ITEM 1. BUSINESS. - ------- ---------
(a) General Development - -----------------------
The Registrant was incorporated under the laws of the State of Ohio in August, 1876, succeeding a proprietorship established in 1859 and is engaged primarily in the sale, manufacture, installation and service of automated self-service transaction systems, security products and software.
During 1994, no significant changes occurred in the manner of conducting the Registrant's business.
(b) Financial Information about Industry Segments - -------------------------------------------------
The Registrant operates predominantly in one industry segment: financial systems and equipment. This segment accounts for more than 90% of the consolidated net sales, operating profit and identifiable assets.
(c) Description of Business - ---------------------------
The Registrant develops, manufactures, sells and services automated teller machines (ATMs), electronic and physical security systems, various products used to equip bank facilities, software and systems for global financial and commercial markets. Sales of systems and equipment are made directly to customers by the Registrant's sales personnel and by manufacturer's representatives and distributors. The sales/support organization works closely with customers and their consultants to analyze and fulfill the customers' needs. Products are sold under contract for future delivery at agreed upon prices. In 1994, 1993, and 1992 the Registrant's sales and services of financial systems and equipment accounted for more than 90% of consolidated net sales.
The principal raw materials used by the Registrant are steel, copper, brass, lumber and plastics which are purchased from various major suppliers. Electronic parts and components are also procured from various suppliers. These materials and components are generally available in quantity at this time.
No customer of the Registrant accounted for more than 10% of consolidated net sales in 1994, and no material part of the business is dependent upon a single customer or a few customers, the loss of any one or more of whom would have a material adverse effect on the business of the Registrant.
Backlog as of December 31, 1994 was $152,511,000 a 5% decrease from December 31, 1993 backlog of $161,303,000. The Registrant believes, however, that with varying customer lead time requirements and other industry factors, order backlog information is not, by itself, a meaningful indicator of future revenue streams. There are numerous factors which influence the amount and timing of revenue in future periods.
ITEM 1. BUSINESS. - (continued) - ------- ---------
All phases of the Registrant's business are highly competitive; some products being in competition directly with similar products and others competing with alternative products having similar uses or producing similar results. Registrant believes, based upon outside independent industry surveys, that it is the leading manufacturer of automated teller machines in the United States and is also a market leader internationally. In the area of automated transaction systems, the Registrant competes primarily with AT&T Global Information Systems (formerly NCR Corporation) and Fujitsu - ICL Systems, Inc. In serving the security products market for the financial services industry, the Registrant meets numerous large competitors in the security equipment and systems field. Of these, some compete in only one or two product lines, while others sell a broader spectrum of products competing with the Registrant. However, the unavailability of comparative sales information and the large variety of individual products makes it impossible to give reasonable estimates of the Registrant's competitive ranking in or share of the market in its security product fields of activity. Many smaller manufacturers of safes, surveillance cameras, alarm systems and remote drive-up equipment are found in the market.
The Registrant charged to expense approximately $34.5 million in 1994, $25.5 million in 1993 and $24.5 million in 1992 for research and development costs.
Compliance by the Registrant with federal, state and local environmental protection laws during 1994 had no material effect upon capital expenditures, earnings or the competitive position of the Registrant and its subsidiaries.
The total number of persons employed by the Registrant at December 31, 1994 was 4,731 compared to 4,202 at the end of the preceding year.
(d) Financial Information about Foreign and Domestic - ---------------------------------------------------- Operations and Export Sales ---------------------------
Sales to customers in foreign countries approximated 19.8%, 17.6% and 18.2% of consolidated net sales for 1994, 1993 and 1992, respectively.
ITEM 2.

ITEM 2. PROPERTIES. - ------- -----------
The Registrant's corporate offices are located in Canton, Ohio. It owns facilities (approximately 1.6 million square feet) in Canton, Uniontown and Newark, Ohio; Lynchburg, Virginia; Sumter, South Carolina; and leases facilities (approximately .3 million square feet) in Akron, Canton, Canal Fulton, Massillon, Newark and Seville, Ohio; Mexico City, Mexico; and Shanghai, China. These facilities house manufacturing, production, associated engineering, warehousing, testing, administration and development and distribution for all product lines. The Registrant believes these facilities are both suitable and adequate for existing operations.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS. - ------- ------------------
At December 31, 1994, the Registrant was a party to several lawsuits that were incurred in the normal course of business, none of which individually or in the aggregate is considered material in relation to the Registrant's financial position or results of operations.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. - ------- ----------------------------------------------------
No matters were submitted to a vote of security holders during the fourth quarter of 1994.
ITEM 4a. EXECUTIVE OFFICERS OF THE REGISTRANT. - -------- -------------------------------------
Refer to pages 6 through 9.
There is no family relationship, either by blood, marriage or adoption, between any of the executive officers of the Registrant.
PART II.
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND - ------- --------------------------------------------- RELATED STOCKHOLDER MATTERS. ----------------------------
On February 1, 1994 the Board of Directors of the Registrant declared a three-for-two stock split which was effected in the form of a stock dividend, distributed on February 22, 1994 to shareholders of record on February 10, 1994. Accordingly, all numbers of Common Shares, except authorized shares and treasury shares, and all per share data have been restated to reflect this stock split in addition to the three-for-two stock split declared on January 27, 1993, distributed on February 26, 1993, to shareholders of record on February 10, 1993.
The Common Shares of the Registrant are listed on the New York Stock Exchange with a symbol of DBD. The price ranges of Common Shares for the Registrant are as follows:
There were approximately 3,400 registered shareholders of record at December 31, 1994.
On the basis of amounts paid and declared the annualized quarterly dividends per share were $0.88 in 1994, $0.80 in 1993 and $0.75 in 1992.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA. - ------- ------------------------
NET SALES Consolidated net sales for 1994 totaled $760,171, which represented growth of $136,894 or 22.0 percent from 1993, and $216,319 or 39.8 percent from 1992. This was the Registrant's fifth consecutive year of record sales.
Product sales of $479,314 grew $111,929 or 30.5 percent from 1993 and $181,275 or 60.8 percent from 1992. The Registrant continued to experience strong growth in domestic sales of ATMs, and also realized increases in domestic sales from all other major product lines during 1994. Total domestic product revenue was up 30.5 percent from 1993. Sales of products outside the U.S. increased 30.4 percent from 1993. The planned decline in fees received by InterBold for the sale of ATMs manufactured by IBM reduced the sales growth of Registrant's products abroad.
