FORM 10-K
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D. C. 20549
(Mark One)

  [X]          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1995
                          -----------------

                                    OR

  [  ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For Transition Period from _________________ to ____________________

Commission File No. 1-9064

                       CONSOLIDATED RAIL CORPORATION
          ------------------------------------------------------
          (Exact name of registrant as specified in its charter)

       Pennsylvania                                23 1989084
----------------------------           ---------------------------------------
(State or other jurisdiction           (I.R.S. Employer Identification Number)
of incorporation or organization)

2001 Market Street, Two Commerce Square
Philadelphia, Pennsylvania                                  19101-1417
------------------------------------------------           ------------
    (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code  (215) 209-4000
                                                    --------------
Securities registered pursuant to Section 12(b) of the Act:      NONE
Securities registered pursuant to Section 12(g) of the Act:      NONE

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
       ---      ---
Aggregate market value of voting stock held by non-affiliates of the
Registrant (as of March 1, 1996): $0.

Shares of Common Stock Outstanding (as of March 1, 1996):  100 Shares, all
of which are held by the parent of the Registrant

DOCUMENTS INCORPORATED BY REFERENCE:  NONE


REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
(J)(1)(a) AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH
THE REDUCED DISCLOSURE FORMAT.

<PAGE>
                           TABLE OF CONTENTS
                           -----------------


         Item                                                      Page
         ----                                                      ----

Part I     1.  Business......................................       1
           2.  Properties....................................       1
           3.  Legal Proceedings.............................       4
           4.  Submission of Matters to a Vote of Security
                  Holders....................................      11


Part II    5.  Market for Registrant's Common Equity and
                  Related Stockholder Matters.................     11
           6.  Selected Financial Data........................     11
           7.  Management's Discussion and Analysis of
                  Financial Condition and Results of
                  Operations..................................     11
           8.  Financial Statements and Supplementary Data....     15
           9.  Changes in and Disagreements with Accountants
                  on Accounting and Financial Disclosure......     40


Part III  10.  Directors and Executive Officers of the
                  Registrant..................................     40
          11.  Executive Compensation.........................     40
          12.  Security Ownership of Certain Beneficial
                  Owners and Management.......................     40
          13.  Certain Relationships and Related Transactions.     40


Part IV   14.  Exhibits, Financial Statement Schedules, and
                  Reports on Form 8-K.........................     41

Power of Attorney.............................................     44
Signatures....................................................     44

Exhibit Index.................................................     46




                                      i

<PAGE>

                                PART I

Item 1.   Business.
------    --------

     GENERAL.  Consolidated Rail Corporation ("the Company") is a
Pennsylvania corporation incorporated on February 10, 1976 to acquire,
pursuant to the Regional Rail Reorganization Act of 1973, the rail
properties of many of the railroads in the northeast and midwest
region of the United States which had gone bankrupt during the early
1970's, the largest of which was the Penn Central Transportation
Company ("Penn Central").

     On July 1, 1993 Conrail Inc. ("Conrail") became the holding
company of the Company.  The Company is Conrail Inc.'s only
significant subsidiary and primary asset.  Conrail Inc.'s common stock
is listed on the New York and Philadelphia Stock Exchanges.

     Reports on Form 10-K for years prior to 1993 were filed by
Consolidated Rail Corporation, and historic data presented herein and
therein reflect the results of Consolidated Rail Corporation for those
time periods.

     RAIL OPERATIONS.  The Company provides freight transportation
services within the northeast and midwest United States.  The Company
interchanges freight with other United States and Canadian railroads
for transport to destinations within and outside the Company's service
region.  The Company operates no significant line of business other
than the freight railroad business and does not provide common carrier
passenger or commuter train service.

     The Company serves a heavily industrial region that is marked by
dense population centers which constitute a substantial market for
consumer durable and non-durable goods, and a market for raw materials
used in manufacturing and by electric utilities. The Company's traffic
levels and, as a result, its financial performance are substantially
affected by its ability to compete with trucks and other railroads, the
economic strength of the industries and metropolitan areas that produce
and consume the freight the Company hauls and the traffic generated by
the Company's connecting railroads. The Company remains dependent on
non-bulk traffic, which tends to generate higher revenues than bulk
commodities, but also involves higher costs and is more vulnerable to
truck competition.

Item 2.   Properties.
------    ----------

     As of December 31, 1995, the Company (excluding subsidiaries)
maintained 17,715 miles of track including track for crossovers,

                                      1
<PAGE>

turnouts, second main, other main, passing and switch track, on its
10,701 mile route system.  Of total route miles, 8,860 are owned, 100
are leased or operated under contract and 1,741 are operated under
trackage rights, including approximately 300 miles operated pursuant
to an easement over Amtrak's Northeast Corridor.  As of December 31,
1995, virtually all track over which at least 10 million gross tons
moved annually (6,274 track miles) was heavy-weight rail of at least
127 pounds per yard, and 100% of such track had continuous welded
rail.  Continuous welded rail reduces track maintenance costs and, in
general, permits trains to travel at higher speeds.  As of December
31, 1995, the Company had 9,493 miles of continuous welded rail on
track it maintained.

     As of December 31, 1995, all of the 4,972 track miles maintained
for fast freight traffic had a maximum operating speed of 50 MPH or
more, and 58% had a maximum operating speed of at least 60 MPH.  As of
December 31, 1995, approximately 96% of the track over which at least
10 million gross tons moved annually was governed by automatic signal
systems.  In all, as of December 31, 1995, 7,656 miles of track were
controlled by automatic signal systems.

     The Company is engaged in an ongoing process to identify certain
under-utilized rail lines and other underperforming assets to avoid
future capital costs and to improve its return on assets. The Company
recorded a $283 million charge in 1995 to cover the expected losses
upon disposition of approximately 1,800 miles of lines and other
assets not required to support the Company's service.  See Note 3 to
the Consolidated Financial Statements elsewhere in this Annual Report.
Previously, the expected losses upon disposition of similar assets
were included in a 1991 special charge.

     The Company owns (or uses subject to capitalized leases) 2,023
locomotives with an average age of 15.2 years and 51,404 freight cars
of various types (including 21,948 freight cars under operating
leases) with an average age of 22.1 years.

     GOVERNMENT REGULATION.  The Company is subject to environmental,
safety, and other regulations generally applicable to all businesses,
and its rail operations are also regulated by the Department of
Transportation ("DOT"), the Federal Railroad Administration ("FRA"),
state Departments of Transportation and some state and local
regulatory agencies.

     Effective January 1, 1996, pursuant to the ICC Termination Act of
1995, the authority of the Interstate Commerce Commission ("ICC") to


                                      2
<PAGE>

regulate railroads was transferred to the DOT to be administered by
the Surface Transportation Board.  The DOT has jurisdiction over,
among other things, rates charged for certain traffic movements,
service levels and freight car rents.  It also has jurisdiction over
the situations and terms under which one railroad may gain access to
another railroad's traffic or facilities, extension or abandonment of
rail lines, consolidation, merger, or acquisition of control of rail
common carriers and of other carriers by rail common carriers, and
labor protection provisions in connection with the foregoing.  The
prior regulatory scheme remains substantially intact, with the
following significant changes: (1) access to freight railroad tracks
by rail operators (both freight and passenger) operating on behalf of
local governmental authorities has been eased;  (2) some types of
abandonments may take appreciably longer;  (3) tariffs and most
contracts will no longer be filed (other mechanisms are required for
advising customers of rates and rate changes); (4) minimum rate levels
will no longer be regulated;  and (5) DOT will not regulate railroad
issuances of securities or assumptions of debt.  Other changes will
require development of new regulations and/or of a body of precedent
before their impact can be fully assessed.

     Under The Staggers Rail Act of 1980, federal regulation of rates
and services was reduced.  The regulatory scheme, now administered by
the Surface Transportation Board, continues the ICC's prior
deregulation of rates for intermodal traffic, most boxcar traffic and
a series of miscellaneous commodities, including steel and
automobiles.  In addition, railroads are free to negotiate contracts
with shippers setting rates, service standards and the terms for
movements of other kinds of traffic.  As a result, railroads have
greater flexibility in adjusting rates and services to meet revenue
needs and competitive conditions.

     The FRA has jurisdiction over safety and railroad equipment
standards.

     The Company's rail operations are also subject to a variety of
governmental laws and regulations relating to the protection of the
environment.  In addition to being involved as a potentially
responsible party at numerous Superfund sites (see Item 3 - "Legal
Proceedings"), the Company is subject to increasing regulation of its
transportation and handling of certain hazardous and non-hazardous
commodities and waste which has resulted in additional administrative
and operating costs.  Also, the United States Environmental Protection
Agency had been required to issue regulations applicable to new
locomotive emissions during 1995.  Its failure to do so is currently


                                      3
<PAGE>

the subject of litigation, and the Company anticipates that the
regulations will be promulgated in 1997.  Locomotive engines (other
than those defined as new or remanufactured) may be regulated by the
states.   Additional investments will likely be required to bring
other than new locomotives into compliance, although the timing and
amount of the investments will not be determinable until the
legislation is adopted.  Except as it relates to a 1991 special
charge, compliance with existing laws and regulations relating to the
protection of the environment has not had a material effect on the
Company's capital expenditures, earnings or competitive condition.
(See Note 13 to the Consolidated Financial Statements included
elsewhere in this Annual Report.)

Item 3.  Legal Proceedings.
------   -----------------

     OCCUPATIONAL DISEASE LITIGATION.  The Company has been named as a
defendant in lawsuits filed pursuant to the provisions of the Federal
Employers' Liability Act ("FELA") by persons alleging (1) personal
injury or death caused by exposure to asbestos in connection with
railroad employment; (2) complete or partial loss of hearing caused by
exposure to excessive noise in the course of railroad employment; (3)
repetitive motion injury in connection with railroad employment; and
(4) personal injury or death caused by exposure to deleterious
substances (mixed dusts, fumes, chemicals, etc.)  As of December 31,
1995, the Company was a defendant in 484 pending asbestosis suits, 659
pending hearing loss suits, 118 pending repetitive motion injury suits
and 442 pending deleterious substance suits, and had notice of 1,408
potential asbestosis claims, 4,575 potential hearing loss claims,
3,044 potential repetitive motion injury claims and 45 deleterious
substance claims.

     The Company expects to be named as a defendant in a significant
number of occupational disease cases in the future.

