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



[x]      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities 
         and Exchange Act of 1934
         For the fiscal quarter ended September 30, 1997

                                       or

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


                          Commission file number 1-9670
                         -------------------------------

                             PLM INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)


        Delaware                                          94-3041257
(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 executive offices)                     (Zip Code)



        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


         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest  practicable date: common stock - $.01
par value; outstanding as of October 24, 1997 - 9,046,200 shares.


<PAGE>


                             PLM INTERNATIONAL, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>


                                                                      For the Three Months                For the Nine Months
                                                                          Ended September 30,                 Ended September 30,
                                                                       1997           1996              1997           1996
                                                                    ------------------------------------------------------------

       <S>                                                          <C>            <C>               <C>            <C>      
       Revenues:
         Operating leases                                           $   4,429      $  4,351          $  12,087      $  13,508
         Finance lease income                                           2,638         1,532              6,436          2,578
         Management fees                                                2,792         2,752              8,450          8,198
         Partnership interests and other fees                             162         1,430              1,155          2,722
         Acquisition and lease negotiation fees                           986         2,596              1,749          5,260
         Aircraft brokerage and services                                  479           621              1,814          2,037
         Gain on the sale or disposition of assets, net                   649           257              3,250          2,050
         Other                                                            794           521              2,329          1,664
                                                                    ------------------------------------------------------------
           Total revenues                                              12,929        14,060             37,270         38,017
                                                                    ------------------------------------------------------------

       Costs and expenses:
         Operations support                                             3,901         4,938             12,123         16,159
         Depreciation and amortization                                  2,315         2,887              6,661          8,503
         General and administrative                                     2,709         2,250              7,435          6,009
                                                                    ------------------------------------------------------------
           Total costs and expenses                                     8,925        10,075             26,219         30,671
                                                                    ------------------------------------------------------------

       Operating income                                                 4,004         3,985             11,051          7,346

         Interest expense                                              (2,466 )      (2,117 )           (7,460 )       (5,100 )
         Interest income                                                  390           368              1,228            891
         Other income (expense), net                                       15          (738 )               (9 )         (348 )
                                                                    ------------------------------------------------------------
           Income before income taxes                                   1,943         1,498              4,810          2,789

         Provision for income taxes                                       624           133              1,562            371
                                                                    ------------------------------------------------------------

       Net income to common shares                                  $   1,319      $  1,365          $   3,248      $   2,418
                                                                    ============================================================

       Earnings per weighted-average common share
             outstanding                                            $    0.14      $   0.14          $    0.34      $    0.23
                                                                    ============================================================



</TABLE>













             See accompanying notes to these consolidated financial
                                  statements.
<PAGE>

                             PLM INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share amounts)


<TABLE>
<CAPTION>

                                                                           September 30,            December 31,
                                                                                1997                    1996
                                                                         ------------------------------------------

                                     ASSETS


   <S>                                                                     <C>                     <C>       
   Cash and cash equivalents                                               $    6,145              $    7,638
   Receivables                                                                  5,976                   5,286
   Receivables from affiliates                                                  4,938                   6,019
   Investment in direct finance leases, net                                    80,417                  69,994
   Loans receivable                                                             5,002                   5,718
   Equity interest in affiliates                                               27,716                  30,407
   Assets held for sale                                                           520                   6,222
   Transportation equipment held for operating leases                          58,556                  66,546
     Less accumulated depreciation                                            (34,124 )               (41,750 )
                                                                         ----------------------------------------
                                                                               24,432                  24,796
   Commercial and industrial equipment held for
         operating leases                                                      15,770                  15,930
      Less accumulated depreciation                                            (4,113 )                (2,302 )
                                                                         ----------------------------------------
                                                                               11,657                  13,628
   Restricted cash and cash equivalents                                        18,164                  17,828
   Other, net                                                                  10,056                  11,213
                                                                         ----------------------------------------
       Total assets                                                        $  195,023              $  198,749
                                                                         ========================================

            LIABILITIES, MINORITY INTEREST, AND SHAREHOLDERS' EQUITY

   Liabilities:
     Short-term secured debt                                               $        -              $   30,966
     Senior secured loan                                                       22,059                  25,000
     Senior secured notes                                                      25,098                  18,000
     Other secured debt                                                           474                     618
     Nonrecourse securitization facility                                       68,507                  45,392
     Payables and other liabilities                                            12,922                  16,757
     Deferred income taxes                                                     16,735                  15,334
                                                                         ----------------------------------------
       Total liabilities                                                      145,795                 152,067

   Minority interest                                                              349                     362

   Shareholders' equity:
     Common stock ($0.01 par value, 50,000,000 shares
         authorized, 9,047,566 issued and outstanding at
         September 30, 1997 and 9,142,761 at December 31, 1996)                   117                     117
     Paid-in capital, in excess of par                                         77,778                  77,778
     Treasury stock (3,548,825 and 3,453,630 shares at
          respective dates)                                                   (12,918 )               (12,382 )
                                                                         ----------------------------------------
                                                                               64,977                  65,513
     Accumulated deficit                                                      (16,098 )               (19,193 )
                                                                         ----------------------------------------
        Total shareholders' equity                                             48,879                  46,320
                                                                         ----------------------------------------
   Total liabilities, minority interest, and shareholders' equity          $  195,023              $  198,749
                                                                         ========================================

</TABLE>



             See accompanying notes to these consolidated financial
                                  statements.


<PAGE>


                             PLM INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CHANGES IN
            SHAREHOLDERS' EQUITY For the Year Ended December 31, 1996
                  and the Nine Months Ended September 30, 1997
                                 (in thousands)


<TABLE>
<CAPTION>

                                                 Common Stock
                                   -----------------------------------------
                                               Paid-in
                                              Capital in                                             Total
                                     At         Excess          Treasury       Accumulated       Shareholders'
                                     Par        of Par           Stock           Deficit             Equity
                                   -------------------------------------------------------------------------------

<S>                                <C>        <C>             <C>              <C>                      <C>    
Balances, December 31, 1995        $ 117      $  77,743       $   (5,931 )     $  (23,309 )             $48,620
Net income                                                                          4,095                 4,095
Common stock repurchases                                          (6,451 )                               (6,451 )
Exercise of stock options                            35                                                      35
Translation gain                                                                       21                    21
                                   -------------------------------------------------------------------------------
  Balances, December 31, 1996        117         77,778          (12,382 )        (19,193 )              46,320

Net income                                                                          3,248                 3,248
Common stock repurchases                                            (775 )                                 (775 )
Reissuance of treasury stock                                         239              (38 )                 201
Redemption of shareholder rights                                                      (92 )                 (92 )
Translation loss                                                                      (23 )                 (23 )
                                   ===============================================================================
  Balances, September 30, 1997     $ 117      $  77,778       $  (12,918 )     $  (16,098 )             $48,879
                                   ===============================================================================

</TABLE>








             See accompanying notes to these consolidated financial
                                  statements.

