UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
                ____________________________________________________
                                     FORM 10-K
                         FOR ANNUAL AND TRANSITION REPORTS
                      PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934
(Mark One)

  X ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15 (d) OF THE  SECURITIES  EXCHANGE
    ACT OF 1934 [NO FEE REQUIRED]
    For the fiscal year ended June 30,1997

                                         OR
     TRANSITION REPORT  PURSUANT TO SECTION 13 OR 15 (d) OF THE  SECURITIES  
     EXCHANGE ACT  OF  1934  [NO  FEE   REQUIRED]   
     For  the transition period from  ______________ to  ______________  
     Commission file number 0-15167

                         Trans Leasing International, Inc.
               (Exact name of registrant as specified in its charter)

            Delaware                                           36-2747735
 (State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                           Identification No.)

      3000 Dundee Road, Northbrook, Illinois                     60062
      (Address of principal executive offices)                (Zip Code)

         Registrant's telephone number, including area code (847) 272-1000
       Securities registered pursuant to Sections 12(b) or 12(g) of the Act:

                                                       Name of each exchange on
      Title of each class                                  which registered
Common Stock, $.01 par value per share                  NASDAQ National Market

     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 by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained,  to the
Registrant's  best  knowledge,  in definitive  proxy or  information  statements
incorporated  by reference in Part II of this Form 10-K or any amendment to this
Form 10-K. [ ]

     The number of shares of Common  Stock,  Par Value  $.01 Per  Share,  of the
Registrant outstanding as of September 11, 1997, was 4,040,755. Excluding shares
beneficially  owned by directors and officers of the  Registrant,  the aggregate
market value of such  outstanding  shares on September 11, 1997  $18,326,812 was
based upon the average of the closing bid and asked  prices for the Common Stock
on the NASDAQ National Market on such date.

                        Documents Incorporated by Reference

     Part III  incorporates  information  by  reference  from  the  Registrant's
definitive  Proxy  Statement  for its 1997  Annual  Meeting to be filed with the
Securities and Exchange Commission within 120 days after the close of the fiscal
year.


                                       1
<PAGE>

                                       

--------------------------------------------------------------------------------

                                TABLE OF CONTENTS
PART I

ITEM                                                                  PAGE

1.   Business                                                          3

2.   Properties                                                        16

3.   Legal Proceedings                                                 16

4.   Submission of Matters to a Vote of Security Holders               16

PART II

ITEM

5.   Market for the Registrant's Common Equity and Related
     Stockholder Matters                                               17

6.   Selected Financial Data                                           18

7.   Management's Discussion and Analysis of Financial
     Condition and Results of Operations                               19

8.   Financial Statements and Supplementary Data                       27

9.   Disagreements on Accounting and Financial Disclosure              48

PART III

ITEM

10.  Executive Officers of the Registrant                              49

11.  Executive Compensation                                            50

12.  Security Ownership of Certain Beneficial Owners and Management    50

13.  Certain Relationships and Related Transactions                    50

PART IV

ITEM

14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K   50

     Signatures                                                        56




                                       2
<PAGE>

                                     FORM 10-K

                         TRANS LEASING INTERNATIONAL, INC.

                                       PART I



Item 1.     Business

GENERAL

     Trans  Leasing  International,  Inc.  (hereafter "the  Company"  or "Trans
Leasing")  leases  medical,   scientific  and  other  equipment  to  physicians,
osteopaths,  dentists and other health care  providers.  The Company also leases
general  office  equipment  and  automobiles  to health care  providers  and the
general commercial market. The Company believes that its lessees lease equipment
from Trans Leasing for a variety of reasons, including the speed and convenience
of acquiring such equipment from Trans Leasing, the reduced initial cash outlays
the Company requires and the potential tax benefits.

     At June 30, 1997, the Company's net investment in direct finance leases was
approximately  $271 million,  consisting of approximately  34,000 active leases.
Lease terms generally range from one to five years, with an average initial term
of  approximately 38 months.  The average cost of total equipment  purchased per
lease  originated  during fiscal 1997 was  approximately  $13,000.  The original
equipment  cost of each  item of  lease  equipment  generally  does  not  exceed
$100,000,  although  the Company may in the future lease more  equipment  with a
cost in excess of $100,000.  The  Company's  primary  market is the  continental
United States, with only limited leasing activities occurring in Canada,  Mexico
and Puerto Rico.

     The Company also functions as an insurance agent,  selling a limited amount
of property and casualty  insurance to its lessees.  The Company also  purchases
lease receivables  originated by third parties after Trans Leasing independently
verifies that such receivables meet its credit standards. At June 30, 1997, such
purchased lease receivables  approximated $7.0 million. In addition, the Company
is  currently  evaluating   opportunities  with  respect  to  larger  industrial
equipment leases.

     The  Company  believes  the  following  factors  have been  critical to its
success in the past and will remain critical to its success in the future:

  Business Strategy

          Trans Leasing  provides fast and convenient  financing to creditworthy
          applicants.

          The Company leases equipment through its LeaseCard program, supported
          by  the  Company's  Instant  Access  program.   Over  45,000  medical
          professionals and 20,000 commercial  accounts nationwide have utilized
          the LeaseCard program to date.

          Through its 72 member  sales,  marketing  and customer  service  staff
          located at the Company's  headquarters  and in its five regional sales
          offices, the Company has developed strong relationships with equipment
          manufacturers and dealers.

                                       3
<PAGE>

          The Company  distributes  LeaseCards to lessees and potential  lessees
          because it believes that having a LeaseCard  makes them more likely to
          choose  Trans  Leasing  over its  competitors,  even when dealing with
          manufacturers  and dealers that have not previously  worked with Trans
          Leasing.

          The lessee market  targeted by the Company has  historically  financed
          their equipment purchases through banks, leasing and finance companies
          and other financial  institutions.  Management  believes that the time
          required by many such financial  institutions to process  applications
          for credit has created a  significant  market for quick  financing for
          less expensive equipment.

  Credit Risk Management

          The Company  believes its credit loss  experience  compares  favorably
          with  other  "small-ticket" lessors  primarily  because of its credit
          evaluation  procedures,  the repeat  business it receives from current
          lessees  with known  payment  histories  and the fact that much of the
          equipment the Company leases is a source of income  generation for the
          lessees.

          The Company  believes that the diversified  nature of the equipment it
          leases  reduces the potential  impact of  technological  obsolescence,
          which could  adversely  affect the Company's  ability to collect lease
          receivables and residual values.

  Full Pay-Out & Operating Leases

          A  significant  portion  of the  Company's  equipment  leases are full
          pay-out  leases,  where the minimum  lease  payments in the  aggregate
          cover the full cost of the equipment plus an interest factor.

          Full pay-out leases reduce the Company's  exposure to  obsolescence of
          leased equipment.

          Substantially  all of the Company's  operating  leases are written for
          automobiles,  for which the Company has on average  received  the full
          amount of  residual  values  established  at the time the leases  were
          initiated.

  Funding Strategy

          The Company continues to aggressively  focus on minimizing its cost of
          funds by utilizing a funding  strategy based on  securitization.  This
          financing  method is believed  to provide the Company  with its lowest
          cost  long-term  financing.  The Company will  continue to monitor the
          private and public  markets to ensure it  maintains  a  cost-effective
          financing program.

LEASED EQUIPMENT

     The Company leases all types of moderately  priced medical,  scientific and
commercial  equipment  currently  in demand.  The Company  believes  that it has
benefited  and will  continue  to benefit  from  technological  advances,  which
stimulate  the demand for such  equipment.  The Company also leases all types of
automobiles.

                                       4
<PAGE>

     The following table sets forth certain  information about the categories of
equipment,  which includes  examples of the types of equipment  included in each
category, leased by the Company as of June 30, 1997.

<TABLE>
<CAPTION>


                                            Original
                                         Equipment Cost        % of      Number    % of
Category of Equipment                     ($ in 000's)        Total   of Leases   Total
                                         ----------------

Medical Equipment, including automated
  laboratory systems, endoscopy systems,
  ambulatory monitors and EKGs, diagnostic
  imaging systems, surgical equipment and
  diagnostic equipment, physical therapy
  equipment, medical exam tables, dental
<S>                                             <C>           <C>        <C>      <C>  
  chairs, microscopes and optical equipment     $184,685      41.4%      12,881   37.7%
 
Computer Equipment, including personal
  computers and laptops, network
  systems, desktop publishing and
<S>                                              <C>          <C>        <C>      <C>  
  document imaging systems                       120,396      27.0%      10,846   31.8%

<S>                                               <C>          <C>        <C>      <C> 
Automobiles                                       38,646       8.7%       1,476    4.3%

Office Equipment and Furniture,
  including photocopiers, facsimile
  machines, desks and furniture and
<S>                                               <C>          <C>        <C>     <C>  
  mail equipment                                  35,997       8.1%       3,489   10.2%

Telecommunications Equipment,
  including telephone systems and voice
<S>                                               <C>          <C>        <C>      <C> 
  mail systems                                    15,993       3.6%       1,482    4.4%

Other, including industrial machine
  tools, graphic arts equipment,
<S>                                               <C>         <C>         <C>     <C>  
  printing equipment and restaurant               49,846      11.2%       3,968   11.6%
  equipment

<S>                                             <C>          <C>         <C>     <C>   
      Total Equipment Cost                      $445,563     100.0%      34,142  100.0%
</TABLE>


     The percentages of each equipment  category relative to the total portfolio
may vary from time to time with marketing initiatives of equipment suppliers and
introductions of new or improved  products.  The Company believes that no single
type of  equipment  currently  accounts  for more than 10  percent  of the lease
portfolio.


                                       5
<PAGE>



LESSEES

     Two  thirds  of the  Company's  lessees  are  health  care  providers.  The
remaining one third is composed of other  professionals  and general  commercial
lessees.  The following  table provides the  approximate  lessee  composition of
Trans Leasing's portfolio as of June 30, 1997:

<TABLE>
<CAPTION>


      Original Equipment Cost
      Lessee Description                       ($ in         Percentage
                                                 000's)
                                               -----------   ------------

      Medical
<S>                                            <C>                  <C> 
         General Practice                      $   16,783           3.8%
         Family Practice                           19,597           4.4%
         Internal Medicine                         25,214           5.7%
         OB/GYN                                    14,943           3.3%
         Other MDs                                 68,234          15.3%
                                               -----------       --------
           Total Doctors (MDs)                    144,771          32.5%
                                               -----------       --------


<S>                                                <C>              <C> 
      Chiropractors                                29,500           6.6%
      Veterinarians                                14,713           3.3%
      Dentists                                     63,453          14.3%
      Osteopaths                                    9,935           2.2%
      Other Doctors (Non-MDs)                      11,605           2.6%
                                               -----------       --------
         Total Doctors (Non-MDs)                  129,206          29.0%
                                               -----------       --------

<S>                                               <C>              <C>  
         Total Doctors (MDs and Non-MDs)          273,977          61.5%
                                               -----------       --------

<S>                                                <C>              <C> 
      Medical Institutions                         24,594           5.5%
                                               -----------       --------
<S>                                               <C>              <C>  
         Total Medical                            298,571          67.0%
                                               -----------       --------

<S>                                               <C>              <C>  
      Total Non-Medical                           146,992          33.0%
                                               -----------       --------

<S>                                            <C>                <C>   
      Total for all Lessees                    $  445,563         100.0%
                                               ===========       ========
</TABLE>


     The Company's lessees are located throughout the United States, the largest
concentrations  of which are in heavily  populated  states  such as  California,
Florida, Texas, Illinois and New York. As of June 30, 1997, no single lessee (or
group of affiliated  lessees)  accounted for more than 2% of the Companys lease
portfolio.

                                       6
<PAGE>



MARKETING

     The Company  markets  its  leasing  services  through  LeaseCard,  which it
introduced  in 1982 and which it  believes  was the  first  business-to-business
finance card widely used in the United States for purposes  other than travel or
entertainment.  The  LeaseCard  is offered to lessees and  potential  lessees by
salespeople  representing the various equipment suppliers with which the Company
does business, as well as by the Company's own sales force.

     The Company issues  LeaseCards to lessees and potential  lessees which meet
its  credit  standards.  LeaseCards  are  issued for  one-year  periods  and are
automatically  renewed  for  additional  one-year  periods  so long  as  holders
continue to maintain their credit standing with the Company.  LeaseCard  holders
who are medical  professionals are entitled to lease up to $125,000 of equipment
and commercial accounts are entitled to lease up to $75,000 of equipment, with a
minimum of paperwork  and delay.  Larger  credit  limits are  available to those
meeting   additional  credit  criteria.   LeaseCard  provides  the  holder  with
convenience and  pre-arranged  credit and enables  equipment  manufacturers  and
dealers  to  concentrate  their  efforts  on  marketing  equipment  rather  than
arranging financing.

     To date, over 45,000 medical  professionals and 20,000 commercial  accounts
have used LeaseCard to lease  equipment from the Company.  A LeaseCard is issued
to every  lessee with whom the Company has a lease.  The Company  also  actively
solicits other potential  lessees who do not currently hold  LeaseCards  through
various   advertisements  in  medical  and  commercial  trade  publications,   a
nationwide  direct mail  program;  personal  contacts at trade  conventions  and
telephone solicitation. The Company markets the LeaseCard to equipment suppliers
through direct mail solicitation, trade journal advertisements, participation in
trade shows and
telephone solicitation.

     Another  important  part of the  Company's  marketing  program  is  Instant
Access.  Holders of active LeaseCards can obtain approval for new leases quickly
by calling the Company's toll free Instant Access line (800-YES-1000). Using the
Company's on-line balance and credit information,  the Company's credit analysts
can typically approve a transaction  within five minutes for existing  customers
requesting transactions within their pre-approved credit limits. Non-holders can
call Instant  Access and typically  obtain  preliminary  approval  within twenty
minutes if all credit information is readily available.  Telephone  inquiries to
Trans  Leasing  are  normally   initiated  by  potential  lessees  or  equipment
salespeople on sales calls in customers' offices.

     The Company also  utilizes its own sales,  marketing  and customer  service
staff  of 72  people  located  at the  Company's  headquarters  and in its  five
regional sales offices to market its leasing services.  The sales staff calls on
equipment manufacturers and dealers,  lessees and prospective lessees,  provides
information  to equipment  suppliers  and their  representatives  regarding  the
merits of the  Company and of leasing in general  and  conducts  seminars at the
suppliers'  places of  business.  The  Company  participates  in trade shows and
conventions around the country.

     The Company has also developed  joint  advertising  and marketing  programs
with a number  of major  medical  and  commercial  equipment  manufacturers  and
dealers. In a typical joint advertising  program,  the Company and the suppliers
prepare printed  materials  advertising  the supplier's  equipment which contain
specific references to LeaseCard and Trans Leasing.


                                       6
<PAGE>

TERMS OF LEASE AGREEMENTS

     Substantially all of the Company's leases are full pay-out,  non-cancelable
leases,  where the minimum lease  payments  during the lease term cover the full
cost of the equipment plus an interest  factor.  However,  as the Company's auto
lease  portfolio  continues  to grow,  the  Company  expects  to enter into more
operating leases.

     The  Company  utilizes  a  standard,  non-cancelable  lease  agreement  for
substantially all of its leases other than autos for which a different  standard
lease form is used. Under the terms of the Company's standard leases, the lessee
is  obligated  to service the leased  equipment  and maintain it in good working
condition,  to procure and maintain  insurance on the leased  equipment  for the
benefit of the  Company  and to pay all  property,  sales and other taxes on the
leased  equipment.  The  Company's  leases  generally  provide  for fixed  lease
payments that are due and payable monthly over the lease term. In the event of a
default by the lessee,  the lease agreement  typically  provides that the lessor
and its  assignees  have all the  rights  afforded  creditors  under  the law to
protect their interest in the leased equipment, including the right to repossess
the leased  equipment  and, in the case of legal  proceedings  resulting  from a
default, to recover certain additional damages.

     While the  lessee  has the full  benefit  of the  equipment  manufacturers'
warranties with respect to the leased equipment,  the Company's leases expressly
disclaim all  warranties as to the leased  equipment.  Additionally,  the leases
obligate the lessee to continue making lease payments  regardless of any defects
in the equipment.  Under the terms of the standard  leases,  the Company retains
title to the leased  equipment and has the right to assign the lease without the
consent of the lessee.  The lease  terms do not  provide  the  lessees  with the
option to prepay though Trans Leasing does allow  prepayments  on a case by case
basis.  Management  estimates  the number of early  payments of the entire lease
balances to be approximately 5% of the total number of leases.  When prepayments
are permitted, the lessee is typically required to pay the sum of future minimum
lease payments minus 80% of the remaining unearned income on the lease.