Service net sales of $280,857 increased $24,965 or 9.8 percent from 1993 and were up $35,044 or 14.3 percent from 1992. The major factors contributing to the service revenue gain in 1994 were the continuing growth of the installed base of equipment resulting from new product installations, growth of new service offerings such as first-line maintenance and the acquisition of Mexico's largest ATM service business.
Total product backlog of unfilled orders was $152,511 at December 31, 1994, compared to $161,303 at the end of 1993 and $106,122 at the end of 1992. In response to customer requirements for shorter manufacturing lead times, the Registrant has committed to reducing its production cycle time. The Registrant believes that due to varying customer lead time requirements and other industry factors, order backlog information is not, by itself, a meaningful indicator of future revenue streams. There are numerous factors which influence the amount and timing of revenue in future periods.
COST OF SALES AND EXPENSES Consolidated cost of sales for 1994 was $504,489, compared to $413,239 in 1993 and $358,031 in 1992.
Gross profits on product sales increased $33,180 and $55,019 from 1993 and 1992, respectively, to a level of $167,524 in 1994. Product gross margins in 1994 were 35.0 percent of product sales, compared to 36.6 percent in 1993 and 37.7 percent in 1992.
The anticipated reduction in license fees received from IBM by InterBold reduced gross margin percentages. This trend has continued as these fees have become a smaller percentage of total ATM sales as a result of continuing international market acceptance of the InterBold i and ix Series ATMs. The Registrant believes the planned phase-out of the fees will have minimal effect on product gross margin percentages going forward. Excluding the effect of the fees, product gross margins continued to improve in 1994.
Service gross profits of $88,158 in 1994 increased from $75,694 in 1993 and $73,316 in 1992. Service gross margins as a percentage of service sales also improved to 31.4 percent from 29.6 percent in 1993 and 29.8 percent in 1992. Even with the establishment of money-back guarantees for service performance, cost controls and improved reliability of products enabled service profitability to improve. The performance of Diebold Mexico's service business which was acquired at the beginning of 1994 also contributed favorably to service gross margins.
Supporting the Registrant's volume growth and market expansion, operating expenses increased $23,960 or 17.0 percent from 1993 and were $32,888 or 24.9 percent above 1992. Total operating expenses of $164,908 in 1994 improved to 21.7 percent of net sales, from 22.6 percent in 1993 and 24.3 percent in 1992.
Operating profit of $90,774 in 1994 represented an increase of $21,684 or 31.4 percent from 1993 and $36,973 or 68.7 percent from 1992. Operating profit again grew faster than net sales as manufacturing cost reductions and expense controls allowed the operating profit margin to widen from 11.1 percent and 9.9 percent in 1993 and 1992, respectively, to 11.9 percent in 1994.
OTHER INCOME, NET AND MINORITY INTEREST Other income, net decreased $512 or 9.0 percent from 1993 but was $1,633 or 46.4 percent above 1992. Investment income increased slightly in 1994 due to rising interest rates and return on investment in lease receivables. The increase in investment income was offset, however, by increases in certain expenses related to Registrant-owned insurance contracts and amortization related to the purchase of certain assets.
Minority interest of $1,948 decreased from $4,239 in 1993 and consisted primarily of income or losses allocated to the minority ownership of InterBold and Diebold Financial Equipment Company, Ltd. (China). Minority interests for both companies are calculated as a percentage of profits of the joint ventures based on formulas defined in the partnership agreements.
INCOME Income before taxes and cumulative effect of change
in accounting principles amounted to $93,978 in 1994. This was an increase of $23,463 or 33.3 percent from 1993 and $39,142 or 71.4 percent from 1992. Income before taxes and cumulative effect of change in accounting principles also improved as a percentage of sales, representing 12.4 percent in 1994 compared to 11.3 percent in 1993 and 10.1 percent in 1992.
The effective tax rate was 32.4 percent in 1994, compared to 31.4 percent in 1993 and 25.0 percent in 1992. The primary reason for the higher tax rate in 1994 was a reduction in tax-exempt interest as a percentage of pretax income. The 1992 rate was favorably affected by the settlement of a tax case involving accounting for rotatable spare parts. Details of the reconciliation between the U.S. statutory rate and the effective tax rate are included in Note 12 of the 1994 Consolidated Financial Statements.
Income before cumulative effect of change in accounting principles increased to $63,511 or 8.4 percent of consolidated net sales, compared to income of $48,374 or 7.8 percent of net sales in 1993 and $41,137 or 7.6 percent of net sales in 1992.
MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITION The Registrant continued to enhance its financial position during 1994. Total assets increased $52,864 or 8.7 percent to a 1994 year-end level of $661,883. Asset turnover (excluding cash, cash equivalents and short-term and long-term investment securities) increased to 1.89 in 1994 from 1.78 in 1993.
Total current assets at December 31, 1994, of $326,089 represented an increase of $14,589 or 4.7 percent from the prior year-end. The increase in trade receivables and inventories comprises the majority of this increase and is a result of higher sales volumes and expansion of international operations in 1994. Trade receivables increased $23,851 or 18.5 percent to a December 31, 1994, level of $153,107. However, as a percentage of consolidated net sales, trade receivables continued to decline from 22.2 percent and 20.7 percent in 1992 and 1993, respectively, to a 1994 level of 20.1 percent. Inventories at year-end 1994 totaled $85,543 which represented an increase of $10,560 or 14.1 percent from 1993.
Long-term securities and other investments declined by $25,532 or 14.1 percent to a December 31, 1994, level of $155,800 largely due to maturities of tax- exempt municipal bonds, which were reinvested into certain other assets. The Registrant anticipates being able to meet both short- and long-term operational funding requirements without liquidating individual securities prior to maturity by varying the length and timing of maturities within the portfolio. However, since most of these securities are marketable, they could readily be converted into cash and cash equivalents if needed. The Registrant adopted the provisions of the Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," effective January 1, 1994.
Total property, plant and equipment, net of accumulated depreciation, was $64,713 at the end of 1994, which results in an increase of $4,053 or 6.7 percent over prior year-end. Capital expenditures were $22,641 in 1994 compared with $18,343 in 1993. This increase resulted primarily from the need to meet higher manufacturing capacity requirements, capital investments in new foreign operations and expansion of facilities for research, development and administration. Other assets increased as a result of increases in net lease receivables and certain assets acquired in relation to new businesses.
Total current liabilities at December 31, 1994, were $155,464, representing an increase of $16,893 or 12.2 percent from the prior year-end. The primary reason for the increase in current liabilities was an increase in accounts payable of $16,370 or 36.7 percent to a level of $60,962, reflecting increased purchasing activity to support higher sales volumes. The Registrant's current ratio was 2.1 at the end of 1994, compared to 2.3 at the end of 1993.
