Consolidated Transportation Bonds and State Highway Construction Bonds were deposited with escrow
agents. As a result of these transactions, the refunded bonds are deemed to be retired and, accordingly, are no
longer reported as long-term debt in the accompanying financial statements. At June 30, 1987, the refunded
bonds outstanding were $76,615,000.

In December, 1985, the Department of Transportation undertook an exchange of certain securities which
were being held in the Consolidated Transportation Bonds, Refunding Series 1978 Sinking Fund. In
connection with this exchange, the Department recognized a gain of $53,337,000, while maintaining sufficient
U. S. Treasury obligations to fully provide for the timely payment of $354,865,000 of Consolidated
Transportation Bonds and interest thereon. As a result of this transaction and the subsequent escrow deposit
agreement entered into with the State Treasurer as escrow fund agent, these bonds are defeased and are no
longer reported as long-term debt in the financial statements. At June 30, 1987, the defeased bonds
outstanding were $354,865,000.

On September 13, 1985, the Department undertook an exchange of certain securities which were being
held in the County Transportation Bonds - First Issue, Refunding Series 1978 Sinking Fund. This exchange
resulted in the purchase of a sufficient amount of U. S. Treasury obligations to provide for the timely payment
of principal and interest on the refunding series. In connection with this exchange, the Department recognized
a gain of $39,543,000. An agreement with an escrow fund agent was entered into during fiscal year 1987. As a
result, the principal amount of $155,725,000 of County Transporation Bonds — First Issue, Refunding Series
1978 was defeased and are no longer reported as long-term debt in the financial statements. At June 30,1987,
the defeased bonds outstanding were $155,725,000.

On November 18, 1986, the Department issued $29,175,000 County Transportation Bonds — First Issue,
Refunding Series 1986 with an average interest rate of 5.41% to advance refund the callable maturities in the
amount of $24,680,000 of two separate issues of outstanding County Transportation Bonds, First Issue,
Fourth and Fifth Series (Refunded Bonds). The net proceeds of $29,053,000 plus an additional $936,000 of
sinking fund monies were used to purchase U.S. Treasury Obligations sufficient to provide for the timely
payment of the principal and interest on the Refunded Bonds. Those securities were deposited in an
irrevocable trust with an escrow agent. As a result, the Refunded Bonds are considered to be defeased and the
liability for those bonds has been removed from the general long-term debt account group. The Department
advance refunded the Refunded Bonds to reduce its total debt service payments by $3,672,000 and to obtain
an economic gain (difference between the present values of the debt service payments on the old and the new
debt) of $2,465,000.

On August 7,1986, Consolidated Transportation Bonds in the amount of $100,000,000 were issued with a
discount of $992,000.

10. Changes in General Long-Term Debt:

Changes in general long-term debt (amounts expressed in thousands) for the year ended June 30,1987, are
summarized as follows:

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