UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               -------------------
                                    FORM 10-K



     [X]      Annual  Report  Pursuant to Section 13 or 15(d) of the  Securities
              Exchange Act of 1934 For the fiscal year ended December 31, 1998.

     [  ]     Transition Report Pursuant to Section 13 or 15(d) of the 
              Securities Exchange Act of 1934
              For the transition period from              to

                         Commission file number 33-40093
                             -----------------------



                          PLM EQUIPMENT GROWTH FUND VI
             (Exact name of registrant as specified in its charter)


      California                                        94-3135515
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                      Identification No.)

One Market, Steuart Street Tower
  Suite 800, San Francisco, CA                          94105-1301
    (Address of principal                               (Zip code)
     executive offices)


        Registrant's telephone number, including area code (415) 974-1399
                             -----------------------



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No

Aggregate market value of voting stock:  N/A

An index of exhibits filed with this Form 10-K is located at page 53.

Total number of pages in this report:  131.


<PAGE>



                                     PART I
ITEM 1.    BUSINESS

(A)  Background

In April 1991,  PLM Financial  Services,  Inc. (FSI or the General  Partner),  a
wholly-owned subsidiary of PLM International,  Inc. (PLM International or PLMI),
filed a  Registration  Statement  on Form S-1 with the  Securities  and Exchange
Commission with respect to a proposed offering of 8,750,000 limited  partnership
units  (the  units)  in PLM  Equipment  Growth  Fund  VI, a  California  limited
partnership  (the  Partnership,  the Registrant,  or EGF VI). The  Partnership's
offering became effective on December 23, 1991. FSI, as General Partner,  owns a
5% interest  in the  Partnership.  The  Partnership  engages in the  business of
investing in a diversified  equipment  portfolio  consisting  primarily of used,
long-lived,  low-obsolescence  capital equipment that is easily transportable by
and among prospective users.

The Partnership's primary objectives are:

     (1) to invest in a diversified portfolio of low obsolescence equipment with
long lives and high residual values, at prices that the General Partner believes
to be below  inherent  values and to place the equipment on lease or under other
contractual  arrangements with creditworthy  lessees and operators of equipment.
All  transactions  over $1.0  million  must be approved  by PLM  International's
Credit  Review  Committee  (the  Committee),  which is made up of members of PLM
International's senior management.  In determining a lessee's  creditworthiness,
the Committee considers, among other factors, the lessee's financial statements,
internal and external credit ratings, and letters of credit;

     (2) to generate sufficient net operating cash flow from lease operations to
meet liquidity  requirements  and to generate cash  distributions to the limited
partners  until  such  time  as  the  General  Partner   commences  the  orderly
liquidation of the  Partnership  assets or unless the  Partnership is terminated
earlier upon sale of all Partnership property or by certain other events;

     (3) to create a significant  degree of safety  relative to other  equipment
leasing investments through the purchase of a diversified  equipment  portfolio.
This  diversification  reduces the  exposure to market  fluctuations  in any one
sector. The purchase of used, long-lived,  low-obsolescence equipment, typically
at prices that are substantially  below the cost of new equipment,  also reduces
the  impact  of  economic  depreciation  and  can  create  the  opportunity  for
appreciation  in certain  market  situations,  where supply and demand return to
balance from oversupply conditions; and

     (4) to increase the Partnership's  revenue base by reinvesting a portion of
its operating  cash flow in additional  equipment  during the first six years of
the  Partnership's  operation in order to grow the size of its portfolio.  Since
net income and  distributions  are  affected by a variety of factors,  including
purchase prices, lease rates, and costs and expenses,  growth in the size of the
Partnership's  portfolio  does  not  necessarily  mean  that  in all  cases  the
Partnership's  aggregate  net income and  distributions  will  increase upon the
reinvestment of operating cash flow.

The offering of units of the Partnership  closed on May 24, 1993. As of December
31,  1998,  there  were  8,206,339  units   outstanding.   The  General  Partner
contributed $100 for its 5% general partner interest in the Partnership.

Beginning  in the  Partnership's  seventh  year of  operation,  which  commences
January 1, 2000, the General Partner will stop reinvesting cash flow and surplus
funds,  which,  if any, less  reasonable  reserves,  will be  distributed to the
partners.  In the ninth year of operations of the  Partnership,  which commences
January 1, 2002,  the  General  Partner  intends  to begin the  dissolution  and
liquidation of the Partnership in an orderly fashion,  unless the Partnership is
terminated earlier upon sale of all of the equipment or by certain other events.
Under  certain  circumstances,  however,  the  term  of the  Partnership  may be
extended. In no event will the Partnership be extended beyond December 31, 2011.



                         (This space intentionally left
                                    blank.)


<PAGE>


Table  1,  below,  lists  the  equipment  and  the  cost  of  equipment  in  the
Partnership's   portfolio,   and  the  cost  of  investments  in  unconsolidated
special-purpose entities as of December 31, 1998 (in thousands of dollars):

                                     TABLE 1

<TABLE>
<CAPTION>

 Units                          Type                                  Manufacturer                       Cost
-------------------------------------------------------------------------------------------------------------------

Owned equipment held for operating leases:

  <S>       <C>                                               <C>                                    <C>
      2     Container cargo carrier vessels                   O. C. Staalskibsvaerft A/F             $     16,036
      1     Brown water vessel                                Moss Point Marine                            10,058
      1     DC-9-82 Stage III commercial aircraft             McDonnell Douglas                            13,951
      1     737-200 Stage II commercial aircraft              Boeing                                        5,406
      1     Portfolio of aircraft rotables                    Various                                       2,273
    422     Pressurized tank railcars                         Various                                      11,970
    203     Nonpressurized tank railcars                      Various                                       3,582
    139     Covered hopper railcars                           Various                                       3,086
    189     Over-the-road refrigerated trailers               Various                                       5,702
    345     Dry piggyback trailers                            Stoughton                                     5,304
    287     Over-the-road dry trailers                        Various                                       2,198
  3,026     Various marine containers                         Various                                       8,301
    186     Refrigerated marine containers                    Various                                       2,888
                                                                                                     -------------
                Total owned equipment held for operating leases                                      $     90,755<F1>
                                                                                                     =============

Investments in unconsolidated special-purpose entities:

   0.64     Trust comprised of a 767-200ER
              Stage III commercial aircraft                   Boeing                                 $     27,329<F3>
   0.40     Equipment on direct finance lease:
              Two DC-9 Stage III commercial aircraft          McDonnell Douglas                             4,505<F3>
   0.53     Product tanker                                    Boelwerf-Temse                               10,476<F2>
   0.50     Container cargo feeder vessel                     O. C. Staalskibsvaerft A/F                    4,004<F2>
   0.20     Handymax dry bulk carrier marine vessel           Tsuneishi Shipbuilding Co., Ltd               3,553<F2>
   0.30     Mobile offshore drilling unit                     AT & CH de France                             6,166<F3>
   0.25     Marine containers                                 Various                                       2,489<F2>
                                                                                                       -----------
                Total investments in unconsolidated special-purpose entities                         $     58,522<F1>
                                                                                                     =============
<FN>

<F1> Includes equipment and investments purchased with the proceeds from capital
     contributions,  undistributed  cash flow from  operations,  and Partnership
     borrowings invested in equipment. Includes costs capitalized, subsequent to
     the  date  of  purchase,   and  equipment  acquisition  fees  paid  to  PLM
     Transportation  Equipment  Corporation  (TEC), or PLM Worldwide  Management
     Services (WMS).

<F2> Jointly owned:  EGF VI and an affiliated program.

<F3> Jointly owned:  EGF VI and two affiliated programs.

</FN>

</TABLE>

The equipment is generally  leased under  operating  leases with terms of one to
six years. Some of the  Partnership's  marine containers are leased to operators
of utilization-type leasing pools, which include equipment owned by unaffiliated
parties.  In such instances,  revenues received by the Partnership  consist of a
specified  percentage of revenues  generated by leasing the pooled  equipment to
sublessees  after  deducting  certain  direct  operating  expenses of the pooled
equipment.

As of  December  31,  1998,  approximately  58%  of  the  Partnership's  trailer
equipment operated in rental yards owned and maintained by PLM Rental, Inc., the
short-term trailer rental subsidiary of PLM International  doing business as PLM
Trailer Leasing.  Revenues collected under short-term rental agreements with the
rental yards'  customers are credited to the owners of the related  equipment as
received.  Direct expenses associated with the equipment are charged directly to
the  Partnership.  An allocation of other  indirect  expenses of the rental yard
operations is charged to the Partnership monthly.

The  lessees of the  equipment  include  but are not  limited  to:  Transamerica
Leasing,  Burlington Northern Railroad Company,  Northern  Navigation  Services,
Inc.,  Malaysian Air Systems Berhad,  CSX  Transportation,  Inc.,  Union Pacific
Railroad  Company,  Trans  World  Airlines.  Aero  California,  Westway  Express
Incorporated, and Pacific Carriers Ltd.

(B)  Management of Partnership Equipment

The  Partnership  has entered into an equipment  management  agreement  with PLM
Investment  Management,  Inc.  (IMI), a wholly-owned  subsidiary of FSI, for the
management  of  the  Partnership's   equipment.   The  Partnership's  management
agreement with IMI is to co-terminate  with the dissolution of the  Partnership,
unless the limited  partners vote to terminate the agreement  prior to that date
or at the  discretion  of the  General  Partner.  IMI has agreed to perform  all
services  necessary to manage the equipment on behalf of the  Partnership and to
perform or contract for the  performance of all  obligations of the lessor under
the Partnership's  leases. In consideration for its services and pursuant to the
partnership agreement,  IMI is entitled to a monthly management fee (see Notes 1
and 2 to the audited financial statements).

(C)  Competition

(1)  Operating Leases versus Full Payout Leases

Generally,  the equipment  owned or invested in by the Partnership is leased out
on an  operating  lease  basis  wherein  the rents  received  during the initial
noncancelable  term of the lease are  insufficient to recover the  Partnership's
purchase  price of the  equipment.  The short to  mid-term  nature of  operating
leases generally  commands a higher rental rate than the longer-term full payout
leases and offers lessees relative flexibility in their equipment commitment. In
addition, the rental obligation under an operating lease need not be capitalized
on the lessee's balance sheet.

The Partnership  encounters  considerable  competition from lessors that utilize
full payout leases on new equipment,  i.e.,  leases that have terms equal to the
expected  economic  life  of  the  equipment.  While  some  lessees  prefer  the
flexibility offered by a shorter-term  operating lease, other lessees prefer the
rate  advantages  possible with a full payout lease.  Competitors may write full
payout  leases  at  considerably  lower  rates  and for  longer  terms  than the
Partnership offers, or larger competitors with a lower cost of capital may offer
operating leases at lower rates,  which may put the Partnership at a competitive
disadvantage.

(2)  Manufacturers and Equipment Lessors

The Partnership competes with equipment manufacturers who offer operating leases
and full payout leases.  Manufacturers may provide  ancillary  services that the
Partnership  cannot offer, such as specialized  maintenance  service  (including
possible substitution of equipment),  training,  warranty services, and trade-in
privileges.

The  Partnership  also  competes  with many  equipment  lessors,  including  ACF
Industries,  Inc.  (Shippers Car Line Division),  GATX Corp.,  General  Electric
Railcar  Services  Corporation,   General  Electric  Capital  Aviation  Services
Corporation,  Xtra Corporation,  and other programs that lease the same types of
equipment.

(D)  Demand

The Partnership operates in the following operating segments:  aircraft leasing,
marine vessel  leasing,  marine  container  leasing,  railcar  leasing,  trailer
leasing,  and mobile  offshore  drilling unit leasing.  Each  equipment  leasing
segment  engage in  short-term  to  mid-term  operating  leases to a variety  of
customers.  Except for those  aircraft  leased to passenger  air  carriers,  the
Partnership's  equipment  and  investments  are used to transport  materials and
commodities, rather than people.

The following  section describes the international and national markets in which
the Partnership's capital equipment operates:

(1)  Marine Vessels

The  Partnership  owns or has  investments  in  small to  medium-sized  dry bulk
vessels,  product tankers, and container vessels that trade in worldwide markets
and carry  commodity  cargoes.  Demand for commodity  shipping  closely  follows
worldwide economic growth patterns, which can alter demand by causing changes in
volume on trade routes.  The General Partner operates the Partnership's  vessels
through  spot and period  charters,  an  operating  approach  that  provides the
flexibility to adapt to changing market situations.

The markets for both dry bulk vessels and product tankers  weakened in 1998. Dry
bulk vessels  experienced  a decline in freight  rates,  as demand for commodity
shipments remained flat and fleet capacity increased  marginally.  Freight rates
for product tankers  weakened during the course of the year, after a very strong
1997. Demand for product shipments  decreased,  while the fleet grew moderately.
The Asian recession has had significant  effects on world shipping markets,  and
demand is unlikely to improve until Pacific Rim economies experience a sustained
recovery.

(a)  Dry Bulk Vessels

Freight rates for dry bulk vessels  decreased  for all ship sizes in 1998,  with
the largest  vessels  experiencing  the  greatest  declines.  After a relatively
stable year in 1997,  rates  declined due to a decrease in cargo tonnage  moving
from the Pacific  Basin and Asia to western  ports.  The size of the overall dry
bulk carrier  fleet  decreased by 3%, as measured by the number of vessels,  but
increased by 1%, as measured by deadweight  (dwt)  tonnage.  While  scrapping of
ships was a significant  factor in 1998  (scrapping  increased by 50% over 1997)
overall  there was no material  change in the size of the dry bulk vessel fleet,
as deliveries and scrapings were nearly equal.

Total dry trade (as  measured  in  deadweight  tons) was flat,  compared to a 3%
growth in 1997. As a result, the market had no foundation for increasing freight
rates, and charter rates declined as trade not only failed to grow, but actually
declined due to economic  disruptions in Asia.  Overall  activity is expected to
remain flat in 1999, with trade in two of the three major commodities  static or
decreasing in volume.  Iron ore volume is expected to decrease,  and grain trade
is anticipated to be flat, while a bright spot remains in an estimated  increase
in steam coal trade.

Ship values experienced a significant decline in 1998, as expectations for trade
growth  were  dampened.  The  decline in ship  values was also driven by bargain
pricing for newbuilding in Asian yards.

The uncertainty in forecasts is the Asian economic  situation;  if there is some
recovery  from the  economic  shake-up  that started in the second half of 1997,
then  1999 has  prospects  for  improvement.  The  delivery  of ships in 1999 is
expected to be less than in 1998, and high scrapping levels should continue. Dry
bulk  shipping  is a cyclical  business -- inducing  capital  investment  during
periods of high freight rates and discouraging  investment during periods of low
rates. The current environment thus discourages investment. However, the history
of the industry  implies that this period will be followed by one of  increasing
rates and investment in new ships, driven by growth in demand. Over time, demand
grows at an average of 3% a year,  so when  historic  levels of growth in demand
resume, the industry is expected to experience a significant increase in freight
rates and ship values.

(b)  Product Tankers

Product  tanker  markets  experienced  a year in which a fall in  product  trade
volume and an increase in total fleet size  induced a decline in freight  rates.
Charter rates for  standard-sized  product tankers  averaged  $10,139 per day in
1998,  compared  to $13,277 per day in 1997.  The  weakening  in rates  resulted
primarily  from a decrease  in product  import  levels to the United  States and
Japan.  Significantly lower crude oil prices worldwide induced higher volumes of
imports of crude oil to the United States, thereby lessening domestic demand for
refined products.  Product trade in 1998 fell by an estimated 5% worldwide.  The
crude oil trade,  which is closely  related to  product  trades,  especially  in
larger vessels,  remained stable in 1998. Crude trade grew 1% in volume,  led by
imports to Europe, which grew 6%.

Overall,  the entire product tanker fleet grew only 1% in 1998. Supply growth in
1998 was moderated by high  scrapping  levels,  especially  of larger ships.  In
1999,  the fleet is expected to receive an  additional 9% in capacity from newly
built deliveries, most of which will be in large tankers (above 80,000 dwt tons)
carrying crude products. Smaller tankers (below 80,000 dwt tons) are expected to
receive 7% in new deliveries over current fleet levels.

While these new deliveries  represent a high  percentage of the existing  fleet,
the tanker  markets are now  beginning to feel the effects of the United  States
Oil Pollution Act of 1990.  Under the act,  older  tankers are  restricted  from
trading to the United  States  once they exceed 25 years old if they do not have
double  bottoms  and/or double hulls.  Similar  though  somewhat less  stringent
restrictions  are in place in other  countries  with  developed  economies.  The
retirement  of older,  noncomplying  tankers  may allow the fleet to absorb what
would  otherwise  be an  excessive  number of new orders in  relation to current
demand prospects. Given that a large proportion of the current tanker fleet does
not meet these regulatory requirements, coupled with anticipated flat demand yet
continuing high delivery  levels,  charter rates for 1999 are not anticipated to
increase significantly from 1998 levels.

(c)  Container and Container Feeder Vessels

Container vessels transport  containerized cargo. They are called feeder vessels
when they move containers from small,  outlying ports to main transportation hub
ports,  from which  containers are moved by regularly  scheduled liner services.
Container  vessels  typically  carry up to about 1,000  20-foot-equivalent  unit
containers  (TEUs).  This trade has been  characterized by growth in both supply
and demand for the past several years;  however, in 1998, patterns changed.  All
containerized  trade,  as measured by TEU  movement,  grew 8% in shipments  from
Asia, but declined 14% in shipments to Asia, for a composite  decline of 1% over
1997 levels.  This  flattening of trade  represents a significant  change in the
container shipping markets, which have shown robust growth ever since containers
were introduced as a shipping medium.

As with other shipping markets, the lack of growth in demand has occurred at the
same  time  that the  capacity  to meet  previously  projected  growth  has been
underway,  and  charter  rates have  decreased  accordingly.  The total fleet of
containerized  vessels has  increased in capacity by over 60% since 1988.  While
some of this  growth  has come from  very  large  vessels,  which  have  created
container  shipping  demand due to lower unit costs,  the expansion of the fleet
has eroded charter rates, since demand has not grown as quickly.  For the larger
container vessels (above 1,000 TEU per ship), rate erosion may continue, because
ships on order could add as much as 16% to existing  capacity  through 2001. For
feeder  ships (less than 1,000 TEU),  only 9% of existing  capacity is on order,
and most remaining orders will be delivered in 1999. While these deliveries will
suppress  prospects for improving  feeder vessel charter rates in 1999, the lack
of planned  deliveries  beyond then provides  some  potential for rate and value
increases.

(2)  Aircraft

(a)  Commercial Aircraft

The world's major  airlines  experienced a fourth  consecutive  year of profits,
showing a combined  marginal net income (net income  measured as a percentage of
revenue)  of 6%,  compared  to the  industry's  historical  annual  rate  of 1%.
Airlines recorded positive marginal net annual income of 2% in 1995, 4% in 1996,
6% in 1997,  and 6% in 1998.  The two factors that have led to this  increase in
profitability are improvements in yield management systems and reduced operating
costs,  particularly  lowered fuel costs.  These higher levels of  profitability
have allowed many airlines to re-equip their fleets with new aircraft, resulting
in a record number of orders for manufacturers.

Major  airlines  increased  their fleets from 7,181 aircraft in 1997 to 7,323 in
1998,  which has  resulted  in more used  aircraft  available  on the  secondary
market. Despite these increases, the number of Stage II aircraft in these fleets
(similar to those owned by the Partnership)  decreased by 26% from 1997 to 1998,
and  sharper  decreases  are  expected  in 1999.  This  trend is due to  Federal
Aviation  Regulation  section C36.5,  which requires airlines to convert 100% of
their fleets to Stage III aircraft,  which have lower noise levels than Stage II
aircraft,  by the year 2000 in the United States and the year 2002 in Canada and
Europe.  Stage II aircraft can be modified to Stage III with the installation of
a  hushkit  that  significantly  reduces  engine  noise.  The  cost  of  hushkit
installation ranges from $1.0 to $2.0 million for the types of aircraft owned by
the Partnership.

Orders for new aircraft  have risen rapidly  worldwide in recent  years:  691 in
1995,  1,182 in 1996, 1,328 in 1997, and an estimated 1,500 in 1998. As a result
of this increase in orders,  manufacturers  have expanded their production,  and
new aircraft deliveries have increased from 482 in 1995, 493 in 1996, and 674 in
1997, to an estimated 825 in 1998.

The industry now has in place two of the three  conditions that led to financial
problems in the early 1990s: potential excess orders and record deliveries.  The
missing element is a worldwide recession. Should a recession occur, the industry
will experience  another period of excess aircraft capacity and surplus aircraft
on the ground.

The  Partnership's  fleet consists of several Stage II narrowbody  (single-aisle
aircraft),  one  Stage III  widebody  aircraft,  and one  Stage  III  narrowbody
aircraft. The Stage II aircraft are scheduled to be leased or sold outside Stage
III-legislated  areas before the year 2000. It is anticipated that the Stage III
widebody aircraft now on lease will also be sold during 1999.

(b)      Rotables

Aircraft  rotables,  or  components,  are  replacement  spare  parts  held in an
airline's  inventory.  They are  recycled  parts that are first  removed from an
aircraft or engine, overhauled,  and then recertified,  returned to an airline's
inventory,  and ultimately  refit to an aircraft in as-new  condition.  Rotables
carry  identification  numbers that allow them to be individually tracked during
their use.

The types of rotables owned and leased by the Partnership  include landing gear,
certain engine components,  avionics,  auxiliary power units, replacement doors,
control surfaces,  pumps, and valves. The market for the Partnership's  rotables
remains stable.