At December 31, 1994, the Registrant had lines of credit totaling $40,000, all unrestricted as to use. Due to the strong liquidity position, the Registrant continued its practice of having no long-term debt. The Registrant's financial position provides it with sufficient resources to meet projected future capital expenditures, dividend and working capital requirements. However, if the need arises, the Registrant's financial position should ensure the availability of adequate additional financial resources.
Minority interests of $15,028 represented the minority interest in InterBold owned by IBM and the minority interests in Diebold Financial Equipment Company, Ltd. (China) owned by the Shanghai FarEast Aero-Technology Import and Export Corporation and the Industrial and Commercial Bank of China, Shanghai Pudong Branch. Shareholders' equity increased $32,172 or 7.5 percent to $459,219 at December 31, 1994. Included within shareholders' equity are a translation adjustment related to the year-end revaluation of foreign net assets and the effects of adopting Statement of Financial Accounting Standards No. 115. Shareholders' equity per share was $15.08 at the end of 1994 compared to $14.11 in 1993. The Common Shares of the Registrant are
listed on the New York Stock Exchange with a symbol of DBD. There were approximately 3,400 shareholders of record as of December 31, 1994.
The Board of Directors declared a first-quarter 1995 cash dividend of $0.24 per share. This amount, which represents a 9.0 percent increase from the prior year's quarterly dividend rate, will be paid on March 10, 1995, to shareholders of record on February 17, 1995. Comparative quarterly cash dividends paid in 1994 and 1993 were $0.22 and $0.20, respectively.
MANAGEMENT'S ANALYSIS OF CASH FLOWS During 1994, the Registrant generated $41,333 in cash from operating activities, compared to $94,577 in 1993 and $86,485 in 1992. In addition to net income of $63,511, adjusted for depreciation, amortization and other charges of $31,014, increases in accounts payables of $16,370 also aided cash provided by operations. Cash in operations was utilized to fund long-term lease receivables and increases in inventory levels and trade receivables as a result of additional sales volumes and formation of international operations. Expressed as a percentage of total assets employed, the Registrant's cash yield from operations was 6.2 percent in 1994 and 15.5 percent in 1993 and 1992. Cash generated from operating activities in 1994 was used to reinvest $40,615, net, in assets of the Registrant, compared with $63,303 in 1993 and $58,838 in 1992. The Registrant returned $26,682 to shareholders in the form of cash dividends paid during 1994, which was a 10.3 percent increase from 1993 and an 18.8 percent increase from 1992.
OTHER BUSINESS INFORMATION In January 1994, the Registrant purchased 100 percent of the ATM distribution and certain related businesses of Hidromex, S.A. de C.V., to form Diebold Mexico, S.A. de C.V. This new subsidiary is responsible for the distribution and service of ATMs and certain other products in the Mexican market. In January 1994, the Registrant also acquired a 50 percent interest in OLTP ATM Systems, C.A. which distributes, installs and services ATMs and certain other products in Venezuela. Both of these actions were part of a continuing strategy to strengthen the Registrant's international competitiveness by actively seeking acquisitions, joint ventures and strategic alliances throughout the world. As operations are established in foreign locations, the Registrant recognizes that an increasing number of business transactions will involve foreign currencies. To minimize foreign currency exchange risk, the Registrant denominates transactions in U.S. dollars whenever feasible. However, when that is not possible, the Registrant utilizes a strategy of matching monetary assets and liabilities in each currency to the extent practicable.
The Registrant also has a continuing strategy to leverage its technological expertise into new product applications and new markets for its products. At December 31, 1994, the Registrant owned 100 percent of MedSelect Systems, Inc., which was originally formed as a joint venture with Daily-Med, Inc. in 1993. MedSelect Systems, now a division of the Company, develops, manufactures and distributes medical supply, medication control and dispensing systems.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DIEBOLD, INCORPORATED AND SUBSIDIARIES (Dollars in thousands except per share amounts)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Registrant and its subsidiaries. All significant inter-company accounts and transactions have been eliminated.
STATEMENTS OF CASH FLOWS
For the purposes of the Consolidated Statements of Cash Flows, the Registrant considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Cash paid during 1994, 1993 and 1992 for income taxes amounted to $37,488, $30,134 and $16,898, respectively.
FOREIGN OPERATIONS
The Registrant translates the assets and liabilities of its foreign subsidiaries at the exchange rates in effect at year-end and the results of operations at the average rate throughout the year. The translation adjustments are recorded directly as a separate component of shareholders' equity, while transaction gains (losses) are included in net income. The Registrant does not have any investment-type transactions or any unperformed forward exchange contracts.
Sales to customers in foreign countries approximated 19.8 percent, 17.6 percent and 18.2 percent of net sales in 1994, 1993 and 1992, respectively. The investment used to generate this sales volume is considered immaterial by management.
TRADE RECEIVABLES AND SALES
Revenue, after provision for installation, is generally recognized based on the terms of the contracts which, for product sales, is usually when material to be installed for customer orders is shipped from the plants.
The equipment that is sold is usually shipped and installed within one year. Installation that extends beyond one year is ordinarily attributable to causes not under the control of the Registrant.
The concentration of credit risk in the Registrant's trade receivables with respect to the banking and financial services industries is substantially mitigated by the Registrant's credit evaluation process, reasonably short collection terms and the geographical dispersion of sales transactions from a large number of individual customers. The Registrant maintains allowances for potential credit losses, and such losses have been minimal and within management's expectations.
INVENTORIES
Inventories are valued principally at the lower of cost or market applied on a first-in, first-out basis. Cost is determined on the basis of actual cost.
SECURITIES AND OTHER INVESTMENTS
Effective January 1, 1994, the Registrant adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which requires that investments in debt and marketable equity securities be designated as held-to-maturity, trading or available-for-sale.
Held-to-maturity securities are stated at cost and no adjustment is made in the financial statements for unrealized holding gains and losses.
Trading securities are stated at fair value and unrealized holding gains and losses are included in income.
Securities that are not classified as held-to-maturity or trading are classified as available-for-sale and are carried at fair value with the unrealized holding gains and losses, net of tax, reported as a separate component of shareholders' equity.
There is no cumulative effect resulting from the adoption of Statement 115.
Prior to 1994, the Registrant followed Statement of Financial Accounting Standards No. 12, "Accounting for Certain Marketable Securities."
DEPRECIATION AND AMORTIZATION
Depreciation of property, plant and equipment is computed using the straight-line method for financial statement purposes. Accelerated methods of depreciation are used for federal income tax purposes. Amortization of leasehold improvements is based upon the shorter of original terms of the lease or life of the improvement.
