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 EXCHANGE
     ACT OF 1934  FOR THE FISCAL QUARTER ENDED JUNE 30, 1999

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO


                          COMMISSION FILE NUMBER 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 July 26 , 1999 - 7,992,574 shares.


<PAGE>





                             PLM INTERNATIONAL, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
               (in thousands ofdollars, except per share amounts)
<TABLE>
<CAPTION>

                                              For the Three Month                 For the Six Months
                                                  Ended June 30,                   Ended June 30,
                                                1999           1998                1999            1998
                                         -------------------------------------------------------------------


<S>                                       <C>               <C>               <C>               <C>
REVENUES
Operating lease income                    $    7,573        $   5,452         $    13,670       $   9,344
Finance lease income                           2,736            3,042               5,888           5,694
Management fees                                2,271            2,535               4,639           5,099
Partnership interests and other fees              26              357                 316             681
Acquisition and lease negotiation fees           618            1,184               1,079           2,211
Gain on the sale or disposition of assets, net 1,317            1,533               1,630           2,295
Aircraft brokerage and services                   --              362                  --             886
Other                                            864              843               1,790           1,642
                                              -----------------------------------------------------------------
  Total revenues                              15,405           15,308              29,012          27,852
                                              -----------------------------------------------------------------

COSTS AND EXPENSES
Operations support                             4,771            4,657               8,602           8,466
Depreciation and amortization                  3,663            3,497               7,062           6,047
General and administrative                     2,045            2,257               3,529           4,171
                                               ----------------------------------------------------------------
  Total costs and expenses                    10,479           10,411              19,193          18,684
                                              -----------------------------------------------------------------

Operating income                               4,926            4,897               9,819           9,168

Interest expense                              (3,822)          (3,604)             (7,507)         (6,674)
Interest income                                  233              299                 476             694
Other (expenses) income, net                    (150)             469              (1,098)            463
                                              ----------------------------------------------------------------
  Income before income taxes                   1,187            2,061               1,690           3,651

Provision for income taxes                       466              860                 673           1,467
                                               ---------------------------------------------------------------

  Net income before cumulative
  effect of accounting change                    721            1,201               1,017           2,184

Cumulative effect of accounting change,
net of tax of $165                                --               --                 236              --

     Net income to common shares          $      721        $   1,201         $       781       $   2,184
                                          ====================================================================

Basic earnings per weighted-average
common share outstanding                  $     0.09        $    0.14         $      0.10       $    0.26
                                          ====================================================================

Diluted earnings per weighted-average
common share outstanding                  $     0.09        $    0.14         $      0.09       $    0.26
                                          ====================================================================

</TABLE>










       See accompanying notes to these consolidated financial statements.



<PAGE>





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



                                     ASSETS

<TABLE>
<CAPTION>

                                                                           June 30,               December 31,
                                                                             1999                     1998
                                                                      -------------------------------------------

<S>                                                                    <C>                       <C>
Cash and cash equivalents                                              $      4,001              $     8,786
Receivables (net of allowancefor doubtful
  accounts of $0.7 million as of
  June 30, 1999 and $0.4 million as of
  December 31, 1998)                                                         12,583                    7,282
Receivables from affiliates                                                   2,841                    2,944
Investment in direct finance leases, net                                    127,655                  145,088
Loans receivable                                                             22,766                   23,493
Equity interest in affiliates                                                20,602                   22,588

Transportation equipment held for operating leases                           87,141                   63,044

Less accumulated depreciation                                               (18,127)                 (15,516)
                                                                        -----------------------------------------------
                                                                             69,014                   47,528

Commercial and industrial equipment held for operating leases                24,949                   24,520
Less accumulated depreciation                                               (10,157)                  (7,831)
                                                                      -----------------------------------------------
                                                                             14,792                   16,689

Restricted cash and cash equivalents                                         11,840                   10,349
Other, net                                                                    6,009                    7,322
                                                                      -----------------------------------------------
     Total assets                                                      $    292,103              $   292,069
                                                                      ===============================================



                                      LIABILITIES AND SHAREHOLDERS' EQUITY


Liabilities:
Short-term warehouse facilities                                        $     33,279              $    34,420
Senior secured notes                                                         24,439                   28,199
Senior secured loan                                                          11,765                   14,706
Other secured debt                                                           22,249                   13,142
Nonrecourse securitized debt                                                107,904                  111,222
Payables and other liabilities                                               23,128                   21,768
Deferred income taxes                                                        19,336                   18,415
                                                                      -----------------------------------------------
  Total liabilities                                                         242,100                  241,872

