-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: keymaster@town.hall.org
Originator-Key-Asymmetric:
 MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq
 pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ==
MIC-Info: RSA-MD5,RSA,
 FebEcGNi/RcfwtslBZlJDoZgWtOUUa/CU5SlqwB9fTnwHPycIOs2rcBZrq/NSMRS
 bClxVMmgLGOgqq28z1qR5Q==

<IMS-DOCUMENT>0000897732-94-000005.txt : 19940527
<IMS-HEADER>0000897732-94-000005.hdr.sgml : 19940527
ACCESSION NUMBER:		0000897732-94-000005
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	19940331
FILED AS OF DATE:		19940511

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CONRAIL INC
		CENTRAL INDEX KEY:			0000897732
		STANDARD INDUSTRIAL CLASSIFICATION:	4011
		IRS NUMBER:				232728514
		STATE OF INCORPORATION:			PA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-12184
		FILM NUMBER:		94527232

	BUSINESS ADDRESS:	
		STREET 1:		TWO COMMERCE SQ
		STREET 2:		P O BOX 41417
		CITY:			PHILADELPHIA
		STATE:			PA
		ZIP:			19101-1417
		BUSINESS PHONE:		2152094434

	MAIL ADDRESS:	
		STREET 1:		P.O. BOX 41429
		STREET 2:		2001 MARKET STREET
		CITY:			PHILADELPHIA
		STATE:			PA
		ZIP:			19101-1429
</IMS-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<DESCRIPTION>1Q 1994 CONRAIL INC 10-Q BODY
<TEXT>


                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549


                               FORM 10-Q



(X) Quarterly report pursuant to section 13 or 15(d) of the Securities
    Exchange Act of 1934 for the quarterly period ended March 31, 1994
                                                        --------------
    or
( ) Transition report pursuant to section 13 or 15(d) of the Securities
    Exchange Act of 1934 for the transition period from        to

Commission file number  1-12184
                        -------
                              CONRAIL INC.
        ------------------------------------------------------
        (Exact name of registrant as specified in its charter)


            Pennsylvania                           23-2728514
- - -----------------------------------        --------------------------
  (State or other jurisdiction of             (I.R.S. Employer
  incorporation or organization)              Identification No.)

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


                            (215) 209-4000
- - ---------------------------------------------------------------------
         (Registrant's telephone number, including area code)


- - ---------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)


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
   ----   ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

Number of shares of common stock outstanding (as of April 30, 1994)
79,035,291
<PAGE>
                             CONRAIL INC.



                                 INDEX





                                                         Page Number
                                                         -----------
    PART I.   FINANCIAL INFORMATION

              Item 1.  Financial Statements:

                       Condensed Consolidated Statements
                       of Income - Quarters ended
                       March 31, 1994 and 1993                3

                       Condensed Consolidated Balance
                       Sheets - March 31, 1994 and
                       December 31, 1993                      4

                       Condensed Consolidated Statements
                       of Cash Flows - Quarters ended
                       March 31, 1994 and 1993                5

                       Notes to Condensed Consolidated
                       Financial Statements                   6

                       Reports of Independent Accountants     8

              Item 2.  Management's Discussion and
                       Analysis of Financial Condition
                       and Results of Operations              10

    PART II.  OTHER INFORMATION

              Item 1.  Legal Proceedings                      14

              Item 6.  Exhibits and Reports on Form 8-K       14

    SIGNATURES                                                15
                                2
<PAGE>
                     PART I. FINANCIAL INFORMATION
                             CONRAIL INC.
 Item 1.  Financial Statements.
          --------------------
<TABLE>
              CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                              (Unaudited)
<CAPTION>
 ($ In Millions Except Per Share Data)
                                                    Quarters ended
                                                       March 31,
                                                    --------------
                                                     1994     1993
                                                    -----    -----
 <S>                                                <C>      <C>
 Revenues                                           $ 847    $ 816
                                                    -----    -----
 Operating expenses
   Way and structures                                 144      136
   Equipment                                          210      176
   Transportation                                     350      322
   General and administrative                          91       97
   Early retirement program                            84
                                                    -----    -----
     Total operating expenses                         879      731
                                                    -----    -----
 Income (loss) from operations                        (32)      85
 Interest expense                                     (47)     (44)
 Other income, net                                     26       32
                                                    -----    -----
Income (loss) before income taxes and the
 cumulative effect of changes in accounting
 principles                                           (53)      73
 Income taxes (benefits)                              (21)      27
                                                    -----    -----
 Income (loss) before the cumulative effect
 of changes in accounting principles                  (32)      46
 Cumulative effect of changes in accounting
 principles                                                    (74)
                                                    -----    -----
 Net loss                                           $ (32)   $ (28)
                                                    =====    =====
 Income (loss) per common share
 Before the cumulative effect of changes
  in accounting principles
   Primary                                          $(.45)   $ .52
   Fully diluted                                     (.45)     .52
 Cumulative effect of changes in accounting
  principles
   Primary and fully diluted                                  (.91)
 Net loss per common share
   Primary                                          $(.45)   $(.39)
   Fully diluted                                     (.45)    (.39)
 Dividends per common share                         $.325    $.275
 Weighted average number of shares used in
 computing earnings (loss) per share (thousands)
   Primary                                         79,629   80,982
   Fully diluted                                   79,629   80,982
 Ratio of earnings to fixed charges                -          2.25x

