11

The New York Central Railroad Company

Acquisition of Short Line Railroads

During the year, the Interstate Commerce Commission approved the acquisition
of the Ulster & Delaware Railroad, fixing as the commercial value to be paid therefor
the sum of $2,500,000. It is expected that the actual acquisition will be concluded early
in the year 1932.

The Interstate Commerce Commission, during the year, also approved the sale to
the Lehigh Valley Railroad Company of a one-half interest in the stock of the Owasco
River Railway, pursuant to the expectation in that behalf at the time of the acquisition
of control of the Owasco River Railway. It is expected that this sale will be concluded
early in the year 1932.

There still remain pending before the Interstate Commerce Commission proceedings
with reference to the acquisition of the Boyne City, Gaylord & Alpena and the Chicago,
Attica & Southern railroads.

Extension of lease of Detroit Manufacturers Railroad

The lease or operating agreement dated April 1, 1902, under which the Detroit
Manufacturers Railroad was held by The Michigan Central Railroad Company was by
its terms to have expired on January 1, 1928, but was extended by agreement between
the companies to June 11, 1931, the date of expiration of the City ordinance under which
the railroad occupied the streets. The right to use the streets was extended for a period
of thirty years by a new ordinance passed by the Common Council of Detroit on May 26,
1931, and thereafter the lease agreement was further extended for a corresponding term.
The extension of the lease was approved by the Interstate Commerce Commission by its
order entered July 30, 1931. Since February 1, 1930, the property has been operated by
this company under the provision of its lease of the properties of The Michigan Central
Railroad Company.

Issue and sale of $75,000,000 of the Company's Refunding

and Improvement Mortgage 43^ V^i" ceni Bonds, Series A

On April 1, 1931, the Company issued, under authority of the Interstate Commerce
Commission's order of March 16, 1931, and sold to Messrs. J. P. Morgan & Co.,
$75,000,000., principal amount, of its 4J4 per cent Refunding and Improvement Mortgage
Bonds, of Series A. Through the sale of these bonds, the Company provided, among other
things, for the payment of $50,000,000. of The Lake Shore and Michigan Southern Railway
Company's Twenty-Five Year 4 per cent Gold Bonds of 1906 which matured May 1, 1931.

Issue and pledge of Refunding and Improvement Mortgage
6 per cent Bonds, Series C

In order that they might be available for pledge as collateral security for temporary
borrowing, pending more favorable conditions for sale of the Company's securities, the
Executive Committee of the Board of Directors on December 2, 1931, authorized the
issue from time to time of not exceeding $100,000,000. of the Company's Refunding and
Improvement Mortgage 5 per cent Bonds, Series C, due October 1, 2013. During the
year $51,400,000. of these bonds Were issued and pledged as collateral security for notes.