     STRUCTURE AND CROSSING REMOVAL DISPUTES IN CONNECTION WITH LINES
ABANDONED UNDER NERSA.  The Company may be responsible, in whole or in
part, for the costs of removal of several hundred overhead and
underpass crossings located on railroad lines it has abandoned under
the Northeast Rail Service Act of 1981 ("NERSA") (and, in some
instances, responsible for the removal of the lines of railroad
themselves as well as appurtenant structures).  The Company's
liability for the removal of such lines, crossings and structures will
be determined on a case-by-case basis.  Some states have imposed upon
the Company the obligation to remove certain crossings.


                                      4
<PAGE>

     CONSOLIDATED RAIL CORP.'S WITHDRAWAL FROM RCAF MASTER TARIFF.
The Rail Cost Adjustment Factor ("RCAF") is an index of rail costs
issued by the ICC according to which railroads may adjust their
regulated rates for inflation and cost increases free of regulatory
interference. In March 1989, the ICC decided to offset the quarterly
RCAF by the entirety of the average rail industry productivity gain.

     On January 1, 1990, the Company ceased applying RCAF increases to
its regulated rates, by ending its participation in the RCAF master
tariff.  Effective July 1, 1990, the Company published a series of
independent rate increases approximately equal to its increases in
costs as reflected by the RCAF.  The Company's action was contested,
but was upheld by the ICC.  Since July 1, 1990, the Company has
continued to make independent selective increases to its regulated
rates.  These regulated rates will continue to be subject to
individual challenge to the extent the levels of the increases exceed
those previously permitted pursuant to the RCAF and no other statutory
provisions bar ICC jurisdiction.

     In January 1991, the ICC commenced a proceeding at the request of
a shippers' organization to clarify the legal effect of the Company's
(and other railroads') withdrawal from the RCAF master tariff,
including the shippers' assertion that railroads thereby lose
protection from challenge for rates previously adjusted under these
procedures.  In April 1991, the Company individually opposed and
participated in the rail industry's opposition to the petition.  The
ICC has taken no action on the matter since that time, and the matter
has been transferred to the Surface Transportation Board of the DOT.

     ENGELHART V. CONSOLIDATED RAIL CORP.  In connection with the
Special Voluntary Retirement Program offered to certain employees in
late 1989 and early 1990, the Company used surplus funds in its
overfunded Supplemental Pension Plan ("Plan") to fund certain aspects
of that program.  In December 1992, certain former Company employees
brought suit in the U.S. District Court for the Eastern District of
Pennsylvania challenging the use of surplus Plan funds (i) to pay
administrative Plan expenses previously paid by The Company, (ii) to
fund the Special Voluntary Retirement Program, and (iii) to pay life
insurance and medical insurance premiums of former employees as
improper and unlawful, and alleging that employees who have made
contributions to the Plan or its predecessor plans are entitled to
share in the surplus assets of the Plan.  In August 1993, the federal
district court granted the Company's Motion to Dismiss the majority of
counts in the complaint, but declined to dismiss the issue of the
Company's use of Plan assets to pay administrative expenses of the
Plan, which are estimated to be approximately $34 million as of


                                      5
<PAGE>

December 31, 1995.  Cross Motions for Summary Judgment on the
remaining issues are pending.   The Company continues to believe that
the use of surplus Plan assets for this purpose is lawful and proper.
The Company uses surplus Plan assets in a similar manner in connection
with subsequent early retirement programs.

     ENVIRONMENTAL LITIGATION.  The Company is subject to various
federal, state and local laws and regulations regarding environmental
matters.  In certain instances, the Company has received notices of
violations of such laws and regulations and either has taken or plans
to take appropriate steps to address the problems cited or to contest
the allegations of violation.  As of December 31, 1995, the Company
had received inquiries from governmental agencies or had been
identified, together with other companies, as a potentially
responsible party for cleanup and/or removal costs due to its status
as an alleged transporter, generator or property owner at 130
locations throughout the country.  However, the Company, through its
own investigations and assessments, believes it may have some
potential responsibility at only 56 of these sites.  The amounts the
Company has accrued with respect to the proceedings listed below are
included in its $64 million accrual for estimated future environmental
expenses.  (See Note 13 to the Consolidated Financial Statements
included elsewhere in this Annual Report.)  The significant
environmental proceedings, including Superfund sites, are discussed
below.

     UNITED STATES V. SOUTHEASTERN PENNSYLVANIA TRANSPORTATION
AUTHORITY ("SEPTA"), NATIONAL RAILROAD PASSENGER CORPORATION
("AMTRAK"), AND CONSOLIDATED RAIL CORPORATION.  In March 1986, the
United States Environmental Protection Agency ("EPA") filed an action
in the United States District Court for the Eastern District of
Pennsylvania for cost recovery, injunctive relief, and a declaratory
judgment against the Company, Southeastern Pennsylvania Transportation
Authority ("SEPTA") and National Railroad Passenger Corp. ("Amtrak")
under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 ("CERCLA" or "Superfund Law"), as amended.  In
1990, the Pennsylvania Department of Environmental Resources ("PADER")
intervened as a plaintiff.  Suit is based on the release or threatened
release at the Paoli Railroad Yard, Paoli, Chester County,
Pennsylvania, of polychlorinated biphenyls ("PCBs"), a listed
hazardous substance under CERCLA.  The Company is sued in its capacity
as the operator of the rail yard from April 1, 1976 through December
31, 1982, under an agreement with SEPTA to provide commuter rail
service.  In March 1992, Penn Central brought suit before the Special
Court arguing that the terms of the transfer of its properties to the


                                      6
<PAGE>

Company did not contemplate environmental liability for conditions
existing at the time of the transfer.  On August 23, 1994, the Special
Court held that the reorganization did not prevent the government from
pursuing its CERCLA claims against Penn Central.  The Court also
granted the Company's Motion for Summary Judgment against Penn
Central, finding that the Company's liability for contamination to
former Penn Central property was limited only to the period after
April 1, 1976.  Notwithstanding this finding, the Special Court
declined to preclude federal courts from applying principles of joint
and several liability and holding the Company liable for pre-April 1,
1976 contamination in instances where contamination of the property
was not divisible.

     In a related action, the Company sought a declaration against the
Reading Company similar to that granted with respect to Penn Central,
as well as a declaration that the Company is entitled to
indemnification from SEPTA and/or the federal government for
environmental liability resulting from its statutorily mandated
provision of commuter rail service.  In April 1995, the Special Court
issued a similar declaration against the Reading Company as granted
with respect to Penn Central, but refused to determine whether the
Company is entitled to such indemnification from SEPTA.  The court
rejected the Company's arguments that controlling federal statutes
mandated indemnification of the Company for environmental liability in
connection with commuter rail service provided pursuant to such
statutes.  Immediately prior to the trial of this matter in January
1996, the Company and Reading reached a settlement of this matter. The
Company continues to assert its right to indemnification against
SEPTA, and trial of this matter is expected to commence in late 1996.

     Pursuant to a series of partial preliminary consent decrees,
defendants have performed a series of cleanup actions both on and off-
site and have conducted a Remedial Investigation/Feasibility Study
("RI/FS").  As of December 31, 1995, the cost of the RI/FS and of the
interim cleanup measures performed by the three defendants is
approximately $9 million.  Those costs have been shared equally among
the three defendants but are subject to reallocation.  All work done
to date has been performed subject to a denial of liability and
without waiving any defense to the governmental claim for cleanup
costs or other relief. Negotiations with EPA continue.

     UNITED STATES V. CONSOLIDATED RAIL CORP.  The EPA has listed the
Company's Elkhart Yard in Indiana on the National Priorities List.
The EPA contends that chemicals have migrated from the yard and
contaminated drinking wells in the area.  On February 14, 1990, the


                                      7
<PAGE>
EPA filed a civil action against the Company in the U.S. District
Court for the Northern District of Indiana seeking recovery of
approximately $345,000 for costs incurred in protecting the water
supply.  In addition, the EPA seeks a declaratory judgment against the
Company for all future costs incurred in responding to the release or
threatened release of hazardous substances from the site.  The Company
believes it is not the sole source and may not be a contributing
source to the contamination alleged by the EPA.  The Company filed a
third-party action joining Penn Central as a defendant, to which Penn
Central responded by filing a declaratory judgment action in Special
Court. As a result of the  Special Court decision in August 1994, the
Company and Penn Central have negotiated an interim cost-sharing
arrangement for costs in implementing the EPA's 1992 interim Record of
Decision, which is substantially complete.  (See previous discussion
regarding the Special Court under "United States v. SEPTA, et al"). On
May 15, 1995, EPA issued an Administrative Order that required the
parties to install a public water supply system for up to an
additional 700 to 1,000 homes.  On June 14, 1995, the Company and Penn
Central agreed that each company would comply with the Order.  The
cost for providing public water to the remaining residences is
estimated to be between $4 and $6 million, which will be apportioned
between Penn Central and the Company.

     UNITED STATES V. CONSOLIDATED RAIL CORP., ET AL.  The Company has
been identified as the fifth largest generator of waste oil at the
Berks Associates Superfund site in Douglasville, Pennsylvania.  In
addition, the Company has become aware that it and its predecessor,
Penn Central, owned a small portion of land that was leased to the
operator of the Berks site.  As such, the Company's liability could
increase due to its questionable status as both an owner and a
generator.  In August 1991, the EPA issued an administrative order
against the Company and thirty-five other entities mandating the
implementation of an approximately $2 million partial remedy and filed
a complaint in the U.S. District Court for the Eastern District of
Pennsylvania for the recovery of approximately $8 million in costs
incurred by the government.  The parties have negotiated an
administrative order with the EPA and have filed an answer to the
civil action.  A group of potentially responsible parties (including
the Company) undertook compliance with the administrative order.  The
Company and the 35 other defendants have filed a third-party complaint
against approximately 630 entities seeking contribution for the costs
of the remedy and government costs.  The Company, along with other
defendants, is negotiating a settlement with the EPA.  On June 30,
1993, the EPA issued another administrative order against the Company
and 33 other entities, mandating the remediation of the southern


                                      8
<PAGE>

portion of the site.  The effective date of the order has been delayed
in light of the negotiations.

     The most expensive aspect of the remediation of the site is the
cleanup of Source Area 2, which the government estimates at between
$45 and $55 million.  This Source Area was closed prior to the
Company's incorporation, and therefore the Company has maintained that
it is not liable for the cost of remediating Source Area 2.  In
addition, PADER has filed with the court a complaint for the recovery
of natural resource damages.

