UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                     --------------------------------------
                                  FORM 10-Q/A
                               (Amendment No. 1)




[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, 1996.

                                                        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 November 4, 1996 - 9,142,761 shares


<PAGE>


                            PLM INTERNATIONAL, INC.
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                          September 30,           December 31,
                                                                               1996                   1995
                                                                                     (in thousands)
                                     ASSETS
   <S>                                                                     <C>                     <C>       
   Cash and cash equivalents                                               $    7,020              $   13,764
   Receivables                                                                  5,817                   4,931
   Receivables from affiliates                                                  5,816                   8,690
   Investment in direct finance leases, net                                    43,243                      --
   Loan receivable                                                              3,006                      --
   Assets held for sale                                                           748                     719
   Equity interest in affiliates                                               30,857                  28,208

   Equipment held for operating leases                                        103,651                 112,732
     Less accumulated depreciation                                            (56,136 )               (64,892 )
                                                                               47,515                  47,840
   Restricted cash and cash equivalents                                        21,687                  10,621
   Other, net                                                                  11,359                  11,440

   Total assets                                                            $  177,068              $  126,213

            LIABILITIES, MINORITY INTEREST, AND SHAREHOLDERS' EQUITY

   Liabilities:
     Short-term secured debt                                               $   27,791              $       --
     Senior secured loan                                                       35,000                  35,000
     Senior secured notes                                                      18,000                      --
     Other secured debt                                                         1,174                   1,353
     Subordinated debt                                                             --                  11,500
     Nonrecourse securitization facility                                       22,308                      --
     Payables and other liabilities                                            11,910                  13,884
     Deferred income taxes                                                     15,823                  15,493
   Total liabilities                                                          132,006                  77,230

   Minority interest                                                              372                     363

   Shareholders' Equity:
     Common  stock,  $.01 par value,  50,000,000  shares  authorized,  9,142,761
       issued and outstanding at September 30, 1996 and 10,833,161 at
       December 31, 1995                                                          117                     117
     Paid-in capital, in excess of par                                         77,778                  77,743
     Treasury stock (3,453,630 and 1,753,230 shares at
        respective dates)                                                     (12,382 )                (5,931 )
                                                                               65,513                  71,929
   Accumulated deficit                                                        (20,823 )               (23,309 )
   Total shareholders' equity                                                  44,690                  48,620

     Total liabilities, minority interest,
       and shareholders' equity                                            $  177,068              $  126,213

</TABLE>


             See accompanying notes to these consolidated financial
                                  statements.


<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,
                                                                       1996           1995                 1996           1995

       <S>                                                          <C>            <C>                <C>           <C>         
       Revenues:
         Operating leases                                           $   4,351      $   5,311          $   13,508    $     17,942
         Management fees                                                2,752          2,909               8,198           8,231
         Partnership interests and other fees                           1,430          1,410               2,722           3,739
         Acquisition and lease negotiation fees                         2,596          2,467               5,260           4,797
         Finance lease income                                           1,532             --               2,578              --
         Commissions                                                       --             --                  --           1,322
         Aircraft brokerage and services                                  621          1,383               2,037           3,700
         Gain on the sale or disposition of assets, net                   257            730               2,050           5,911
         Other                                                            521            540               1,664           1,062
           Total revenues                                              14,060         14,750              38,017          46,704

       Costs and expenses:
         Operations support                                             4,938          6,050              16,359          18,602
         Depreciation and amortization                                  2,887          2,104               8,503           6,491
         Commissions                                                       --            (51 )                --           1,417
         General and administrative                                     2,250          2,579               5,809           7,646
           Total costs and expenses                                    10,075         10,682              30,671          34,156

       Operating income                                                 3,985          4,068               7,346          12,548

       Interest expense                                                 2,117          1,609               5,100           5,540
       Other (expense) income, net                                       (738 )          591                (348 )           537
       Interest income                                                    368            566                 891           1,491
       Income before income taxes                                       1,498          3,616               2,789           9,036

       Provision for income taxes                                         133          1,559                 371           3,884

       Net income to common shares                                  $   1,365      $   2,057          $    2,418    $      5,152

       Earnings per common share outstanding                        $    0.14      $    0.18          $     0.23    $       0.44

</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,
                            1995 and the Nine Months
                          Ended September 30, 1996 (in
                                   thousands)



<TABLE>
<CAPTION>



                                                  Common Stock
                                   --------------------------------------
                                               Paid-in
                                              Capital in                      Earnings           Total
                                     At         Excess         Treasury     Accumulated      Shareholders'
                                     Par        of Par          Stock        (Deficit)           Equity
                                  ----------------------------------------------------------------------------
<S>                                <C>        <C>            <C>            <C>              <C>            
Balances, December 31, 1994        $ 117      $  77,699      $   (2,831 )   $  (29,290 )     $        45,695

Net income                                                                       6,048                 6,048
Common stock repurchases                                         (3,100 )                             (3,100 )
Exercise of stock options                            44                                                   44
Translation loss                                                                   (67 )                 (67 )
                                  ----------------------------------------------------------------------------
Balances, December 31, 1995          117         77,743          (5,931 )      (23,309 )              48,620

Net income                                                                       2,418                 2,418
Common stock repurchases                                         (6,451 )                             (6,451 )
Exercise of stock options                            35                                                   35
Translation gain                                                                    68                    68
                                  =============================================================================
Balances, September 30, 1996       $ 117      $  77,778      $  (12,382 )   $  (20,823 )     $        44,690


</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,
                                                                                              1996               1995
   <S>                                                                                 <C>                  <C>        
   Operating activities:
     Net income                                                                        $       2,418        $     5,152
     Adjustments to reconcile net income to net cash
       provided by operating activities:
         Depreciation and amortization                                                         8,503              6,491
         Foreign currency translation                                                             68                 29
         Increase in deferred income taxes                                                       348              3,659
         Gain on sale or disposition of assets, net                                           (2,050 )           (5,911 )
         Undistributed residual value interests                                                 (405 )             (201 )
         Minority interest in net income of subsidiaries                                           9                 31
         Decrease in payables and other liabilities                                           (1,966 )             (472 )
         Decrease (increase) in receivables and receivables from affiliates                    3,260             (2,063 )
         Increase in loan receivable                                                          (3,006 )               --
         Cash distributions from affiliates in excess of income accrued                        2,086                580
         Increase in other assets                                                              (368)               (906 )
           Net cash provided by operating activities                                           8,897              6,389