In 1998, the Partnership acquired rotable spare parts that are used on Stage III
narrowbody  (single-aisle)  aircraft  in  Europe.  This  purchase  reflects  the
Partnership's  strategy to acquire  quality used Stage III narrowbody  aircraft,
engines, and spare parts.

(3)  Railcars

(a)  Pressurized Tank Cars

Pressurized tank cars transport primarily two chemicals: liquefied petroleum gas
(natural  gas) and  anhydrous  ammonia  (fertilizer).  Natural  gas is used in a
variety of ways in businesses,  electric plants, factories,  homes, and now even
cars.  The demand for  fertilizer  is driven by a number of  factors,  including
grain prices,  the status of  government  farm subsidy  programs,  the amount of
farming acreage and mix of crops planted,  weather patterns,  farming practices,
and the value of the U.S. dollar.

In North  America,  1998 carload  originations  of both  chemicals and petroleum
products  remained  relatively  constant,  compared to 1997. The 98% utilization
rate of the  Partnership's  pressurized  tank  cars  was  consistent  with  this
statistic.

(b)  General-Purpose (Nonpressurized) Tank Cars

Tank cars that do not require  pressurization are used to transport a variety of
bulk liquid  commodities and chemicals,  including  certain  petroleum fuels and
products,  liquified asphalt, lubricating and vegetable oils, molten sulfur, and
corn syrup. The largest  consumers of chemical  products are the  manufacturing,
automobile, and housing sectors. Because the bulk liquid industry is so diverse,
its overall  health is reflected by such  general  indicators  as changes in the
Gross  Domestic  Product,  personal  consumption  expenditures,   retail  sales,
currency exchange rates, and national and international economic forecasts.

In North  America,  railcar  loadings  for the  commodity  group  that  includes
chemicals and petroleum  products remained  essentially  unchanged,  compared to
1997. The Partnership's general purpose cars continue to be in high demand, with
utilization over 98% in 1998.

(c)  Covered Hopper (Grain) Cars

Covered hopper railcars are used to transport grain to domestic food processors,
poultry  breeders,  cattle feed lots, and for export.  Demand for covered hopper
cars  softened In 1998, as total North  American  grain  shipments  declined 8%,
compared to 1997,  with grain  shipments  within Canada  contributing to most of
this  decrease.  This has put downward  pressure on lease rates,  which has been
exacerbated by a significant increase in the number of covered hopper cars built
in the last few years.  Since 1988, there has been a nearly 20% increase in rail
transportation  capacity  assigned to agricultural  service.  In 1996, just over
one-half of all new railcars  built were  covered  hopper  cars;  in 1997,  this
percentage dropped somewhat, to 38% of all cars built.

The Partnership's covered hopper cars were not impacted by the decrease in lease
rates during 1998, as all of the cars continued to operate on long-term leases.

(5)  Trailers

(a)  Intermodal (Piggyback) Trailers

Intermodal  (piggyback)  trailers  are used to ship goods  either by truck or by
rail.  Activity  within the North American  intermodal  trailer market  declined
slightly in 1998, with trailer shipments down 4% from 1997 levels, due primarily
to rail service problems  associated with the mergers in this area.  Utilization
of the intermodal  per diem rental fleet,  consisting of  approximately  170,000
units, was 73%. Intermodal utilization in 1999 is expected to decline another 2%
from 1998 levels,  due to a slight leveling off of overall economic  activity in
1999, after a robust year in 1998.

The General  Partner  has  initiated  expanded  marketing  and asset  management
efforts for its intermodal  trailers,  from which it expects to achieve improved
trailer  utilization and operating  results.  During 1998,  average  utilization
rates for the Partnership's intermodal trailer fleet approached 80%.

(b)  Over-the-Road Dry Trailers

The U.S. over-the-road nonrefrigerated (dry) trailer market continued to recover
in 1998, with a strong domestic economy resulting in heavy freight volumes.  The
leasing outlook continues to be positive, as equipment surpluses of recent years
are being  absorbed by a buoyant  market.  In addition to high freight  volumes,
declining  fuel  prices  have led to a strong  trucking  industry  and  improved
equipment demand.

The  Partnership's  nonrefrigerated  van fleet  experienced  strong  utilization
throughout 1998, with utilization  rates remaining well above 70% throughout the
year.

(c)  Over-the-Road Refrigerated Trailers

The temperature-controlled  over-the-road trailer market remained strong in 1998
as  freight  levels  improved  and  equipment   oversupply  was  reduced.   Many
refrigerated  equipment  users retired  older  trailers and  consolidated  their
fleets, making way for new,  technologically  improved units.  Production of new
equipment is backlogged  into the third quarter of 1999. In light of the current
tight  supply of  trailers  available  on the  market,  it is  anticipated  that
trucking companies and other refrigerated  trailer users will look outside their
own fleets more  frequently  by leasing  trailers on a short-term  basis to meet
their equipment needs.

This  leasing  trend  should  benefit the  Partnership,  which makes most of its
trailers  available for short-term  leasing from rental yards owned and operated
by a PLM International subsidiary. The Partnership's utilization of refrigerated
trailers showed  improvement in 1998, with  utilization  rates  approaching 70%,
compared to 60% in 1997.

(6)  Marine Containers

The marine container market began 1998 with industrywide  utilization in the low
80% range.  This  percentage  eroded  somewhat  during the year,  while per diem
rental  rates  remained  steady.   One  factor  affecting  the  market  was  the
availability   of   historically   low-priced   marine   containers  from  Asian
manufacturers.  This trend is expected to remain in 1999,  and will  continue to
put pressure on economic results fleetwide.

The trend  toward  industrywide  consolidation  continued  in 1998,  as the U.S.
parent company of one of the industry's top ten container lessors announced that
it would be outsourcing  the management of its container  fleet to a competitor.
While  this  announcement  has yet to be  finalized,  over the long  term,  such
industrywide  consolidation  should bring more  rationalization to the container
leasing  market and result in both  higher  fleetwide  utilization  and per diem
rates.


<PAGE>



(7)  Mobile Offshore Drilling Unit (Rig)

For the  first  half of 1998,  overall  worldwide  demand  for  mobile  offshore
drilling  units (rigs)  continued  the increases  experienced  in 1996 and 1997.
During the second  half of the year,  demand  softened  --  particularly  in the
shallow-water  U.S. Gulf markets -- due to decreases in worldwide oil prices and
U.S.  gas  prices.  Day rates in the  shallow-water  sector  showed  significant
decreases;  however,  day rates for deep-water floating rigs maintained the gain
attained earlier in the year. Future prospects for offshore drilling markets are
favorable,  since low oil and gas prices, along with economic growth in general,
tend to stimulate demand for oil and gas. In the short term, 1999 is expected to
be a flat  year for  growth  in the  offshore  markets,  with the  exception  of
long-term projects already planned or contracted by large  international oil and
gas exploration and development companies.

The Partnership currently has an interest in one drillship,  a floating drilling
rig. The floating rig market has  experienced  the most  improvement  of all rig
types since 1995.  Technological  advances and more  efficient  operations  have
improved the economics of drilling and production in the deepwater  locations in
which  floating rigs are utilized.  Overall,  demand for floating rigs increased
from 128 rig-years in 1996 to 131 rig-years in 1997, and stayed at that level in
1998 (a  rig-year  is the  equivalent  of one rig  employed  for 12  consecutive
months).  The  increase in demand and  utilization  during this period  prompted
significant increases in contract day rates and an associated increase in market
values for floating rigs. Currently 177 floating rigs (151  semisubmersibles and
26 drillships) are operating  internationally  and 39 floating rigs are on order
or undergoing conversion,  scheduled for delivery between 1999 and 2001. All but
six of these  newbuildings and conversions have already been contracted for more
than two  years.  This high level of  commitment  should  prevent a  significant
deterioration in the market as the rigs are delivered.

(E)  Government Regulations

The use,  maintenance,  and  ownership  of equipment  are  regulated by federal,
state,  local, or foreign  government  authorities.  Such regulations may impose
restrictions and financial burdens on the Partnership's  ownership and operation
of  equipment.  Changes  in  government  regulations,   industry  standards,  or
deregulation  may also  affect  the  ownership,  operation,  and  resale  of the
equipment.  Substantial  portions of the Partnership's  equipment  portfolio are
either registered or operated internationally.  Such equipment may be subject to
adverse  political,   government,  or  legal  actions,  including  the  risk  of
expropriation  or loss arising from  hostilities.  Certain of the  Partnership's
equipment is subject to extensive  safety and operating  regulations,  which may
require  it's  removal  from  service or  extensive  modification  to meet these
regulations at considerable  cost to the Partnership.  Such regulations  include
but are not limited to:

     (1) the U.S. Oil Pollution  Act of 1990,  which  established  liability for
     operators  and owners of vessels and mobile  offshore  drilling  units that
     create environmental pollution.  This regulation has resulted in higher oil
     pollution  liability  insurance.  The  lessee  of the  equipment  typically
     reimburses the Partnership for these additional costs;

     (2) the U.S. Department of Transportation's  Aircraft Capacity Act of 1990,
     which limits or eliminates the operation of commercial aircraft in the U.S.
     that do not meet certain noise, aging, and corrosion criteria. In addition,
     under U.S. Federal Aviation Regulations, after December 31, 1999, no person
     may operate an aircraft  to or from any  airport in the  contiguous  United
     States  unless that  aircraft has been shown to comply with Stage III noise
     levels.  The  Partnership  has a Stage II aircraft that does not meet Stage
     III requirements. This Stage II aircraft is scheduled to be either modified
     to meet Stage III  requirements,  sold, or re-leased in a country that does
     not require  this  regulation  before the year 2000.  The cost to install a
     hushkit  to meet  quieter  Stage III  requirements  is  approximately  $1.5
     million, depending on the type of aircraft;

     (3) the Montreal  Protocol on  Substances  that Deplete the Ozone Layer and
     the U.S. Clean Air Act  Amendments of 1990,  which call for the control and
     eventual  replacement  of  substances  that  have  been  found  to cause or
     contribute  significantly  to harmful  effects on the  stratospheric  ozone
     layer and which are used extensively as refrigerants in refrigerated marine
     cargo containers and over-the-road refrigerated trailers;

     (4)  the  U.S.   Department   of   Transportation's   Hazardous   Materials
     Regulations,  which regulate the classification and packaging  requirements
     of hazardous  materials and which apply  particularly to the  Partnership's
     tank  railcars,  issued  a  statement  that  requires  the  Partnership  to
     initially  inspect  approximately 23% of the tank railcars for a protective
     coating to the outside of the tank, as well as the inside of the metal tank
     jacket whenever a tank is insulated.  If any of the inspected tank railcars
     fail to  meet  the  requirements,  an  additional  percentage  of the  tank
     railcars will need to be inspected. If all the tank railcars in the initial
     inspection  meet the issued  requirements,  the remaining  railcars will be
     eliminated  from  the  inspection  program.  The  Partnership  owns 73 tank
     railcars that need to be inspected. Tank railcars that fail the inspection,
     will have to be repaired at a cost of approximately  $25,000 each before it
     can go back into service by August 2000. The Partnership  plans to complete
     the initial inspection of the tank railcars by the end of March 1999.

As of  December  31,  1998,  the  Partnership  is in  compliance  with the above
governmental  regulations.  Typically,  costs  related  to  extensive  equipment
modifications to meet government regulations are passed on to the lessee of that
equipment.

ITEM 2.    PROPERTIES

The Partnership  neither owns nor leases any properties other than the equipment
it has  purchased  and its interest in entities  that own  equipment for leasing
purposes.  As of  December  31,  1998,  the  Partnership  owned a  portfolio  of
transportation  and related  equipment  and  investments  in equipment  owned by
unconsolidated  special-purpose  entities (USPE's) as described in Item 1, Table
1. The  Partnership  acquired  equipment  with the  proceeds of the  Partnership
offering of $166.1 million through the third quarter of 1993, with proceeds from
the debt  financing  of $30.0  million,  and by  reinvesting  a  portion  of its
operating cash flow in additional equipment.

The  Partnership  maintains its principal  office at One Market,  Steuart Street
Tower, Suite 800, San Francisco,  California  94105-1301.  All office facilities
are provided by FSI without reimbursement by the Partnership.

ITEM 3. LEGAL PROCEEDINGS 

PLM  International,  (the  Company) and various of its  affiliates  are named as
defendants in a lawsuit filed as a purported class action on January 22, 1997 in
the Circuit Court of Mobile County,  Mobile,  Alabama,  Case No.  CV-97-251 (the
Koch action).  Plaintiffs, who filed the complaint on their own and on behalf of
all class  members  similarly  situated  (the class),  are six  individuals  who
invested in certain California limited partnerships (the Partnerships) for which
the Company's wholly-owned subsidiary,  PLM Financial Services, Inc. (FSI), acts
as the general partner, including the Partnership, PLM Equipment Growth Funds V,
and IV, and PLM Equipment Growth & Income Fund VII (the Growth Funds). The state
court ex parte  certified  the  action  as a class  action  (i.e.,  solely  upon
plaintiffs'  request and without the Company being given the opportunity to file
an  opposition).  The  complaint  asserts  eight  causes of action  against  all
defendants,   as   follows:   fraud   and   deceit,    suppression,    negligent
misrepresentation  and  suppression,   intentional  breach  of  fiduciary  duty,
negligent  breach  of  fiduciary  duty,  unjust  enrichment,   conversion,   and
conspiracy.  Additionally,  plaintiffs  allege a cause  of  action  against  PLM
Securities Corp. for breach of third party beneficiary contracts in violation of
the  National   Association  of  Securities  Dealers  rules  of  fair  practice.
Plaintiffs  allege that each  defendant  owed  plaintiffs  and the class certain
duties due to their  status as  fiduciaries,  financial  advisors,  agents,  and
control persons.  Based on these duties,  plaintiffs  assert  liability  against
defendants  for improper  sales and marketing  practices,  mismanagement  of the
Growth Funds,  and concealing  such  mismanagement  from investors in the Growth
Funds.  Plaintiffs seek unspecified  compensatory and recissory damages, as well
as punitive damages,  and have offered to tender their limited partnership units
back to the defendants.

In March 1997,  the  defendants  removed the Koch action from the state court to
the United States District Court for the Southern District of Alabama,  Southern
Division (Civil Action No. 97-0177-BH-C) based on the district court's diversity
jurisdiction,  following which plaintiffs filed a motion to remand the action to
the state court. Removal of the action to federal court automatically  nullified
the state court's ex parte  certification  of the class.  In September 1997, the
district court denied plaintiffs' motion to remand the action to state court and
dismissed without  prejudice the individual claims of the California  plaintiff,
reasoning that he had been fraudulently joined as a plaintiff.  In October 1997,
defendants filed a motion to compel arbitration of plaintiffs' claims,  based on
an agreement to arbitrate contained in the limited partnership agreement of each
Growth  Fund,  and to stay  further  proceedings  pending  the  outcome  of such
arbitration.  Notwithstanding plaintiffs' opposition, the district court granted
defendants' motion in December 1997.

Following  various  unsuccessful  requests that the district court  reverse,  or
otherwise certify for appeal, its order denying plaintiffs' motion to remand the
case to state court and dismissing the California plaintiff's claims, plaintiffs
filed with the U.S.  Court of Appeals for the Eleventh  Circuit a petition for a
writ of mandamus  seeking to reverse the district  court's  order.  The Eleventh
Circuit  denied  plaintiffs'  petition in  November  1997,  and  further  denied
plaintiffs  subsequent  motion in the  Eleventh  Circuit for a rehearing on this
issue.  Plaintiffs also appealed the district court's order granting defendants'
motion  to compel  arbitration,  but in June 1998  voluntarily  dismissed  their
appeal pending settlement of the Koch action, as discussed below.

On June 5, 1997, the Company and the  affiliates who are also  defendants in the
Koch action were named as defendants in another  purported class action filed in
the San Francisco  Superior Court,  San Francisco,  California,  Case No. 987062
(the Romei action). The plaintiff is an investor in PLM Equipment Growth Fund V,
and filed the  complaint  on her own behalf  and on behalf of all class  members
similarly situated who invested in certain  California limited  partnerships for
which FSI acts as the general partner, including the Growth Funds. The complaint
alleges the same facts and the same nine causes of action as in the Koch action,
plus five additional causes of action against all of the defendants, as follows:
violations of California  Business and Professions  Code Sections 17200, et seq.
for  alleged  unfair  and  deceptive   practices,   constructive  fraud,  unjust
enrichment, violations of California Corporations Code Section 1507, and a claim
for treble damages under California Civil Code Section 3345.

On July 31,  1997,  defendants  filed with the  district  court for the Northern
District of California  (Case No. C-97-2847 WHO) a petition (the petition) under
the Federal  Arbitration Act seeking to compel arbitration of plaintiff's claims
and for an order staying the state court proceedings  pending the outcome of the
arbitration.  In connection with this motion,  plaintiff agreed to a stay of the
state court  action  pending the  district  court's  decision on the petition to
compel  arbitration.  In October 1997,  the district  court denied the Company's
petition  to  compel  arbitration,  but in  November  1997,  agreed  to hear the
Company's motion for  reconsideration  of this order. The hearing on this motion
has been taken off calendar and the district  court has  dismissed  the petition
pending  settlement of the Romei  action,  as discussed  below.  The state court
action  continues to be stayed pending such  resolution.  In connection with her
opposition  to the petition to compel  arbitration,  plaintiff  filed an amended
complaint  with the state court in August 1997 alleging two new causes of action
for violations of the California Securities Law of 1968 (California Corporations
Code  Sections  25400 and  25500) and for  violation  of  California  Civil Code
Sections 1709 and 1710.  Plaintiff  also served  certain  discovery  requests on
defendants.  Because of the stay, no response to the amended complaint or to the
discovery is currently required.

In May 1998, all parties to the Koch and Romei actions entered into a memorandum
of understanding  (MOU) related to the settlement of those actions (the monetary
settlement).  The  monetary  settlement  contemplated  by the MOU  provides  for
stipulating to a class for settlement purposes,  and a settlement and release of
all claims  against  defendants  and third party brokers in exchange for payment
for the benefit of the class of up to $6.0 million.  The final settlement amount
will  depend on the  number  of claims  filed by  authorized  claimants  who are
members  of the  class,  the  amount of the  administrative  costs  incurred  in
connection with the settlement, and the amount of attorneys' fees awarded by the
Alabama  district court. The Company will pay up to $0.3 million of the monetary
settlement, with the remainder being funded by an insurance policy.

The  parties to the  monetary  settlement  have also agreed in  principal  to an
equitable  settlement (the equitable  settlement)  which  provides,  among other
things,  (a) for the extension of the operating  lives of the  Partnership,  PLM
Equipment  Growth Fund V, and PLM Equipment Growth & Income Fund VII (the Funds)
by judicial  amendment to each of their partnership  agreements,  such that FSI,
the general  partner of each such Fund, will be permitted to reinvest cash flow,
surplus partnership funds or retained proceeds in additional  equipment into the
year 2004, and will liquidate the partnerships'  equipment in 2006; (b) that FSI
will be  entitled  to earn  front  end fees  (including  acquisition  and  lease
negotiation  fees) in excess of the  compensatory  limitations  set forth in the
North American Securities Administrators  Association,  Inc. Statement of Policy
by judicial amendment to the Partnership Agreements for each Fund; (c) for a one
time  redemption  of up to 10% of the  outstanding  units of each Fund at 80% of
such  partnership's  net asset  value;  and (d) for the deferral of a portion of
FSI's management fees. The equitable settlement also provides for payment of the
equitable  settlement  attorneys' fees from Partnership  funds in the event that
distributions paid to investors in the Funds during the extension period reach a
certain internal rate of return.

Defendants will continue to deny each of the claims and contentions and admit no
liability in connection with the proposed  settlements.  The monetary settlement
remains  subject to  numerous  conditions,  including  but not  limited  to: (a)
agreement and execution by the parties of a settlement agreement (the settlement
agreement),  (b) notice to and  certification of the monetary class for purposes
of the  monetary  settlement,  and (c)  preliminary  and final  approval  of the
monetary  settlement by the Alabama  district  court.  The equitable  settlement
remains  subject to  numerous  conditions,  including  but not  limited  to: (a)
agreement and execution by the parties of the settlement  agreement,  (b) notice
to the current  unitholders in the Funds (the equitable class) and certification
of  the  equitable  class  for  purposes  of  the  equitable   settlement,   (c)
preparation,  review  by the  Securities  and  Exchange  Commission  (SEC),  and
dissemination  to the members of the equitable class of solicitation  statements
regarding  the  proposed  extensions,  (d)  disapproval  by less than 50% of the
limited partners in each of the Funds of the proposed  amendments to the limited
partnership agreements,  (e) judicial approval of the proposed amendments to the
limited  partnership  agreements,  and (f) preliminary and final approval of the
equitable  settlement by the Alabama district court.  The parties  submitted the
settlement agreement to the Alabama district court on February 12, 1999, and the
preliminary class certification  hearing is scheduled for March 24, 1999. If the
district court grants  preliminary  approval,  notices to the monetary class and
equitable  class will be sent  following  review by the SEC of the  solicitation
statements  to be prepared in  connection  with the  equitable  settlement.  The
monetary  settlement,  if approved,  will go forward  regardless  of whether the
equitable  settlement is approved or not. The Company  continues to believe that
the  allegations of the Koch and Romei actions are completely  without merit and
intends to continue to defend this matter vigorously if the monetary  settlement
is not consummated.

The  Partnership,  together  with  affiliates,  initiated  litigation in various
official forums in India against a defaulting Indian airline lessee to repossess
Partnership  property and to recover damages for failure to pay rent and failure
to maintain the aircraft in accordance  with the relevant  lease  contract.  The
Partnership  has  repossessed  all  of the  property  previously  leased  to the
airline, and the airline has ceased operations. In response to the Partnership's
collection efforts, the airline filed counter-claims  against the Partnership in
excess of the  Partnership's  claims  against the airline.  The General  Partner
believes that the airline's  counterclaims are completely without merit, and the
General Partner will vigorously defend against such counterclaims.