     UNITED STATES V. CONSOLIDATED RAIL CORP., ET AL.  The Company is
a potentially responsible party ("PRP"), along with more than 50 other
parties, in the United Scrap Lead federal Superfund action in Troy,
Ohio, where substantial quantities of batteries were disposed of over
a period of several years.  The EPA sued the Company and nine other
parties in August 1991 in the Southern District of Ohio for the
recovery of approximately $2 million in past costs.  The Company and
other PRP's have commissioned treatability studies.  The court has
imposed a stay to discuss whether this matter can be settled.  EPA has
selected a remedy for the site with an estimated cost of approximately
$33 million, which the PRP's are challenging.  The Company estimates
its share of the liability at 8%.

     COMMONWEALTH OF MASSACHUSETTS V. CONSOLIDATED RAIL CORP.  On
April 21, 1992, the Massachusetts Attorney General filed suit in
Superior Court of Massachusetts alleging the Company's violation of
the Massachusetts Clean Air Act and its implementing regulations by
allowing diesel engines to idle unnecessarily and/or in excess of
thirty minutes. On May 4, 1992, the court entered a preliminary
injunction, the terms of which are substantially consistent with the
Company's existing idling policy.  The Attorney General subsequently
filed a complaint alleging the Company's violation of the preliminary
injunction.  On February 2, 1993, the parties entered into a partial
settlement agreement; however, the  Attorney General has alleged that
the Company has failed to comply with certain provisions of the
settlement.  The Company is negotiating the terms of a settlement with
the Attorney General's office.

     NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION ORDER ON
CONSENT.  On February 18, 1993, the New York State Department of
Environmental Conservation ("NYSDEC") served the Company with a draft
Order on Consent requiring the payment of civil fines in connection
with its inspection of Selkirk Yard.  The order also seeks
compensation for the hiring of three full-time NYSDEC employees to


                                      9
<PAGE>

monitor the Company's compliance at Selkirk and two other rail yards
in New York.  The Company is negotiating the terms of the Order with
NYSDEC.

     NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION ORDER ON
CONSENT.  On November 3, 1994, NYSDEC served the Company with an Order
on Consent requiring the payment of civil fines in connection with the
alleged discharge of waste water from DeWitt Yard in Onondaga County,
New York into New York State waters.  The Company is negotiating the
terms of the Order with NYSDEC.

     IN THE MATTER OF CONSOLIDATED RAIL CORPORATION, ASHTABALA, OH.
On September 21, 1994, the EPA filed an Administrative Complaint
against the Company seeking civil penalties for certain alleged
violations of its National Pollutants Discharge Emissions System
permit.  The Company filed its answer on November 30, 1994, and is
negotiating with the EPA to settle this matter.

     CONWAY YARD, PITTSBURGH.  In 1991, the Company received Notices
of Violation ("NOV") from the PADER alleging violations of the Clean
Streams Act for discharges of oil into the Ohio River.  In September
1993, PADER sent to the Company a draft Consent Order and Agreement
requiring a comprehensive site remediation for soil, ground water,
surface waters and sediments at the Conway rail yard and requiring the
payment of civil fines in connection with violations at the yard,
including continuing ground water contamination.  The Company and
PADER continue to negotiate the extent of the investigation and
remediation to be undertaken at the yard and the amount of the fines.

     OTHER.  In addition to the above proceedings, the Company has
been named in various legal proceedings arising out of its activities
as an employer and as an operator of a freight railroad, including
personal injury actions brought by its employees under FELA, as well
as administrative proceedings with and investigation by government
agencies.

     In view of the inherent difficulty of predicting the outcome of
legal proceedings, particularly in certain matters described above in
which substantial damages are or may be sought, the Company cannot
state what the eventual outcomes of such legal proceedings will be.
Certain of these matters, if determined adversely to the Company,
could result in the imposition of substantial damage awards against,
or increased costs to, the Company that could have a material adverse
effect on the Company's results of operations and financial position.
The Company's management believes, however, based on current


                                      10
<PAGE>

knowledge, that such legal proceedings will not have a material
adverse effect on the Company's financial position.


Item 4.  Submission of Matters to a Vote of Security Holders.
------   ---------------------------------------------------

     Information omitted in accordance with General Instruction
J(2)(c).


                                PART II

Item 5.   Market for Registrant's Common Equity
------    -------------------------------------
          and Related Stockholder Matters.
          -------------------------------

     All of the common stock of the Company is held by Conrail.
Accordingly, there is no market for the Company's common stock.  See
Note 4 to the Consolidated Financial Statements elsewhere in this
Annual Report for information with respect to dividends paid by the
Company.

Item 6.  Selected Financial Data.
------   -----------------------

     Information omitted in accordance with General Instruction
J(2)(a).


Item 7.  Management's Discussion and Analysis of Financial
------   -------------------------------------------------
          Condition and Results of Operations.
          -----------------------------------

     See General Instruction J (2) (a).


Results of Operations
---------------------

1995 Compared with 1994

Net income for 1995 was $256 million compared with $319 million for
1994.  The results for 1995 include the effects of a $283 million
asset disposition charge ($175 million after income taxes) and the
recognition of a $21 million reduction in income taxes related to a
decrease in a state tax rate (see Notes 3 and 8 to the Consolidated
Financial Statements included elsewhere in this Annual Report).


                                      11
<PAGE>

Without these items, net income for 1995 would have been $410 million.
The results for 1994 include a one-time charge of $51 million (net of
tax benefits of $33 million) relating to a non-union early retirement
program and related costs (see Note 11 to the Consolidated Financial
Statements included elsewhere in this Annual Report).

The fourth quarter 1995 asset disposition charge resulted from a
review of the Company's route system and other assets to determine
those that no longer effectively and economically support current and
expected operations.  As a result of this review, the Company
identified approximately 1,800 miles of rail lines that will be
candidates for sale.  These dispositions are expected to provide
proceeds substantially less than net book value. Certain other
operating assets identified for disposition, primarily yards and
sidetracks, have also been written down to estimated net realizable
value.  Accordingly, the asset disposition charge of $283 million
represents the expected loss on rail line and other asset
dispositions.  The Company estimates that net cash proceeds from the
disposition of these assets will be approximately $50 million.  The
Company's goal is to have sales agreements in place on many of the
lines during 1996 and on most of the lines by the end of 1997.

Operating revenues (primarily freight line haul revenues, but also
including switching, demurrage and incidental revenues) decreased $48
million, or 1.3%, from $3,716 million in 1994 to $3,668 million in
1995.  A 5.4% decrease in traffic volume in units (freight cars and
intermodal trailers and containers) resulted in a $191 million
decrease in revenues which was partially offset by  an increase in
average revenue per unit that increased revenues by $140 million.  The
improvement in average revenue per unit resulted from increases in
average rates, $117 million, and a favorable traffic mix, $23 million.
Traffic volume decreases were experienced by three of the four service
groups, with only Automotive showing a slight volume increase of .8%.
Traffic volume declines for the other service groups were as follows:
Intermodal, 7.3%; Unit Train, 5.4%; and CORE, 5.1%.  Within the CORE
Service Group, traffic volume declines were also experienced by each
of the commodity groups: Food and Agriculture, 8.2%; Petrochemicals,
4.6%; Metals, 4.0%; and Forest and Manufactured Products, 3.9%.  Other
revenues increased $3 million.



                                      12
<PAGE>

Operating expenses increased $100 million, or 3.2%, from $3,113
million in 1994 to $3,213 million in 1995.  The following table sets
forth the operating expenses for the two years:

                                                        Increase
(In Millions)                    1995        1994      (Decrease)
                               ------      ------       ---------

Compensation and benefits      $1,247      $1,259         $(12)
Fuel                              168         188          (20)
Material and supplies             167         203          (36)
Equipment rents                   355         381          (26)
Depreciation and amortization     293         278           15
Casualties and insurance          178         187           (9)
Other                             522         533          (11)
Asset disposition charge          283                      283
Early retirement program                       84          (84)
                               ------      ------         ----
                               $3,213      $3,113         $100
                               ======      ======         ====


Compensation and benefits costs decreased $12 million, or 1.0%, as a
result of a 5.3% reduction in employment levels, which exceeded the
increases in wage rates and fringe benefit costs.  Compensation and
benefits as a percent of revenues was 34.0% in 1995 compared with
33.9% in 1994.

Fuel costs decreased $20 million, or 10.6%, as a result of greater use
of newer fuel efficient locomotives, lower average fuel prices and
lower traffic volume.

The decrease of $36 million, or 17.7%, in material and supplies costs
was primarily attributable to a lower level of repair and maintenance
expenditures related to lower traffic volume.

Equipment rents decreased $26 million, or 6.8%, primarily as a result
of fewer foreign cars on the Company's lines and improved equipment
utilization, partially offset by the increased costs associated with
new operating leases for equipment.

Depreciation and amortization increased $15 million, or 5.4%, due to
asset additions and increased depreciation rates for track structure
as a result of a depreciation study required by the former Interstate
Commerce Commission.


                                      13
<PAGE>

Casualties and insurance decreased $9 million, or 4.8%.  The cost
reduction attributable to an approximate 35% decline in the number of
employee injuries was largely offset by the escalating costs to settle
claims as well as the continuing increase in the number and cost of
occupational claims.

Conrail recorded an asset disposition charge of $283 million in 1995
(see Note 3 to the Consolidated Financial Statements included
elsewhere in this Annual Report) and a one-time pre-tax charge of $84
million in 1994 for the non-union voluntary early retirement program
and related costs (see Note 11 to the Consolidated Financial
Statements included elsewhere in this Annual Report).

Conrail's operating ratio (operating expenses as a percent of
revenues) was 87.6% for 1995, compared with 83.8% for 1994.  Without
the $283 million asset disposition charge in 1995 and the $84 million
charge for the early retirement program in 1994, the operating ratios
for 1995 and 1994 would have been 79.9% and 81.5%, respectively.

Other income, net, increased $10 million, or 9.9%, primarily due to an
$8 million gain from a property sale completed during the second
quarter of 1995.

The Company's effective income tax rate for 1995 was 32.8%
compared with 39.4% for 1994.  The lower rate reflects the
effect of a $21 million reduction in income taxes resulting from
a decrease in a state income tax rate enacted during the second
quarter of 1995 (see Note 8 to the Consolidated Financial
Statements included elsewhere in this Annual Report).



