operations for the year ended December 31, 2003, of which $59,000 has been paid,
as of December 31, 2003. The outstanding balance owed of $276,000 was paid on
January 5, 2004.


                                       12


                            HEARTLAND PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Effective January 1, 2000, the Company approved the CMC Heartland Partners
Incentive Plan ("CMC Plan") and the Sales Incentive Plan ("Sales Plan") to
provide incentives to attract, retain or motivate highly competent employees of
the Company. The aggregate benefits payable under the CMC Plan were computed by
multiplying the following percentages (3% for the year 2001, 2% for the year
2002 and 1% for the year 2003) by the net proceeds from the sale of certain land
parcels during those years. Effective December 31, 2001, the CMC Plan was
amended to vest benefits earned under the CMC Plan as of December 31, 2001 and
provides that earned benefits shall be paid at the time of a cash distribution
to the Unitholders. The CMC Plan was then terminated effective December 31,
2001. The aggregate benefits payable under the Sales Plan were computed by
multiplying 3% for the year 2001 by the net proceeds from the sale of certain
real estate during that year. As of December 31, 2003, $973,000 had been accrued
as compensation expense under the plans of which $481,000 has been paid to the
officers by the Company. The outstanding balance owed of $492,000 was paid on
January 5, 2004.

Effective January 1, 2002, the CMC Heartland Partners 2002 Incentive Plan ("2002
CMC Plan") was approved by the Company. The aggregate benefits payable under the
2002 CMC Plan shall be computed by multiplying 2% by the net proceeds from the
sale of certain land parcels for the period January 1, 2002 to December 31,
2004. Three officers of the Company are eligible for benefits under the 2002 CMC
Plan. For the three months ended March 31, 2004, the Company has accrued and
paid in full, $58,000 as compensation expense under the 2002 CMC Plan. As of
December 31, 2003, for the years 2003 and 2002, $581,000 had been accrued as
compensation expense under the 2002 CMC Plan, of which $277,000 had been paid to
the officers as of December 31, 2003. The outstanding balance owed of $304,000
was paid on January 5, 2004. Also, the 2002 CMC Plan granted three officers the
economic (but not tax) equivalent of ownership of 10,000 (non-voting) Heartland
Class A Partnership Units payable at the time of any distributions to the
Unitholders. The Phantom Units awarded under the CMC Plan are accounted for in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and related Interpretations. Compensation expense is
recognized when the amount of the underlying distribution is probable and
estimable. No compensation expense related to these Phantom Units has been
recorded in the consolidated statements of operations for the three months ended
March 31, 2004. Compensation expense related to these Phantom Units of $100,500
has been recognized in the consolidated statement of operations for the year
ended December 31, 2003, of which $19,500 has been paid, as of December 31,
2003. The outstanding balance owed of $81,000 was paid on January 5, 2004.

8. Liquidation of Heartland Partners, L.P.

The Company's management expects to sell to unrelated third parties the
remainder of its properties with a view towards eventually dissolving the
partnership within the next two years. The Unitholders will not have control
over the divestiture of the Company's remaining assets or, if the partnership is
dissolved, the liquidation process. The Company cannot make any assurance that
changes in its policies will serve fully the interests of all Unitholders or
that the Unitholders will receive any liquidating distributions of cash or other
property.

                                       13


                            HEARTLAND PARTNERS, L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

9.    Subsequent Events

On April 16, 2004, the Company purchased the claims that an unrelated third
party had against HTI, the former general partner of Heartland, for $70,000. The
Company bought these claims because it believes the value was reasonable and to
preserve an orderly liquidation of HTI given HTI's ownership of the limited
liability companies which hold the Company's Class B and General Partner
interests.

In April 2004 the Company filed suit against RACM in the Milwaukee County
Circuit Court appealing the compensation paid by RACM in the July 2003
condemnation of Heartland's Menomonee Valley property located in Milwaukee,
Wisconsin.




                                       14



                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004


Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

Forward-Looking Statements

This report includes forward-looking statements intended to qualify for the safe
harbor from liability established by the Private Securities Litigation Reform
Act of 1995. These forward-looking statements generally can be identified by
phrases such as Heartland or the Company, or its management "believes,"
"expects," "anticipates," "foresees," "forecasts," "estimates," or other words
or phrases of similar import. Similarly, statements in this report that describe
the Company's plans, outlook, objectives, intentions or goals are also
forward-looking statements. Forward-looking statements are not guarantees of
future performance. They involve risks and uncertainties that are difficult to
predict. The Company's actual future results, actions, performance or
achievement of results and the value of the partnership Units may differ
materially from what is forecast in any forward-looking statements. We caution
you not to put undue reliance on any forward-looking statement in these
documents. The Company does not undertake any obligation to update or publicly
release any revisions to forward-looking statements to reflect events,
circumstances or changes in expectations after the date of this report.

Risk Factors

Real Estate Investment Risks; General Economic Conditions Affecting
Real Estate Industry

The Company faces risks associated with local real estate conditions in areas
where the Company owns properties. These risks include, but are not limited to:
liability for environmental hazards; changes in general or local economic
conditions; changes in real estate and zoning laws; changes in income taxes,
real estate taxes, or federal or local taxes; floods, earthquakes, and other
acts of nature; and other factors beyond the Company's control. The illiquidity
of real estate investments generally may impair the Company's ability to respond
promptly to changing circumstances. The inability of management to respond
promptly to changing circumstances could adversely affect the Company's
financial condition and ability to make distributions to the Unitholders.

The real estate industry generally is highly cyclical and is affected by changes
in national, global and local economic conditions and events, such as employment
levels, availability of financing, interest rates, consumer confidence and the
demand for housing and other types of construction. Sellers of real estate are
subject to various risks, many of which are outside the control of the seller,
including real estate market conditions, changing demographic conditions,
adverse weather conditions and natural disasters, such as hurricanes and
tornadoes, changes in government regulations or requirements and increases in
real estate taxes and other local government fees. The occurrence of any of the
foregoing could have a material adverse effect on the financial condition of
Heartland.


                                       15


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

Environmental Liabilities

Under various federal, state and local laws, ordinances, and regulations, the
owner or operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances located on or in, or emanating
from, such property, as well as costs of investigation and property damages.
Such laws often impose such liability without regard to whether the owner or
operator knew of, or was responsible for, the presence of such hazardous or
toxic substances. The presence of such substances, or the failure to properly
remediate such substances, may adversely affect the owner or operator's ability
to sell or lease a property or borrow using the property as collateral. Other
statutes may require the removal of underground storage tanks. Noncompliance
with these and other environmental, health or safety requirements may result in
substantial costs to us or may result in the need to cease or alter operations
on the property and may reduce the value of the property or our ability to sell
it.

Environmental laws may impose liability on a previous owner or operator of a
property that owned or operated the property at a time when hazardous or toxic
substances were disposed on, or released from, the property. A conveyance of the
property, therefore, does not relieve the owner or operator from liability. The
Company cannot assure that environmental liability claims will not arise in the
future.

Heartland is subject to federal and state requirements for protection of the
environment, including those for discharge of hazardous materials and
remediation of contaminated sites. Heartland is in the process of assessing its
environmental exposure, including obligations and commitments for remediation of
contaminated sites and assessments of ranges and probabilities of recoveries
from other responsible parties. Because of the regulatory complexities and risk
of unidentified contaminants on its properties, the potential exists for
remediation costs to be materially different from the costs Heartland has
estimated. Some of the property owned by the Company consists of land formerly
used for railroad. Other properties were leased to tenants that used hazardous
materials in their businesses. Any contamination of that property may affect
adversely the Company's ability to sell such property.

Notes Receivable from HTI

HTI owes Heartland, in the aggregate, approximately $9,734,000 under the 2000
Notes and the PG Oldco Notes, both of which are secured by the Class B Interest.
Heartland has recorded an allowance for doubtful accounts of approximately
$5,133,000 related thereto. Upon either the acquisition of the Class B Interest
pursuant to a proposed settlement agreement or the foreclosure on the Class B
Interest, the receivable amount in respect of the 2000 Notes and the PG Oldco
Notes reflected in the "Due from Affiliate" account will be reduced to zero, and
the Class B Interest and the Class B Interest's capital account balance will be
cancelled. If cancelled, the Class B Interest will no longer be entitled to
receive any distributions of cash or other property from Heartland. Although
Heartland's management believes it is unlikely, there can be no assurance that
either the settlement agreement will be approved by HTI's stockholders or that
Heartland will be able to foreclose on the Class B Interest. If the Class B
Interest is not foreclosed upon and cancelled, it will be entitled to receive
distributions in accordance with the terms of the Partnership Agreement.


                                       16


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

Pending Litigation

The Jacobson litigation described in Part II Item 1. "Legal Proceedings" may not
be resolved in the Company's favor, and the Company may incur significant costs
associated therewith. If the Company is required to pay substantial amounts with
respect to the Jacobson litigation, the Company may not be left with any cash or
other property to distribute to the Unitholders.

Access to Financing

As of March 31, 2004, Heartland's total consolidated indebtedness was zero.
There can be no assurance that the amounts available from internally generated
funds, cash on hand and sale of assets will be sufficient to fund Heartland's
anticipated operations. Heartland may be required to seek additional capital in
the form of bank financing. No assurance can be given that such financing will
be available or, if available, will be on terms favorable to Heartland. If
Heartland is not successful in obtaining sufficient capital to fund the
implementation of its liquidation strategy and for other expenditures,
properties might be sold for far less than their value. Any such discounted sale
could adversely affect Heartland's future results of operations and future cash
flows. However, management does not have any intention to discount the sale of
properties for far less than their value.

Period-to-Period Fluctuations

Heartland's sales activity varies from period to period, and the ultimate
success of this sales activity cannot always be determined from results in any
particular period or periods. Thus, the timing and amount of revenues arising
from this sales activity are subject to considerable uncertainty. The inability
of Heartland to manage effectively their cash flows from operations would have
an adverse effect on their ability to service any future debt, and to meet
working capital requirements.

Liquidation of Assets

The Company's management expects to sell to unrelated third parties the
remainder of its properties. The Unitholders will not have control over the
divestiture of the Company's remaining assets or, if the partnership is
dissolved, the liquidation process. The Company cannot make any assurance that
changes in its policies will serve fully the interests of all Unitholders or
that the Unitholders will receive any liquidating distributions of cash or other
property.