The  Partnership  is involved as plaintiff  or defendant in various  other legal
actions incident to its business.  Management does not believe that any of these
actions will be material to the financial condition of the Company.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Partnership's limited partners during
the fourth quarter of its fiscal year ended December 31, 1998.














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<PAGE>


                                     PART II

ITEM 5.    MARKET FOR THE PARTNERSHIP'S EQUITY AND RELATED UNITHOLDER MATTERS

Pursuant  to the terms of the  partnership  agreement,  the  General  Partner is
generally  entitled  to a 5%  interest  in  the  profits  and  losses  and  cash
distributions of the Partnership. The General Partner is the sole holder of such
interests.  Special  allocations of income are made to the General Partner equal
to the deficit  balance,  if any, in the capital account of the General Partner.
The General Partner's annual allocation of net income will generally be equal to
the General  Partner's  cash  distributions  paid during the current  year.  The
remaining  interests  in the  profits and losses and cash  distributions  of the
Partnership  are  allocated  to the limited  partners.  As of December 31, 1998,
there were 8,037 limited partners holding units in the Partnership.

There are several  secondary  markets in which limited  partnership units trade.
Secondary markets are characterized as having few buyers for limited partnership
interests and therefore are generally viewed as being  inefficient  vehicles for
the sale of limited partnership units. Presently,  there is no public market for
the  limited  partnership  units and none is likely to  develop.  To prevent the
units from being considered publicly traded and thereby to avoid taxation of the
Partnership  as an  association  treated  as a  corporation  under the  Internal
Revenue Code, the limited partnership units will not be transferable without the
consent  of  the  General  Partner,  which  may  be  withheld  in  its  absolute
discretion.  The General  Partner  intends to monitor  transfers  of units in an
effort to ensure that they do not exceed the  percentage or number  permitted by
certain safe harbors promulgated by the Internal Revenue Service. A transfer may
be  prohibited  if the  intended  transferee  is not an U.S.  citizen  or if the
transfer  would cause any portion of the units of a "Qualified  Plan" as defined
by the Employee Retirement Income Security Act of 1974 and Individual Retirement
Accounts to exceed the allowable  limit.  The  Partnership  may redeem a certain
number  of  units  each  year  under  the  terms  of the  Partnership's  Limited
Partnership Agreement,  beginning November 24, 1995. If the number of units made
available  for  purchase by limited  partners in any  calendar  year exceeds the
number  that  can  be  purchased  with  reinvestment  plan  proceeds,  then  the
Partnership may, subject to certain terms and conditions, redeem up to 2% of the
outstanding units each year. The purchase price to be offered by the Partnership
for these units will be equal to 110% of the unrecovered principal  attributable
to the units. The unrecovered principal for any unit will be equal to the excess
of  (i)  the  capital  contribution  attributable  to the  unit  over  (ii)  the
distributions from any source paid with respect to the units. As of December 31,
1998, the Partnership had agreed to purchase  approximately  23,700 units for an
aggregate  price of $0.2 million.  The General  Partner  anticipates  that these
units  will be  repurchased  in the first and  second  quarters  of 1999.  As of
December 31, 1998, the Partnership has repurchased a cumulative total of 111,908
units at a cost of $1.4 million. In addition to these units, the General Partner
may purchase  additional limited  partnership units on behalf of the Partnership
in the future.











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<PAGE>


ITEM 6.    SELECTED FINANCIAL DATA

Table 2, below, lists selected financial data for the Partnership:

                                     TABLE 2

                          For the Years Ended December
                      31, (In thousands of dollars, except
                         weighted-average unit amounts)

<TABLE>
<CAPTION>

                                                       1998            1997            1996           1995            1994
                                                   -----------------------------------------------------------------------------

      <S>                                           <C>             <C>             <C>            <C>             <C>        
      Operating results:
        Total revenues                             $    24,545     $    32,723     $    31,436    $    33,445     $    37,467
        Net gain on disposition of equipment             6,253          10,121           7,214            128           4,295
        Loss on revaluation of equipment                 4,276              --              --             --           1,175
        Equity in net income of unconsolidated
          special-purpose entities                       6,998           3,384           3,426             --              --
        Net income (loss)                                1,445           9,232           8,291         (1,974 )        (1,680 )

      At year-end:
        Total assets                               $    88,337     $   103,961     $   113,525    $   121,957     $   139,848
        Total liabilities                               35,383          36,809          37,735         36,527          34,926
        Note payable                                    30,000          30,000          31,286         30,000          30,000

      Cash distribution                            $    15,226     $    17,384     $    17,467    $    17,518     $    17,537

      Cash distribution representing
        a return of capital to the limited
        partners                                   $    13,781     $     8,152     $     9,176    $    16,642     $    16,661

      Per weighted-average limited partnership unit:

        Net income (loss)                          $      0.08     $      1.01     $      0.89    $     (0.34 )   $     (0.31 )

        Cash distribution                          $      1.76     $      2.00     $      2.00    $      2.00     $      2.00

        Cash distribution representing
          a return of capital                      $      1.68     $      0.99     $      1.11    $      2.00     $      2.00


</TABLE>









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<PAGE>


ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
           RESULTS OF OPERATIONS

(A)  Introduction

Management's  discussion  and  analysis of  financial  condition  and results of
operations  relates to the financial  statements of PLM Equipment Growth Fund VI
(the Partnership).  The following  discussion and analysis of operations focuses
on the performance of the  Partnership's  equipment in various segments in which
it operates and its effect on the Partnership's overall financial condition.

(B)  Results of Operations - Factors Affecting Performance

(1)  Re-leasing Activity and Repricing Exposure to Current Economic Conditions

The exposure of the Partnership's  equipment portfolio to re-pricing risk occurs
whenever the leases for the equipment expire or are otherwise terminated and the
equipment must be re-marketed. Major factors influencing the current market rate
for Partnership equipment include, but are not limited to, supply and demand for
similar or comparable types of transport capacity, desirability of the equipment
in the leasing market,  market conditions for the particular industry segment in
which the equipment is to be leased,  overall economic  conditions,  and various
regulations  concerning the use of the equipment.  Equipment that is idle or out
of  service  between  the  expiration  of one  lease  and  the  assumption  of a
subsequent  lease can result in a reduction of contribution to the  Partnership.
The Partnership  experienced  re-leasing or repricing activity in 1998 primarily
in its railcar, trailer, marine vessel, and container portfolios.

     (a) Railcars:  While this equipment  experienced some re-leasing  activity,
lease rates in this market remain relatively constant.

     (b) Trailers:  The Partnership's  trailer portfolio  operates in short-term
rental  facilities or with short-line  railroad  systems.  The relatively  short
duration of most leases in these operations exposes the trailers to considerable
re-leasing activity.

     (c) Marine vessels: Certain of the Partnership's marine vessels ended their
existing  leases and were required to go into  drydocking.  These marine vessels
will be remarketed during 1999 exposing them to repricing and releasing risk.

     (d) Marine containers: Some of the Partnership's marine containers that are
on lease are leased to operators of utilization-type leasing pools and, as such,
are highly  exposed  to  repricing  activity.  The  decline in marine  container
contributions  was due to equipment  sales.  Market  conditions  were relatively
constant in repricing activity during 1998.

(2)  Equipment Liquidations and Nonperforming Lessees

Liquidation  of  Partnership   equipment  and   investments  in   unconsolidated
special-purpose entities (USPEs), unless accompanied by an immediate replacement
of additional  equipment earning similar rates (see Reinvestment  Risk,  below),
represents a reduction in the size of the equipment  portfolio and may result in
a reduction of contribution to the Partnership. Lessees not performing under the
terms of their leases,  either by not paying rent, not  maintaining or operating
the equipment in accordance with the conditions of the leases, or other possible
departures  from  the  lease  terms,  can  result  not  only  in  reductions  in
contribution, but also may require the Partnership to assume additional costs to
protect its interests under the leases,  such as repossession or legal fees. The
Partnership experienced the following in 1998:

     (a)  Liquidations:  During  the year,  the  Partnership  disposed  of owned
equipment  that  included a  commercial  aircraft,  an aircraft  engine,  marine
containers,  trailers,  and railcars, and an interest in a USPE trust that owned
four Stage II commercial aircraft for total proceeds of $29.1 million.

     (b)  Nonperforming   lessees:   A  Brazilian  lessee  is  having  financial
difficulties.  The lessee has  contacted  the  General  Partner and asked for an
extended repayment schedule for the lease payment arrearage. The General Partner
is currently in  negotiation  with the lessee to work out a suitable  settlement
for both parties to collect the lease payments that are overdue.

 (3) Reinvestment Risk

Reinvestment  risk occurs  when;  the  Partnership  cannot  generate  sufficient
surplus cash after  fulfillment of operating  obligations and  distributions  to
reinvest in additional  equipment during the  reinvestment  phase of Partnership
operations,  equipment is sold or liquidated  for less than  threshold  amounts,
proceeds from dispositions, or surplus cash available for reinvestment cannot be
reinvested at the threshold  lease rates; or proceeds from sales or surplus cash
available for reinvestment cannot be deployed in a timely manner.

During the first six years of operations,  the  Partnership  intends to increase
its equipment portfolio by investing surplus cash in additional  equipment after
fulfilling  operating  requirements  and paying  distributions  to the partners.
Subsequent to the end of the reinvestment  period, the Partnership will continue
to operate for another two years and then begin an orderly  liquidation  over an
anticipated two-year period.

Other  nonoperating  funds  for  reinvestment  are  generated  from  the sale of
equipment prior to the Partnership's  planned  liquidation phase, the receipt of
funds  realized from the payment of stipulated  loss values on equipment lost or
disposed  of during  the time it is  subject  to lease  agreements,  or from the
exercise  of  purchase  options in certain  lease  agreements.  Equipment  sales
generally  result  from  evaluations  by  the  General  Partner  that  continued
ownership  of  certain  equipment  is  either  inadequate  to  meet  Partnership
performance  goals,  or  that  market  conditions,   market  values,  and  other
considerations indicate it is the appropriate time to sell certain equipment.

During  1998,  the  Partnership  completed  the  purchase  of an MD-82 Stage III
commercial  aircraft for a cost of $13.4 million and paid  acquisition and lease
negotiation fees of $0.7 million to FSI for the purchase of this equipment.  The
Partnership  made a deposit of $1.3 million toward this purchase in 1997,  which
is included in the December 31, 1997 balance  sheet as an equipment  acquisition
deposit. Additionally, the Partnership purchased a portfolio of aircraft rotable
components for $2.2 million,  a portfolio of marine containers for $5.0 million,
a group of railcars for $2.9  million,  and a marine vessel for $9.6 million and
paid  acquisition  and lease  negotiation  fees of $1.1  million  to FSI for the
purchase of this equipment.

Also during 1998, the Partnership entered into a commitment to purchase a marine
vessel for a cost of $6.7 million and made a deposit of $0.7 million toward this
purchase,  which is  included  in the  December  31,  1998  balance  sheet as an
equipment  acquisition deposit.  The Partnership  completed the purchase of this
equipment  during  February 1999 and paid $0.4 million in acquisition  and lease
negotiation fees to FSI related to this acquisition.

(4)  Equipment Valuation

In accordance  with  Financial  Accounting  Standards  Board  statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  Of",  the  General  Partner  reviews  the  carrying  value  of the
Partnership's  equipment  portfolio  at least  quarterly in relation to expected
future market conditions for the purpose of assessing the  recoverability of the
recorded  amounts.  If the  projected  undiscounted  future lease  revenues plus
residual  values are less than the carrying  value of the  equipment,  a loss on
revaluation  is  recorded.  Reductions  of $4.3  million and $1.0 million to the
carrying value of owned equipment and partially owned  equipment,  respectively,
were required  during 1998. No reductions were required to the carrying value of
equipment during 1997 or 1996.

As of December 31, 1998, the General  Partner  estimated the current fair market
value of the  Partnership's  equipment  portfolio,  including the  Partnership's
interest in equipment  owned by USPEs,  to be $114.6  million.  This estimate is
based on recent market  transactions for equipment  similar to the Partnership's
equipment portfolio and the Partnership's  interest in equipment owned by USPEs.
Ultimate  realization  of  fair  market  value  by the  Partnership  may  differ
substantially from the estimate due to specific market conditions, technological
obsolescence,  and government regulations, among other factors, that the General
Partner cannot accurately predict.

(C)  Financial Condition - Capital Resources, Liquidity, and Unit 
     Redemption Plan

The General Partner purchased the Partnership's initial equipment portfolio with
capital raised from its initial equity  offering of $166.1 million and permanent
debt  financing of $30.0  million.  No further  capital  contributions  from the
limited  partners are  permitted  under the terms of the  Partnership's  limited
partnership  agreement.   The  Partnership's  total  outstanding   indebtedness,
currently  $30.0  million,  can only be  increased  by a maximum of $5.0 million
subject  to  specific   covenants  in  existing  debt   agreements   unless  the
Partnership's senior lender will issue a waiver.

The Partnership relies on operating cash flow to meet its operating obligations,
to  make  cash   distributions  to  the  limited  partners,   and  increase  the
Partnership's equipment portfolio with any remaining available surplus cash.

For the year ended December 31, 1998, the Partnership generated $14.3 million in
operating cash (net cash provided by operating  activities plus  non-liquidating
cash  distributions  from  USPEs)  to meet its  operating  obligations  and make
distributions  of $15.2  million to the  partners,  but also used  undistributed
available cash from prior periods of approximately $0.9 million.

Pursuant the terms of the limited partnership  agreement,  beginning December 1,
1994, if the number of units made available for purchase by limited  partners in
any calendar  year exceeds the number that can be  purchased  with  reinvestment
plan  proceeds,   then  the  Partnership  may,  subject  to  certain  terms  and
conditions,  redeem up to 2% of the  outstanding  units each year.  The purchase
price to be  offered  for such  units  will be equal to 110% of the  unrecovered
principal  attributed  to the  units.  Unrecovered  principal  is defined as the
excess of the capital contribution attributable to a unit over the distributions
from any source paid with respect to that unit.  As of December  31,  1998,  the
Partnership had agreed to purchase  approximately  23,700 units for an aggregate
price of approximately $0.2 million.  The General Partner anticipates that these
units  will be  repurchased  during the first and second  quarters  of 1999.  In
addition to these units,  the General Partner may purchase  additional  units on
behalf of the Partnership in the future.

The General  Partner has entered into a joint $24.5 million credit facility (the
Committed Bridge Facility) on behalf of the Partnership,  PLM Equipment Growth &
Income Fund VII (EGF VII) and Professional  Lease Management Income Fund I (Fund
I), both affiliated  investment  programs;  and TEC Acquisub,  Inc. (TECAI),  an
indirect  wholly-owned  subsidiary of the General Partner,  which may be used to
provide interim financing of up to (i) 70% of the aggregate book value or 50% of
the  aggregate  net  fair  market  value  of  eligible  equipment  owned  by the
Partnership,  plus  (ii) 50% of  unrestricted  cash  held by the  borrower.  The
Partnership,  EGF VII,  Fund I, and TECAI  collectively  may  borrow up to $24.5
million of the Committed Bridge Facility. Outstanding borrowings by one borrower
reduce the amount  available to each of the other  borrowers under the Committed
Bridge Facility.  The Committed Bridge Facility also provides for a $5.0 million
Letter of Credit Facility for the eligible borrowers.  Individual borrowings may
be  outstanding  for no more than 179 days,  with all advances due no later than
December 14, 1999.  Interest  accrues at either the prime rate or adjusted LIBOR
plus  1.625% at the  borrower's  option  and is set at the time of an advance of
funds.  Borrowings by the Partnership are guaranteed by the General Partner.  As
of December 31, 1998, no eligible borrower had any outstanding borrowings. As of
March 17, 1999, the Partnership  had outstanding  borrowings of $3.7 million and
TECAI had outstanding borrowings of $9.4 million; no other eligible borrower had
any  outstanding  borrowings.  The General  Partner  believes it will be able to
renew the Committed  Bridge  Facility upon its expiration  with similar terms as
those in the current Committed Bridge Facility.

The General  Partner has not  planned any  expenditures,  nor is it aware of any
contingencies  that would  cause it to require  any  additional  capital to that
mentioned above.







                      (This space intentionally left blank)



<PAGE>


(D)  Results of Operations - Year-to-Year Detailed Comparison

(1)  Comparison of the Partnership's Operating Results for the Years Ended 
     December 31, 1998 and 1997

(a)  Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as  repair  and  maintenance,
equipment operating,  and asset-specific  insurance expenses) on owned equipment
decreased  during the year ended  December 31, 1998,  when  compared to the same
period of 1997. Gains or losses from the sale of equipment and certain expenses,
such as depreciation and amortization  and general and  administrative  expenses
relating  to  the  operating  segments  (see  Note 5 to  the  audited  financial
statements),  are not  included  in the  owned  equipment  operation  discussion
because  they are  indirect  in nature and not a result of  operations,  but the
result of owning a portfolio of equipment.  The following  table  presents lease
revenues less direct expenses by segment (in thousands of dollars):

<TABLE>
<CAPTION>

                                                                                For the Years
                                                                             Ended December 31,
                                                                            1998             1997
                                                                         ----------------------------
  <S>                                                                    <C>             <C>        
  Rail equipment                                                         $  3,254        $   3,134      
  Aircraft, aircraft engines, and components                                2,845            3,083
  Trailers                                                                  2,478            2,890
  Marine vessels                                                            1,678            1,610
  Marine containers                                                           911            1,668

</TABLE>

Rail  equipment:  Rail equipment  lease  revenues and direct  expenses were $4.1
million and $0.9  million,  respectively,  for the year ended  December 31, 1998
compared to $4.1 million and $1.0 million, respectively,  during the same period
of 1997. The increase in railcar  contribution was due to lower repairs required
during 1998 when compared to the same period of 1997.

Aircraft,  aircraft engines, and components:  Aircraft lease revenues and direct
expenses  were $4.0 million and $1.1 million,  respectively,  for the year ended
December 31,  1998,  compared to $3.6  million and $0.5  million,  respectively,
during the same period of 1997. The decrease in aircraft contribution was due to
the  sale of a Stage  II  commercial  aircraft  during  1998  and the  sale of a
portfolio of aircraft engines and components  during the fourth quarter of 1997.
The sale of this  equipment  was offset,  in part,  by the  purchase of an MD-82
Stage III  commercial  aircraft and a portfolio of aircraft  rotable  components
during the first quarter of 1998.

Trailers:  Trailer lease revenues and direct expenses were $3.3 million and $0.8
million,  respectively,  for the year ended December 31, 1998,  compared to $3.8
million and $0.9  million,  respectively,  during the same  period of 1997.  The
number of trailers owned by the  Partnership  has declined  during 1998 and 1997
due to sales and  dispositions.  The result of this  declining  fleet has been a
decrease in trailer contribution.

Marine  vessels:  Marine  vessel lease  revenues and direct  expenses  were $5.2
million and $3.6 million,  respectively,  for the year ended  December 31, 1998,
compared to $8.9 million and $7.3 million, respectively,  during the same period
of 1997. The increase in marine vessel  contribution was due to the receipt of a
$0.2  million  loss-of-hire  insurance  refund  during 1998 from  Transportation
Equipment Indemnity Company,  Ltd., an affiliate of the General Partner,  due to
lower  claims  from  the  insured   Partnership  and  other  insured  affiliated
partnerships.  The decrease in marine vessel lease revenues and direct  expenses
was due to sale of the  Partnership's  two  marine  vessels  during  the  fourth
quarter of 1997,  that were  operating  under a lease  arrangement  in which the
lessee paid a higher lease rate however,  the Partnership paid for all operating
expenses.  The decrease in lease revenues was offset in part, by the purchase of
an additional  marine vessel during the second quarter of 1998 that is operating
under a bareboat  charter  in which the  lessee  pays a flat lease rate and also
pays for certain operating expenses while on lease.

Marine containers: Marine container lease revenues and direct expenses were $0.9
million  and  $13,000,  respectively,  for the year  ended  December  31,  1998,
compared to $1.7 million and $13,000,  respectively,  during the same quarter of
1997.  The number of containers  has declined  during 1998 and 1997 due to sales
and  dispositions.  The result of this  declining  fleet has been a decrease  in
container contribution.

(b)  Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $23.7 million for the year ended  December 31, 1998
increased from $17.0 million for the same period in 1997.  Significant variances
are explained as follows:

     (i) A $4.8 million increase in depreciation and amortization  expenses from
1997 levels  reflects the purchase of certain assets during 1998.  This increase
was offset in part by the sale of certain equipment during 1998 and 1997 and the
double-declining  balance  method  of  depreciation  which  results  in  greater
depreciation in the first years an asset is owned.

     (ii)Loss on revaluation of equipment increased $4.3 million during the year
ended December 31, 1998 and resulted from the Partnership  reducing the carrying
value of marine  containers and marine vessels to their estimated net realizable
value. No revaluation of equipment was required during 1997.

     (iii)A  $0.2  million  decrease in  management  fees was due to lower lease
revenues earned by the Partnership during 1998, when compared to 1997.

     (iv)A $0.3 million  decrease in interest expense was due to a lower average
debt balance on the short-term credit facility when compared to 1997.

     (v) A $0.6  million  decrease in  administrative  expenses was due to lower
costs for professional  services needed to collect past due receivables due from
certain nonperforming lessees.

     (vi)A $1.3 million  decrease in the  provision for bad debts was due to the
collection  of $0.7  million  from past due  receivables  during  the year ended
December 31, 1998 that had  previously  been reserved for as a bad debt, and the
General  Partner's  evaluation of the  collectibility  of  receivables  due from
certain lessees.

