FUNDED DEBT

Changes in the Funded  Debt of Brooklyn and  Queens
Transit System during the fiscal year 1939 were as follows:

Brooklyn Bus Corporation:

Conditional Sales Agreements for pur¬
chase of 150 buses................     $1,389,000.00

Less:

Payments on Conditional Sales Agree¬
ments...........................         130,601.00     $1,258,399.00

B. and Q. Service Co. Inc.:
Payments on:

Car Lease Warrants...............     $  149,500.00

Equipment Trust Notes, Series A...         150,000.00        299,500.00

Net Increase....................                          $ 958,899.00
 

Under date of June 16, 1939, holders of the Brooklyn City
and Nevrtown Railroad Company Five Per Cent. Consolidated
First Mortgage Bonds due July 1, 1939 were notified that your
Corporation had arranged with Bankers Trust Company,
Trustee, for the payment of the six months' interest due on
July 1st but that in view of the pendency of the BMT-BQT
Unification Plan (which provides for the issuance to the holders
of these bonds who elect to accept such Plan, of Corporate Stock
of the City of New York or, at the option of the City, cash) it
had been decided not to pay the principal of such bonds on
July 1, 1939, but to continue to pay the interest on such bonds as
and when due. In this connection, the Company relies also upon
the New York Mortgage Moratorium Statute and upon the pro¬
visions of the mortgage securing the bonds. If the Unification
Plan should not be consummated the Company will in due course
take up with the holders of such bonds the matter of extending
the date of their maturity.

UNIFICATION PLAN AND AGREEMENT

On March 1,1939 a tentative agreement was reached between
the City of New York and the companies as to the general terms
of a plan for the acquisition and unification under public owner¬
ship and control of the rapid transit and surface railroads and
related power properties and omnibus lines of the B.-M.T.
System. A proposed plan and agreement embodying the terms
of the March 1st understanding was formulated by representa¬
tives of the City, the Transit Commission and your Corporation,
and made the basis of public hearings before the Transit Com¬
mission during May and June.  On June 27, 1939, the Transit

6