   Investing activities:
     Additional investment in affiliates                                                      (4,972 )           (7,718 )
     Purchase of residual option                                                                  --               (200 )
     Principal payments received on finance leases                                             2,603                 --
     Investment in direct finance leases                                                     (57,295 )               --
     Purchase of equipment                                                                   (40,759 )          (41,454 )
     Proceeds from  the sale of transportation equipment for lease                             7,288             11,498
     Proceeds from the sale of assets held for sale                                            2,052             38,462
     Proceeds from the sale of commercial and industrial equipment to
       institutional investment program                                                       20,941                 --
     Proceeds from the sale of commercial and industrial equipment to
       third parties                                                                          14,961                 --
     Proceeds from the sale of leveraged leased assets                                            --              4,530
     Proceeds from the disposition of residual options                                            --              2,059
     Sale of investment in subsidiary                                                            372                 --
     Increase in restricted cash and restricted cash equivalents                             (11,066 )           (9,318 )
           Net cash used in investing activities                                             (65,875 )           (2,141 )

</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,
                                                                                              1996               1995

   <S>                                                                                 <C>                <C>          
   Financing activities:
     Borrowings of short-term secured debt                                             $      59,390      $       9,800
     Repayment of short-term secured debt                                                    (31,599 )          (16,204 )
     Proceeds from other secured debt                                                             90                657
     Repayment of other secured debt                                                             (39 )              (33 )
     Borrowings under senior notes facility                                                   18,000                 --
     Borrowings under securitization facility                                                 29,989                 --
     Repayment of securitization facility                                                     (7,681 )               --
     Repayment of subordinated debt                                                          (11,500 )               --
     Payments received from ESOP Trustee                                                          --                928
     Repurchase of treasury stock                                                             (6,451 )             (494 )
     Proceeds from exercise of stock options                                                      35                 44
         Net cash provided by (used in) financing activities                                  50,234             (5,302 )

   Net decrease in cash and cash equivalents                                                  (6,744 )           (1,054 )
   Cash and cash equivalents at beginning of period                                           13,764             16,131
   Cash and cash equivalents at end of period                                                  7,020

   Supplemental information:
     Interest paid during the period                                                   $       4,188      $       4,878
     Income taxes paid during the period                                               $       1,285      $         595

</TABLE>

























             See accompanying notes to these consolidated financial
                                  statements.


<PAGE>



                            PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1996


1.   General

   
In the opinion of management,  the accompanying unaudited consolidated financial
statements contain all normal recurring  adjustments necessary to present fairly
PLM International, Inc.'s (the Company's) financial position as of September 30,
1996, the statements of income for the three and nine months ended September 30,
1996 and 1995, the statements of cash flows for the nine months ended  September
30, 1996 and 1995, and the statements of changes in shareholders' equity for the
year ended  December  31, 1995 and the nine months  ended  September  30,  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/A for the year ended  December 31, 1995,  on file with the  Securities  and
Exchange Commission.
    

2.   Reclassifications

Certain  amounts in the 1995  financial  statements  have been  reclassified  to
conform to the 1996 presentation.

3.   Finance Lease Activities

   
In 1995,  the  Company  established  a new  wholly-owned  equipment  leasing and
management  subsidiary,  American Finance Group, Inc. (AFG), and entered into an
agreement to manage certain  operations of  Boston-based,  privately-held  Equis
Financial Group (Equis).  During 1995, the Company provided  management services
for investor  programs of Equis for which the Company earned management fees and
other  revenues.  In  January  1996,  the  agreement  was  modified  to  exclude
management  of Equis'  investor  programs.  Under the  modified  agreement,  the
Company obtained the lease origination and servicing operations,  and the rights
to  manage  an  institutional  leasing  investment  program.  Additionally,  the
agreement  provided for AFG to acquire software,  computers,  and furniture that
support the marketing and operations activities. AFG is originating and managing
lease  transactions  on new  commercial  and  industrial  equipment such as data
processing,  communications,  materials  handling,  and construction  equipment,
which are financed by a securitization  facility, for the Company's own account,
or sold to the institutional investment program or other investors. The majority
of these leases are accounted for as direct finance  leases.  Periodically,  the
Company will use its short-term  loan facility to finance the acquisition of the
assets  subject to these  leases  prior to sale or  permanent  financing  by the
securitization facility.
    

4.   Equipment

Equipment  held for  operating  leases  includes  transportation  equipment  and
commercial and industrial  equipment purchased by AFG which are depreciated over
their estimated useful lives, subject to an impairment analysis.

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.  Transportation  equipment  held for sale is valued at the lower of
depreciated cost or fair value less costs to sell. As of September 30, 1996, the
Company had one  commuter  aircraft  subject to a pending  contract for sale for
$0.7 million,  with an aggregate net book value of $0.7 million.  As of December
31, 1995, the Company had 1 marine  container and 69 railcars subject to pending
contracts for sale for a total of $0.7 million, with an aggregate net book value
of $0.7 million.

Periodically,  the Company will purchase groups of assets whose ownership may be
allocated  among  affiliated  partnerships  and the Company.  Generally in these
cases,  only  assets  that  are on lease  will be  purchased  by the  affiliated
partnerships.  The Company will generally  assume the ownership and  remarketing
risks associated with off-lease equipment. Allocation of the purchase price will
be  determined  by a  combination  third  party  industry  sources,  and  recent
transactions or published fair market value  references.  During the nine months
ended September 30, 1996, the Company realized

<PAGE>


4.   Equipment (continued)

$0.7  million of gains on the sale of 69  railcars  purchased  by the Company as
part of a group of assets in 1994 which had been  allocated to Equipment  Growth
Funds (EGFs) IV, VI, VII,  Professional  Lease Management  Income Fund I, L.L.C.
(Fund I) and the Company.  These assets were included in assets held for sale at
December 31, 1995.

5.   Debt

Assets  acquired  and held on an interim  basis for  placement  with  affiliated
partnerships  or purchased  with the intent of permanent  financing  through the
Company's securitization facility have, from time to time, been partially funded
by a $35.0 million short-term equipment  acquisition loan facility.  The Company
amended this facility on May 31, 1996. The amendment  extended the  availability
of the facility  until May 23, 1997 and added the Company's AFG  subsidiary as a
borrower.

This facility,  which is shared with EGFs III, IV, V, VI, VII and Fund I, allows
the Company to purchase equipment prior to the designated program or partnership
being identified,  or prior to its having raised sufficient  capital to purchase
the equipment.  This facility provides 80% financing for  transportation  assets
and the lesser of 100% of the  present  value of the lease  stream or 85% of the
original  equipment cost on commercial and  industrial  equipment  purchased for
placement  in the  securitization  facility,  if the Company is the borrower and
working capital is used for the  nonfinanced  costs of these  acquisitions.  The
Company can hold purchased assets under this bridge facility for up to 150 days.
Interest  accrues at prime or LIBOR plus 2.0% at the option of the  borrower  at
the time of the advance  under the facility.  The Company  retains the net lease
revenue earned and is liable for the interest expense during the interim holding
period since its capital is at risk. As of September 30, 1996, the Company's AFG
subsidiary  had borrowed $27.8 million and the EGFs and Fund I had no borrowings
on this facility.  All borrowings under this line are guaranteed by a subsidiary
of the Company.