RESEARCH AND DEVELOPMENT
Total research and development costs charged to expense were $34,476, $25,493 and $24,452 in 1994, 1993 and 1992, respectively.
OTHER ASSETS
Purchased contracts, deferred charges and certain other assets are stated at cost and are amortized ratably over a period of three to 25 years.
DEFERRED INCOME
Deferred income is recognized for customer billings in advance of the period in which the service will be performed and is recognized in income on a straight-line basis over the contract period.
TAXES ON INCOME
Effective January 1, 1992, the Registrant adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." There was no cumulative effect on the consolidated income statement resulting from the adoption of Statement 109.
RECLASSIFICATIONS
The Registrant has reclassified the presentation of certain prior-year information to conform with the current presentation format.
NOTE 2: RELATED PARTY TRANSACTIONS
INTERBOLD JOINT VENTURE
The consolidated financial statements include the accounts of InterBold, a joint venture between the Registrant and IBM, of which the Registrant owns 70 percent. The joint venture provides ATMs and other financial self-service systems worldwide. IBM's ownership interest in InterBold is reflected in "minority interest" on the Registrant's Consolidated Balance Sheets. Net profits of InterBold are allocated based upon a formula as specified in the partnership agreement.
InterBold provides ATM and other financial self-service systems marketing and sales support for IBM's international sales and marketing organization, and the Registrant's U.S. sales and marketing organization, both of which sell and distribute InterBold products.
All research, development and engineering activities for the Registrant for self-service financial systems are the responsibility of the joint venture.
NOTE 3: FINANCIAL INSTRUMENTS
Effective January 1, 1994, the Registrant adopted the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which requires certain investments in marketable debt and equity securities to be classified as either trading, held-to-maturity or available-for-sale. At December 31, 1993, the Registrant's investment portfolio was stated at the lower of cost or market. At December 31, 1994, the investment portfolio was classified as available-for-sale due to the potential needs for liquidity to fund future acquisitions, joint ventures and strategic alliances throughout the world as part of a continuing strategy to strengthen the Registrant's international competitiveness. At December 31, 1994, the marketable debt and equity securities are stated at fair value and net unrealized holding losses of $1,649, net of tax, are included as a separate component of shareholders' equity until realized. The fair value of securities and other investments is estimated based on quoted market prices.
The Registrant's financial instruments, excluding insurance contracts at December 31, are summarized as follows:
NOTE 6: OTHER ASSETS
Included in other assets are net lease receivables and prepaid pension costs which are the excess of plan contributions over net periodic pension costs. Also, included in other assets were certain assets acquired in relation to new businesses.
NOTE 7: SHORT-TERM FINANCING
At December 31, 1994, bank credit lines approximated $40,000 with various banks for short-term financing. There were no short-term borrowings under these agreements at any time during 1994 and 1993.
The Registrant has informal understandings with certain of the banks to maintain compensating balances which are not legally restricted as to withdrawal. The lines of credit can be withdrawn at each bank's option.
NOTE 8: SHAREHOLDERS' EQUITY
On February 1, 1994, the Board of Directors declared a three-for-two stock split effected in the form of a stock dividend, distributed on February 22, 1994, to shareholders of record on February 10, 1994. Accordingly, all numbers of Common Shares, except authorized shares and treasury shares, and all per share data have been restated to reflect this stock split in addition to the three-for-two stock split declared on January 27, 1993, distributed on February 26, 1993, to shareholders of record on February 10, 1993. On the basis of amounts declared and paid, the annualized quarterly dividends per share were $0.88 in 1994, $0.80 in 1993 and $0.75 in 1992. Under the 1991 Equity and Performance Incentive Plan (1991 Plan), Common Shares are available for grant of options at a price not less than 85 percent of the fair market value of the Common Shares on the date of grant. Options are exercisable in cumulative annual installments over five years, beginning one year from the date of grant. The number of Common Shares that may be issued or delivered pursuant to the 1991 Plan is 1,451,250, of which 1,170,901 shares were available for issuance at December 31, 1994. The 1991 Plan will expire on April 2, 2002. The 1991 Plan replaced the Amended and Extended 1972 Stock Option Plan (1972 Plan), which expired by its terms on April 2, 1992. Awards already outstanding under the 1972 Plan are unaffected by the adoption of the 1991 Plan.
At December 31, 1994, there were 82,506 and 79,057 shares subject to options issued under the 1991 Plan and the 1972 Plan, respectively, that were exercisable. The 1991 Plan also provides for the issuance of restricted shares without cost to certain employee associates. Outstanding awards granted at December 31, 1994, for both plans totaled 162,000 restricted shares. The shares are subject to forfeiture under certain circumstances. Unearned compensation representing the fair market value of the shares at the date of grant will be charged to income over the three-to-five-year vesting period. The 1991 Plan also provides for the issuance of Common Shares based on certain management objectives achieved within a specified performance period of at least one year as determined by the Board of Directors. The management objectives set in 1994 are based on a three-year performance period ending December 31, 1996. The management objectives for the period ended December 31, 1994, were set in April 1992. The objectives were exceeded and shares were issued in 1995. In February 1989, the Board of Directors declared a dividend distribution of one right for each outstanding Common Share of the Registrant. Pursuant to the Rights Agreement covering the Shareholder Rights Plan, each right entitles the registered holder to purchase one one-hundredth of a share of Cumulative Redeemable Serial Preferred Shares, without par value, at a price of $130. The rights become exercisable 20 days after a person or group acquires 20 percent or more of the Registrant's shares. At that time, rights certificates would be issued and could be traded independently from the Registrant's shares. If the Registrant is involved in certain mergers or other business combination transactions at any time after the rights become exercisable, then the rights will be modified so as to entitle the holder to buy a number of an acquiring company's shares having a market value of twice the exercise price of each right. In addition, if a holder of 20 percent or more acquires the Registrant by means of a reverse merger in which the Registrant and its shares survive, or engages in certain other self-dealing transactions with the Registrant, each right not owned by the acquirer will become exercisable for a number of Common Shares of the Registrant with a market value of two times the exercise price of the right. The rights are redeemable for $0.01 per right at any time before 20 percent or more of the Registrant's shares have been acquired, and will expire on February 10, 1999, unless redeemed earlier by the Registrant. As a result of the stock split effected on February 22, 1994, each Common Share is currently accompanied by four-ninths of a right.
NOTE 9: INCOME PER SHARE
The income per share computations are based upon the weighted average number of Common Shares outstanding during each year. The inclusion in the computation of incremental shares applicable to outstanding stock options and performance shares would have no material effect.