                                14
<PAGE>

Item 8.  Financial Statements and Supplementary Data.
------  -------------------------------------------

                   Report Of Independent Accountants

The Stockholder and Board of Directors of
Consolidated Rail Corporation

In our opinion, the consolidated financial statements listed in the
index appearing under Item 14(a)1. and 2. present fairly, in all
material respects, the financial position of Consolidated Rail
Corporation and subsidiaries at December 31, 1995 and 1994, and the
results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these
financial statements based on our audits.  We conducted our audits of
these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation.  We believe that our audits provide
a reasonable basis for the opinion expressed above.  The consolidated
financial statements of Consolidated Rail Corporation and subsidiaries
for the year ended December 31, 1993 were audited by other independent
accountants whose report dated January 24, 1994 expressed an
unqualified opinion on those statements.

As discussed in Note 1 to the consolidated financial statements, the
Company changed its methods for accounting for income taxes and
postretirement benefits other than pensions in 1993.




Price Waterhouse LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania   19103

January 22, 1996,
except as to paragraphs five and six of Note 13,
which are as of February 21, 1996








                                      15
<PAGE>

                   REPORT OF INDEPENDENT ACCOUNTANTS

The Stockholder and Board of Directors
Consolidated Rail Corporation


We have audited the 1993 consolidated financial statements and the
financial statement schedule of Consolidated Rail Corporation and
subsidiaries listed in Item 14(a) of this Form 10-K.  These financial
statements and financial statement schedule are the responsibility of
the Company's management.  Our responsibility is to express an opinion
on these financial statements and financial statement schedule based
on our audit.

We conducted our audit in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated results of
operations and cash flows of Consolidated Rail Corporation and
subsidiaries for the year ended December 31, 1993, in conformity with
generally accepted accounting principles.  In addition, in our
opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a
whole, present fairly, in all material respects, the information
required to be included therein.

As discussed in Note 1 to the consolidated financial statements, the
Company changed its methods for accounting for income taxes and
postretirement benefits other than pensions in 1993.

                                   COOPERS & LYBRAND

2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 24, 1994




                                      16
<PAGE>

                     CONSOLIDATED RAIL CORPORATION
                   CONSOLIDATED STATEMENTS OF INCOME

                                              Years ended December 31,
                                            ----------------------------
($ In Millions Except Per Share Data)         1995       1994       1993
                                            ------     ------     ------
[S]                                         [C]        [C]        [C]
Revenues                                    $3,668     $3,716     $3,438
                                            ------     ------     ------
Operating expenses
  Way and structures                           486        500        491
  Equipment                                    767        816        703
  Transportation                             1,311      1,366      1,273
  General and administrative                   366        347        378
  Asset disposition charge (Note 3)            283
  Early retirement program (Note 11)                       84
                                            ------     ------     ------
    Total operating expenses                 3,213      3,113      2,845
                                            ------     ------     ------
Income from operations                         455        603        593
Interest expense                              (185)      (178)      (177)
Reserve of intercompany receivables
 (Note 4)                                                            (89)
Other income, net (Note 12)                    111        101        114
                                            ------     ------     ------
Income before income taxes
 and the cumulative effect of
 changes in accounting principles              381        526        441
Income taxes (Note 8)                          125        207        207
                                            ------     ------     ------
Income before the cumulative
 effect of changes in accounting
 principles                                    256        319        234
Cumulative effect of changes in
 accounting principles (Notes 1, 8 and 9)                            (70)
                                            ------     ------     ------
Net income                                  $  256     $  319     $  164
                                            ======     ======     ======

Ratio of earnings to fixed charges
 (Note 1)                                     2.52x      3.29x      3.00x




See accompanying notes.




                                      17
<PAGE>

                     CONSOLIDATED RAIL CORPORATION
                      CONSOLIDATED BALANCE SHEETS

                                                      December 31,
                                                    ----------------
($ In Millions)                                       1995      1994
                                                    ------    ------
[S]                                                 [C]       [C]
         ASSETS
Current assets
  Cash and cash equivalents                         $   58    $   31
  Accounts receivable                                  624       650
  Deferred tax assets (Note 8)                         325       241
  Material and supplies                                158       164
  Other current assets                                  26        23
                                                    ------    ------
     Total current assets                            1,191     1,109

Property and equipment, net (Note 5)                 6,408     6,498
Other assets                                           788       676
                                                    ------    ------
     Total assets                                   $8,387    $8,283
                                                    ======    ======

         LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
  Short-term borrowings                                 89       112
  Current maturities of long-term debt (Note 7)        181       130
  Accounts payable                                     126       122
  Wages and employee benefits                          182       169
  Casualty reserves                                    107       103
  Accrued and other current liabilities (Note 6)       492       549
                                                    ------    ------
     Total current liabilities                       1,177     1,185

Long-term debt (Note 7)                              1,911     1,940
Casualty reserves                                      217       212
Deferred income taxes (Note 8)                       1,401     1,212
Special income tax obligation (Note 8)                 440       513
Other liabilities                                      312       328
                                                    ------    ------
     Total liabilities                               5,458     5,390
                                                    ------    ------
Commitments and contingencies (Note 13)
Stockholder's equity (Notes 2 and 10)
  Preferred stock (no par value; 25,000,000
    shares authorized; 1 share issued)
  Common stock ($1 par value; 250,000,000
    shares authorized; 100 shares issued and
    outstanding)
  Additional paid-in capital                         2,130     2,128
  Note receivable from ESOP                           (305)     (312)
  Retained earnings                                  1,104     1,077
                                                    ------    ------
     Total stockholder's equity                      2,929     2,893
                                                    ------    ------
     Total liabilities and stockholder's equity     $8,387    $8,283
                                                    ======    ======

See accompanying notes.


                                      18
<PAGE>
<TABLE>
                       CONSOLIDATED RAIL CORPORATION
              CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

<CAPTION>
                                         Series A      Unearned          Additional        Note
                                        Preferred          ESOP  Common     Paid-In  Receivable  Retained  Treasury
($ In Millions Except Per Share Data)       Stock  Compensation   Stock     Capital   From ESOP  Earnings     Stock
                                        ---------  ------------  ------  ----------  ----------  --------  --------
<S>                                        <C>          <C>        <C>       <C>         <C>         <C>       <C>
Balance, January 1, 1993                    $ 287         $(263)  $  83      $1,888                 $ 903     $(150)
Amortization                                                  5
Net income                                                                                            164
Common dividends (Note 4)                                                                            (131)
Preferred dividends, $1.0825 per share                                                                (11)
Common shares acquired                                                                                          (32)
Exercise of stock options                                             1           6
Common shares reclassified as
unissued                                                                         (1)                   (1)        2
Corporate reorganization (Note 2)            (287)          258     (84)        226       $(307)                180
Other                                                                             4          (1)        4
                                            -----         -----   -----       -----       -----     -----     -----
Balance, December 31, 1993                      -             -       -       2,123        (308)      928         -
Net income                                                                                            319
Common dividends, (Note 4)                                                                           (170)
Other                                                                             5          (4)
                                            -----         -----   -----      ------       -----    ------     -----
Balance, December 31, 1994                      -             -       -       2,128        (312)    1,077         -
Net income                                                                                            256
Common dividends, (Note 4)                                                                           (229)
Other                                                                             2           7
                                            -----         -----   -----      ------       -----    ------     -----
Balance, December 31, 1995                  $   -         $   -   $   -      $2,130       $(305)   $1,104     $   -
                                            =====         =====   =====      ======       =====    ======     =====


</TABLE>


See accompanying notes.               19

<PAGE>


                     CONSOLIDATED RAIL CORPORATION
                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                 Years ended December 31,
                                                 -------------------------
($ In Millions)                                   1995      1994      1993
                                                 -----     -----     -----
[S]                                              [C]       [C]       [C]
Cash flows from operating activities
  Net income                                     $ 256     $ 319     $ 164
  Adjustments to reconcile net income to
   net cash provided by operating activities:
    Asset disposition charge                       283
    Early retirement program                                  84
    Reserve of intercompany receivable                                  89
    Cumulative effect of accounting changes                             70
    Depreciation and amortization                  293       278       282
    Deferred income taxes                          108       150       224
    Special income tax obligation                  (73)      (62)      (50)
    Gains from sales of property                   (27)      (18)      (20)
    Pension credit                                 (43)      (46)      (43)
    Changes in:
      Accounts receivable                           26         1       (57)
      Accounts and wages payable                    17        22         7
    Settlement of tax audit                                            (51)
    Other                                         (116)      (94)     (120)
                                                 -----     -----     -----
    Net cash provided by operating
       activities                                  724       634       495
                                                 -----     -----     -----
Cash flows from investing activities
  Property and equipment acquisitions             (415)     (490)     (566)
  Proceeds from disposals of properties             37        32        23
  Other                                            (45)      (18)      (45)
                                                 -----     -----     -----
    Net cash used in investing activities         (423)     (476)     (588)
                                                 -----     -----     -----
Cash flows from financing activities
  Net proceeds from (repayments of)
    short-term borrowings                          (23)       33       (48)
  Payment of capital lease and equipment
    obligations                                    (81)      (96)     (109)
  Proceeds from long-term debt                      85       114       485
  Payment of long-term debt                        (52)      (62)      (86)
  Dividends on common stock                       (229)     (170)     (131)
  Repurchase of common stock                                           (32)
  Dividends on Series A preferred stock                                (11)
  Other                                             26        28        11
                                                 -----     -----     -----
  Net cash provided by (used in) financing
     activities                                   (274)     (153)       79
                                                 -----     -----     -----
Increase (decrease) in cash and cash equivalents    27         5       (14)
Cash and cash equivalents
  Beginning of year                                 31        26        40
                                                 -----     -----     -----
  End of year                                    $  58     $  31     $  26
                                                 =====     =====     =====
See accompanying notes.
                                      20
<PAGE>

                       CONSOLIDATED RAIL CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Summary of Significant Accounting Policies
     ------------------------------------------

         Industry
         --------
   Consolidated Rail Corporation (the "Company"), operates a freight
   railroad system within the northeast and midwest United States and the
   Province of Quebec.

       Principles of Consolidation
       ---------------------------
   The consolidated financial statements include the Company and majority-
   owned subsidiaries.  Investments in 20% to 50% owned companies are
   accounted for by the equity method.

       Cash Equivalents
       ----------------
   Cash equivalents consist of commercial paper, certificates of deposit
   and other liquid securities purchased with a maturity of three months
   or less, and are stated at cost which approximates market value.

       Material and Supplies
       ---------------------
   Material and supplies consist mainly of fuel oil and items for
   maintenance of property and equipment, and are valued at the lower of
   cost, principally weighted average, or market.

       Property and Equipment
       ----------------------
   Property and equipment are recorded at cost.  Depreciation is provided
   using the composite straight-line method.  The cost (net of salvage)
   of depreciable property retired or replaced in the ordinary course of
   business is charged to accumulated depreciation and no gain or loss is
   recognized.