On October 31, 1996,  the Company  amended this  agreement (for details refer to
"Liquidity and Capital Resources").

The Company has available a  securitization  facility for up to $80 million on a
nonrecourse  basis that is secured  primarily  by direct  finance  leases  which
generally have terms of three to five years. The facility is available for a one
year period expiring July 1997.  Repayment of the facility  matches the terms of
the underlying leases. The securitized debt bears interest equivalent to average
U.S.  treasury rates plus 1%. As of September 30, 1996, there were $22.3 million
in borrowings outstanding under this facility.

6.   Note Agreement

On June 28,  1996,  the Company  completed a floating  rate senior  secured note
agreement  which allows the Company to borrow up to $27.0  million  within a one
year period. At September 30, 1996, $18.0 million in borrowings were outstanding
under this facility.  The facility bears interest at three-month  LIBOR plus 240
basis  points.  The  Company has pledged  substantially  all of its  management,
acquisition and lease negotiation fees, and certain partnership distributions as
collateral  to the  facility.  The facility  requires  quarterly  interest  only
payments  through  August  15,  1997,  with  principal  plus  interest  payments
beginning  November 15,  1997.  Principal  payments are payable  quarterly in 20
equal amounts through termination of the loan on August 15, 2002.

7.   Shareholders' Equity

The Company  repurchased 1.7 million shares of its common stock for $6.5 million
during the nine months ended  September 30, 1996.  The  repurchases  completed a
$5.0 million common stock repurchase program announced in November 1995, as well
as an additional repurchase of $3.7 million authorized by the Company's Board of
Directors in July 1996.

Additionally,  during the nine months  ended  September  30,  1996,  options for
10,000 shares were exercised.  Consequently, the total common shares outstanding
decreased to 9,142,761 at September

<PAGE>


7.   Shareholders' Equity (continued)

30, 1996,  from the 10,833,161  outstanding at December 31, 1995. Net income per
common  share was  computed  by  dividing  net  income  to common  shares by the
weighted  average number of shares and stock options deemed  outstanding  during
the period.  The  weighted  average  number of shares and stock  options  deemed
outstanding  during the three months  ended  September  30, 1996 and 1995,  were
9,505,195 and 11,755,658,  respectively.  The weighted  average number of shares
and stock options deemed  outstanding during the nine months ended September 30,
1996 and 1995, were 10,499,605 and 11,799,894, respectively.

8.   Syndication Activities

   
On May 14, 1996,  the Company  announced  the halt of  syndication  of equipment
leasing  programs  with the May 13, 1996 close of Fund I after  concluding  that
future syndication sales would not reach the levels required to make syndication
activities  financially  attractive  to the  Company.  The Company  recognized a
one-time $1.4 million  charge  during the nine months ended  September 30, 1996,
mainly related to severance pay associated with this decision.
    

Through May 13, 1996, Fund I had raised $100 million in equity and is now in the
equipment investment phase.

9.   Sale of Subsidiary

In January 1996, the Company sold its 100% ownership interest in Austin Aero FBO
Ltd. to a third party for  $923,000.  The Company  recorded a $2,000 loss on the
sale, net of the tax benefit.  During the year ended 1995, revenues and expenses
related  to  Austin  Aero  FBO  Ltd.   were  $2.3  million  and  $2.1   million,
respectively,  representing  net income of $0.2 million or net income per common
share of $0.01.

10.  Legal Matters

The Company is involved as  plaintiff  or  defendant  in various  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.

In  November  1995,  James F.  Schultz  (Plaintiff),  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 (the ESOP), the ESOP's trustee, and certain individual employees,
officers,  and/or directors of PLM International.  The Complaint contains claims
for relief alleging  breaches of fiduciary duties and various  violations of the
Employee Retirement Income Security Act of 1974 (ERISA) arising principally from
purported defects in the structure,  financing,  and termination of the ESOP and
for interference with Plaintiff's  rights under ERISA.  Plaintiff seeks monetary
damages,  rescission of the preferred  stock  transactions  with the ESOP and/or
restitution  of ESOP assets,  and  attorneys'  fees,  and costs under ERISA.  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 has
appealed to the U.S. Court of Appeals for the Ninth Circuit,  seeking a reversal
of District Court's  judgment.  The parties are required to complete briefing on
the appeal by January 2, 1997.



<PAGE>


11.  Purchase Commitments

As of September 30, 1996, the Company, through its AFG subsidiary, had committed
to purchase  $208.8  million of  equipment  for its  commercial  and  industrial
equipment lease portfolio.

During  October  1996,  the Company,  through its AFG  subsidiary,  funded $12.8
million of commitments  outstanding for its commercial and industrial  equipment
lease  portfolio at September  30, 1996,  and entered into new  commitments  for
$24.2 million.

12.  Subsequent Event

On October 1, 1996, the Company repaid $10.0 million of the entire floating rate
portion of its senior loan through the use of  restricted  cash from the sale of
pledged equipment and incurred prepayment penalties of $0.1 million.




<PAGE>



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

The Company owns a diversified portfolio of transportation  equipment from which
it earns operating lease revenue and incurs  operating  expenses.  The Company's
transportation  equipment held for operating leases, which consists of aircraft,
marine  containers,  trailers,  and storage  equipment at September 30, 1996, is
mainly  equipment built prior to 1988. As equipment ages, the Company  continues
to monitor the performance of its assets on lease and 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 and higher costs
of maintaining and operating aged equipment and, in certain  instances,  limited
remarketability.

The Company has syndicated  investment programs from which it earns various fees
and equity interests.  The Professional  Lease Management Income Fund I (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
is then managed 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 the 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 the partnership subject to certain allocation
provisions.  The Fund I agreement  entitles the Company to a 15% interest in the
cash  distributions  and earnings of the 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 halt of public  syndication
of  equipment  leasing  programs  with  the May 13,  1996  close of Fund I after
concluding that future  syndication sales would not reach the levels required to
make syndication  activities  financially attractive to the Company. 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 is engaged in the  funding  and  management  of  longer-term  direct
finance  leases and operating  leases  through its American  Finance Group (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.  This is an important  new growth area for the Company.
The investment in AFG permits the Company to apply much of the same  accounting,
finance  and   management   experience   gained  from  its  many  years  in  the
transportation  sector.  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.



<PAGE>


For the Three Months Ended September 30, 1996 versus September 30, 1995

The following analysis reviews the operating results of the Company:
<TABLE>
<CAPTION>

        Revenue:                                                                For the three months
                                                                                 ended September 30,
                                                                               1996              1995
                                                                                   (in thousands)
        <S>                                                                 <C>             <C>        
        Operating leases                                                    $  4,351        $     5,311
        Management fees                                                        2,752              2,909
        Partnership interests and other fees                                   1,430              1,410
        Acquisition and lease negotiation fees                                 2,596              2,467
        Finance lease income                                                   1,532                 --
        Aircraft brokerage and services                                          621              1,383
        Gain on the sale or disposition of assets, net                           257                730
        Other                                                                    521                540
            Total revenues                                                  $ 14,060        $    14,750

</TABLE>

The  fluctuations in revenues for the three months ended September 30, 1996 from
the same period in 1995 are summarized and explained below.