<PAGE>


                             PLM INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>


                                                                                                For the Nine Months
                                                                                                Ended September 30,
                                                                                              1997               1996
                                                                                           -------------------------------

   <S>                                                                                      <C>               <C>       
   Operating activities:
     Net income                                                                             $  3,248          $   2,418 
     Adjustments to reconcile net income to net cash
         provided by operating activities:
       Depreciation and amortization                                                           6,661              8,503
       Foreign currency translation                                                              (23 )               68
       Increase in deferred income taxes                                                       1,401                348
       Gain on sale or disposition of assets, net                                             (3,250 )           (2,050 )
       Undistributed residual value interests                                                    508               (405 )
       Minority interest in net (loss) income of subsidiaries                                    (13 )                9
       Decrease in payables and other liabilities                                               (662 )           (1,966 )
       Decrease in receivables and receivables from affiliates                                   391              3,260
       Cash distributions from affiliates in excess of income accrued                          2,183              2,086
       Decrease (increase) in other assets                                                       757               (368 )
                                                                                           -------------------------------
           Net cash provided by operating activities                                          11,201             11,903
                                                                                           -------------------------------

   Investing activities:
     Additional investment in affiliates                                                           -             (4,972 )
     Principal payments received on finance leases                                            12,627              2,603
     Principal payments received on loans                                                      1,493                  -
     Investment in direct finance leases                                                     (60,996 )          (57,295 )
     Investment in loans receivable                                                             (777 )           (3,006 )
     Purchase of equipment                                                                   (40,459 )          (40,759 )
     Proceeds from  the sale of transportation equipment for lease                            10,761              7,288
     Proceeds from the sale of assets held for sale                                           24,710              2,052
     Proceeds from the sale of commercial and industrial equipment                            44,988             35,902
     Sale of investment in subsidiary                                                              -                372
     Increase in restricted cash and restricted cash equivalents                                (336 )          (11,066 )
                                                                                           -------------------------------
           Net cash used in investing activities                                              (7,989 )          (68,881 )
                                                                                           -------------------------------

</TABLE>

                                                                (continued)















             See accompanying notes to these consolidated financial
                                  statements.


<PAGE>


                             PLM INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>


                                                                                                For the Nine Months
                                                                                                Ended September 30,
                                                                                              1997               1996
                                                                                          --------------------------------

   <S>                                                                                    <C>                      <C>   
   Financing activities:
     Borrowings of short-term secured debt                                                $    76,427              59,390
     Repayment of short-term secured debt                                                    (107,393 )           (31,599 )
     Repayment of senior secured loan                                                          (2,941 )                 -
     Proceeds from other secured debt                                                               -                  90
     Repayment of other secured debt                                                             (144 )               (39 )
     Borrowings under senior secured notes                                                      9,000              18,000
     Repayment of senior secured notes                                                         (1,902 )                 -
     Borrowings under securitization facility                                                  36,055              29,989
     Repayment of securitization facility                                                     (12,940 )            (7,681 )
     Repayment of subordinated debt                                                                 -             (11,500 )
     Purchase of treasury stock                                                                  (775 )            (6,451 )
     Redemption of shareholder rights                                                             (92 )                 -
     Proceeds from exercise of stock options                                                        -                  35
                                                                                          ----------------------------------
           Net cash (used in) provided by financing activities                                 (4,705 )            50,234
                                                                                          ----------------------------------

   Net decrease in cash and cash equivalents                                                   (1,493 )            (6,744 )
   Cash and cash equivalents at beginning of period                                             7,638              13,764
                                                                                          ==================================
   Cash and cash equivalents at end of period                                             $     6,145          $    7,020
                                                                                          ==================================

   Supplemental information - net cash paid for:

     Interest                                                                             $     7,088          $    4,188
                                                                                          ==================================

     Income taxes                                                                         $       759          $    1,285
                                                                                          ==================================



</TABLE>



















             See accompanying notes to these consolidated financial
                                  statements.


<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1997


1.   General

In the opinion of management,  the accompanying unaudited consolidated financial
statements  contain all adjustments  necessary,  consisting  primarily of normal
recurring accruals, to present fairly PLM International,  Inc.'s (the Company's)
financial position as of September 30, 1997 and December 31, 1996; statements of
income  for the  three  and nine  months  ended  September  30,  1997 and  1996;
statements of changes in  shareholders'  equity for the year ended  December 31,
1996 and the nine months ended  September 30, 1997; and statements of cash flows
for the nine months ended September 30, 1997 and 1996.  Certain  information and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted from the accompanying  consolidated  financial  statements.  For further
information,  reference  should be made to the  financial  statements  and notes
thereto  included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, on file with the Securities and Exchange Commission.

2.   Accounting Pronouncements

In February 1997, the Financial  Accounting Standards Board issued SFAS No. 128,
"Earnings Per Share," which requires the Company to replace its  presentation of
primary  earnings per share with a presentation of basic earnings per share, and
requires dual  presentation of basic and diluted  earnings per share on the face
of the income statement.  The principal  difference between primary earnings per
share under current accounting  standards and basic earnings per share under the
new  statement is that basic  earnings per share does not consider  common stock
equivalents such as stock options and warrants. Diluted earnings per share under
the new statement will include  potential  dilution of  convertible  securities,
stock options, and warrants.  The statement is effective for the Company's first
quarter of fiscal 1998 and requires  restatement of all prior periods presented.
Under the new  statement,  basic  earnings  per share  would have been $0.14 and
$0.15 for the three months ended September 30, 1997 and 1996, respectively,  and
$0.35  and  $0.23  for the nine  months  ended  September  30,  1997  and  1996,
respectively.  Under the new  statement,  diluted  earnings  per share for those
periods would have been the same as net income per common and common  equivalent
share presented on the income statement.

In  June  1997,  the  Financial   Accounting  Standards  Board  issued  two  new
statements:  SFAS No. 130,  "Reporting  Comprehensive  Income,"  which  requires
enterprises to report,  by major  component and in total,  all changes in equity
from  nonowner  sources;  and SFAS No. 131,  "Disclosures  about  Segments of an
Enterprise  and  Related  Information,"  which  establishes  annual and  interim
reporting  standards  for a public  company's  operating  segments  and  related
disclosures about its products, services, geographic areas, and major customers.
Both  statements  are effective for the Company's  fiscal year 1999 with earlier
application  permitted.  The  effect of  adoption  of these  statements  will be
limited to the form and content of the Company's disclosures and will not impact
the Company's results of operations, cash flow, or financial position.

3.   Reclassifications

Certain  amounts in the 1996  financial  statements  have been  reclassified  to
conform to the 1997 presentation.

4.   Financing Transaction Activities

The Company's  wholly-owned  subsidiary,  American  Finance Group,  Inc.  (AFG),
originates and manages lease and loan  transactions  on primarily new commercial
and industrial  equipment.  While the majority of these leases are accounted for
as finance leases,  some are accounted for as loans or operating leases.  During
the nine months ended  September 30, 1997,  the Company  funded $61.0 million in
equipment  that was placed on finance  lease.  Also during the nine months ended
September 30, 1997, the Company sold equipment on finance lease with an original
equipment cost of $37.3 million, resulting in a net gain of $1.7 million. During
the nine months  ended  September  30,  1997,  the Company  funded loans of $0.8
million that were secured by commercial and industrial equipment.



<PAGE>


5.   Equipment

Equipment held for operating lease includes transportation  equipment,  which is
depreciated  over its estimated  useful lives,  and  commercial  and  industrial
equipment, which is depreciated over the lease term to an estimated residual.

During the nine months ended September 30, 1997, the Company funded $8.9 million
in commercial and  industrial  equipment,  which was placed on operating  lease.
During the nine months ended September 30, 1997, the Company sold commercial and
industrial  equipment that was on operating  lease with an original cost of $7.5
million for a net gain of $0.2 million.

The  Company  classifies  assets  as held  for sale if the  particular  asset is
subject  to a  pending  contract  for sale or is held for sale to an  affiliated
partnership.  Equipment held for sale is valued at the lower of the  depreciated
cost or the fair value less costs to sell. As of December 31, 1996,  the Company
had a 25.5%  interest in a mobile  offshore  drilling unit (rig) with a net book
value of $5.1 million that was held for sale to an affiliated  program.  Also as
of December 31, 1996,  two commuter  aircraft  with a combined net book value of
$1.1 million were held for sale.  The rig was sold to an  affiliated  program at
its original cost in March 1997. The two commuter aircraft were sold in February
1997 for their approximate net book value to an unaffiliated third party.

