acts, which payments amounted to $15,204,-
144, compared with $12,729,288 in 1941, and
represent 2.56 cents out of each dollar of oper¬
ating revenue. United States income and ex¬
cess profits tax accruals were $41,579,081, as
compared with $7,592,388 in 1941. Accruals
for Canadian income and excess profits taxes
totaled $1,880,985 as against $838,185 in 1941.

Fixed Charges

There was a net decrease of $292,323 in fixed
charges compared with 1941.

Rent for leased roads and equipment in¬
creased in the net amount of $314,718.
Amounts payable to The Mahoning Coal Rail¬
road Company under the lease of its property
and to The Peoria and Eastern Railway Com¬
pany under agreement for the operation of its
property, increased $528,275. This was par¬
tially offset, to the extent of $180,605, by re¬
duction in interest paid as rental under other
leases, resulting from the retirement of obli¬
gations of lessor companies.

As a result of the retirement of capital obli¬
gations, there was a net decrease of $875,655
in interest payable on funded debt.

Interest on unfunded debt increased in the
net amount of $268,614. Interest on additional
Federal income taxes, etc., and on money bor¬
rowed from New York State for grade cross¬
ing elimination accounted for increases in the
amount of $342,741, offset in part by miscel¬
laneous decreases of $74,127.

Net Income

Net income, after all deductions, was $49,-
082,183 and was transferred to the credit of
Profit and Loss. This result reflects the un¬
precedented volume of traffic, both freight and
passenger, occasioned by the war.

Dividend

The Board of Directors, on November 11,
1942, declared a dividend of $1.00 per share
on the capital stock, payable January 15, 1943,
to stockholders of record December 10, 1942.
The amount of this dividend, $6,447,394, was
charged to Profit and Loss.
 

Depreciation

In accordance with established practice, depre¬
ciation on equipment was accrued in operating
expenses during the year in the amount of
$17,891,829.

The Company instituted during the year the
accrual of depreciation on certain fixed struc¬
tures. Under orders of the Interstate Com¬
merce Commission such action was permissible
in 1942 and became mandatory effective Janu¬
ary 1, 1943. A total of $9,544,822 was accrued
in operating expenses on this account.

The accounts reflecting Other Income and
Miscellaneous Deductions from Income in¬
clude charges in the total amount of $10,673,-
963, representing depreciation on miscellane¬
ous physical properties covering the period
1933-1942 inclusive.

Amortization of capital expenditures in¬
curred for equipment and other facilities neces¬
sary in the interest of national defense during
the emergency period is authorized by law,
which provides for amortization of such ex¬
penditures over a five-year period. The oper¬
ating accounts for 1942 reflect charges for such
amortization in the total amount of $6,686,939.

Profit and Loss

Aside from the dividend for the year, the most
important charge against this account was an
accounting adjustment involving an itern of
$11,413,400, with a corresponding credit to
accrued depreciation—equipment. This was
incident to the retirement during the period
January 1, 1935 to December 31, 1940 of
equipment of The Michigan Central Railroad
Company and The Cleveland, Cincinnati, Chi¬
cago and St. Louis Railway Company, leased
lines. The amount represents the difference
between the appraised value of such retired
equipment at the date of the leases and the
depreciation which had been accrued thereon
when retired and which previously had been
charged to accrued depreciation—equipment.
At the end of the year the balance to the
credit of Profit and Loss was $201,606,205,
compared with $174,468,421 on December 31,
1941.