Operating lease revenue:
<TABLE>
<CAPTION>
                                                                 For the three months
                                                                  ended September 30,
                                                                1996              1995
                                                                    (in thousands)
   <S>                                                        <C>              <C>      
   By equipment type:
     Trailers                                                 $ 1,807          $   2,508
     Aircraft                                                   1,111              1,514
     Marine vessels                                                --                (13 )
     Marine containers                                             70                156
     Storage equipment                                            276                263
     Railcars                                                      16                190
     Commercial and industrial equipment                        1,071                693
                                                              $ 4,351          $   5,311

</TABLE>

As of September 30, 1996,  the Company owned  transportation  equipment held for
operating leases or held for sale with an original cost of $92.8 million,  which
was $41.9 million less than the original cost of transportation  equipment owned
and held for  operating  leases  or held for sale at  September  30,  1995.  The
reduction in  equipment,  on an original  cost basis,  is a  consequence  of the
Company's   strategic  decision  to  dispose  of  certain   underperforming  and
nonperforming transportation assets resulting in a 100% reduction in its railcar
portfolio,  a 35% net  reduction in its marine  container  portfolio,  a 43% net
reduction  in its  aircraft  portfolio,  and an 8% net  reduction in its trailer
portfolio,  compared to September 30, 1995.  Operating  lease  revenue  includes
revenues  generated from assets held for operating leases,  assets held for sale
that are on lease,  and rents  received  during  short-term  holding  periods on
operating leased assets. The reduction in transportation equipment available for
lease is the primary reason trailer,  railcar,  marine  container,  and aircraft
revenue  were all reduced as compared to the prior year.  In  addition,  trailer
lease revenue decreased due to lower utilization.

The  decrease  in  operating  lease  revenues  as a result of the  reduction  in
equipment available for lease was partially offset by a $0.4 million increase in
operating lease revenues generated by commercial and industrial equipment leases
on $13.2  million  of  purchased  equipment  and  revenues  generated  on leased
equipment purchased for $5.5 million prior to being sold to third parties.



<PAGE>


Management fees:

         Management  fees are,  for the most part,  based on the gross  revenues
generated by equipment under management. The $0.2 million decrease in management
fees during the quarter  ended  September 30, 1996,  compared to the  comparable
prior year quarter,  resulted from a decrease in  management  fees  generated by
gross  revenues  of the  managed  programs  which fell due to a net  decrease in
managed  equipment  and a decrease in lease rates for certain types of equipment
in those programs and the elimination of management of the Equis Financial Group
(Equis)  programs.  With the termination of syndication  activities,  management
fees are  expected  to  decrease  in the  future  as the  older  programs  begin
liquidation and the managed  equipment  portfolio becomes  permanently  reduced.
This future decrease will 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 $0.6 million and $0.8 million for the quarters  ended
September 30, 1996 and 1995,  respectively.  In addition,  net increases of $0.8
million and $0.6 million in the Company's  residual  values were recorded during
the  quarters  ended  September  30,  1996 and  1995,  respectively.  These  net
increases  in residual  values were  related to  equipment  purchased by Fund I,
offset  partially  by  decreases  in residual  values  related to certain of the
equipment  growth funds and Equis  programs.  Residual  income is  recognized on
residual  interests based upon the general  partner's share of the present value
of  the  estimated  disposition  proceeds  of  the  equipment  portfolio  of the
affiliated  partnership.  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,  1996,  a total of $45.1  million of
equipment  was  purchased on behalf of the  equipment  growth funds  compared to
$41.2  million  during the same  quarter of the prior year,  resulting in a $0.2
million  increase  in  acquisition  and lease  negotiation  fees.  In  addition,
acquisition  and lease  negotiation  fees related to AFG  purchases  for managed
programs  decreased  $0.1 million in the quarter  ended  September  30, 1996, as
compared to the quarter  ended  September 30, 1995. As a result 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 had a no  front-end  fee  structure,
acquisition and lease negotiation fees will be reduced in the future.

         Finance lease income:

The Company earns finance lease income for certain leases  originated by its AFG
subsidiary  and  retained for  long-term  investment.  During the quarter  ended
September 30, 1996,  the Company  earned direct  finance lease income on average
equipment  purchases of $38.5 million,  financed by both short-term secured debt
and a nonrecourse  securitization facility. These direct finance leases resulted
in $1.5  million  in  earned  income  for  the  third  quarter  of  1996,  which
represented  income  earned on the lease payment  stream.  There were no similar
transactions in the comparable prior year period.

         Aircraft brokerage and services:

         Aircraft  brokerage  and services  revenue,  which  represents  revenue
earned by Aeromil Holdings,  Inc. (Aeromil),  the Company's aircraft leasing and
spare parts  brokerage  subsidiary,  decreased  $0.8 million  during the quarter
ended  September 30, 1996,  compared to the comparable  prior year quarter.  The
decrease was attributable to the sale of the subsidiary's ownership interests in
Aeromech  Pty.  Ltd. and Austin Aero FBO Ltd. to third  parties in December 1995
and January 1996, respectively.



<PAGE>


Gain on the sale or disposition of assets, net:

         During the quarter ended September 30, 1996, the Company  recorded $0.4
million  in gains  which  resulted  mainly  from the  sale or  disposition  of 1
commuter aircraft,  104 marine containers,  16 railcars, 4 storage units, and 40
trailers,  and recorded $0.3 million in gains  related to AFG  equipment  sales.
Gains for the third  quarter of 1996 were  offset  partially  by a $0.4  million
adjustment to decrease the estimated net  realizable  value of certain  commuter
aircraft.  During the quarter ended September 30, 1995, the Company  purchased a
commuter  aircraft  for $0.7  million and sold the  aircraft  for a gain of $0.1
million, net of selling costs.  Additional net gains of $0.6 million on the sale
or disposition of assets for the quarter ended  September 30, 1995 resulted from
the  sale or  disposition  of 68  marine  containers,  1  commuter  aircraft,  3
helicopters, 91 railcars, 12 storage units, and 101 trailers.