                                       17


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

Risks Related to the Class A Units

The market value of the Class A units could decrease based on the Company's
performance, market perception and conditions. The market value of the Class A
units may be based primarily upon the market's perception of the Company's
growth potential and current and future cash distributions, and may be
secondarily based upon the real estate market value of the Company's underlying
assets. The market price of the Class A units may be influenced by the
distributions on the Class A units relative to market interest rates. Rising
interest rates may lead potential buyers of the Class A units to expect a higher
distribution rate, which would adversely affect the market price of the Class A
units. In addition, if the Company were to borrow, rising interest rates could
result in increased expense, thereby adversely affecting the cash flow and the
Company's ability to service its indebtedness and make distributions.

The Class A units have been traded since June 20, 1990. The Company believes
that factors such as (but not limited to) announcements of developments related
to the Company's business, fluctuations in the Company's quarterly or annual
operating results, failure to meet expectations, and general economic
conditions, could cause the price of the Company's units to fluctuate
substantially. In recent years the stock market has experienced extreme price
fluctuations, which have often been unrelated to the operating performance of
affected companies. Such fluctuations could adversely affect the market price of
the Class A units.

The Class A units are currently traded on the American Stock Exchange under the
symbol "HTL". The Class A units are thinly traded. There are no assurances that
the Company will maintain its listing on the exchange. If the Class A units
should be delisted from the exchange, it is likely that it could materially
and/or adversely effect any future liquidity in the Class A units.

Summary of Significant Accounting Estimates

The Company's most significant accounting estimates relate to the net realizable
value of assets, potential environmental liabilities, the Jacobson litigation
and the treatment of certain loans from Heartland to the General Partner.

Net Realizable Value of Assets

For properties held for sale, an impairment loss is recognized when the fair
value of the property, less the estimated cost to sell, is less than the
carrying amount of the property. No event occurred during the three months ended
March 31, 2004 that resulted in an impairment loss being recognized. In the
fourth quarter of 2003, an impairment loss of $250,000 was recognized as a
component of cost of sales on Kinzie Station Phase II as the Company was able to
quantify the costs associated with the disposal of the property.


                                       18


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

Potential Environmental Liabilities

Heartland evaluates environmental liabilities associated with its properties on
a regular basis. An allowance is provided with regard to potential environmental
liabilities, including remediation, legal and consulting fees, when it is
probable that a liability has been incurred and the amount of the liability can
be reasonably estimated. The amount of any liability is evaluated independently
from any claim the company may have for recovery. If the amount of the liability
cannot be reasonably estimated but management is able to determine that the
amount of the liability is likely to fall within a range, and no amount within
that range can be determined to be the better estimate, then an allowance in the
minimum amount of the range is established. If the Company were to use a
different approach, the reserve could be materially higher. By reserving at the
low end of possible results, it is likely that the actual costs of environmental
claims will be higher than the reserve on the Company's books, because it is
unlikely that, as a whole, the claims will be less expensive to resolve than the
low end of the range, and more likely that the claims will cost more than the
best case amount. Also, the Company does not reserve any amounts for unknown
claims. This means that as new claims arise additional reserves will need to be
added. Estimates can be affected by various uncertainties including future
changes in technology, changes in regulations or requirements of local
governmental authorities, third party claims, the scope and cost to be performed
at each site, the portion of costs that may be shared and the timing of the
remediation work. Environmental costs that are incurred in connection with
Heartland's development activities are expensed or capitalized as appropriate.
In the event the Company believes a third party was responsible for the
contamination, it attempts to have that third party assume the responsibility
for the costs of cleaning up the site. Sometimes there are funds available from
state programs for clean up. These funds can be available for contamination
resulting from railroad operations as well as those from third parties. The
Company seeks these funds when they are available. Potential recoveries from
third parties or government programs are not considered in the environmental
reserve. At March 31, 2004, Heartland's allowance for environmental claims and
liabilities was approximately $4,027,000. Significant matters related to the
Company's reserve for environmental claims are discussed below.

Under environmental laws, liability for hazardous substance contamination is
imposed on the current owners and operators of the contaminated site, as well as
the owner or the operator of the site at the time the hazardous substance was
disposed or otherwise released. In most cases, this liability is imposed without
regard to fault. Currently, the Company has known environmental liabilities
associated with certain of its properties arising out of the activities of its
predecessor or certain of its predecessor's lessees and may have further
material environmental liabilities as yet unknown. The majority of the Company's
known environmental liabilities stem from the use of petroleum products, such as
motor oil and diesel fuel, in the operation of a railroad or in operations
conducted by its predecessor's lessees.

                                       19


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

From time to time contaminants are discovered on property the Company now owns.
Some of these may have resulted from the historical activities of the Milwaukee
Road railroad. In other cases the property was leased to a tenant who released
contaminants onto the property. The Company's property may also be polluted by a
release or migration of contaminants onto the Company's property by unrelated
third parties. The Company has not investigated all of its properties and does
not know how many of them may be contaminated.

The Company's practice when it sells land is to sell the property "as is, where
is" without any representation or indemnification for environmental conditions;
however, the Company has one active site, Miles City, Montana, where it has
agreed to indemnify the buyer for known environmental concerns. There are other
cases in which the Company has had a claim arising out of alleged contamination
on sold property. In some, but not all, of these instances, the Company has been
successful in asserting the bar arising out of the bankruptcy proceedings of the
Milwaukee Road railroad.

The Company may be responsible for certain liabilities that arise from the
historical operations of the Milwaukee Road railroad that have nothing to do
with the ownership of property. The Company has been, for example, named as a
"potentially liable party" in a number of landfill-clean-up cases in which there
is an allegation that the Milwaukee Road railroad sent materials to the
landfill. Additional claims may arise in the future. In some, but not all, of
these cases, the Company has been successful in asserting the bar arising out of
the bankruptcy proceedings of the Milwaukee Road railroad.

The Montana Department of Environmental Quality ("DEQ") has asserted that the
Company is liable for some or all of the investigation and remediation of
certain properties in Montana sold by its predecessor's reorganization trustee
prior to the consummation of its predecessor's reorganization. The Company has
denied liability at certain of these sites based on the reorganization bar of
the Company's predecessor. The Company's potential liability for the
investigation and remediation of these sites was discussed in detail at a
meeting with DEQ in April 1997. While DEQ has not formally changed its position,
DEQ has not elected to file suit. Since the Company cannot determine if it is
probable that a liability has been incurred and the amount of any potential
liability cannot be reasonably estimated, the Company's management is not able
to express an opinion at this time whether the cost of the defense of this
liability or the environmental exposure in the event of the Company's liability
will or will not be material.

At three separate sites, the Company has been notified that releases arising out
of the operations of a lessee, former lessee or other third party have been
reported to government agencies. At each of these sites, the third party is
voluntarily cooperating with the appropriate agency by investigating the extent
of any such contamination and performing the appropriate remediation, if any.

                                       20


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

CMC owns a 4.99 acre site in Minneapolis, Minnesota that is impacted with
arsenic and lead. The Company filed suit against US Borax on July 23, 2003, in
the United States District Court for the District of Minnesota for contribution.
US Borax is a former operator of a pesticide/herbicide facility on the property;
its operations were discontinued in 1968. The matter has been stayed pending
agreement between the parties and the Minnesota Department of Agriculture
("MDA") on the appropriate remediation for the site. Subject to a public comment
period, on March 15, 2004, the MDA approved a Response Action Plan for the
property owned by CMC. At March 31, 2004, Heartland's aggregate allowance for
claims and liabilities for this site is $3,415,000. The Company has also been
informed that the United States Environmental Protection Agency is considering a
cleanup of arsenic soils in a nearby residential neighborhood and may seek to
recover cost of the cleanup from CMC.

The Canadian Pacific Railroad, formerly known as the Soo Line Railroad Company,
has asserted that the Company is liable for, among other things, the remediation
of releases of petroleum or other regulated materials at six different sites
located in Iowa, Minnesota and Wisconsin that Canadian Pacific acquired from the
Company. The Company has denied liability based on the underlying asset purchase
agreement. The environmental claims are all currently being handled by Canadian
Pacific, and the Company understands that Canadian Pacific has paid settlements
on certain of these claims. Because Canadian Pacific has been handling these
matters exclusively, the Company has made no determination as to the merits of
the claims and is unable to determine their materiality.

In November 1995, the Company settled a claim with respect to the so-called
"Wheeler Pit" site near Janesville, Wisconsin. The Company's only outstanding
obligation under the settlement is to pay 32% of the monitoring costs for
twenty-five years beginning in 1992. At March 31, 2004, Heartland's allowance
for claims and liabilities for this site is $142,000.

In addition to the environmental matters set forth above, there may be other
properties with environmental liabilities not yet known to the Company, with
potential environmental liabilities for which the Company has no reasonable
basis to estimate, or for which the Company believes it is not reasonably likely
to ultimately bear responsibility for the liability but the investigation or
remediation of which may require future expenditures. Management is not able to
express an opinion at this time whether the environmental expenditures for these
properties will or will not be material.

The Company has given notice to insurers, which issued policies to the Milwaukee
Road railroad of certain of the Company's environmental liabilities. Due to the
high deductibles on these policies, the Company has not yet demanded that any
insurer indemnify or defend the Company. Consequently, management has not formed
an opinion regarding the legal sufficiency of the Company's claims for insurance
coverage.

In the event the Company is dissolved, the Company will have to make a provision
for its potential environmental liabilities. It will have to provide for known
liabilities and also for those likely to arise or become known within ten years
after the date of dissolution. The Company's management believes it may be in
the best interests of the Company to purchase environmental insurance or
contract with a third party to assume the Company's environmental liabilities if
it appears that the cost to do so will be less than maintaining the Company's
overhead to resolve these liabilities going forward. The Company has hired an
insurance consultant and broker to help determine the best alternative to
provide for these potential liabilities. The cost of any transfer of
environmental liabilities and insurance policy is likely to be greater than the
amount of the reserve, and the cost of such transfer and insurance is not
reflected in the environmental reserve.

                                       21


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

Treatment of Certain Loans from HTI to Heartland

As of March 31, 2004, HTI owes Heartland and CMC an aggregate of $8,464,000
under promissory notes issued in December 2000 (the "2000 Notes"). The notes are
collateralized by a security interest in the Class B Interest (the "Collateral")
and bear interest at 13% per annum. The Company also received as additional
consideration for the 2000 Notes a Series C Warrant that entitles Heartland to
purchase 320,000 shares of HTI common stock at an exercise price of $1.05 per
share. HTI's stock was trading in the over-the-counter market (after its
delisting from the American Stock Exchange) at less than $0.01 per share as of
December 31, 2003. On February 25, 2002, the Company and CMC demanded immediate
payment in full of all obligations due under the 2000 Notes from HTI.