During the first nine months of 1997,  the Company  purchased a mobile  offshore
drilling  unit for $10.5 million and a marine  vessel for $19.0  million,  which
were resold to  affiliated  programs at cost.  Also during the nine months ended
September  30, 1997,  the Company  purchased  two  commercial  aircraft for $5.0
million and trailers for $6.1 million. The aircraft were subsequently sold to an
unaffiliated  third  party  for a gain of  $0.8  million.  Other  transportation
equipment  was sold for net gains of $0.6  million  during the nine months ended
September  30,  1997.  As of September  30,  1997,  the Company had one commuter
aircraft with a net book value of $0.5 million held for sale to a third party.

Periodically,  the Company  purchases  groups of assets whose  ownership  may be
allocated among affiliated  programs and the Company.  Generally in these cases,
only assets that are on lease are purchased by affiliated programs.  The Company
generally  assumes 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 the nine months ended September 30, 1996, the Company
realized  $0.7 million of gains from the sale of 69 railcars to an  unaffiliated
third party.  These  railcars  were  originally  purchased as part of a group of
assets by the Company in 1994 that had been  allocated to PLM  Equipment  Growth
Funds  (EGFs)  IV and IV,  PLM  Equipment  Growth & Income  Fund VII (EGF  VII),
Professional Lease Management Income Fund I, LLC (Fund I), and the Company.

6.   Debt

Assets  acquired  and held on an interim  basis for  placement  with  affiliated
partnerships or purchased for placement in the Company's securitization facility
have,  from time to time,  been partially  funded by a $50.0 million  short-term
secured debt facility.  The Company  amended this facility on October 3, 1997 to
extend its  availability  until November 3, 1997. The facility,  which is shared
with EGFs IV,  V, VI,  and VII,  and Fund I,  allows  the  Company  to  purchase
equipment prior to its designation to a specific  program or partnership.  As of
September 30, 1997, the Company had no borrowings under this facility and EGFs V
and VI had $9.1  million  and $10.0  million in  borrowings,  respectively.  All
borrowings  under this  facility  are  guaranteed  by the  Company.  The Company
believes  it will be able to extend  the  facility  prior to its  expiration  on
similar terms.

The Company has available a securitization facility to be used to acquire assets
on a nonrecourse basis, secured by direct finance leases,  operating leases, and
loans on commercial and industrial  equipment that generally have terms from two
to seven  years.  The  Company  amended  this  facility  on  October  14,  1997,
increasing  the facility from $80.0 million to $125.0  million and extending the
availability  of the facility  until October 13, 1998. As of September 30, 1997,
outstanding  borrowings  totaled  $68.5  million  under this  facility,  payable
through 2004.


<PAGE>


7.   Shareholders' Equity

On March  3,  1997,  the  Company  announced  that the  Board of  Directors  had
authorized the  repurchase of up to $5.0 million of the Company's  common stock.
As of September 30, 1997,  155,198 shares had been repurchased  under this plan,
for a total of $0.8 million.

During the nine months ended September 30, 1997, 60,003 shares (net of forfeited
shares) were issued from treasury stock as part of the senior  management  bonus
program.  During the nine months ended  September 30, 1997,  155,198 shares were
repurchased.  Consequently,  the total common  shares  outstanding  decreased to
9,047,566 as of September 30, 1997 from the 9,142,761 outstanding as of December
31, 1996. Net income per weighted-average  common share outstanding was computed
by dividing net income to common shares by the weighted-average number of shares
deemed  outstanding  during the period.  The  weighted-average  number of shares
deemed  outstanding  for the  earnings-per-share  calculation  during  the three
months  ended   September  30,  1997  and  1996  was  9,405,003  and  9,505,195,
respectively.  The weighted-average  number of shares deemed outstanding for the
earnings-per-share  calculation  during the nine months ended September 30, 1997
and 1996 was 9,419,206 and 10,499,605, respectively.

On March  12,  1989,  the  Company  distributed  rights  as a  dividend  on each
outstanding  share of common  stock.  Upon the  occurrence  of  certain  events,
characterized  as  unsolicited  or abusive  attempts  to acquire  control of the
Company, the rights would have become exercisable. On June 10, 1997, the Company
announced the  redemption of these rights for $0.01 per right.  Shareholders  of
record as of June 24, 1997 were paid a total of $0.1 million for the  redemption
of these rights on July 24, 1997.

8.   Legal Matters

As more  fully  described  by the  Company  in its Form 10-K for the year  ended
December 31, 1996,  in November  1995,  a former  employee of PLM  International
filed and served a first amended  complaint (the Complaint) in the United States
District Court for the Northern  District of California (Case No. C-95-2957 MMC)
against the Company,  the PLM International,  Inc. Employee Stock Ownership Plan
(ESOP), the ESOP's trustee,  and certain  individual  employees,  officers,  and
directors of the Company.  In January 1996,  PLMI and other  defendants  filed a
motion to dismiss the Complaint for lack of subject matter jurisdiction, arguing
the plaintiff lacked  standing.  The motion was granted and on May 30, 1996, the
Court entered a judgment  dismissing  the  Complaint for lack of subject  matter
jurisdiction.  Plaintiff  appealed  to the U.S.  Court of Appeals  for the Ninth
Circuit,  seeking a reversal of the District Court's judgment, and oral argument
was heard on September  17, 1997.  The Company is currently  waiting for the 9th
Circuit court's decision in this matter.

As more  fully  described  by the  Company  in its Form 10-K for the year  ended
December  31,1996,  the  Company  and  various  of its  affiliates  are named as
defendants  in a lawsuit  filed as a class  action on  January  22,  1997 in the
Circuit Court of Mobile County,  Mobile,  Alabama,  Case No. CV-97-251 (the Koch
action). On March 6, 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),  following which plaintiffs
filed a motion to remand the action to the state court.  On September  24, 1997,
the district court denied plaintiffs' motion and dismissed without prejudice the
individual claims of the California class representative,  reasoning that he had
been fraudulently joined as a plaintiff.  On October 3, 1997, plaintiffs filed a
motion  requesting  that the district  court  reconsider  its ruling,  or in the
alternative,   that  the  court  modify  its  order  dismissing  the  California
plaintiff's  claims so that it is a final  appealable  order, as well as certify
for an immediate  appeal to the Eleventh  Circuit  Court of Appeals that part of
its order denying plaintiffs' motion to remand. On October 7, 1997, the district
court  denied each of these  motions.  On October 10, 1997,  defendants  filed a
motion  to  compel  arbitration  of  plaintiffs'  claims  and  to  stay  further
proceedings  pending the outcome of such arbitration.  The Company believes that
the  allegations of the Koch action are completely  without merit and intends to
defend this matter vigorously.



<PAGE>


8.   Legal Matters (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 named plaintiff has alleged the same facts and the same
nine causes of action as is in the Koch action (as  described  in the  Company's
Form 10-K for the year ended December 31, 1996),  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,  a  claim  for  constructive  fraud,  a claim  for  unjust
enrichment, a claim for violations of California Corporations Code Section 1507,
and a claim for treble  damages under  California  Civil Code Section 3345.  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 sponsored by PLM Securities,
for which PLM Financial  Services,  Inc. acts as the general partner,  including
PLM Equipment Growth Funds IV, V, and VI, and PLM Equipment Growth & Income Fund
VII.