 (c) Net Gain (Loss) on Disposition of Owned Equipment

The net gain on the  disposition of owned  equipment for the year ended December
31, 1998  totaled  $6.3  million,  and  resulted  from the sale of a  commercial
aircraft, an aircraft engine, marine containers, trailers, and railcars, with an
aggregate net book value of $6.1 million,  for $12.4 million which included $1.4
million of unused engine reserves.  The net gain on the disposition of equipment
for the year ended December 31, 1997 totaled $10.1 million,  which resulted from
the sale of  aircraft  components,  marine  containers,  and  trailers,  with an
aggregate net book value of $5.4 million,  for proceeds of $7.2 million, and the
sale of two marine  vessels with a net book value of $10.3  million for proceeds
of $17.8  million.  Included  in the gain of $8.3  million  from the sale of the
marine vessels is the unused portion of accrued drydocking of $0.8 million.

(d)   Interest and Other Income

Interest and other  income  increased  $0.3  million due to higher  average cash
balances available for investment throughout most of 1998 when compared to 1997.


<PAGE>



(e)  Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities 
     (USPEs)

Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity  method is shown in the following  table by equipment  type
(in thousands of dollars):

<TABLE>
<CAPTION>

                                                                                 For the Years
                                                                              Ended December 31,
                                                                            1998               1997
                                                                         ------------------------------
  <S>                                                                    <C>                <C>     
  Aircraft                                                               $   8,642          $  4,090
  Mobile offshore drilling unit                                                243                 1
  Marine containers                                                            (20 )              --
  Marine vessels                                                            (1,867 )            (707 )
  ===================================================================================       ==========
      Equity in net income of USPEs                                      $   6,998          $  3,384
  ===================================================================================       ==========

</TABLE>

Aircraft:  As of December  31,  1998,  the  Partnership  owned an interest in an
entity  that owns a Boeing 767  commercial  aircraft  and an interest in a trust
that owns two commercial  aircraft on a direct finance lease. As of December 31,
1997,  the  Partnership  owned an  interest  in an entity that owns a Boeing 767
commercial aircraft, an interest in a trust that owns two commercial aircraft on
a direct  finance  lease,  and an interest in a trust that held four  commercial
aircraft.  During the year ended  December  31,  1998,  lease  revenues  of $5.0
million  and the gain from the sale of an  interest  in the trust that held four
commercial aircraft of $6.9 million, were offset by depreciation expense, direct
expenses, and administrative expenses of $3.2 million. During the same period of
1997,  lease  revenues of $7.6 million and the gain from the sale of an interest
in the trust that held six commercial  aircraft of $3.4 million,  were offset by
depreciation  expense,  direct  expenses,  and  administrative  expenses of $6.9
million.  The decrease in lease revenues during the year ended December 31, 1998
was due to the  sale  of the  Partnership's  interest  in a  trust  owning  four
commercial  aircraft during 1998 and the sale of the  Partnership's  interest in
another trust owning six commercial  aircraft during the fourth quarter of 1997.
Depreciation  expense,   direct  expenses,  and  administrative   expenses  also
decreased as a result of these sales.

Mobile offshore drilling unit: As of December 31, 1998 and 1997, the Partnership
owned an  interest in a mobile  offshore  drilling  unit.  During the year ended
December 31, 1998, revenues of $1.2 million were offset by depreciation expense,
direct expenses,  and administrative  expenses of $1.0 million.  During the same
period of 1997,  revenues of $1.1 million were offset by  depreciation  expense,
direct expenses,  and administrative  expenses of $1.1 million. The contribution
from this equipment  increased  during 1998, when compared to the same period of
1997, due to a higher lease rate earned on this equipment and lower depreciation
expense due to the double-declining balance method of depreciation which results
in greater depreciation in the first years an asset is owned.

Marine containers: As of December 31, 1998, the Partnership owned an interest in
an entity that owns marine  containers.  During  1998,  revenues of $0.1 million
were  offset  by  depreciation  expense,  direct  expenses,  and  administrative
expenses of $0.1 million. The Partnership  purchased the interest in this entity
during the third quarter of 1998.

Marine  vessels:  As of December  31, 1998 and 1997,  the  Partnership  owned an
interest  in  entities  that own three  marine  vessels.  During  the year ended
December 31, 1998, revenues of $4.3 million were offset by depreciation expense,
direct expenses,  and administrative  expenses of $5.2 million and a loss on the
revaluation of a marine vessel of $1.0 million.  During the same period of 1997,
revenues of $3.2 million were offset by depreciation  expense,  direct expenses,
and  administrative  expenses  of  $3.9  million.  The  primary  reason  for the
increases  in  revenues  and  depreciation   expense,   direct   expenses,   and
administrative  expenses was due to the purchase of an interest in an additional
entity that owns a marine vessel during 1997.  Loss on  revaluation of equipment
of $1.0  million  during the year ended  December  31,  1998  resulted  from the
Partnership  reducing the carrying  value of its interest in an entity  owning a
marine vessel to its estimated  net  realizable  value.  No  revaluation  in the
carrying value of interests in marine vessels was required during 1997.

(f)  Net Income

As a result of the foregoing,  the  Partnership's  net income for the year ended
December  31, 1998 was $1.4  million,  compared to a net income of $9.2  million
during the same period of 1997. The Partnership's  ability to acquire,  operate,
and liquidate  assets,  secure  leases,  and re-lease  those assets whose leases
expire is subject to many factors, and the Partnership's  performance during the
year ended December 31, 1998 is not necessarily indicative of future periods. In
the year ended December 31, 1998, the Partnership  distributed  $14.4 million to
the limited partners, or $1.76 per weighted-average limited partnership unit.

(2)  Comparison of the Partnership's Operating Results for the Years Ended 
     December 31, 1997 and 1996

(a)   Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as  repair  and  maintenance,
equipment operating,  and asset-specific  insurance expenses) on owned equipment
decreased  during the year ended  December 31, 1997,  when  compared to the same
period of 1996. Gains or losses from the sale of equipment and certain expenses,
such as depreciation and amortization  and general and  administrative  expenses
relating  to  the  operating  segments  (see  Note 5 to  the  audited  financial
statements),  are not  included  in the  owned  equipment  operation  discussion
because  they are  indirect  in nature and not a result of  operations,  but the
result of owning a portfolio of equipment.  The following  table  presents lease
revenues less direct expenses by owned equipment type (in thousands of dollars):

<TABLE>
<CAPTION>

                                                                                For the Years
                                                                             Ended December 31,
                                                                            1997             1996
                                                                         ----------------------------
  <S>                                                                    <C>                 <C>     
  Rail equipment                                                         $  3,134         $  2,774   
  Aircraft, aircraft engines, and components                                3,083            3,982
  Trailers                                                                  2,890            3,148
  Marine containers                                                         1,668            2,179
  Marine vessels                                                            1,610            3,816

</TABLE>

Rail  equipment:  Rail equipment  lease  revenues and direct  expenses were $4.1
million and $1.0 million,  respectively,  for the year ended December, 31, 1997,
compared to $4.1 million and $1.3 million, respectively,  during the same period
of 1996.  Although the railcar fleet remained  relatively the same size for both
years, the increase in railcar contribution  resulted from fewer running repairs
during 1997 than were  required on certain of the  railcars in the fleet  during
1996.

Aircraft,  aircraft engines, and components:  Aircraft lease revenues and direct
expenses  were $3.6 million and $0.5 million,  respectively,  for the year ended
December 31,  1997,  compared to $4.2  million and $0.2  million,  respectively,
during 1996.  The decrease in aircraft  contribution  was due to the sale of two
aircraft  engines during the second quarter of 1996 and the sale of the aircraft
components during the fourth quarter of 1997.

Trailers:  Trailer lease revenues and direct expenses were $3.8 million and $0.9
million,  respectively,  for the year ended December 31, 1997,  compared to $4.2
million and $1.1  million,  respectively,  during  1996.  The number of trailers
owned by the Partnership has been declining over the past 12 months due to sales
and  dispositions.  The result of this  declining  fleet has been a decrease  in
trailer contribution.

Marine containers: Marine container lease revenues and direct expenses were $1.7
million  and  $13,000,  respectively,  for the year  ended  December  31,  1997,
compared to $2.2 million and $12,000,  respectively,  during 1996. The number of
marine  containers  owned by the Partnership has been declining over the past 12
months due to sales and  dispositions.  The result of this  declining  fleet has
been a decrease in marine container contribution.

Marine  vessels:  Marine  vessel lease  revenues and direct  expenses  were $8.9
million and $7.3 million,  respectively,  for the year ended  December 31, 1997,
compared to $8.9  million  and $5.1  million,  respectively,  during  1996.  The
decrease in marine vessel contribution was due in part to the sale of two marine
vessels during the fourth  quarter of 1997. The decrease in marine  contribution
caused by these  dispositions was offset in part by an increase in marine vessel
lease  revenues  due to the  purchase  of two marine  vessels  during the second
quarter of 1996 that were on lease for the full year of 1997,  compared to being
on lease for only a partial  period of 1996. The increase in lease revenues from
the purchased marine vessels was offset in part by lower day rates earned on two
marine  vessels  that were sold  during  1997,  when  compared  to 1996.  Direct
expenses  increased  $2.2 million  during the year ended 1997,  due primarily to
repairs to two marine  vessels that were not needed  during 1996 and an increase
in the liability insurance for these marine vessels.

(b)   Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $17.0 million for the year ended  December 31, 1997
decreased  from  $18.8  million  for the same  period in 1996.  The  significant
variances are explained as follows:

     (i) A $2.6 million decrease in depreciation and amortization  expenses from
1996 levels  reflects  the sale of certain  assets  during 1997 and 1996 and the
double-declining balance method of depreciation.

     (ii)A $0.2  million  decrease  in  management  fees was due to lower  lease
revenues.

     (iii) A $0.7 million increase in administrative expenses was because of the
additional  professional services needed to collect outstanding  receivables due
from certain nonperforming lessees.

     (iv)A $0.3 million  increase in the  allowance  for bad debts was due to an
increase in uncollectable amounts due from certain lessees during 1997.

(c)   Net Gain on Disposition of Owned Equipment

The net gain on the  disposition  of equipment  for the year ended  December 31,
1997 totaled $10.1 million, which resulted from the sale of aircraft components,
marine  containers,  and  trailers,  with an  aggregate  net book  value of $5.4
million, for proceeds of $7.2 million, and the sale of two marine vessels with a
net book value of $10.3 million for proceeds of $17.8  million.  Included in the
gain of $8.3 million from the sale of the marine  vessels is the unused  portion
of accrued  drydocking of $0.8 million.  For the year ended December,  31, 1996,
the $7.2 million net gain on the disposition of equipment resulted from the sale
or disposal of marine containers, aircraft engines, trailers, and railcars, with
an aggregate net book value of $6.0 million,  for proceeds of $7.0 million.,  In
addition,  one marine vessel with a net book value of $14.6 million was sold for
proceeds of $20.8 million. Included in the gain of $6.3 million from the sale of
the marine vessel was the unused portion of accrued drydocking of $0.1 million.

(d)   Interest and Other Income

Interest and other income  decreased  $0.1 million  during the year of 1997 when
compared to the same period of 1996.  Interest  income  decreased  $0.4  million
during 1997, due to lower cash balances available for investment.  This decrease
was offset,  in part,  by the receipt of $0.3  million in business  interruption
claims during 1997  resulting  from the off-hire  status of a marine vessel that
had various mechanical breakdowns.

(e)   Equity in Net Income (Loss) of USPEs

Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity  method is shown in the following  table by equipment  type
(in thousands of dollars):

<TABLE>
<CAPTION>

                                                                                For the Years
                                                                             Ended December, 31,
                                                                            1997               1996
                                                                         ------------------------------
  <S>                                                                    <C>                <C>        
  Aircraft                                                               $   4,090          $  (1,853 )
  Mobile offshore drilling unit                                                  1              5,694
  Marine vessels                                                              (707 )             (415 )
  ======================================================================================================
      Equity in net income of USPEs                                      $   3,384          $   3,426
  ======================================================================================================

</TABLE>

Aircraft:  As of December  31,  1997,  the  Partnership  owned an interest in an
entity that owns a Boeing 767 commercial  aircraft,  an interest in a trust that
owns two commercial aircraft on direct finance lease, and an interest in a trust
that holds four  commercial  aircraft.  As of December 31, 1996, the Partnership
owned an interest in an entity that owned a Boeing 767 commercial  aircraft,  an
interest in a trust that held two  commercial  aircraft on direct finance lease,
and an interest in a trust that held ten  commercial  aircraft.  During the year
ended  December 31, 1997,  lease  revenues of $7.6 million and the gain from the
sale of an  interest  in a trust  that  held six  commercial  aircraft,  of $3.4
million,   were  offset  by   depreciation   expense,   direct   expenses,   and
administrative  expenses of $6.9 million.  During the same period of 1996, lease
revenues of $6.3 million were offset by depreciation  expense,  direct expenses,
and  administrative  expenses of $8.2  million.  The increase of $1.3 million in
revenues was due to the purchase of a trust that owns two commercial aircraft on
direct  finance  lease  during 1997 and the  purchase of a trust that holds five
commercial  aircraft  during the latter half of the first  quarter of 1996.  The
decrease  of  $1.3  million  in  depreciation  expense,   direct  expenses,  and
administrative expenses was primarily due to the double-declining balance method
of depreciation

Mobile offshore drilling unit: As of December 31, 1997, the Partnership owned an
interest in a rig that was purchased  during the fourth  quarter of 1996. In the
third quarter of 1996, the Partnership  sold its interest in another rig. During
the year ended  December  31,  1997,  revenues  of $1.1  million  were offset by
depreciation  expense,  direct  expenses,  and  administrative  expenses of $1.1
million.  During the same period of 1996,  revenues of $0.8 million and the gain
from the sale of the rig of $5.8  million were offset by  depreciation  expense,
direct expenses, and administrative expenses of $0.9 million.

Marine vessels:  As of December 31, 1997, the  Partnership  owned an interest in
entities that own three marine  vessels,  one of which was purchased  during the
third  quarter of 1997.  As of  December  31,  1996,  the  Partnership  owned an
interest  in two  marine  vessels.  During  the year ended  December  31,  1997,
revenues of $3.2 million were offset by depreciation  expense,  direct expenses,
and  administrative  expenses of $3.9  million.  During the same period of 1996,
revenues of $1.6 million were offset by depreciation  expense,  direct expenses,
and  administrative  expenses of $2.0 million.  The primary reason  revenues and
expenses  increased  during  1997 was due to the  purchase  of an interest in an
entity that owns a marine vessel during 1997.

(f)  Net Income

As a result of the foregoing,  the  Partnership's  net income for the year ended
December  31, 1997 was $9.2  million,  compared to a net income of $8.3  million
during the same period in 1996. The  Partnership's  ability to operate,  acquire
and liquidate  assets,  secure  leases,  and re-lease  those assets whose leases
expire is subject to many factors, and the Partnership's performance in the year
ended December, 31, 1997 is not necessarily indicative of future periods. In the
year ended December 31, 1997, the Partnership  distributed  $16.5 million to the
limited partners, or $2.00 per weighted-average limited partnership unit.

(E)  Geographic Information

Certain of the Partnership equipment operates in international markets. Although
these operations expose the Partnership to certain currency,  political,  credit
and economic risks, the General Partner believes that these risks are minimal or
has implemented strategies to control the risks. Currency risks are at a minimum
because  all  invoicing,  with  the  exception  of a small  number  of  railcars
operating in Canada, is conducted in U.S. dollars. Political risks are minimized
by avoiding  operations in countries that do not have a stable  judicial  system
and established  commercial business laws. Credit support strategies for lessees
range from letters of credit supported by U.S. banks to cash deposits.  Although
these credit support mechanisms  generally allow the Partnership to maintain its
lease yield,  there are risks associated with  slow-to-respond  judicial systems
when legal  remedies  are  required to secure  payment or  repossess  equipment.
Economic risks are inherent in all international markets and the General Partner
strives to minimize this risk with market analysis prior to committing equipment
to a  particular  geographic  area.  Refer  to Note 6 to the  audited  financial
statements,  for information on the lease revenues,  net income (loss),  and net
book value of equipment in various geographic regions.

Revenues and net operating income by geographic  region are impacted by the time
period  the  asset is owned  and the  useful  life  ascribed  to the  asset  for
depreciation  purposes.  Net  income  (loss)  from  equipment  is  significantly
impacted  by  depreciation  charges,  which are  greatest  in the early years of
ownership due to the use of the double-declining balance method of depreciation.
The relationships of geographic revenues,  net income (loss), and net book value
of equipment are expected to change  significantly in the future, as assets come
off lease and  decisions  are made  either to  redeploy  the  assets in the most
advantageous geographic location or sell the assets.

The Partnership's owned equipment and investments in equipment owned by USPEs on
lease to U.S.-  domiciled  lessees  consist of aircraft,  trailers and railcars.
During 1998,  U.S. lease revenues  accounted for 33% of the total lease revenues
of wholly- and  partially-owned  equipment,  while  reporting a net loss of $3.5
million  compared to the total  aggregate net income for the Partnership of $1.4
million.  The  primary  reason  for this  relationship  is that a large gain was
realized from the sale of an asset in other geographic regions. In addition, the
Partnership depreciates its rail equipment over a 15-year period versus 12 years
for other equipment types owned and leased in other geographic regions.

The Partnership's owned equipment on lease to Canadian-domiciled lessees consist
of railcars.  During 1998, Canadian lease revenues accounted for 7% of the total
lease  revenues  of  wholly-  and  partially-owned  equipment,  while net income
accounted for $7.5 million of the total aggregate net income for the Partnership
of $1.4 million.  The primary reason for this  relationship is that a large gain
was realized from the sale of the commercial aircraft that were on lease in this
geographic region.

The  Partnership's  investment in an aircraft  owned by a USPE on lease to South
American-domiciled  lessees  during  1998  accounted  for 12% of the total lease
revenues of wholly- and  partially-owned  equipment.  South American  operations
accounted  for  $3.3  million  of  the  total   aggregate  net  income  for  the
Partnership.

The Partnership's owned equipment that was on lease to lessees domiciled in Asia
consists of  aircraft.  Lease  revenues in this region  accounted  for 5% of the
total lease revenues of wholly- and partially-owned equipment and recorded a net
income of $5.0 million when  compared to the total  aggregate  net income of the
Partnership of $1.4 million.  The primary reason for this relationship is that a
large gain was realized from the sale of assets in this geographic region.

The Partnership's owned equipment and investments in equipment owned by USPEs on
lease to lessees in the rest of the world consists of marine vessels, a rig, and
marine containers.  During 1998, lease revenues from these operations  accounted
for 43% of the total lease  revenues of wholly- and  partially-owned  equipment,
while  reporting a net loss from these  operations of $6.7 million when compared
to the total  aggregate  net income for the  Partnership  of $1.4  million.  The
primary reason for this relationship is that the Partnership  recorded a loss on
the  revaluation of certain owned marine  vessels and marine  containers of $4.3
million and investments in marine vessels owned by USPEs of $1.0 million.

(F) Effects of Year 2000

It is possible that the General Partner's  currently installed computer systems,
software  products,  and other business systems,  or the Partnership's  vendors,
service  providers,  and customers,  working either alone or in conjunction with
other  software or systems,  may not accept  input of,  store,  manipulate,  and
output  dates on or after  January  1, 2000  without  error or  interruption  (a
problem  commonly  known  as the  "Year  2000"  or  "Y2K"  problem).  Since  the
Partnership  relies  substantially on the General  Partner's  software  systems,
applications,  and  control  devices in  operating  and  monitoring  significant
aspects of its business,  any Year 2000 problem  suffered by the General Partner
could have a material adverse effect on the  Partnership's  business,  financial
condition, and results of operations.

The General Partner has  established a special Year 2000 oversight  committee to
review  the  impact  of Year  2000  issues on its  software  products  and other
business  systems  in  order to  determine  whether  such  systems  will  retain
functionality  after  December  31, 1999.  The General  Partner (a) is currently
integrating Year  2000-compliant  programming code into its existing  internally
customized and internally developed transaction  processing software systems and
(b) the General Partner's  accounting and asset management software systems have
either already been made Year 2000-compliant or Year 2000-compliant  upgrades of
such systems are planned to be implemented by the General Partner before the end
of  fiscal  1999.  Although  the  General  Partner  believes  that its Year 2000
compliance  program  can be  completed  by  the  end of  1999,  there  can be no
assurance that the  compliance  program will be completed by that date. To date,
the  costs  incurred  and  allocated  to the  Partnership  to  become  Year 2000
compliant have not been material.  Also, the General Partner believes the future
cost  allocable to the  Partnership  to become Year 2000  compliant  will not be
material.

It is possible that certain of the  Partnership's  equipment lease portfolio may
not be  Year  2000  compliant.  The  General  Partner  is  currently  contacting
equipment  manufacturers  of the  Partnership's  leased  equipment  portfolio to
assure Year 2000 compliance or to develop  remediation  strategies.  The General
Partner does not expect that  non-Year 2000  compliance of its leased  equipment
portfolio will have an adverse material impact on its financial statements.

Some risks  associated  with the Year 2000 problem are beyond the ability of the
Partnership  or the General  Partner to control,  including  the extent to which
third  parties  can  address  the Year 2000  problem.  The  General  Partner  is
communicating with vendors, services providers, and customers in order to assess
the Year 2000  compliance  readiness of such parties and the extent to which the
Partnership is vulnerable to any third-party  Year 2000 issues.  There can be no
assurance  that the  software  systems of such parties will be converted or made
Year 2000  compliant in a timely manner.  Any failure by the General  Partner or
such other parties to make their  respective  systems Year 2000 compliant  could
have a material adverse effect on the business,  financial position, and results
of operations  from the  Partnership.  The General  Partner will make an ongoing
effort to recognize and evaluate potential exposure relating to third-party Year
2000  noncompliance,  and will develop a contingency plan if the General Partner
determines that third-party noncompliance will have a material adverse effect on
the Partnership's business, financial position, or results of operation.