     At the end of each lease, in accordance with arrangements typically made at
the time the lease is  originated,  the lessee will have the option (i) to renew
the lease on the same or  renegotiated  terms,  (ii) to return the  equipment or
(iii) to purchase the  equipment at either (a) a fixed price  determined  at the
time the  lease is  originated  (which  may be $1 or a fixed  percentage  of the
original  cost of the equipment  or, in the case of leased  vehicles,  an amount
determined to be the value of the leased vehicle at the end of the lease) or (b)
the then fair market value of the equipment. In any case, if the lessee fails to
return or purchase the equipment or renew the lease, the lessee will be required
to make  payments  equal to the  prior  rent  payments  until the  equipment  is
returned or purchased or the lease is renewed. Historically, the majority of the
Company's  lessees have elected to exercise  their option to purchase the leased
equipment.  Equipment  which is not acquired or re-leased by the original lessee
can be sold,  re-leased  or  otherwise  disposed of by the Company or one of its
wholly-owned  subsidiaries.  The Company maintains its own warehouse and a staff
to re-market  previously-leased  equipment.  The Company also has an arrangement
with a  re-marketing  agent to  distribute  principally  all  medical  equipment
returned to the Company in exchange  for an amount  approximating  the  residual
value of the equipment.

     As of June 30, 1997,  approximately 94% of the lessees whose leases expired
in  fiscal  1997  purchased  the  equipment   covered  by  the  expired  leases,
approximately 3% returned such equipment to the Company and  approximately 3% of
the lessees had not yet either purchased, re-leased or returned the equipment.

                                       7
<PAGE>

CREDIT REVIEW AND LOSS EXPERIENCE

     Although   comparative   information  from  competitors  is  generally  not
available,  the Company believes its credit loss experience  compares  favorably
with  other   "small-ticket"   lessors  because  (a)  the  Company   utilizes  a
comprehensive  proprietary  on-line credit evaluation  procedure to screen lease
applications,  (b) approximately 40% of new leases are with existing lessees who
have a credit history with the Company,  (c) a substantial  portion of equipment
leased is  income-producing  or  necessary  for the  operations  of the  lessees
practice or business,  (d) a majority of the  Company's  lessees are health care
providers  and other  professionals  with high incomes and (e) a majority of the
leases are personally guaranteed by individual lessees or business owners.

     The Company's  credit  department  consists of five credit analysts and two
credit support staff.  For each  application  the Company  receives,  the credit
department  performs  a credit  review of the  applicant,  or its  owners if the
applicant is a commercial  business,  which  includes  obtaining  retail  credit
reports from the major credit bureaus  servicing the area in which the applicant
is located.  In addition,  with respect to transactions over $10,000 ($25,000 if
the lessee is in the  medical or another  healthcare  field),  the  Company  may
obtain  bank  verification  of account  activity  in deposit  accounts  and loan
activity,  including the length of time  accounts have been opened,  the average
balance  maintained,  the high dollar amount of credit  extended and the payment
terms. The Company may elect not to verify bank information  based on its review
of other available credit information.

     On  medical  accounts,   the  Company  also  obtains  an  American  Medical
Association  report or its  equivalent  if the lessee is a dentist or osteopath.
These  reports  indicate  the year the  individual  was  licensed,  the  college
attended and year of graduation,  the individual's medical specialty and whether
or not Board  Certification  has been  obtained.  For commercial  accounts,  the
Company may obtain a Dun & Bradstreet  report.  All of the information is stored
electronically on the Company's  computer systems and is reviewed by one or more
persons  depending upon the dollar amount involved.  The Company also performs a
similar credit check on each equipment supplier and obtains other information to
verify that the equipment supplier is known to be reputable.

     If a LeaseCard holder who has available credit as a result of an update and
review by the Company applies for a new lease, the Company also conducts a check
of the cardholder's payment history and status. If the lessee holds a LeaseCard,
but  desires  to lease  equipment  with a value in excess  of the  amount of the
lessee's  available credit, or if it is a new applicant and the Company's credit
department has determined there is not enough information  available through the
credit bureau,  bank reports,  American Medical Association reports and/or Dun &
Bradstreet  reports,  the Company may conduct additional credit checks which may
include a review of the lessee's  current  financial  statements and most recent
tax return.  Management  estimates  that in fiscal  1997,  approximately  20% of
applications  were  turned  down  for  credit  reasons,  approximately  25% were
terminated by the  applicant  and  approximately  55% of the  applications  were
ultimately consummated.

     The Company  generally places an order to purchase  equipment only after it
has  completed  the credit  examination  and  received an executed  lease from a
lessee.  Upon  obtaining the signed lease,  a deposit  check (if  required),  an
acceptance  notice,  an invoice and any  additional  documentation  which may be
required,  such as a personal  guarantee,  corporate  resolution  or evidence of
insurance, the Company's sales coordinators verify directly with the lessee that
all the items  covered by the lease have been  delivered  and  installed and are
working to the lessee's  satisfaction.  The Company then pays the vendor for the
equipment.

                                       8
<PAGE>

     The Company utilizes its own 14 person in-house collection staff to solicit
late  payments  from  lessees.  The Company  also  employs  outside  counsel for
litigation related to collection matters. When an account is 7 days past due the
Company assesses a late fee equal to 10 percent of the original payment due. For
fiscal  years 1997 and 1996,  income from such late charges was $2.4 million and
$2.3 million, respectively. When any payment is 20 days past due (13 days if the
lease balance is greater than $20,000),  the account is  automatically  inserted
into a collector's  follow-up system.  An account is considered  delinquent if a
payment has not been received for 30 days beyond its due date.

     The following  table  illustrates  Trans Leasing's  historical  delinquency
rates.  The increase in  delinquencies  from 3.6 percent at June 30, 1996 to 4.5
percent at June 30,  1997  results  from  competitive  pressure as it relates to
credit  criteria in the Company's  primary  markets with the principal  increase
occurring in the 30-60 day delinquent category. Delinquencies in the over 90 day
category have not increased significantly.



 
                                 Delinquency Rates
                                    ($ in 000's)
 
<TABLE>
<CAPTION>


                                                                  Remaining
                                                            Receivable Balance on
                                                             Delinquent Accounts

                                  Receivable                                  % of
                                    Balance             Amount                Total

<S>  <C> <C>                     <C>                  <C>                     <C> 
June 30, 1995................... $ 224,846            $  6,115                2.7%
June 30, 1996...................   277,230              10,083                3.6%
June 30, 1997...................   314,335              14,111                4.5%
</TABLE>

                                       9
<PAGE>

     Accounts are normally  written off if no payment has been  received  within
150 to 180 days.  Accounts  can be written off earlier if it is evident  that no
further  payment  will  be  received.  The  following  table  illustrates  Trans
Leasing's historical lease charge-off experience:

                                                  Fiscal Year Ended June 30,
                                                         ($ in 000's)
<TABLE>
<CAPTION>

                                         1997       1996       1995        1994       1993
                                       ---------- ---------- ----------  ---------  ----------
Allowance for Uncollectible
Accounts:
<S>                                    <C>        <C>         <C>        <C>        <C>      
   Beginning balance                   $   9,506  $   6,482   $  4,047   $  2,709   $   2,181
   Additions                               7,154      6,667      5,328      6,489       3,690
   Net charge-offs                       (5,758)     (3,643)    (2,893)                (3,162)
                                                                            (5,151)
                                       ---------- ---------- ----------  ---------  ----------

<S>                                    <C>        <C>         <C>        <C>        <C>      
   Ending balance                      $  10,902  $   9,506   $  6,482   $  4,047   $   2,709
                                       ========== ========== ==========  =========  ==========
Net investment in direct finance
leases   
<S>                                    <C>        <C>         <C>        <C>        <C>      
   (before allowance)                  $ 281,886  $ 246,063   $ 199,576  $ 170,864  $ 150,590

Net charge-offs divided
<S>                                         <C>        <C>        <C>        <C>         <C> 
   by net investment in direct              2.0%       1.5%       1.4%       3.0%        2.1%
finance leases

Ending allowance divided
<S>                                         <C>        <C>        <C>        <C>         <C> 
   by net investment in direct              3.9%       3.9%       3.2%       2.4%        1.8%
finance leases
</TABLE>

     Net charge-offs in fiscal year 1997 increased due to significant  increases
in net  investment  in direct  finance  leases  and more  aggressive  charge-off
policies  instituted in 1997. Net charge-offs in fiscal years 1996 and 1995 were
somewhat  favorable  relative to historical  norms,  which resulted in increased
allowances as a percentage of net investment in direct finance leases at the end
of the respective  fiscal years.  The increase in net charge-offs  during fiscal
year 1994 was primarily due to the write-off of one account at December 31, 1993
in the amount of $1,696,000  which reduced net earnings by $.24 per share.  This
write-off  was  expensed in 1994.  The Company is  continuing  to work with this
account to maximize the ultimate recovery.

REALIZATION OF RESIDUAL VALUE

     Historically,  the  majority  of the  Company's  lessees  have  elected  to
exercise their options to purchase the leased equipment.  Equipment which is not
acquired or  re-leased by the  original  lessee is sold,  re-leased or otherwise
disposed of by the Company. The Company maintains its own warehouse and staff to
re-market  previously leased equipment.  From time to time, the Company utilizes
various equipment dealers and vendors to re-market returned equipment, for which
it pays a commission based upon the amount received by the Company.  The Company
has also entered  into an  agreement  with a  re-marketing  agent to  distribute
principally all previously leased medical  equipment  returned to the Company in
exchange for an amount approximating the residual value.

     The growth in the Company's lease portfolio in recent years has resulted in
increases in the aggregate amount of recorded residual values. Substantially all
of the residual  values on the  Company's  balance sheet as of June 30, 1997 are
attributable  to leases that will expire  before June 30, 2001.  Realization  of
such values  depends on factors not within the  Company's  control,  such as the
condition  of the  equipment,  the  cost of  comparable  new  equipment  and the
technological  or economic  obsolescence of the equipment.  Although the Company
has, in aggregate,  generally received approximately the full amount of recorded
residual values upon exercise of the purchase option by lessees for leases which
expired the last five years,  there can be no assurance  this  realization  rate
will be maintained.

                                       10
<PAGE>

     During fiscal years 1997 and 1996,  the Company put  increased  emphasis on
its auto leasing activities. Auto leases typically have residuals that represent
a higher  percentage of the original cost of the auto than the average  residual
percentage  of the other types of equipment  leased by the Company.  The Company
has on average received  approximately  the full amount of anticipated  residual
values for  automobile  leases  which have  expired  during the last five years.
However, given the volatility of market prices for used autos and uncertainty as
to  residual  realization,  there  can be no  assurance  that the  Company  will
continue to be able to realize the amount of residuals  anticipated  at the time
of lease  origination.  The Company regularly monitors the residual value of its
leases.

MANAGEMENT INFORMATION SYSTEMS ($ in 000's)

     The   Company   has   developed    automated    information   systems   and
telecommunications  capabilities  tailored  to  support  all  areas  within  the
organization.   Systems  support  is  provided  for  accounting,   tax,  credit,
collections,  operations,  sales,  sales support and marketing.  The Company has
made significant  investments in computer hardware and proprietary software. The
Company'  computerized  system provide management with accurate up-to-date data
which strengthens its management controls and assists in forecasting.

     The Company at June 30, 1997 employed seven management  information  system
professionals  and has developed a substantial  amount of proprietary  software.
Terminals in the Company's Northbrook,  Illinois headquarters and branch offices
are linked 24 hours a day by dedicated  telephone  lines to the  Company's  main
computer system.

     The Company's  centralized data processing  system provides instant support
for the  marketing  and  service  efforts of  salespeople  from the  Company and
equipment  manufacturers and dealers. The system permits the Company to generate
collection histories,  vendor analyses,  lessee reports and credit histories and
other data useful in servicing the lessees and equipment suppliers.

     Expenditures  during  fiscal year 1997 for computer  hardware were $309 and
for  software  were $85.  Expenditures  during  fiscal  year  1996 for  computer
hardware were $169 and for software were $103. The Company  completed an upgrade
of its data processing  system in fiscal 1995 and spent  approximately  $498 for
new computer hardware and approximately $20 for software in that year.

COMPETITION

          Leasing is only one of many  financing  alternatives  available to the
     Company's  lessees and potential  lessees.  The leasing  business is highly
     competitive.  Concerns engaged in the leasing business include: (a) finance
     divisions,   affiliates  and   subsidiaries  of  equipment   manufacturers,
     including  some which sell  products  leased by the Company,  (b) banks and
     their affiliates or subsidiaries,  some of which loan funds to the Company,
     (c) other  leasing  and  finance  companies  and (d)  independently  formed
     partnerships or corporations  operated for the specific  purpose of leasing
     equipment. Many of these organizations have substantially greater financial
     and other resources than the Company.  As a consequence they may be able to
     obtain funds on terms more  favorable  than those  available to the Company
     and may provide  financing  which is less  expensive  than leasing from the
     Company.  However,  the Company  believes its  financing  services are more
     convenient  than  those  available  from  many  alternative   sources.  The
     Company/'s  ability to compete  effectively for profitable leasing business
     will continue to depend upon its ability to procure financing on attractive
     terms,  to  develop  and  maintain  good  relations  with new and  existing
     equipment  suppliers,  to  attract  additional  lessees  by  means  of  its
     LeaseCard and other marketing programs and to maintain a very high level of
     service to its lessees and vendors. However, there can be no assurance that
     the Company can continue to do so. See Marketing".

                                       11
<PAGE>

     Historically,  the Company has  concentrated on leasing  moderately  priced
medical and office equipment. The Company may in the future lease more expensive
equipment than it has in the past. As it does so, the Company's  competition can
be expected to increase.  Rising costs,  changes in government  regulations  and
increased competition among health care providers have led to the development of
alternative  health care delivery  systems,  including  health  maintenance  and
preferred provider organizations and managed care programs. In addition,  recent
surveys have indicated a continuing  trend toward the formation of group medical
practices,  which affects the nature and size of the Company's market. While the
Company does not believe that these  developments  have had a material impact on
its business to date,  their  long-term  impact,  including the  possibility  of
increased  competition  in the medical  equipment  leasing  industry,  cannot be
predicted.

HEALTH CARE TRENDS

     The  increasing  cost of medical care has brought  about  federal and state
regulatory changes designed to limit government  reimbursement of certain health
care providers. These changes include the enactment of fixed-price reimbursement
systems which  involve  determining  rates of payment to hospitals,  out-patient
clinics and private  individual  and group  practices for specific  illnesses in
advance of treatment.  While the Company does not believe that these regulations
have had a material impact on its business to date, their long-term  effect,  as
well as that of future changes in legislative or administrative policies, cannot
be predicted.

     One  result  of  these  regulatory  changes  is  increased  limitations  on
in-patient  hospital  stays.  The Company  believes  this trend has  resulted in
greater  outpatient  services,  where a large majority of the medical lessees in
the Company's market practice. The Company believes these regulatory changes, if
sustained,  could result in greater need for medical  equipment  for  outpatient
procedures  and supporting  office  equipment.  However,  no assurance of actual
results from such regulatory changes can be made by the Company.

     Rising health care costs may also cause non-governmental  medical insurers,
such as Blue Cross and Blue Shield Plans and the growing number of  self-insured
employers,  to revise their reimbursement  systems and regulations governing the
purchasing and leasing of equipment.  Alternative  health care delivery systems,
such as health maintenance  organizations,  preferred provider organizations and
managed care programs, have adopted similar cost containment measures.  Although
these developments have not materially  affected the Company's business to date,
future changes in the health care industry and the effect of such changes on the
Company's business cannot be predicted.

EMPLOYEES

     At June 30, 1997,  the Company had 157  full-time  employees,  none of whom
were represented by a labor union.  Approximately 43 of the Company's  employees
are  engaged  in  the  credit,   collections  and  lease  documentation   areas,
approximately  72 are in the sales,  marketing and customer service areas and 42
are engaged in the general  administration  area.  Management  believes that the
Company's employee relations are good.