The Company  and the other  defendants  removed  the Romei  action to the United
States  District  Court  for the  Northern  District  of  California  (Case  No.
C-97-2450  SC) on  June  30,  1997,  based  on  the  federal  court's  diversity
jurisdiction.  The defendants  then filed a motion to compel  arbitration of the
plaintiffs'  claims,  based on an agreement  to  arbitrate  contained in the PLM
Equipment Growth Fund V limited partnership  agreement,  to which plaintiff is a
party.  Pursuant  to an  agreement  with  plaintiff,  the  Company and the other
defendants  withdrew  their  petition  for removal of the Romei action and their
motion to compel  arbitration,  and on July 31,  1997,  filed with the  district
court  for the  Northern  District  of  California  (Case No.  C-97-2847  WHO) a
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  agreement,  plaintiff
agreed to a stay of the state court action pending the district court's decision
on the petition to compel  arbitration.  On October 7, 1997,  the district court
denied the Company's petition to compel and indicated that a memorandum decision
would follow.  To date such memorandum  setting forth the court's  reason(s) for
denying the  petition has not been filed by the  district  court.  On August 22,
1997, the plaintiff filed an amended complaint with the state court 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 Section 1709 and 1710.  The Company will soon be required
to respond to the amended  complaint,  and a status  conference has been set for
December  5, 1997.  The Company  believes  that the  allegations  of the amended
complaint in the Romei action are completely without merit and intends to defend
this matter vigorously.

The Company 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.

9.   Purchase Commitments

As of September 30, 1997, the Company, through its AFG subsidiary, had committed
to purchase  $102.5  million of  equipment  for its  commercial  and  industrial
equipment  lease  portfolio,  to be held by the Company or sold to the Company's
institutional leasing investment program or to third parties.

From  October  1,  1997 to  October  24,  1997,  the  Company,  through  its AFG
subsidiary,  funded $5.4 million of the commitments  outstanding as of September
30, 1997 for its commercial and industrial equipment lease portfolio.

As of October 24, 1997, the Company had committed to purchase  $145.3 million of
equipment for its commercial and industrial equipment lease portfolio.




<PAGE>



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

A major  activity of the Company is the funding and  management  of  longer-term
direct finance leases,  operating leases, and loans through its American Finance
Group,  Inc.  (AFG)  subsidiary.  Master lease  agreements are entered into with
predominately  investment-grade  lessees  and serve as the  basis for  marketing
efforts.  The  underlying  assets  represent  a broad  range of  commercial  and
industrial  equipment,  such  as  data  processing,  communications,   materials
handling, and construction  equipment.  Through AFG, the Company is also engaged
in the management of an institutional  leasing  investment  program for which it
originates leases and receives acquisition and management fees.

The Company operates 10 trailer rental  facilities that engage in short-term and
mid-term operating leases.  Equipment  operated in these facilities  consists of
dry van trailers leased to a variety of customers and refrigerated trailers used
primarily in the food distribution  industry.  The Company is selling certain of
its older trailers and is replacing them with new or late-model used trailers.

The Company has syndicated  investment programs from which it earns various fees
and equity interests. The Professional Lease Management Income Fund I, LLC (Fund
I) was  structured  as a  limited  liability  company  with a no  front-end  fee
structure.  The previously  syndicated limited partnership  programs allowed the
Company to receive fees for the  acquisition and initial lease of the equipment.
The Fund I program does not provide for acquisition and lease  negotiation fees.
The Company  invests the equity raised  through  syndication  in  transportation
equipment,  which it then  manages  on behalf of the  investors.  The  equipment
management  activities for these types of programs generate equipment management
fees for the Company over the life of a program,  typically 10 to 12 years.  The
limited partnership  agreements generally entitle the Company to receive a 1% or
5% interest in the cash distributions and earnings of a partnership,  subject to
certain  allocation  provisions.  The Fund I agreement entitles the Company to a
15% interest in the cash  distributions  and  earnings of a program,  subject to
certain  allocation  provisions,  which will increase to 25% after the investors
have received distributions equal to their original invested capital.

         On May 14,  1996,  the  Company  announced  the  suspension  of  public
syndication of equipment leasing programs with the May 13, 1996 close of Fund I.
As a result of this  decision,  revenues  earned from  managed  programs,  which
include management fees,  partnership  interests and other fees, and acquisition
and lease  negotiation fees, will be reduced in the future as the older programs
begin  liquidation  and the  managed  equipment  portfolio  becomes  permanently
reduced.

The Company also owns a portfolio of  transportation  equipment,  in addition to
the dry van and refrigerated  over-the-road trailers mentioned above, from which
it earns operating lease revenue and incurs  operating  expenses.  The Company's
transportation  equipment held for operating lease,  which consists of aircraft,
marine containers,  intermodal  trailers,  and storage equipment as of September
30, 1997,  is  equipment  mainly built prior to 1988.  As  equipment  ages,  the
Company  continues  to monitor  the  performance  of its assets on lease and the
current  market  conditions  for  leasing  equipment  in  order to seek the best
opportunities for investment. Failure to replace equipment may result in shorter
lease terms,  higher costs of maintaining and operating aged equipment,  and, in
certain instances, limited remarketability.



<PAGE>


For the Three Months Ended September 30, 1997 versus September 30, 1996

The following analysis reviews the operating results of the Company:

Revenues

<TABLE>
<CAPTION>
                                                                                 For the Three Months
                                                                                 Ended September 30,

                                                                    1997                          1996
                                                                    -----------------------------------------
                                                                                    (in thousands)

<S>                                                                       <C>                     <C>    
Operating leases                                                          $ 4,429                 $ 4,351
Finance lease income                                                        2,638                   1,532
Management fees                                                             2,792                   2,752
Partnership interests and other fees                                          162                   1,430
Acquisition and lease negotiation fees                                        986                   2,596
Aircraft brokerage and services                                               479                     621
Gain on the sale or disposition of assets, net                                649                     257
Other                                                                         794                     521
                                                                    -----------------------------------------
  Total revenues                                                          $12,929                 $14,060

</TABLE>

The  fluctuations  in revenues for the three months  ended  September  30, 1997,
compared to the same period in 1996, are summarized and explained below.

Operating lease revenues by equipment type:
<TABLE>
<CAPTION>

                                                                                 For the Three Months
                                                                                 Ended September 30,

                                                                    1997                           1996
                                                                    -----------------------------------------
                                                                                    (in thousands)

<S>                                                                        <C>                     <C>   
Trailers                                                                   $2,187                  $1,807
Commercial and industrial equipment                                         1,510                   1,071
Marine vessel                                                                 501                       -
Storage equipment                                                              95                     276
Aircraft                                                                       69                   1,111
Marine containers                                                              61                      70
Railcars                                                                        6                      16
                                                                    -----------------------------------------
  Total operating lease revenues                                           $4,429                  $4,351

</TABLE>

Operating  lease  revenues  include  revenues  generated  from  assets  held for
operating leases and assets held for sale that are on lease. As of September 30,
1997, the Company owned  transportation  equipment  held for operating  lease or
held for sale with an original  cost of $60.9  million,  which was $31.9 million
less  than the  original  cost of  transportation  equipment  owned and held for
operating  lease or held for sale as of  September  30, 1996.  The  reduction in
equipment,  on an  original  cost  basis,  is a  consequence  of  the  Company's
strategic decision to dispose of certain underperforming  transportation assets,
and resulted in an 81% net  reduction in its  aircraft  portfolio  and a 25% net
reduction in its marine container portfolio,  compared to these portfolios as of
September 30, 1996.  The  reduction in  transportation  equipment  available for
lease is the primary reason aircraft and marine container revenues were reduced,
compared to the prior year. The $0.2 million decrease in storage equipment lease
revenue is due to an agreement the Company entered into in January 1997 to lease
all of its storage  equipment assets to a third party on a triple-net  operating
lease,  as opposed  to  short-term  operating  leases,  resulting  in both lower
storage equipment operating lease revenues and operating expenses.