Shareholders' equity:
Common stock, ($.01 par value, 50,000,000 shares
  authorized, 7,992,574 issued and outstanding as of
  June 30, 1999 and 8,159,919 as of December 31, 1998)                          112                      112
Paid-in capital, in excess of par                                            75,222                   74,947
Treasury stock (4,043,181 shares as of June 30, 1999 and
   3,875,836 shares as of December 31, 1998)                                (16,322)                 (15,072)
Accumulated deficit                                                          (9,009)                  (9,790)
    Total shareholders' equity                                               50,003                   50,197
                                                                      -----------------------------------------------
      Total liabilities and shareholders' equity                       $    292,103              $   292,069
                                                                      ===============================================

</TABLE>






             See accompanying notes to these consolidated financial statements.




<PAGE>



                             PLM INTERNATIONAL, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
            AND COMPREHENSIVE INCOME For the Year Ended December 31,
                   1998 and the Six Months Ended June 30, 1999
                            (in thousands of dollars)




<TABLE>
<CAPTION>

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



<S>                                   <C>          <C>              <C>             <C>                <C>             <C>
  Balances, December 31, 1997         $  112       $  74,650        $   (13,435)    $  (14,779)                        $     46,548
Compresensive income
  Net income                                                                             4,857         $    4,857             4,857
  Other comprehensive income:
    Foreign currency translation
      income                                                                               132                132               132
Comprehensive income                                                                                   $    4,989
                                                                                                       ====================
Exercise of stock options                                218                211                                                 429
Common stock repurchases                                                 (2,059)                                             (2,059)
Reissuance of treasury stock                              79                211                                                 290
  Balances, December 31, 1998            112          74,947            (15,072)        (9,790)                              50,197

Comprehensive income
  Net income                                                                               781         $      781               781
                                                                                                       ====================
Exercise of stock options                                174                245                                                 419
Common stock repurchases                                                 (1,604)                                             (1,604)
Reissuance of treasury stock, net                        101                109                                                 210
                                        -----------------------------------------------------------------              -------------
  Balances, June 30, 1999             $  112       $  75,222        $   (16,322)    $   (9,009)                        $     50,003
                                        =============================================================                  =============

</TABLE>



















       See accompanying notes to these consolidated financial statements.



<PAGE>





                             PLM INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)
<TABLE>
<CAPTION>

                                                                                                        For the Six Months
                                                                                                          Ended June 30,
                                                                                                     1999                1998
                                                                                                -----------------------------------
<S>                                                                                               <C>                  <C>
OPERATING ACTIVITIES
Net income                                                                                        $       781          $    2,184
Adjustments to reconcile net income to net cash
  provided by operating activities:
    Depreciation and amortization                                                                       7,062               6,047
    Cumulative effect of accounting change, net of tax of $165                                            236                  --
    Write off of costs associated with initial public offering of AFG                                     975                  --
    Foreign currency translation                                                                           --                 (29)
    Deferred income tax expense                                                                           921               1,641
    Gain on sale or disposition of assets, net                                                         (1,630)             (2,295)
    Undistributed residual value interests                                                                562                 546
    Minority interest in net loss of subsidiaries                                                          --                 (84)
    Increase (decrease) in payables and other liabilities                                               4,810              (1,669)
    (Increase) decrease in receivables and receivables from affiliates                                 (5,198)              2,913
    Amortization of organization and offering costs                                                     1,424               1,481
    (Increase) decrease in other assets                                                                   (94)                521
                                                                                                 -----------------------------------
      Net cash provided by operating activities                                                         9,849              11,256
                                                                                                 -----------------------------------

INVESTING ACTIVITIES
Principal payments received on finance leases                                                          17,611              14,441
Principal payments received on loans                                                                    3,737               1,878
Investment in direct finance leases                                                                   (24,488)            (82,047)
Investment in loans receivable                                                                         (3,010)            (18,651)
Purchase of property, plant, and equipment                                                               (466)               (110)
Purchase of transportation equipment and capital improvements                                         (38,724)            (32,919)
Purchase of commercial and industrial equipment held for operating lease                              (14,119)            (14,938)
Proceeds from  the sale of transportation equipment for lease                                             234               3,081
Proceeds from the sale of assets held for sale                                                         13,801              19,866
Proceeds from the sale of commercial and industrial equipment                                          35,477              29,757
(Increase) decrease in restricted cash and restricted cash equivalents                                 (1,491)              6,506
                                                                                                 -----------------------------------
      Net cash used in investing activities                                                           (11,438)            (73,136)