                                       12
<PAGE>


CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
LITIGATION REFORM ACT OF 1995

     Except for historical matters,  the matters discussed in this Form 10-K are
forward-looking statements that involve risks and uncertainties. Forward-looking
statements  include,  but are not limited  to,  statements  under the  following
headings:  (i)  under  the  heading  "General  -  Business  Strategy"  as to the
likelihood that LeaseCard holders will choose the Company over competitors; (ii)
under the  heading  "General - Credit  Risk  Management"  regarding  credit loss
experience  and the  effects  of  technological  obsolescence;  (iii)  under the
heading "Leased Equipment" regarding the benefit of technological advances; (iv)
under the heading  "Credit  Review and Loss  Experience"  regarding  credit loss
experiences;  (v)  under  the  heading "Realization  of  Residual  Value" as to
lessees'  elections to exercise their purchase  options;  (vi) under the heading
"Competition"  regarding the Company's services being more convenient than those
of others and the impact of health  developments;  and (vii)  under the  heading
"Health  Care  Trends"  as to the  benefit  to the  Company  of  limitations  on
in-patient hospital stays and the effects of health care developments.

     The Company  wishes to caution  readers  that in addition to the  important
factors described  elsewhere in this Form 10-K, the following important factors,
among  others,  sometimes  have  affected  and in the future could  affect,  the
Company's  actual  results and could cause the Company's  actual  results during
fiscal  1998 and  beyond,  to differ  materially  from  those  expressed  in any
forward-looking statements made by, or on behalf of, the Company:

  Portfolio Risk

     The principal assets of the Company are its portfolio of lease  receivables
and the residual value of its equipment.  Investment risks inherent in a leasing
company  include  the  possibility  that  lease  receivables  might not be fully
collectible and that equipment might be sold at lease  expiration or termination
for less than the residual value recorded on the Company's balance sheet.

     Receivables Risk: Although the allowance for uncollectible accounts carried
  on the Company's books has historically been adequate to provide for losses
associated with its lease receivables,  changes in the reimbursement policies of
government or third-party payors, obsolescence of equipment under lease, changes
in the local,  regional  or national  economies,  changes in federal tax laws or
other factors could  significantly  impact the Company's future  delinquency and
loss  experience,  which  could in turn have a  material  adverse  effect on the
Company's earnings.

     Residual  Risk:  When the Company enters into a lease from which it expects
to derive value through the resale of equipment at lease expiration,  it records
an estimate of the expected  resale value on the  Company's  balance  sheet as a
residual  interest.  The growth in the Company's  equipment  lease  portfolio in
recent  years has  resulted in  increases  in the  aggregate  amount of recorded
residual  values.  Realization of residual  values depends on factors not within
the Company's control, such as equipment obsolescence, whether the lease expires
or is terminated  for default,  whether the equipment is in fact returned to the
Company at the end of the lease and the  condition of the  equipment  when it is
returned.  Although the Company has in  aggregate,  generally  received the full
amount of recorded residual values on expired leases,  there can be no assurance
this will continue in the future.  Failure to realize residual values could have
a material adverse effect on the Company's earnings.


                                       13
<PAGE>

  Interest Rate Risk

     The  Company's  leases are at fixed rates but its  warehouse  lines,  which
represent a  significant  portion of its  borrowings,  bear interest at floating
rates.  Consequently,  if interest  rates were to  increase,  earnings  would be
adversely affected. In addition,  the Company' ability to increase its yield on
new receivables would be limited by competitive and economic factors.

  Financing

     The Company's  profitability  depends,  among other factors, on the size of
its lease  portfolio,  which in turn depends on the Company's  ability to obtain
external  financing to supplement  cash flows  available  from  operations.  The
Company' principal sources of external financing have been borrowings under its
revolving credit agreements, public offerings and private placements of debt and
lease-backed obligations.  Although the Company has been successful in arranging
these types of funding in the past,  there can be no  assurance  that it will be
able to obtain  funding in the future in amounts or on terms it deems  necessary
or acceptable. The Company's inability to obtain financing would have a material
adverse  effect on its  operations.  Covenants in certain of the Company's  debt
agreements limit its ability to incur additional debt above certain levels.

     The Company's debt agreements  contained  provisions  triggering  events of
default  or  requiring  prepayment  in the  event  the  principal  shareholder's
ownership of common stock fell below 35%. Upon the Principal shareholder's death
in fiscal 1997, these provisions were revised.

  Third Party Reimbursement

     The Company  believes that, due to the growing national concern with rising
health  care costs,  the amount the  government  and other  third  party  payors
reimburse for individual  health care  procedures  could be reduced.  Changes in
third  party   reimbursement   policies,   especially   if  such  changes  limit
reimbursement for outpatient  services (the type of services  generally provided
by the Company's medical lessees), could adversely affect the Company.

  Competition

     The Company  competes with finance  affiliates  of equipment  manufacturers
which sell products  leased by the Company,  banks and other leasing and finance
companies.  Many  of  these  organizations  have  greater  financial  and  other
resources  than the Company and as a consequence  may be able to obtain funds on
terms  more  favorable  than  those  available  to the  Company.  Some of  these
competitors may provide  financing which is less expensive than leasing from the
Company.

                                       14
<PAGE>

Item 2.     Properties

     The Company  leases its executive  offices in  Northbrook,  Illinois  under
leases which run through August 31, 1998 and May 31, 2002. The executive offices
are approximately 22,088 square feet in area. The Company also leases additional
office space in Orange County and Roseville, California, Boca Raton, Florida and
Plymouth  Meeting,  Pennsylvania.  An  additional  office  with a  warehouse  in
Grayslake,  Illinois is also leased for the Company's  auto leasing  activities,
the  telemarketing   functions  of  its  LeaseCard  Direct  Group  and  for  the
re-marketing of equipment returned when leases expire or terminate.  The Company
has  entered  into a new lease for a facility  commencing  in fiscal  1998,  and
expiring in 2002. This facility, located in Deerfield, Illinois, will be used to
consolidate the Company's executive offices and Grayslake facility. Accordingly,
the Company's  current lease in Northbrook will be sublet after taking occupancy
of the new facility.  Management does not anticipate any material adverse impact
on its operations as a result of such sublet.

Item 3.     Legal Proceedings

     While the  Company  is from time to time  subject  to actions or claims for
damages in the  ordinary  course of its  business,  it is not now a party to any
material legal proceedings.

Item     Submission of Matters to a Vote of Security Holders

         a.)   A special shareholders meeting was held on May 1, 1997.

         b.)   The matters voted upon and the results of voting were as follows:

                    i)   To approve the  Company's  1996 Stock  Option Plan with
                         respect to  1,000,000  shares of the  Company's  common
                         stock (see Exhibit 10.5 to this Form 10-K).

                        Results:    FOR                     2,474,753
                                    AGAINST                   351,823
                                    ABSTENTION                 20,210
                                    BROKER NONVOTER                 0


                  ii)    Warrants  granted to certain  directors  to purchase in
                         the aggregate  285,000 shares of the Company's common 
                         stock (see Exhibit 10.4 to this Form 10-K).

                        Results:    FOR                     2,589,153
                                    AGAINST                   229,123
                                    ABSTENTION                 28,510
                                    BROKER NONVOTER                 0




                                       15
<PAGE>



 

                                     PART II

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

     The  Company's  common stock is traded in the  over-the-counter  market and
reported  on the NASDAQ  National  Market  under the ticker  symbol  "TLII." The
common stock has been trading on NASDAQ  National  Market since April 1986,  the
time when the Company's initial public offering took place.

     The  approximate  number of  beneficial  holders of record of the Company's
common stock on September 11, 1997, was 66.

COMMON STOCK INFORMATION
<TABLE>
<CAPTION>


        For the
     quarter ended                  Fiscal 1997                          Fiscal 1996
   ------------------          -----------------------             -------------------------
                                High             Low                  High             Low

<S>          <C>             <C>     <C>      <C>   <C>            <C>    <C>      <C>   <C>
   September 30              $   3 5/8        $ 3 5/16             $  3 1/2        $   2 7/8

   December 31                   5 7/8           3 5/8                3 7/8            3 1/8

   March 31                      7 1/2           5 1/2                3 3/4            3 1/4

   June 30                           8           5 1/2                3 5/8            3 5/16

</TABLE>


     The holders of Common Stock are entitled to receive  dividends  when and as
declared by the Board of Directors.  The Board of Directors  approved a dividend
in the amount of $.03 per share  during  each  quarter of fiscal  years 1997 and
1996,  and in the  fourth  quarter  of  fiscal  year  1995.  There  were no cash
dividends  declared in the first three quarters of fiscal 1995. The  declaration
of  dividends  in the future will be reviewed by the Board of Directors in light
of the Company's  earnings,  financial  condition and capital  requirements  and
future  dividends may be declared,  reduced,  or eliminated at the discretion of
the  Board of  Directors  on the  basis of  these  or other  considerations.  In
addition,  the Company's  credit facility  restricts the payment of dividends on
the Company's  common stock unless  certain  financial  tests are met. Under the
most restrictive  limitations,  the Company shall not purchase its common stock,
pay cash  dividends  or redeem  subordinated  debt prior to maturity  which,  in
aggregate,  exceed the sum of $2 million  plus 50  percent of  consolidated  net
income computed on a cumulative  basis plus net proceeds to the Company from the
issue or sale after  December 31, 1992 of shares of capital stock of the Company
or warrants,  rights or options to purchase or acquire any shares of its capital
stock.  On August 5, 1997,  the Board of  Directors  approved  the  payment of a
quarterly  cash  dividend in the amount of $.03 per share on August 26, 1997, to
holders of record as of August 15, 1997.













                                       16
<PAGE>



Item 6.     Selected Financial Data

(In thousands, except common share and per common share amounts)

OPERATIONS STATEMENT DATA
<TABLE>
<CAPTION>
                                                      Fiscal Year Ended June 30,
                                        1997       1996       1995       1994       1993
                                       -------   ---------   --------  ---------  ---------
Revenues:
<S>                                     <C>         <C>        <C>       <C>         <C>     
   Finance and other lease              $ 39,354    $ 33,915   $ 28,861  $ 26,520    $ 24,239
related income
   Operating lease income               2,712       1,469        694        404        349
   Other                                1,161       1,234        974        565        407
                                       -------   ---------   --------  ---------  ---------
     Total revenues                     43,227      36,618     30,529    27,489      24,995

Expenses:
<S>                                     <C>         <C>        <C>       <C>         <C>   
   Interest                             17,819      15,733     13,338    11,738      10,601
   General & administrative             15,682      13,018     10,220     9,113      8,148
   Provision for uncollectible
     accounts                           5,660       5,166      4,431      5,673      2,949
                                       -------   ---------   --------  ---------  ---------
     Total expenses                     39,161      33,917     27,989    26,524      21,698

Keyman Life Insurance Income         (1)2,196           -          -          -          -
                                       -------   ---------   --------  ---------  ---------

Earnings before income taxes
   and cumulative effect on a
<S>                                     <C>         <C>        <C>          <C>      <C>  
   change in accounting                 6,262       2,701      2,540        965      3,297
Income taxes                            1,557       1,034        973        369      1,263
                                       -------   ---------   --------  ---------  ---------

Earnings before cumulative
<S>                                     <C>         <C>        <C>          <C>      <C>  
   effect of a change in                4,705       1,667      1,567        596      2,034
accounting

Cumulative effect of a change
   in accounting for income taxes           -           -          -   (2)  155          -
                                       -------   ---------   --------  ---------  ---------

<S>                                   <C>         <C>        <C>       <C>         <C>      
Net earnings                          $ 4,705     $ 1,667    $ 1,567   $    441    $ 2,034  
                                       =======   =========   ========  =========  =========

Earnings per common share:
Earnings before cumulative
<S>                                   <C>         <C>        <C>       <C>         <C>     
   effect of a change in              $  1.13     $  0.41    $  0.37   $   0.13    $  0.52 
accounting
Cumulative effect of a change
   in accounting for income taxes           -           -          -      (0.03)         -
                                       -------   ---------   --------  ---------  ---------
 
<S>                                    <C>        <C>        <C>       <C>         <C>     
Net earnings                           $ 1.13     $  0.41    $  0.37   $   0.10    $  0.52 
                                       =======   =========   ========  =========  =========

<S>                                    <C>        <C>        <C>       <C>         <C>    
   Primary                             $ 1.13     $  0.41    $  0.37   $   0.10    $  0.52
   Fully diluted                       $ 1.10     $  0.41    $  0.37   $   0.10    $  0.52 

Weighted average common
   shares outstanding
<S>                                     <C>         <C>        <C>        <C>        <C>  
   Primary                              4,146       4,098      4,291      4,372      3,889
   Fully diluted                        4,263       4,098      4,291      4,372      3,889
</TABLE>
(1)  On 10/7/96,  Richard Grossman, the Company's principal shareholder,  passed
     away.  Prior to that date,  Mr.  Grossman held the positions of Chairman of
     the  Board,  Chief  Executive  Officer  and  President.   The  Company  was
     beneficiary on two keyman life insurance  policies,  which insured the life
     of Richard Grossman.

(2)  Represents the cumulative effect of adopting SFAS No. 109,  "Accounting for
     Income Taxes."



                                       17
<PAGE>



BALANCE SHEET DATA

<TABLE>
<CAPTION>

                                               June 30,                          
                           1997       1996        1995        1994        1993

Net investment in direct
<S>                     <C>        <C>         <C>         <C>         <C>     
  finance leases         $270,984   $236,616    $193,094    $166,817    $147,881
Total assets             311,036    269,427     226,383     193,735      170,075
Senior debt and
  lease-backed obligations250,179   209,817     168,963     138,841      115,897
Subordinated debt         17,400     20,730      21,840      23,000       23,000
Stockholders'equity      30,285     26,286      25,670      24,779       24,342
Book value per share        7.49       6.50        6.09        5.67         5.57
Dividends declared per share .12        .12         .03          --


</TABLE>


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

GENERAL

     The Company's  operations comprise almost exclusively lease financing.  The
Company's  net earnings are  significantly  influenced  by the level of invested
assets,  the related financing spread (i.e., the excess of interest rates earned
on invested assets over interest rates incurred on borrowings),  and the quality
of those  assets.  General  and  administrative  expenses  and a  provision  for
uncollectible accounts further reduce the Company's net earnings.

     Substantially all of the Company's lease receivables are written at a fixed
rate of interest for a fixed term.  The Company's  borrowings  are at both fixed
and floating  rates of interest.  The Company  borrows  under  revolving  credit
facilities at floating  interest rates (see  "Liquidity and Capital  Resources")
and periodically refinances that debt through either a fixed-rate loan option in
the revolving credit agreements, securitization of lease receivables or the sale
of debt in the public or private markets.  To the extent the Company  refinances
with  fixed-rate  debt,  the Company locks in the spread in its  portfolio.  The
Company will, from time to time,  utilize  interest rate swaps to the extent its
borrowings  are at floating  interest  rates.  Such swaps  reduce the  Company's
exposure to interest rate risk.

     The primary long-term  funding method currently  employed by the Company is
to  securitize  portions  of its lease  portfolio.  This  method of  funding  is
believed  to  afford  the  lowest  cost  long-term  financing  available.  These
transactions  are not reflected as sales of lease  receivables  in the financial
statements as the Company has an ongoing  economic  interest in the  securitized
assets.  As such,  the leases remain on the  consolidated  balance sheet and the
income  associated  with such leases is  recognized  over the  respective  lease
terms.

     The Company has experienced  growth in the total dollar amount of new lease
receivables  added to its  portfolio  during each of the last five fiscal years,
though  there can be no  assurances  that the  growth  trend will  continue.  In
analyzing the Company's financial statements,  it is important to understand the
impact of lease  receivable  growth during an accounting  period on lease income
and net earnings.



                                       18
<PAGE>



     For financial reporting purposes,  the majority of the Company's leases are
classified as direct finance leases.  The Company accounts for its investment in
direct  finance leases by recording on the balance sheet the total minimum lease
payments  receivable  plus the estimated  unguaranteed  residual value of leased
equipment less the unearned lease income.  Unearned lease income  represents the
excess of the total minimum lease  payments  plus the estimated  residual  value
expected  to be  realized  at the end of the  lease  term  over  the cost of the
related equipment.  Unearned lease income is recognized as revenue over the term
of the lease by the effective interest method,  i.e.,  application of a constant
periodic  rate of return to the declining  net  investment  in each lease.  As a
result,  during a period  in which  the  Company  realizes  growth  in new lease
receivables, lease income should also increase, but at a lesser rate.