         Costs, Expenses, and Other:
<TABLE>
<CAPTION>

                                                                        For the three months
                                                                         ended September 30,
                                                                       1996              1995
                                                                           (in thousands)

   <S>                                                               <C>              <C>       
   Operations support                                                $   4,938        $    6,050
   Depreciation and amortization                                         2,887             2,104
   Commissions                                                              --               (51 )
   General and administrative                                            2,250             2,579
   Interest expense                                                      2,117             1,609
   Other (expense) income, net                                            (738 )             591
   Interest income                                                         368               566

</TABLE>

         Operations support:

Operations  support expense  (including salary and  office-related  expenses for
operational  activities,  provision for doubtful accounts,  equipment insurance,
repair and maintenance  costs, and equipment  remarketing  costs) decreased $1.1
million (18%) for the quarter ended September 30, 1996, from the same quarter in
1995. The decrease resulted from a $0.3 million decrease in operating and repair
and maintenance costs due to sales of the Company's transportation equipment and
due to the sale of the Company's  ownership  interests in Aeromech Pty. Ltd. and
Austin  Aero FBO Ltd.  to third  parties  in  December  1995 and  January  1996,
respectively,  a $1.3 million  decrease in compensation and bonus expense due to
headcount  reductions  and higher  compensation  expense in 1995  (primarily  to
compensate  employees for lost benefits  resulting  from the  termination of the
401(k) plan during  1995),  offset  partially by a $0.2 million  increase in bad
debt  expense,  a $0.1  million  increase  in  professional  and  administrative
expenses,  and a $0.2 million  decrease in allocated  expenses to Equis programs
(the Company is no longer managing these  programs)  during the third quarter of
1996.

         Depreciation and amortization:

         Depreciation and amortization  expense increased $0.8 million (37%) for
the quarter ended September 30, 1996, as compared to the quarter ended September
30, 1995. The increase  resulted from  amortization of costs associated with AFG
and  depreciation  of AFG assets held for  operating  leases and  administrative
assets,  offset  partially  by  the  reduction  in  depreciable   transportation
equipment discussed in the operating lease revenue section.

         General and administrative:

General and  administrative  expense  decreased  $0.3  million  (13%) during the
quarter  ended  September  30, 1996,  compared to the same quarter in 1995,  due
primarily to a $0.1 million  decrease in compensation  related to the reductions
in headcount  and  commission  expenses,  and a $0.2  million  decrease in other
administrative expenses.


<PAGE>



         Interest expense:

         Interest expense  increased $0.5 million (32%) during the quarter ended
September 30, 1996,  compared to the same period in 1995,  due to an increase in
borrowings on the nonrecourse  securitization facility, the senior secured notes
facility,  and  the  short-term  equipment  acquisition  loan  facility,  offset
partially by the retirement of the subordinated debt.

Other (expense) income, net:

Other expense, net was $0.7 million during the quarter ended September 30, 1996,
compared to other income,  net, of $0.6 million for same quarter in 1995. During
the quarter  ended  September  30,  1996,  the Company  prepaid the $8.6 million
balance of its  subordinated  debt and  incurred  prepayment  penalties  of $0.7
million.  Other income,  net of $0.6 million for the quarter ended September 30,
1995,  represented  the  receipt  of an  account  receivable  from a  previously
bankrupt debtor.

Interest income:

Interest income  decreased $0.2 million (35%) in the quarter ended September 30,
1996,  compared to the same quarter of 1995,  as a result of lower  average cash
balances in 1996.

         Income taxes:

For the three months ended  September  30, 1996,  the provision for income taxes
was $0.1  million,  which  represented  an  effective  rate of 9%. Tax  planning
strategies, an adjustment for state tax apportionment factors, and an adjustment
related to the Employee  Stock  Ownership  Plan resulted in the reduction in the
Company's  effective tax rate for the third quarter of 1996. For the same period
in 1995, the provision for income taxes was $1.6 million,  which  represented an
effective rate of 43% and higher income before tax.

         Net income:

         As a result of the foregoing,  for the three months ended September 30,
1996,  net income was $1.4  million  resulting in net income per common share of
$0.14. For the same period in 1995, net income was $2.1 million resulting in net
income per common share of $0.18.




<PAGE>


For the Nine Months Ended September 30, 1996 versus September 30, 1995

The following analysis reviews the operating results of the Company:

Revenue:
<TABLE>
<CAPTION>
                                                                                 For the nine months
                                                                                 ended September 30,
                                                                               1996              1995
                                                                                   (in thousands)
        <S>                                                                  <C>                <C>    
        Operating leases                                                     $13,508            $17,942
        Management fees                                                        8,198              8,231
        Partnership interests and other fees                                   2,722              3,739
        Acquisition and lease negotiation fees                                 5,260              4,797
        Finance lease income                                                   2,578                 --
        Commissions                                                               --              1,322
        Aircraft brokerage and services                                        2,037              3,700
        Gain on the sale or disposition of assets, net                         2,050              5,911
        Other                                                                  1,664              1,062
            Total revenues                                                   $38,017            $46,704

</TABLE>

The  fluctuations  in revenues for the nine months ended September 30, 1996 from
the same period in 1995 are summarized and explained below.

Operating lease revenue:
<TABLE>
<CAPTION>
                                                                For the nine months
                                                                ended September 30,
                                                               1996             1995
                                                                  (in thousands)
  <S>                                                       <C>                <C>      
  By equipment type:
    Trailers                                                $   5,765          $   7,888
    Aircraft                                                    3,676              4,587
    Marine vessels                                                 --              1,079
    Marine containers                                             289                456
    Storage equipment                                             820                763
    Railcars                                                       89              1,453
    Commercial and industrial equipment                         2,869              1,716
                                                            $  13,508          $  17,942

</TABLE>

As of September 30, 1996,  the Company owned  transportation  equipment held for
operating leases or held for sale with an original cost of $92.8 million,  which
was $41.9 million less than the original cost of transportation  equipment owned
and held for  operating  leases  or held for sale at  September  30,  1995.  The
reduction in  equipment,  on an original  cost basis,  is a  consequence  of the
Company's   strategic  decision  to  dispose  of  certain   underperforming  and
nonperforming  transportation assets resulting in a 100% reduction in its marine
vessel fleet and railcar portfolio,  a 35% net reduction in its marine container
portfolio,  a 43%  net  reduction  in  its  aircraft  portfolio,  and  an 8% net
reduction in its trailer  portfolio,  compared to September 30, 1995.  Operating
lease revenue includes revenues generated from assets held for operating leases,
assets held for sale that are on lease,  and rents  received  during  short-term
holding  periods on operating  leased  assets.  The reduction in  transportation
equipment  available  for lease is the primary  reason marine  vessel,  trailer,
railcar, marine container,  and aircraft revenue were all reduced as compared to
the prior year comparable  period. In addition,  trailer lease revenue decreased
due to lower utilization.

The  decrease  in  operating  lease  revenues  as a result of the  reduction  in
equipment available for lease was partially offset by a $0.1 million increase in
operating lease revenues  generated by higher storage equipment  utilization and
by a $1.2 million  increase in operating lease revenues  generated by commercial
and  industrial  leases on $13.2  million of  purchased  equipment  and revenues
generated on leased equipment purchased for $26.3 million prior to being sold to
third parties.