The  decrease  in  operating  lease  revenues  as a result of the  reduction  in
transportation equipment available for lease and the storage equipment agreement
was partially offset by a $0.4 million increase in operating lease revenues as a
result of an increase in commercial and industrial equipment owned and

<PAGE>


on operating lease and by a $0.4 million increase in trailer lease revenues as a
result of higher  lease rates  received on new trailer  additions.  In addition,
during the third  quarter of 1997,  the  Company  owned a 47.5%  interest  in an
entity that owns a marine vessel, which generated $0.5 million in lease revenue.

         Finance lease income:

The Company earns finance lease income for certain leases  originated by its AFG
subsidiary  that are either  retained for long-term  investment or sold to third
parties or to an institutional leasing investment program.  Finance lease income
increased $1.1 million in the third quarter of 1997, compared to the same period
in 1996, reflecting an increase in commercial and industrial assets owned and on
finance lease. For the quarter ended September 30, 1997, the average  investment
in direct finance  leases was $73.5  million,  compared to $38.9 million for the
third quarter of 1996.

Management fees:

         Management  fees are,  for the most part,  based on the gross  revenues
generated by equipment under  management.  Management fees were $2.8 million for
both the quarters ended  September 30, 1997 and 1996.  Although  management fees
related to Fund I and the institutional  leasing  investment  program managed by
the Company's AFG subsidiary increased, this increase was offset by a decline in
management  fees from the remaining  older programs due to a decrease in managed
equipment  and due to lower lease rates.  With the  termination  of  syndication
activities  in 1996,  management  fees are expected to decrease in the future as
the older programs begin liquidation and the managed equipment portfolio becomes
permanently  reduced.  This  decrease has been and is expected to continue to be
offset,  in part,  by  management  fees  earned from the  institutional  leasing
investment program managed by the Company's AFG subsidiary.

         Partnership interests and other fees:

The Company  records as  revenues  its equity  interest  in the  earnings of the
Company's affiliated programs. The net earnings and distribution levels from the
affiliated  programs  were $0.5 million and $0.6 million for the quarters  ended
September  30,  1997 and 1996,  respectively.  In  addition,  a decrease of $0.3
million in the Company's  residual interests in the programs was recorded during
the quarter  ended  September  30,  1997.  A net increase of $0.8 million in the
Company's  residual  interests in the  programs was recorded  during the quarter
ended  September  30, 1996.  Residual  income is based on the general  partner's
share  of  the  present  value  of the  estimated  disposition  proceeds  of the
equipment portfolio of affiliated  partnerships when the equipment is purchased.
Net decreases in the recorded residual values result when partnership assets are
sold and the reinvestment  proceeds are less than the original investment in the
sold equipment.

         Acquisition and lease negotiation fees:

During the quarter  ended  September  30, 1997,  the  Company,  on behalf of the
equipment growth funds,  purchased  trailer equipment and a 47.5% interest in an
entity that owns a marine vessel for $12.7 million, compared to $45.1 million of
equipment  purchased  on behalf of the  equipment  growth  funds during the same
quarter of the prior year,  resulting in a $1.8 million  decrease in acquisition
and lease  negotiation  fees.  Also during the quarter ended September 30, 1997,
equipment purchased for the institutional  leasing investment program managed by
AFG was $10.2  million,  compared  to $4.3  million for the same period in 1996,
resulting  in an  increase in  acquisition  and lease  negotiation  fees of $0.2
million.  Because of the Company's decision to suspend  syndication of equipment
leasing  programs  with the close of Fund I on May 13, 1996,  and because Fund I
has a no front-end fee structure, acquisition and lease negotiation fees will be
substantially reduced in the future.

         Aircraft brokerage and services:

         Aircraft  brokerage  and services  revenue,  which  represents  revenue
earned by Aeromil Holdings, Inc., the Company's aircraft leasing and spare parts
brokerage subsidiary,  decreased $0.1 million during the quarter ended September
30,  1997,  compared to the same period of the prior year,  due to a decrease in
spare parts sales.


<PAGE>


Gain on the sale or disposition of assets, net:

         During the quarter  ended  September 30, 1997,  the Company  recorded a
$0.6 million net gain on the sale of commercial and industrial equipment. During
the quarter ended  September 30, 1996,  the Company  recorded a $0.3 million net
gain on the sale or disposition of assets.  Of this gain, $0.4 million  resulted
from  the  sale or  disposition  of  trailers,  marine  containers,  a  commuter
aircraft,  railcars,  and storage units, and $0.3 million related to the sale of
commercial and industrial equipment. These gains were partially offset by a $0.4
million  adjustment to decrease the estimated  net  realizable  value of certain
aircraft.

         Other:

         Other revenue increased $0.3 million during the quarter ended September
30,  1997,  compared  to the same  period of the prior  year,  due to  increased
revenue earned from financing income and brokerage fees.

         Costs and Expenses
<TABLE>
<CAPTION>

                                                                                 For the Three Months
                                                                                 Ended September 30,

                                                                    1997                          1996
                                                                    -----------------------------------------
                                                                                    (in thousands)

<S>                                                                       <C>                    <C>     
Operations support                                                        $ 3,901                $  4,938
Depreciation and amortization                                               2,315                   2,887
General and administrative                                                  2,709                   2,250
                                                                    -----------------------------------------
  Total costs and expenses                                                $ 8,925                 $10,075

</TABLE>

         Operations support:

Operations  support expense  (including salary and  office-related  expenses for
operational  activities,  equipment  insurance,  repair and  maintenance  costs,
equipment  remarketing  costs,  costs of goods sold,  and provision for doubtful
accounts) decreased $1.0 million (21%) for the quarter ended September 30, 1997,
compared to the same quarter in 1996. The decrease  resulted from a $0.3 million
decrease in compensation  and benefits expense due to staff  reductions,  a $0.3
million  decrease in  equipment  operating  costs due to sales of the  Company's
transportation  equipment,  a $0.2 million increase in allocable expenses due to
system  improvements  that now enable  program  expenses to be  allocated in the
month incurred rather than one month in arrears,  and a $0.2 million decrease in
other fees.

         Depreciation and amortization:

         Depreciation and amortization expenses decreased $0.6 million (20%) for
the quarter ended  September 30, 1997,  compared to the quarter ended  September
30, 1996. The decrease resulted from the reduction in depreciable transportation
equipment (discussed in the operating lease revenue section),  and was partially
offset by increased  depreciation  of  commercial  and  industrial  equipment on
operating lease.

         General and administrative:

General and  administrative  expenses  increased  $0.5 million  (20%) during the
quarter  ended  September  30,  1997,  compared  to the  same  quarter  in 1996,
primarily due to a $0.6 million increase in expense related to the redemption of
stock  options and to a $0.3 million  increase in legal fees related to the Koch
and Romei actions (refer to Note 8 to the  consolidated  financial  statements).
These expenses were partially  offset by a $0.4 million decrease in compensation
and benefits expenses.