 See accompanying notes.
</TABLE>
                                3
<PAGE>
<TABLE>
                             CONRAIL INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                              (Unaudited)
<CAPTION>
   ($ In Millions)                           March 31,  December 31,
                                                1994        1993
                                            ----------  ------------
   <S>                                        <C>         <C>
         ASSETS
   Current assets
   Cash and cash equivalents                  $   43      $   38
   Accounts receivable                           661         644
   Deferred tax assets                           236         227
   Material and supplies                         153         132
   Other current assets                           26          21
                                              ------      ------
   Total current assets                        1,119       1,062
   Property and equipment, net                 6,309       6,313
   Other assets                                  612         573
                                              ------      ------
   Total assets                               $8,040      $7,948
                                              ======      ======
         LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities
   Short-term borrowings                         112          79
   Current maturities of long-term debt          154         146
   Accounts payable                               95          62
   Wages and employee benefits                   179         185
   Casualty reserves                              96          93
   Accrued and other current liabilities         519         510
                                              ------      ------
   Total current liabilities                   1,155       1,075
   Long-term debt                              1,985       1,959
   Casualty reserves                             210         132
   Deferred income taxes                       1,083       1,081
   Special income tax obligation                 560         575
   Other liabilities                             337         342
                                              ------      ------
   Total liabilities                           5,330       5,164
                                              ------      ------
   Stockholders' equity
   Series A ESOP convertible junior
   preferred stock                               286         286
   Unearned ESOP compensation                   (251)       (253)
   Common stock                                   80          80
   Additional paid-in capital                  1,829       1,819
   Retained earnings                             795         857
                                              ------      ------
                                               2,739       2,789
   Treasury stock                                (29)         (5)
                                              ------      ------
   Total stockholders' equity                  2,710       2,784
                                              ------      ------
   Total liabilities and
   stockholders' equity                       $8,040      $7,948
                                              ======      ======

   See accompanying notes.
</TABLE>
                                4
<PAGE>
<TABLE>
                             CONRAIL INC.

            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                              (Unaudited)


<CAPTION>

 ($ In Millions)
                                                       Quarters ended
                                                          March 31,
                                                      ---------------
                                                       1994      1993
                                                      -----     -----
 <S>                                                  <C>       <C>
 Cash flows from operating activities                 $  62     $  33

 Cash flows from investing activities
 Property and equipment acquisitions                    (68)      (80)
   Other                                                 (2)      (35)
                                                      -----     -----
 Net cash used in investing activities                  (70)     (115)
                                                      -----     -----


 Cash flows from financing activities
 Repurchase of common stock                             (24)      (10)
 Net proceeds from (repayment of)short-term
  borrowings                                             33       (21)
 Payment of capital lease and equipment obligations     (18)      (24)
 Proceeds from medium-term notes                         50        79
 Payment of medium-term notes                            (5)
 Proceeds from long-term debt                                      54
 Dividends paid on common stock                         (26)      (22)
 Dividends paid on preferred stock                       (5)       (5)
 Other                                                    8         5
                                                      -----     -----


 Net cash from financing activities                      13        56
                                                      -----     -----


 Increase (decrease) in cash and cash equivalents         5       (26)


 Cash and cash equivalents
 Beginning of period                                     38        40
                                                      -----     -----


 End of period                                        $  43     $  14
                                                      =====     =====



 See accompanying notes.
</TABLE>
                                5
<PAGE>
                             CONRAIL INC.
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                              (Unaudited)



      1.  The unaudited financial statements contained herein present
     the consolidated financial position of Conrail Inc. (the
     "Company") as of March 31, 1994 and December 31, 1993, and the
     consolidated results of operations and cash flows for the
     quarters ended March 31, 1994 and 1993.  In the opinion of
     management, these financial statements include all adjustments,
     consisting of normal recurring adjustments and the cumulative
     effect of changes in accounting principles mentioned in Note 3,
     necessary to present fairly the results for the interim periods
     included.