        Revenue Recognition
        -------------------
   Revenue is recognized proportionally as a shipment moves on the
   Company's system from origin to destination.

        Ratio of Earnings to Fixed Charges
        ----------------------------------
   Earnings used in computing the ratio of earnings to fixed charges
   represent income before income taxes plus fixed charges, less equity
   in undistributed earnings of 20% to 50% owned companies.  Fixed
   charges represent interest expense together with interest capitalized

                                      21
<PAGE>

   and a portion of rent under long-term operating leases representative
   of an interest factor.

          New Accounting Standards
          ------------------------
   Effective January 1, 1993, the Company adopted Statement of Financial
   Accounting Standards No. 106, "Employers' Accounting for
   Postretirement Benefits Other Than Pensions" ("SFAS 106") (Note 9) and
   Statement of Financial Accounting Standards No. 109, "Accounting for
   Income Taxes" ("SFAS 109") (Note 8).  As a result, the Company
   recorded cumulative after tax charges of $22 million and $48 million
   for SFAS 106 and SFAS 109, respectively.

   During 1995, the Financial Accounting Standards Board issued Statement
   of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
   the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
   Disposed Of" (SFAS 121) and SFAS No. 123, "Accounting for Stock-Based
   Compensation" (SFAS 123), which are both effective in 1996. The Company
   has decided to adopt only the disclosure provisions of SFAS 123 in
   1996.  The Company has also determined that SFAS 121 will not have a
   material effect on its financial statements.

          Use of Estimates
          ----------------

   The preparation of financial statements in conformity with generally
   accepted accounting principles requires management to make estimates
   and assumptions that affect the reported amounts of assets and
   liabilities and disclosure of contingent assets and liabilities at
   the date of the financial statements and the reported amounts of
   revenues and expenses during the reporting period.  Actual results
   could differ from those estimates.

2.  Corporate Reorganization and Presentation
    ------------------------------------------
    In 1993, the shareholders of the Company approved a plan for the
    adoption of a holding company structure.  Under the Plan, each share
    of the Company's common stock which was issued and outstanding or held
    in the treasury of the Company, and each share of the Company's
    convertible preferred stock ("ESOP Stock"), all of which were held by
    the Non-union Employee Stock Ownership Plan ("Non-union ESOP"), were
    automatically converted into one share of common stock and one share
    of preferred stock, respectively, of a newly created holding company,
    Conrail Inc.  As a result, Conrail Inc. became the publicly held

                                      22
<PAGE>

    entity and the Company became a wholly-owned subsidiary of Conrail
    Inc. effective July 1, 1993.

    The promissory note receivable, plus accrued interest, which the
    Company received in 1990 from the Non-union ESOP in exchange for its
    preferred shares remained with the Company and is recorded in the
    stockholder's equity section of its balance sheet.

3.  Asset Disposition Charge
    ------------------------
    Included in 1995 operating expenses is an asset disposition charge of
    $283 million, which reduced net income by $175 million. The asset
    disposition charge resulted from a review of the Company's route
    system and other operating assets to determine those that no longer
    effectively and economically support current and expected operations.
    The Company identified and has committed to sell 1,800 miles of rail
    lines that are expected to provide proceeds substantially less than
    net book value.  In addition, other assets, principally yards and side
    tracks, identified for disposition have been written down to estimated
    net realizable value.

4.  Related Party Transactions
    --------------------------
    The Company engages in various transactions with Conrail Inc.  The
    Company funds the cash requirements of Conrail Inc. primarily through
    cash dividends, which totalled $229 million, $170 million and $87
    million (excluding $44 million paid to shareholders prior to July 1,
    1993) in 1995, 1994 and 1993, respectively.  The Company is obligated
    to pay a management fee to Conrail Inc. equal to the amount of
    preferred dividends declared by Conrail Inc. in connection with the
    Non-union ESOP, which totalled $21 million in 1995 and 1994, and $11
    million in 1993, and is recorded in "Other income, net" on the
    consolidated statements of income (Notes 9 and 12).  Advances between
    the two companies accrue interest at the Federal Reserve Bank's 30-day
    average interest rate.  The resulting interest income and interest
    expense on advances to and from Conrail Inc. were immaterial to the
    Company's financial statements.  A summary of the Company's
    transactions with Conrail Inc. are as follows:

                                              December 31,
                                             --------------
                                             1995      1994
                                             ----      ----
                                              (In Millions)

    Short-term receivable                     $14       $12
    Short-term payable                         18         9

                                      23
<PAGE>

    In 1993, the Company recorded a reserve of $89 million relating
    advances made to Concord Resources Group, Inc., a subsidiary of
    Conrail Inc.

5.  Property and Equipment
    ----------------------
                                                  December 31,
                                               ----------------
                                                 1995      1994
                                               ------    ------
                                                 (In Millions)

    Roadway                                   $ 6,828   $ 6,764
    Equipment                                   1,211     1,169
    Less:  Accumulated depreciation            (1,570)   (1,570)
           Allowance for disposition             (439)     (241)
                                              -------   -------
                                                6,030     6,122
                                              -------   -------

    Capital leases (primarily equipment)          908       988
    Accumulated amortization                     (530)     (612)
                                              -------   -------
                                                  378       376
                                              -------   -------
                                              $ 6,408   $ 6,498
                                              =======   =======

    The Company acquired equipment and incurred related long-term debt
    under various capital leases of $71 million in 1995, $8 million in 1994
    and $75 million in 1993.  As part of the 1995 (Note 3) and 1991 asset
    dispositions, the Company recorded allowances for disposition for the
    sale or abandonment of certain under-utilized rail lines and other
    facilities.

6.  Accrued and Other Current Liabilities
    -------------------------------------
                                                 December 31,
                                                --------------
                                                1995      1994
                                                ----      ----
                                                 (In Millions)

      Freight settlements due others            $ 52      $ 51
      Equipment rents (primarily car hire)        71        76
      Unearned freight revenue                    56        74
      Property and corporate taxes                67        77
      Other                                      246       271
                                                ----      ----
                                                $492      $549
                                                ====      ====
                                      24
<PAGE>

7.  Long-Term Debt
    --------------
    Long-term debt outstanding, including the weighted average interest
    rates at December 31, 1995, is composed of the following:

                                                 December 31,
                                              -----------------
                                               1995        1994
                                              ------      -----
                                                (In Millions)
      Capital leases                          $ 489      $  488
      Medium-term notes payable,
      6.16%, due 1996 to 1999                   208         228
      Notes payable, 9.75%, due 2000            250         250
      Debentures payable, 7.88%, due 2043       250         250
      Debentures payable, 9.75%, due 2020       544         544
      Equipment and other obligations, 6.43%    251         210
      Commercial paper, 5.90%                   100         100
                                             ------      ------
                                              2,092       2,070
      Less current portion                     (181)       (130)
                                             ------      ------
                                             $1,911      $1,940
                                             ======      ======

    Using current market prices when available, or a valuation based on
    the yield to maturity of comparable debt instruments having similar
    characteristics, credit rating and maturity, the total fair value of
    the Company's long-term debt, including the current portion, but
    excluding capital leases, is $1,870 million and $1,601 million at
    December 31, 1995 and 1994, respectively, compared with carrying
    values of $1,603 million and $1,582 million at December 31, 1995 and
    1994, respectively.

    The Company's noncancelable long-term leases generally include options
    to purchase at fair value and to extend the terms.  Capital leases
    have been discounted at rates ranging from 3.09% to 14.26% and are
    collateralized by assets with a net book value of $378 million at
    December 31, 1995.

                                      25
<PAGE>


    Minimum commitments, exclusive of executory costs borne by the
    Company, are:


                                      Capital        Operating
                                       Leases           Leases
                                      -------        ---------
                                           (In Millions)

           1996                       $ 102            $  127
           1997                          92               108
           1998                          84               100
           1999                          75                84
           2000                          58                76
           2001 - 2017                  269               576
                                      -----            ------
           Total                        680            $1,071
                                                       ======
           Less interest portion       (191)
                                      -----
           Present value              $ 489
                                      =====

    Operating lease rent expense was $130 million in 1995, $118 million in
    1994 and $88 million in 1993.

    In June 1993, the Company and Conrail Inc. filed a shelf registration
    statement on Form S-3 to enable the Company to issue up to $500
    million in debt securities or Conrail Inc. to issue up to $500 million
    in convertible debt and equity securities.  The remaining balance
    under this shelf registration was $312 million at December 31, 1995.

    In June 1995, the Company issued $110 million of 6.76% Pass Through
    Certificates, Series 1995-A, due 2015, to finance the acquisition of
    equipment.  Of these Certificates, $55 million are direct obligations
    of the Company secured by the acquired equipment.  The remaining $55
    million of Certificates were issued to finance equipment that the
    Company will utilize under a capital lease, and while such
    certificates are not direct obligations of, or guaranteed by the
    Company, the amounts payable by the Company under the lease will be
    sufficient to pay principal and interest on the Certificates.

    In June 1995, the Company issued $30 million of 6.3% Medium-Term Notes
    maturing in 1999.

                                      26
<PAGE>


    Equipment and other obligations mature in 1996 through 2043 and are
    collateralized by assets with a net book value of $279 million at
    December 31, 1995.  Maturities of long-term debt other than capital
    leases and commercial paper are $114 million in 1996, $64 million in
    1997, $44 million in 1998, $44 million in 1999, $264 million in 2000
    and $973 million in total from 2001 through 2043.

    The Company had $189 million of commercial paper outstanding at
    December 31, 1995.  Of the total amount outstanding, $100 million is
    classified as long-term since it is expected to be refinanced through
    subsequent issuances of commercial paper and is supported by the long-
    term credit facility mentioned below.

    The Company maintains a $500 million uncollateralized bank credit
    agreement with a group of banks which is used for general corporate
    purposes and to support its commercial paper program. The agreement
    has a five year maturity and requires interest to be paid on amounts
    borrowed at rates based on various defined short-term rates and an
    annual maximum fee of .125% of the facility amounts.  The agreement
    contains, among other conditions, restrictive covenants relating to a
    debt ratio and consolidated tangible net worth.

    During 1995, the Company borrowed $130 million under its
    uncollateralized bank credit agreement at interest rates ranging from
    6.0% to 6.4%, and repaid $130 million during the year.  At December
    31, 1995, no amount was outstanding under this agreement.

    Interest payments were $177 million in 1995, $174 million in 1994 and
    $164 million in 1993.