     The  Company  also  originates   leases  classified  as  operating  leases.
Operating  lease income is recognized as revenue when the rental payments become
due.  Equipment under operating  leases is recorded at cost and depreciated on a
straight-line  basis over the estimated useful life of the equipment,  generally
three to five years.

     Initial  direct  costs  incurred  in  consummating  a  lease,   principally
commissions  and a portion  of  salaries  for  personnel  directly  involved  in
generating new lease receivables,  are capitalized as part of the net investment
in direct finance leases and amortized over the lease term as a reduction in the
yield. An allowance for uncollectible accounts is provided over the terms of the
underlying leases as the leases are determined to be uncollectible. See "Results
of Operations" below for further discussion.

     On  August  27,  1997  the  Company  entered  into  an  agreement  to  sell
substantially  all the net assets of the  Company to  General  Electric  Capital
Corporation (GECC). The gross sale proceeds approximate $46 million and involves
assumption by GECC of certain debt outstanding upon closing of the sale. Subject
to the required regulatory filings, the Company anticipates the sale transaction
will close in the second  quarter of fiscal 1998.  Net  proceeds  from the sale,
after consideration of certain  post-closing  expenses,  will approximate $10.00
per share and be distributed to shareholders via a liquidating dividend in early
calendar year 1998.  At this time,  there can be no assurance as to the absolute
certainty of the occurrence of these events.

RESULTS OF OPERATIONS ($ in 000's)

     Finance and other  lease  related  income  increased  by $5,439  (16.0%) in
fiscal 1997 and $5,054  (17.5%) in fiscal 1996 due  primarily  to  increases  of
14.6% and 22.5%,  respectively,  in the net investment in direct finance leases.
The increase in the net  investment in direct  finance  leases is due in part to
increases in lease  receivables  originated of 6.7% and 25.2% in fiscal 1997 and
1996,  respectively.  In  addition,  the  increase  in finance  lease  income is
attributable to increases in lease-related fees of $850 (27.9%) and $117 (4.0%),
respectively, in fiscal 1997 and 1996.

     Operating lease income  increased by $1,243 (84.6%) in fiscal 1997 and $775
(111.7%)  in  fiscal  1996  due  primarily  to  increases  of 46.5%  and  97.8%,
respectively,  in net  equipment  under  operating  leases.  The increase in net
equipment under operating leases is due to increases in equipment  purchased for
new operating leases of 20.3% and 43.2%, respectively, in fiscal 1997 and 1996.

     The growth in the Company's lease portfolio is the result of an increase in
the number of leases  originated in each fiscal year. The Company  believes that
the  number of leases  originated  has  increased  primarily  as a result of its
increased  marketing  and  selling  activities,   greater  name  recognition  of
LeaseCard in the marketplace  and the  introduction of new products by equipment
manufacturers.  Lease-related fees, primarily documentation fees and delinquency
charges,  have  increased as a result of the growth in the size of the Company's
lease  portfolio.  Delinquency  charges in fiscal 1997  increased to $2,410 from
$2,013 in fiscal 1996 and $1,877 in fiscal 1995.  Delinquency rates increased to
4.5% at June 30, 1997 from 3.6% at June 30, 1996 and 2.7% at June 30, 1995.  The
increases  in  delinquency  rates  from 1996 to 1997 were noted in the 30-60 day
delinquency category.  Other delinquency  categories have remained substantially
consistent with prior period results. The increase in delinquencies from 3.6% at
June 30, 1996 to 4.5% at June 30, 1997 results from  competitive  pressure as it
relates to credit criteria in the Company's primary markets.



                                       19
<PAGE>



     Interest expense increased $2,086 (13.3%) in fiscal 1997 and $2,395 (18.0%)
in fiscal 1996 due to increases in the amounts borrowed to finance the growth in
the Company's lease  portfolio.  Interest  expense as a percent of lease income
decreased  to 42.4% in fiscal  1997 from 44.5% in fiscal  1996 and from 45.1% in
fiscal  1995  primarily  as a result of more  cost  effective  borrowing  by the
Company.

     General and  administrative  expense  increased by $2,664 (20.5%) in fiscal
1997 and $2,798  (27.4%) in fiscal 1996  primarily  as a result of  increases in
salaries and benefits  expense and  sales-related  expenses.  Additionally,  the
growth  in  the  Company's  operating  lease  portfolio  resulted  in  increased
depreciation  expense.  The average  number of  personnel  increased  to 157 for
fiscal 1997 from 140 for fiscal 1996 and 117 for fiscal 1995.  As such,  general
and  administrative  expense  as a percent  of lease  income was 37.3% in fiscal
1997,  36.8% in fiscal 1996 and 34.6% in fiscal 1995.  The growth in the average
number of employees  has been  necessary to  accommodate  the  Company's  growth
during the period.

     The provision for uncollectible accounts increased by $494 (9.6%) in fiscal
1997 and by $735  (16.6%)  in  fiscal  1996.  The  provision  for  uncollectible
accounts as a percent of lease income was 13.5% in fiscal 1997,  14.6% in fiscal
1996 and 15.0% in fiscal 1995.

     Earnings before income taxes and keyman life insurance  income increased by
$1,365  (50.5%) in fiscal 1997 and $161 (6.3%) in fiscal  1996.  The increase in
earnings is primarily due to the increase in lease and lease related  income and
the  decrease in interest  expense as a percent of lease  income,  as  discussed
above.

     Net earnings increased by $3,038 (182.2%) in fiscal 1997 and $100 (6.4%) in
fiscal  1996.  In addition to the reasons for the  increases  noted  above,  the
increase in 1997 net  earnings  was also due to $2,196 of keyman life  insurance
proceeds.

LIQUIDITY AND CAPITAL RESOURCES

     The Company historically has financed its operations,  including the growth
of its lease  portfolio,  principally  through  borrowings  under its  revolving
credit  agreements,  issuance of debt and  lease-backed  obligations in both the
institutional  private  placement and public markets,  principal  collections on
leases and cash provided from operations.

     Net cash used in investing  activities,  which was $49.5  million in fiscal
1997,  $48.2 million in fiscal 1996 and $37.1 million in fiscal 1995,  generally
represents  the  excess  of  equipment  purchased  for  leasing  over  principal
collections on leases. Net cash provided by financing  activities (the excess of
borrowings  under  the  revolving  credit  agreement  and  issuing  of debt  and
lease-back  obligations  over  repayments of these debt  instruments)  was $36.3
million in fiscal 1997, $38.7 million in fiscal 1996 and $28.3 million in fiscal
1995.  The  remaining  funds  used in  investing  activities  were  provided  by
operating  cash  flows.  As of  June  30,  1997,  the  Company  had  outstanding
commitments to purchase equipment, which it intended to lease, with an aggregate
purchase price of $5.2 million.



                                       20
<PAGE>




     The following  paragraphs summarize certain terms of the Company's existing
debt  agreements  and  instruments.  The  Company  believes  these  terms may be
material to investors, but these summaries, which do not purport to be complete,
are subject to the detailed  provisions of those  documents and are qualified in
their entirety by reference to the agreements and instruments  filed as exhibits
or incorporated by reference to this Form 10-K.

  Revolving Credit Agreement

     The Company  borrows under its unsecured  revolving  credit  agreement (the
"TLI  Revolving  Credit  Facility") to fund its  operations.  As the Company has
approached full utilization under this facility,  it has sold long-term debt and
lease-backed  obligations in both the institutional private placement and public
markets and used the proceeds to reduce its revolving credit  borrowings.  These
long-term  debt and  lease-backed  obligations  are  issued  either  with  fixed
interest  rates or with floating  interest  rates combined with an interest rate
hedge to secure a fixed  borrowing  cost.  The maximum  borrowing  under the TLI
Revolving  Credit  Facility  is $30  million.  As of  September  11,  1997,  the
outstanding  loans under this  facility  were $20  million and unused  borrowing
capacity was $10 million.

     Currently,  the Company may borrow  through an unsecured  revolving  credit
facility up to $30 million with interest  paid  quarterly.  The Company,  at its
option, pays interest equal to the prime rate or the Federal Funds rate plus .70
percent.  The Company has the option at the end of every  quarter to convert its
revolving loans outstanding under this facility into a fixed-rate loan, in which
case the principal  amount is payable in 18 equal  quarterly  installments  with
interest at 2 percent over a calculated  rate based on LIBOR.  If the  revolving
credit agreement is not extended, all revolving loans will be due on January 29,
1998 and on such date the Company may convert  the  outstanding  balance  into a
two-year term loan bearing interest at the Company's choice of either prime rate
plus  .25  percent  or  LIBOR  plus 1  percent.  As of  September  11,1997,  the
outstanding  loans under this facility were $20 million and the unused borrowing
capacity was $10 million.

     The unsecured  revolving credit agreement contains numerous covenants which
include: a limitation on leverage,  a minimum net worth  requirement,  a minimum
interest  coverage  requirement,  dividend  and other stock and debt  repurchase
limitations and a maximum average original  equipment cost of leased assets.  At
June 30, 1997, the Company was in compliance with all covenants contained in the
revolving credit agreement.



                                       21
<PAGE>



 Issuance of Senior and Subordinated Debt and Lease-Backed Obligations

     The Company has outstanding  debt under unsecured  senior and  subordinated
note placements,  unsecured subordinated  debentures and senior and subordinated
lease-backed obligations, all of which are summarized in the following table:

<TABLE>


                                                      Principal Amount (in 000's)
                                                ----------------------------------------
                                                                              Balance
                                                                                 at
Issuance                     Purchaser(s) or     Interest                      June 30,
Date         Security        their Agent(s)          Rate      Original        1997 (1)
----------   -------------   ----------------   ----------     ---------      ----------

<S>                                                <C>       <C>            <C>        
June         Unsecured       Massachusetts         13.40%    $   10,000     $     4,450
1992           Subordinated    Mutual Life
               notes           Insurance
               

<S>                                                <C>           <C>             <C>   
October      Unsecured       American Nat'l        10.50%        13,000          12,950
1992           Subordinated    Bank & Trust
               debentures      Co., Trustee
          

<S>                                                 <C>          <C>             <C>   
June         Unsecured       Principal              5.83%        38,000          10,000
1993           senior          Mutual Life
               notes           Insurance Co.,
                               Massachusetts
                               Mutual Life
                               Insurance Co.,
                               Phoenix Home
                               Life Mutual
                               Insurance Co. 
                               and TMG Life
                               Insurance Co.

<S>                                                 <C>           <C>             <C>  
June         Unsecured       Phoenix Home           6.82%         4,000           4,000
1993          senior           Life Mutual
               note            Insurance Co.

<S>                                                 <C>          <C>              <C>  
June         Unsecured       Core States            6.31%        10,000           3,400
1993           senior         Bank, N.A.
               note

<S>                                                 <C>          <C>              <C>  
August       Lease-backed    Public                 6.65%        43,416           2,387
1994           notes

<S>                                                 <C>           <C>             <C>  
August       Subordinated    First Union            7.65%         6,054           4,760
1994          lease-backed     Nat'l Bank of
              note             North Crolina


<S>                                                               <C>             <C>  
August       Secured term    First Union         variable         1,000           1,000
1994           note            Nat'l Bank            (2)
                               of North
                               Carolina

<S>                                                 <C>          <C>             <C>   
October      Lease-backed    Public                 6.40%        89,659          27,704
1995           notes
</TABLE>



                                       22
<PAGE>




<TABLE>
<CAPTION>

                                                     Principal Amounts (in 000's)
                                                ----------------------------------------
                                                                              Balance
                                                                                 at
 Issuance                    Purchaser(s) or     Interest                      June 30,
 Date        Security        Their Agent(s)          Rate      Original        1997 (1)
----------   -------------   ----------------   ----------     ---------      ----------


<S>                                                 <C>          <C>              <C>  
 October     Subordinated    Met Life Capital       7.55%        10,802           4,231
 1995          lease-backed    Corporation
               note                


<S>                                                 <C>         <C>              <C>   
 November    Lease-backed    Public                 5.98%       127,849          95,711
 1996          notes


<S>                                                 <C>          <C>             <C>   
 November    Subordinated    New York Life          6.64%        13,537          10,579
 1996          lease-backed    Mutual of
               Note            Omaha
     

<S>                                                              <C>       <C>   <C>   
 December    Leased-backed   First Union          LIBOR +        75,000    (3)   64,770
 1996          Securitized     Nat'l Bank        .75%
               Revolving       of North
               Credit          Carolina
               Facility            
                                                                              ----------
 
                                                    TOTAL                   $   245,942
                                                                              ==========
</TABLE>
 
(1)  The aggregate scheduled maturities of the securities are $159.6 million for
     fiscal 1998,  $51.3 million for fiscal 1999,  $22.2 million for fiscal 2000
     and $13.0 million thereafter.

(2)  In addition to prepaid interest in the amount of $14,025 paid at inception,
     interest payments include all investment earnings on the account.

(3)  Effective June 30, 1997, the credit limit on this securitized  revolver was
     increased  from $75  million to $85  million.  Effective  July 25, 1997 the
     credit limit on this securitized revolver was increased from $85 million to
     $125 million.

     The unsecured senior and subordinated  private placement indentures contain
numerous  financial and other  covenants,  which  include:  limitations on total
leverage and on the ratio of  subordinated  debt to equity,  a minimum net worth
requirement,  a minimum fixed charge  coverage  requirement,  dividend and other
stock  and  debt  repurchase   limitations  and  a  minimum  unencumbered  asset
requirement.  At June 30, 1997, the Company was in compliance with all covenants
contained in the senior and subordinated loan agreements.

     The  publicly  issued  subordinated  debentures  and the related  indenture
contain  financial and other covenants  which include:  limitations on dividends
and stock redemptions,  the incurrence of additional senior and/or  subordinated
debt,  issuance of preferred  stock and on transfers of assets by the Company to
special-purpose subsidiaries formed for the purpose of financing such assets. As
of June 30, 1997, the Company was in compliance  with all  requirements  of this
agreement.




                                       23
<PAGE>



     On December 20, 1996, the Company,  through a wholly-owned  special-purpose
financing  subsidiary,  TL Lease  Funding  Corp.  IV ("TLFC IV"),  established a
securitized  revolving  credit and term loan facility  with a maximum  borrowing
limit of $75 million (the "TLFC IV Revolving  Credit  Facility") with a national
banking  institution.  On June 30,  1997,  the  credit  limit was  raised to $85
million and the  expiration  of the facility was extended  from June 30, 1997 to
July 31,  1997.  On July 25,  1997,  the credit limit was raised to $125 million
through December 31, 1997. TLFC IV pays interest on the revolving  borrowings at
a rate equal to LIBOR plus .75 percent. TLFC IV may, at its option,  convert the
revolving  loans to a term loan with a maturity  determined by the cash flows of
the leases held at the conversion  date and at a rate of interest equal to LIBOR
plus 1 percent.  Upon  conversion  to a term loan,  TLFC IV would be required to
execute an interest rate hedge to fix the rate on this borrowing.

     On January  21,  1997,  the  Company  sold  leases with a net book value of
approximately  $28.5  million to TLFC IV for  approximately  $28 million in cash
borrowed  under the TLFC IV Revolving  Credit  Facility.  On April 4, 1997,  the
Company sold leases with a net book value of approximately $23.2 million to TLFC
IV for  approximately  $23 million in cash borrowed under this facility.  On May
29, 1997, the Company sold leases with a net book value of  approximately  $20.9
million to TLFC IV for  approximately  $21 million in cash  borrowed  under this
facility.  The Company  continues to service the leases sold to TLFC IV and used
the  proceeds  from the sales of leases to reduce  revolving  credit  borrowings
under its  unsecured  revolving  credit  facility.  As of  September  11,  1997,
outstanding  loans under the TLFC IV revolving  credit facility were $82 million
and unused borrowing capacity was $43 million.

     The Company  believes  that the  revolving  credit  facilities,  increasing
principal  payments  on leases  and  continued  placement  of debt in the public
and/or private markets will provide adequate capital resources and liquidity for
the  Company to fund its  operations  and debt  maturities,  but there can be no
assurances that this will continue to be the case.