     The rules and regulations of the Securities and Exchange
     Commission permit certain information and footnote disclosures,
     ordinarily required by generally accepted accounting principles,
     to be condensed or omitted from interim financial reports.
     Accordingly, the financial statements included herein should be
     read in conjunction with the audited financial statements and
     notes for the year ended December 31, 1993, presented in the
     Company's Annual Report on Form 10-K.

      2.  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 the cost of the early retirement
     program will be paid from the Company's overfunded pension plan.

      3.  Effective January 1, 1993, the Company adopted Statement of
     Financial Accounting Standards No. 106, "Employers' Accounting
     for Postretirement Benefits Other Than Pensions" and Statement
     of Financial Accounting Standards No. 109, "Accounting for
     Income Taxes."  As a result, the Company recorded cumulative
     after tax charges totalling $74 million in the first quarter of
     1993.

      4.  In April 1994, Consolidated Rail Corporation, the Company's
     principal subsidiary, entered into a $500 million
     uncollateralized bank credit agreement with a group of banks to
     replace the $300 million credit facility that would have expired
     in the first quarter of 1995.  The new credit agreement, which
     will be used for general corporate purposes and to support
     Consolidated Rail Corporation's commercial paper program,
     provides for a $350 million revolving credit facility with a
     five year maturity and a $150 million revolving credit facility
     with a one year maturity.  Both credit facilities require
     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 new credit agreement
     contains, among other conditions, restrictive covenants relating

                                6
<PAGE>
     to a debt ratio and consolidated tangible net worth.  There were
     no borrowings outstanding under the prior credit agreement at
     March 31, 1994.

      5.  In July 1993, the Board of Directors authorized a $100
     million common stock repurchase program.  Under this program,
     the Company acquired 404,824 shares for approximately $24
     million during the first quarter of 1994.

      6.  Information regarding contingent liabilities and litigation
     was included in Note 12 to Consolidated Financial Statements and
     Part I, Item 3 - Legal Proceedings in the Company's Annual
     Report on Form 10-K for the year ended December 31, 1993.
     Material developments with respect to these and other matters
     are discussed in Part II, Item 1 - Legal Proceedings in this
     Form 10-Q.














                                7

<PAGE>
                   REPORT OF INDEPENDENT ACCOUNTANTS


    The Stockholders and Board of Directors of
    Conrail Inc.


    We have reviewed the accompanying condensed consolidated balance
    sheet of Conrail Inc. and its subsidiaries (the "Company") as of
    March 31, 1994 and the related condensed consolidated statements
    of income and cash flows for the three months ended March 31,
    1994.  The condensed consolidated statements of income and cash
    flows of Consolidated Rail Corporation for the three months
    ended March 31, 1993 were reviewed by other independent
    accountants, whose report dated April 21, 1993, disclosed that
    no material modifications should have been made to the interim
    financial information for it to be in conformity with generally
    accepted accounting principles.  This financial information is
    the responsibility of the Company's management.

    We conducted our review in accordance with standards established
    by the American Institute of Certified Public Accountants.  A
    review of interim financial information consists principally of
    applying analytical procedures to financial data and making
    inquiries of persons responsible for financial and accounting
    matters.  It is substantially less in scope than an audit
    conducted in accordance with generally accepted auditing
    standards, the objective of which is the expression of an
    opinion regarding the financial statements taken as a whole.
    Accordingly, we do not express such an opinion.

    Based on our review, we are not aware of any material
    modifications that should be made to the accompanying interim
    financial information for it to be in conformity with generally
    accepted accounting principles.

    The Company's consolidated balance sheet as of December 31, 1993
    and the related consolidated statements of income, stockholders'
    equity and cash flows for the year then ended (not presented
    herein) were audited by other independent accountants, whose
    report dated January 24, 1994 expressed an unqualified opinion
    on those statements and included an explanatory paragraph
    describing the Company's change in methods for accounting for
    income taxes and postretirement benefits other than pensions in
    1993.