PG Oldco, Inc., a creditor of HTI under notes in an aggregate principal amount
of $2,200,000 ("PG Oldco Notes"), also had a security interest in the Collateral
and had commenced steps to protect its interest. Under a Lien Subordination and
Inter-Creditor Agreement ("Inter-Creditor Agreement") by and among Heartland,
CMC, PG Oldco, Inc. and HTI, Heartland and CMC had a first and prior security
interest in the Collateral and the proceeds thereof up to the Senior Debt
Priority Amount (as defined in the Inter-Creditor Agreement). PG Oldco, Inc. had
a first and prior security interest in the Collateral and the proceeds thereof
for all amounts in excess of the Senior Debt Priority Amount. On May 23, 2003
Heartland purchased from PG Oldco, Inc. the PG Oldco Notes for approximately
$1,270,000. The purchase price consisted of $770,000 in cash paid on May 23,
2003 and a note payable for $500,000 due October 31, 2003. This note and accrued
interest were paid in full on October 31, 2003. The purchase price of $1,270,000
for the PG Oldco Notes was recorded as an increase in "Due from Affiliate" on
the Company's financial statements.

At March 31, 2004, HTI owes Heartland and CMC, in the aggregate, approximately
$9,734,000. Heartland has recorded an allowance for doubtful accounts of
approximately $5,133,000 on the 2000 Notes and PG Oldco Notes receivable balance
of $9,734,000. Heartland has recorded an allowance for doubtful accounts against
the 2000 Notes and PG Oldco Notes because HTI has indicated to Heartland that it
does not have the means to repay the amounts owed under the 2000 Notes and PG
Oldco Notes.

                                       22


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

The $5,000,000 allowance for doubtful accounts that was recorded in the
fourth quarter of 2003 was a result of the Company's closing the sale of its
Fife, Washington property at a price of $13,250,000 and then distributing $2.30
a Unit in December 2003 which reduced the estimated amount of potential future
distributions distributable to the Class B Interest. Because Heartland intends
to acquire the Class B Interest from HTI either pursuant to a proposed
settlement agreement between HTI and certain of its creditors or upon a
foreclosure of the Class B Interest, as discussed below, Heartland has
determined that the amount of the allowance for doubtful accounts should reflect
the value of the Class B Interest based on the estimated amount of potential
future cash distributions distributable in respect of the Class B Interest upon
a liquidation of Heartland (assuming that the Class B Interest is not cancelled
and remains outstanding). Such estimated potential distributions were based on a
variety of assumptions made by Heartland's management. If a proposed settlement
agreement is entered into among all of HTI's creditors (with the exception of
Heartland and Edwin Jacobson) and is approved by HTI's stockholders, Heartland
will acquire the Class B Interest from HTI in exchange for a release of HTI's
obligations under the 2000 Notes and PG Oldco Notes. In the event that the
proposed settlement agreement is not approved by HTI's stockholders, Heartland
anticipates that it will exercise its rights under the 2000 Notes, the PG Oldco
Notes, the related security agreements and applicable law to foreclose on the
Class B Interest. Upon either the acquisition of the Class B Interest pursuant
to the proposed settlement agreement or the foreclosure on the Class B Interest,
the receivable amount in respect of the 2000 Notes and the PG Oldco Notes
reflected in the "Due from Affiliate" account will be reduced to zero, and the
Class B Interest and the Class B Interest's capital account balance will be
cancelled. If cancelled, the Class B Interest will no longer be entitled to
receive any distributions of cash or other property from Heartland. Although
Heartland's management believes it is unlikely, there can be no assurance that
either the settlement agreement will be approved by HTI's stockholders or that
Heartland will be able to foreclose on the Class B Interest. If the Class B
Interest is not foreclosed upon and cancelled, it will be entitled to receive
distributions in accordance with the terms of the partnership agreement.

Jacobson Litigation

Edwin Jacobson, the former President and C.E.O. of CMC, has sued the Company
claiming that it owes him additional salary and incentive compensation based on
the terms of his employment contract. He has demanded $12,000,000 ($1,000,000
salary and $11,000,000 incentive compensation) in damages. The Company has
denied Mr. Jacobson's claims and has countersued to recover past payments made
to him and to collect $332,000 in principal and interest under a note Jacobson
made to the Company (this matter is explained in greater detail in Part II Item
1. "Legal Proceedings"). The Company offered to settle the lawsuits in exchange
for forgiving Jacobson's debt to the Company. When it made the offer, the
Company established an allowance against the Note Receivable of $316,000. CMC
has made no other provision for this potential liability.

                                       23


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

Critical Accounting Policies

The Company's accounting policies are described in more detail in Note 2 to
Consolidated Financial Statements. The following section is a summary of
critical accounting policies that require management estimates and judgements.

   The Company provides an allowance for doubtful accounts against the portion
   of accounts receivable that is estimated to be uncollectible. Accounts
   receivable in the consolidated balance sheets are shown net of an allowance
   for doubtful accounts of $316,000 as of March 31, 2004. Due from affiliate on
   the consolidated balance sheets are shown net of an allowance for doubtful
   accounts of $5,133,000 as of March 31, 2004.

   Land sales are recognized when the Company has received an adequate cash
   down payment and all other conditions necessary for profit recognition have
   been satisfied.

   Heartland evaluates environmental liabilities associated with its properties
   on a regular basis. An allowance is provided with regard to potential
   environmental liabilities, including remediation, legal and consulting fees,
   when it is probable that a liability has been incurred and the amount of the
   liability can be reasonably estimated. The amount of any liability is
   evaluated independently from any claim the company may have for recovery. If
   the amount of the liability cannot be reasonably estimated but management is
   able to determine that the amount of the liability is likely to fall within a
   range, and no amount within that range can be determined to be the better
   estimate, then an allowance in the minimum amount of the range is
   established.

   For properties held for sale, an impairment loss is recognized when the fair
   value of the property, less the estimated cost to sell, is less than the
   carrying amount of the property. No event occurred during the first three
   months of 2004 that resulted in an impairment loss being recognized. In the
   fourth quarter of 2003, an impairment loss of $250,000 was recognized as a
   component of cost of sales on Kinzie Station Phase II as the Company was able
   to quantify the costs associated with the disposal of the property.

Results of Operations

Operations for the three months ended March 31, 2004 and 2003 resulted in net
income of $937,000 and $5,552,000 or $0.42 and $2.61 per Class A Unit,
respectively.

Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003

Property Sales. Property sales decreased $8,002,000, or 72% to $3,115,000 for
the three months ended March 31, 2004 from $11,117,000 for the three months
ended March 31, 2003. This decrease was primarily the result of the sale in 2003
of approximately 3 acres of land in Kinzie Station North ("Kinzie North
Acreage") for $9,850,000.

Cost of Property Sales. Cost of property sales decreased $3,073,000, or 81% to
$744,000 for the three months ended March 31, 2004 from $3,817,000 for the three
months ended March 31, 2003. This decrease was primarily the result of the
decrease in the cost of property sales related to the Kinzie North Acreage sale
which totaled approximately $3,111,000.

                                       24


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

Gross Profit on Property Sales. Gross profit on property sales decreased
$4,929,000, or 68% to $2,371,000 for the three months ended March 31, 2004 from
$7,300,000 for the three months ended March 31, 2003. This decrease was
primarily the result of the decrease in the gross profit recognized of
approximately $6,739,000 on the Kinzie North Acreage sale.

Selling Expenses. Selling expenses decreased $267,000, or 44% to $341,000 for
the three months ended March 31, 2004 from $608,000 for the three months ended
March 31, 2003. This decrease was primarily the result of the decrease in broker
sales commissions of $47,000 because of decreased sales in 2004, the decrease in
the Longleaf community sales expenses of $117,000 resulting from the Company's
sale of all of its property in Longleaf in December 2003, and the decrease of
$96,000 in legal, consulting, security, architecture and surveying expenses from
2003 to 2004 because of reduced activity in 2004.

General and Administrative Expenses. General and administrative expenses
increased $46,000, or 6% to $826,000 for the three months ended March 31, 2004
from $780,000 for the three months ended March 31, 2003. This was primarily the
result of an increase of $36,000 in insurance expense from 2003 to 2004. There
was a substantial increase in the Company's premium for partnership liability
insurance that was renewed in September 2003.

Interest Expense. Interest expense decreased $97,000, or 85% to $17,000 for the
three months ended March 31, 2004 from $114,000 for the three months ended March
31, 2003. This decrease was primarily the result of no outstanding debt during
the three months ended March 31, 2004. However, the Company in March 2004 paid a
fee to LaSalle National Bank related to the line of credit agreement.

Real Estate Taxes. Real estate taxes decreased $10,000, or 12% to $71,000 for
the three months ended March 31, 2004 from $81,000 for the three months ended
March 31, 2003. The decrease was the result of the Company owning fewer
properties in 2004 due to the number of sales that took place in 2003.

Environmental Expenses and Other Charges. Environmental expenses and other
charges increased $369,000, or 315% to $486,000 for the three months ended March
31, 2004 from $117,000 for the three months ended March 31, 2003. This increase
was primarily the result of $352,000 expended for an environmental consultant
that is evaluating and preparing reports related to the remediation of the Lite
Yard site located in Minneapolis, MN.

Rental Income. Total rental income increased $339,000, or 584% to $397,000 for
the three months ended March 31, 2004 from $58,000 for the three months ended
March 31, 2003. This increase was primarily the result of the Company
recognizing $360,000 of deferred rental income as rental income in January 2004
related to the sale of the Petit Point property located near Milwaukee,
Wisconsin to an unrelated third party. The Company had received prepaid rent
from a lease on this property that it was able to retain as a condition of the
closing.

                                       25


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

Net Income. Net income decreased $4,615,000, or 83% to $937,000 for three months
ended March 31, 2004 from $5,552,000 for three months ended March 31, 2003. This
was the result of a decrease in gross profit on property sales from the sale of
former development properties in 2004 compared to 2003, primarily the $6,739,000
gross profit on the Kinzie North Acreage sale.

Liquidity and Capital Resources

Cash flow for operating activities has been derived primarily from proceeds of
property sales, rental income and interest income. Cash was $4,109,000 at March
31, 2004 and $3,926,000 at December 31, 2003.

Net cash provided by operating activities was $183,000 and $5,989,000 for the
three months ended March 31, 2004 and 2003, respectively. Cash provided by
operating activities in 2004 compared to 2003 decreased by $5,806,000 which is
primarily attributable to the sale in February 2003 of the Kinzie North Acreage
at a price of $9,850,000 with no comparable closing taking place in 2004.

No distributions were made during the first quarter of 2004. As of March 31,
2004, the Unitholders' capital account balance was $880,000, the Class B
Interest's capital account balance was $9,541,000, and the General Partner's
capital account balance was $7,000.