     On November 16, 1994,  the Board of Directors  authorized the repurchase by
the Company of up to 1,000,000  shares of its common stock. The Board determined
that this stock  repurchase  program is in the best interests of the Company and
its  shareholders  given the  significant  discount  to book  value at which the
Company's  common  stock is currently  trading.  As of June 30, 1997, a total of
782,745  shares  have been  repurchased  at a total  cost of $2,394  under  this
program.  Of this total amount,  29,620 and 166,000  shares were  repurchased in
fiscal  1997  and  fiscal  1996,  respectively,  at a cost  of  $107  and  $559,
respectively.

     On May 1, 1997, at a special  meeting of the  shareholders  of the Company,
the  shareholders  approved the Company's 1996 Stock Option Plan. The 1996 Stock
Option Plan  provides  for the  granting of stock  options  with  respect to one
million  shares of the Company's  common stock to directors and key employees of
the Company.

     The Company  has entered  into a  five-year  lease  commitment  in order to
consolidate  the  location of its  headquarters  with  certain of its  operating
subsidiaries. The lease commencing on October 1, 1997 is expected to improve the
streamlining and coordination of certain of the Company's operations.

     The holders of common stock are entitled to receive  dividends  when and as
declared by the Board of Directors.  The Board of Directors approved a dividend,
in the amount of $.03 per share  during each quarter of fiscal years of 1997 and
1996,  and the fourth  quarter  of fiscal  1995.  There  were no cash  dividends
declared  in the  first  three  quarters  of fiscal  1995.  The  declaration  of
dividends  in the future will be reviewed by the Board of  Directors in light of
the Company's earnings,  financial condition and capital requirements and future
dividends may be declared, reduced, or eliminated at the discretion of the Board
of Directors on the basis of these or other considerations. The Company"s credit
facility restricts the payment of dividends on the Company's common stock unless
certain  financial tests are met. Under the most  restrictive  limitations,  the
Company  shall not  purchase  its common  stock,  pay cash  dividends  or redeem
subordinated  debt prior to maturity which,  in aggregate,  exceed the sum of $2
million  plus 50 percent of  consolidated  net income  computed on a  cumulative
basis plus net proceeds to the Company from the issue or sale after December 31,
1992 of shares of capital stock of the Company or warrants, rights or options to
purchase  or acquire  any shares of its capital  stock.  On August 5, 1997,  the
Board of  Directors  approved  the payment of a quarterly  cash  dividend in the
amount of $.03 per share on August 26,  1997,  to holders of record as of August
15, 1997.



                                       24
<PAGE>



ACCOUNTING STANDARDS

     Statement  of  Financial  Accounting  Standards  No. 125,  "Accounting  for
Transfers and Servicing of Financial Assets and  Extinguishments of Liabilities"
(SFAS 125),  effective for the Company on January 1, 1997,  provides new methods
of accounting and reporting for transfers and servicing of financial  assets and
extinguishments   of   liabilities.   The   Company   will  apply  SFAS  125  to
securitization  transactions  occurring  on or after  January 1,  1997.  No such
securitizations  have occurred  since January 1, 1997. The effect of SFAS 125 is
not expected to have a material  effect on the Company's  financial  position or
results of operations when applied to future securitization transactions.

     In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation",  which encourages  entities to adopt a fair value based method of
accounting for the compensation cost of employee stock  compensation  plans. The
statement allows an entity to continue the application of the accounting  method
prescribed by APB No. 25, "Accounting  for Stock Issued to Employees",  however
pro forma disclosures of net income and earnings per share, as if the fair value
based method of  accounting  defined by this  statement  had been  applied,  are
required.  The disclosure  requirements of this statement were adopted in fiscal
1997.  Results of  operations  and  financial  position were not affected by the
adoption of this statement.

     In February 1997, the Financial Accounting Standards Board issued Statement
of  Financial   Accounting  Standards  No.  128,  "Earnings  per  Share",  which
simplifies the current  standards for computing earning per share. The statement
is effective for financial  statements  issued for periods ending after December
15, 1997,  including  interim periods.  Earlier adoption of this standard is not
permitted.  The statement will be adopted in fiscal 1998 and will not impact the
results  of  operations,  financial  position  or cash  flows  for the  Company.
Further,  the  requirements  of this  statement  are not expected to  materially
impact the Company's earnings per share calculation.

     Further, in February 1997, the Financial  Accounting Standards Board issued
Statement of Financial  Accounting Standards No. 129, "Disclosure of Information
about Capital Structure", which clarifies the disclosure requirements related to
type and nature of securities  contained in an entity's capital  structure.  The
standard  will be  adopted in fiscal  1998 and will not  impact  the  results of
operations, financial position or cash flows of the Company.



                                       25
<PAGE>



Item 8.     Financial Statements and Supplementary Data


                                                                          Page

Consolidated Financial Statements


      Independent Auditors' Report                                          28

      Consolidated Balance Sheets as of June 30, 1997 and 1996              29

      Consolidated Statements of Operations for the years ended
         June 30, 1997, 1996 and 1995                                       30

      Consolidated Statements of Stockholders' Equity for the
         years ended June 30, 1997, 1996, and 1995                          31

      Consolidated Statements of Cash Flows for the years ended
         June 30, 1997, 1996 and 1995                                       32

      Notes to Consolidated Financial Statements                            33




                                       26
<PAGE>





INDEPENDENT AUDITORS' REPORT





To the Stockholders and Board of Directors
Trans Leasing International, Inc.
Northbrook, Illinois



We have audited the  accompanying  consolidated  balance sheets of Trans Leasing
International,  Inc.  and  subsidiaries  as of June  30,  1997  and 1996 and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for each of the three  years in the  period  ended  June 30,  1997.  These
financial  statements are the  responsibility of the management of Trans Leasing
International,  Inc.  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,  such consolidated  financial  statements present fairly, in all
material respects, the financial position of Trans Leasing  International,  Inc.
and  subsidiaries at June 30, 1997 and 1996 and the results of their  operations
and their  cash flows for each of the three  years in the period  ended June 30,
1997, in conformity with generally accepted accounting principles.





DELOITTE & TOUCHE LLP
Chicago, Illinois
August 27, 1997




                                       27
<PAGE>

                        TRANS LEASING INTERNATIONAL, INC.
                         TRANS LEASING INTERNATIONAL, INC.

                            CONSOLIDATED BALANCE SHEETS
                                     (in 000's)
                                                                       June 30,
<TABLE>
<CAPTION>
                                                                     1997      1996
                                                                                 
                              ASSETS
<S>                                                                  <C>    <C>     
CASH                                                                 4,178  $  4,528

RESTRICTED CASH (Note A)                                             8,681     5,639
DIRECT FINANCE LEASES (Notes B and F):
  Future minimum lease payments                                     307,076   270,458
  Estimated non-guaranteed residual value                           24,571    22,452
                                                                   -------- ---------
Total Direct Finance Lease Receivables                              331,647   292,910
  Less:  Unearned lease income                                      (49,761)  (46,847)
     Allowance for uncollectible accounts                           (10,902)  (9,506)
                                                                        
                                                                    -------   -------

<S>                                                                 <C>       <C>    
  Net Investment in Direct Finance Leases                           270,984   236,557

LEASE FINANCING RECEIVABLES, less allowance for
  uncollectible accounts of $258 and $238, respectively              7,055     6,568
EQUIPMENT UNDER OPERATING LEASES, net of accumulated depreciation   11,292     7,709
(Note C)
FURNITURE, FIXTURES and EQUIPMENT, net of accumulated                1,789     1,811
depreciation (Note D)
INCOME TAX RECOVERABLE                                               1,541       904
OTHER ASSETS (Note E)                                                5,516     5,711
                                                                   -------- ---------

<S>                                                                 <C>     <C>  
   TOTAL ASSETS                                                     311,036 $ 269,427 
                                                                   ======== =========
               LIABILITIES AND STOCKHOLDERS' EQUITY

<S>                                                                  <C>    <C>                           
ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                8,261  $  9,183 

<S>                                                                 <C>       <C>   
NOTES PAYABLE TO FINANCIAL INSTITUTIONS (Note F)                    39,037    50,250

<S>                                                                 <C>       <C>    
LEASE-BACKED OBLIGATIONS (Note F)                                   211,142   159,567

<S>                                                                 <C>       <C>   
SUBORDINATED OBLIGATIONS (Note F)                                   17,400    20,730

<S>                                                                  <C>       <C>  
DEFERRED INCOME TAXES (Note H)                                       4,911     3,411
                                                                   -------- ---------
<S>                                                                 <C>       <C>    
   TOTAL LIABILITES                                                 280,751   243,141

COMMITMENTS AND CONTINGENT LIABILITIES (Note G)

STOCKHOLDERS' EQUITY (Note J):
  Preferred stock, par value $1.00;
   authorized 2,500 shares, none issued
  Common stock, par value $.01; authorized 10,000 shares;
<S>                                                                 <C>       <C>
   issued 4,823 shares, outstanding 4,041 and 4,045 shares,             48        48
respectively
  Additional paid-in capital                                         9,764     9,879
  Retained earnings                                                 22,867    18,646
  Less 783 and 753 shares, respectively, held in treasury, at cost  (2,394)   (2,287)
                                                                   -        --
                                                                    -------   -------

<S>                                                                 <C>       <C>   
   TOTAL STOCKHOLDERS' EQUITY                                       30,285    26,286
                                                                   -------- ---------

<S>                                                                 <C>     <C> 
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       311,036 $ 269,427
                                                                   ======== =========
</TABLE>
                   See notes to consolidated financial statements


                                       28
<PAGE>


                        TRANS LEASING INTERNATIONAL, INC.
<TABLE>
<CAPTION>

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       (in 000's except per share amounts)

                                                        Year ended June 30,
                                              -------------------------------------
                                                  1997         1996         1995
                                              -----------  -----------   ----------
REVENUES:
<S>                                            <C>          <C>          <C>      
   Finance and other lease related income      $  39,354    $  33,915    $  28,861
   Operating lease income                          2,712        1,469          694
   Other                                           1,161        1,234          974
                                              -----------  -----------   ----------

<S>                                               <C>          <C>          <C>   
   Total Revenue                                  43,227       36,618       30,529

EXPENSES:
<S>                                               <C>          <C>          <C>   
   Interest                                       17,819       15,733       13,338
   General and administrative                     15,682       13,018       10,220
   Provision for uncollectible accounts            5,660        5,166        4,431
                                              -----------  -----------   ----------

<S>                                               <C>          <C>          <C>   
   Total Expenses                                 39,161       33,917       27,989

KEYMAN LIFE INSURANCE INCOME (Note O)              2,196            -            -
                                              -----------  -----------   ----------

<S>                                                <C>          <C>          <C>  
EARNINGS BEFORE INCOME TAXES                       6,262        2,701        2,540

INCOME TAXES (Note H)                              1,557        1,034          973
                                              -----------  -----------   ----------

<S>                                            <C>          <C>          <C>      
NET EARNINGS                                   $   4,705    $   1,667    $   1,567
                                              ===========  ===========   ==========

WEIGHTED AVERAGE SHARES
OUTSTANDING (Note A):

<S>                                                <C>          <C>          <C>  
   PRIMARY                                         4,146        4,098        4,291
                                              -----------  -----------   ----------
   FULLY DILUTED                                   4,263        4,098        4,291
                                              -----------  -----------   ----------

EARNINGS PER SHARE (Note J):

<S>                                            <C>          <C>          <C>      
   PRIMARY                                     $    1.13    $    0.41    $    0.37
                                                         
                                              -----------     --------   ----------
<S>                                            <C>          <C>          <C>      
   FULLY DILUTED                               $    1.10    $    0.41    $    0.37
                                              -----------  -----------   ----------
</TABLE>


                  See notes to consolidated financial statements.



                                       29
<PAGE>




<TABLE>
<CAPTION>
                        TRANS LEASING INTERNATIONAL, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (in 000's)

                                                      Additional
                                   Common Stock       Paid-In     Retained   Treasury
                                 Shares    Amount     Capital     Earnings   Stock
                                 -------   -------    --------    -------    -------

<S>           <C> <C>             <C>    <C>        <C>         <C>        <C>      
BALANCE, June 30, 1994            4,371  $     48   $   9,879   $ 16,030   $ (1,178)

Treasury stock purchased          (160)                                       (550)

Dividends declared and paid                                        (126)

Net earnings                                                       1,567
                                 ------- ---------  ----------  ---------  ---------

<S>           <C> <C>             <C>          <C>      <C>       <C>        <C>    
BALANCE, June 30, 1995            4,211        48       9,879     17,471     (1,728)

Treasury stock purchased          (166)                                       (559)

Dividends declared and paid                                        (492)

Net earnings                                                       1,667
                                 ------- ---------  ----------  ---------  ---------

<S>           <C> <C>             <C>          <C>      <C>       <C>        <C>    
BALANCE, June 30, 1996            4,045        48       9,879     18,646     (2,287)

Common stock options                 25                    99
exercised

Warrants repurchased                                    (214)

Treasury stock purchased           (29)                                       (107)

Dividends declared and paid                                        (484)

Net earnings                                                       4,705
                                 ------- ---------  ----------  ---------  ---------

<S>           <C> <C>                    <C>        <C>         <C>        <C>      
BALANCE, June 30, 1997             4,041  $     48   $   9,764   $ 22,867   $ (2,394)
                                 
                                 ======= =========  ==========  =========  =========



</TABLE>


                  See notes to consolidated financial statements.




                                       30
<PAGE>



<TABLE>
<CAPTION>

                        TRANS LEASING INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (in 000')
                                                           Year ended June 30,
                                                     1997       1996        1995
                                                   ---------- ---------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                 <C>        <C>        <C>      
  Net Earnings                                      $  4,705   $  1,667   $   1,567
  Adjustments to reconcile net earnings to net
   cash provided by operating activities:
     Leasing costs, primarily provision for
     uncollectible accounts and
<S>                                                    <C>        <C>         <C>  
     amortization of initial direct costs              8,172      7,307       6,521
     Depreciation and amortization                     3,098      1,916         830
     Initial direct costs incurred                    (3,215)    (2,734)     (2,397)
  Changes in:
<S>                                                    <C>          <C>       <C>  
     Deferred income taxes                             1,500        568       1,016
     Accounts payable and accrued expenses             (922)      2,116       1,779
     Income taxes recoverable                          (637)        560         487
     Other assets                                        137     (1,097)       (457)
     Other                                                 -          -         (22)
                                                   ---------- ---------- ------------

<S>                                                   <C>        <C>          <C>  
     Net cash provided by operating activities        12,838     10,303       9,324
                                                   ---------- ---------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

<S>                                                   <C>        <C>         <C>   
  Principal collection on leases                      104,028    96,331      75,627
  Equipment purchased for leasing                     (143,096)  (134,146)   (106,826)
  Purchase of lease financing receivables             (3,872)    (4,309)     (1,788)
  Purchase of property and equipment                  (7,508)    (6,583)     (4,581)
  Disposal of property and equipment                     934        481         419
                                                   ---------- ---------- -----------

<S>                                                   <C>        <C>         <C>     
     Net cash used in investing activities            (49,514)   (48,226)    (37,149)
                                                   ---------- ---------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

<S>                                                   <C>        <C>        <C>    
  Issuance of notes payable to financial              167,875    131,992    126,225
institutions
  Repayment of notes payable to financial             (179,088)  (130,917)   (137,707)
institutions
  Issuance of lease-backed obligations                271,931    201,879    126,382
  Repayment of lease-backed obligations               (220,356)  (162,100)   (84,778)
  Payment of subordinated obligations                 (3,330)    (1,110)     (1,160)
  Payment of dividends on common stock                 (484)       (492)       (126)
  Common stock options exercised                          99          -           -
  Repurchase of stock warrants                         (214)          -           -
  Purchase of treasury stock                           (107)       (559)       (550)
                                                   ---------- ---------- -----------

<S>                                                   <C>        <C>         <C>   
     Net cash provided by financing activities        36,326     38,693      28,286
                                                   ---------- ---------- -----------

<S>                                                    <C>          <C>         <C>
NET (DECREASE) INCREASE IN CASH                        (350)        770         461

<S>                                                    <C>        <C>         <C>  
CASH, beginning of period                              4,528      3,758       3,297
                                                   ---------- ---------- -----------

<S>                                                 <C>        <C>        <C>      
CASH, end of period                                 $  4,178   $  4,528   $   3,758
                                                   ========== ========== ===========
</TABLE>

                        See notes to consolidated financial statements.