                                      27
<PAGE>

8.  Income Taxes
    ------------
    The provisions for income taxes are composed of the following:
                                       1995     1994    1993
                                       ----     ----   -----
                                            (In Millions)
    Current
       Federal                        $ 75       $104    $ 24
       State                            15         15       9
                                      ----       ----    ----
                                        90        119      33
                                      ----       ----    ----
    Deferred
       Federal                         111        125     192
       State                            (3)        25      32
                                      ----       ----    ----
                                       108        150     224
                                      ----       ----    ----

    Special income tax obligation
       Federal                         (61)       (53)    (42)
       State                           (12)        (9)     (8)
                                      ----       ----    ----
                                       (73)       (62)    (50)
                                      ----       ----    ----
                                      $125       $207    $207
                                      ====       ====    ====


    Effective January 1, 1993, the Company adopted the provisions of
    SFAS 109 which requires a liability approach for measuring deferred
    tax assets and liabilities based on differences between the financial
    statement and tax bases of assets and liabilities at each balance
    sheet date using enacted tax rates in effect when those differences
    are expected to reverse.  As a result, the Company recorded a
    cumulative adjustment of $48 million.

    In conjunction with the public sale in 1987 of the 85% of the
    Company's common stock owned by the U.S. Government, federal
    legislation was enacted which resulted in a reduction of the tax basis
    of certain of the Company's assets, particularly property and
    equipment, thereby substantially decreasing tax depreciation
    deductions and increasing future federal income tax payments.  Also,
    net operating loss and investment tax credit carryforwards were
    cancelled.  As a result of the sale-related transactions, a special
    income tax obligation was recorded in 1987 based on an estimated
    effective federal and state income tax rate of 37.0%.

                                      28
<PAGE>

    As a result of a decrease in a state income tax rate enacted during
    the second quarter of 1995, income tax expense for 1995 was reduced by
    $21 million representing the effects of adjusting deferred income
    taxes and the special income tax obligation for the rate decrease as
    required by SFAS 109.

    As a result of the increase in the federal corporate income tax rate
    from 34% to 35% enacted August 10, 1993, and effective January 1,
    1993, income tax expense for 1993 was increased by $38 million, of
    which $34 million related to the effects of adjusting deferred income
    taxes and the special income tax obligation for the rate increase.

    During 1993, the Company reached a settlement with the Internal Revenue
    Service ("IRS") related to the audit of the Company's consolidated federal
    income tax returns for the fiscal years 1987 through 1989.  Under the
    settlement, the Company paid $51 million, including interest, all of which
    had been previously provided for in years prior to 1993.  The Company's
    consolidated federal income tax returns for the fiscal years 1990 through
    1992 are currently being examined by the IRS.  Federal and state income
    tax payments were $109 million in 1995, $80 million in 1994 and $39
    million in 1993 (excluding tax settlement).

                                      29
<PAGE>


    Reconciliations of the U.S. statutory tax rates with the effective tax
    rates follow:
                                           1995    1994    1993
                                           ----    ----    ----
        Statutory tax rate                 35.0%   35.0%   35.0%
        State income taxes,
          net of federal benefit            3.5     3.9     5.1
        Effect of federal tax increase
          on deferred taxes                                 7.7
        Effect of state tax decrease
          on deferred taxes                (5.5)
        Other                               (.2)     .5     (.9)
                                          -----   -----   -----
        Effective tax rate                 32.8%   39.4%   46.9%
                                          =====   =====   =====

    Significant components of the Company's special income tax
    obligation and deferred income tax liabilities and (assets) are as
    follows:
                                                    December 31,
                                               ---------------------
                                                 1995          1994
                                                -------       ------
                                                   (In Millions)
    Current assets (primarily accounts
      receivable)                              $  (27)        $  (33)
    Current liabilities (primarily accrued
    liabilities and casualty reserves)           (265)          (175)
    Reserve of intercompany receivables           (31)           (31)
    Miscellaneous                                  (2)            (2)
                                               ------         ------
    Current deferred tax asset, net            $ (325)        $ (241)
                                               ======         ======

    Noncurrent liabilities:
     Property and equipment                     1,936          1,923
     Other long-term assets (primarily prepaid
      pension asset)                               67             62
     Miscellaneous                                 66             50
                                               ------         ------
                                                2,069          2,035
                                               ------         ------
    Noncurrent assets:
     Nondeductible reserves and other
      liabilities                                (144)          (151)
     Tax benefit transfer receivable              (33)           (38)
     Alternative minimum tax credits              (38)           (75)
     Miscellaneous                                (13)           (46)
                                               ------         ------
                                                 (228)          (310)
                                               ------         ------
    Special income tax obligation and
     deferred income tax liabilities, net      $1,841         $1,725
                                               ======         ======
                                      30
<PAGE>

9.  Employee Benefits
    -----------------
    Pension Plans
    -------------
    The Company and certain subsidiaries maintain defined benefit
    pension plans which are noncontributory for all non-union employees
    and generally contributory for participating union employees.
    Benefits are based primarily on credited years of service and the
    level of compensation near retirement.  Funding is based on the
    minimum amount required by the Employee Retirement Income Security
    Act of 1974.

    Pension credits include the following components:

                                                       1995  1994  1993
                                                       ----  ----  ----
                                                        (In Millions)

    Service cost - benefits earned during the period   $  8  $  8  $  8
    Interest cost on projected benefit obligation        51    48    46
    Return on plan assets - actual                     (254)  (10) (124)
                          - deferred                    167   (77)   42
    Net amortization and deferral                       (15)  (15)  (15)
                                                       ----  ----  ----
                                                       $(43) $(46) $(43)
                                                       ====  ====  ====

    The funded status of the pension plans and the amounts reflected in
    the balance sheets are as follows:
                                                     1995          1994
                                                     ----          ----
                                                       (In Millions)
    Accumulated benefit obligation ($603 million
     and $526 million vested, respectively)         $  609        $ 530
                                                    ------        -----
    Market value of plan assets                      1,168          982
    Projected benefit obligation                      (726)        (594)
                                                    ------        -----
    Plan assets in excess of projected
      benefit obligation                               442          388
    Unrecognized prior service cost                     50           44
    Unrecognized transition net asset                 (120)        (139)
    Unrecognized net gain                             (157)        (117)
                                                    ------        -----
    Net prepaid pension cost                        $  215        $ 176
                                                    ======        =====
                                      31
<PAGE>


    The assumed weighted average discount rates used in 1995 and 1994 are 7.0%
    and 8.5%, respectively, and the rate of increase in future compensation
    levels used in determining the actuarial present value of the projected
    benefit obligation as of December 31, 1995 and 1994 is 6.0%.  The expected
    long-term rate of return on plan assets (primarily equity securities) in
    1995 and 1994 is 9.0%.

    Savings Plans
    -------------
    The Company and certain subsidiaries provide 401(k) savings plans for
    union and non-union employees.  Under the Non-union ESOP, 100% of
    employee contributions are matched in the form of ESOP Stock for the
    first 6% of a participating employee's base pay.  There is no Company
    match provision under the union employee plan.  Savings plan expense
    was $4 million in 1995 and $5 million in 1994 and 1993.

    In connection with the Non-union ESOP, the Company issued 9,979,562
    of the authorized 10 million shares of its ESOP Stock to the Non-
    union ESOP in exchange for a 20 year promissory note with interest at
    9.55% from the Non-union ESOP in the principal amount of
    $288 million.  In addition, unearned ESOP compensation of
    $288 million was recognized as a charge to stockholders' equity
    coincident with the Non-union ESOP's issuance of its $288 million
    promissory note to the Company.  The debt of the Non-union ESOP was
    recorded by the Company and offset against the promissory note from
    the Non-union ESOP.  Prior to the corporate reorganization (Note 2),
    unearned ESOP compensation was charged to expense as shares of ESOP
    Stock were allocated to participants.  An amount equivalent to the
    preferred dividends declared on the ESOP Stock partially offset
    compensation and interest expense related to the Non-union ESOP.

    In conjunction with the formation of the holding company on July 1,
    1993 (Note 2), each share of the Company's preferred stock, all of
    which were held by the Non-union ESOP, was automatically converted
    into one share of preferred stock of Conrail Inc. and the debt of the
    Non-union ESOP and the unearned ESOP compensation accounts were
    transferred to Conrail Inc.  The promissory note receivable from the
    Non-union ESOP plus the accrued interest were reclassified by the
    Company to the stockholder's equity section of its balance sheet.
    Unearned ESOP compensation is now amortized and charged to the
    Company by Conrail Inc. as shares of ESOP Stock are allocated to
    participants.  The number of allocated ESOP shares outstanding at
    December 31, 1995 was approximately 2.2 million shares.  An amount
    equivalent to the preferred dividends declared on the ESOP Stock
    proportionally offsets compensation expense of the Company and
    interest expense of Conrail Inc. related to the Non-union ESOP.

                                      32
<PAGE>

    Conrail Inc. makes dividend payments at a rate of 7.51% on the ESOP
    Stock and the Company makes additional contributions in an aggregate
    amount sufficient to enable the Non-union ESOP to make the required
    interest and principal payments on its note.

    In 1994, the ESOP's promissory note to the Company was refinanced.
    As part of the refinancing, the interest rate was decreased to 8.0%,
    from the original 9.55%, and accrued interest of $21 million was
    capitalized as part of the principal balance of the promissory note.

    Interest expense incurred by the Non-union ESOP on its debt to the
    Company before the corporate reorganization on July 1, 1993 (Note 2)
    was $15 million in 1993.  Compensation expense related to the Non-
    union ESOP was $10 million in 1995, 1994 and 1993.  Preferred
    dividend payments to the Non-union ESOP by the Company prior to the
    corporate reorganization were $11 million in 1993.  The Company
    received debt service payments from the Non-union ESOP of $31 million
    in 1995, $21 million in 1994, and $26 million in 1993.

    Postretirement Benefits Other Than Pensions
    -------------------------------------------
    The Company provides health and life insurance benefits to certain
    retired non-union employees.  Certain non-union employees are eligible
    for retiree medical benefits, while substantially all non-union
    employees are eligible for retiree life insurance benefits.  Generally,
    company-provided health care benefits terminate when individuals reach
    age 65.

    Retiree life insurance plan assets consist of a retiree life insurance
    reserve held in the Company's group life insurance policy.  There are no
    plan assets for the retiree health benefits plan.