<PAGE>


Management fees:

         Management  fees are,  for the most part,  based on the gross  revenues
generated  by  equipment  under  management.  Management  fees were $8.2 million
during the nine months ended  September 30, 1996 and 1995.  Although  management
fees  related to Fund I  increased,  management  fees from the  remaining  older
programs  decreased due to a net decrease in managed equipment and a decrease in
lease rates for certain types of equipment in those programs and the elimination
of  management  of the  Equis  programs.  With the  termination  of  syndication
activities,  management  fees are  expected  to  decrease in the future as older
programs  begin  liquidation  and  the  managed   equipment   portfolio  becomes
permanently reduced. This future decrease will 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 $2.1 million and $2.5 million for the nine months ended
September 30, 1996 and 1995,  respectively.  In addition,  net increases of $0.6
million and $1.2 million in the Company's  residual values were recorded for the
nine months ended September 30, 1996 and 1995, respectively. These net increases
in  residual  values  were  related to  equipment  purchased  by Fund I,  offset
partially by decreases in residual  values  related to certain of the  equipment
growth  funds and Equis  programs.  Residual  income is  recognized  on residual
interests  based upon the general  partner's  share of the present  value of the
estimated  disposition  proceeds of the  equipment  portfolio of the  affiliated
partnership.   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,  1996, a total of $86.3  million of
equipment  was  purchased on behalf of the  equipment  growth funds  compared to
$69.8  million  during the same  period of the prior year,  resulting  in a $0.9
million  increase in acquisition and lease  negotiation  fees. This increase was
partially offset by a $0.4 million decrease in acquisition and lease negotiation
fees related to AFG purchases for managed programs. As a result 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 had a no  front-end  fee  structure,
acquisition and lease negotiation fees will be reduced in the future.

         Finance lease income:

The Company earns finance lease income for certain leases  originated by its AFG
subsidiary and retained for long-term  investment.  During the nine months ended
September  30, 1996,  the Company  originated  and earned  direct  finance lease
income  on  average  equipment  purchases  of $22.8  million,  financed  by both
short-term secured debt and a nonrecourse  securitization facility. These direct
finance  leases  resulted in $2.6  million in earned  income for the nine months
ended September 30, 1996, which  represented  income earned on the lease stream.
There were no similar transactions in the comparable prior year period.

         Commissions:

         Commission revenue represents  syndication placement fees, generally 9%
of  equity  raised  for the  equipment  growth  funds,  earned  upon the sale of
partnership units to investors. During the nine months ended September 30, 1996,
there was no program  equity raised for the equipment  growth funds  compared to
$14.6 million of equity raised during the nine months ended  September 30, 1995,
resulting  in a $1.3  million  decrease in  placement  commissions.  The Company
closed PLM Equipment Growth & Income Fund VII (EGF VII)  syndication  activities
on April 30, 1995. As a result of the Company's  decision to halt syndication of
equipment  leasing  programs  on  May  14,  1996,  and  because  Fund I had a no
front-end fee structure,  commission revenue has been eliminated since the close
of EGF VII.



<PAGE>


Aircraft brokerage and services:

     Aircraft brokerage and services revenue, which represents revenue earned by
Aeromil Holdings, Inc. (Aeromil), the Company's aircraft leasing and spare parts
brokerage  subsidiary,  decreased  $1.7  million  during the nine  months  ended
September 30, 1996,  compared to the comparable prior year period.  The decrease
was attributable to the sale of the subsidiary's ownership interests in Aeromech
Pty. Ltd. and Austin Aero FBO Ltd. to third parties in December 1995 and January
1996, respectively.

         Gain on the sale or disposition of assets, net:

         During the nine months ended  September 30, 1996, the Company  recorded
$1.9 million in gains which  resulted  mainly from the sale or  disposition of 6
commuter aircraft, 228 marine containers, 85 railcars, 10 storage units, and 245
trailers and  recorded  $0.6 million in gains  related to AFG  equipment  sales.
Gains for the nine months ended September 30, 1996,  were partially  offset by a
$0.4  million  adjustment  to decrease the  estimated  net  realizable  value of
certain  aircraft.  The $5.4 million net gain recorded during the same period in
1995  included  gains  from the  sale of  three  option  contracts  for  railcar
equipment and the  disposition  of 1 marine  vessel,  578 marine  containers,  2
commercial  aircraft,  2 commuter  aircraft,  4  helicopters,  307 railcars,  22
storage  units,  and 326  trailers.  Additionally,  during the nine months ended
September 30, 1995, the Company  purchased three commuter aircraft and sold them
for an aggregate gain of $0.5 million, net of selling costs.

         Other:

         Other  revenues  increased  $0.6  million  during the nine months ended
September  30,  1996,  compared  to the  comparable  prior year  period,  due to
increased revenue earned for data processing  services provided to the Company's
affiliated  programs,  and due to increased  underwriting  income and  brokerage
fees.

         Costs, Expenses, and Other:
<TABLE>
<CAPTION>

                                                                         For the nine months
                                                                         ended September 30,
                                                                       1996              1995
                                                                           (in thousands)

   <S>                                                               <C>              <C>       
   Operations support                                                $  16,359        $   18,602
   Depreciation and amortization                                         8,503             6,491
   Commissions                                                              --             1,417
   General and administrative                                            5,809             7,646
   Interest expense                                                      5,100             5,540
   Other (expense) income, net                                            (348 )             537
   Interest income                                                         891             1,491

</TABLE>

         Operations support:

Operations  support expense  (including salary and  office-related  expenses for
operational  activities,  provision for doubtful accounts,  equipment insurance,
repair and maintenance  costs, and equipment  remarketing  costs) decreased $2.2
million (12%) for the nine months ended September 30, 1996, from the same period
in 1995.  The decrease  resulted  from a $1.2 million  decrease in operating and
repair and  maintenance  costs due to the sale of the  Company's  transportation
equipment and due to the sale of the Company's  ownership  interests in Aeromech
Pty. Ltd. and Austin Aero FBO Ltd. to third parties in December 1995 and January
1996,  respectively,  a $3.4 million  decrease in compensation and bonus expense
due to headcount reductions,  and higher compensation expense in 1995 (primarily
to compensate  employees for lost benefits resulting from the termination of the
401(k) plan during 1995),  offset  partially by a one-time  $1.4 million  charge
related to the termination of syndication activities, a $0.3 million increase in
bad debt expense, a $0.2 million increase in professional  services expense, and
a $0.5 million decrease in allocated  expenses to Equis programs (the Company is
no longer managing these programs) in 1996.


<PAGE>


         Depreciation and amortization:

         Depreciation and amortization  expense increased $2.0 million (31%) for
the nine months ended  September  30, 1996, as compared to the nine months ended
September 30, 1995. The increase  resulted from amortization of costs associated
with  AFG  and  depreciation  of  AFG  assets  held  for  operating  leases  and
administrative   assets,  offset  partially  by  the  reduction  in  depreciable
transportation equipment discussed in the operating lease revenue section.