NOTE 10: PENSION PLANS AND POSTRETIREMENT BENEFITS
The Registrant has several pension plans covering substantially all employee associates. Plans covering salaried employee associates provide pension benefits that are based on the employee associate's compensation during the 10 years before retirement. The Registrant's funding policy for those plans is to contribute annually at an actuarially determined rate. Plans covering hourly employee associates and union members generally provide benefits of stated amounts for each year of service. The Registrant's funding policy for those plans is to make at least the minimum annual contributions required by applicable regulations. Approximately 90 percent of the plan assets at December 31, 1994, were invested in listed stocks and investment grade bonds.
Minimum liabilities have been recorded in 1994, 1993 and 1992 for the plans whose total accumulated benefit obligation exceeded the fair value of the plan's assets. The Registrant offers an employee associate 401(k) Savings Plan (Savings Plan) to encourage eligible employee associates to save on a regular basis, by payroll deductions, and to provide them with an opportunity to become shareholders of the Registrant. Under the Savings Plan in 1994, the Registrant matched 80 percent of a participating employee associate's first 4 percent of earnings and 40 percent of a participating employee associate's second 4 percent of earnings.
In addition to providing pension benefits, the Registrant provides certain healthcare and life insurance benefits for retired employee associates. Eligible employee associates may be entitled to these benefits based upon years of service with the Registrant, age at retirement and collective bargaining agreements.
Effective January 1, 1992, the Registrant adopted the provisions of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions." Under Statement 106, the Registrant records such postretirement benefit costs during the periods in which employee associates provide services for such benefits. The Registrant elected immediate recognition of the transition charge associated with adopting Statement 106 by recording a one-time charge of $17,932, net of $10,990 in income taxes, as a cumulative effect of change in accounting principle.
The transition obligation represented accumulated postretirement benefits associated with service rendered prior to January 1, 1992, by eligible current and former employee associates. Presently, the Registrant has made no commitments to increase these benefits for existing retirees or for employee associates who may become eligible for these benefits in the future. Currently there are no plan assets and the Registrant funds the benefits as the claims are paid.
The effect of a one percentage point annual increase in the assumed healthcare cost trend rate would increase the service and interest cost components of the healthcare benefits from $1,783 to $1,942, an 8.9 percent increase.
Measurement of the accumulated postretirement benefit obligation at December 31, was based on a discount rate of 7.25 percent in 1994 and 1993.
Under the provisions of Statement 106, the postretirement benefit obligation was determined by application of the terms of medical and life insurance plans together with relevant actuarial assumptions and healthcare cost trend rates projected at annual rates declining from 13.2 percent in 1994 to 5.3 percent through the year 2026. The effect of a one percentage point annual increase in these assumed healthcare cost trend rates would increase the healthcare accumulated postretirement benefit obligation from $25,121 to $27,426, a 9.2 percent increase.
Rental expense for 1994, 1993 and 1992 under all lease agreements amounted to approximately $18,100, $16,500 and $15,900, respectively.
Deferred tax assets amounted to $46,308 and $37,706 and deferred tax liabilities amounted to $16,694 and $21,775 at December 31, 1994, and 1993, respectively. No valuation allowance was required for the deferred tax assets.
In 1990, the Registrant filed petitions with the United States Tax Court to protest the Internal Revenue Service's (IRS) proposed deficiencies for the years 1978 through 1982. The IRS disagreed with the Registrant's position that rotatable spare parts (used in the servicing of customer equipment) were fixed assets subject to depreciation and eligible for the Investment Tax Credit (ITC). It is the IRS's position that rotatable spare parts are not entitled to depreciation or ITC and should be accounted for as inventory, for tax purposes, and deducted only when sold or abandoned.
On December 11, 1992, the United States Tax Court entered its decision based on a resolution agreed upon by the IRS and the Registrant regarding the petitions the Registrant had filed to contest the proposed deficiencies for the years 1978 through 1982. In addition, on January 11, 1993, the Registrant and the IRS signed a closing agreement under Section 7121 of the Internal Revenue Code. This agreement applies to the years 1983 through 1990.
As a result of the Tax Court decision and the settlement reached with the IRS, the Registrant will account for its rotatable spare parts as inventory for tax purposes. Under this method of accounting, for tax purposes the value of the rotatable spare parts used to service customer equipment will be deducted as sold or abandoned.
The amounts the Registrant had reserved for the
years in question exceeded the total tax and related accrued interest payable to the IRS for the years noted above. The resolution of this tax case did not have a material impact upon the financial position of the Registrant.
NOTE 13: COMMITMENTS AND CONTINGENCIES
At December 31, 1994, the Registrant was a party to several lawsuits that were incurred in the normal course of business, none of which individually or in the aggregate is considered material in relation to the Registrant's financial position or results of operations.
NOTE 14: SEGMENT INFORMATION
The Registrant operates predominantly in one industry segment, financial systems and equipment. This industry segment accounts for more than 90 percent of the consolidated revenues, operating profit and identifiable assets.
NOTE 15: QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
See "Comparison of Selected Quarterly Financial Data (Unaudited)" on page 28 of this Annual Report on Form 10-K.
REPORT OF MANAGEMENT
The management of Registrant is responsible for the contents of the consolidated financial statements, which are prepared in conformity with generally accepted accounting principles. The consolidated financial statements necessarily include amounts based on judgments and estimates. Financial information elsewhere in the Form 10-K is consistent with that in the consolidated financial statements. The Registrant maintains a comprehensive accounting system which includes controls designed to provide reasonable assurance as to the integrity and reliability of the financial records and the protection of assets. An internal audit staff is employed to regularly test and evaluate both internal accounting controls and operating procedures, including compliance with the Registrant's statement of policy regarding ethical and lawful conduct. The role of KPMG Peat Marwick LLP, the independent auditors, is to provide an objective review of the consolidated financial statements and the underlying transactions in accordance with generally accepted auditing standards. The report of KPMG Peat Marwick LLP accompanies the consolidated financial statements. The Audit Committee of the Board of Directors, composed of directors who are not members of management, meets regularly and separately with management, the independent auditors and the internal auditors to ensure that their respective responsibilities are properly discharged. KPMG Peat Marwick LLP and the Director of Internal Audit have full and free access to the Audit Committee.
Gerald F. Morris Executive Vice President and Chief Financial Officer
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING - ------- ----------------------------------------------------------- AND FINANCIAL DISCLOSURE. -------------------------
There have been no changes in accountants or disagreements with accountants on accounting and financial disclosures.
PART III.