    Effective January 1, 1993, the Company adopted SFAS 106, which requires
    that the cost of retiree benefits other than pensions be accrued during
    the period of employment rather than when benefits are paid.  The Company
    elected the immediate recognition method allowed under the statement and
    accordingly recorded a cumulative, one-time charge of $22 million (net of
    tax benefits of $14 million). This accrual was in addition to the
    remaining balance of $21 million which had been accrued for
    postretirement health benefits for employees who participated in the
    Company's 1989 non-union voluntary retirement program.

                                      33

<PAGE>


    The following sets forth the plans' funded status reconciled with amounts
    reported in the Company's balance sheets:


                                            1995              1994
                                     -----------------  ------------------
                                                Life               Life
                                      Medical Insurance  Medical Insurance
                                       Plan     Plan      Plan     Plan
                                                (In Millions)
    Accumulated postretirement
     benefit obligation:
      Retirees                          $ 38       $19       $38      $15
      Fully eligible active plan
       participants                        5         1         3        1
      Other active plan participants                 5         1        4
                                         ---       ---       ---      ---
    Accumulated benefit obligation        43        25        42       20
    Market value of plan assets                     (7)                (6)
                                         ---       ---       ---      ---
    Accumulated benefit obligation
     in excess of plan assets             43        18        42       14
    Unrecognized gains and (losses)        1        (1)        1        3
    Accrued benefit cost recognized
     in the Consolidated Balance        ----      ----      ----     ----
     Sheet                               $44       $17       $43      $17
                                         ===       ===       ===      ===
    Net periodic postretirement
     benefit cost, primarily
     interest cost                       $ 4       $ 1       $ 4      $ 1
                                         ===       ===       ===      ===

     A 10 percent rate of increase in per capita costs of covered health care
     benefits was assumed for 1996, gradually decreasing to 6 percent by the
     year 2008. Increasing the assumed health care cost trend rates by one
     percentage point in each year would increase the accumulated
     postretirement benefit obligation as of December 31, 1995 by $3 million
     and would have an immaterial effect on the service cost and interest
     cost components of net periodic postretirement benefit cost for 1995.
     Discount rates of 7.0% and 8.5% were used to determine the accumulated
     postretirement benefit obligations for both the medical and life
     insurance plans in 1995 and 1994, respectively.  The assumed rate of
     compensation increase was 5.0% in both 1995 and 1994.

     Retiree medical benefits are funded by a combination of Company and
     retiree contributions.  Retiree life insurance benefits are provided by
     insurance companies whose premiums are based on claims paid during the
     year.
                                      34
<PAGE>

10.  Capital Stock
     -------------
     The Company is authorized to issue 25 million shares of preferred
     stock with no par value.  The Board of Directors has the authority to
     divide the preferred stock into series and to determine the rights
     and preferences of each.

     As a result of the holding company structure that became effective on
     July 1, 1993 (Note 2), each share of the Company's common stock which
     was issued and outstanding or held in the treasury of the Company was
     automatically converted into one share of Conrail Inc. common stock.
     Subsequent to July 1, 1993, the Company had 100 shares of common
     stock outstanding, all held by Conrail Inc.  All of the long-term
     incentive plans of the Company were amended to reflect the use of
     Conrail Inc.'s common stock.

     The activity and status of treasury stock for 1993 is as follows:

     Shares, beginning of year             3,690,002
       Acquired                              611,182
       Reclassified as authorized
        but unissued                         (43,800)
       Corporate reorganization (Note 2)  (4,257,384)
                                          ----------
     Shares, end of year                           -
                                          ==========

    Conrail Inc.'s 1987 and 1991 Long-Term Incentive Plans authorize the
    granting to the Company's officers and key employees of up to
    4 million and 3.2 million shares of Conrail Inc. common stock,
    respectively, through stock options, stock appreciation rights, and
    awards of restricted or performance shares.  A stock option is
    exercisable for a specified term commencing after grant at a price
    not less than the fair market value of the stock on the date of
    grant.  The vesting of awards made pursuant to these plans is
    contingent upon one or more of the following:  continued employment,
    passage of time or financial and other performance goals.

    Conrail Inc. has granted phantom shares and restricted stock under the
    non-union employee bonus plans to eligible employees of the Company who
    elect to defer all or a portion of their annual bonus in a given year.
    The number of shares granted depends on the length of the deferral
    period.  Grants are made at the market price of Conrail Inc.'s common
    stock at the date of grant.  Conrail Inc. has granted 87,529 shares and
    317,028 shares of phantom and restricted stock, respectively, through
    the Company's non-union employee bonus plans through December 31, 1995.
    Conrail Inc. has also granted 68,896 performance shares under its 1991

                                      35
<PAGE>

    Long-Term Incentive Plan through December 31, 1995.  Compensation
    expense related to these plans was $3 million in 1995.

    In May 1995, Conrail Inc.'s shareholders approved the Conrail Senior
    Executive Performance Plan (the "Plan") under which certain senior
    executive officers of the Company will be eligible to receive annual
    bonus awards, payable in cash or common stock, upon the satisfaction of
    certain performance criteria. No awards have been granted under the Plan
    as of December 31, 1995.

    The activity and status of stock options under the incentive
    plans follow:
                                    Non-qualified Stock Options
                                -----------------------------------
                                     Option Price            Shares
                                        Per Share      Under Option
                                -----------------      ------------
    Balance, January 1, 1993    $14.000 - $45.125         2,870,878
        Granted                 $49.375 - $60.500            73,027
        Exercised               $14.000 - $53.875          (928,822)
        Cancelled               $31.813 - $45.125           (48,762)
                                                      -------------
    Balance, December 31, 1993  $14.000 - $60.500         1,966,321
        Granted                 $52.188 - $66.938            23,988
        Exercised               $14.000 - $51.375          (507,450)
        Cancelled               $42.625 - $60.500          (118,904)
                                                      -------------
    Balance, December 31, 1994  $14.000 - $66.938         1,363,955
        Granted                 $50.688 - $68.563           516,757
        Exercised               $14.000 - $53.875          (200,940)
        Cancelled               $42.625 - $53.875          (123,560)
                                                      -------------
    Balance, December 31, 1995  $14.000 - $68.563         1,556,212
                                                      =============
    Exercisable,
       December 31, 1995        $14.000 - $57.875           799,476
                                                      =============
    Available for future grants
       December 31, 1994                                  1,678,293
                                                      =============
       December 31, 1995                                  1,188,193
                                                      =============

11.  1994 Early Retirement Program
     -----------------------------
     During the first quarter of 1994, the Company recorded a charge of $51
     million (after tax benefits of $33 million) for a non-union employee
     voluntary early retirement program and related costs.  The majority of

                                       36
<PAGE>


     the cost of the early retirement program is being paid from the
     Company's overfunded pension plan.

12.  Other Income, Net
     -----------------
                                    1995      1994    1993
                                    ----      ----    ----
                                         (In Millions)
       Interest income              $ 33      $ 34    $ 40
       Rental income                  57        53      56
       Property sales                 27        18      20
       Management fee                (21)      (21)    (11)
       Other, net                     15        17       9
                                    ----      ----    ----
                                    $111      $101    $114
                                    ====      ====    ====

13.  Commitments and Contingencies
     -----------------------------
     Environmental
     -------------
     The Company is subject to various federal, state and local laws and
     regulations regarding environmental matters.  The Company is a party to
     various proceedings brought by both regulatory agencies and private
     parties under federal, state and local laws, including Superfund laws,
     and has also received inquiries from governmental agencies with respect
     to other potential environmental issues.  At December 31, 1995, the
     Company has received, together with other companies, notices of its
     involvement as a potentially responsible party or requests for
     information under the Superfund laws with respect to cleanup and/or
     removal costs due to its status as an alleged transporter, generator or
     property owner at 130 locations.  However, based on currently available
     information, the Company believes that it may have some potential
     responsibility at only 56 of these sites.  Due to the number of parties
     involved at many of these sites, the wide range of costs of possible
     remediation alternatives, the changing technology and the length of time
     over which these matters develop, it is often not possible to estimate
     the Company's liability for the costs associated with the assessment and
     remediation of contaminated sites.

     Although the Company's operating results and liquidity could be
     significantly affected in any quarterly or annual reporting period
     if it were held principally liable in certain of these actions, at
     December 31, 1995, the Company had accrued $64 million, an amount it
     believes is sufficient to cover the probable liability and
     remediation costs that will be incurred at Superfund sites and other
     sites based on known information and using various estimating

                                      37
<PAGE>

     techniques.  The Company believes the ultimate liability for these
     matters will not materially affect its consolidated financial
     condition.

     The Company spent $14 million in 1995, $8 million in 1994 and $7
     million in 1993 for environmental remediation and related costs and
     anticipates spending approximately $10 million in 1996. In addition,
     the Company's capital expenditures for environmental control and
     abatement projects were approximately $6 million in 1995 and $5
     million in 1994, and are anticipated to be approximately $8 million
     in 1996.

     The Environmental Quality Department is charged with promoting the
     Company's compliance with laws and regulations affecting the
     environment and instituting environmentally sound operating
     practices.  The department monitors the status of the sites where
     the Company is alleged to have liability and continually reviews the
     information available and assesses the adequacy of the recorded
     liability.

     Non-union Voluntary Retirement and Separation Programs
     ------------------------------------------------------
     On February 21, 1996, the Board of Directors of Conrail Inc. approved
     a voluntary early retirement program and voluntary separation program
     for eligible members of the Company's non-union workforce with the
     goal of eliminating 900 non-union positions.  Eligible employees have
     until April 23, 1996 to apply for the programs.  In the event the 900
     position goal is not achieved through the voluntary programs, the
     Company expects to obtain the additional reductions through non-
     voluntary separation programs.

     The costs of the programs are expected to be recorded in the second
     quarter of 1996, and are expected to have a material effect on the
     income statement in that quarter.  The programs will not have a
     significant effect on the Company's cash position as the majority of
     the costs will be paid from the Company's overfunded pension plan
     (Note 9).

     Other
     -----
     The Company is involved in various legal actions, principally relating
     to occupational health claims, personal injuries, casualties, property
     damage and damage to lading.  The Company has recorded liabilities on
     its balance sheet for amounts sufficient to cover the expected
     payments for such actions.

                                      38
<PAGE>

     The Company may be contingently liable for approximately $81 million
     at December 31, 1995 under indemnification provisions related to sales
     of tax benefits.

     The Company had an average of 22,631 employees in 1995, approximately
     86% of whom are represented by 14 different labor organizations and
     are covered by 22 separate collective bargaining agreements.  The
     Company was engaged in collective bargaining at December 31, 1995 with
     labor organizations representing approximately 84% of its labor force.
     The Company has reached an agreement with its employees represented by
     the Fraternal Order of Police and has reached a tentative agreement
     with its employees represented by the United Transportation Union
     through negotiations carried on by the National Carriers' Committee,
     of which the Company is a member.