         Commissions:

         Commission   expenses  were  incurred  by  the  Company   primarily  in
connection  with the  syndication  of investment  partnerships  and  represented
payments to brokers  and  financial  planners  for sales of  investment  program
units. Commissions were also paid to certain of the Company's employees directly
involved in syndication and leasing activities. Commission expenses for the nine
months ended  September 30, 1996,  decreased  $1.4 million  (100%) from the same
period in 1995.  The reduction is the result of no syndicated  equity raised for
the  equipment  growth funds during the nine months  ended  September  30, 1996,
versus $14.6 million in syndicated  equity raised for the equipment growth funds
during  the  same  period  in  1995.  Commission  costs  related  to Fund I were
capitalized  as  part of the  Company's  investment  in the  program.  With  the
termination of syndication  activities,  there will be no more commission  costs
incurred in the future.

         General and administrative:

General and administrative  expense decreased $1.8 million (24%) during the nine
months ended  September 30, 1996,  compared to the same period in 1995, due to a
$1.0 million decrease in compensation  expenses  primarily related to terminated
employees and lower 1996 bonus expense (primarily related to the compensation of
employees  during 1995 for lost benefits  resulting from the  termination of the
401(k) plan), a $0.3 million decrease in estimated accruals,  and a $0.5 million
decrease in administrative expenses.

         Interest expense:

         Interest  expense  decreased  $0.4  million (8%) during the nine months
ended September 30, 1996,  compared to the same period in 1995 mainly due to the
retirement of subordinated  debt,  offset partially by an increase in borrowings
on the nonrecourse  securitization  facility, the senior secured notes facility,
and the short-term equipment acquisition loan facility.

Other (expense) income, net:

Other expense,  net was $0.3 million during the nine months ended  September 30,
1996, compared to other income, net of $0.5 million for the same period of 1995.
During the nine months ended  September 30, 1995,  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  which  had
previously  been  written  off.  Other  income,  net of $0.5 million in the nine
months  ended  September  30,  1995,  resulted  from the  receipt  of an account
receivable from a previously bankrupt debtor.

         Interest income:

         Interest  income  decreased $0.6 million (40%) in the nine months ended
September  30,  1996,  compared to the same  period in 1995 from a reduction  in
interest income earned on the ESOP cash collateral  account which related to the
termination of the Company's ESOP and due to a decrease in interest  income as a
result of lower average cash balances in 1996 compared to 1995.



<PAGE>


Income taxes:

For the nine months ended September 30, 1996, the provision for income taxes was
$0.4  million,  which  represented  an  effective  rate  of  13%.  Tax  planning
strategies, an adjustment for state tax apportionment factors, and an adjustment
related to the Employee  Stock  Ownership  Plan resulted in the reduction in the
Company's  effective  tax  rate  for  1996.  For the same  period  in 1995,  the
provision for income taxes was $3.9 million, which represented an effective rate
of 43% and higher income before taxes.

         Net income:

         As a result of the foregoing,  for the nine months ended  September 30,
1996,  net income was $2.4  million  resulting in net income per common share of
$0.23. For the same period in 1995, net income was $5.2 million resulting in net
income per common share of $0.44.



<PAGE>




         Liquidity and Capital Resources:

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

         Liquidity  in 1996  and  beyond  will  depend,  in part,  on  continued
remarketing  of the equipment  portfolio at similar  lease rates,  management of
existing sponsored  programs,  effectiveness of cost control programs,  possible
additional  equipment  sales,  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 will have
sufficient liquidity and capital resources for the future. Specifically,  future
liquidity is influenced by the following:

     Debt Financing:

Senior  Debt:  The  Company's  $35.0  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.  The facility requires  quarterly interest only
payments  through  June 30,  1997,  with  quarterly  principal  payments of $2.1
million plus interest charges  beginning June 30, 1997,  through the termination
of the loan in June 2001.

On October 1, 1996,  the Company  prepaid $10.0  million of the entire  floating
rate portion of the senior loan through the use of cash collateral from the sale
of pledged equipment and incurred prepayment penalties of $0.1 million.

On June 28,  1996,  the  Company  closed a floating  rate  senior  secured  note
agreement  which allows the Company to borrow up to $27.0  million  within a one
year period.  The facility bears interest at LIBOR plus 240 basis points.  As of
November 4, 1996, the Company had borrowed  $18.0 million under this  agreement.
The Company has pledged  substantially  all of its  management,  acquisition and
lease negotiation fees, and certain  partnership  distributions as collateral to
the facility.  The facility  requires  quarterly  interest only payments through
August 15, 1997, with principal plus interest  payments  beginning  November 15,
1997.  Principal  payments  are payable  quarterly in 20 equal  amounts  through
termination of the loan on August 15, 2002.

         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 short-term  equipment  acquisition loan facility.  The Company amended this
facility on May 31, 1996 to add the  Company's AFG  subsidiary as a borrower.  A
second  amendment on October 31, 1996  increased the facility from $35.0 million
to $50.0 million and extended the availability of the facility until October 31,
1997.

         This bridge  facility,  which is shared  with  Equipment  Growth  Funds
(EGFs) IV, V, VI, VII,  and Fund I,  allows the  Company to  purchase  equipment
prior to the designated  program or partnership  being  identified,  or prior to
having  raised  sufficient  capital to purchase  the  equipment.  This  facility
provides 80% financing for  transportation  assets and the lesser of 100% of the
present  value of the lease  stream  or 85% of the  original  equipment  cost on
assets purchased for placement in a securitization  facility,  if the Company is
the  borrower  and working  capital is used for the  nonfinanced  costs of these
acquisitions.  The Company can hold assets under this bridge  facility for up to
150 days.  Interest  accrues  at prime or LIBOR  plus 2.0% at the  option of the
borrower at the time of the advance under the facility.  The Company retains the
difference  between the net lease revenue earned and the interest expense during
the interim holding period since its capital is at risk. As of November 4, 1996,
the Company had $33.2 million in outstanding  borrowings and the EGFs and Fund I
had no outstanding borrowings under this facility.

 Subordinated  Debt: In July 1996, the Company  prepaid in its entirety the $8.6
million balance of its subordinated  debt and incurred  prepayment  penalties of
approximately $0.7 million.

Securitized Debt: The Company has available a securitization  facility for up to
$80 million on a  nonrecourse  basis  secured by direct  finance  and  operating
leases  which  generally  have terms of three to five  years.  The  facility  is
available for a one year period  expiring  July 1997.  Repayment of the facility
matches the terms of the underlying  leases. The securitized debt bears interest
equivalent to average U.S. treasury rates plus 1%. As of November 4, 1996, there
were $25.6 million in borrowings outstanding under this facility.

Interest Rate Swap Contracts: The Company attempts to minimize its interest rate
exposure through the purchase of fixed rate interest rate swap contracts.