    PRICE WATERHOUSE
    Thirty South Seventeenth Street
    Philadelphia, PA 19103

    April 20, 1994
                                8
<PAGE>
                   REPORT OF INDEPENDENT ACCOUNTANTS




    The Stockholders and Board of Directors of
    Conrail Inc.


    We have made a review of the condensed consolidated balance
    sheet of Conrail Inc. and subsidiaries as of March 31, 1993 and
    the related condensed consolidated statements of income and cash
    flows for the three-month period ended March 31, 1993, in
    accordance with standards established by the American Institute
    of Certified Public Accountants.

    A review of interim financial information consists principally
    of obtaining an understanding of the system for the preparation
    of interim financial information, applying analytical procedures
    to financial data, and making inquiries of persons responsible
    for financial and accounting matters.  It is substantially less
    in scope than an audit in accordance with generally accepted
    auditing standards, the objective of which is the expression of
    an opinion regarding the financial statements taken as a whole.
    Accordingly, we do not express such an opinion.

    Based on our review, we are not aware of any material
    modifications that should be made to the condensed consolidated
    financial statements referred to above for them to be in
    conformity with generally accepted accounting principles.

    We have previously audited, in accordance with generally
    accepted auditing standards, the consolidated balance sheet as
    of December 31, 1993, and the related consolidated statements of
    income, stockholders' equity and cash flows for the year then
    ended (not presented herein); and in our report, dated
    January 24, 1994, we expressed an unqualified opinion on those
    consolidated financial statements.  In our opinion, the
    information set forth in the accompanying condensed consolidated
    balance sheet as of December 31, 1993, is fairly presented, in
    all material respects, in relation to the consolidated balance
    sheet from which it has been derived.




                                        COOPERS & LYBRAND



    2400 Eleven Penn Center
    Philadelphia, Pennsylvania
    January 24, 1994
                                9
<PAGE>
                             CONRAIL INC.


    Item 2.  Management's Discussion and Analysis of Financial
             -------------------------------------------------
            Condition and Results of Operations.
            -----------------------------------

    Results of Operations
    ---------------------
    Overview
    --------
    Conrail Inc. (the "Company") incurred a net loss of $32 million
    ($.45 per share, primary and fully diluted basis) for the first
    quarter of 1994 compared with a net loss of $28 million for the
    first quarter of 1993 ($.39 per share, primary and fully diluted
    basis).  The first quarter of 1994 includes a one-time charge of
    $51 million (net of $33 million tax benefits) relating to a non-
    union voluntary early retirement program and related costs and
    the first quarter of 1993 includes charges totalling $74 million
    (net of taxes of $14 million) for adoption of required changes
    in accounting for income taxes and postretirement benefits other
    than pensions.  Absent these one-time charges, the Company would
    have shown net income of $19 million for the first quarter of
    1994,(net income per common share of $.20 primary and $.19 fully
    diluted), and net income of $46 million for the first quarter of
    1993 (net income per common share of $.52 primary and $.49 fully
    diluted).

    The Company's first quarter 1994 results were adversely affected
    by difficult operating conditions caused by severe winter
    weather, which diminished its ability to handle an increase in
    traffic volume during the quarter.  The poor operating
    conditions and greater than anticipated traffic volumes combined
    to create a shortage of locomotives and crews.  These factors in
    conjunction with the simultaneous implementation of the
    Company's new service group structure resulted in service
    disruptions and increased operating expenses.

    The Company has revised its economic assumptions for 1994, to
    3.5 percent growth in real gross domestic product and 4.5
    percent in industrial production, from 3.0 percent and 3.4
    percent, respectively.  While the Company's financial goal of
    achieving an 81.5 percent operating ratio (operating expenses as
    a percent of revenues but excluding non-recurring charges) for
    the full year has not changed, the high operating expenses in
    the first quarter will make achieving the goal more difficult.
    The goal will continue to be evaluated as the year progresses.
    Management is continuing its review of asset utilization in
    light of the Company's goal to earn its cost of capital and its
    revised economic assumptions with a view to identifying excess
    assets and addressing competing demands for additional assets.