FINANCING ACTIVITIES
Borrowings of short-term warehouse credit facilities                                                   50,369              88,065
Repayment of short-term warehouse credit facilities                                                   (51,510)            (64,302)
Repayment of senior secured notes                                                                      (3,760)             (2,510)
Repayment of senior secured loan                                                                       (2,941)             (2,941)
Borrowings of other secured debt                                                                        9,827                 173
Repayment of other secured debt                                                                          (720)                (99)
Borrowings of nonrecourse debt                                                                         26,856              54,512
Repayment of nonrecourse debt                                                                         (30,174)            (12,323)
Reissuance of treasury stock, net                                                                          42                  --
Proceeds from exercise of stock options                                                                   419                  --
Purchase of stock                                                                                      (1,604)               (626)
                                                                                                 -----------------------------------
      Net cash (used in) provided by financing activities                                              (3,196)             59,949
                                                                                                 -----------------------------------

Net decrease in cash and cash equivalents                                                              (4,785)             (1,931)
Cash and cash equivalents at beginning of period                                                        8,786               5,224

                                                                                                 -----------------------------------
Cash and cash equivalents at end of period                                                        $     4,001          $    3,293
                                                                                                 ===================================

SUPPLEMENT INFORMATION
Net cash paid for interest                                                                        $     7,431          $    5,754
                                                ====================================================================================
Net cash paid for income taxes                                                                    $       206          $    1,704
                                                ====================================================================================
</TABLE>


       See accompanying notes to these consolidated financial statements.




<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999



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. and its wholly-and
majority-owned  subsidiaries (the Company's)  financial  position as of June 30,
1999 and December 31,  1998,  statements  of income for the three and six months
ended June 30, 1999 and 1998,  statements of changes in shareholders' equity and
comprehensive  income for the year ended  December  31,  1998 and the six months
ended June 30, 1999,  and statements of cash flows for the six months ended June
30, 1999 and 1998. Certain information and note 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, 1998, on file with the  Securities
and Exchange Commission.

2.  RECLASSIFICATIONS

Certain  prior-period  amounts have been  reclassified to conform to the current
period's presentation.

3.  FINANCING TRANSACTION ACTIVITIES

American  Finance Group,  Inc. (AFG), a wholly-owned  subsidiary of the Company,
originates and manages lease and loan  transactions  on primarily new commercial
and industrial  equipment that is financed by nonrecourse  securitized  debt for
the Company's own account or sold to  unaffiliated  investors.  The Company uses
one of its  warehouse  credit  facilities  to finance the  acquisition  of these
assets prior to permanent financing by nonrecourse securitized debt or sale. The
majority of these transactions are accounted for as direct finance leases, while
some transactions qualify as operating leases or loans.

During the six months ended June 30, 1999,  the Company  funded $24.5 million in
equipment  that was placed on finance  lease.  Also during the six months  ended
June 30,  1999,  the Company sold  equipment  on finance  lease with an original
equipment cost of $29.8 million, resulting in a net gain of $0.3 million.

During the six months  ended June 30, 1999,  the Company  funded $3.0 million in
loans to customers.

4.   EQUIPMENT

Equipment  held  for  operating  lease  includes  transportation  equipment  and
commercial  and industrial  equipment  that is depreciated on the  straight-line
method down to the equipment's estimated salvage value.

During the six months ended June 30, 1999,  the Company  funded $14.1 million in
commercial and industrial  equipment that was placed on operating lease.  During
the six months ended June 30, 1999,  the Company sold  commercial and industrial
equipment that was on operating lease for a net gain of $1.3 million.

During the first six months of 1999,  the Company  purchased  trailers for $24.9
million  and  sold   trailers  with  a  net  book  value  of  $0.2  million  for
approximately their net book value.