<PAGE>


Other Income and Expenses
<TABLE>
<CAPTION>

                                                                              For the Three Months
                                                                               Ended September 30,

                                                                           1997                     1996
                                                                     -----------------------------------------
                                                                                   (in thousands)

<S>                                                                       <C>                      <C>      
Interest expense                                                          $(2,466 )                $(2,117 )
Interest income                                                               390                      368
Other income (expense), net                                                    15                     (738 )
Provision for income taxes                                                    624                      133

</TABLE>

         Interest expense:

         Interest expense  increased $0.3 million (16%) during the quarter ended
September 30, 1997,  compared to the same period in 1996,  due to an increase in
borrowings on the  nonrecourse  securitization  facility and the senior  secured
notes  facility.  The  increase in interest  expense  caused by these  increased
borrowings  was partially  offset by lower interest  expense  resulting from the
reduction  in the  amount  outstanding  on  the  senior  secured  loan  and  the
short-term secured debt facility.

Other income (expense), net:

During the third quarter of 1996, the Company  prepaid the $8.6 million  balance
of its subordinated debt and incurred  prepayment  penalties of $0.7 million. No
similar amounts were recorded during the quarter ended September 30, 1997.

         Provision for income taxes:

For the three months ended  September  30, 1997,  the provision for income taxes
was $0.6 million,  representing  an effective  rate of 32%. For the three months
ended  September  30,1996,  the  provision  for income  taxes was $0.1  million,
representing an effective rate of 9%. Tax-planning strategies, an adjustment for
state tax apportionment factors, and an adjustment related to the Employee Stock
Option Plan (ESOP)  resulted in a reduction in the Company's  effective tax rate
for the third quarter of 1996.

Net Income

As a result of the foregoing, for the three months ended September 30, 1997, net
income was $1.3  million,  resulting in net income per  weighted-average  common
share  outstanding  of $0.14.  For the same period in 1996,  net income was $1.4
million,  resulting in net income per weighted-average  common share outstanding
of $0.14.




<PAGE>


For the Nine Months Ended September 30, 1997 versus September 30, 1996

The following analysis reviews the operating results of the Company:

Revenues
<TABLE>
<CAPTION>

                                                                             For the Nine Months
                                                                             Ended September 30,

                                                                          1997                     1996
                                                                    -----------------------------------------
                                                                               (in thousands)

<S>                                                                       <C>                     <C>    
Operating leases                                                          $12,087                 $13,508
Finance lease income                                                        6,436                   2,578
Management fees                                                             8,450                   8,198
Partnership interests and other fees                                        1,155                   2,722
Acquisition and lease negotiation fees                                      1,749                   5,260
Aircraft brokerage and services                                             1,814                   2,037
Gain on the sale or disposition of assets, net                              3,250                   2,050
Other                                                                       2,329                   1,664
                                                                    -----------------------------------------
  Total revenues                                                          $37,270                 $38,017


</TABLE>

The  fluctuations  in revenues  for the nine months  ended  September  30, 1997,
compared to the same period in 1996, are summarized and explained below.

Operating lease revenues by equipment type:
<TABLE>
<CAPTION>

                                                                           For the Nine Months
                                                                           Ended September 30,

                                                                          1997                     1996
                                                                    -----------------------------------------
                                                                                (in thousands)

<S>                                                                      <C>                     <C>     
Trailers                                                                 $  6,047                $  5,765
Commercial and industrial equipment                                         3,933                   2,869
Mobile offshore drilling units                                                603                       -
Aircraft                                                                      521                   3,676
Marine vessel                                                                 501                       -
Storage equipment                                                             294                     820
Marine containers                                                             165                     289
Railcars                                                                       23                      89
                                                                    -----------------------------------------
  Total operating lease revenues                                          $12,087                 $13,508

</TABLE>

Operating  lease  revenues  include  revenues  generated  from  assets  held for
operating leases and assets held for sale that are on lease. As of September 30,
1997, the Company owned  transportation  equipment held for operating  leases or
held for sale with an original  cost of $60.9  million,  which was $31.9 million
less  than the  original  cost of  transportation  equipment  owned and held for
operating  leases or held for sale as of September  30, 1996.  The  reduction in
equipment,  on an  original  cost  basis,  is a  consequence  of  the  Company's
strategic decision to dispose of certain underperforming  transportation assets,
and resulted in an 81% net  reduction in its  aircraft  portfolio  and a 25% net
reduction in its marine container portfolio,  compared to these portfolios as of
September 30, 1996.  The  reduction in  transportation  equipment  available for
lease is the primary reason aircraft and marine container  revenue were reduced,
compared to the prior year's  comparable  period.  The $0.5 million  decrease in
storage  equipment lease revenue is due to an agreement the Company entered into
in January 1997 to lease all of its storage equipment assets to a third party on
a  triple-net  operating  lease,  as opposed  to  short-term  operating  leases,
resulting in both lower storage equipment operating lease revenues and operating
expenses.

The  decrease  in  operating  lease  revenues  as a result of the  reduction  in
transportation equipment available for lease and the storage equipment agreement
was partially offset by a $1.1 million increase in operating lease revenues as a
result of an  increase  in  commercial  and  industrial  equipment  owned and on
operating  lease and by a $0.3 million  increase in trailer lease  revenues as a
result of higher  lease rates  received on new trailer  additions.  In addition,
during the nine months ended  September  30, 1997,  the Company owned one mobile
offshore  drilling unit as well as a 25.5% interest in another  mobile  offshore
drilling unit, which together generated $0.6 million in lease revenue, and owned
a 47.5%  interest in a marine  vessel,  which  generated  $0.5  million in lease
revenue.  Both of the  drilling  units and the  marine  vessel  were sold at the
Company's cost to affiliated programs during the nine months ended September 30,
1997.

         Finance lease income:

The Company earns finance lease income for certain leases  originated by its AFG
subsidiary  that are either  retained for long-term  investment or sold to third
parties or to an institutional leasing investment program.  Finance lease income
increased $3.9 million during the nine months ended September 30, 1997, compared
to the same  period in 1996,  due to an increase in  commercial  and  industrial
assets owned and on finance lease. For the nine months ended September 30, 1997,
the average  investment in direct finance leases was $70.4 million,  compared to
$28.1 million for the same period of 1996.

Management fees:

         Management  fees are,  for the most part,  based on the gross  revenues
generated by equipment under management.  Management fees increased $0.3 million
during the nine months ended September 30, 1997,  compared to the same period of
the prior year. Although management fees related to Fund I and the institutional
leasing  investment  program managed by the Company's AFG subsidiary  increased,
management fees from the remaining older programs declined due to a net decrease
in managed  equipment  and due to lower lease  rates.  With the  termination  of
syndication  activities in 1996, management fees are expected to decrease in the
future as older programs begin liquidation and the managed  equipment  portfolio
becomes permanently reduced.  This decrease has been and is expected to continue
to be offset, in part, by management fees earned from the institutional  leasing
investment program managed by the Company's AFG subsidiary.

         Partnership interests and other fees:

The Company  records as  revenues  its equity  interest  in the  earnings of the
Company's affiliated programs. The net earnings and distribution levels from the
affiliated programs were $1.7 million and $2.1 million for the nine months ended
September  30,  1997 and 1996,  respectively.  In  addition,  a decrease of $0.5
million in the Company's  residual interests in the programs was recorded during
the nine months ended  September  30, 1997,  and a $0.6 million  increase in the
Company's residual interests in the programs was recorded during the same period
of 1996.  Residual income is based on the general partner's share of the present
value of the estimated  disposition  proceeds of the equipment  portfolio of the
affiliated  partnership  when the equipment is  purchased.  Net decreases in the
recorded  residual  values  result  when  partnership  assets  are  sold and the
reinvestment  proceeds  are  less  than  the  original  investment  in the  sold
equipment.