Proceeds from property sales were $3,115,000 and $11,117,000 for the three
months ended March 31, 2004 and 2003, respectively. During the period between
2004 and 2006, the Company expects proceeds from property sales to consist
primarily of the sale of the remaining Kinzie Station North acreage, Kinzie
Station Phase II property, remaining sites in Wisconsin and Minnesota that in
prior years had been designated as development properties and land held for sale
acreage (13,640 acres of scattered land parcels located in 12 states).

The cost of property sales for the three months ended March 31, 2004 and 2003
was $744,000 or 24% of sales proceeds and $3,817,000 or 34% of sales proceeds,
respectively. It is not expected that future cost of sales ratios for the
remaining real estate sales will change materially from ratios experienced in
the prior three years, as the balance of Heartland's real estate, other than
development projects, consists primarily of railroad properties acquired over
the past 150 years at values far lower than current fair values. The Company is
no longer selling, building or closing homes in any homebuilding communities as
of December 31, 2003.

As of March 31, 2004, Heartland had designated 4 sites, or approximately 94
acres with a book value of approximately $1,654,000, for sale which in prior
years had been designated for development. This is an average of $17,600 per
acre.

At March 31, 2004, land held for sale consists of 13,640 acres of scattered land
parcels with a book value of $614,000. Land held for sale (scattered land
parcels) will be disposed of in an orderly fashion; however, it is anticipated
that the disposal of such properties may extend beyond the year 2005. The
Company is also exploring the sale of these properties as a whole to a third
party.

                                       26


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

Heartland's management believes it will have sufficient funds available from its
land sales activities for operating and selling expenses as it liquidates the
remaining assets of the Company. However, effective February 11, 2004, Heartland
obtained a $2,000,000 line of credit with LaSalle National Bank ("LNB"). As of
March 31, 2004, the Company had not drawn on the line of credit. The line of
credit will mature December 1, 2004 and bears interest at the LNB prime rate
plus 1.5% (5.5% at March 31, 2004). The LNB line of credit is secured by the
Kinzie Station North and Kinzie Station Phase II properties that are located in
Chicago, Illinois. LNB also requires the Company to maintain net worth (defined
as assets minus liabilities) of $5,500,000, maintain net income of $1,000,000
during any fiscal year beginning with the year ended December 31, 2003, not make
any advances or distributions to Unitholders or members from funds borrowed
under the line of credit, and adhere to various other covenants described in the
Secured Revolving Note document. The Company was in default under the line
of credit agreement because it did not meet the net income covenant in 2003.
However, a waiver of this default was received from LNB on May 14, 2004.

Real Estate Sale Activities

The Company sold several properties in its real estate portfolio in 2003,
including its last active development project, which was located in North
Carolina. At March 31, 2004 the Company had remaining property at Kinzie Station
in Chicago, Illinois, approximately 4 acres, a 7-acre parcel in Fife,
Washington, a 20-acre property in Glendale, Wisconsin, and approximately 13,640
acres of land scattered over 12 states. In addition, although the Company
conveyed its property in Menomonee Valley to the Redevelopment Authority of the
City of Milwaukee ("RACM") in 2003, it retained the right to appeal the purchase
price and to seek additional consideration. The Company exercised such right to
appeal in April 2004 by filing suit in the Milwaukee County Circuit Court
against RACM appealing the condemnation award.

Kinzie Station

Heartland has developed a 2.68 acre site in the City of Chicago, part of a
larger development known as Kinzie Station, which is bisected by railroad tracks
running east and west. Zoning approval for the construction of 381 residential
units on this 2.68 acre site was received in 1997. On March 28, 2001, zoning
approval to increase the total number of residential units from 381 to 442 units
was received from the City of Chicago. At December 31, 2003 on the south side of
the tracks, Heartland had the following two (2) parcels of land: an industrial
parcel, which the Company sold on February 26, 2004 for $1,597,000, and a parcel
known as Kinzie Station Phase II, which consists of 1.45 acre site on which the
Company has appropriate zoning to construct a 267 unit residential tower
building. The Company has a contract, subject to certain contingencies, to sell
Kinzie Station Phase II to a developer for $4,200,000.

                                       27


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

To the north, the Company owned approximately seven (7) acres of land and four
(4) acres of air rights as of January 1, 2003 ("Kinzie Station North"). Kinzie
Station North consisted of three (3) parcels (roughly four (4) acres) zoned for
residential units, one parcel zoned for a grocery store, and another parcel for
a city park. A consortium of residential developers has entered into an
agreement with the Company to purchase the Kinzie Station North residential
acreage. On February 11, 2003, this consortium closed the sale of the two
parcels for an aggregate purchase price of $9,850,000. The remaining residential
site is under contract for $2,850,000 but is contingent on the vacation of a
city street by the City of Chicago. The Company's management believes that this
vacation could take place during 2004. The Company has entered into an
agreement, subject to certain contingencies, to sell the grocery store site.

Fife, Washington

In Fife, Washington, the Company continues to own approximately seven (7) acres
along which the Wapato creek runs. This property is under contract but is
subject to contingencies typical of such contracts.

Menomonee Valley

The Company owned approximately 142 acres of property in the Menomonee River
Valley in Milwaukee, Wisconsin. The property is located next to Miller Park, the
home stadium of the Milwaukee Brewers baseball team. The Company had proposed a
mixed use development to include retail and entertainment uses complementary to
the baseball park as a recreational destination. The City of Milwaukee had
stated that it believed industrial development would be more appropriate for the
site, and RACM announced it would seek to acquire the Company's property through
eminent domain if necessary.

On June 10, 2003, RACM delivered to the Company an appraisal of the Company's
property in the Menomonee Valley in Milwaukee as an initial step in RACM's
condemnation of the property. The RACM appraisal valued the property at
$3,550,000. On July 30, 2003, the Company received $3,550,000 in cash and a
release for all environmental matters related to the property from RACM, and the
Company conveyed title to the property to RACM. The Company obtained an
appraisal in the amount of $10,500,000. The Company reserved the right to bring
suit for additional consideration. The Company exercised such right in April
2004 by filing suit in the Milwaukee County Circuit Court against RACM appealing
the condemnation award. Any additional compensation received in the future will
be recognized as income in the period received.

Property Sales and Leasing Activities

The Company has the right to sell easements for fiber optic lines along or
across 83 miles of rail right of way running from downtown Chicago west to
Elgin, Illinois and northwest to Fox Lake, Illinois. The Company shall receive
2/3 of the proceeds of any sale.

                                       28


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

The remainder of Heartland's inventory of land currently held for sale consists
of approximately 13,640 acres of scattered land parcels located throughout 12
states. The book value of this inventory is approximately $614,000. The majority
of the land (former railroad rights-of-way) comprises long, narrow strips of
land approximately 100 feet in width. Some of Heartland's sites, located in
small rural communities or outlying mid-cities, are leased to third parties for
agricultural use and may be improved with the lessee's structures.

The sale, management and leasing of the approximate 13,640 acres of scattered
land parcels is conducted by Heartland's sales and property management
department. The volume of the Company's sales has slowed over the last seven
years due to the less desirable characteristics of the remaining properties. The
individual parcels are held at a relatively low book value, and the Company
anticipates that the sale of the remaining parcels may not occur until 2005 or
later. The Company is also exploring the sale of these properties as a whole to
a third party.

The Company leases less than 1% of its total acreage under operating leases. The
number of leases declines each year as sales of properties are made to existing
lessees. The majority of the leases provide nominal rental income to Heartland.
The leases generally require the lessee to construct, maintain and remove any
improvements, pay property taxes, maintain insurance and maintain the condition
of the property. The majority of the leases are cancelable by either party upon
thirty to sixty days notice. Heartland's ability to terminate or modify certain
of these leases is restricted by applicable law and regulations. As of March 31,
2004, Heartland had eight locations under lease, which yield less than $20,000 a
year in rental income.

Economic and Other Conditions Generally

The real estate industry is highly cyclical and is affected by changes in local,
national, and global economic conditions and events, such as employment levels,
availability of financing, interest rates, consumer confidence and the demand
for housing and other types of construction. Sellers of real estate are subject
to various risks, many of which are outside the control of the seller, including
real estate market conditions, changing demographic conditions, adverse weather
conditions and natural disasters, such as hurricanes and tornadoes, changes in
government regulations or requirements, increases in real estate taxes and other
local government fees and availability and cost of land. The occurrence of any
of the foregoing could have a material adverse effect on the financial condition
and results of operations of Heartland.

Interest Rate Sensitivity

The Company's total consolidated indebtedness at March 31, 2004 was zero. The
Company paid interest on its outstanding borrowings during the period ended
March 31, 2004 under revolving credit facilities at the LNB prime rate plus
1.5%. As of March 31, 2004 the Company did not have any other financial
instruments for which there was a significant exposure to interest rate changes.

                                       29


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

Item 3. Quantitative and Qualitative Disclosures About Market Risk

See "Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Access to Financing," "Economic and Other Conditions Generally"
and "Interest Rate Sensitivity." The Company is not subject to significant
foreign currency exchange rate risk, commodity price risk or other relevant
market price risks.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Heartland's Chief Executive Officer and Chief Financial Officer have evaluated
the Company's disclosure controls and procedures as of the end of the period
covered by this report and they have concluded that these controls and
procedures are adequate to ensure that information required to be disclosed by
Heartland in the reports that it files or submits under the Securities and
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms.

Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting that
occurred during the first quarter of 2004 that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.



                                       30


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004

                                     PART II
                                OTHER INFORMATION

Item 1.  Legal Proceedings

At March 31, 2004, Heartland's allowance for claims and liabilities was
approximately $4,027,000.

There have been no legal proceedings instituted against the Company during the
three months ended March 31, 2004, and no material developments in the legal
proceedings disclosed in the Company's 2003 Form 10-K.

Item 2.  Changes in Securities and Use of Proceeds
None.

Item 3.  Defaults Upon Senior Securities
None.

Item 4.  Submission of Matters to a Vote of Security Holders
None.

Item 5.  Other Information
None.





                                       31


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004



Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits:


Exhibit No.    Description
-----------    ---------------------------------------------------------------



10.70*         $2,000,000 Secured Revolving Note between CMC Heartland Partners,
               Heartland Partners, L.P. and LaSalle Bank National Association
               dated February 11, 2004.

31.1*          Certification of Chief Executive Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002.

31.2*          Certification of Chief Financial Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002.

32.1*          Certification of Chief Executive Officer pursuant to 18 U.S.C
               1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
               Act of 2002.

32.2*          Certification of Chief Financial Officer pursuant to 18 U.S.C
               1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
               Act of 2002.


*Attached hereto.

(b) Reports on Form 8-K:

None.