The Company  classifies  equipment 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.  During the first six months of 1999,
the Company  purchased  marine  containers for $13.8  million,  and sold them to
affiliated  programs at cost, which  approximated their fair market value. As of
June 30, 1999 and December 31, 1998, the Company held no equipment for sale.




<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999



5.   DEBT

The Company has warehouse  credit  facilities for PLM Financial  Services,  Inc.
(FSI) and AFG. FSI has a $24.5 million  warehouse  credit facility to be used to
acquire  assets on an interim  basis  prior to sale to  affiliated  programs  or
unaffiliated third parties and to purchase trailers prior to obtaining permanent
financing.  FSI's  facility  is shared  with PLM  Equipment  Growth Fund VI, PLM
Equipment  Growth & Income Fund VII, and Professional  Lease  Management  Income
Fund I, LLC.  Borrowings  under this  facility by the other  eligible  borrowers
reduce the amount available to be borrowed by the Company.  All borrowings under
this facility are guaranteed by the Company.  AFG has a $60.0 million  warehouse
credit  facility  to be used to  acquire  assets on an  interim  basis  prior to
placement  in the  Company's  nonrecourse  securitization  facility  or  sale to
unaffiliated  third  parties.  These  facilities  expire  December 14, 1999. The
Company believes it will be able to renew these facilities on substantially  the
same  terms  upon  expiration.  As of June 30,  1999,  FSI had $10.4  million in
borrowings  outstanding  on the $24.5  million  facility and there were no other
borrowings  outstanding on the facility by any of the other eligible  borrowers.
As of June 30, 1999,  AFG had $22.9  million in  borrowings  outstanding  on its
$60.0 million facility.

The Company has  available a nonrecourse  securitization  facility to be used to
acquire assets by AFG, secured by direct finance leases,  operating leases,  and
loans on commercial and industrial  equipment that generally have terms from one
to seven years.  The facility  allows the Company to borrow up to $150.0 million
through  October 12, 1999.  The Company  believes it will be able to extend this
facility on similar  terms prior to its  expiration.  Repayment  of the facility
matches  the terms of the  underlying  leases.  As of June 30, 1999 , there were
$101.9  million in borrowings  under this  facility.  The Company is required to
hedge the interest rate exposure to the Company on at least 90% of the aggregate
discounted  lease balance (ADLB) of those leases and loans used as collateral in
its nonrecourse  securitization  facility.  As of June 30, 1999, 91% of the ADLB
had been hedged.

During the first six months of 1999, the Company made principal payments of $1.6
million on its nonrecourse  notes payable.  As of June 30, 1999, the Company had
$6.0 million in nonrecourse  notes payable.  Principal and interest on the notes
are due monthly beginning April 1998 through March 2001. The notes bear interest
ranging  from 8.32% to 9.5% per annum and are secured by direct  finance  leases
for  commercial and industrial  equipment that have terms  corresponding  to the
repayment of the notes.

In April 1999, the Company  entered into a $5.0 million debt  agreement  bearing
interest at 6.20%,  with  payments of $0.1 million due monthly  beginning  April
1999 and a final  payment of $1.3  million  due April  2006,  secured by certain
trailer equipment. In return for favorable financing terms, this agreement gives
beneficial tax treatment in these secured trailers to the lenders.

In May 6, 1999, the Company  entered into a $15.0 million  credit  facility loan
agreement  bearing interest at LIBOR plus 1.5%. This facility allows the Company
to borrow up to $15.0 million within a one-year period. As of June 30, 1999, the
Company had borrowed $4.8 million under this facility.  Payments of $0.1 million
are due quarterly  beginning  August 2000,  with a final payment of $1.4 million
due August 2006.

During the first six months of 1999,  the  Company  repaid  $2.9  million of the
senior secured loan, $3.8 million of the senior secured notes,  and $0.7 million
of the other secured debt, in accordance with the debt repayment schedules.

6.   SHAREHOLDERS' EQUITY

During the first six months of 1999, the Company  repurchased  264,115 shares of
the Company's  common stock for $1.6 million under the $5.0 million common stock
repurchase  program  authorized by the Company's  Board of Directors in December
1998. As of June 30, 1999,  327,415 shares had been repurchased under this plan,
for a total of $2.0 million.