     Portfolio Activities:

During the nine months ended September 30, 1996, the Company generated  proceeds
of $9.3  million  from the sale of owned  transportation  equipment.  These  net
proceeds  were  placed in a  collateral  account as  required by the senior loan
facility  agreement.  In March 1996,  $1.9 million in funds were released to the
Company for general  corporate use from the cash collateral  account relating to
asset sales in 1996 and 1995.  On October 1, 1996,  $10.0  million in funds from
the cash collateral  account,  related to 1996 and 1995 asset sales, was used to
pay down $10.0  million of the floating  rate  portion of its senior  loan.  The
funds were released  based on the  appraised  fair market value of the equipment
portfolio and the related collateral coverage ratio.

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

     Syndication Activities:

         On May 14, 1996, the Company's  Board of Directors  approved a decision
to halt the syndication of transportation  equipment leasing programs  effective
with the May 13, 1996 close of its then  current  offering,  Professional  Lease
Management  Income  Fund I. The  Company  will no longer be required to fund the
front-end  investment  requirement of this no front-end fee structured  program.
From May 1995  through  May 14,  1996,  Fund I raised  $100  million  in  equity
investment  from the public.  The Company  recognized  a one-time  $1.4  million
charge in the second  quarter of 1996 mainly  related to employee  severance pay
associated with this decision to halt syndication activities.

         The Company earned fees from syndication  activities related to EGF VII
during the first four months of 1995.  Total equity  raised since  inception for
this  partnership  was $107.4 million  through April 30, 1995,  when the program
closed. There will be no more equity raised for this partnership.

     Commercial Equipment Leasing 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.  Lease  originations  funded  through  November 4, 1996,  equal $110.8
million, on an original equipment cost basis. A portion of these leases has been
financed,  on an interim basis, through the Company's bridge financing facility.
Some  equipment  subject to leases ($39.0  million) is sold to an  institutional
leasing  investment  program  for  which  the  Company  serves  as the  manager.
Placement  fees and  management  fees are received  for the sale and  subsequent
management  of  these  leases.  The  Company  believes  this  lease  origination
operation is a growth area for the future.



<PAGE>

   
Trends:

The Company  continues to seek  opportunities for new businesses,  markets,  and
acquisitions.  During 1995, the Company  established its AFG subsidiary,  and in
1996 entered into an agreement with Equis  Financial Group (Equis) to obtain its
lease  origination  and  servicing  operations,  and  the  rights  to  manage  a
significant  offshore investment program.  Additionally,  the agreement provided
for AFG to acquire software,  computers and furniture that support the marketing
and  operations  activities.  AFG is engaged in the  funding and  management  of
longer-term  direct  finance-type   leases,   operating  leases  and  loans  for
investment-grade, Fortune 2000 companies. Key to its success is AFG's ability to
differentiate   itself  from  much  larger   competitors  by  offering   greater
flexibility  in lease  structures  and terms and a  consistently  high  level of
customer service, backed by sophisticated reporting systems. The longer-term AFG
leases  provide a  predictable  cash  stream that PLM  International  is able to
leverage using nonrecourse,  securitized debt. The underlying assets represent a
broad range of commercial and  industrial  equipment,  such as data  processing,
communications,  materials  handling,  and construction  equipment.  AFG also is
engaged in the management of an  institutional  leasing  investment  program for
which it originates  leases and receives  acquisition  and  management  fees. We
intend to  substantially  expand  AFG's  equipment  portfolio  in the future and
expect AFG's revenue and income to grow in 1997.

        Going  forward,  the Company  will also  concentrate  on  expanding  its
current trailer leasing and management  operations through its PLM Rental,  Inc.
subsidiary.   PLM  Rental  is  currently  the  largest   short-term,   on-demand
refrigerated trailer rental operation in North America, and the Company believes
there  are new  opportunities  in the  refrigerated  and other  trailer  leasing
markets.

        During 1996, the Company announced the suspension of public  syndication
of  equipment  leasing  programs  with  the May 13,  1996  close of Fund I after
concluding that future  syndication sales would not reach the levels required to
make  syndication  activities  financially  attractive  to the  Company,  due to
lower-fee investment  alternatives  becoming more attractive to investors.  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 has  continued to  selectively  reduce the size of its owned
transportation  equipment  portfolio  over the  past  year.  As a result  of the
reduction  in owned  equipment,  the  Company's  operating  lease  revenues  are
expected  to  continue  to  decrease  as  well as the  associated  depreciation,
operating,  and repair and maintenance costs.  However, the Company has used the
proceeds  from  equipment  sales and cash from  operations  to reduce senior and
subordinated  outstanding  indebtedness over the last three years,  resulting in
reduced  interest  costs.  These  reductions  will  help  offset  the  increased
borrowing activity associated with the expansion of the AFG lease portfolio.  In
addition, the reduction in transportation equipment lease revenue will be offset
by increases in commercial and industrial  equipment lease revenue  generated by
AFG.

        The  Company   continues  to  benefit  from  cost  reduction   measures,
principally  reflecting  reductions in total Company staffing implemented during
1995 and 1996, which are resulting in lower  operations  support and general and
administrative expenses.


     Management believes that through debt and equity financing,  possible sales
of transportation  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-QA 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-QA should be read as
being applicable to all related forward-looking  statements wherever they appear
in this Form 10-QA.  The Company's  actual results could differ  materially from
those discussed here.

    

<PAGE>


                          PART II - OTHER INFORMATION


         Item 1.   Legal Proceedings

         See Note 10 of Notes to Consolidated Financial Statements.

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

At the Annual  Meeting of  Stockholders  held July 16, 1996,  two proposals were
submitted to a vote of the Company's security holders.

1. Harold R.  Somerset was  re-elected to the Board of Directors of the Company.
Douglas P. Goodrich,  Senior Vice  President of the Company,  was elected to the
Board of  Directors  of the  Company.  The votes  cast in the  election  were as
follows: Votes Withheld Nominee For

Harold R. Somerset             7,195,935             2,110,393
Douglas P. Goodrich            7,184,188             2,122,140

Directors whose terms continued after the Annual Meeting of Stockholders held on
July 16, 1996 are as follows:

                               Class I (Terms expire in 1997)
                               Walter E. Hoadley
                               Robert N. Tidball

                               Class II (Terms expire in 1998)
                               J. Alec Merriam
                               Robert L. Pagel

2. The  proposal to amend  employment  contracts  entered  into by and among PLM
International, Inc. and certain management employees was not approved.

                                     Votes
                                                                      Broker
   For                   Against             Abstentions             Non Votes

3,478,284               3,766,816               207,284               1,853,944

         Item 6.   Exhibits and Reports on Form 8-K

     (A) Exhibits

None.

     (B) Reports on Form 8-K

 July 17, 1996 - Announcement  regarding PLM  International's  repurchase of 1.6
million shares of the Company's common stock for $6.1 million.




<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/ J. Michael Allgood
                               ----------------------------         
                               J. Michael Allgood
                               Vice President and Chief Financial Officer






      Date: November 7, 1996