                                       32


                            HEARTLAND PARTNERS, L.P.
                                 March 31, 2004


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                     HEARTLAND PARTNERS, L.P.
                                                          (Registrant)


Date:  May 17, 2004                               By /s/ Lawrence S. Adelson
                                                     -----------------------
                                                       Lawrence S. Adelson
                                                     Chief Executive Officer



Date:  May 17, 2004                               By /s/ Daniel L. Bernardi
                                                     ----------------------
                                                       Daniel L. Bernardi
                                                     Chief Financial Officer





                                       33


                                  EXHIBIT INDEX


Exhibit No.    Description
-----------    ---------------------------------------------------------------

10.70          $2,000,000 Secured Revolving Note between CMC Heartland Partners,
               Heartland Partners, L.P. and LaSalle Bank National Association
               dated February 11, 2004*.

31.1           Certification of Chief Executive Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002.

31.2           Certification of Chief Financial Officer pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002.

32.1           Certification of Chief Executive Officer pursuant to 18 U.S.C
               1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
               Act of 2002.

32.2           Certification of Chief Financial Officer pursuant to 18 U.S.C
               1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
               Act of 2002.



                                       34

                                                                 Exhibit 10.70



                             SECURED REVOLVING NOTE

Executed this 11th of February, 2004

Amount Up to $2,000,000                                Due: As described below

     FOR VALUE RECEIVED, on or before December 1, 2004 (the "Maturity Date"),
each of the undersigned, CMC Heartland Partners, a Delaware general partnership
("CMC") and Heartland Partners, L.P., a Delaware limited partnership
("Heartland"; Heartland and CMC are collectively referred to as the
"Borrowers"), jointly and severally, promise to pay to the order of LASALLE BANK
NATIONAL ASSOCIATION, a national banking association (the "Bank"), the principal
sum of TWO MILLION and 00/100 DOLLARS ($2,000,000.00), or if less, the aggregate
unpaid principal amount of all loans made by Bank to the Borrowers. Capitalized
terms used herein but not otherwise defined will have the meanings assigned to
such terms on Exhibit A attached hereto and made a part hereof. The unpaid
principal amount hereof shall bear interest at the Prime Rate plus one and
one-half percent (1.5%) (referred to herein as the "Interest Rate"). Interest
shall be payable from the date hereof on the aggregate unpaid principal amount
of all loans made by Bank to the Borrowers hereunder (collectively, the "Loans")
monthly in arrears on the last Business Day of each calendar month commencing on
February 29, 2004 and at the Maturity Date. Interest after maturity (whether by
reason of acceleration or otherwise) shall be paid on the unpaid balance at the
Interest Rate plus 3% per annum. Each change in the Interest Rate hereon shall
take effect on the effective date of the change in the Prime Rate. Bank shall
not be obligated to give notice of any change in the Prime Rate and any notice
to which the Borrowers may be entitled is hereby waived. The Interest Rate and
the Unused Portion Fee (as defined below) shall be computed on the basis of a
year consisting of 360 days and shall be paid for the actual number of days
elapsed, unless otherwise specified herein.

     Each Borrower hereby authorizes Bank to charge any account of any Borrower
for all sums due hereunder. Principal payments submitted in funds not available
until collected shall continue to bear interest until collected. If payment
hereunder becomes due and payable on a Saturday, Sunday or legal holiday under
the laws of the United States or the State of Illinois, the due date thereof
shall be extended to the next succeeding business day, and interest shall be
payable thereon at the rate specified during such extension.

     This Note is executed pursuant to a revolving line of credit under which
the Borrowers are indebted to Bank and evidences the aggregate unpaid principal
amount of all advances made or to be made by Bank to the Borrowers under this
Note. All advances and repayments hereunder shall be evidenced by entries on the
books and records of Bank which shall be presumptive evidence of the principal
amount and interest owing and unpaid on this Note, or any renewal or extension
hereof. The failure to so record any such amount or any error in so recording
any such amount shall not, however, limit or otherwise affect the obligations of
the Borrowers hereunder to repay the principal amount of the liabilities
together with all interest accruing thereon.

     Subject to the terms and conditions of this Note, Bank agrees that during
the period from the date hereof to, but not including, the Maturity Date, it
will make loans to the Borrowers in an aggregate amount not to exceed $2,000,000
less the aggregate outstanding principal amount of all Loans and the stated
amount of all Letters of Credit outstanding hereunder from time to time
(referred to herein as the "Revolving Loan Commitment").

     To compensate Bank for the cost of reserving funds to be made available to
Borrowers under this Note, Borrowers shall pay to Bank, on the last day of each
fiscal quarter an unused revolving line fee (the "Unused Portion Fee") equal to
the sum of the daily amounts by which the maximum aggregate principal amount of
the Revolving Loan Commitment exceeds the actual principal amount of all Loans
made hereunder. The Unused Portion Fee is calculated for each applicable day of
such quarter in an amount equal to the excess of the maximum aggregate principal
amount of the Revolving Loan Commitment over the principal amount of all
outstanding advances under the Loans on such day, multiplied by one-quarter of
one percent (1/4%). All fees and charges imposed on Borrowers pursuant to this
Note including, without limitation, the Unused Portion Fee accrued through the
date of termination, shall be nonrefundable to Borrowers, notwithstanding any
prepayment and termination by Borrowers of this Agreement.

                                       35


     CMC (referred to herein as the "Representative") shall give written notice
to the Bank of each proposed borrowing of Loans not later than 11:00 a.m.,
Chicago time, on the proposed date of such borrowing. Each such notice shall be
effective upon receipt by the Bank, shall be irrevocable, and shall specify the
date and amount of the borrowing therefore together with a written certification
that (i) no Default (as hereinafter defined) has occurred and is continuing,
(ii) the amount requested to be so advanced hereunder and (iii) the specific
corporate purpose for which such advance shall be used (each a "Borrowing
Notice"). Upon receipt of such Borrowing Notice, Bank shall advance funds under
this Note; provided, however, that the aggregate unpaid principal amount of all
Loans under this Note made by Bank to the Borrowers shall at no time exceed the
Revolving Loan Commitment as of any date. Each such Loan shall normally be made
to the operating account maintained by the Borrowers with Bank no later than
3:00 p.m. (Chicago, Illinois time) (i) on the Business Day following the
submission by the Representative of the Borrowing Notice to Bank; provided that
all of the conditions to making such Loan set forth above have been satisfied
and, provided further, that the Borrowing Notice is received by Bank prior to
11:00 a.m. (Chicago, Illinois time) on the required day. Interest shall begin to
accrue when each Loan hereunder is made to the Borrowers' operating account.
Each borrowing shall be on a Business Day.

     The Bank will issue standby and trade letters of credit hereunder, in each
case containing such terms and conditions as are permitted by this Secured
Revolving Note and are satisfactory to the Bank (each a "Letter of Credit"), at
the request of and for the account of each Borrower from time to time before the
date which is 30 days prior to the Maturity Date; provided that (i) the
aggregate stated amount of all Letters of Credit shall not at any time exceed
Three Hundred Thousand Dollars ($300,000) and (ii) the outstanding aggregate
principal amount of all Loans plus the stated amount of all outstanding Letters
of Credit may not exceed the Revolving Loan Commitment (after giving effect to
the issuance of each Letter of Credit).

     The Representative shall give notice to the Bank of the proposed issuance
of each Letter of Credit on a Business Day which is at least three (3) Business
Days (or such lesser number of days as the Bank shall agree in any particular
instance in its sole discretion) prior to the proposed date of issuance of such
Letter of Credit. Each such notice shall be accompanied by an L/C Application,
duly executed by the applicable Borrower and in all respects satisfactory to the
Bank, together with such other documentation as the Bank may request in support
thereof, it being understood that each L/C Application shall specify, among
other things, the date on which the proposed Letter of Credit is to be issued,
the expiration date of such Letter of Credit (which shall not be later than the
earlier to occur of (x) one year after the date of issuance thereof and (y)
thirty days prior to the scheduled Maturity Date); and whether such Letter of
Credit is to be transferable in whole or in part. So long as the Bank has not
determined that the conditions precedent set forth herein with respect to the
issuance of such Letter of Credit have not been satisfied, the Bank shall issue
such Letter of Credit on the requested issuance date. In the event of any
inconsistency between the terms of any L/C Application and the terms of this
Note, the terms of this Note shall control.

     Each Borrower hereby unconditionally and irrevocably agrees to reimburse
the Bank for each payment or disbursement made by the Bank under any Letter of
Credit honoring any demand for payment made by the beneficiary thereunder, in
each case on the date that such payment or disbursement is made. Any amount not
reimbursed on the date of such payment or disbursement shall bear interest from
the date of such payment or disbursement to the date that the Bank is reimbursed
by the Borrowers therefore, payable on demand, at a rate per annum equal to the
Interest Rate from time to time in effect. The Bank shall notify the
Representative whenever any demand for payment is made under any Letter of
Credit by the beneficiary thereunder; provided that the failure of the Bank to
so notify the Representative shall not affect the rights of the Bank in any
manner whatsoever.

     In determining whether to pay under any Letter of Credit, the Bank shall
not have any obligation to the Borrowers or any lender other than to confirm
that any documents required to be delivered under such Letter of Credit appear
to have been delivered and appear to comply on their face with the requirements
of such Letter of Credit. Any action taken or omitted to be taken by the Bank
under or in connection with any Letter of Credit, if taken or omitted in the
absence of gross negligence and willful misconduct, shall not impose upon the
Bank any liability to any Borrower or Bank and shall not reduce or impair the
Borrowers' reimbursement obligations hereunder.

                                       36


     Any such advances shall be conclusively presumed (absent manifest error) to
have been made by Bank to or for the benefit of the Borrowers. Each Borrower
hereby irrevocably confirms, ratifies and approves all such advances by Bank and
hereby indemnifies Bank against losses and expenses (including court costs,
attorneys' and paralegals' fees) and shall hold Bank harmless with respect
thereto. If Bank elects to bill the Borrowers for any amount due hereunder, such
amount shall be immediately due and payable, with interest accruing thereon
daily at the Interest Rate determined in accordance with this Note and in effect
from time to time.

     If either (i) the introduction of or any change in or change in the
interpretation of any law or regulation or (ii) compliance by Bank with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by Bank or any corporation
controlling Bank and Bank determines that the amount of such capital is
increased solely by or solely based upon the existence of Bank's commitment to
lend hereunder and other commitments of this type, then, upon demand by Bank,
the Borrowers shall immediately pay to Bank, from time to time as specified by
Bank, additional amounts sufficient to compensate Bank in the light of such
circumstances, to the extent that Bank reasonably determines such increase in
capital to be allocable to the existence of Bank's commitment to lend hereunder.