                                10
<PAGE>
    First Quarter 1994 compared with First Quarter 1993
    ---------------------------------------------------
    Net loss for the first quarter of 1994 was $32 million after the
    effects of a one-time charge of $51 million related to a non-
    union voluntary early retirement program and related costs which
    the Company completed during the quarter (see Note 2 to the
    Condensed Consolidated Financial Statements).  Net loss for the
    first quarter of 1993 was $28 million after the effects of one-
    time charges of $74 million for adoption of required changes in
    accounting principles (see Note 3 to the Condensed Consolidated
    Financial Statements).

    Operating revenues (primarily freight line-haul revenues, but
    also including switching, demurrage and incidental revenues)
    increased $31 million, or 3.8%, from $816 million in the first
    quarter of 1993 to $847 million in the first quarter of 1994.  A
    7.8% increase in traffic volume in units (freight cars and
    intermodal trailers and containers) resulted in a $61 million
    increase in revenues that was partially offset by a 3.0%
    decrease in average revenue per unit which reduced revenue by
    $25 million.  The decline in average revenue per unit is
    attributable to traffic mix and decreases in average rates which
    lowered revenue by $7 million and $18 million, respectively.
    Incidental revenues decreased $5 million.

    Operating expenses increased $148 million (including the $84
    million charge related to the non-union voluntary early
    retirement program and related costs), or 20.2%, from $731
    million in the first quarter of 1993 to $879 million in the
    first quarter of 1994.  The following table sets forth the
    operating expenses for the two periods:

                                      First Quarter
                                      -------------
                                                       Increase
    ($ In Millions)                   1994    1993    (Decrease)
                                      ----    ----    ----------

    Compensation and benefits         $341    $323    $ 18
    Fuel                                47      43       4
    Material and supplies               62      57       5
    Equipment rents                     91      75      16
    Depreciation and amortization       70      72      (2)
    Casualties and insurance            45      34      11
    Other                              139     127      12
    Early retirement program            84              84
                                      ----    ----    ----
                                      $879    $731    $148
                                      ====    ====    ====

    Compensation and benefits as a percent of revenues was 40.3% in
    the first quarter of 1994 and 39.6% in the first quarter of
    1993.  The labor cost increase of $18 million, or 5.6%, was
                                11
<PAGE>
    attributable primarily to increased overtime caused by the
    adverse weather conditions and service disruptions experienced
    in the first quarter.

    The increase of $16 million, or 21.3%, in equipment rents
    primarily reflects the effects of crowded serving yards and
    train delays due to adverse weather conditions and higher
    traffic volume.

    The increase of $11 million, or 32.4%, in casualties and
    insurance cost was due to an increase in the number of personal
    injury claims plus increases in the average cost per claim.
    Also contributing to the increase were costs associated with
    loss and damage to lading from train derailments.

    Other operating expenses increased $12 million, or 9.4%,
    primarily due to increases in lease rentals, snow removal and
    property and corporate taxes during the quarter.

    In the first quarter of 1994, the Company incurred a one-time
    charge of $84 million for the non-union voluntary early
    retirement program and related costs (see Note 2 to the
    Condensed Consolidated Financial Statements).

    The Company's operating ratio (operating expenses as a percent
    of revenues) was 103.8% for the first quarter of 1994 compared
    with 89.6% for the first quarter of 1993.  Without the one-time
    charge for the early retirement program, the operating ratio for
    the first quarter of 1994 would have been 93.8%.


    Liquidity and Capital Resources
    -------------------------------
    The Company's cash and cash equivalents increased $5 million in
    the first quarter of 1994, from $38 million at December 31, 1993
    to $43 million at March 31, 1994.  Cash generated from
    operations, primarily from its wholly-owned subsidiary,
    Consolidated Rail Corporation, and borrowings are the Company's
    principal sources of liquidity and are used primarily for
    capital expenditures, debt service and dividends.  In the first
    quarter of 1994, operating activities provided cash of $62
    million and net short-term borrowings and proceeds from medium-
    term notes provided $83 million.

    The principal uses of cash during the quarter were for:
    property and equipment acquisitions, $68 million; repurchase of
    common stock, $24 million; payment of capital lease and
    equipment obligations, $18 million; and cash dividends on common
    and preferred stock, $31 million.

    A working capital (current assets less current liabilities)
    deficiency of $36 million existed at March 31, 1994 as compared
                                12
<PAGE>
    with a deficiency of $13 million at December 31, 1993.
    Management believes that the Company's financial position allows
    it sufficient access to credit sources on investment grade
    terms, and, if necessary, additional intermediate or long-term
    debt could be obtained for working capital requirements.