  

                                       31
<PAGE>



                       TRANS LEASING INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (in 000's except share amounts)


A.    Summary of Significant Accounting Policies:

      Business:

          Trans Leasing International, Inc., (the "Company") leases a variety of
     medical and general  office  equipment and  automobiles  to the medical and
     commercial equipment markets.

      Principles of Consolidation:

          The financial  statements  include the accounts of the Company and its
     wholly-owned   subsidiaries,   Trans  Leasing  Insurance  Services,   Inc.,
     LeaseCard Auto Group, Inc., Nuvotron,  Inc., TL Lease Funding Corp. III and
     TL Lease Funding Corp. IV. Intercompany accounts and transactions have been
     eliminated.

      Lease Accounting:

          Completed lease  contracts,  which qualify as direct finance leases as
     defined by  Statement  of Financial  Accounting  Standards  ("SFAS") No. 13
     "Accounting  for  Leases",  are  accounted  for by recording on the balance
     sheet the total future minimum lease payments receivable plus the estimated
     nonguaranteed  residual  value of  leased  equipment  less  unearned  lease
     income.  Unearned  lease income  represents  the excess of the total future
     minimum  lease  payments plus the estimated  nonguaranteed  residual  value
     expected  to be  realized at the end of the lease term over the cost of the
     related equipment.  Unearned lease income is recognized as revenue over the
     term of the lease by the effective  interest  method.  Initial direct costs
     incurred in  consummating a lease are capitalized as part of the investment
     in direct  finance  leases and amortized over the lease term as a reduction
     in the yield. An allowance for uncollectible  accounts is provided over the
     terms  of  the  underlying  leases  as  the  leases  are  determined  to be
     uncollectible.  Accounts  are  normally  written off if no payment has been
     received within 150 to 180 days of their due dates. Accounts can be written
     off earlier if it is evident that no further payment will be received.

          Operating  lease  income is  recognized  as  revenue  when the  rental
     payments become due.  Equipment under operating  leases is recorded at cost
     and depreciated to estimated residual values on a straight-line  basis over
     the estimated useful life of the equipment,  generally three to five years.
     The  Company  has in  aggregate,  generally  received  the full  amount  of
     recorded residual values on expired leases.

          The primary long-term funding method currently employed by the Company
     is to securitize portions of its lease portfolio. This method of funding is
     believed to provide the lowest cost long-term  financing  available.  These
     transactions  are not  reflected  as  sales  of  lease  receivables  in the
     financial statements as the Company has an ongoing economic interest in the
     assets  securitized.  As such, the lease receivables  securitized remain on
     the consolidated  balance sheet and the income  associated with such leases
     is recognized over the respective lease terms.



                                       32
<PAGE>



                              TRANS LEASING INTERNATIONAL, INC.

                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       (continued)


          Statement of Financial  Accounting  Standards No. 125, "Accounting for
     Transfers  and  Servicing  of  Financial  Assets  and   Extinguishments  of
     Liabilities"  (SFAS  125),  effective  for the  Company on January 1, 1997,
     provides  new  methods  of  accounting  and  reporting  for  transfers  and
     servicing of  financial  assets and  extinguishments  of  liabilities.  The
     Company will apply SFAS 125 to securitization  transactions occurring on or
     after January 1, 1997. No such  securitizations have occurred since January
     1, 1997.  The effect of SFAS 125 is not expected to have a material  effect
     on the Company's  financial  position or results of operations when applied
     to future securitization transactions.

      Use of Estimates:

          The  preparation of financial  statements in conformity with generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that  affect  the  reported  amounts  and  disclosures  in the
     financial statements. Actual results could differ from these estimates.

      Restricted Cash:

          Restricted cash represents cash received related to securitized leases
     which is held in  segregated  cash  accounts  pending  distribution  to the
     lease-backed certificate holders.

      Furniture, Fixtures and Equipment:

          Furniture,  fixtures, & equipment are recorded at cost and depreciated
     using the straight-line method over their estimated useful lives, generally
     three to seven years.

      Income Taxes:

          The provision for income taxes includes  deferred taxes resulting from
     temporary  differences  between the  financial  statement  and tax bases of
     assets and  liabilities,  using the liability  method  required by SFAS No.
     109, "Accounting for Income Taxes."

      Interest Rate Hedges:

          Interest  rate swaps and collars are utilized to hedge  interest  rate
     risk on the Company's  borrowings.  Such financial  instruments involve the
     exchange  of interest  payments  without  the  exchange  of the  underlying
     notional principal amounts. The Company accrues a net payable or receivable
     for the amount of interest to be paid or received under the swap or collar.
     Such amounts represent an adjustment to interest expense and are recognized
     contemporaneously with the item being hedged.



                                       33
<PAGE>



                              TRANS LEASING INTERNATIONAL, INC.

                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       (continued)



      Earnings Per Common Share:

          Earnings  per common  share are  computed on the basis of the weighted
     average  number of shares  outstanding  plus common stock  equivalents,  if
     dilutive, applicable to warrants and options.

          In February  1997,  the Financial  Accounting  Standards  Board issued
     Statement of Financial  Accounting Standards No. 128, "Earnings per Share,"
     which  simplifies the current  standards for computing  earnings per share.
     The  statement is effective  for  financial  statements  issued for periods
     ending after December 15, 1997, including interim periods. Earlier adoption
     of this standard is not permitted.  The statement will be adopted in fiscal
     1998 and will not impact the results of operations,  financial  position or
     cash flows for the Company. Further, the requirements of this statement are
     not  expected  to  materially  impact  the  Company's  earnings  per  share
     calculation.

     Stock-Based Compensation Plans:

          During 1997, the Company adopted the disclosure-only option under SFAS
     No.  123,  "Accounting  for  Stock-Based  Compensation".  Accordingly,  the
     provisions  of  APB  Opinion  No.  25,  "Accounting  for  Stock  Issued  to
     Employees",  and related interpretations continue to be used to account for
     stock options and warrants issued under the Company's plans.

      Reclassifications:

          Certain  reclassifications  have been made to prior  years to  conform
     with the presentation used in 1996.





                                       34
<PAGE>



                           TRANS LEASING INTERNATIONAL, INC.

                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       (continued)

B.     Net Investment in Direct Finance Leases:

          The Company leases  equipment with lease terms generally  ranging from
     one to five years.  Minimum  payments to be received on lease contracts for
     each of the succeeding five fiscal years ending June 30 are:
<TABLE>
<CAPTION>

<S>              <C>                                    <C>     
                 1998                                   $127,389
                 1999                                     89,535
                 2000                                     54,237
                 2001                                     27,612
                 2002                                      8,191
                 Thereafter                                  112
</TABLE>


          Initial  direct costs are  capitalized  as part of the  investment  in
     direct  finance leases and are amortized over the lease term as a reduction
     in yield. Initial direct costs capitalized are as follows:

<TABLE>
<CAPTION>

                                          1997        1996        1995
                                        ---------   ----------  ---------

<S>                                      <C>          <C>        <C>     
      Initial direct costs:              $  3,215     $ 2,734    $  2,397


     An analysis of the changes in the allowance for  uncollectible  accounts is
     as follows:

                                                Year ended June 30,
                                         1997         1996         1995
                                       ----------   ----------  -----------

<S>                                     <C>          <C>         <C>      
      Balance, beginning of year        $  9,506     $  6,482    $   4,047

<S>                                        <C>          <C>          <C>  
      Additions                            7,154        6,667        5,328

      Uncollected lease receivables
<S>                                       <C>          <C>          <C>    
         written    off,    net   of      (5,758)      (3,643)      (2,893)
     recoveries
                                       ----------   ----------  -----------

<S>                                     <C>          <C>         <C>      
      Balance, end of year              $ 10,902     $  9,506    $   6,482
                                       ==========   ==========  ===========

</TABLE>



                                       35
<PAGE>






                        TRANS LEASING INTERNATIONAL, INC.

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (continued)


C.     Equipment Under Operating Leases:

          The  original  cost  of  equipment  under  operating  leases  and  the
     accumulated depreciation are as follows:
<TABLE>
<CAPTION>

                                                         Year ended June 30,
                                                          1997          1996
                                                       -----------   -----------

<S>                                                     <C>           <C>       
       Equipment under operating leases                 $  14,413     $    9,197
          Less accumulated depreciation                    (3,121)       (1,488)


<S>                                                     <C>           <C>       
                                                        $  11,292     $    7,709
                                                       ===========   ===========


D.     Furniture, Fixtures and Equipment:

            The major classes of property and equipment are as follows:

                                                         Year ended June 30,
                                                         1997         1996
                                                       ----------   ----------

<S>                                                     <C>          <C>     
       Data processing equipment                        $  1,780     $  1,474
       Furniture and fixtures                                779          737
       Personal    computer    and    communication        1,008          772
       equipment
       Vehicles                                              156           60
       Leasehold improvements                                114           84
                                                       ----------   ----------
                                                           3,837        3,127
          Less accumulated depreciation                   (2,048)      (1,316)
                                                       ----------   ----------

<S>                                                     <C>          <C>     
                                                        $  1,789     $  1,811
                                                       ==========   ==========

</TABLE>



                                       36
<PAGE>




                        TRANS LEASING INTERNATIONAL, INC.

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (continued)
<TABLE>
<CAPTION>


E.     Other Assets:

            Other assets consist of:

                                                         Year ended June 30,
                                                         1997        1996
                                                       ---------   ----------

       Cash  surrender   value  of  life  insurance
       policies,
<S>                                                     <C>         <C>     
         net of policy loans of $63                     $   510     $  1,915
       Deferred debt issuance costs                       2,239        1,777
       Due from lessees                                   1,177          836
       Supplies                                             127          151
       Deposits                                             549          484
       Other                                                914          548
                                                       ---------   ----------

<S>                                                     <C>         <C>     
                                                        $ 5,516     $  5,711
                                                       =========   ==========


F.     Debt:


                                                         Year ended June 30,
                                                         1997          1996
                                                       ----------   -----------
       Notes Payable to Financial Institutions:
          Unsecured,  floating  rate (6.33% at June
           30, 1997),
<S>                                                     <C>          <C>      
           Twelve-month revolving                       $ 21,637     $  20,650
       Other notes payable to financial
         institutions:
          Unsecured, interest rate of 5.83%,
           due in  installments  through  March 31,       10,000        20,000
           1998
          Unsecured, interest rate of 6.31%,
           due in  installments  through  September        3,400         5,600
           30, 1998
          Unsecured, interest rate of 6.82%,
           due in installments through June 1, 1998        4,000         4,000
                                                       ----------   -----------

<S>                                                     <C>          <C>      
                                                        $ 39,037     $  50,250
                                                       ----------   -----------

</TABLE>



                                       37
<PAGE>




                           TRANS LEASING INTERNATIONAL, INC.

<TABLE>
<CAPTION>



                                                           Year ended June 30,
                                                           1997          1996
                                                        -----------   ----------
       Lease-backed obligations:
          Variable interest rate (6.4375% as of
<S>                                                      <C>          <C>       
            June 30, 1997), Due December 31, 1997        $  64,770    $   71,995
          Variable  interest  rate (5.50% as of June
            30, 1997), Due March 25, 1998                    1,000         1,000
          Interest rate of 6.65%,
           Due in installments through June 25, 2000         2,387        15,276
          Interest rate of 7.65%,
           Due in installments through June 25, 2000         4,760         4,759
          Interest rate of 5.98%,
           Due in installments  through November 20,        95,711             -
             2002
          Interest rate of 6.64%,
           Due in installments  through November 20,        10,579             -
             2002
          Interest rate of 6.40%,
           Due  in  installments  through  September        27,704        59,281
             15, 2001
          Interest rate of 7.55%,
           Due  in  installments  through  September         4,231         7,256
             15, 2001
                                                        -----------   ----------

                                                           211,142       159,567

       Subordinated obligations:
          Unsecured, interest rate of 10.5%,
           Due October 15, 2002                             12,950        12,950
          Unsecured, interest rate of 13.4%,
           Due June 30, 1999                                 4,450         7,780
                                                        -----------   ----------

<S>                                                      <C>           <C>      
                                                         $  17,400     $  20,730
                                                        ===========   ==========
</TABLE>


          The Company may borrow up to $30 million under an unsecured  revolving
     credit facility that pays interest  quarterly.  The Company, at its option,
     pays  interest  equal to the prime rate or the Federal  Funds rate plus .70
     percent,  with  the  option  at the end of every  quarter  to  convert  its
     revolving loans into a fixed-rate  loan, in which case the principal amount
     is payable in 18 equal  quarterly  installments  with interest at 2 percent
     over a calculated rate based on LIBOR. If the revolving credit agreement is
     not extended,  all revolving  loans will be due on January 29, 1998, and on
     such date the Company may convert the  outstanding  balance into a two-year
     term loan bearing interest at the prime rate plus .25 percent or LIBOR plus
     1 percent.  As of September  11,  1997,  the  outstanding  loans under this
     facility  were  $20  million  and the  unused  borrowing  capacity  was $10
     million.



                                       38
<PAGE>



                            TRANS LEASING INTERNATIONAL, INC.

                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       (continued)

          The Company's loan agreements contain certain  restrictive  covenants.
     The more  significant of these covenants  require the Company to maintain a
     ratio of earnings before taxes and interest  expense to interest expense of
     1.15 to 1.0 on a  rolling  four  quarter  basis;  require  the  Company  to
     maintain a ratio of debt, (excluding subordinated debt due in more than one
     year), to equity,  (including subordinated debt due in more than one year),
     not to exceed 4.0 to 1.0;  prohibit  consolidated  tangible net worth, plus
     aggregate  net assets of  securitization  subsidiaries,  plus the aggregate
     amount paid by the Company on or after  December  31,  1992,  to redeem its
     stock  from being less than $17  million  plus 50 percent of the  Company's
     consolidated  cumulative net income from January 1, 1993;  provide that the
     Company shall not purchase its common stock,  pay cash  dividends or redeem
     subordinated debt prior to maturity which, in aggregate,  exceed the sum of
     $2 million  plus 50  percent  of  consolidated  net  income  computed  on a
     cumulative  basis plus net  proceeds to the Company  from the issue or sale
     after  December  31,  1992 of shares of  capital  stock of the  Company  or
     warrants,  rights or  options  to  purchase  or  acquire  any shares of its
     capital  stock;  and  prohibit  the  Company's  activities  in mergers  and
     acquisitions without the consent of the lender.

      At June 30, 1997, the Company was in compliance with all covenants.

          The  Company,  through  its  wholly-owned   special-purpose  financing
     subsidiary,   TL  Lease  Funding  Corp.  IV  ("TLFC  IV"),   established  a
     securitized revolving credit and term loan facility with various historical
     maximum  borrowing  limits of up to $85  million  (the "TLFC IV  Revolving
     Credit  Facility")  with a  national  banking  institution.  TLFC  IV  pays
     interest  on the  revolving  borrowings  at a rate  equal to LIBOR plus .75
     percent.  On April 18,  1997,  TLFC IV entered  into an interest  rate swap
     agreement  which fixed the  interest  rate of a portion of the  securitized
     revolving credit facility. TLI receives floating rate LIBOR in exchange for
     paying a fixed rate of 6.65% on an amortizing notional outstanding balance.
     The notional amount outstanding as of June 30, 1997 was $46.5 million.

          On January 21, 1997,  the Company sold leases with a net book value of
     approximately  $28.5  million to TLFC IV for  approximately  $28 million in
     cash  borrowed  under the TLFC IV Revolving  Credit  Facility.  On April 4,
     1997, the Company sold leases with a net book value of approximately  $23.2
     million to TLFC IV for  approximately  $23 million in cash  borrowed  under
     this  facility.  On May 29,  1997,  the Company sold leases with a net book
     value of approximately $20.9 million to TLFC IV for



                                       39
<PAGE>



                        TRANS LEASING INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

     approximately $21 million in cash borrowed under this facility. The Company
     continues to service the leases sold to TLFC IV and used the proceeds  from
     the  sales of  leases  to  reduce  revolving  credit  borrowings  under its
     unsecured revolving credit facility. As of June 30, 1997, outstanding loans
     under the TLFC IV  revolving  credit  facility  were $65 million and unused
     borrowing capacity was $20 million.