     As security for the payment of this Note and any and all other liabilities,
obligations, costs, fees and expenses of or owing by the Borrowers to Bank,
however created, arising or evidenced, and howsoever owned, held or acquired,
whether now or hereafter existing, whether now due or to become due, whether
direct or indirect, absolute or contingent, and whether several, joint or joint
and several made by the Borrowers in favor of Bank (all of the foregoing are
hereinafter referred to as the "Obligations"), the Borrowers have executed and
delivered (i) a Mortgage and Security Agreement, (ii) an Assignment of Rents and
Leases and (iii) an Environmental Indemnity Agreement, each of even date
herewith and in favor of Bank, with respect to two (2) parcels of real property
known as the Fifield B Mortgaged Property and the Jewel Mortgaged Property
(collectively, the "Collateral") located in Cook County, Illinois (the foregoing
documents, together with all amendments, modifications and restatements of the
foregoing, are referred to herein as the "Loan Documents"). The cancellation or
surrender of this Note shall not affect the right of Bank or any assignee to
retain the Collateral under any of the Loan Documents for any of the Obligations
so long as any such Obligations remain outstanding or if any commitment to lend
remains in effect hereunder.

     Each Borrower represents and warrants to Bank that: (a) each Borrower is a
general or limited partnership, as applicable, duly organized, validly existing
and in good standing under the laws of the State of Delaware and is duly
qualified to do business and is in good standing under the laws of each state in
which the ownership of its properties and the nature and extent of the
activities transacted by it makes such qualification necessary; (b) each
Borrower has all requisite partnership power and authority to conduct its
activities as presently conducted, to own its properties and to perform its
obligations under the Loan Documents to which it is a party; (c) each Borrower
has the partnership power and authority to enter into, deliver and be bound by
this Note and the other Loan Documents to which it is a party and has duly
executed and delivered the Loan Documents to which it is a party; (d) the
execution and delivery by each Borrower of the Loan Documents and each
Borrower's performance of all its obligations under and the consummation of the
transactions contemplated under the Loan Documents do not conflict with or
violate any applicable law or any ruling, judgment or order of any court or
other governmental authority, and do not conflict with or result in or
constitute any breach or default under or result in the creation or imposition
of any lien, charge or encumbrance under any material agreement, indenture or
undertaking concerning the Collateral except with respect to which appropriate
waivers or consents have been obtained; (e) no approval, consent or
authorization of any governmental authority is required in connection with any
Borrower entering into or performing its obligations under the Loan Documents;
(f) the Loan Documents constitute the legal, valid and binding obligation of
each Borrower, enforceable against each Borrower in accordance with their
respective terms except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other similar laws
affecting enforcement of creditors' rights generally, and by general principles
of equity;

                                       37


(g) other than as set forth on Schedule 1 hereto, there is no pending or, to
the best knowledge of any Borrower any threatened action, suit, inquiry,
investigation, or proceeding against any Borrower before any court, governmental
agency or arbitrator, which, in any case, may (i) if adversely determined,
materially and adversely effect the financial condition of any Borrower, (ii)
seek to restrain or otherwise have a material adverse affect on the transactions
contemplated herein, or (iii) affect the validity or enforceability of the Loan
Documents; (h) the consolidated financial statements and balance sheet
(including the notes thereto) of Heartland and its consolidated subsidiaries as
of June 30, 2003, and the related consolidated statements of income and equity
and consolidated statements of cash flows of Heartland and its consolidated
subsidiaries, are complete and correct and fairly present the financial
condition of Heartland and its consolidated subsidiaries and the results of
operations of Heartland and its consolidated subsidiaries at such date, in
accordance with GAAP, there has been no material adverse change in Heartland or
any consolidated subsidiary's financial condition, business, properties or
operations; and (i) except as set forth on Schedule 2 hereto, no Borrower has
any indebtedness for borrowed money except in favor of Bank. In extending
financial accommodations to the Borrowers, Bank is expressly acting and relying
upon the aforesaid representations and warranties.

     As a condition to Bank providing any financial accommodations to the
Borrowers, the Borrowers have agreed that they shall cause to be prepared and
furnished to Bank the following (all to be kept and prepared in accordance with
GAAP applied on a consistent basis):

(a)         as soon as  possible,  but not later than  ninety (90)  days after
            the close of fiscal year ended  December 31,  2003 and each  fiscal
            year of  Heartland  thereafter, consolidated financial statements
            of  Heartland  certified  by  Heartland's certified  independent
            public  accountants  (acceptable  to  Bank  in its  sole discretion)
            in  accordance  with GAAP and fairly  presenting  the  consolidated
            financial  position and results of operations of Heartland and its
            consolidated subsidiaries  for  such  year  as of the  end of  such
            year,  certified  by the principal financial officer of Heartland;

(b)         as soon as possible, but not later than forty-five (45) days after
            close of each fiscal quarter of Borrower and beginning with the
            fiscal quarter ending March
             31, 2004, consolidated financial statements (including, but not
            limited to, a balance sheet, income statement and statement of cash
            flows) of Heartland prepared in accordance with GAAP and fairly
            presenting the financial position and results of operations of
            Heartland and its consolidated subsidiaries for such fiscal quarter
            as of the end of such fiscal quarter, certified by the principal
            financial officer of Heartland;

(c)         together with each annual delivery of financial statements, a
            calculation of the financial covenants required hereunder as of the
            end of such fiscal year certified by the principal financial officer
            of the Borrowers;

(d)         such other data and information (financial and otherwise) as Bank,
            from time to time, may reasonably request, bearing upon or related
            to the Loan or the Collateral, any Borrower's financial condition or
            results of operations, including, without limitation, (i) federal
            income tax returns of each Borrower, (ii) accounts payable ledgers
            and bank statements of each Borrower and (iii) accounts receivable
            ledgers and reports of construction in progress, each in form and
            substance acceptable to Bank in its sole discretion.

     Each Borrower will do or cause to be done all things reasonably necessary
to preserve and keep in full force and effect the existence of its business and
no Borrower shall, without Bank's prior written consent thereto, which Bank may
or may not give based upon its reasonable discretion, concurrently or
thereafter: (i) seek to dissolve or liquidate its business; or (ii) without the
prior written consent of Bank, convey, transfer, lease (other than in the
ordinary course of business) or otherwise dispose of (whether in one transaction
or in a series of transactions) any ownership or economic interest in any
Collateral to any person; or (iii) incur any Indebtedness other than the Loans,
or (iv) grant a lien, claim, encumbrance or security interest in the Collateral
to any person or entity other than the Bank; or (v) engage in any transaction
out of the ordinary course of business; or (vi) guaranty, endorse or otherwise
in any way directly, indirectly or contingently become liable for the
obligations or liabilities of any other person or entity other than the Bank,
except endorsements of negotiable instruments for collection in the ordinary
course of business. In addition to the foregoing, the Borrowers covenant and
agree with Bank to (i) maintain Capital Funds of at least $5,500,000 at all
times; (ii) not allow Net Losses to exceed $100,000 during any fiscal year
beginning with the fiscal year ended December 31, 2003; (iii) maintain Net
Income of at least $1,000,000 during any fiscal year of Borrowers beginning with
the fiscal year ended December 31, 2003; (iv) maintain all of each Borrower's
operating and cash management accounts with Bank as long as the Obligations
remain outstanding; and (v) not allow any advances or distributions to
shareholders or members from funds borrowed hereunder.

                                       38


     All covenants, conditions and agreements contained in each Loan Document
are hereby incorporated herein by express reference and a default or event of
default thereunder shall be and constitute a Default (as hereinafter defined)
under this Note.

     Bank shall have exercised reasonable care in the custody and preservation
of the Collateral if it takes such action for that purpose as the Borrowers
shall reasonably request in writing, provided that such request shall not be
inconsistent with Bank's status as a secured party, but the failure to comply
with any such request shall not be deemed a failure to exercise reasonable care.
No failure of Bank to preserve or protect any rights with respect to the
Collateral against prior or third parties, or to do any act with respect to
preservation of the Collateral, not so requested by the Borrowers shall be
deemed a failure to exercise reasonable care in the custody or preservation of
the Collateral.

     All Obligations of the Borrowers and all rights, powers and remedies of
Bank expressed herein shall be in addition to, and not in limitation of, those
provided by law or in any written agreement or instrument (other than this Note)
relating to any of the Obligations or any security therefore including, without
limitation, the Loan Documents. In addition to all other rights possessed by it,
Bank may, except as specifically set forth below whether before or after
Default, at its sole discretion, and without notice to any Borrower, take any or
all of the following actions: (1) after Default, transfer the whole or any part
of securities which may constitute Collateral into the name of itself or its
nominee without disclosing to third parties, if Bank so desires, that such
securities so transferred are subject to the security interests granted
hereunder, and any corporation or association, or any of the managers or
trustees of any trust, issuing any of said securities, or any transfer agent,
shall not be bound to inquire, in the event that Bank or said nominee makes any
further transfer of said securities, or any portion thereof, as to whether Bank
or the nominee of Bank has the right to make such further transfer, and shall
not be liable for transferring the same; (2) after Default, notify any obligors
on any of the Collateral to make payment to Bank of any amounts due or to become
due with respect thereto; (3) after Default, enforce collection of any of the
Collateral by suit or otherwise, or surrender, release or exchange all or any
part thereof; (4) after Default, take possession or control of any proceeds and
products of any of the Collateral, including the proceeds of insurance thereon;
(5) extend or renew or modify for one or more periods (whether or not longer
than the original period) this Note, or any other of the Obligations, and grant
any releases, compromises or indulgences with respect to this Note, or any other
of the Obligations, or any extension or renewal thereof, or any security
therefore, or to any obligor hereunder or thereunder; (6) after Default, vote
the Collateral, if applicable; (7) after Default, make an election with respect
to the Collateral under Section 1111 of the United States Bankruptcy Code, now
existing or hereafter amended (the "Code") or take action under Section 364 or
any other section of the Code; provided, however, that any such action of Bank
as herein set forth shall not, in any manner whatsoever, impair or affect the
liability hereunder, nor prejudice, nor waive, nor be construed to impair,
affect, prejudice or waive Bank's rights and remedies at law, in equity or by
statute, nor release or discharge, any Borrower or other person, firm,
corporation or other entity liable to Bank for the Obligations; and (8) at any
time, and from time to time, accept additions to, releases, reductions,
exchanges or substitutions of the Collateral, without in any way altering,
impairing, diminishing or affecting the provisions of this Note.