    In July 1993, the Company began a third common stock repurchase
    program of up to $100 million.  During the first quarter of
    1994, 404,824 shares were acquired for $24 million, bringing the
    total acquired under this program through March 31, 1994 to
    642,679 shares at a cost of approximately $38 million.

    During the first quarter of 1994, Consolidated Rail Corporation
    issued $243 million of commercial paper and repaid $210 million.
    At March 31, 1994, $212 million of commercial paper remained
    outstanding, of which $100 million is classified as long-term
    debt since it is expected to be refinanced through subsequent
    issuances of commercial paper and is supported by a long-term
    credit facility.

    In January 1994, Consolidated Rail Corporation established a
    $300 million Medium-Term Note Program under a shelf registration
    statement filed on Form S-3 in August 1993.  Under this Program,
    Consolidated Rail Corporation issued $50 million of medium-term
    notes during the first quarter of 1994, with an average interest
    rate of 5.73%.

    In April 1994, Consolidated Rail Corporation entered into an
    uncollateralized bank credit agreement with a group of banks to
    replace the $300 million credit facility that would have expired
    in the first quarter of 1995.  The new credit agreement, which
    will be used for general corporate purposes and to support the
    Consolidated Rail Corporation's commercial paper program,
    provides for a $350 million revolving credit facility with a
    five year maturity and a $150 million revolving credit facility
    with a one year maturity.









                                13
<PAGE>

                      PART II.  OTHER INFORMATION

                             CONRAIL INC.




    Item 1.  Legal Proceedings.
             -----------------
    United States v. Consolidated Rail Corporation, et al.
    -----------------------------------------------------
    On March 17, 1994, the United States Department of Justice
    ("DOJ") served notice that it had filed a complaint in the
    Federal District Court for the Eastern District of Pennsylvania
    against Consolidated Rail Corporation and two other parties
    citing various violations of the Clean Air Act ("CAA") and the
    National Emission Standard for Hazardous Air Pollutants
    ("NESHAP") in connection with the alleged release of asbestos
    during the renovation of a grain storage facility.  DOJ seeks
    civil penalties and injunctive relief against further violations
    of CAA and NESHAP.


    Item 6.  Exhibits and Reports on Form 8-K.
             --------------------------------
             (a)  Exhibits

                  11   Statement of earnings (loss) per share
                       computations.

                  12   Computations of the ratio of earnings to
                       fixed charges.

                  15.a Letter re unaudited interim financial
                       information from Price Waterhouse.

                  15.b Letter re unaudited interim financial
                       information from Coopers & Lybrand.


             (b)  Reports on Form 8-K

                  On February 18, 1994, the Company filed a report
                  on Form 8-K reporting the following under "Item 4.
                  Change in Registrant's Certifying Accountants,":
                  On February 16, 1994, the Company dismissed
                  Coopers & Lybrand as its independent accountants
                  and engaged Price Waterhouse as its new
                  independent accountants effective as of that date.

                                14
<PAGE>
                               SIGNATURES



    Pursuant to the requirements of the Securities Exchange Act of
    1934, the registrant has duly caused this report to be signed on
    its behalf by the undersigned thereunto duly authorized.


                                    CONRAIL INC.
                                    Registrant





                                    Bruce B. Wilson
                                    -----------------------------
                                    Bruce B. Wilson
                                    Senior Vice President - Law






                                    H. W. Brown
                                    -----------------------------
                                    H. W. Brown
                                    Senior Vice President -
                                    Finance and Administration
                                    (Principal Financial Officer)


    Date: May 11, 1994





                                15
<PAGE>
                             EXHIBIT INDEX
                             -------------


    Exhibit                                       Page Number in
      No.                                         SEC Sequential
                                                 Numbering System
    -------                                      ----------------
    11        Statement of earnings (loss)
              per share computations.

    12        Computations of the ratio of
              earnings to fixed charges.

    15.a      Letter re unaudited interim
              financial information from
              Price Waterhouse.