The General  Partner is currently  developing a contingency  plan to address the
possible  failure of any  systems  due to the Year 2000  problems.  The  General
Partner anticipates these plans will be completed by September 30, 1999.

(G)  Accounting Pronouncements

In June 1998, the Financial  Accounting  Standards Board issued  "Accounting for
Derivative   Instruments  and  Hedging   Activities"   (SFAS  No.  133),   which
standardizes  the  accounting  for  derivative  instruments,  including  certain
derivative instruments embedded in other contracts,  by requiring that an entity
recognize  those items as assets or  liabilities  in the  statement of financial
position and measure  them at fair value.  This  statement is effective  for all
quarters of fiscal years beginning after June 15, 1999. As of December 31, 1998,
the  General  Partner is  reviewing  the effect this  standard  will have on the
Partnership's consolidated financial statements.

(H)  Inflation

Inflation had no significant impact on the Partnership's operations during 1998,
1997, or 1996.

(I)  Forward-Looking Information

Except for historical  information contained herein, the discussion in this Form
10-K contains  forward-looking  statements that involve risks and uncertainties,
such as statements of the Partnership's  plans,  objectives,  expectations,  and
intentions.  The cautionary  statements made in this Form 10-K should be read as
being applicable to all related forward-looking  statements wherever they appear
in this Form 10-K. The Partnership's actual results could differ materially from
those discussed here.

(J)  Outlook for the Future

Several factors may affect the Partnership's  operating  performance in 1999 and
beyond,  including  changes in the markets for the  Partnership's  equipment and
changes in the regulatory environment in which that equipment operates.

The Partnership's operation of a diversified equipment portfolio in a broad base
of markets is  intended  to reduce its  exposure  to  volatility  in  individual
equipment sectors.

The  ability  of the  Partnership  to  realize  acceptable  lease  rates  on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
and  government  or other  regulations.  The  unpredictability  of some of these
factors makes it difficult for the General  Partner to clearly  define trends or
influences that may impact the performance of the Partnership's  equipment.  The
General  Partner  continuously  monitors  both  the  equipment  markets  and the
performance of the Partnership's equipment in these markets. The General Partner
may make an evaluation to reduce the  Partnership's  exposure to those equipment
markets in which it  determines  that it cannot  operate  equipment  and achieve
acceptable  rates of  return.  Alternatively,  the  General  Partner  may make a
determination   to  enter  those   equipment   markets  in  which  it  perceives
opportunities  to  profit  from  supply-demand  instabilities  or  other  market
imperfections.

The  Partnership  intends to use  excess  cash flow,  if any,  after  payment of
operating  expenses,  principal and interest on debt, and cash  distributions to
the  partners  to  acquire  additional  equipment  during the first six years of
Partnership operations. The General Partner believes that these acquisitions may
cause the  Partnership  to generate  additional  earnings  and cash flow for the
Partnership.

(1)  Repricing and Reinvestment Risk

Certain of the  Partnership's  aircraft,  marine  vessel,  marine  containers in
pools,  railcar,  and trailer  portfolios will be remarketed in 1999 as existing
leases  expire,   exposing  the   Partnership  to  repricing   risk/opportunity.
Additionally,  the  General  Partner may elect to sell  certain  underperforming
equipment  or  equipment  whose  continued  operation  may become  prohibitively
expensive.  In either  case,  the  General  Partner  intends to re-lease or sell
equipment at  prevailing  market  rates;  however,  the General  Partner  cannot
predict  these  future  rates  with  any  certainty  at this  time,  and  cannot
accurately assess the effect of such activity on future Partnership performance.
The  proceeds  from the  sold or  liquidated  equipment  will be  redeployed  to
purchase additional equipment, as the Partnership is in its reinvestment phase.

(2)  Impact of Government Regulations on Future Operations

The General  Partner  operates the  Partnership's  equipment in accordance  with
current applicable regulations (see Item 1, Section E, Government  Regulations).
However, the continuing implementation of new or modified regulations by some of
the  authorities  mentioned  previously,  or others,  may  adversely  affect the
Partnership's  ability to continue to own or operate equipment in its portfolio.
Additionally,  regulatory  systems  vary  from  country  to  country,  which may
increase the burden to the Partnership of meeting regulatory  compliance for the
same equipment  operated between countries.  Currently,  the General Partner has
observed  rising  insurance  costs to operate  certain  vessels into U.S.  ports
resulting  from  implementation  of the U.S. Oil Pollution Act of 1990.  Ongoing
changes  in  the  regulatory   environment,   both  in  the  United  States  and
internationally,  cannot be predicted with any accuracy and preclude the General
Partner from  determining the impact of such changes on Partnership  operations,
purchases, or sale of equipment. Under U.S. Federal Aviation Regulations,  after
December 31,  1999,  no person may operate an aircraft to or from any airport in
the contiguous  United States unless that aircraft has been shown to comply with
Stage III noise levels.  The  Partnership  has a Stage II aircraft that does not
meet Stage III  requirements.  This Stage II aircraft is scheduled  either to be
modified to meet Stage III  requirements,  sold,  or re-leased in a country that
does not require this  regulation  before the year 2000. The U.S.  Department of
Transportation's   Hazardous   Materials   Regulations,   which   regulate   the
classification and packaging requirements of hazardous materials and which apply
particularly  to the  Partnership's  tank  railcars,  issued  a  statement  that
requires the owner to inspect a certain  percentage  of the tank  railcars for a
protective coating to the outside of the tank as well as the inside of the metal
tank jacket  whenever a tank is insulated.  The  Partnership  owns tank railcars
that need to be inspected and, if needed,  repaired before they can go back into
service by August 2000.

(3)  Additional Capital Resources and Distribution Levels

The Partnership's  initial contributed capital was composed of the proceeds from
its initial  offering of $166.1  million,  supplemented by permanent debt in the
amount of $30.0 million.  The General Partner has not planned any  expenditures,
nor is it  aware of any  contingencies,  that  would  cause  it to  require  any
additional  capital or debt (an  additional  $5.0  million of debt is  allowable
under the Partnership's  debt agreement  covenants which could be borrowed under
the Partnership's warehouse credit facility) to that mentioned above.

Pursuant to the limited  partnership  agreement,  the Partnership  will cease to
reinvest surplus cash in additional  equipment  beginning in its seventh year of
operations,  which commences on January 1, 2000. Prior to that date, the General
Partner  intends to continue its strategy of selectively  redeploying  equipment
throughout the  reinvestment  phase of the  Partnership  to achieve  competitive
returns. By the end of this reinvestment  period, the General Partner intends to
have assembled an equipment  portfolio capable of achieving a level of operating
cash  flow for the  remaining  life of the  Partnership  sufficient  to meet its
obligations and sustain a predictable level of distributions to the partners.

The General Partner will evaluate the level of distributions the Partnership can
sustain over extended periods of time and,  together with other  considerations,
may  adjust  the  level of  distributions  accordingly.  In the long  term,  the
difficulty in predicting  market  conditions  precludes the General Partner from
accurately  determining the impact of changing market conditions on liquidity or
distribution levels.

The  Partnership's  permanent debt obligation begins to mature in November 2001.
The General Partner  believes that sufficient cash flow will be available in the
future for repayment of debt.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership's  primary market risk exposure is that of currency  devaluation
risk.  During 1998, 67% of the  Partnership's  total lease revenues from wholly-
and  partially-owned  equipment came from non-United  States domiciled  lessees.
Most of the  Partnership's  leases  require  payment  in  United  States  (U.S.)
currency.  If these  lessees  currency  devalues  against the U.S.  dollar,  the
lessees  could  potentially  encounter  difficulty  in  making  the U.S.  dollar
denominated lease payments.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  financial  statements  for the  Partnership  are  listed  in the  Index  to
Financial Statements included in Item 14(a) of this Annual Report on Form 10-K

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

None.















                      (This space intentionally left blank)


<PAGE>


                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF PLM INTERNATIONAL AND 
           PLM FINANCIAL SERVICES, INC.

As of the date of this annual  report,  the directors and executive  officers of
PLM  International  and of PLM  Financial  Services,  Inc.  (and  key  executive
officers of its subsidiaries) are as follows:

<TABLE>
<CAPTION>

Name                                     Age     Position
---------------------------------------- ------- ------------------------------------------------------------------

<S>                                      <C>     <C>                                                                   
Robert N. Tidball                        60      Chairman of the Board, Director, President, and Chief Executive
                                                 Officer, PLM International, Inc.;
                                                 Director, PLM Financial Services, Inc.;
                                                 Vice President, PLM Railcar Management Services, Inc.;
                                                 President, PLM Worldwide Management Services Ltd.

Randall L.-W. Caudill                    51      Director, PLM International, Inc.

Douglas P. Goodrich                      52      Director and Senior Vice President, PLM International, Inc.;
                                                 Director and President, PLM Financial Services, Inc.; President,
                                                 PLM Transportation Equipment Corporation; President, PLM Railcar
                                                 Management Services, Inc.

Warren G. Lichtenstein                   33      Director, PLM International, Inc.

Howard M. Lorber                         50      Director, PLM International, Inc.

Harold R. Somerset                       63      Director, PLM International, Inc.

Robert L. Witt                           58      Director, PLM International, Inc.

J. Michael Allgood                       50      Vice President and Chief Financial Officer, PLM International,
                                                 Inc. and PLM Financial Services, Inc.

Robin L. Austin                          52      Vice President, Human Resources, PLM International, Inc. and PLM
                                                 Financial Services, Inc.

Stephen M. Bess                          52      President, PLM Investment Management, Inc.; Vice President and
                                                 Director, PLM Financial Services, Inc.

Richard K Brock                          36      Vice President and Corporate Controller, PLM International, Inc.
                                                 and PLM Financial Services, Inc.

James C. Chandler                        50      Vice President, Planning and Development, PLM International,
                                                 Inc. and PLM Financial Services, Inc.

Susan C. Santo                           36      Vice President, Secretary, and General Counsel, PLM
                                                 International, Inc. and PLM Financial Services, Inc.

Janet M. Turner                          42      Vice President, Investor Relations and Corporate Communications,
                                                 PLM International, Inc. and PLM Investment Management, Inc.

</TABLE>

Robert N.  Tidball  was  appointed  Chairman  of the  Board in  August  1997 and
President and Chief Executive Officer of PLM International in March 1989. At the
time of his  appointment  as  President  and  Chief  Executive  Officer,  he was
Executive Vice President of PLM International.  Mr. Tidball became a director of
PLM  International  in April 1989.  Mr.  Tidball was appointed a Director of PLM
Financial Services, Inc. in July 1997 and was elected President of PLM Worldwide
Management Services Limited in February 1998. He has served as an officer of PLM
Railcar  Management  Services,  Inc.  since June 1987. Mr. Tidball was Executive
Vice President of Hunter Keith,  Inc., a  Minneapolis-based  investment  banking
firm,  from March  1984 to  January  1986.  Prior to Hunter  Keith,  he was Vice
President, General Manager, and Director of North American Car Corporation and a
director of the American Railcar Institute and the Railway Supply Association.

Randall L.-W.  Caudill was elected to the Board of Directors in September  1997.
He is  President  of  Dunsford  Hill  Capital  Partners,  a San  Francisco-based
financial  consulting firm serving emerging growth companies.  Prior to founding
Dunsford  Hill Capital  Partners,  Mr.  Caudill held senior  investment  banking
positions at Prudential  Securities,  Morgan Grenfell Inc., and The First Boston
Corporation. Mr. Caudill also serves as a director of Northwest Biotherapeutics,
Inc., VaxGen, Inc., SBE, Inc., and RamGen, Inc.

Douglas  P.  Goodrich  was  elected  to the  Board of  Directors  in July  1996,
appointed  Senior  Vice  President  of PLM  International  in  March  1994,  and
appointed Director and President of PLM Financial  Services,  Inc. in June 1996.
Mr.  Goodrich  has also served as Senior Vice  President  of PLM  Transportation
Equipment Corporation since July 1989 and as President of PLM Railcar Management
Services,  Inc. since September 1992,  having been a Senior Vice President since
June 1987.  Mr.  Goodrich was an executive  vice  president of G.I.C.  Financial
Services  Corporation of Chicago,  Illinois, a subsidiary of Guardian Industries
Corporation, from December 1980 to September 1985.

Warren G.  Lichtenstein  was elected to the Board of Directors in December 1998.
Mr.  Lichtenstein  is the Chief  Executive  Officer of Steel  Partners II, L.P.,
which is PLM International's  largest  shareholder,  currently owning 16% of the
Company's common stock. Additionally,  Mr. Lichtenstein is Chairman of the Board
of Aydin Corporation,  a NYSE-listed defense  electronics  concern, as well as a
director of Gateway  Industries,  Rose's Holdings,  Inc., and Saratoga  Beverage
Group,  Inc. Mr.  Lichtenstein is a graduate of the University of  Pennsylvania,
where he received a Bachelor of Arts degree in economics.

Howard M.  Lorber was elected to the Board of  Directors  in January  1999.  Mr.
Lorber is President and Chief Operating  Officer of New Valley  Corporation,  an
investment banking and real estate concern. He is also Chairman of the Board and
Chief  Executive  Officer  of  Nathan's  Famous,  Inc.,  a  fast  food  company.
Additionally,  Mr. Lorber is a director of United Capital  Corporation and Prime
Hospitality  Corporation and serves on the boards of several  community  service
organizations.  He is a graduate of Long Island University,  where he received a
Bachelor  of Arts  degree and a Masters  degree in  taxation.  Mr.  Lorber  also
received charter life  underwriter and chartered  financial  consultant  degrees
from the American  College in Bryn Mawr,  Pennsylvania.  He is a trustee of Long
Island University and a member of the Corporation of Babson College.

Harold R. Somerset was elected to the Board of Directors of PLM International in
July 1994.  From February 1988 to December 1993, Mr.  Somerset was President and
Chief Executive  Officer of California & Hawaiian Sugar Corporation (C&H Sugar),
a subsidiary of Alexander & Baldwin,  Inc. Mr. Somerset joined C&H Sugar in 1984
as Executive Vice President and Chief  Operating  Officer,  having served on its
Board of Directors  since 1978.  Between 1972 and 1984, Mr.  Somerset  served in
various  capacities  with  Alexander & Baldwin,  Inc., a publicly  held land and
agriculture company headquartered in Honolulu,  Hawaii, including Executive Vice
President of Agriculture  and Vice President and General  Counsel.  Mr. Somerset
holds a law  degree  from  Harvard  Law  School  as well as a  degree  in  civil
engineering  from the  Rensselaer  Polytechnic  Institute and a degree in marine
engineering from the U.S. Naval Academy.  Mr. Somerset also serves on the boards
of directors for various other companies and organizations, including Longs Drug
Stores, Inc., a publicly held company.

Robert L. Witt was elected to the Board of Directors  in June 1997.  Since 1993,
Mr. Witt has been a principal with WWS  Associates,  a consulting and investment
group specializing in start-up situations and private  organizations about to go
public.  Prior to that, he was Chief Executive Officer and Chairman of the Board
of Hexcel  Corporation,  an international  advanced materials company with sales
primarily in the aerospace,  transportation, and general industrial markets. Mr.
Witt also serves on the boards of  directors  for various  other  companies  and
organizations.

J. Michael Allgood was appointed Vice President and Chief  Financial  Officer of
PLM International in October 1992 and Vice President and Chief Financial Officer
of PLM Financial Services,  Inc. in December 1992. Between July 1991 and October
1992,  Mr.  Allgood  was a  consultant  to  various  private  and  public-sector
companies  and  institutions   specializing  in  financial   operations  systems
development.  In October 1987, Mr. Allgood  co-founded  Electra Aviation Limited
and its holding  company,  Aviation  Holdings Plc of London,  where he served as
Chief Financial Officer until July 1991. Between June 1981 and October 1987, Mr.
Allgood  served as a first vice  president  with  American  Express Bank Ltd. In
February 1978,  Mr. Allgood  founded and until June 1981 served as a director of
Trade Projects  International/Philadelphia  Overseas  Finance  Company,  a joint
venture with  Philadelphia  National Bank. From March 1975 to February 1978, Mr.
Allgood served in various capacities with Citibank, N.A.

Robin  L.  Austin  became  Vice  President,  Human  Resources  of PLM  Financial
Services,  Inc. in 1984, having served in various capacities with PLM Investment
Management,  Inc., including Director of Operations, from February 1980 to March
1984.  From June 1970 to September 1978, Ms. Austin served on active duty in the
United  States Marine Corps and served in the United States Marine Corp Reserves
from 1978 to 1998.  She retired as a Colonel of the United  States  Marine Corps
Reserves  in 1998.  Ms.  Austin  has  served  on the Board of  Directors  of the
Marines'  Memorial  Club  and is  currently  on the  Board of  Directors  of the
International Diplomacy Council.

Stephen M. Bess was appointed a Director of PLM Financial Services, Inc. in July
1997.  Mr. Bess was appointed  President of PLM Investment  Management,  Inc. in
August  1989,   having  served  as  Senior  Vice  President  of  PLM  Investment
Management,  Inc. beginning in February 1984 and as Corporate  Controller of PLM
Financial Services, Inc. beginning in October 1983. Mr. Bess served as Corporate
Controller  of  PLM,  Inc.  beginning  in  December  1982.  Mr.  Bess  was  Vice
President-Controller  of Trans Ocean Leasing  Corporation,  a container  leasing
company, from November 1978 to November 1982, and Group Finance Manager with the
Field  Operations  Group of Memorex  Corporation,  a  manufacturer  of  computer
peripheral equipment, from October 1975 to November 1978.

Richard K Brock was appointed  Vice  President  and Corporate  Controller of PLM
International and PLM Financial Services, Inc. in June 1997, having served as an
accounting  manager  beginning in September 1991 and as Director of Planning and
General  Accounting  beginning  in  February  1994.  Mr.  Brock  was a  division
controller of Learning Tree International,  a technical education company,  from
February 1988 through July 1991.

James C.  Chandler  became  Vice  President,  Planning  and  Development  of PLM
International  in  April  1996.  From  1994 to 1996  Mr.  Chandler  worked  as a
consultant to public  companies,  including PLM, in the  formulation of business
growth  strategies.  Mr.  Chandler was Director of Business  Development at Itel
Corporation from 1987 to 1994, serving with both the Itel  Transportation  Group
and Itel Rail.

Susan C. Santo  became Vice  President,  Secretary,  and General  Counsel of PLM
International and PLM Financial Services,  Inc. in November 1997. She has worked
as an  attorney  for PLM  International  since  1990 and  served  as its  Senior
Attorney since 1994.  Previously,  Ms. Santo was engaged in the private practice
of law in San  Francisco.  Ms. Santo  received her J.D.  from the  University of
California, Hastings College of the Law.

Janet M. Turner became Vice President of Investor  Services of PLM International
in  1994,   having  previously  served  as  Vice  President  of  PLM  Investment
Management,  Inc.  since 1990.  Before 1990,  Ms.  Turner held the  positions of
manager of systems development and manager of investor relations at the Company.
Prior  to  joining  PLM  in  1984,   she  was  a  financial   analyst  with  The
Toronto-Dominion Bank in Toronto, Canada.

The directors of PLM  International,  Inc. are elected for a three-year term and
the directors of PLM Financial Services, Inc. are elected for a one-year term or
until their successors are elected and qualified.  No family relationships exist
between  any  director or  executive  officer of PLM  International  Inc. or PLM
Financial Services,  Inc., PLM Transportation Equipment Corp., or PLM Investment
Management, Inc.




<PAGE>



ITEM 11.   EXECUTIVE COMPENSATION

The Partnership has no directors, officers, or employees. The Partnership had no
pension,  profit  sharing,  retirement,  or similar benefit plan in effect as of
December 31, 1998.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(A)      Security Ownership of Certain Beneficial Owners

           The  General  Partner is  generally  entitled to a 5% interest in the
           profits  and  losses  (subject  to  certain  special  allocations  of
           income),  cash  available  for  distributions,  and  net  disposition
           proceeds of the Partnership. As of December 31, 1998, no investor was
           known by the General Partner to beneficially  own more than 5% of the
           limited partnership units of the Partnership.

     (B) Security Ownership of Management

           Neither the  General  Partner and its  affiliates  nor any  executive
           officer or director of the General  Partner and its affiliates  owned
           any limited  partnership  units of the Partnership as of December 31,
           1998.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     (A) Transactions with Management and Others

           During 1998,  the  Partnership  paid or accrued the following fees to
           FSI or its  affiliates:  management  fees,  $1.0  million;  equipment
           acquisition fees, $1.5 million; lease negotiation fees, $0.3 million,
           and administrative  and data processing  services performed on behalf
           of  the  Partnership,   $0.9  million.  The  Partnership  received  a
           loss-of-hire insurance refund from Transportation Equipment Indemnity
           Company Ltd. (TEI), a wholly-owned,  Bermuda-based  subsidiary of PLM
           International,  of $0.2  million due to lower claims from the insured
           Partnership  and other  insured  affiliated  programs  for  insurance
           coverages during previous years.

           During 1998,  the USPEs paid or accrued the following  fees to FSI or
           its  affiliates  (based on the  Partnership's  proportional  share of
           ownership):  management fees, $0.5 million;  administrative  and data
           processing services,  $0.1 million;  equipment acquisition fees, $0.1
           million, and lease negotiation fees, $12,000. The USPEs also paid TEI
           $7,000  for   insurance   coverages   during  1998  and   received  a
           loss-of-hire insurance refund of $32,000.