During the six months  ended June 30,  1999,  27,486  shares  were  issued  from
treasury stock as part of the senior  management bonus program (net of forfeited
shares), 6,784 shares were issued from treasury



<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999



6.   SHAREHOLDERS' EQUITY (CONTINUED)

stock as a stock grant,  and 62,500 shares were issued for the exercise of stock
options.   Consequently,  the  total  common  shares  outstanding  decreased  to
7,992,574 as of June 30, 1999 from the 8,159,919  outstanding as of December 31,
1998.

Net income per basic  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 basic earnings per share calculation during the three
months ended June 30, 1999 was 8,066,243, and during the three months ended June
30, 1998 was 8,337,963. The weighted-average number of shares deemed outstanding
for the basic  earnings per share  calculation  during the six months ended June
30,  1999 was  8,115,458,  and  during the six  months  ended June 30,  1998 was
8,359,271.  The weighted-average number of shares deemed outstanding,  including
potentially   dilutive   common   shares,   for   the   diluted   earnings   per
weighted-average  share calculation  during the three months ended June 30, 1999
was  8,179,429,  and during the three months ended June 30, 1998 was  8,501,476.
The weighted-average number of shares deemed outstanding,  including potentially
dilutive  common shares,  for the diluted  earnings per  weighted-average  share
calculation during the six months ended June 30, 1999 was 8,239,249,  and during
the six months ended June 30, 1998 was 8,525,127.

7.  LEGAL MATTERS

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. 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 defendants'  allegedly engaging
in prohibited  transactions and interfering 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, the Company and other defendants filed a motion to
dismiss  the  complaint  for lack of subject  matter  jurisdiction,  arguing the
plaintiff  lacked standing under ERISA.  The motion was granted and in May 1996,
the district  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  dismissal of his
ERISA  claims,  and in an  opinion  filed in  October  1997,  the Ninth  Circuit
reversed  the  decision  of the  district  court  and  remanded  the case to the
district  court for  further  proceedings.  The  Company  filed a  petition  for
rehearing,  which was denied in November  1997.  The Ninth  Circuit  mandate was
filed in the district court in December 1997.

In February 1998, plaintiff was permitted by the district court to file a second
amended  complaint  in order to bring the fourth,  fifth,  and sixth  claims for
relief as a class action on behalf of himself and all similarly situated people.
These claims  allege that the Company and the other  defendants  breached  their
fiduciary duties and entered into prohibited transactions in connection with the
termination  of the  ESOP  and by  causing  the  ESOP to sell  or  exchange  the
preferred  shares  held for the benefit of the ESOP  participants  for less than
their fair market value. Also in February 1998, the defendants filed a motion to
dismiss the fourth,  fifth,  and sixth claims relating to the termination of the
ESOP, and the seventh claim relating to defendants'  alleged  interference  with
plaintiff's  rights under ERISA, all for failure to state claims for relief. The
district  court,  in an order  dated  July 14,  1998,  granted  this  motion and
dismissed  the fourth  through  seventh  claims for  relief.  In June 1998,  the
defendants  filed a motion for summary  judgment seeking a ruling that the first
two claims for relief,  which  allege  breaches  arising out of the purchase and
sale of stock at the inception of the ESOP, are barred by the applicable statute
of  limitations.  In an order dated July 14, 1998, the district court granted in
part and denied in part this  motion and ruled that these  claims for relief are
barred by the  statute of  limitations  to the extent that they rely on a theory
that the  automatic  conversion  feature and other terms and  conditions  of the
purchase and sale of the preferred stock violated  ERISA,  but are not so barred
to the extent that they rely on a



<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999


7.   LEGAL MATTERS (CONTINUED)

theory that the purchase and sale of the preferred stock at the inception of the
ESOP was for more than adequate consideration.  On September 30, 1998, plaintiff
filed a motion to certify as final, and enter judgment on, the two July 14, 1998
orders.  This motion was  denied.  Defendants  filed their  answer to the second
amended  complaint on  September  18, 1998,  denying the  remaining  allegations
contained in the first, second, and third claims for relief.

The parties  reached an agreement  to settle this matter on April 15, 1999,  and
plaintiff filed a notice of voluntary  dismissal of the complaint with prejudice
on June 18, 1999.  The amount paid by the Company in  settlement is not material
to the financial condition of the Company.