         Acquisition and lease negotiation fees:

During the nine months ended  September 30, 1997, the Company,  on behalf of the
equipment growth funds,  purchased  trailer  equipment and an entity that owns a
marine  vessel  for  $22.7  million,  compared  to $86.3  million  of  equipment
purchased on behalf of the equipment  growth funds during the same period of the
prior  year,  resulting  in a $3.5  million  decrease in  acquisition  and lease
negotiation  fees.  Acquisition  fees  related to  equipment  purchased  for the
institutional  leasing  investment  program managed by AFG were $0.5 million for
both the nine months ended September 30, 1997 and 1996. Because of the Company's
decision to halt  syndication  of equipment  leasing  programs with the close of
Fund I on May 13, 1996,  and because Fund I has a no  front-end  fee  structure,
acquisition  and lease  negotiation  fees will be  substantially  reduced in the
future.



<PAGE>


Aircraft brokerage and services:

         Aircraft  brokerage  and services  revenue,  which  represents  revenue
earned by Aeromil Holdings, Inc., the Company's aircraft leasing and spare parts
brokerage  subsidiary,  decreased  $0.2  million  during the nine  months  ended
September  30,  1997,  compared to the same  period of the prior year,  due to a
decrease in spare parts sales and due to the sale of the subsidiary's  ownership
interest in Austin Aero FBO Ltd. to third parties in January 1996.

         Gain on the sale or disposition of assets, net:

         During the nine months ended  September 30, 1997, the Company  recorded
$3.3 million in net gains on the sale or  disposition  of assets.  Of this gain,
$0.6 million  resulted from the sale or disposition of trailers,  storage units,
marine containers,  commuter aircraft, and railcars. Also during the nine months
ended  September 30, 1997,  the Company  purchased and  subsequently  resold two
commercial  aircraft  to an  unaffiliated  third  party  for a net  gain of $0.8
million and earned  $1.9  million  from the sale of  commercial  and  industrial
equipment. During the nine months ended September 30, 1996, the Company recorded
a $2.1 million net gain on the sale or disposition of assets. Of this gain, $1.9
million  resulted from the sale or disposition of trailers,  marine  containers,
railcars,  storage units, and commuter aircraft, and $0.6 million related to the
sale of commercial and industrial  equipment.  These gains were partially offset
by a $0.4 million  adjustment to decrease the estimated net realizable  value of
certain aircraft.

         Other:

         Other  revenues  increased  $0.7  million  during the nine months ended
September  30, 1997,  compared to the  comparable  prior year's  period,  due to
increased revenue earned from financing income and brokerage fees.

         Costs and Expenses

<TABLE>
<CAPTION>

                                                                             For the Nine Months
                                                                             Ended September 30,

                                                                          1997                     1996
                                                                    -----------------------------------------
                                                                                    (in thousands)

<S>                                                                       <C>                     <C>    
Operations support                                                        $12,123                 $16,159
Depreciation and amortization                                               6,661                   8,503
General and administrative                                                  7,435                   6,009
                                                                    -----------------------------------------
  Total costs and expenses                                                $26,219                 $30,671

</TABLE>

         Operations support:

Operations  support expense  (including salary and  office-related  expenses for
operational  activities,  equipment  insurance,  repair and  maintenance  costs,
equipment  remarketing  costs,  costs of goods sold,  and provision for doubtful
accounts)  decreased $4.0 million (25%) for the nine months ended  September 30,
1997,  compared to the same period in 1996.  The decrease  resulted  from a $1.4
million charge related to the  termination  of syndication  activities  recorded
during the nine months ended  September  30,  1996,  a $1.1 million  decrease in
compensation  and  benefits  expense  due to staff  reductions,  a $0.8  million
decrease  in  equipment   operating   costs  due  to  sales  of  the   Company's
transportation  equipment, a $0.5 million decrease in other office expenses, and
a $0.2 million increase in allocable  expenses due to system  improvements  that
now enable program  expenses to be allocated in the month  incurred  rather than
one month in arrears.

         Depreciation and amortization:

         Depreciation and amortization expenses decreased $1.8 million (22%) for
the nine months  ended  September  30,  1997,  compared to the nine months ended
September 30, 1996.  The decrease  resulted  from the  reduction in  depreciable
transportation equipment (discussed in the operating lease revenue section), and
was partially  offset by increased  depreciation  of commercial  and  industrial
equipment on operating lease.


<PAGE>


         General and administrative:

General and administrative expenses increased $1.4 million (24%) during the nine
months ended  September 30, 1997,  compared to the same period in 1996, due to a
$0.6 million  increase in expense related to the redemption of stock options,  a
$0.5 million increase in legal fees related to the Koch and Romei actions (refer
to Note 8 to the consolidated financial statements),  a $0.5 million increase in
costs related to a submission of matters to a vote of security  holders,  a $0.3
million credit recorded in the second quarter of 1996 related to the ESOP, and a
$0.2 million increase in compensation and benefits expenses. These expenses were
partially  offset by a $0.5 million  decrease in  office-related  expenses and a
$0.2 million decrease in consulting expense.

Other Income and Expenses
<TABLE>
<CAPTION>

                                                                                For the Nine Months
                                                                                Ended September 30,

                                                                            1997                    1996
                                                                     -----------------------------------------
                                                                                  (in thousands)

<S>                                                                       <C>                      <C>      
Interest expense                                                          $(7,460 )                $(5,100 )
Interest income                                                             1,228                      891
Other income (expense), net                                                    (9 )                   (348 )
Provision for income taxes                                                  1,562                      371

</TABLE>

         Interest expense:

         Interest  expense  increased  $2.4 million (46%) during the nine months
ended  September  30,  1997,  compared  to the same  period  in 1996,  due to an
increase in borrowings on the nonrecourse  securitization  facility,  the senior
secured notes facility,  and the short-term secured debt facility.  The increase
in interest expense caused by these increased borrowings was partially offset by
lower interest expense  resulting from the retirement of the  subordinated  debt
and the reduction in the amount outstanding on the senior secured loan.

         Interest income:

         Interest  income  increased $0.3 million (38%) in the nine months ended
September  30, 1997,  compared to the same period in 1996, as a result of higher
average cash balances for the nine months ended September 30, 1997,  compared to
the same period in 1996.

Other income (expense), net:

During the nine months ended  September 30, 1996,  the Company  prepaid the $8.6
million balance of its subordinated  debt and incurred  prepayment  penalties of
$0.7 million,  which was partially offset by other income of $0.4 million due to
the  sale of 32 wind  turbines  during  the  second  quarter  of 1996  that  had
previously  been written off. No similar  amounts were recorded  during the nine
months ended September 30, 1997.

         Provision for income taxes:

For the nine months ended September 30, 1997, the provision for income taxes was
$1.6  million,  representing  an  effective  rate of 32%. For the same period in
1996, the provision for income taxes was $0.4 million, representing an effective
rate of 13%. Tax-planning strategies,  an adjustment for state tax apportionment
factors,  and an  adjustment  related to the ESOP resulted in a reduction in the
Company's effective tax rate for 1996.



<PAGE>


Net Income

         As a result of the foregoing,  for the nine months ended  September 30,
1997, net income was $3.2 million,  resulting in net income per weighted-average
common share  outstanding of $0.34.  For the same period in 1996, net income was
$2.4  million,  resulting  in  net  income  per  weighted-average  common  share
outstanding of $0.23.

         Liquidity and Capital Resources

         Cash  requirements  historically  have been satisfied through cash flow
from operations, borrowings, or sales of equipment.

         Liquidity in 1997 and beyond will  depend,  in part,  on the  continued
remarketing of the equipment portfolio at similar lease rates, the management of
existing  sponsored  programs,  the effectiveness of cost control programs,  the
purchase and sale of  equipment,  and the volume of  commercial  and  industrial
equipment  leasing  transactions  for which the Company earns fees and a spread.
Management  believes the Company can  accomplish  the preceding and that it will
have sufficient liquidity and capital resources for the future. Future liquidity
is influenced by the factors summarized below.