     The Borrowers, without notice or demand of any kind, shall be in default (a
"Default") hereunder if: (1) any amount payable on any of the Obligations is not
paid when due; or (2) any Borrower shall otherwise fail to perform any of the
promises to be performed by such Borrower under this Note, any other Loan
Document or any other agreement with Bank; or (3) any Borrower shall make any
assignment for the benefit of creditors, or there shall be commenced any
bankruptcy, receivership, insolvency, reorganization, dissolution or liquidation
proceedings by or against, or the entry of any judgment, levy, attachment,
garnishment or other process, or the filing of any lien against any Borrower, or
against any of the Collateral having a value in excess of $50,000, and such
proceedings shall not be dismissed within sixty (60) days after commencement
thereof; or (4) there should be any material deterioration or impairment of any
Collateral, or any material decline or depreciation in the value or market price
thereof (whether actual or reasonably anticipated), which causes said
Collateral, in the reasonable opinion of Bank acting in good faith, to become
unsatisfactory as to value or character, or which causes Bank to reasonably
believe that it is insecure and the likelihood for repayment of the Obligations
is or will soon be impaired, time being of the essence; or (5) there is any


                                       39


occurrence of any default or event of default under any Loan Document or any
other agreement or any other guarantor of the Obligations with Bank; or (6) any
material warranty, representation, certificate or statement of any Borrower to
Bank is untrue in any material respect when made or furnished; or (7) failure of
any Borrower after request by Bank to furnish financial information or to permit
inspection by Bank of any Borrower's books and records as required hereunder; or
(8) any Borrower fails to pay in full when due or any other default occurs with
respect to or in connection with any indebtedness of any Borrower in excess of
$50,000; or (9) the occurrence of any material adverse event which causes a
material adverse change in the financial condition of any Borrower or which
would have a material adverse effect on the business of any Borrower; or (10)
there is a discontinuance by any guarantor of any guaranty; or (11) any
guarantor shall contest the validity of any guaranty; or (12) any change shall
occur in the controlling partnership interests in either Borrower.

     Whenever the Borrowers shall be in Default as aforesaid, without demand or
notice or legal process of any kind, the entire unpaid amount of all Obligations
shall become immediately due and payable at Bank's option and: (1) upon notice
to the Representative, Bank may sell all or any of the Collateral at public or
private sale, upon such terms and conditions as Bank may deem proper, and Bank
may purchase any or all of the Collateral at any such sale, and Bank may apply
the net proceeds, after deducting all costs, expenses, and reasonable attorneys'
and paralegals' fees incurred or paid at any time in the collection, protection
and sale of the Collateral and the Obligations, to the payment of this Note,
returning the excess proceeds, if any, to the Borrowers, and the Borrowers shall
remain liable for any amount remaining unpaid after such application, with
interest; and (2) Bank may exercise, from time to time, any and all rights and
remedies available to it under the Illinois Uniform Commercial Code, or
otherwise available to it including, without limitation, those available under
any Loan Document or any written instrument (in addition to this Note) relating
to any of the Obligations or any security therefore and may, without demand or
notice of any kind, appropriate and apply toward the payment of such of the
Obligations, whether matured or unmatured, including, without limitation, costs
of collection and reasonable attorneys' and paralegals' fees, and in such order
of application as Bank may, from time to time, elect, any balances, credits,
deposits, accounts or moneys of any Borrower in possession, control or custody
of, or in transit to Bank. Any notification of intended disposition of any of
the Collateral required by law shall be conclusively deemed reasonably and
properly given if given at least ten (10) calendar days before such disposition
hereby confirming, approving and ratifying all acts and deeds of Bank relating
to the foregoing, and each part thereof.

     The Borrowers shall have the right to pay all or any portion of the unpaid
principal amount hereof at any time and from time to time prior to the date
otherwise payable without premium or penalty.

     EACH BORROWER WAIVES THE BENEFIT OF ANY LAW THAT WOULD OTHERWISE RESTRICT
OR LIMIT BANK IN THE EXERCISE OF ITS RIGHT, WHICH IS HEREBY ACKNOWLEDGED, TO
APPROPRIATE WITHOUT NOTICE AND REGARDLESS OF THE COLLATERAL, AT ANY TIME
HEREAFTER, ANY INDEBTEDNESS MATURED OR UNMATURED, OWING FROM BANK TO THE
BORROWERS. BANK MAY, FROM TIME TO TIME, WITHOUT DEMAND OR NOTICE OF ANY KIND,
APPROPRIATE AND APPLY TOWARD THE PAYMENT OF SUCH OF THE OBLIGATIONS, AND IN SUCH
ORDER OF APPLICATION, AS BANK MAY FROM TIME TO TIME ELECT, ANY AND ALL SUCH
BALANCES, CREDITS, DEPOSITS, ACCOUNTS, MONEYS, CASH EQUIVALENTS AND OTHER
ASSETS, OF OR IN THE NAME OF ANY BORROWER THEN OR THEREAFTER WITH BANK.
IMMEDIATELY UPON THE OCCURRENCE OF A DEFAULT HEREUNDER, EACH BORROWER HEREBY
ASSIGNS AND TRANSFERS TO BANK ANY AND ALL CASH, NEGOTIABLE INSTRUMENTS,
DOCUMENTS OF TITLE, CHATTEL PAPER, SECURITIES, CERTIFICATES OF DEPOSIT, DEPOSIT
ACCOUNTS, OTHER CASH EQUIVALENTS AND OTHER ASSETS OF EACH BORROWER IN THE
POSSESSION OR CONTROL OF BANK FOR ANY PURPOSE.

     EACH BORROWER AGREES THAT BANK SHALL NOT BE LIABLE FOR ANY ERROR OF
JUDGMENT OR MISTAKES OF FACT OR LAW EXCEPT THAT BANK SHALL REMAIN LIABLE FOR ITS
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. EACH BORROWER AND THE BANK KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, THE RIGHT EITHER MAY HAVE TO
TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS NOTE OR THE COLLATERAL, OR ANY AGREEMENT
EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF
CONDUCT OR COURSE OF DEALING IN WHICH BANK AND ANY BORROWER ARE ADVERSE PARTIES.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK GRANTING ANY FINANCIAL
ACCOMMODATION TO THE BORROWERS.

                                       40


     Each Borrower waives any and all presentment, demand, notice of dishonor,
protest, and all other notices and demands in connection with enforcement of
Bank's rights hereunder except as otherwise set forth herein, and hereby
consents to, and waives notice of release, with or without consideration, of any
Borrower or of any Collateral. No Default shall be waived by Bank except in
writing. No delay on the part of Bank in exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by Bank of any
right or remedy shall preclude other or further exercise thereof, or the
exercise of any other right or remedy. This Note: (i) is valid, binding and
enforceable in accordance with its provisions, and no conditions exist to the
legal effectiveness of this Note; (ii) contains the entire agreement among the
Borrowers and Bank with respect to the subject matter hereof except for the
other Loan Documents contemplated hereby; (iii) is the final expression of their
intentions; and (iv) supersedes all negotiations, representations, warranties,
commitments, offers, contracts (of any kind or nature, whether oral or written)
prior to or contemporaneous with the execution hereof. No prior or
contemporaneous representations, warranties, understandings, offers or
agreements of any kind or nature, whether oral or written, have been made by
Bank or relied upon by the Borrowers in connection with the execution hereof. No
modification, discharge, termination or waiver of any of the provisions hereof
shall be binding upon Bank, except as expressly set forth in a writing duly
signed and delivered on behalf of Bank.

     The Borrowers, jointly and severally, agree to pay all costs, legal
expenses, reasonable attorneys' fees and paralegals' fees of every kind, paid or
incurred by Bank in connection with the documentation, negotiation and
enforcement of its rights hereunder, including, but not limited to, litigation
or proceedings initiated under the United States Bankruptcy Code, or in
connection with the Collateral, promptly on demand of Bank or other persons
paying or incurring the same.

     Each Borrower agrees that, in addition to (and without limitation of) any
right of set-off, bankers' lien or counterclaim Bank may otherwise have, Bank
shall be entitled, at its option, to offset balances held by it for account of
any Borrower at any of its offices, in United States Dollars or in any other
currency, against any principal of or interest on any of Bank's loans, or any
other amount payable to such Bank hereunder, which is not paid when due
(regardless of whether such balances are then due to Borrowers), in which case
it shall promptly notify such Borrower thereof, provided that such Bank's
failure to give such notice shall not affect the validity thereof.

In addition to the foregoing, Borrowers agree to pay to Bank a fee equal to
$20,000 upon the Closing Date which shall be fully earned and non-refundable on
the Closing Date.

     Bank may at any time transfer this Note and Bank's rights in any or all of
the Collateral, and Bank thereafter shall be relieved from all liability with
respect thereto.

     TO INDUCE BANK TO MAKE THE LOANS EVIDENCED BY THIS NOTE, EACH BORROWER
IRREVOCABLY AGREES THAT ALL ACTIONS ARISING DIRECTLY OR INDIRECTLY AS A RESULT
OR IN CONSEQUENCE OF THIS NOTE OR ANY OTHER AGREEMENT WITH BANK, OR THE
COLLATERAL, SHALL BE INSTITUTED AND LITIGATED ONLY IN COURTS HAVING SITUS IN THE
CITY OF CHICAGO, ILLINOIS, AND EACH BORROWER HEREBY CONSENTS TO THE EXCLUSIVE
JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT LOCATED AND HAVING ITS
SITUS IN SAID CITY, AND WAIVES ANY OBJECTION BASED ON FORUM NONCONVENIENS, AND
EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS, AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, DIRECTED TO THE BORROWERS AT THE ADDRESS INDICATED HEREIN IN
THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.
FURTHERMORE, EXCEPT AS OTHERWISE SET FORTH HEREIN, EACH BORROWER WAIVES ALL
NOTICES AND DEMANDS IN CONNECTION WITH THE ENFORCEMENT OF BANK'S RIGHTS
HEREUNDER, AND HEREBY CONSENTS TO, AND WAIVES NOTICE OF THE RELEASE WITH OR
WITHOUT CONSIDERATION OF ANY BORROWER OR OF ANY COLLATERAL.