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. - -------- ---------------------------------------------------
Information with respect to directors of the Registrant is included on pages 3 through 9 of the Registrant's proxy statement for the 1995 Annual Meeting of Shareholders ("1995 Annual Meeting") and is incorporated herein by reference. Refer to pages 6 through 9 of this Form 10-K for information with respect to executive officers.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION. - -------- -----------------------
Information with respect to executive compensation is included on pages 9 through 20 of the Registrant's proxy statement for the 1995 Annual Meeting and is incorporated herein by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. - -------- ---------------------------------------------------------------
Information with respect to security ownership of certain beneficial owners and management is included on pages 1 through 7 of the Registrant's proxy statement for the 1995 Annual Meeting and is incorporated herein by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. - -------- -----------------------------------------------
The information with respect to certain relationships and related transactions set forth under the caption "Compensation Committee Interlocks and Insider Participation" on page 9 of the Registrant's proxy statement for the 1995 Annual Meeting is incorporated herein by reference.
PART IV.
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K. - -------- ---------------------------------------------------------------
(a) Documents filed as a part of this report.
1. The following additional information for the years 1994, 1993 and 1992 is submitted herewith:
Independent Auditors' Report on Financial Statements and Financial Statement Schedule
SCHEDULE VIII. Valuation and Qualifying Accounts
All other schedules are omitted, as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K. - -------- --------------------------------------------------------------- (continued)
2. Exhibits
3.1 (i) Amended and Restated Articles of Incorporation of Diebold, Incorporated.
3.1 (ii) Code of Regulations -- incorporated by reference to Exhibit 4(c) to Registrant's Post-Effective Amendment No. 1 to Form S-8 Registration Statement No. 33-32960.
3.2 Certificate of Amendment by Shareholders to Amended Articles of Incorporation of Diebold, Incorporated -- incorporated by reference to Exhibit 3.1 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992.
4. Rights Agreement dated as of February 10, 1989 between Diebold, Incorporated and Ameritrust Company National Association -- incorporated by reference to Exhibit 2.1 to Registrant's Registration Statement on Form 8-A dated February 10, 1989.
* 10.1 Form of Employment Agreement as amended and restated as of September 13, 1990 -- incorporated by reference to Exhibit 10.1 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1990.
* 10.2 Schedule of Certain Officers who are Parties to Employment Agreements in the form of Exhibit 10.1. -- incorporated by reference to Exhibit 10.2 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992.
* 10.3 Supplemental Pension Agreement with Raymond Koontz.
* 10.4 Supplemental Retirement Benefit Agreement with Robert W. Mahoney.
* 10.5 Supplemental Employee Retirement Plan (as amended January 1, 1994).
10.6 Amended and Restated Partnership Agreement dated as of September 12, 1990 -- incorporated by reference to Exhibit 10 to Registrant's Form 8-K dated September 26, 1990.
* 10.7 1985 Deferred Compensation Plan for Directors of Diebold, Incorporated -- incorporated by reference to Exhibit 10.7 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992.
* 10.8 1991 Equity and Performance Incentive Plan -- incorporated by reference to Exhibit 4(a) to Registrant's Form S-8 Registration Statement No. 33-39988.
* Reflects management contract or other compensatory arrangement required to be filed as an exhibit pursuant to Item 14(c) of this report.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K. - -------- --------------------------------------------------------------- (continued)
* 10.9 Long-Term Executive Incentive Plan -- incorporated by reference to Exhibit 10.9 of Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.
* 10.10 1992 Deferred Incentive Compensation Plan (as amended and restated as of July 1, 1993) -- incorporated by reference to Exhibit 10.10 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.
* 10.11 Annual Incentive Plan -- incorporated by reference to Exhibit 10.11 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992.
* 10.12 Employment Agreement with Robert P. Barone -- incorporated by reference to Exhibit 10.12 to Registrant's Form 10-Q for the quarter ended September 30, 1994.
21. Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
24. Power of Attorney.
27. Financial Data Schedule.
* Reflects management contract or other compensatory arrangement required to be filed as an exhibit pursuant to Item 14(c) of this report.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DIEBOLD, INCORPORATED
March 9, 1995 By: /s/Robert W. Mahoney - ------------- ----------------------- Date Robert W. Mahoney Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
INDEPENDENT AUDITORS' REPORT ON ------------------------------- FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE -----------------------------------------------------
The Board of Directors Diebold, Incorporated
We have audited the accompanying consolidated balance sheets of Diebold, Incorporated and Subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1994. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in Item 14 (a)(1) of Form 10-K of Diebold, Incorporated for each of the years in the three-year period ended December 31, 1994. These consolidated financial statements and financial statement schedule are the responsibility of the Registrant's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Diebold, Incorporated and Subsidiaries as of December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1994, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
As discussed in Notes 1 and 10 to the consolidated financial statements, the Registrant adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," and Statement of Financial Accounting Standards No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions," in 1992.
/s/KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP Cleveland, Ohio January 18, 1995


Item 1. Business ---------------------
The principal business of GATX Capital Corporation and subsidiaries (the "Company") is to provide and arrange equipment leases and other loan financing. The Company also manages a portfolio of leased equipment for its own account and the account of others. GATX Capital Corporation is a wholly- owned subsidiary of GATX Corporation.
Item 2.

Item 2. Properties ----------------------
The Company leases all of its office space and owns no materially important physical properties other than those related directly to its investment portfolio. The Company's principal offices are rented under a twelve year lease expiring in 2003.
Item 3.

Item 3. Legal Proceedings ---------------------------------
There are no legal proceedings pending to which the Company is a party, other than routine litigation in the normal course of business of the Company. The Company believes that the outcome of any lawsuit or claim which is pending or threatened will not have a material adverse effect on its financial condition or operations.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders -------------------------------------------------------------------------
Omitted under provisions of the reduced disclosure format.
				 PART II
Item 5.

Item 5. Market for the Registrant's Common Stock and Related Stockholder ----------------------------------------------------------------------------- Matters --------
Not applicable. All common stock of the Registrant is held by GATX Corporation. Information regarding dividends is shown on the consolidated statements of income and reinvested earnings included in Item 8.
Item 6.

Item 6. Selected Financial Data ---------------------------------------
Omitted under provisions of the reduced disclosure format.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and ----------------------------------------------------------------------------- Results of Operations ---------------------
Incorporate herein by reference to the Annual Report, pages 19, 21, 22 and 25, included as Exhibit 13 of this document.
Item 8.