                         (This space intentionally left
                                    blank.)



<PAGE>


                                     PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (A) 1.Financial Statements

           The  financial   statements  listed  in  the  accompanying  Index  to
           Financial  Statements are filed as part of this Annual Report on Form
           10-K.

     (B) Reports on Form 8-K

           None.

     (C) Exhibits

      4.   Limited  Partnership   Agreement  of  Partnership.   Incorporated  by
           reference  to the  Partnership's  Registration  Statement on Form S-1
           (Reg. No.  33-40093)  which became  effective with the Securities and
           Exchange Commission on December 23, 1991.

     10.1  Management   Agreement   between   Partnership   and  PLM  Investment
           Management,  Inc.  Incorporated  by  reference  to the  Partnership's
           Registration  Statement on Form S-1 (Reg. No.  33-40093) which became
           effective with the Securities and Exchange Commission on December 23,
           1991.

     10.2  Note Agreement,  dated as of August 1, 1993,  regarding $30.0 million
           in 6.7% senior notes due November 17, 2003.

     10.3  Fourth Amended and Restated Warehousing Credit Agreement, dated as of
           December 15, 1998, with First Union National Bank of North Carolina.

     24.   Powers of Attorney.










                         (This space intentionally left
                                    blank.)



<PAGE>



                                   SIGNATURES

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

The Partnership has no directors or officers.  The General Partner has signed on
behalf of the Partnership by duly authorized officers.


Dated: March 17, 1999                 PLM EQUIPMENT GROWTH FUND VI
                                      PARTNERSHIP

                                      By: PLM Financial Services, Inc. 
                                          General Partner


                                      By: /s/ Douglas P. Goodrich
                                          --------------------------- 
                                          Douglas P. Goodrich
                                          President and Director


                                      By: /s/ Richard K Brock        
                                          ---------------------------        
                                          Richard K Brock
                                          Vice President and
                                          Corporate Controller


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  directors of the  Partnership's  General
Partner on the dates indicated.


Name                          Capacity                          Date



*_______________________
Robert N. Tidball            Director, FSI                March 17, 1999



*_______________________
Douglas P. Goodrich          Director, FSI                March 17, 1999



*_______________________
Stephen M. Bess              Director, FSI                March 17, 1999


*Susan Santo,  by signing her name hereto,  does sign this document on behalf of
the persons indicated above pursuant to powers of attorney duly executed by such
persons and filed with the Securities and Exchange Commission.


/s/ Susan C. Santo
----------------------     
Susan C. Santo
Attorney-in-Fact



<PAGE>


                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          INDEX TO FINANCIAL STATEMENTS

                                  (Item 14(a))


                                                                     Page

Independent auditors' report                                          34

Balance sheets as of December 31, 1998 and 1997                       35

Statements of income for the years ended
     December 31, 1998, 1997, and 1996                                36

Statements of changes in partners' capital for the
     years ended December 31, 1998, 1997, and 1996                    37

Statements of cash flows for the years ended
     December 31, 1998, 1997, and 1996                                38

Notes to financial statements                                         39-52


All other  financial  statement  schedules  have been  omitted,  as the required
information  is not pertinent to the  registrant or is not material,  or because
the  information  required  is included in the  financial  statements  and notes
thereto.



<PAGE>


                          INDEPENDENT AUDITORS' REPORT



The Partners
PLM Equipment Growth Fund VI:


We have audited the  accompanying  financial  statements of PLM Equipment Growth
Fund VI (the  Partnership),  as listed in the  accompanying  index to  financial
statements.   These  financial   statements  are  the   responsibility   of  the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of PLM Equipment Growth Fund VI as
of December 31, 1998 and 1997,  and the results of its  operations  and its cash
flows for each of the years in the three-year  period ended December 31, 1998 in
conformity with generally accepted accounting principles.



/S/ KPMG LLP
---------------------------


SAN FRANCISCO, CALIFORNIA
March 12, 1999


<PAGE>





                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                                 BALANCE SHEETS
                                  December 31,
                 (in thousands of dollars, except unit amounts)

<TABLE>
<CAPTION>


                                                                                       1998                 1997
                                                                                  -----------------------------------
  <S>                                                                             <C>                  <C>         
  Assets

  Equipment held for operating leases, at cost                                    $     90,755         $     71,597
  Less accumulated depreciation                                                        (43,341 )            (33,895 )
                                                                                  -----------------------------------
    Net equipment                                                                       47,414               37,702

  Cash and cash equivalents                                                              2,558               14,204
  Restricted cash                                                                        1,416                  792
  Accounts receivable, less allowance for doubtful accounts of
      $1,930 in 1998 and $2,524 in 1997                                                  2,321                2,560
  Investments in unconsolidated special-purpose entities                                33,414               46,796
  Net investment in direct finance lease                                                    41                  153
  Lease negotiation fees to affiliate, less accumulated
      amortization of $217 in 1998 and $92 in 1997                                         263                   58
  Debt issuance costs, less accumulated amortization
      of $76 in 1998 and $61 in 1997                                                        76                   91
  Debt placement fees to affiliate, less accumulated
      amortization of $74 in 1998 and $59 in 1997                                           74                   89
  Prepaid expenses and other assets                                                         93                  181
  Equipment acquisition deposits                                                           667                1,335
                                                                                  -----------------------------------

        Total assets                                                              $     88,337         $    103,961
                                                                                  ===================================

  Liabilities and partners' capital

  Liabilities
  Accounts payable and accrued expenses                                           $      1,147         $      1,296
  Due to affiliates                                                                      2,946                2,822
  Lessee deposits and reserve for repairs                                                1,290                2,691
  Note payable                                                                          30,000               30,000
                                                                                  -----------------------------------
    Total liabilities                                                                   35,383               36,809
                                                                                  -----------------------------------

  Partners' capital
  Limited partners (limited partnership units of 8,206,339 and
        8,247,264 as of December 31, 1998 and 1997, respectively)                       52,954               67,152
  General Partner                                                                           --                   --
                                                                                  -----------------------------------
    Total partners' capital                                                             52,954               67,152
                                                                                  -----------------------------------

        Total liabilities and partners' capital                                   $     88,337         $    103,961
                                                                                  ===================================


</TABLE>









                       See accompanying notes to financial
                                  statements.

<PAGE>

                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                              STATEMENTS OF INCOME

                      For the Years Ended December 31, (In
               thousands of dollars, except weighted-average unit
                                    amounts)

<TABLE>
<CAPTION>


                                                                     1998             1997             1996
                                                                ------------------------------------------------
  <S>                                                           <C>               <C>               <C>        
  Revenues

  Lease revenue                                                 $     17,528      $    22,116       $  23,592  
  Interest and other income                                              764              486             630
  Net gain on disposition of equipment                                 6,253           10,121           7,214
                                                                ------------------------------------------------
    Total revenues                                                    24,545           32,723          31,436
                                                                ------------------------------------------------

  Expenses

  Depreciation and amortization                                       14,604            9,793          12,394
  Repairs and maintenance                                              3,961            4,743           3,085
  Equipment operating expenses                                         2,270            3,635           3,775
  Insurance expense to affiliate                                        (188 )            224             186
  Other insurance expenses                                               378            1,277             694
  Management fees to affiliate                                           997            1,187           1,363
  Interest expense                                                     2,018            2,296           2,339
  General and administrative expenses
      to affiliates                                                      853              860             953
  Other general and administrative expenses                            1,004            1,587             766
  Loss on revaluation of equipment                                     4,276               --              --
  Provision for (recovery of) bad debts                                  (75 )          1,273           1,016
                                                                ------------------------------------------------
      Total expenses                                                  30,098           26,875          26,571
                                                                ------------------------------------------------

  Equity in net income of unconsolidated
      special-purpose entities                                         6,998            3,384           3,426
  --------------------------------------------------------------------------------------------------------------
        Net income                                              $      1,445      $     9,232       $   8,291  
                                                                ================================================

  Partners' share of net income

  Limited partners                                              $        666      $     8,363       $   7,418  
  General Partner                                                        779              869             873
                                                                ------------------------------------------------

  Total                                                         $      1,445      $     9,232       $   8,291  
                                                                ================================================

  Net income per weighted-average limited
      partnership unit                                          $       0.08      $      1.01       $    0.89  
                                                                ================================================

  Cash distribution                                             $     15,226      $    17,384       $  17,467  
                                                                ================================================

  Cash distribution per weighted-average
      limited partnership unit                                  $       1.76      $      2.00       $    2.00  
                                                                ================================================
</TABLE>







                       See accompanying notes to financial
                                  statements.

<PAGE>

                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
              For the Years Ended December 31, 1998, 1997, and 1996
                            (in thousands of dollars)

<TABLE>
<CAPTION>


                                                          Limited             General
                                                          Partners            Partner            Total
                                                       -----------------------------------------------------

  <S>                                                  <C>                 <C>                  <C> 
  Partners' capital as of December 31, 1995            $     85,430        $        --          $  85,430   

  Net income                                                  7,418                873              8,291

  Repurchase of limited partnership units                      (464 )               --               (464 )

  Cash distribution                                         (16,594 )             (873 )          (17,467 )
                                                       -----------------------------------------------------

    Partners' capital as of December 31, 1996                75,790                 --             75,790

  Net income                                                  8,363                869              9,232

  Repurchase of limited partnership units                      (486 )               --               (486 )

  Cash distribution                                         (16,515 )             (869 )          (17,384 )
                                                       -----------------------------------------------------

    Partners' capital as of December 31, 1997                67,152                 --             67,152

  Net income                                                    666                779              1,445

  Repurchase of limited partnership units                      (417 )               --               (417 )

  Cash distribution                                         (14,447 )             (779 )          (15,226 )
                                                       -----------------------------------------------------

    Partners' capital as of December 31, 1998          $     52,954        $        --          $  52,954 
                                                       =====================================================

</TABLE>




















                       See accompanying notes to financial
                                  statements.


<PAGE>




                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                            STATEMENTS OF CASH FLOWS
                        For the Years Ended December 31,
                            (in thousands of dollars)

<TABLE>
<CAPTION>

                                                                                   1998          1997           1996
                                                                                -----------------------------------------
 <S>                                                                             <C>          <C>             <C>       
 Operating activities
 Net income                                                                      $  1,445     $   9,232       $  8,291  
 Adjustments to reconcile net income
     to net cash provided by (used in) operating activities:
   Depreciation and amortization                                                   14,604         9,793         12,394
   Loss on revaluation of equipment                                                 4,276            --             --
   Net gain on disposition of equipment                                            (6,253 )     (10,121 )       (7,214 )
   Equity in net income from unconsolidated special-purpose entities               (6,998 )      (3,384 )       (3,426 )
   Changes in operating assets and liabilities:
     Restricted cash                                                                 (624 )         493             13
     Accounts receivable, net                                                          (9 )         946            160
     Prepaid expenses and other assets                                                 88            60            (14 )
     Accounts payable and accrued expenses                                            133           (34 )          196
     Due to affiliates                                                                124           645            217
     Lessee deposits and reserve for repairs                                           16           240            448
                                                                                -----------------------------------------
       Net cash provided by operating activities                                    6,802         7,870         11,065
                                                                                -----------------------------------------

 Investing activities
 Payments for purchase of equipment and capitalized repairs                       (31,739 )         (17 )      (13,927 )
 Investments in and equipment purchased and placed in
    unconsolidated special-purpose entities                                        (3,778 )     (10,604 )      (26,287 )
 Distribution from unconsolidated special-purpose entities                          7,479         7,575          7,941
 Distribution from liquidation of unconsolidated special-purpose
     entities                                                                      16,679         1,736         11,677
 Payments of acquisition fees to affiliate                                         (1,486 )          --           (675 )
 Payments for equipment acquisition deposits                                         (667 )      (1,335 )           --
 Principal payments received on direct finance lease                                  101           101             41
 Payments of lease negotiation fees to affiliate                                     (330 )          --           (152 )
 Proceeds from disposition of equipment                                            10,936        25,017         27,379
                                                                                -----------------------------------------
       Net cash (used in) provided by investing activities                         (2,805 )      22,473          5,997
                                                                                -----------------------------------------

 Financing activities
 Proceeds from short-term note payable                                                 --        10,551         12,506
 Payments of short-term note payable                                                   --       (11,837 )      (11,220 )
 Proceeds from short-term loan from affiliate                                          --        10,001             --
 Payment of short-term loan to affiliate                                               --       (10,001 )           --
 Cash distribution paid to limited partners                                       (14,447 )     (16,515 )      (16,594 )
 Cash distribution paid to General Partner                                           (779 )        (869 )         (873 )
 Repurchase of limited partnership units                                             (417 )        (486 )         (464 )
                                                                                -----------------------------------------
       Net cash used in financing activities                                      (15,643 )     (19,156 )      (16,645 )
                                                                                -----------------------------------------

 Net (decrease) increase in cash and cash equivalents                             (11,646 )      11,187            417
 Cash and cash equivalents at beginning of year                                    14,204         3,017          2,600
                                                                                ---------------------------==============
 Cash and cash equivalents at end of year                                        $  2,558     $  14,204       $  3,017     
                                                                                =========================================

 Supplemental information
 Interest paid                                                                   $  2,018     $   2,297       $  2,513     
 ========================================================================================================================

</TABLE>




                       See accompanying notes to financial
                                  statements.

<PAGE>

                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

1.   Basis of Presentation

     Organization

     PLM  Equipment  Growth  Fund  VI, a  California  limited  partnership  (the
     Partnership),  was formed on April 17,  1991 to engage in the  business  of
     owning, leasing or otherwise investing in primarily used transportation and
     related  equipment.  PLM  Financial  Services,  Inc.  (FSI) is the  General
     Partner  of  the  Partnership.  FSI  is a  wholly-owned  subsidiary  of PLM
     International, Inc. (PLM International).

     Beginning in the Partnership's seventh year of operations,  which commences
     on January 1, 2000, the General Partner will stop reinvesting  excess cash,
     if  any,  which,  less  reasonable  reserves,  will be  distributed  to the
     Partners.  Beginning in the Partnership's  ninth year of operations,  which
     commences  on January  1, 2002,  the  General  Partner  intends to begin an
     orderly  liquidation of the  Partnership's  assets.  The  Partnership  will
     terminate on December 31, 2011, unless terminated  earlier upon sale of all
     equipment or by certain other events.

     FSI manages the affairs of the Partnership.  The net income (loss) and cash
     distributions of the Partnership are generally allocated 95% to the limited
     partners  and 5% to  the  General  Partner,  (see  Net  Income  (Loss)  and
     Distributions per Limited  Partnership Unit, below). The General Partner is
     also  entitled to receive a  subordinated  incentive  fee after the limited
     partners  receive a minimum  return  on, and a return  of,  their  invested
     capital.

     The General Partner has determined that it will not adopt the  reinvestment
     plan for the  Partnership.  Beginning  November 24, 1995,  if the number of
     units made available for purchase by limited  partners in any calendar year
     exceeds the number that can be purchased with  reinvestment  plan proceeds,
     then the  Partnership  may  redeem up to 2% of the  outstanding  units each
     year,  subject to certain terms and  conditions.  The purchase  price to be
     offered  by the  Partnership  for these  units will be equal to 110% of the
     unrecovered principal  attributable to the units. The unrecovered principal
     for any unit will be equal to the  excess of (i) the  capital  contribution
     attributable to the unit over (ii) the  distributions  from any source paid
     with respect to the units.  For the years ended December 31, 1998, 1997 and
     1996, the  Partnership had  repurchased  40,925,  39,702 and 31,281 limited
     partnership  units  for  $0.4  million,  $0.5  million  and  $0.5  million,
     respectively.

     As of December 31, 1998, the Partnership agreed to repurchase approximately
     23,700 units for an aggregate  price of  approximately  $0.2  million.  The
     General  Partner  anticipates  that these units will be  repurchased in the
     first and second quarters of 1999. In addition to these units,  the General
     Partner may purchase  additional  units on behalf of the Partnership in the
     future.

     These  financial  statements  have been  prepared on the  accrual  basis of
     accounting in accordance  with generally  accepted  accounting  principles.
     This requires  management to make estimates and assumptions that affect the
     reported  amounts  of assets and  liabilities,  disclosures  of  contingent
     assets and  liabilities  at the date of the financial  statements,  and the
     reported  amounts of revenues and  expenses  during the  reporting  period.
     Actual results could differ from those estimates.

     Operations

     The equipment of the Partnership is managed,  under a continuing management
     agreement,  by  PLM  Investment  Management,  Inc.  (IMI),  a  wholly-owned
     subsidiary  of  FSI.  IMI  receives  a  monthly  management  fee  from  the
     Partnership  for managing the equipment  (see Note 2). FSI, in  conjunction
     with its  subsidiaries,  sells  equipment  to investor  programs  and third
     parties,  manages pools of  transportation  equipment under agreements with
     investor programs, and is a general partner of other programs.

<PAGE>


                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

1.   Basis of Presentation (continued)

     Accounting for Leases

     The Partnership's leasing operations generally consist of operating leases.
     Under  the  operating  lease  method of  accounting,  the  leased  asset is
     recorded at cost and  depreciated  over its estimated  useful life.  Rental
     payments  are recorded as revenue  over the lease term.  Lease  origination
     costs  are   capitalized   and  amortized  over  the  term  of  the  lease.
     Periodically,  the  Partnership  leases  equipment  with  lease  terms that
     qualify for direct finance lease  classification,  as required by Statement
     of Financial Accounting Standards No. 13, "Accounting for Leases".

     Depreciation and Amortization

     Depreciation  of  transportation  equipment  held for  operating  leases is
     computed on the  double-declining  balance  method,  taking a full  month's
     depreciation in the month of acquisition, based upon estimated useful lives
     of 15 years for railcars and,  typically,  12 years for most other types of
     equipment.  The depreciation method is changed to straight line when annual
     depreciation expense using the straight-line method exceeds that calculated
     by the double-declining balance method.  Acquisition fees and certain other
     acquisition  costs  have  been  capitalized  as  part  of the  cost  of the
     equipment.  Lease negotiation fees are amortized over the initial equipment
     lease term.  Debt issuance costs and debt placement fees are amortized over
     the term of the loan (see Note 8). Major  expenditures that are expected to
     extend the useful lives or reduce  future  operating  expenses of equipment
     are  capitalized  and amortized  over the estimated  remaining  life of the
     equipment.

     Transportation Equipment

     In accordance with the Financial Accounting Standards Board's Statement No.
     121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
     Assets to Be Disposed Of", the General  Partner  reviews the carrying value
     of the  Partnership's  equipment at least quarterly in relation to expected
     future market conditions for the purpose of assessing recoverability of the
     recorded  amounts.  If projected  undiscounted  future  lease  revenue plus
     residual  values are less than the carrying value of the equipment,  a loss
     on revaluation is recorded.  Reductions of $4.3 million and $1.0 million to
     the  carrying  value of owned  equipment  and  partially  owned  equipment,
     respectively,  were  required  during 1998.  No  reductions to the carrying
     value of equipment were required during either 1997, or 1996.

     Equipment held for operating leases is stated at cost.

     Investments in Unconsolidated Special-Purpose Entities

     The Partnership has interests in  unconsolidated  special-purpose  entities
     (USPEs) that own  transportation  equipment.  These interests are accounted
     for using the equity method.

     The  Partnership's  investment  in USPEs  includes  acquisition  and  lease
     negotiation  fees paid by the Partnership to PLM  Transportation  Equipment
     Corporation  (TEC) and PLM Worldwide  Management  Services (WMS).  TEC is a
     wholly-owned  subsidiary of FSI and WMS is a wholly-owned subsidiary of PLM
     International.  The Partnership's interest in USPEs are managed by IMI. The
     Partnership's  equity  interest  in the  net  income  (loss)  of  USPEs  is
     reflected  net  of  management   fees  paid  or  payable  to  IMI  and  the
     amortization of acquisition and lease negotiation fees paid to TEC or WMS.

     Repairs and Maintenance

     Repair and  maintenance  costs  related to railcars,  marine  vessels,  and
     trailers are usually the obligation of the Partnership.  Maintenance  costs
     of most of the other  equipment are the  obligation of the lessee.  If they
     are  not  covered  by  the  lessee,  they  are  generally  charged  against
     operations as incurred.  To meet the  maintenance  requirements  of certain
     aircraft airframes and engines, reserve

<PAGE>

                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

1.   Basis of Presentation (continued)

     Repairs and Maintenance (continued)

     accounts  are  prefunded by the lessee.  Estimated  costs  associated  with
     marine  vessel dry docking are accrued and charged to income  ratably  over
     the period prior to such dry-docking.  The reserve accounts are included in
     the balance sheet as lessee deposits and reserve for repairs.

     Net Income (Loss) and Distributions Per Limited Partnership Unit

     The net income (loss) of the Partnership is generally  allocated 95% to the
     limited  partners and 5% to the General  Partner.  Special  allocations  of
     income are made to the General  Partner  equal to the deficit  balance,  if
     any, in the capital account of the General Partner.  Cash  distributions of
     the Partnership are generally  allocated 95% to the limited partners and 5%
     to the General Partner and may include amounts in excess of net income. The
     limited partners' net income (loss) is allocated among the limited partners
     based on the  number of limited  partnership  units  owned by each  limited
     partner  and on the number of days of the year each  limited  partner is in
     the Partnership.

     Cash  distributions are recorded when paid. Monthly  unitholders  receive a
     distribution check 15 days after the close of the previous month's business
     and quarterly  unitholders  receive a distribution  check 45 days after the
     close of the quarter.