     Debt financing:

Senior  Debt:  The  Company's  $22.1  million  senior loan with a  syndicate  of
insurance companies provides that equipment sale proceeds from pledged equipment
or cash  deposits  be  placed  into  collateral  accounts  or  used to  purchase
additional  equipment to the extent required to meet certain debt covenants.  As
of September  30,  1997,  the cash  collateral  balance was $13.3  million.  The
facility  required  quarterly  interest  payments  through March 31, 1997,  with
quarterly  principal  payments of $1.47 million plus interest charges  beginning
June 30, 1997 through termination of the loan in June 2001.

Senior  Notes:  On June 28,  1996,  the Company  closed a  floating-rate  senior
secured note  agreement  that allowed the Company to borrow up to $27.0  million
within a one-year  period.  During the nine months ended September 30, 1997, the
Company drew down $9.0 million and prepaid  $1.9 million on this  facility.  The
outstanding  balance as of October  24,  1997 was $25.1  million.  Beginning  in
November 1997, the Company will be required to make quarterly principal payments
of $1.25 million.

        Bridge  Financing:  Assets  acquired  and held on an  interim  basis for
placement  with  affiliated  partnerships  or  purchased  for  placement  in the
Company's securitization facility have, from time to time, been partially funded
by a $50.0 million  short-term  secured debt facility.  The Company amended this
facility on October 3, 1997 to extend its  availability  until November 3, 1997.
The facility,  which is shared with PLM Equipment Growth Funds (EGFs) IV, V, and
VI, PLM Equipment  Growth & Income Fund VII, and  Professional  Lease Management
Fund I, LLC,  allows the Company to purchase  equipment prior to its designation
to a specific  program or  partnership.  As of October 24, 1997, the Company had
$1.5  million in  borrowings,  and EGF V and EGF VI had $9.1  million  and $10.0
million  in  outstanding  borrowings,  respectively,  under this  facility.  The
Company believes it will be able to extend this facility prior to its expiration
on similar terms.

        Securitized Debt: The Company has available a securitization facility to
be used to acquire  assets on a  nonrecourse  basis,  secured by direct  finance
leases,  operating leases, and loans on commercial and industrial equipment that
generally have terms from two to seven years.  The Company amended this facility
on October  14,  1997,  increasing  the  facility  from $80.0  million to $125.0
million and extending the  availability  of the facility until October 13, 1998.
As of October 24, 1997, there were $72.1 million in borrowings outstanding under
this facility.

Interest-Rate  Swap Contracts:  The Company has entered into  interest-rate swap
agreements in order to manage the  interest-rate  exposure  associated  with its
securitized  debt. As of September 30, 1997,  the swap  agreements had remaining
terms averaging 2.76 years,  corresponding  to the terms of the related debt. At
September  30, 1997, a notional  amount of $68.5 million of  interest-rate  swap
agreements  effectively  fixed  interest  rates at an  average  of 7.16% on such
obligations.  For the nine months ended  September  30, 1997,  interest  expense
increased by $0.2 million due to these arrangements.


<PAGE>


     Commercial and industrial equipment activities:

The Company earns finance lease or operating lease income for leases  originated
and retained by its AFG  subsidiary.  The funding of leases requires the Company
to retain an equity interest in all leases financed  through the  securitization
facility. AFG also originated loans in which it takes a security interest in the
assets.  From January 1, 1997 through  October 24, 1997,  the Company  purchased
commercial  and industrial  equipment  with an original  equipment cost of $75.3
million.  A portion of these  transactions  was financed,  on an interim  basis,
through the  Company's  bridge-financing  facility.  Some  equipment  subject to
leases is sold to an  institutional  leasing  investment  program  for which the
Company serves as the manager.  Acquisition and management fees are received for
the sale and subsequent  management of these leases.  The Company  believes that
this lease origination operation is a growth area for the future.

     As of September  30, 1997,  the Company,  through its AFG  subsidiary,  had
committed  to  purchase  $102.5  million of  equipment  for its  commercial  and
industrial  equipment lease portfolio,  to be held by the Company or sold to the
Company's institutional leasing investment program or to third parties.

From October 1, 1997  through  October 24,  1997,  the Company,  through its AFG
subsidiary,  funded $5.4 million of commitments  outstanding as of September 30,
1997 for its commercial and industrial equipment lease portfolio.

As of October 24, 1997, the Company had committed to purchase  $145.3 million of
equipment for its commercial and industrial equipment lease portfolio.

     Transportation equipment activities:

During the nine months ended September 30, 1997, the Company generated  proceeds
of  $10.8  million  from the sale of  owned  transportation  equipment.  The net
proceeds  on the sale of assets that were  collateralized  as part of the senior
loan facility were placed in a collateral account.

The Company operates 10 trailer rental  facilities that engage in short-term and
mid-term operating leases.  Equipment  operated in these facilities  consists of
dry van trailers leased to a variety of customers and refrigerated trailers used
primarily in the food distribution  industry.  The Company is selling certain of
its older trailers and is replacing  them with new or late-model  used trailers.
The new trailers will be placed in existing rental facilities or in new yards.

         Over the last four years, the Company has downsized its  transportation
equipment portfolio through the sale or disposal of underperforming  assets. The
Company will  continue to analyze its  transportation  equipment  portfolio  for
underperforming assets to sell or dispose of as necessary.

Management  believes that through debt and equity  financing,  possible sales of
equipment,  and cash flows from  operations,  the Company  will have  sufficient
liquidity and capital resources to meet its projected future operating needs.

     Forward-looking information:

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



<PAGE>


                           PART II - OTHER INFORMATION


         Item 1.  Legal Proceedings

         See Note 8 to the consolidated financial statements.


Item 6.  Exhibits and Reports on Form 8-K

(A)  Exhibits

10.1 Second  Amendment to Warehousing  Credit  Agreement among American  Finance
Group Inc.,  First Union National Bank of North Carolina,  and Fleet Bank, N.A.,
dated as of October 3, 1997.

10.2 Third Amendment to Amended and Restated  Warehousing Credit Agreement among
TEC AcquiSub, Inc., First Union National Bank of North Carolina, and Fleet Bank,
N.A., dated as of October 3, 1997.

10.3 Third  Amendment to Pooling and Servicing  Agreement and Indenture of Trust
among AFG Credit  Corporation,  American  Finance Group,  Inc. and Bankers Trust
Company, dated as of October 14, 1997.

10.4 Series 1997-1 Supplemental Indenture to Pooling and Servicing Agreement and
Indenture of Trust among AFG Credit  Corporation,  American Finance Group, Inc.,
First Union  Capital  Markets  Corp.,  and Bankers  Trust  Company,  dated as of
October 14, 1997.

10.5 Note Purchase  Agreement  among AFG Credit  Corporation,  Variable  Funding
Capital Corporation,  and First Union Capital Markets Corp., dated as of October
14, 1997.


(B) Reports on Form 8-K

July 28, 1997 -  Announcement  regarding  the  retirement  of two members of PLM
International's Board of Directors, J. Alec Merriam and Robert L. Pagel.

     September  3,  1997 -  Announcement  regarding  the  election  of Robert N.
Tidball as Chairman of the Board of Directors of the Company and the election of
Randall  L.W.  Caudill as a Class II director of the Board of  Directors  of the
Company.


<PAGE>





<PAGE>


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


                                             PLM INTERNATIONAL, INC.



                                             /s/Richard Brock
                                             --------------------   
                                             Richard Brock
                                             Vice President and
                                             Corporate Controller






          Date: October 24, 1997