    15.b      Letter re unaudited interim
              financial information from
              Coopers & Lybrand.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-11
<SEQUENCE>2
<DESCRIPTION>CONRAIL INC EXHIBIT 11
<TEXT>


<TABLE>
                                                           Exhibit 11
                                                           ----------
                             CONRAIL INC.
                             -----------
                EARNINGS (LOSS) PER SHARE COMPUTATIONS
                --------------------------------------
                   ($ In Millions Except Per Share)

<CAPTION>

                                               Quarters ended
                                                  March 31,
                                          ----------------------
                                              1994        1993
                                              ----        ----
    <S>                                       <C>         <C>
    Income before the cumulative effect
    -----------------------------------
    of changes in accounting principles (1)
    -----------------------------------
    Primary
    Income (loss)                             $(32)       $ 46
    Dividends declared on Series A
    ESOP convertible junior preferred
    stock (ESOP Stock), net of
    tax benefits                                (3)         (3)
                                              ----        ----
                                              $(35)       $ 43
                                              ====        ====


    Fully diluted
    Income (loss)                              (32)         46
    Dividends declared on ESOP Stock,
    net of tax benefits                         (3)         (3)
                                              ----        ----
                                              $(35)       $ 43
                                              ====        ====

    Weighted average number of shares
    ---------------------------------
    Primary
    Weighted average number of
    common shares outstanding           79,628,510  79,874,152
    Effect of shares issuable
    under stock option plans (2)            -        1,107,994
                                        ----------  ----------
                                        79,628,510  80,982,146
                                        ==========  ==========
    Fully diluted (3)
    Weighted average number of
    common shares outstanding           79,628,510  79,874,152
    Effect of shares issuable
    under stock option plans (2             -        1,107,994
                                        ----------  ----------
                                        79,628,510  80,982,146
                                        ==========  ==========

    Income (loss) per common share before
    the cumulative effect of changes in
    accounting principles
    Primary                                  $(.45)       $.52
    Fully diluted                             (.45)        .52

</TABLE>
                              Page 1 of 4
<PAGE>
                                                           Exhibit 11
                                                           ----------


<TABLE>
                             CONRAIL INC.
                             -----------
                EARNINGS (LOSS) PER SHARE COMPUTATIONS
                --------------------------------------
                   ($ In Millions Except Per Share)


<CAPTION>

                                                  Quarters ended
                                                      March 31,
                                                 ----------------
                                                 1994        1993
                                                 ----        ----
    <S>                                          <C>         <C>
    Charges relative to the cumulative effect
    -----------------------------------------
    of changes in accounting principles (1)
    -----------------------------------
    Primary and fully diluted
    Postretirement benefits                                  $(22)
    Income taxes                                              (52)
                                                             ----
                                                             $(74)
                                                             ====

    Weighted average number of shares (*)
                                                       80,982,146
                                                       ==========
    Charges per common share relative
    to the cumulative effect of
    changes in accounting principles
    Postretirement benefits                                 $(.27)
    Income taxes                                             (.64)
                                                            -----
                                                            $(.91)
                                                            =====




    (*)  See Page 1 of 4 for components.

</TABLE>



                              Page 2 of 4
<PAGE>
                                                           Exhibit 11
                                                           ----------

<TABLE>
                             CONRAIL INC.
                             -----------
                EARNINGS (LOSS) PER SHARE COMPUTATIONS
                --------------------------------------
                   ($ In Millions Except Per Share)


<CAPTION>
                                              Quarters ended
                                                 March 31,
                                             ----------------
                                             1994        1993
                                             ----        ----
  <S>                                        <C>         <C>
  Net loss
  --------
   Primary
    Net loss                                 $(32)       $(28)
    Dividends declared on Series A
    ESOP convertible junior preferred
    stock (ESOP Stock), net of tax
    benefits                                   (3)         (3)
                                             ----        ----
                                             $(35)       $(31)
                                             ====        ====

   Fully diluted
    Net loss                                  (32)        (28)
    Dividends declared on ESOP Stock,
    net of tax benefits                        (3)         (3)
                                             ----        ----
                                             $(35)       $(31)
                                             ====        ====

  Weighted average number of shares (*)
  ---------------------------------
     Primary                           79,628,510  80,982,146
                                       ==========  ==========

     Fully diluted                     79,628,510  80,982,146
                                       ==========  ==========


   Net loss per common share
     Primary                                $(.45)      $(.39)
     Fully diluted                           (.45)       (.39)





    (*)  See Page 1 of 4 for components.