     Cash  distributions  to investors in excess of net income are  considered a
     return of capital.  Cash  distributions  to the  limited  partners of $13.8
     million,   $8.2  million,  and  $9.2  million  in  1998,  1997,  and  1996,
     respectively, were deemed to be a return of capital.

     Cash  distributions  related to the fourth quarter of 1998 of $2.0 million,
     1997 and 1996 of $2.6  million  for each year,  were paid  during the first
     quarter of 1999, 1998, or 1997, respectively.

     Net Income (Loss) Per Weighted-Average Partnership Unit

     Net income  (loss) per  weighted-average  Partnership  unit was computed by
     dividing  net  income  (loss)  attributable  to  limited  partners  by  the
     weighted-average  number of Partnership units deemed outstanding during the
     year. The  weighted-average  number of Partnership units deemed outstanding
     during the years ended  December 31, 1998,  1997,  and 1996 was  8,216,472,
     8,257,256, and 8,292,853, respectively.

     Cash and Cash Equivalents

     The  Partnership  considers  highly  liquid  investments  that are  readily
     convertible  to known  amounts of cash with  original  maturities  of three
     months or less as cash equivalents. The carrying amount of cash equivalents
     approximates  fair  market  value  due  to  the  short-term  nature  of the
     investments.

     Comprehensive Income

     During 1998, the Partnership adopted Financial Accounting Standards Board's
     Statement  No.  130,  "Reporting   Comprehensive  Income,"  which  requires
     enterprises  to report,  by major  component  and in total,  all changes in
     equity from nonowner sources.  The Partnership's net income (loss) is equal
     to  comprehensive  income for the years ended December 31, 1998,  1997, and
     1996.

     Restricted Cash

     As of  December  31,  1998 and 1997,  restricted  cash  represented  lessee
     security deposits held by the Partnership.



<PAGE>


                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

2.   General Partner and Transactions with Affiliates

     An  officer of PLM  Securities  Corp.,  a  wholly-owned  subsidiary  of the
     General  Partner,  contributed $100 of the  Partnership's  initial capital.
     Under  the  equipment  management   agreement,   IMI,  subject  to  certain
     reductions,  receives a monthly management fee attributable to either owned
     equipment or interests in equipment  owned by the USPEs equal to the lesser
     of (i) the fees that  would be charged by an  independent  third  party for
     similar  services  for similar  equipment  or (ii) the sum of (a) 5% of the
     gross lease revenues attributable to equipment that is subject to operating
     leases,  (b) 2% of the gross lease  revenues,  as defined in the agreement,
     that is subject to full  payout net  leases,  and (c) 7% of the gross lease
     revenues  attributable  to equipment for which IMI provides both management
     and additional  services  relating to the continued and active operation of
     program equipment,  such as on-going marketing and re-leasing of equipment,
     hiring or  arranging  for the  hiring of crew or  operating  personnel  for
     equipment,  and similar services.  Partnership management fees payable were
     $0.2 and $0.3 million as of December 31, 1998 and 1997,  respectively.  The
     Partnership's  proportional  share of USPE  management fees of $0.1 million
     was  payable  as  of  December  31,  1998,  and  1997.  The   Partnership's
     proportional  share of USPE  management fee expense was $0.5 million,  $0.5
     million and $0.3 million  during 1998,  1997, and 1996,  respectively.  The
     Partnership  reimbursed FSI $0.9 million, $0.9 million, and $1.0 million in
     1998, 1997, and 1996, respectively,  for data processing and administrative
     expenses  directly  attributable  to  the  Partnership.  The  Partnership's
     proportional  share of USPE data  processing  and  administrative  expenses
     reimbursed to FSI was $0.1 million during 1998, 1997 and 1996.

     The  Partnership  paid $0.2  million  in 1997 and 1996,  to  Transportation
     Equipment  Indemnity  Company Ltd. (TEI),  which provides marine  insurance
     coverage for Partnership  equipment and other insurance brokerage services.
     TEI is an affiliate  of the General  Partner.  No fees for owned  equipment
     were  paid to TEI in 1998.  The  Partnership's  proportional  share of USPE
     marine  insurance  coverage paid to TEI was $7,000,  $0.1  million,  and $0
     during 1998,  1997, and 1996,  respectively.  A substantial  portion of the
     amount paid was to third-party  reinsurance  underwriters or placed in risk
     pools   managed  by  TEI  on  behalf  of   affiliated   programs   and  PLM
     International,  which provide threshold  coverages on marine vessel loss of
     hire and hull and  machinery  damage.  All  pooling  arrangement  funds are
     either paid out to cover  applicable  losses or  refunded  pro rata by TEI.
     Also,  during 1998, the  Partnership  and the USPEs received a $0.2 million
     loss-of-hire insurance refund from TEI due to lower claims from the insured
     Partnership and other insured affiliated programs.  PLM International plans
     to liquidate TEI in 1999.  During 1998,  TEI did not provide the same level
     of  insurance  coverage as had been  provided  during 1997 and 1996.  These
     services were provided by an unaffiliated third party.

     Debt placement fees were paid to the General  Partner in an amount equal to
     1% of the  Partnership's  long-term  borrowings,  less  any  costs  paid to
     unaffiliated parties related to obtaining the borrowing.

     The Partnership and USPEs paid or accrued  equipment  acquisition and lease
     negotiation  fees of $1.9 million,  $0.6 million,  and $1.2 million  during
     1998, 1997, and 1996, respectively, to FSI, TEC and WMS.

     As of December 31, 1998,  approximately  58% of the  Partnership's  trailer
     equipment  was in  rental  facilities  operated  by PLM  Rental,  Inc.,  an
     affiliate of the General  Partner,  doing business as PLM Trailer  Leasing.
     Revenues  collected  under  short-term  rental  agreements  with the rental
     yards'  customers  are  credited to the owners of the related  equipment as
     received. Direct expense associated with the equipment are charged directly
     to the Partnership.  An allocation of indirect  expenses of the rental yard
     operations is charged to the Partnership monthly.

     The  Partnership  owned certain  equipment in conjunction  with  affiliated
     programs during 1998, 1997, and 1996 (see Note 4).





<PAGE>


                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

2.   General Partner and Transactions with Affiliates (continued)

     During 1997 the Partnership borrowed $1.0 million and $9.0 million from the
     General Partner for 52 days and 3 days,  respectively.  The General Partner
     charged the Partnership  market interest rates.  Total interest paid to the
     General Partner was $17,000.  There were no similar  borrowings during 1998
     or 1996.

     The balance due to affiliates as of December 31, 1998 includes $0.2 million
     due to FSI and its affiliates for management fees and $2.8 million due to a
     USPE.  The balance due to  affiliates as of December 31, 1997 included $0.3
     million due to FSI and its affiliates for management  fees and $2.5 million
     due to a USPE.

3.   Equipment

     The  components  of owned  equipment  as of December 31, are as follows (in
thousands of dollars):

<TABLE>
<CAPTION>

          Equipment Held for Operating Leases                1998                1997
  -----------------------------------------------------  --------------------------------
  <S>                                                    <C>                 <C>        
  Marine vessels                                         $    26,094         $    16,035
  Aircraft, aircraft engines and components                   21,630              11,919
  Rail equipment                                              18,638              15,657
  Trailers                                                    13,204              16,203
  Marine containers                                           11,189              11,783
                                                         ---------------------------------
                                                              90,755              71,597
  Less accumulated depreciation                              (43,341 )           (33,895 )
                                                         --------------------------------
      Net equipment                                      $    47,414         $    37,702
                                                         =================================
</TABLE>

     Revenues are earned by placing the  equipment  under  operating  leases.  A
     portion of the Partnership's marine containers and marine vessels is leased
     to operators of utilization-type leasing pools that include equipment owned
     by  unaffiliated  parties.  In such  instances,  revenues  received  by the
     Partnership  consist of a specified  percentage  of revenues  generated  by
     leasing the pooled equipment to sublessees  after deducting  certain direct
     operating expenses of the pooled equipment. Rents for railcars are based on
     mileage  traveled or a fixed rate;  rents for all other equipment are based
     on fixed rates.

     As of December 31, 1998, all owned equipment in the Partnership's portfolio
     was on lease or  operating  in  PLM-affiliated  short-term  trailer  rental
     facilities, except for 15 railcars and 59 marine containers with a net book
     value of $0.3 million.  As of December 31, 1997, all owned equipment in the
     Partnership's  portfolio  was  on  lease  or  operating  in  PLM-affiliated
     short-term  trailer rental  facilities,  except for a railcar and 92 marine
     containers with a net book value of $0.4 million.

     During 1998, the Partnership entered into a commitment to purchase a marine
     vessel for a cost of $6.7 million and made a deposit of $0.7 million toward
     this purchase,  which is included in the December 31, 1998 balance sheet as
     equipment  acquisition deposit.  The Partnership  completed the purchase of
     this equipment  during  February 1999 and paid $0.3 million for acquisition
     fees to FSI related to this acquisition.

     Additionally,  during  1998,  the  Partnership  purchased  a  portfolio  of
     aircraft rotable components for $2.3 million, including acquisition fees of
     $0.1 million; a portfolio of marine containers for $5.2 million,  including
     acquisition  fees of $0.2  million;  a group of railcars for $3.1  million,
     including  acquisition fees of $0.1 million;  and a marine vessel for $10.1
     million,  including  acquisition fees of $0.4 million. All acquisition fees
     were paid to FSI.

     The  Partnership  completed  its  commitment  to purchase a MD-80 Stage III
     commercial  aircraft  for  $14.0  million  during  January  1998  including
     acquisition  fees of $0.6 million to FSI related to this  acquisition.  The
     Partnership  made a deposit of $1.3  million  toward this  purchase in 1997
     which is


<PAGE>


                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

3.       Equipment (continued)

     included in the balance sheet as equipment acquisition deposits.

     During  1998,  the  Partnership  disposed  of  or  sold  a  Boeing  737-200
     commercial aircraft, an aircraft engine, marine containers,  trailers,  and
     railcars,  with an  aggregate  net book  value of $6.1  million,  for $12.4
     million which includes $1.4 million of unused engine reserves.

     During  1997,  the  Partnership  disposed of or sold  aircraft  components,
     marine containers,  and trailers,  with an aggregate net book value of $5.4
     million, for proceeds of $7.2 million. The Partnership also sold two marine
     vessels  with a net book  value  of $10.3  million  for  proceeds  of $17.8
     million.  Included in the gain of $8.3  million from the sale of the marine
     vessels is the unused portion of accrued drydocking of $0.8 million.

     Periodically,  PLM International purchases groups of assets whose ownership
     may be allocated among affiliated programs and PLM International. Generally
     in these  cases  only  assets  that are on lease will be  purchased  by the
     affiliated programs.  PLM International will generally assume the ownership
     and remarketing  risks associated with off-lease  equipment.  Allocation of
     the purchase price is determined by a combination  of third-party  industry
     sources,  recent  transactions and published fair market value  references.
     During  1998,  PLM  International  purchased a group of railcars  that were
     allocated  to the  Partnership  at cost.  During  1996,  PLM  International
     realized a $0.7 million gain on the sale of 69 off-lease railcars purchased
     by PLM  International  as part of a group of  assets  in 1994 that had been
     allocated to the  Partnership,  PLM Equipment Growth Fund IV, PLM Equipment
     Growth & Income Fund VII, Professional Lease Management Income Fund I, LLC,
     and PLM International.

     All wholly- and  partially-owned  equipment  on lease is  accounted  for as
     operating  leases,  except for one finance lease.  Future  minimum  rentals
     under  noncancelable  operating leases as of December 31, 1998, for wholly-
     and  partially-owned  equipment  during  each of the next  five  years  are
     approximately  $12.2 million in 1999, $7.6 million in 2000, $4.9 million in
     2001,  $2.6  million  in  2002,  $1.9  million  in 2003,  and $1.4  million
     thereafter.  Contingent rentals based upon utilization were $0.7 million in
     1998, $2.8 million in 1997, and $7.0 million in 1996.

4.       Investments in Unconsolidated Special-Purpose Entities

     The net investments in USPEs include the following  jointly-owned equipment
     and related  assets and  liabilities  as of December  31 (in  thousands  of
     dollars):

<TABLE>
<CAPTION>

                                                                                     1998             1997
                                                                                 ------------------------------
     <S>                                                                         <C>              <C>       
     64% interest in a trust owning a 767-200ER Stage III commercial
               aircraft                                                          $  11,536        $   12,854
     53% interest in an entity owning a product tanker                               7,678             9,881
     40% interest in a trust owning two commercial Stage III aircraft
               on direct finance lease                                               4,435             4,581
     30% interest in an entity owning a mobile offshore drilling unit                4,279             5,050
     25% interest in an entity owning marine containers                              2,475                --
     50% interest in an entity owning a container feeder vessel                      1,421             2,812
     20% interest in an entity owning a handymax dry bulk carrier                    1,311             1,513
     50% interest in a trust that owned four Stage II commercial aircraft              279             6,614
     17% interest in a trust that owned a Stage II commercial aircraft                  --             3,491
     --------------------------------------------------------------------------------------       -----------
         Net investments                                                         $  33,414        $   46,796
                                                                                 ==========       ===========
</TABLE>

<PAGE>



                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

4.   Investments in Unconsolidated Special-Purpose Entities (continued)

     The  Partnership  has  beneficial  interests in two USPEs that own multiple
     aircraft  (the  Trusts).  One of these  Trusts  contain  provisions,  under
     certain  circumstances,  for allocating specific aircraft to the beneficial
     owners.  During 1998, the  Partnership  increased its investment in a trust
     owning four commercial aircraft by funding the installation of a hushkit on
     an aircraft  assigned  to the  Partnership  in the trust for $1.3  million,
     including  acquisition and lease negotiation fees of $0.1 million that were
     paid to FSI.  In this  Trust,  the  Partnership  subsequently  sold the two
     commercial  aircraft  assigned to it with a net book value of $6.2  million
     for proceeds of $13.1 million.  During 1997, the Partnership's 17% interest
     in one of the Trusts owning the  commercial  aircraft was sold for proceeds
     of $5.2 million for its net  investment  of $1.8 million.  The  Partnership
     received  liquidating  proceeds of $1.7 million  during 1997. The remaining
     liquidating proceeds of $3.5 were received during January 1998.

     During 1998, the Partnership also purchased an interest in an entity owning
     a portfolio of marine  containers for $2.5 million,  including  acquisition
     and lease  negotiation  fees of $0.1  million  that  were paid to FSI.  The
     remaining interest in this entity was purchased by an affiliated program.

     During 1998,  the  Partnership  reduced its interest in an entity  owning a
     container feeder vessel by $1.0 million to its net realizable value.

     The following  summarizes the financial  information  for the USPEs and the
     Partnership's interest therein as of and for the year ended December 31 (in
     thousands of dollars):

<TABLE>
<CAPTION>


                                           1998                          1997                       1996
                                                 Net                             Net                         Net
                                   Total         Interest        Total         Interest        Total       Interest
                                   USPEs            of           USPEs            of           USPEs          of
                                                Partnership                   Partnership                  Partnership
                                ---------------------------   ---------------------------   -------------------------
            <S>                   <C>            <C>            <C>            <C>            <C>          <C>      
            Net Investments       $  67,308      $  33,414      $  95,743      $  46,796      $  97,980    $  42,119
            Lease revenues           22,809          9,934         27,145         10,935         24,157        8,728
            Net income               22,942          6,998          6,411          3,384          5,955        3,426

</TABLE>

5.   Operating Segments

     The  Partnership  operates in five  operating  segments:  trailer  leasing,
     railcar leasing,  aircraft leasing, marine vessel leasing, marine container
     leasing, and all other. Each equipment leasing segment engage in short-term
     to mid-term operating leases to a variety of customers.

     The General  Partner  evaluates  the  performance  of each segment based on
     profit or loss from  operations  before  allocation  of  interest  expense,
     general and  administrative  expenses,  and  certain  other  expenses.  The
     segments are managed  separately due to different  business  strategies for
     each operation.




                      (This space intentionally left blank)






<PAGE>


                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

5.       Operating Segments (continued)

     The  following  tables  present a summary  of the  operating  segments  (in
thousands of dollars):

<TABLE>
<CAPTION>


                                                      Marine     Marine
                                           Aircraft  Container   Vessel   Trailer    Railcar   All
     For the Year Ended December 31, 1998  Leasing   Leasing    Leasing   Leasing    Leasing   Other<F1>    Total
     ------------------------------------ --------- ---------  --------- ---------  --------- ---------  -----------

     <S>                                   <C>       <C>        <C>       <C>        <C>       <C>        <C>     
     Revenues
       Lease revenue                       $  3,968  $    923   $  5,231  $  3,295   $  4,111  $     --   $ 17,528
       Interest income and other                 19        89         64        10         20       562        764
       Gain (loss) on disposition of          5,594       582         19        51         12        (5 )    6,253
     equipment
                                           ------------------------------------------------------------------------
         Total revenues                       9,581     1,594      5,314     3,356      4,143       557     24,545

     Costs and expenses
       Operations support                     1,122        13      3,550       817        857        62      6,421
       Depreciation and amortization          8,571       712      2,976     1,040      1,273        32     14,604
       Interest expense                          --        --         --        --         --     2,018      2,018
       General and administrative expenses      491        76        389       820        355       723      2,854
       Loss on revaluation of equipment          --       183      4,093        --         --        --      4,276
       Provision for (recovery of) bad          (83 )      --         --        22        (14 )      --        (75 )
     debts
                                           ------------------------------------------------------------------------
         Total costs and expenses            10,101       984     11,008     2,699      2,471     2,835     30.098
                                           ------------------------------------------------------------------------
     Equity in net income (loss) of USPEs     8,642       (20 )   (1,867 )      --         --       243      6,998
                                           ------------------------------------------------------------------------
                                           ========================================================================
     Net income (loss)                     $  8,122  $    590   $ (7,561 )$    657   $  1,672  $ (2,035 ) $  1,445
                                           ========================================================================

     As of December 31, 1998
     Total assets                          $ 26,534  $  9,267   $ 25,194  $  4,824   $ 10,913  $ 11,605   $ 88,337
                                           ========================================================================
<FN>

<F1> Includes  interest  income  and  costs  not  identifiable  to a  particular
     segment, such as general and administrative,  interest expense, and certain
     operations support expenses.  Also includes income from an investment in an
     entity owning a mobile offshore drilling unit.

</FN>

</TABLE>

<TABLE>
<CAPTION>


                                                      Marine     Marine
                                           Aircraft  Container   Vessel   Trailer    Railcar   All
     For the Year Ended December 31, 1997  Leasing   Leasing    Leasing   Leasing    Leasing   Other<F2>     Total
     ------------------------------------  --------- ---------  --------- ---------  --------- ---------  -----------

     <S>                                   <C>       <C>        <C>       <C>        <C>       <C>        <C>      
     Revenues
       Lease revenue                       $  3,606  $  1,681   $  8,934  $  3,760   $  4,135  $     --   $  22,116
       Interest income and other                 --        36        251        47         --       152         486
       Gain (loss) on disposition of          1,972        55      8,265      (171 )       --        --      10,121
     equipment
                                           -------------------------------------------------------------------------
         Total revenues                       5,578     1,772     17,450     3,636      4,135       152      32,723

     Costs and expenses
       Operations support                       618        12      7,326       870      1,001        52       9,879
       Depreciation and amortization          1,582     1,147      4,060     1,522      1,452        30       9,793
       Interest expense                          --        --         --        --         --     2,296       2,296
       General and administrative expenses      965        96        591       811        351       820       3,634
       Provision for (recovery of) bad        1,188      (111 )       --       153         43        --       1,273
     debts
                                           -------------------------------------------------------------------------
         Total costs and expenses             4,353     1,144     11,977     3,356      2,847     3,198      26,875
                                           -------------------------------------------------------------------------
     Equity in net income (loss) of USPEs     4,090        --       (707 )      --         --         1       3,384
                                           -------------------------------------------------------------------------
                                           =========================================================================
     Net income (loss)                     $  5,315  $    628   $  4,766  $    280   $  1,288  $ (3,045 ) $   9,232
                                           =========================================================================

     As of December 31, 1997
     Total assets                          $ 33,093  $  4,393   $ 26,492  $  7,098   $  9,129  $ 23,756   $ 103,961
                                           =========================================================================
<FN>

<F2> Includes  interest  income  and  costs  not  identifiable  to a  particular
     segment, such as general and administrative,  interest expense, and certain
     operations support expenses.

</FN>

</TABLE>



<PAGE>


                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

5.   Operating Segments (continued)

<TABLE>
<CAPTION>

                                                      Marine     Marine
                                           Aircraft  Container   Vessel   Trailer    Railcar    All
     For the Year Ended December 31, 1996  Leasing   Leasing    Leasing   Leasing    Leasing   Other<F3>     Total
     ------------------------------------  --------- ---------  --------- ---------  --------- ---------  -----------

     <S>                                   <C>       <C>        <C>       <C>        <C>       <C>        <C>      
     Revenues
       Lease revenue                       $  4,215  $  2,191   $  8,915  $  4,198   $  4,073  $     --   $  23,592
       Interest income and other                 --        --         67        19         --       544         630
       Gain (loss) on disposition of            591       136      6,267       180         40        --       7,214
     equipment
                                           -------------------------------------------------------------------------
         Total revenues                       4,806     2,327     15,249     4,397      4,113       544      31,436

     Costs and expenses
       Operations support                       234        12      5,098     1,050      1,299        47       7,740
       Depreciation and amortization          2,560     1,504      4,718     1,975      1,678       (41 )    12,394
       Interest expense                          --        --         --        --         --     2,339       2,339
       General and administrative expenses      224        96        608       916        345       893       3,082
       Provision for bad debts                  628       416         --        30        (59 )       1       1,016
                                           -------------------------------------------------------------------------
         Total costs and expenses             3,646     2,028     10,424     3,971      3,263     3,239      26,571
                                           -------------------------------------------------------------------------
     Equity in net income (loss) of USPEs    (1,853 )      --       (415 )      --         --     5,694       3,426
                                           -------------------------------------------------------------------------
                                           =========================================================================
     Net income (loss)                     $   (693 )$    299   $  4,410  $    426   $    850  $  2,999   $   8,291
                                           =========================================================================

     As of December 31, 1996
     Total assets                          $ 40,678  $  7,370   $ 30,858  $  9,486   $ 10,537  $ 14,596   $ 113,525

                                           =========================================================================

<FN>

<F3> Includes  interest  income  and  costs  not  identifiable  to a  particular
     segment, such as general and administrative,  interest expense, and certain
     operations  support  expenses.  Also  includes the gain from the sale of an
     interest in an entity owning a mobile offshore drilling unit.