Item 8. Financial Statements and Supplementary Data -----------------------------------------------------
The following consolidated financial statements of GATX Capital Corporation, included in the 1994 Annual Report (Exhibit 13), are incorporated herein by reference (page references are to the Annual Report):
Consolidated Statements of Income and Reinvested Earnings 	Years Ended December 31, 1994, 1993 and 1992 Page 20
Consolidated Balance Sheets 	As of December 31, 1994 and 1993 Page 23
Consolidated Statements of Cash Flows 	Years Ended December 31, 1994, 1993 and 1992 Page 24
Notes to Consolidated Financial Statements Pages 26-33
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and ----------------------------------------------------------------------------- Financial Disclosure ---------------------
None.
				 PART III
Item 10(a). Directors of the Registrant ----------------------------------------------
Name Office Held Since Age ------- -------------- -------- ------- James J. Glasser Chairman of the Board 1971 60 Joseph C. Lane President and Director 1994 41 Alan C. Coe Executive Vice President 			and Director 1994 43 Jesse V. Crews Executive Vice President 		 	and Director 1994 42 David M. Edwards Director 1990 43 Frederick L. Hatton Executive Vice President 		 	and Director 1984 52 Ronald H. Zech Director 1984 51
Item 10(b). Executive Officers of the Registrant
Name Office Held Since Age ------- -------------- -------- ------- Joseph C. Lane President, Director, and 			 Chief Executive Officer 1994 41 				 Frederick L. Hatton Executive Vice President 			 and Director 1984 52 Alan C. Coe Executive Vice President 			 and Director 1994 43 Jesse V. Crews Executive Vice President 			 and Director 1994 42 Michael E. Cromar Vice President and Chief 			 Financial Officer 1994 47 Cal C. Harling Senior Vice President 1994 46 Robert J. Sammis Senior Vice President 1993 48 Thomas C. Nord Vice President, General Counsel, 			 and Secretary 1980 54 George R. Prince Vice President and Treasurer 1983 50 Curt F. Glenn Principal Accounting Officer, 1992 40 			Vice President and Controller Valerie C. Williams Vice President - Human Resources 1989 50
JOSEPH C. LANE, President, Director and Chief Executive Officer since 1994. Mr. Lane joined the Company in 1979 as a Financial Analyst and has served as District Manager, Regional Manager, Vice President, Senior Vice President and Executive Vice President. Mr. Lane was formerly Vice President - Corporate Finance for Rotan Mosle Investment Bankers (two years) and a member of the Yale University Development Faculty (three years). Mr. Lane currently serves as a Director of the Equipment Leasing Association Board. He received a BA from Yale University in 1975.
FREDERICK L. HATTON, Executive Vice President and Director since 1984. Mr. Hatton joined the Company in 1983 as Senior Vice President and President of GATX Air. He is currently responsible for GATX Airlog. Prior to 1983, he served as Vice President-Marketing for two years, and Executive Vice President for four years with International Air Service Company (IASCO). Prior to IASCO, Mr. Hatton served in a number of managerial capacities for Flying Tiger Lines. He received a BS from Yale University in 1964, an MS in aerospace management from the University of Southern California in 1971, and an MBA from the Wharton School in 1972. Mr. Hatton served as a U.S. Marine Corps fighter pilot from 1964 to 1970 including a tour in Vietnam.
ALAN C. COE, Executive Vice President and Director since 1994. Mr. Coe joined the Company in 1977 as a Financial Analyst and has held a variety of positions both domestically and internationally. Prior to 1977, Mr. Coe served as an officer in the United States Air Force (four years) and as Vice President - Corporate Finance - with Rotan Mosle in Houston, Texas (three years). Mr. Coe received a BA from Southern Methodist University in 1973 and his MBA from Golden Gate University in 1976.
JESSE V. CREWS, Executive Vice President and Director since 1994. Mr. Crews joined the Company in 1977 as a Financial Analyst and had a variety of positions, including Regional Manager of the Singapore (two years) and New Orleans/Houston (five years) offices before returning to San Francisco in 1985. He has been broadly responsible for the development of new business investment opportunities for the Company's own portfolio since 1986 and as head of the Corporate Finance Group from 1990 to 1994. Mr. Crews received a BA from Yale and an MBA from the University of Virginia.
MICHAEL E. CROMAR, Vice President and Chief Financial Officer since October 1994. Prior to joining GATX, Mr. Cromar was Vice President, Treasurer and Chief Financial Officer at The Harper Group, Inc., a San Francisco based international logistics services company (two years). Previously, he served S.A. Louis-Dreyfus & Cie., principally as Senior Vice President, Finance and Information, for Gearbulk Ltd. an industrial bulk shipping joint venture in Bergen, Norway (four years). From 1982 to 1988 (five years) he was corporate controller and a director of information technology for American President Companies, Ltd. From 1975, he held a variety of financial management positions with Natomas Co., an energy resources company. Mr. Cromar began his career with Touche Ross & Co. where he was a Certified Public Accountant. He received a BS degree in Business Administration in 1972 from the University of Utah and was an infantry officer in the U.S. Army, including service in Vietnam.
CAL C. HARLING, Senior Vice President since 1994. Mr Harling joined the Company in 1987 as Vice President, Technology Financing. Prior to 1987 Mr. Harling was an independent consultant for two years. Mr. Harling worked for Decimus Corporation, a subsidiary of BankAmerica Corporation, for ten years starting in 1975. While at Decimus Mr. Harling held various positions including Vice President of Vendor Operating Leasing, Vice President of Portfolio Management, and other management positions in systems development. Mr. Harling received a BS from California State University, Sacramento in 1973.
ROBERT J. SAMMIS, Senior Vice President - Corporate Development since 1993. Mr. Sammis joined the Company in 1975 as Associate Counsel. He has served as a Senior Vice President in charge of Equipment Management and as Managing Director, International. Mr. Sammis is a Fulbright scholar and, in that capacity, taught law at the University of Los Andes, Bogota, Columbia. Prior to joining the Company, he was with Pillsbury, Madison & Sutro as Associate Counsel. Mr. Sammis received a BA from the University of California and a JD from the University of Michigan.
THOMAS C. NORD, Vice President and General Counsel since 1980. Mr. Nord joined the Company as Associate Counsel in 1977 and became Assistant General Counsel in 1978. Prior to 1977, Mr. Nord served as Counsel for Charter New York Leasing, an affiliate of Irving Trust Company (three years), and as an Associate in the New York law firm of Seward and Kissel (five years). Mr. Nord received a BA from Northwestern University in 1962 and a JD from the University of North Carolina in 1969.
GEORGE R. PRINCE, Vice President and Treasurer since 1983. Mr. Prince joined the Company in 1981 as Assistant Vice President - Corporate Development. In 1983, he was promoted to Vice President and Treasurer. Prior to 1981, Mr. Prince was Vice President for Continental Bank. Mr. Prince received his BS in 1966 from Cornell University and MBA in 1968 from Michigan State.