                                       41


     Except as otherwise provided herein, whenever it is provided herein that
any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other party, or whenever any of the parties desires to give or serve upon any
other a communication with respect to this Note, each such notice, demand,
request, consent, approval, declaration or other communication shall be in
writing and shall be delivered in person with receipt acknowledged, or
telecopied and confirmed immediately in writing by a copy mailed by registered
or certified mail, return receipt requested, postage prepaid, addressed as
hereinafter set forth, or sent by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

                   (A)    If to Bank, at:
                          LaSalle Bank National Association
                          135 South LaSalle Street
                          Chicago, Illinois 60603
                          Attention:  Erica Scully
                          Telecopier No. (312) 904-0651
                          Telephone No. (312) 904-1706
                          with a copy to:

                          Vedder, Price, Kaufman & Kammholz,
                          P.C.
                          222 North LaSalle Street, Suite 2600
                          Chicago, Illinois  60601
                          Attention:  Michael A. Nemeroff, Esq.
                          Telecopier No.  (312) 609-5005
                          Telephone No.  (312) 609-7500
                   (B)    If to the Borrowers:
                          CMC Heartland Partners
                          330 North Jefferson Ct., Suite 305
                          Chicago, Illinois  60601
                          Attention:  Richard Brandstatter
                          Telecopier No.:  (312) 575-0605
                          Telephone: No.  (312) 575-0400
                          with a copy to:

                          CMC Heartland Partners
                          330 N. Jefferson Court
                          Suite 305
                          Chicago, Illinois  60661
                          Attn:  Larry Adelson
                          Telecopier No.:  (312) 575-0605
                          Telephone: No.  (312) 575-0400

or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, or the date of the telecopy transmission, or three
(3) Business Days after the same shall have been deposited in the United States
mail. Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to the persons designated
above to receive copies shall in no way adversely affect the effectiveness of
such notice, demand, request, consent, approval, declaration or other
communication.

                                       42


     The Loan(s) evidenced hereby has been made and this Note has been delivered
at Bank's principal place of business in Chicago, Illinois. This Note shall be
governed and construed in accordance with the laws of the State of Illinois,
except for conflicts of laws principles thereof, and shall be binding upon each
Borrower and its legal representatives, successors and assigns. Wherever
possible, each provision of this Note shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Note
shall be prohibited by or be invalid under such law, such provision shall be
severable, and be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Note.

     Each Borrower represents and warrants to Bank that the execution and
delivery of this Note has been duly authorized by resolutions heretofore adopted
by each Borrower's general partner, that said resolutions have not been amended
nor rescinded, are in full force and effect and that the officers of each
general partner executing and delivering this Note for and on behalf of such
Borrower are duly authorized so to act. Bank, in extending financial
accommodations to the Borrowers, is expressly acting and relying upon the
aforesaid representations and warranties.
Each Borrower acknowledges and agrees that the lending relationship hereby
created with Bank is and has been conducted on an open and arms' length basis in
which no fiduciary relationship exists and that no Borrower has relied and is
not relying on any such fiduciary relationship in consummating the Loan(s)
evidenced by this Note.

     As used herein, all provisions shall include the masculine, feminine,
neuter, singular and plural thereof, wherever the context and facts require such
construction and in particular the word "Borrower" shall be so construed.

     The effect of the joint and several obligations of Borrowers hereunder is
that each Borrower hereby unconditionally and absolutely guarantees to Bank,
irrespective of the validity, regularity or enforceability of this Note or any
other agreement, the full and prompt payment in full to Bank at maturity,
whether by acceleration or otherwise, of all the Obligations of the Borrowers to
Bank. The guaranty set forth in this paragraph shall in all respects be
continuing, absolute and unconditional, and shall remain in full force and
effect until the Obligations of the Borrowers to Bank have been fully repaid.
The guaranty set forth in this paragraph is an absolute and unconditional
guaranty of payment and not of collectibility. THE GUARANTY OBLIGATION SET FORTH
IN THIS PARAGRAPH SHALL IN ALL RESPECTS BE IN FURTHERANCE, AND SHALL IN NO EVENT
BE DEEMED IN LIMITATION, OF THE OBLIGATIONS OF EACH BORROWER UNDER THIS NOTE.


                            [SIGNATURE PAGE FOLLOWS]



                                       43


                   (Signature Page to Secured Revolving Note)

IN WITNESS WHEREOF, the parties hereto have duly executed this Secured Revolving
Note as of the date first above written.

                                 CMC HEARTLAND PARTNERS, a Delaware
                                 general partnership

                                    By: HTI INTERESTS, LLC, a Delaware
                                              limited liability company and an
                                              authorized general partner

                                    By:    __________________________________
                                    Its:   __________________________________

                                    By:   HEARTLAND PARTNERS, L.P., a Delaware
                                          limited partnership and an authorized
                                          general partner

                                    By:   ___________________________________
                                    Its:  ___________________________________


                                 HEARTLAND PARTNERS, L.P., a Delaware limited
                                 partnership

                                    By:     HTI Interests, LLC
                                    Its:    General Partner

                                    By:   ___________________________________
                                    Its:  ___________________________________




                                       44


                                    EXHIBIT A

                                   Definitions

     "Business Day" shall mean each day other than a Saturday, Sunday or legal
holiday under the laws of the United States or the State of Illinois. If payment
hereunder becomes due and payable on a day other than a Business Day, the due
date thereof shall be extended to the next succeeding Business Day, and interest
shall be payable thereon at the rate specified during such extension.

     "Capital Funds" means as of any date of determination, the Net Worth of
Heartland and its consolidated Subsidiaries, as determined in accordance with
GAAP.

     "Closing Date" shall mean February 11, 2004.

     "Default Rate" shall mean the Interest Rate plus three percent (3%).

     "GAAP" shall mean United States generally accepted accounting principles,
as in effect from time to time.

     "Indebtedness" shall mean, without duplication, (i) indebtedness for
borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) the face amount of all letters of credit issued for
the account of the Borrower and, without duplication, all drafts drawn
thereunder, (iv) obligations to pay the deferred purchase price of property or
services (other than trade payables and other current liabilities incurred in
the ordinary course of business which are not more than 120 days past due), (v)
obligations as lessee under leases which have been or should be, in accordance
with GAAP, recorded as capital leases, (vi) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of other of the kinds referred to in clauses (i)
through (v) above, (vii) all net obligations under any interest rate swap
agreements, any interest rate cap agreement, any interest rate collar agreement
or other similar agreement or arrangement, and (viii) all obligations to pay a
specified purchase price for goods or services whether or not delivered or
accepted (i.e., take-or-pay and similar obligations).

     "L/C Application" means, with respect to any request for the issuance of a
Letter of Credit, a letter of credit application in the form being used by the
issuing lender at the time of such request for the type of letter of credit
requested.

     "Lien" shall mean, with respect to any asset of any Borrower, any mortgage,
pledge, security interest, encumbrance, lien or charge of any kind (including
any agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financial statement under the Uniform Commercial Code in
effect in any jurisdiction).

     "Net Income" shall mean the amount of Borrowers' net income as reported on
Borrowers' consolidated financial statements as at the end of each fiscal year,
determined in accordance with GAAP.
"Net Losses" shall mean the amount of any net loss reported on Borrowers'
consolidated financial statements as at the end of each fiscal year, determined
in accordance with GAAP.

     "Net Worth" shall mean total assets less total liabilities, as determined
in accordance with GAAP. "Prime Rate" shall mean, at any time and from time to
time, the rate of interest then most recently announced by Bank as its Prime
Rate, which is not necessarily the lowest or most favorable rate of interest
charged by Bank on commercial loans at any one time.



                                       45


                                   Schedule 1

                                   Litigation

                                 (See Attached)




                                       46




                                   Schedule 2

                             Permitted Indebtedness

                                 (See Attached)




                                       47




                                                                 Exhibit 31.1

                                 CERTIFICATIONS

I, Lawrence S. Adelson, certify that:

1) I have reviewed this quarterly report on Form 10-Q of Heartland Partners,
   L.P.;
2) Based on my knowledge, this report does not contain any untrue statement of a
   material fact or omit to state a material fact necessary to make the
   statements made, in light of the circumstances under which such statements
   were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial
   information included in this report, fairly present in all material respects
   the financial condition, results of operations and cash flows of the
   registrant as of, and for, the periods presented in this report;
4) The registrant's other certifying officer and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure
   controls and procedures to be designed under our supervision, to ensure that
   material information relating to the registrant, including its consolidated
   subsidiaries, is made known to us by others within those entities,
   particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
   procedures and presented in this report our conclusions about the
   effectiveness of the disclosure controls and procedures, as of the end of the
   period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal control over
   financial reporting that occurred during the registrant's most recent fiscal
   quarter that has materially affected, or is reasonably likely to materially
   affect, the registrant's internal control over financial reporting; and
5) The registrant's other certifying officer and I have disclosed, based on our
   most recent evaluation of internal control over financial reporting, to the
   registrant's auditors and the audit committee of the board of directors of
   the registrant's general partner:
   a) All significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant's ability to record,
      process, summarize and report financial information; and
   b) Any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal control
      over financial reporting.

   Date:  May 17, 2004                     By /s/ Lawrence S. Adelson
                                              -----------------------
                                              Lawrence S. Adelson
                                              Chief Executive Officer




                                       48




                                                                  Exhibit 31.2

I, Daniel L. Bernardi, certify that:

1)    I have reviewed this report on Form 10-Q of Heartland Partners, L.P.;
2)    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;
3)    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      report;
4)    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange
      Act of 1934, as amended) for the registrant and we have:
a)    designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under our supervision,
      to ensure that material information relating to the registrant, including
      its consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;
b)    evaluated the effectiveness of the registrant's disclosure controls and
      procedures and presented in this quarterly report our conclusions about
      the effectiveness of the disclosure controls and procedures, as of the end
      of the period covered by this report based on such evaluation; and
c)    disclosed in this report any change in the registrant's internal control
      over financial reporting that occurred during the registrant's most recent
      fiscal quarter that has materially affected, or is reasonably likely to
      materially affect, the registrant's internal control over financial
      reporting;
5)    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of the board of
      directors of the registrant's general partner:
(a)   all significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant's ability to record,
      process, summarize and report financial information; and
(b)   any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal control
      over financial reporting.

   Date:  May 17, 2004                     By /s/ Daniel L. Bernardi
                                              ----------------------
                                              Daniel L. Bernardi
                                              Chief Financial Officer



                                       49


                                                                  Exhibit 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Heartland Partners,  L.P.
(the "Company") on Form 10-Q for the  quarter  ending  March 31,  2004 as filed
with the Securities and Exchange Commission on the date hereof (the  "Report"),
I,  Lawrence S.  Adelson,  Chief  Executive Officer of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002 that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and (2) The information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.


Date:  May 17, 2004                       By /s/ Lawrence S. Adelson
                                             -----------------------
                                             Lawrence S. Adelson
                                             Chief Executive Officer

This certification accompanies this Report on Form 10-Q pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required
by such Act, be deemed filed by the Company for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended.





                                       50

                                                                  Exhibit 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Heartland Partners,  L.P.
(the "Company") on Form 10-Q for the  quarter  ending  March 31,  2004 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Daniel L. Bernardi, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002 that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and (2) The information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.


Date:  May 17, 2004                       By /s/ Daniel L. Bernardi
                                             ----------------------
                                             Daniel L. Bernardi
                                             Chief Financial Officer

This certification accompanies this Report on Form 10-Q pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required
by such Act, be deemed filed by the Company for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended.




                                       51