</FN>

</TABLE>

6.   Geographic Information

     The  Partnership  owns  certain  equipment  that  is  leased  and  operated
     internationally.  A limited number of the  Partnership's  transactions  are
     denominated in a foreign  currency.  Gains or losses resulting from foreign
     currency transactions are included in the results of operations and are not
     material.

     The Partnership  leases or leased its aircraft,  railcars,  and trailers to
     lessees  domiciled  in five  geographic  regions:  United  States,  Canada,
     Mexico,  Europe, and Asia. Marine vessels,  mobile offshore drilling units,
     and marine  containers  are leased or were  leased to  multiple  lessees in
     different regions that operate worldwide.

     The table below sets forth  lease  revenues  by  geographic  region for the
     Partnership's owned equipment and investments in USPEs grouped by domiciles
     of the lessees as of and for the years ended  December 31 (in  thousands of
     dollars):

<TABLE>
<CAPTION>

                                              Owned Equipment                      Investments in USPEs
                                    -------------------------------------  --------------------------------------

                 Region                 1998         1997        1996           1998         1997        1996
       ----------------------------  -------------------------------------   -------------------------------------

       <S>                            <C>         <C>         <C>              <C>        <C>         <C>       
       United States                  $   9,126   $    7,132  $    7,522       $     --   $       --  $       --
       Canada                               988          764         748            986        3,619       3,179
       South America                         --           --          --          3,283        3,149       3,149
       Asia                               1,260        2,658       3,207             --           --         693
       Europe                                --          948       1,009             --           --          --
       Rest of the world                  6,154       10,614      11,106          5,665        4,167       1,707
                                      -------------------------------------   -------------------------------------
                                      =====================================   =====================================
           Lease revenues             $  17,528   $   22,116  $   23,592       $  9,934   $   10,935  $    8,728
                                      =====================================   =====================================

</TABLE>





<PAGE>


                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

6.       Geographic Information (continued)

     The following table sets forth net income (loss)  information by region for
     the owned  equipment and  investments in USPEs for the years ended December
     31 (in thousands of dollars):

<TABLE>
<CAPTION>

                                              Owned Equipment                      Investments in USPEs
                                    -------------------------------------  --------------------------------------

                 Region                 1998         1997        1996           1998         1997        1996
       ----------------------------  -------------------------------------   -------------------------------------

       <S>                            <C>         <C>         <C>              <C>        <C>         <C>         
       United States                  $  (3,494 ) $    1,219  $    1,129       $     --   $       --  $       --  
       Canada                               324          461         195          7,191        3,159      (1,576 )
       South America                         --           --          --            801          224        (274 )
       Mexico                                --           --          --            651          707          (3 )
       Asia                               4,980       (1,219 )       887             --           --       5,723
       Europe                                --        2,370         294             --           --          --
       Rest of the world                 (5,086 )      6,076       5,401         (1,645 )       (706 )      (444 )
                                      -------------------------------------   -------------------------------------
          Regional income (loss)         (3,276 )      8,907       7,906          6,998        3,384       3,426
       Administrative and other          (2,277 )     (3,059 )    (3,041 )           --           --          --
                                      =====================================   =====================================
          Net income (loss)           $  (5,553 ) $    5,848  $    4,865       $  6,998   $    3,384  $    3,426  
                                      =====================================   =====================================
</TABLE>

     The net book value of these  assets as of  December  31 are as follows  (in
thousands of dollars):

<TABLE>
<CAPTION>

                                              Owned Equipment                      Investments in USPEs
                                    -------------------------------------  --------------------------------------

                 Region                 1998         1997        1996           1998         1997        1996
       ----------------------------  -------------------------------------   -------------------------------------

       <S>                           <C>         <C>           <C>            <C>        <C>         <C>                      
       United States                 $   22,048  $   14,250    $ 17,964       $     --   $    3,491  $       --               
       Canada                             1,889       1,978       2,059            279        6,614      10,993
       South America                         --          --          --         11,536       12,854      15,453
       Mexico                                --          --          --          4,435        4,581       4,429
       Asia                               2,084       5,552       6,663             --           --          --
       Europe                                --          --       3,141             --           --          --
       Rest of the world                 21,393      15,922      33,180         17,164       19,256      11,244
                                     -------------------------------------   -------------------------------------
                                     =====================================   =====================================
           Net book value            $   47,414  $   37,702    $ 63,007       $ 33,414   $   46,796  $   42,119               
                                     =====================================   =====================================
</TABLE>

7.   Net Investment in a Direct Finance Lease

     During 1996,  the  Partnership  entered into a direct  finance lease for 48
     trailers.  Gross lease  payments of $0.3 million were to be received over a
     three-year  period,  which commenced in May of 1996. This lease allows each
     trailer to be purchased for $1.00 at the end of the lease.

     The  components  of the net  investment  in the direct  finance lease as of
December 31, are as follows (in thousands in dollars):

<TABLE>
<CAPTION>

                                                                1998          1997
                                                             ---------     ---------
  <S>                                                        <C>           <C>     
  Total minimum lease payments                               $     42      $    163
  Less unearned income                                             (1 )         (10 )
                                                             =========     =========
                                                             $     41      $    153
                                                             =========     =========
</TABLE>

     Future  minimum  rentals  receivable  under the direct  finance lease as of
     December 31, 1998 year are approximately $42,000 in 1999 and $0 thereafter.


<PAGE>


                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

8.   Debt

     In August  1993,  the  Partnership  entered  into an  agreement  to issue a
     long-term note totaling $30.0 million to two institutional  investors.  The
     note  bears  interest  at a fixed  rate of 6.7% per  annum  and has a final
     maturity in 2003. Interest on the note is payable monthly. The note will be
     repaid in three  principal  payments of $10.0 million on November 17, 2001,
     2002, and 2003. The agreement  requires the Partnership to maintain certain
     financial  covenants  related to fixed-charge  coverage.  Proceeds from the
     sale of the note  were  used to fund  equipment  acquisitions  and to repay
     obligations of the  Partnership  under the credit  facility (see discussion
     below).

     The General Partner estimates, based on recent transactions,  that the fair
     market value of the $30.0 million fixed-rate note is $30.2 million.

     The General  Partner has entered into a joint $24.5 million credit facility
     (the Committed Bridge Facility) on behalf of the Partnership, PLM Equipment
     Growth & Income Fund VII (EGF VII) and Professional Lease Management Income
     Fund I (Fund I), both  affiliated  investment  programs;  and TEC Acquisub,
     Inc. (TECAI), an indirect  wholly-owned  subsidiary of the General Partner,
     which  may be used to  provide  interim  financing  of up to (i) 70% of the
     aggregate  book  value or 50% of the  aggregate  net fair  market  value of
     eligible equipment owned by the Partnership,  plus (ii) 50% of unrestricted
     cash held by the  borrower.  The  Partnership,  EGF VII,  Fund I, and TECAI
     collectively  may  borrow  up to  $24.5  million  of the  Committed  Bridge
     Facility.   Outstanding  borrowings  by  one  borrower  reduce  the  amount
     available  to  each of the  other  borrowers  under  the  Committed  Bridge
     Facility.  The Committed  Bridge  Facility also provides for a $5.0 million
     Letter of Credit Facility for the eligible borrowers. Individual borrowings
     may be  outstanding  for no more than 179 days,  with all  advances  due no
     later than December 14, 1999.  Interest accrues at either the prime rate or
     adjusted LIBOR plus 1.625% at the borrower's  option and is set at the time
     of an advance of funds. Borrowings by the Partnership are guaranteed by the
     General  Partner.  As of December  31, 1998,  no eligible  borrower had any
     outstanding borrowings under this facility. The General Partner believes it
     will be able to renew the Committed  Bridge  Facility  upon its  expiration
     with similar terms as those in the current Committed Bridge Facility.

9.   Concentrations of Credit Risk

     As of December 31, 1998,  no single  lessee  accounted for more than 10% of
     the  consolidated  revenues for the owned  equipment  and  partially  owned
     equipment  during 1998,  1997 and 1996. In 1998,  however,  Triton Aviation
     Services, Ltd. purchased a commercial aircraft from the Partnership and the
     gain from the sale accounted for 16% of total consolidated  revenues during
     1998. Also, in 1996,  Noble Asset Company Ltd.  purchased a mobile offshore
     drilling unit from the Partnership and the gain from the sale accounted for
     13% of total  consolidated  revenues and  Masterbulk  Pte Ltd.  purchased a
     marine vessel from the Partnership and the gain from the sale accounted for
     14% of total consolidated revenues during 1996.

     As of  December  31,  1998 and  1997,  the  General  Partner  believes  the
     Partnership  had no other  significant  concentrations  of credit risk that
     could have a material adverse effect on the Partnership.

10.  Income Taxes

     The  Partnership  is not subject to income taxes,  as any income or loss is
     included in the tax returns of the  individual  partners.  Accordingly,  no
     provision for income taxes has been made in the financial statements of the
     Partnership.



<PAGE>


                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

10.  Income Taxes (continued)

     As of December 31, 1998, there were temporary  differences of approximately
     $35.0 million  between the financial  statement  carrying values of certain
     assets and  liabilities and the federal income tax basis of such assets and
     liabilities,   primarily  due  to  differences  in  depreciation   methods,
     equipment  reserves,  provisions for bad debts,  lessee's prepaid deposits,
     and the tax treatment of underwriting commissions and syndication costs.

11.  Contingencies

     PLM International, (the Company) and various of its affiliates are named as
     defendants  in a lawsuit  filed as a purported  class action on January 22,
     1997 in the  Circuit  Court of Mobile  County,  Mobile,  Alabama,  Case No.
     CV-97-251 (the Koch action).  Plaintiffs,  who filed the complaint on their
     own and on behalf of all class members similarly  situated (the class), are
     six individuals  who invested in certain  California  limited  partnerships
     (the  Partnerships) for which the Company's  wholly-owned  subsidiary,  PLM
     Financial Services, Inc. (FSI), acts as the general partner,  including the
     Partnership, PLM Equipment Growth Funds V, and IV, and PLM Equipment Growth
     & Income Fund VII (the Growth  Funds).  The state court ex parte  certified
     the action as a class action  (i.e.,  solely upon  plaintiffs'  request and
     without the Company being given the opportunity to file an opposition). The
     complaint  asserts  eight  causes  of action  against  all  defendants,  as
     follows:  fraud and deceit,  suppression,  negligent  misrepresentation and
     suppression,  intentional  breach of fiduciary  duty,  negligent  breach of
     fiduciary   duty,   unjust   enrichment,    conversion,   and   conspiracy.
     Additionally,  plaintiffs  allege a cause of action  against PLM Securities
     Corp. for breach of third party  beneficiary  contracts in violation of the
     National   Association  of  Securities  Dealers  rules  of  fair  practice.
     Plaintiffs allege that each defendant owed plaintiffs and the class certain
     duties due to their status as fiduciaries,  financial advisors, agents, and
     control persons. Based on these duties, plaintiffs assert liability against
     defendants for improper sales and marketing practices, mismanagement of the
     Growth Funds,  and  concealing  such  mismanagement  from  investors in the
     Growth  Funds.  Plaintiffs  seek  unspecified  compensatory  and  recissory
     damages,  as well as punitive  damages,  and have  offered to tender  their
     limited partnership units back to the defendants.

     In March 1997, the defendants  removed the Koch action from the state court
     to the United States  District Court for the Southern  District of Alabama,
     Southern  Division  (Civil Action No.  97-0177-BH-C)  based on the district
     court's diversity  jurisdiction,  following which plaintiffs filed a motion
     to remand the action to the state  court.  Removal of the action to federal
     court  automatically  nullified the state court's ex parte certification of
     the class. In September 1997, the district court denied  plaintiffs' motion
     to remand the action to state court and  dismissed  without  prejudice  the
     individual claims of the California  plaintiff,  reasoning that he had been
     fraudulently  joined as a plaintiff.  In October 1997,  defendants  filed a
     motion to compel arbitration of plaintiffs'  claims,  based on an agreement
     to arbitrate contained in the limited partnership  agreement of each Growth
     Fund,  and  to  stay  further  proceedings  pending  the  outcome  of  such
     arbitration.  Notwithstanding  plaintiffs'  opposition,  the district court
     granted defendants' motion in December 1997.

     Following various unsuccessful requests that the district court reverse, or
     otherwise  certify  for appeal,  its order  denying  plaintiffs'  motion to
     remand the case to state court and dismissing  the  California  plaintiff's
     claims,  plaintiffs  filed with the U.S.  Court of Appeals for the Eleventh
     Circuit a petition  for a writ of mandamus  seeking to reverse the district
     court's order. The Eleventh Circuit denied plaintiffs' petition in November
     1997,  and further  denied  plaintiffs  subsequent  motion in the  Eleventh
     Circuit  for a  rehearing  on this  issue.  Plaintiffs  also  appealed  the
     district court's order granting  defendants' motion to compel  arbitration,
     but in June 1998 voluntarily  dismissed their appeal pending  settlement of
     the Koch action, as discussed below.


<PAGE>


                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

11.  Contingencies (continued)

     On June 5, 1997, the Company and the affiliates who are also  defendants in
     the Koch action were named as defendants in another  purported class action
     filed in the San Francisco Superior Court, San Francisco,  California, Case
     No.  987062  (the  Romei  action).  The  plaintiff  is an  investor  in PLM
     Equipment  Growth Fund V, and filed the  complaint on her own behalf and on
     behalf of all class  members  similarly  situated  who  invested in certain
     California limited  partnerships for which FSI acts as the general partner,
     including  the Growth Funds.  The complaint  alleges the same facts and the
     same nine  causes of action  as in the Koch  action,  plus five  additional
     causes of action against all of the defendants,  as follows:  violations of
     California  Business  and  Professions  Code  Sections  17200,  et seq. for
     alleged  unfair  and  deceptive   practices,   constructive  fraud,  unjust
     enrichment,  violations of California Corporations Code Section 1507, and a
     claim for treble damages under California Civil Code Section 3345.

     On July 31, 1997, defendants filed with the district court for the Northern
     District of California  (Case No.  C-97-2847 WHO) a petition (the petition)
     under  the  Federal  Arbitration  Act  seeking  to  compel  arbitration  of
     plaintiff's  claims and for an order  staying the state  court  proceedings
     pending the outcome of the  arbitration.  In  connection  with this motion,
     plaintiff  agreed to a stay of the state court action  pending the district
     court's  decision on the petition to compel  arbitration.  In October 1997,
     the district court denied the Company's petition to compel arbitration, but
     in November 1997,  agreed to hear the Company's motion for  reconsideration
     of this order.  The hearing on this motion has been taken off  calendar and
     the district  court has  dismissed the petition  pending  settlement of the
     Romei action,  as discussed  below.  The state court action continues to be
     stayed pending such  resolution.  In connection  with her opposition to the
     petition to compel  arbitration,  plaintiff filed an amended complaint with
     the state  court in  August  1997  alleging  two new  causes of action  for
     violations  of  the   California   Securities   Law  of  1968   (California
     Corporations Code Sections 25400 and 25500) and for violation of California
     Civil Code Sections 1709 and 1710.  Plaintiff also served certain discovery
     requests  on  defendants.  Because of the stay,  no response to the amended
     complaint or to the discovery is currently required.

     In May 1998,  all  parties  to the Koch and Romei  actions  entered  into a
     memorandum  of  understanding  (MOU)  related  to the  settlement  of those
     actions (the monetary settlement).  The monetary settlement contemplated by
     the MOU provides for stipulating to a class for settlement purposes,  and a
     settlement  and release of all claims  against  defendants  and third party
     brokers in exchange  for payment for the benefit of the class of up to $6.0
     million.  The final  settlement  amount will depend on the number of claims
     filed by authorized  claimants who are members of the class,  the amount of
     the  administrative  costs incurred in connection with the settlement,  and
     the amount of attorneys' fees awarded by the Alabama  district  court.  The
     Company will pay up to $0.3 million of the  monetary  settlement,  with the
     remainder being funded by an insurance policy.

     The parties to the monetary  settlement have also agreed in principal to an
     equitable settlement (the equitable settlement) which provides, among other
     things,  (a) for the extension of the operating  lives of the  Partnership,
     PLM  Equipment  Growth Fund V, and PLM  Equipment  Growth & Income Fund VII
     (the Funds) by judicial amendment to each of their partnership  agreements,
     such that FSI, the general  partner of each such Fund, will be permitted to
     reinvest  cash flow,  surplus  partnership  funds or  retained  proceeds in
     additional   equipment   into  the  year  2004,   and  will  liquidate  the
     partnerships'  equipment  in 2006;  (b) that FSI will be  entitled  to earn
     front end fees (including acquisition and lease negotiation fees) in excess
     of the compensatory  limitations set forth in the North American Securities
     Administrators Association,  Inc. Statement of Policy by judicial amendment
     to the Partnership  Agreements for each Fund; (c) for a one time redemption
     of up to 10%  of  the  outstanding  units  of  each  Fund  at  80% of  such
     partnership's  net asset  value;  and (d) for the  deferral of a portion of
     FSI's management  fees. The equitable  settlement also provides for payment
     of the equitable  settlement  attorneys' fees from Partnership funds in the
     event  that  distributions  paid  to  investors  in the  Funds  during  the
     extension period reach a certain internal rate of return.


<PAGE>


                          PLM EQUIPMENT GROWTH FUND VI
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

11.  Contingencies (continued)

     Defendants  will  continue to deny each of the claims and  contentions  and
     admit no  liability  in  connection  with  the  proposed  settlements.  The
     monetary settlement remains subject to numerous  conditions,  including but
     not limited to: (a)  agreement and execution by the parties of a settlement
     agreement (the settlement  agreement),  (b) notice to and  certification of
     the  monetary  class  for  purposes  of the  monetary  settlement,  and (c)
     preliminary  and final  approval of the monetary  settlement by the Alabama
     district  court.  The  equitable  settlement  remains  subject to  numerous
     conditions,  including  but not limited to: (a)  agreement and execution by
     the  parties  of the  settlement  agreement,  (b)  notice  to  the  current
     unitholders in the Funds (the  equitable  class) and  certification  of the
     equitable class for purposes of the equitable settlement,  (c) preparation,
     review by the Securities and Exchange  Commission  (SEC), and dissemination
     to the members of the equitable class of solicitation  statements regarding
     the proposed  extensions,  (d)  disapproval by less than 50% of the limited
     partners  in each of the Funds of the  proposed  amendments  to the limited
     partnership agreements, (e) judicial approval of the proposed amendments to
     the limited partnership agreements,  and (f) preliminary and final approval
     of the equitable  settlement  by the Alabama  district  court.  The parties
     submitted  the  settlement  agreement  to the  Alabama  district  court  on
     February 12,  1999,  and the  preliminary  class  certification  hearing is
     scheduled  for March 24,  1999.  If the district  court grants  preliminary
     approval,  notices to the monetary  class and equitable  class will be sent
     following review by the SEC of the  solicitation  statements to be prepared
     in connection with the equitable  settlement.  The monetary settlement,  if
     approved, will go forward regardless of whether the equitable settlement is
     approved or not. The Company  continues to believe that the  allegations of
     the Koch and Romei  actions  are  completely  without  merit and intends to
     continue to defend this matter vigorously if the monetary settlement is not
     consummated.

     The Partnership,  together with affiliates, initiated litigation in various
     official  forums in India  against a defaulting  Indian  airline  lessee to
     repossess  Partnership  property and to recover  damages for failure to pay
     rent and failure to maintain the aircraft in  accordance  with the relevant
     lease  contract.  The  Partnership  has  repossessed  all of  the  property
     previously leased to the airline, and the airline has ceased operations. In
     response  to  the  Partnership's  collection  efforts,  the  airline  filed
     counter-claims  against  the  Partnership  in excess  of the  Partnership's
     claims against the airline. The General Partner believes that the airline's
     counterclaims  are completely  without merit,  and the General Partner will
     vigorously defend against such counterclaims.

     The  Partnership  is involved as plaintiff  or  defendant in various  other
     legal actions  incident to its business.  Management  does not believe that
     any of these  actions  will be material to the  financial  condition of the
     Company.

12.      Subsequent Event

     During  February  1999,  the  Partnership  borrowed  $3.7 million under the
Committed Bridge Facility.



<PAGE>


                                INDEX OF EXHIBITS


  Exhibit                                                               Page

    4.      Limited Partnership Agreement of Partnership.                *    

   10. 1    Management Agreement between Partnership and                 *
            PLM Investment Management, Inc.

   10.      2 Note  Agreement,  dated as of  August  1,  1993,  regarding
           $30.0 million in 6.7% senior notes due November 17, 2003.     *

   10. 3    Fourth Amended and Restated Warehousing Credit Agreement,  
            dated as of December 15, 1998, with First Union National 
            Bank of North Carolina.                                    54-128

   24.      Powers of Attorney.                                       129-131


-------

* Incorporated by reference.  See page 31 of this report.