</TABLE>


                              Page 3 of 4

<PAGE>
                                                           Exhibit 11
                                                           ----------



                             CONRAIL INC.
                             -----------
                EARNINGS (LOSS) PER SHARE COMPUTATIONS
                --------------------------------------
                   ($ In Millions Except Per Share)




    Notes:  1. Conrail adopted Statement of Financial Accounting
               Standards No. 106 ("Employers' Accounting for
               Postretirement Benefits Other Than Pensions") and
               Statement of Financial Accounting Standards No. 109
               ("Accounting for Income Taxes") effective January 1,
               1993.  As a result, Conrail recorded cumulative after
               tax charges of $22 million, or $.27 per share,
               primary and fully diluted, and $52 million, or $.64
               per share, primary and fully diluted, respectively.

            2. The effects of shares issuable under stock option
               plans were antidilutive for the first quarter of 1994
               and were excluded from the per share calculations.

            3. The effects of the assumed conversion of Series A
               ESOP convertible junior preferred stock were
               antidilutive for both the first quarters of 1993 and
               1994 and were excluded from the per share
               calculations.













                              Page 4 of 4


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>3
<DESCRIPTION>CONRAIL INC EXHIBIT 12
<TEXT>



                                                           Exhibit 12
                                                           ----------
<TABLE>
                             CONRAIL INC.
                             -----------
        COMPUTATIONS OF THE RATIO OF EARNINGS TO FIXED CHARGES
        ------------------------------------------------------
                            ($ In Millions)

<CAPTION>

                                                  Quarters ended
                                                     March 31,
                                                  --------------
                                                  1994      1993
                                                  ----      ----
  <S>                                             <C>       <C>

  Earnings
  --------
    Pre-tax income                                $(53)     $ 73
     Add:
      Interest expense                              47        44
      Rental expense interest factor                 9         7
     Less equity in undistributed earnings
      of 20-50% owned companies                     (3)       (9)
                                                  ----      ----
  Earnings available for fixed charges              -       $115
                                                  ====      ====


  Fixed charges
  -------------
    Interest expense                                47        44
    Rental expense interest factor                   9         7
                                                  ----      ----
  Fixed charges                                   $ 56      $ 51
                                                  ====      ====

  Ratio of earnings to fixed charges                -       2.25x

<FN>

  For purposes of computing the ratio of earnings to fixed
  charges, earnings 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 and a portion of rent under
  long-term operating leases representative of an interest factor.
</FN>
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-15.A
<SEQUENCE>4
<DESCRIPTION>CONRAIL INC EXHIBIT 15.A
<TEXT>


                                                          Exhibit 15.a
                                                          ------------




     May 11, 1994





     Securities and Exchange Commission
     450 Fifth Street, NW
     Washington, DC 20549

     Dear Sirs:

     We are aware that Conrail Inc. has incorporated by reference
     our report dated April 20, 1994 (issued pursuant to the
     provisions of Statement of Auditing Standards No. 71) in the
     following registration statements:

           Registration Statement on Form S-8 No. 33-19155

           Registration Statement on Form S-8 No. 33-44140

           Registration Statement on Form S-3 No. 33-64670.

     We are also aware of our responsibilities under the
     Securities Act of 1933 and that pursuant to Rule 436(c) our
     report dated April 20, 1994 shall not be considered part of
     a registration statement prepared or certified by us or a
     report prepared or certified by us within the meaning of
     Sections 7 and 11 of the Securities Act of 1933.

     Yours very truly,



     PRICE WATERHOUSE
     PRICE WATERHOUSE
     Thirty South Seventeenth Street
     Philadelphia, PA  19103

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-15.B
<SEQUENCE>5
<DESCRIPTION>CONRAIL INC EXHIBIT 15.B
<TEXT>




                                                          Exhibit 15.b
                                                          ------------




     May 10, 1994


     Securities and Exchange Commission
     450 Fifth Street, NW
     Washington, DC 20549


     Re:  Conrail Inc.

     Registration on Form S-8 (Registration Form No. 33-19155 and
                              (Registration Form No. 33-44140)

     Registration on Form S-3 (Registration Form No. 33-64670)


     We are aware that our report dated January 24, 1994 on our
     review of interim financial information of Conrail Inc. and
     subsidiaries for the three-month period ended March 31, 1993
     and included in the Company's quarterly report on Form 10-Q
     for the quarter ended March 31, 1994 will be incorporated by
     reference in the registration statements.  Pursuant to
     Rule 436(c) under the Securities Act of 1933, this report
     should not be considered a part of the registration
     statements prepared or certified by us within the meaning of
     Sections 7 and 11 of that Act.



                               COOPERS & LYBRAND
                               COOPERS & LYBRAND




</TEXT>
</DOCUMENT>
</IMS-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----