     In October 1994, Locomotive Management Services, a general partnership
     of which the Company holds a fifty percent interest, issued
     approximately $96 million of Equipment Trust Certificates to fund 100%
     of the purchase price of 60 new locomotives.  While the principal and
     interest payments on the certificates will be fully guaranteed by the
     Company, through a sharing agreement with its partner, the Company's
     portion of the guarantee is reduced to approximately $80 million.

14.  Condensed Quarterly Data (Unaudited)
     -----------------------------------
<TABLE>
                                         First       Second      Third         Fourth
                                       ----------  ----------  -----------   ----------

                                       1995  1994  1995  1994   1995  1994   1995  1994
                                       ----  ----  ----  ----   ----  ----   ----  ----
                                                  ($ In Millions Except Per Share)
   <S>                                  <C>   <C>   <C>   <C>    <C>    <C>   <C>   <C>
   Revenues                            $885  $843  $918  $949   $919   $943  $946  $981
   Income (loss) from operations        113   (33)  179   189    208    192   (45)  255
   Net income (loss)                     53   (33)  120   101    115    104   (32)  147
   Ratio of earnings to fixed charges  2.45x    -  3.48x 4.04x  4.07x  4.13x    -  4.76x

</TABLE>

   As a result of a decrease in a state income tax rate enacted during
   the second quarter of 1995, income tax expense was reduced by $21
   million representing the effects of adjusting deferred income taxes
   and the special income tax obligation for the rate decrease as
   required under SFAS 109 (Note 8).  During the fourth quarter of 1995,
   an asset disposition charge reduced income from operations by $283
   million and adversely affected the quarter's net income by $175
   million (Note 3).  After the asset disposition charge, earnings were
   insufficient by $62 million to cover fixed charges for the quarter.

                                      39
<PAGE>

   During the first quarter of 1994, the Company recorded a charge of $51
   million (after tax benefits of $33 million) for a non-union employee
   voluntary retirement program and related costs (Note 11). After this one-
   time charge, earnings were insufficient by $55 million to cover fixed
   charges for the quarter.

Item 9.   Changes in and Disagreements with Accountants
------    ---------------------------------------------
          on Accounting and Financial Disclosure.
          --------------------------------------

          None.


                                 PART III


Item 10.  Directors and Executive Officers of the Registrant.
-------   --------------------------------------------------

          Information omitted in accordance with General Instruction
          J(2)(c).

Item 11.  Executive Compensation.
-------   ----------------------

          Information omitted in accordance with General Instruction
          J(2)(c).

Item 12.  Security Ownership of Certain Beneficial
-------   ----------------------------------------
          Owners and Management.
          ---------------------

          Information omitted in accordance with General Instruction
          J(2)(c).

          and

Item 13.  Certain Relationships and Related Transactions.
-------   ----------------------------------------------
          Information omitted in accordance with General Instruction
          J(2)(c).

                                      40
<PAGE>

                               PART IV

Item 14.  Exhibits, Financial Statement
-------   -----------------------------
          Schedules, and Reports on Form 8-K.
          ----------------------------------

(a)  The following documents are filed as a part of this report:

     1.   Financial Statements:                                  Page

          Reports of Independent Accountants..................... 15
          Consolidated Statements of Income for each of the
               three years in the period ended December 31, 1995. 17
          Consolidated Balance Sheets at December 31, 1995
               and 1994 ......................................... 18
          Consolidated Statements of Stockholder's
               Equity for each of the three years in the
               period ended December 31, 1995.................... 19
          Consolidated Statements of Cash Flows for each of
               the three years in the period ended
               December 31, 1995   .............................. 20
          Notes to Consolidated Financial Statements............. 21

     2.   Financial Statement Schedules:

          The following financial statement schedules should be read in
          connection with the financial statements listed in Item 14(a)1
          above.

                  Index to Financial Statement Schedules
                  --------------------------------------
                                                                  Page

          Schedule II  -  Valuation and Qualifying Accounts       S-1

          Schedules other than those listed above are omitted for reasons
          that they are not required, are not applicable, or the
          information is included in the financial statements or related
          notes.
                                      41
<PAGE>


     3.   Exhibits:

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

     2        Agreement and Plan of Merger among Consolidated Rail
              Corporation, Conrail Inc. and Conrail Subsidiary Corporation,
              dated as of February 17, 1993, filed as Appendix A to the
              Proxy Statement of the Registrant, dated April 16, 1993 and
              incorporated herein by reference.

      3.1     Amended and Restated Articles of Incorporation of the
              Registrant filed as Exhibit 3.1 to the Registrant's Report on
              Form 10-K for the year ended December 31, 1994 and
              incorporated herein by reference.

      3.2     Bylaws of the Registrant, filed as Exhibit 3.2 to the
              Registrant's Report on Form 10-K for the year ended December
              31, 1993 and incorporated herein by reference.

      3.3     Amendment to Bylaws of the Registrant, as of March 15, 1995,
              filed as Exhibit 3.3 to the Registrant's Report on Form 10-K
              for the year ended December 31, 1994 and incorporated herein
              by reference.

      4.1     Form of Certificate of Common Stock, par value $1.00 per
              share, of the Registrant, filed as Exhibit 4.7 to the
              Registrant's Registration Statement on Form S-8 (No. 33-
              19155) and incorporated herein by reference.

      4.2     Form of Indenture between the Registrant and The First
              National Bank of Chicago, as Trustee, with respect to the
              issuance of up to $1.25 billion aggregate principal amount of
              the Registrant's debt securities, filed as Exhibit 4 to the
              Registrant's Registration Statement on Form S-3 (Registration
              No. 33-34040) and incorporated herein by reference.

              In accordance with Item 601(b)(4)(iii) of Regulation S-K,
              copies of instruments of the Registrant with respect to the
              rights of holders of certain long-term debt are not filed
              herewith, or incorporated by reference, but will be furnished
              to the Commission upon request.

     10.1     Second Amended and Restated Northeast Corridor Freight
              Operating Agreement dated October 1, 1986 between
              National Railroad Passenger Corporation and Consolidated Rail

                                      42
<PAGE>

              Corporation, filed as Exhibit 10.1 to the Registrant's
              Registration Statement on Form S-1 (Registration
              No. 33-11995) and incorporated herein by reference.

     10.2     Letter agreements dated September 30, 1982 and July 19, 1986
              between Consolidated Rail Corporation and The Penn Central
              Corporation, filed as Exhibit 10.5 to the Registrant's
              Registration Statement on Form S-1 (Registration
              No. 33-11995) and incorporated herein by reference.

     10.3     Letter agreement dated March 16, 1988 between Consolidated
              Rail Corporation and Penn Central Corporation relating to
              hearing loss litigation, filed as Exhibit 19.1 to the
              Registrant's Quarterly Report on Form 10-Q for the quarter
              ended March 31, 1988 and incorporated herein by reference.

     12       Computation of the ratio of earnings to fixed charges.

     23.1     Consent of Independent Accountants.

     23.2     Consent of Independent Accountants.

     24       Each of the officers and directors signing this Annual
              Report on Form 10-K has signed a power of attorney, contained
              on page 44 hereof, with respect to amendments to this Annual
              Report.

     27       Financial Data Schedule.

(b)      Reports on Form 8-K.
         -------------------
         None.

(c)      Exhibits.
         --------

         The Exhibits required by Item 601 of Regulation S-K as listed in
         Item 14(a)3 are filed herewith or incorporated herein by
         reference.

(d)      Financial Statement Schedules.
         -----------------------------

         Financial statement schedules and separate financial statements
         specified by this Item are included in Item 14(a)2 or are
         otherwise omitted for reasons that they are not required or are
         not applicable.

                                      43
<PAGE>

                             POWER OF ATTORNEY
                             -----------------
     Each person whose signature appears below under "SIGNATURES" hereby
authorizes H. William Brown and Bruce B. Wilson, or either of them, to
execute in the name of each such person, and to file, any amendment to this
report and hereby appoints H. William Brown and Bruce B. Wilson, or either
of them, as attorneys-in-fact to sign on his or her behalf, individually
and in each capacity stated below, and to file any and all amendments to
this report.

                                SIGNATURES
                                ----------
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act 1934, Consolidated Rail Corporation has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                        CONSOLIDATED RAIL CORPORATION


Date: March 20, 1996

                                        By /S/ David M. LeVan
                                        ---------------------
                                        David M. LeVan
                                        President and Chief Executive
                                        Officer and Director

     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on this 20th day of March, 1996, by the
following persons on behalf of Consolidated Rail Corporation and in the
capacities indicated.

Signature                               Title

/S/ David M. LeVan
-------------------------------------   President and Chief Executive
David M. LeVan                          Officer and Director
                                        (Principal Executive Officer)

/S/ H. William Brown
-------------------------------------   Senior Vice President - Finance
H. William Brown                        and Administration
                                        (Principal Financial Officer)

                                      44
<PAGE>

/S/ Donald W. Mattson
-------------------------------------   Vice President - Controller
Donald W. Mattson                       (Principal Accounting Officer)

/S/ James A. Hagen
-------------------------------------   Chairman of the Board of
James A. Hagen                          Directors

/S/ H. Furlong Baldwin
-------------------------------------   Director
H. Furlong Baldwin

/S/ Claude S. Brinegar
------------------------------------    Director
Claude S. Brinegar


------------------------------------    Director
Daniel B. Burke

/S/ Kathleen Foley Feldstein
-----------------------------------     Director
Kathleen Foley Feldstein

/S/ Roger S. Hillas
-----------------------------------     Director
Roger S. Hillas

/S/ E. Bradley Jones
----------------------------------      Director
E. Bradley Jones

/S/ David B. Lewis
----------------------------------      Director
David B. Lewis

/S/ John C. Marous
----------------------------------      Director
John C. Marous

/S/ Raymond T. Schuler
----------------------------------      Director
Raymond T. Schuler


----------------------------------      Director
David H. Swanson

                                      45
<PAGE>


                                    E-1
                               EXHIBIT INDEX


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


12        Computation of the ratio of earnings to fixed charges

23.1      Consent of Independent Accountants

23.2      Consent of Independent Accountants

27        Financial Data Schedule


Exhibits 2, 3.1, 3.2, 3.3, 4.1, 4.2, 10.1, 10.2 and 10.3 are incorporated
herein by reference.  Powers of attorney with respect to amendments to this
Annual Report are contained on page 44.


                                      46



<PAGE>