          Maturities   of  debt  (notes   payable  to  financial   institutions,
     subordinated  obligations,  lease-backed  obligations and leases discounted
     with  financial  institutions)  during  each of the  succeeding  five years
     ending June 30 and thereafter are as follows:
<TABLE>
<CAPTION>

<S>              <C>                                        <C> 
                 1998                                       $182
                 1999                                         51
                 2000                                         22
                 2001                                          -
                 2002                                          -
                 Thereafter                                   13
</TABLE>

G.     Commitments:

          The Company leases its office facilities and certain office equipment.
     Future  minimum rental  commitments  under such leases as of June 30, 1997,
     and thereafter are as follows:

<TABLE>
<CAPTION>



<S>              <C>                                     <C>    
                 1998                                    $   944
                 1999                                        742
                 2000                                        695
                 2001                                        683
                 Thereafter                                  632
</TABLE>

          The Company has entered into a five-year lease  commitment in order to
     consolidate  the  location  of  its  headquarters  with  certain  operating
     subsidiaries.  The lease commencing on October 1, 1997 and expiring in 2002
     is expected to improve the  streamlining and coordination of certain of the
     Companyss operations.

          The Company leases its two executive  offices in Northbrook,  Illinois
     under leases  which run through  August 31,  1998,  and May 31, 2002.  Upon
     commencement of the new lease mentioned  above, the existing leases will be
     sublet.

          Total rent  expense for the years ended June 30,  1997,  1996 and 1995
     was $593, $543, and $353, respectively.

          As of June 30,  1997,  the  Company  had  outstanding  commitments  to
     purchase equipment,  which it intended to lease, with an aggregate purchase
     price of $5.2 million.



                                       40
<PAGE>



                        TRANS LEASING INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)


H.     Income taxes:

          Deferred  income  taxes  reflect the net tax effects of (a)  temporary
     differences  between the carrying amounts of the assets and liabilities for
     financial  reporting  purposes and the amounts used for income tax purposes
     and (b)  operating  loss and tax credit  carryforwards.  The tax effects of
     significant items comprising the Company's net deferred tax liability as of
     June 30, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>

                                                          Year ended June 30,
                                                          1997          1996
                                                       -----------   -----------
       Deferred Tax Liabilities:
          Difference between book and tax
<S>                                                     <C>           <C>       
           Investment in equipment leased               $  15,361     $   14,312

       Deferred Tax Assets:
          Operating loss carry-forwards                     2,523          2,955

          Tax credit carry-forwards:
           Investment tax credits                           2,361          2,464
           Alternative minimum tax credits                  5,566          5,482
                                                          --------      --------
                                                           10,450         10,901
                                                       -----------   -----------

<S>                                                     <C>           <C>       
       Net deferred tax liability                       $   4,911     $    3,411
                                                       ===========   ===========
</TABLE>

          No valuation  allowances as of June 30, 1997,  and 1996 are considered
     necessary.

          At June 30,  1997,  the  Company  has  $6,587  of net  operating  loss
     carryforwards  available for federal income tax purposes. The net operating
     loss carryforwards expire as follows:
<TABLE>
<CAPTION>

                                     Loss       Year

<S>                                 <C>         <C> 
                                    $ 1,220     2005
                                      1,170     2006
                                      1,136     2009
                                      3,061     2012

</TABLE>



                                       41
<PAGE>




                         TRANS LEASING INTERNATIONAL, INC.

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (continued)


          At June 30, 1997, the Company's  investment  tax credit  carryforwards
     expire as follows:
<TABLE>
<CAPTION>


                                  ITC        Year

<S>                             <C>          <C> 
                                $ 631        1998
                                  784        1999
                                  699        2000
                                  247        2001

</TABLE>

          At June 30, 1997,  the Company has $5,566 of  alternative  minimum tax
     credit  carryover,  which is available  to offset  future  regular  taxable
     federal income taxes.

            The provision for income taxes is as follows:
<TABLE>
<CAPTION>

                                                   Year ended June 30,
                                             1997         1996         1995
                                          -----------   ----------   ----------
        Federal:
<S>                                        <C>           <C>          <C>     
           Current                         $      57     $      -     $      -
           Deferred                            1,234          685          810
                                          -----------   ----------   ----------
                                               1,291          685          810
        State:
<S>                                                           <C>           <C>
           Current                                 -          254           50
           Deferred                              266           95          113
                                          -----------   ----------   ----------
                                                 266          349          163
                                             --------      -------      -------
                                         
<S>                                        <C>           <C>          <C>     
                                           $   1,557     $  1,034     $    973
                                          ===========   ==========   ==========
</TABLE>

          The  differences  between the statutory and effective tax rates are as
     follows:


<TABLE>
<CAPTION>
                                                  Year ended June 30,
                                             1997         1996         1995
                                         ------------  -----------  -----------

<S>                                          <C>          <C>          <C>  
       U.S. statutory income tax rate        34.0%        34.0%        34.0%
       State  income  taxes less  federal     4.3          4.3          4.3
       benefit
       Nontaxable life insurance proceeds   (11.9)           -            -
       Other                                 (1.5)           -            -                                               
                                         ============  ===========  ===========
<S>                                          <C>          <C>          <C>  
       Effective income tax rate             24.9%        38.3%        38.3%
                                         ============  ===========  ===========

</TABLE>



                                       42
<PAGE>



                       TRANS LEASING INTERNATIONAL, INC.

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (continued)

I.    Profit Sharing Plan:

          The  Company  has  established  a profit  sharing  401(k) plan for its
     employees.  The Company matches 30 percent of participants'  contributions.
     Contributions  charges to earnings for the years ended June 30, 1997,  1996
     and 1995 were $81, $70 and $49, respectively.

J.    Stock Option Plans:

          The Company has three stock-based  incentive plans, the Employee Stock
     Option  and  Performance  Unit  Plan  (the  "1986  Plan"),   the  Executive
     Management  Group Stock  Option  Plan (the "1992  Plan") and the 1996 Stock
     Option Plan. Options are granted under these plans at exercise prices equal
     to the fair value of the  Company's  common stock on the  applicable  grant
     date.  Options vest either immediately or ratably over a three year period.
     Options granted may be exercised when vested and will generally expire five
     years after the date of grant.

          A summary of the status of the Company stock-based  incentive plans is
     as follows:
<TABLE>
<CAPTION>

                                               Weighted-
                                                average
                                     1997    Exercise price    1996         1995
                                  -----------  -----------  -----------   ------

<S>                                  <C>       <C>             <C>       <C>    
       Beginning balance             493,195   $     4.06      208,039   176,883
            
         Granted                     536,000         5.09      391,156    31,156
         Exercised                   (25,000)        3.95            -         -
         Cancelled or expired       (193,039)        4.62     (106,000)        -

       Ending balance                811,156         4.53      493,195   208,039

       Options exercisable at
         end of year                 681,156         4.31      493,195   208,039

       Weighted average fair
         value of options
       granted
         during the year          $     4.42                  $   3.27     $3.96
                                 

</TABLE>



                                       43
<PAGE>




                        TRANS LEASING INTERNATIONAL, INC.

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (continued)


          The  weighted-average  fair value (at grant  date) per option  granted
     during 1997 is $4.42.  The fair value of each option  grant is estimable on
     the date of grant  using the  Black-Scholes  option-pricing  model with the
     following  weighted average  assumptions  used or grants in 1997;  dividend
     yield of 1.7%;  volatility factor of 44%, risk-free interest rate of 6.14%;
     and expected life of 4.05 years.

          Information on the range of exercise prices for options outstanding as
     of June 30, 1997:

<TABLE>
<CAPTION>

                        Options Outstanding                           Options Exercisable

       Range of     Number                      Weighted-average    Number
       exercise   outstanding  Weighted-average   remaining       exercisable Weighted-average
        prices    at 6/30/97    exercise price   contractual life   at 6/30/96  exercise price
                              
<S>    <C>   <C>    <C>           <C>               <C>             <C>          <C>        
       $3.25-$6.25  811,156       $ 4.53            4.09            681,156      $ 4.31
</TABLE>

          The  Company  has  adopted  the  financial  disclosure  provisions  of
     Statement of Financial  Accounting  Standards ("SFAS") No. 123, "Accounting
     for Stock-Based  Compensation"  with respect to its  stock-based  incentive
     plans. The Company applies  Accounting  Principles Board Opinion No. 25 and
     related  interpretations in accounting for these plans as allowed for under
     the provisions of SFAS No. 123. Accordingly,  no compensation cost has been
     recognized for its stock-based incentive plans as the exercise price of the
     option equals  market price at the grant date.  Had  compensation  cost for
     these plans been determined on the fair value at the grant date for options
     granted,  consistent with the provisions of SFAS No. 123, the Company's net
     income and earnings per share would have been reduced to the  following pro
     forma amounts:
<TABLE>
<CAPTION>

                                                  Year ended June 30, 1997
                                                -------------------------------
                                                 1997        1996         1995
                                                ------       -----       ------
<S>                                           <C>          <C>         <C>    
       Net Income              As reported    $ 4,705      $ 1,667     $ 1,567
                               Pro forma        3,592         824        1,491

<S>                                              <C>         <C>          <C> 
       Primary earning per     As reported       1.13        0.41         0.37
         Share                 Pro forma         0.87        0.21         0.35
         
<S>                                              <C>         <C>          <C>    
       Fully diluted           As reported       1.10        0.41         0.37   
       earnings                                                        
<S>                                              <C>         <C>          <C> 
         per share             Pro forma         0.84        0.21         0.35

</TABLE>

K.    Supplementary Statement of Earnings Information:

          Advertising  expenses for the years ended June 30, 1997, 1996 and 1995
     were $771, $802, and $535, respectively.



                                       44
<PAGE>



                         TRANS LEASING INTERNATIONAL, INC.

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (continued)

L.     Estimated Fair Value of Financial Instruments:

          The  following  disclosure  of the  estimated  fair value of financial
     instruments is made in accordance  with the  requirements  of SFAS No. 107,
    "Disclosures about Fair Values of Financial Instrument". The estimated fair
     value amounts have been  determined by the Company using  available  market
     information and appropriate valuation methodologies.  However, considerable
     judgement is necessarily  required to interpret  market data to develop the
     estimates of fair value.  Accordingly,  the estimates  presented herein are
     not  necessarily  indicative  of the amounts the Company could realize in a
     current market  exchange.  The use of different market  assumptions  and/or
     estimation  methodologies  may have a material effect on the estimated fair
     value amounts. SFAS No. 107 also excludes certain items from its disclosure
     requirements such as the Company's investments in leased assets.

          The following  methods and assumptions  were used to estimate the fair
     value of each class of financial instruments for which it is practicable to
     estimate that value.

          Long-Term  debt:  Fair  value  of  the  Company's  long-term  debt  is
     determined  utilizing  current  market  rates based upon the market rate of
     debt with similar  terms and  conditions.  The fair value of the  Company's
     long-term debt is approximately  $267,685 as of June 30, 1997; the carrying
     value is $267,579.  As of June 30, 1996,  the fair value and carrying value
     of the Company's long-term debt were $231,539 and $230,547, respectively.

          Interest  Rate Swaps:  The fair value of the  Company's  interest rate
     hedge  instruments  is  estimated  at the amount the  Company  would pay or
     receive to terminate the  instrument.  At June 30, 1997,  the fair value of
     such  agreements  was a net  liability  of  $348.  No  interest  rate  swap
     agreements were outstanding at June 30, 1996.

          Other Financial  Investments:  The carrying value in the balance sheet
     as of June 30, 1997, for cash,  receivables (other than lease receivables),
     accrued  liabilities  and revolving  line of credit and variable rate notes
     payable  approximate  fair  value  because  of the  short  maturity  of the
     investments or bear interest rates that approximate current market rates.

M.     Supplementary Statement of Cash Flow Information:

            Cash paid (received) during the year for:
<TABLE>
<CAPTION>

                                                Year ended June 30,
                                         1997          1996          1995
<S>                                    <C>           <C>           <C>    
                  Interest             $17,167       $14,754       $12,416
                  Income taxes             699           (49)         (529)

</TABLE>



                                       45
<PAGE>



                         TRANS LEASING INTERNATIONAL, INC.

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (continued)

N.     Dividends Declared:

          The holders of Common Stock are entitled to receive dividends when and
     as declared by the Board of  Directors.  The Board of Directors  approved a
     dividend,  in the amount of $.03 per share  during  each  quarter of fiscal
     year 1997.  The  declaration of dividends in the future will be reviewed by
     the  Board  of  Directors  in light of the  Company'  earnings,  financial
     condition and capital  requirements  and future  dividends may be declared,
     reduced,  or eliminated at the  discretion of the Board of Directors on the
     basis of  these or other  considerations.  The  Company'  credit  facility
     restricts  the payment of  dividends on the  Company'  common stock unless
     certain  financial tests are met. Under the most  restrictive  limitations,
     the Company  shall not purchase  its common  stock,  pay cash  dividends or
     redeem subordinated debt prior to maturity which, in aggregate,  exceed the
     sum of $2 million plus 50 percent of consolidated  net income computed on a
     cumulative  basis plus net  proceeds to the Company  from the issue or sale
     after  December  31,  1992 of shares of  capital  stock of the  Company  or
     warrants,  rights or  options  to  purchase  or  acquire  any shares of its
     capital  stock.  On August 5, 1997,  the Board of  Directors  approved  the
     payment of a  quarterly  cash  dividend  in the amount of $.03 per share on
     August 26, 1997 to holders of record as of August 15, 1997.

O.    Insurance Proceeds:

          On  October  7,  1996,  Richard  Grossman,   the  Company'  principal
     shareholder,  passed  away.  Prior  to that  date,  Mr.  Grossman  held the
     positions of Chairman of the Board, Chief Executive Officer and President.

          The Company was  beneficiary  on two keyman life  insurance  policies,
     which  insured  the life of  Richard  Grossman.  The  proceeds  from  these
     policies amounted to approximately $2,500, resulting in recognition of life
     insurance income of $2,196, in the second quarter of 1997.

P.    Subsequent Event:

          On August 27,  1997 the  Company  entered  into an  agreement  to sell
     substantially  all the assets of the  Company to General  Electric  Capital
     Corporation  (GECC).  The gross sale proceeds  approximate  $46 million and
     involves assumption by GECC of certain debt outstanding upon closing of the
     sale. Subject to the required regulatory  filings,  the Company anticipates
     the sale  transaction  will close in the second quarter of fiscal 1998. Net
     proceeds  from  the  sale,  after  consideration  of  certain  post-closing
     expenses,   will  approximate  $10.00  per  share  and  be  distributed  to
     shareholders via a liquidating dividend in early calendar 1998.



                                       46
<PAGE>



Item 9.   Disagreements on Accounting and Financial Disclosure


Item 9.   No change of the  Company's  independent  accountants  has  occurred 
          in fiscal 1996 or fiscal 1997.


                                       47
<PAGE>


                                      PART III

Item 10.    Executive Officers of the Registrant

          The  following  table sets forth  certain  information  regarding  the
     Company's executive officers.

      Name                    Age                         Position

      Larry S. Grossman       48                       Chairman of the Board and
                                                         Chief Executive Officer

      Michael J. Heyman       44                          President and
                                                         Chief Operating Officer

      Joseph Rabito           39                       Executive Vice President,
                                                          Operations

      Stephen J. Hupp         33                         Vice President, Finance


          Larry S.  Grossman  is Chairman  of the Board of  Directors  and Chief
     Executive  Officer of the Company since October,  1996;  Chairman and Chief
     Executive Officer of FluoroScan Imaging Systems,  Inc. (the manufacturer of
     the FluoroScan Imaging System, a fluoroscopic Device) from 1982 to 1986 and
     from 1989 to 1996; Chief Operating  Officer and Director of Pain Prevention
     Labs, Inc. (a manufacturer of an electronic dental anesthesia  device) from
     1986 to 1989; and President,  Chief  Executive  Officer and Director of the
     Company  from 1981 to 1982 and Vice  President  and Director of the Company
     from 1972 to 1981.

          Michael J.  Heyman is  President  and Chief  Operating  Officer of the
     Company since October,  1996;  President and Chairman of MOKSHA  Worldwide,
     Inc. (an international  marketing and merchandising  concern in the apparel
     industry)  since 1994; and Senior Vice President of Heyman  Corporation (an
     international  marketing and merchandising concern in the apparel industry)
     from 1982 to 1994.

          Joseph Rabito has been Executive  Vice  President of Operations  since
     1996.  Prior to that he was Vice President of Operations from 1985 to 1996.
     Since joining the Company in 1981, Mr. Rabito has held various positions in
     the Company's credit department.