CURT F. GLENN, Principal Accounting Officer, Vice President and Controller since 1992. Mr. Glenn joined the company in 1980 as Assistant Tax Manager, was appointed Tax Manager in 1985 and elected Vice President in 1989. Prior to joining the Company, Mr. Glenn was a Senior Tax Analyst at GATX Corporation (two years) and a Senior Tax Accountant with Trans Union Corporation (four years). Mr. Glenn received a B.S. in Accounting from DePaul University in 1977. Mr. Glenn is currently Chairman of the Federal Tax Committee of the Equipment Leasing Association of America.
VALERIE C. WILLIAMS, Vice President - Human Resources since 1989. Prior to joining GATX, Ms. Williams was President of VC Williams & Associates, a human resources consulting firm; was Director, Corporate Compensation and Incentives at Carson Pirie Scott & Co. and Consultant, Compensation with A.S. Hansen, Inc. Ms. Williams received her MBA from Lake Forest College in 1980.
Items 11, 12 & 13 ----------------------
Omitted under provisions of the reduced disclosure format.
				 PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K --------------------------------------------------------------------------- (a) 1. Financial statements
The following consolidated financial statements of GATX Capital Corporation included in the Annual Report for the year ended December 31, 1994, are incorporated by reference in Item 8.
Consolidated Balance Sheets As of December 31, 1994 and 1993 Consolidated Statements of Income and Reinvested Earnings Years Ended December 31, 1994, 1993 and 1992 Consolidated Statements of Cash Flows Years Ended December 31, 1994, 1993 and 1992 Notes to Consolidated Financial Statements
2. Financial statement schedules
All financial statement schedules have been omitted because they are not applicable or because required information is provided in the financial statements, including the notes thereto, which are incorporated by reference in Item 8.
Item 14.(a) (continued) --------------------------- 3. Exhibits Required by Item 601 of Regulation S-K
Exhibit Number ----------- 3(a) Restated Certificate of Incorporation of the Company.(1) 3(b) By-laws of the Company.(2) 4(d) Term Loan Agreement between the Company and a Bank dated as of 	 December 26, 1990.(3) 10(a) Office Leases, Four Embarcadero Center, dated October 1, 1990 and 	 June 1, 1991, between the Company and Four Embarcadero Center 	 Venture.(3) 10(b) Tax Operating Agreement dated January 1, 1983 between GATX 	 Corporation and GATX Leasing Corporation.(4) 10(c) Preferred Stock and Tax Assumption program and Issuance of Common 	 Stock.(5) 10(d) Preferred Stock Redemption Agreement.(6) 10(e) Credit Agreement among the Company, the Subsidiaries listed in 	 Schedule II thereto, the Banks listed on the signature pages 	 thereto, and Chase Manhattan Bank, as agent for the Banks, 	 dated December 14, 1992.(7) 10(f) Credit Agreement among the Company, its two subsidiaries 		operating in Canada, and the Bank of Montreal, dated December 		14, 1992.(7) 10(g) Second Amendment, dated June 14, 1994, to Credit Agreement referred 		to in 10(f).(8) 10(h) Third Amendment, dated December 1, 1994, to Credit Agreement 		referred to in 10(f).(8) 10(i) Amendment No. 1, dated December 1, 1994, to Credit Agreement 		 referred to in 10(e).(8) 10(j) First Amendment, dated June 20, 1993, to Credit Agreement referred to in 10(f).(8) 12 Computation of Ratio of Earnings to Fixed Charges.(8) 13 Annual Report to Shareholder, pages 19-34.(8) 23 Consent of Independent Auditors.(8) 27 Financial Data Schedule.(8) 99 Listing of Medium Term Notes.(8)
The Registrant agrees to furnish to the Commission upon request a copy of each instrument with respect to issues of long-term debt of the Registrant the authorized principal amount of which does not exceed 10% of the total assets of Registrant.
(1) Incorporated by reference to Form 10-K filed with the Commission on 	 March 30, 1990. (2) Incorporated by reference to Registration Statement on Form S-1, as 	 amended, (file number 2-75467) filed with the Commission on 	 December 23, 1981, page II-4. (3) Incorporated by reference to Form 10-K filed with the Commission on 	 March 30, 1991. (4) Incorporated by reference to Form 10-K filed with the Commission on 	 March 28, 1983. (5) Incorporated by reference to Form 10-K filed with the Commission on 	 March 24, 1986. (6) Included in the Restated Certificate of Incorporation incorporated by 	 reference herein. (7) Incorporated by reference to Form 10-K filed with the Commission on 	 March 31, 1993. (8) Submitted to the Securities and Exchange Commission with the 	 electronic filing of this document.
Item 14(b). Reports on Form 8-K ----------------------------------------- No reports on Form 8-K have been filed during the last quarter of the period covered by this report.
Report of Independent Auditors
Board of Directors GATX Capital Corporation
We have audited the consolidated financial statements of GATX Capital Corporation (a wholly owned subsidiary of GATX Corporation) and subsidiaries listed in the accompanying index to financial statements (Item 14(a)). 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 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements listed in the accompanying index to financial statements Item 14(a)) present fairly, in all material respects, the consolidated financial position of GATX Capital Corporation and subsidiaries at December 31, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles.
In 1992, the Company changed its method of accounting for income taxes and postretirement benefits other than pensions effective January 1, 1992.
													 ERNST & YOUNG LLP
San Francisco, California January 24, 1995
				 SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
											 GATX CAPITAL CORPORATION 													 (Registrant)
												 By /s/ Joseph C. Lane 													 ------------------------------ 												 Joseph C. Lane President, Director, and Chief Executive Officer
												 March 27, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
By /s/ Joseph C. Lane By /s/ Michael E. Cromar ---------------------- --------------------------- Joseph C. Lane Michael E. Cromar President, Director, and Vice President and Chief Executive Officer Chief Financial Officer
Dated: March 27, 1995 Dated: March 27, 1995
By /s/ Curt F. Glenn By /s/ David M. Edwards ---------------- --------------------------- Curt F. Glenn David M. Edwards Principal Accounting Officer and Director Vice President & Controller
	Dated: March 27, 1995 Dated: March 27, 1995
By /s/ Jesse V. Crews By /s/ Alan C. Coe ----------------------- --------------------- Jesse V. Crews Alan C. Coe Executive Vice President Executive Vice President and Director and Director
	Dated: March 27, 1995 Dated: March 27, 1995