          Stephen J. Hupp is Vice President of Finance since March,  1997. Prior
     to joining the Company, Mr. Hupp served as Controller for GE Capital's Auto
     Leasing business from 1996 to 1997 and, prior to that, was a Senior Manager
     with Deloitte & Touche LLP from 1986 to 1996.

          Other information  required herein is hereby incorporated by reference
     from the  definitive  Proxy  Statement  for the 1997 Annual  Meeting of the
     Company.



                                       48
<PAGE>



Item 11.    Executive Compensation

          The information  required  herein is hereby  incorporated by reference
     from the  definitive  Proxy  Statement  for the 1997 Annual  Meeting of the
     Company.

Item 12.    Security Ownership of Certain Beneficial Owners and Management

          The information  required  herein in hereby  incorporated by reference
     from the  definitive  Proxy  Statement  for the 1997 Annual  Meeting of the
     Company.

Item 13.    Certain Relationships and Related Transactions

          The information  required  herein is hereby  incorporated by reference
     from the  definitive  Proxy  Statement  for the 1997 Annual  Meeting of the
     Company.


                                      PART IV

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

(a)  The following  documents are filed as part of this Report. The page number,
     if any,  listed  opposite  a  document  indicates  the page  number  in the
     sequential  numbering system in the manually signed original of this Report
     where such document can be found.

     (1)  The consolidated  financial statements filed as part of the Report are
          listed in Item 8.

     (2)  Financial Statement Schedules

          Schedules have been omitted  because they are not  applicable,  or not
          required,  or  because  the  required  information  is  shown  in  the
          consolidated financial statements or notes thereto.

      (3) Exhibits

          3.1(a)  Restated   Certificate  of   Incorporation,   incorporated  by
     reference to Exhibit 3.1(a) to the Registrant's  Registration  Statement on
     Form S-1 (Registration No. 33-50228).

          3.1(b)   Certificate   of   Amendment  to  Restated   Certificate   of
     Incorporation,  dated  December  12,  1986,  incorporated  by  reference to
     Exhibit  3.1(b)  to the  Registrant's  Registration  Statement  on Form S-1
     (Registration No. 33-50228).

          3.1(c)   Certificate   of   Amendment  to  Restated   Certificate   of
     Incorporation, dated as of November 17, 1992.



                                       49
<PAGE>



          3.2(a)  By-laws,  incorporated  by reference to Exhibit  3.2(a) to the
     Registrant's   Registration   Statement  on  Form  S-1   (Registration  No.
     33-50228).

          3.2(b) Amendment to the By-laws, dated April 27, 1988, incorporated by
     reference to Exhibit 3.2(b) to the Registrant's  Registration  Statement on
     Form S-1 (Registration No. 33-50228).

          4.1  Instruments  defining the rights of holders of long-term  debt of
     the Registrant are included in item 10 below.

          10.1  1986  Employees   Stock  Option  and   Performance   Unit  Plan,
     incorporated by reference to Exhibit 10.6 to the Registrant's  Registration
     Statement on Form S-1 (Registration No. 33-3322).

          10.2 1992 Executive  Management Group Stock Option Plan,  incorporated
     by reference to Exhibit 10.2 to the Registrant's  Registration Statement on
     Form S-1 (Registration No. 33-50228).

          10.3(a) Trans Leasing International, Inc. Savings Plan (As Amended and
     Restated  Effective  as of July 1,  1994),  incorporated  by  reference  to
     Exhibit  99.1  to the  Registrant's  Registration  Statement  on  Form  S-8
     (Registration No. 333-12291).

          10.3(b) First Amendment to Trans Leasing  International,  Inc. Savings
     Plan (As Amended and  Restated  Effective  as of July 1, 1994),  as amended
     effective as of October 1, 1995,  incorporated by reference to Exhibit 99.2
     to the Registrant's  Registration  Statement on Form S-8  (Registration No.
     333-12291).
 
          10.4 Form of directors' warrants.

          10.5  Trans  Leasing  International,  Inc.,  1996 Stock  Option  Plan,
     incorporated  by reference to Exhibit 10.45 to the  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended March 31, 1997.

          10.6  Employment  Agreement,  dated  October  24,  1996,  between  the
     Registrant and Michael J. Heyman.

          10.7  Severance  Agreement,   dated  October  31,  1996,  between  the
     Registrant  and Larry S.  Grossman,  incorporated  by  reference to Exhibit
     10.46 to the  Registrant's  Quarterly  Report on Form 10-Q for the  quarter
     ended March 31, 1997.

          10.8  Severance  Agreement,   dated  October  31,  1996,  between  the
     Registrant and Joseph Rabito, incorporated by reference to Exhibit 10.47 to
     the Registrant's  Quarterly Report on Form 10-Q for the quarter ended March
     31, 1997.

          10.9 Employment Agreement, dated April 8, 1997, between the Registrant
     and Kevin J. Dunworth.



                                       50
<PAGE>



          10.10 Promissory Note, dated May 29, 1997, of Kevin J. Dunworth to the
     Registrant.

          10.11  Indenture dated as of October 1, 1992,  between  Registrant and
     American   National  Bank  and  Trust  Company  of  Chicago,   as  Trustee,
     incorporated  by  reference  to Exhibit  10.17 to the  Registrant's  Annual
     Report on Form 10-K for the year ended June 30, 1993.

          10.12  Amended and Restated  Contribution  and Sale  Agreement,  dated
     August 2, 1994,  between the  Registrant  and TL Lease Funding  Corp.  III,
     incorporated  by  reference  to Exhibit  10.29 to the  Registrant's  Annual
     Report on Form 10-K for the year ended June 30, 1994.

          10.13 Receivables Acquisition Agreement, dated August 2, 1994, between
     TL Lease Funding Corp.  III and  Prudential  Securities  Secured  Financing
     Corporation, incorporated by reference to Exhibit 10.30 to the Registrant's
     Annual Report on Form 10-K for the year ended June 30, 1994.

          10.14 Pooling and Servicing Agreement, dated August 2, 1994, among the
     Registrant,  Prudential  Securities Secured Financing Corporation and PSSFC
     Equipment Lease Trust 1994-1, incorporated by reference to Exhibit 10.31 to
     the  Registrant's  Annual  Report on Form 10-K for the year  ended June 30,
     1994.

          10.15 Indenture,  dated August 2, 1994,  between PSSFC Equipment Lease
     Trust 1994-1 and Manufacturers  and Traders Trust Company,  incorporated by
     reference to Exhibit 10.32 to the  Registrant's  Annual Report on Form 10-K
     for the year ended June 30, 1994.
 
          10.16  Trust  Agreement,  dated  August 2,  1994,  between  Prudential
     Securities  Secured  Financing  Corporation  and Bankers Trust  (Delaware),
     incorporated  by  reference  to Exhibit  10.33 to the  Registrant's  Annual
     Report on Form 10-K for the year ended June 30, 1994.
 
          10.17  Administration  Agreement,  dated August 2, 1994, between PSSFC
     Equipment Lease Trust 1994-1 and the Registrant,  incorporated by reference
     to Exhibit  10.34 to the  Registrant's  Annual  Report on Form 10-K for the
     year ended June 30, 1994.

          10.18 Loan and  Security  Agreement,  dated  August 2,  1994,  between
     Prudential   Securities  Secured  Financing  Corporation  and  First  Union
     National Bank of North Carolina, incorporated by reference to Exhibit 10.35
     to the Registrant's  Annual Report on Form 10-K for the year ended June 30,
     1994.

          10.19(a) Amended and Restated Note Agreement, dated as of November 30,
     1994,   between  the   Registrant   and  certain   lenders  named  therein,
     incorporated  by reference to Exhibit 10.37 to the  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended December 31, 1994.

          10.19(b) Amendment,  to Amended and Restated Note Agreement,  dated as
     of December 30,  1996,  incorporated  by reference to Exhibit  10.38 to the
     Registrant's  Quarterly  Report on Form 10-Q for the quarter ended December
     31, 1996.



                                       51
<PAGE>



          10.20(a) Amended and Restated Note Agreement, dated as of November 30,
     1994,  between the  Registrant  and  Massachusetts  Mutual  Life  Insurance
     Company,  incorporated  by reference to Exhibit  10.39 to the  Registrant's
     Quarterly Report on Form 10-Q for the quarter ended December 31, 1994.


          10.20(b) Amendment,  to Amended and Restated Note Agreement,  dated as
     of December 30,  1996,  incorporated  by reference to Exhibit  10.39 to the
     Registrant's  Quarterly  Report on Form 10-Q for the quarter ended December
     31, 1996.

          10.21 Amended and Restated  Contribution and Sale Agreement,  dated as
     of October 6, 1995,  among the  Registrant  and TL Lease Funding Corp.  IV,
     incorporated  by reference to Exhibit 10.33 to the  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended September 30, 1995.

          10.22  Pooling and Servicing  Agreement,  dated as of October 6, 1995,
     among the Registrant, TL Lease Funding Corp. IV and TLFC IV Equipment Lease
     Trust   1995-1,   incorporated   by  reference  to  Exhibit  10.34  to  the
     Registrant's  Quarterly Report on Form 10-Q for the quarter ended September
     30, 1995.

          10.23  Indenture,  dated  as of  October  6,  1995,  between  TLFC  IV
     Equipment Lease Trust 1995-1 and  Manufacturers  and Traders Trust Company,
     incorporated  by reference to Exhibit 10.35 to the  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended September 30, 1995.

          10.24 Trust Agreement,  dated as of October 6, 1995,  between TL Lease
     Funding Corp. IV and Bankers Trust (Delaware), incorporated by reference to
     Exhibit  10.36 to the  Registrant's  Quarterly  Report on Form 10-Q for the
     quarter ended September 30, 1995.

          10.25 Administration  Agreement,  dated as of October 6, 1995, between
     the Registrant and TLFC IV Equipment  Lease Trust 1995-1,  incorporated  by
     reference to Exhibit  10.37 to the  Registrant's  Quarterly  Report on Form
     10-Q for the quarter ended September 30, 1995.

          10.26(a)  Credit  Agreement,  dated as of January 31, 1996,  among the
     Registrant,  the Banks (as defined  therein) and The First National Bank of
     Chicago,  as  agent,  incorporated  by  reference  to  Exhibit  10.4 to the
     Registrant's  Quarterly  Report  Form 10-Q  Report  for the  quarter  ended
     December 31, 1995.

          10.26(b)  Amendment,  dated as of June 28, 1996,  to Credit  Agreement
     dated as of January 31, 1996,  among the Registrant,  the Banks (as defined
     therein) and The First National Bank of Chicago, as agent,  incorporated by
     reference to Exhibit 10.27 to the  Registrant's  Annual Report on Form 10-K
     for the year ended June 30, 1996.




                                       52
<PAGE>



          10.26(c)  Amendment,   dated  as  of  December  30,  1996,  to  Credit
     Agreement,  dated as of January 31, 1996,  among the Registrant,  the Banks
     (as defined  therein)  and The First  National  Bank of Chicago,  as agent,
     incorporated  by reference to Exhibit 10.37 to the  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended December 31, 1996.

          10.26(d) Consent to Extension, dated as of January 30, 1997, to Credit
     Agreement,  dated as of January 31, 1996,  among the Registrant,  the Banks
     (as defined  therein)  and The First  National  Bank of Chicago,  as agent,
     incorporated  by reference to Exhibit 10.44 to the  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended March 31, 1997.

          10.27 Amended and Restated  Contribution and Sale Agreement,  dated as
     of November 26, 1996, between the Registrant and TL Lease Funding Corp. IV,
     incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K
     of TL Lease Funding Corp. IV, dated November 26, 1996.

          10.28 Pooling and Servicing Agreement,  dated as of November 26, 1996,
     among the Registrant, TL Lease Funding Corp. IV and TLFC IV Equipment Lease
     Trust  1996-1,  incorporated  by  reference  to Exhibit  4.2 to the Current
     Report on Form 8-K of TL Lease Funding Corp. IV, dated November 26, 1996.

          10.29  Indenture,  dated as of  November  26,  1996,  between  TLFC IV
     Equipment Lease Trust 1996-1 and  Manufacturers  and Traders Trust Company,
     incorporated  by reference to Exhibit 4.1 to the Current Report on Form 8-K
     of TL Lease Funding Corp. IV, dated November 26, 1996.

          10.30 Trust Agreement, dated as of November 26, 1996, between TL Lease
     Funding Corp. IV and Bankers Trust (Delaware), incorporated by reference to
     Exhibit 4.3 to the Current Report on Form 8-K of TL Lease Funding Corp. IV,
     dated November 26, 1996.

          10.31 Administration Agreement, dated as of November 26, 1996, between
     TLFC IV Equipment  Lease Trust 1996-1 and the  Registrant,  incorporated by
     reference  to Exhibit  10.2 to the  Current  Report on Form 8-K of TL Lease
     Funding Corp. IV, dated November 26, 1996.

          10.32(a) Revolving Credit and Term Loan and Security Agreement,  dated
     as of December 20, 1996,  between TL Lease Funding Corp. IV and First Union
     National Bank of North Carolina, incorporated by reference to Exhibit 10.40
     to the  Registrant's  Quarterly  Report on Form 10-Q for the quarter  ended
     December 31, 1996.

          10.32(b)  Amendment  No.  1 to  Revolving  Credit  and  term  Loan and
     Security  Agreement,  dated as of June 30, 1997,  between TL Lease  Funding
     Corp. IV and First Union National Bank of North Carolina.

          10.32(c)  Amendment  No.  2 to  Revolving  Credit  and  Term  Loan and
     Security  Agreement,  dated as of July 25, 1997,  between TL Lease  Funding
     Corp. IV and First Union National Bank of North Carolina.



                                       53
<PAGE>



          10.33(a)  Limited  Recourse  Agreement,  dated as of January 21, 1997,
     between the  Registrant  and First Union  National Bank of North  Carolina,
     incorporated  by reference to Exhibit 10.41 to the  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended December 31, 1996.

          10.33(b)  Amendment No. 1 to Limited Recourse  Agreement,  dated as of
     June 30, 1997,  between the  Registrant  and First Union  National  Bank of
     North Carolina.

          10.33(c)  Amendment No. 2 to Limited Recourse  Agreement,  dated as of
     July 25, 1997,  between the  Registrant  and First Union  National  Bank of
     North Carolina.

          10.34 Contribution and Sale, dated as of January 21, 1997, between the
     Registrant  and TL Lease Funding  Corp.  IV,  incorporated  by reference to
     Exhibit  10.42 to the  Registrant's  Quarterly  Report on Form 10-Q for the
     quarter ended December 31, 1996.

          10.35  Servicing  Agreement,  dated as of January 21, 1997,  among the
     Registrant,  TL Lease  Funding  Corp.  IV and First Union  National Bank of
     North  Carolina,   incorporated  by  reference  to  Exhibit  10.43  to  the
     Registrant's  Quarterly  Report on Form 10-Q for the quarter ended December
     31, 1996.


            11.1    Earnings Per Share Computation.

            21.1    Subsidiaries of the Registrant.

            27.1    Financial Data Schedule.

(b)    Reports on Form 8-K

          No report on Form 8-K has been filed by the Registrant during the last
     quarter covered by the report.  One of the Company's  wholly-owned  special
     purpose  financing  subsidiaries,  TL Lease  Funding Corp IV, files routine
     monthly servicing reports on Form 8-K.




                                       54
<PAGE>



                                    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,  as of
     this 26th day of September, 1997.


                                        TRANS LEASING INTERNATIONAL, INC.



                                        By:  /s/LARRY S. GROSSMAN
                                             Larry S. Grossman
                                             Chairman of the Board and
                                             Chief Executive Officer




                                       55
<PAGE>




         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  indicated  as of  this  26th  day  of
     September, 1997.




/s/LARRY S. GROSSMAN                       Chief Executive Officer,
Larry S. Grossman                          Chairman of the Board of Directors

/s/MICHAEL J. HEYMAN                       President and Chief Operating Officer
Michael J. Heyman

/s/JOSEPH RABITO                           Executive Vice President, Operations
Joseph Rabito

/s/STEPHEN J. HUPP                         Vice President, Finance
Stephen J. Hupp                            (Principal  Accounting and Financial
                                           Officer)


/s/CLIFFORD V. BROKAW, III                 Director
Clifford V. Brokaw, III


/s/LARRY BIER                              Director
Larry Bier

/s/MARK C. MATTHEWS                        Director
Mark C. Matthews


/s/JOHN W. STODDER                         Director
John W. Stodder