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

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

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

On June 5, 1997, the Company and the  affiliates who are also  defendants in the
Koch action were named as defendants in another  purported class action filed in
the San Francisco  Superior Court,  San Francisco,  California,  Case No. 987062
(the  Romei  action).  The  plaintiff  is an  investor  in Fund V, and filed the
complaint  on her own  behalf  and on  behalf  of all  class  members  similarly
situated who invested



<PAGE>



                            PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 1999



7.   LEGAL MATTERS (CONTINUED)

in certain  California  limited  partnerships  for which FSI acts as the general
partner,  including the  Partnerships.  The complaint alleges the same facts and
the same  nine  causes of action  as in the Koch  action,  plus five  additional
causes of action  against  all of the  defendants,  as  follows:  violations  of
California  Business and  Professions  Code Sections  17200, et seq. for alleged
unfair  and  deceptive   practices,   constructive   fraud,  unjust  enrichment,
violations of California  Corporations Code Section 1507, and a claim for treble
damages under California Civil Code Section 3345.

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

In May 1998, all parties to the Koch and Romei actions entered into a memorandum
of  understanding  related to the  settlement  of those  actions  (the  monetary
settlement),  following  which the  parties  agreed to an  additional  equitable
settlement (the equitable settlement).  The terms of the monetary settlement and
the equitable  settlement are contained in a Stipulation of Settlement  that was
filed with the court on February 12, 1999. On June 14, 1999, the parties amended
the stipulation and revised certain exhibits, and requested that the court set a
preliminary   approval   hearing  on  the  monetary   settlement  and  equitable
settlement.

The monetary  settlement  provides  for  stipulating  to a class for  settlement
purposes,  and a settlement  and release of all claims  against  defendants  and
third party  brokers in exchange  for payment for the benefit of the class of up
to $6.0 million. The final settlement amount will depend on the number of claims
filed by authorized  claimants  who are members of the class,  the amount of the
administrative costs incurred in connection with the settlement,  and the amount
of attorneys' fees awarded by the court. The Company will pay up to $0.3 million
of the  monetary  settlement,  with the  remainder  being funded by an insurance
policy.  The equitable  settlement  provides,  among other  things:  (a) for the
extension of the operating  lives of Funds V, VI, and VII by judicial  amendment
to each of their partnership  agreements,  such that FSI, the general partner of
each such partnership,  be permitted to reinvest cash flow, surplus  partnership
funds, or retained proceeds in additional equipment into the year 2004, and will
liquidate the partnerships'  equipment in 2006; (b) that FSI is entitled to earn
front-end fees (including  acquisition and lease  negotiation fees) up to 20% in
excess  of  the  compensatory  limitations  set  forth  in  the  North  American
Securities  Administrator's   Association's  Statement  of  Policy  by  judicial
amendment  to the  partnership  agreements  for Funds V, VI, and VII;  (c) for a
one-time  repurchase of up to 10% of the  outstanding  units of Funds V, VI, and
VII by the respective  partnership at 80% of such partnership's net asset value;
and (d) for the deferral of a portion of FSI's  management  fees until such time
as certain  performance  thresholds have, if ever, been met by the partnerships.
The  equitable  settlement  also  provides  for payment of the  equitable  class
attorneys' fees from partnership funds in the event, if ever, that distributions
paid to  investors in Funds V, VI, and VII during the  extension  period reach a
certain  internal rate of return.  Defendants  will continue to deny each of the
claims and  contentions  and admit no liability in connection  with the monetary
and equitable settlements.

The preliminary  approval  hearing was set for and occurred on June 25, 1999. On
June  29,  1999,  the  court  entered  orders,  among  other  things,   granting
preliminary  approval of the monetary and equitable  settlements,  conditionally
certifying the monetary and equitable settlement classes, providing for a final



<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999



7.   LEGAL MATTERS (CONTINUED)

fairness  hearing on November  16, 1999,  approving  the form and content of the
notices to be sent to the monetary  class and the equitable  class,  and staying
all claims, counterclaims, and crossclaims by the monetary and equitable classes
against  defendants  pending the court's  consideration  of the  fairness of the
monetary and equitable  settlements at the final fairness hearing.  The monetary
settlement  class  (the  monetary  class)  consists  of all  investors,  limited
partners,  assignees,  or unit  holders  who  purchased  or  received  by way of
transfer or assignment  any units in the  Partnerships  between May 23, 1989 and
June 29, 1999. The equitable  settlement class (the equitable class) consists of
all investors,  limited partners, assignees or unit holders who on June 29, 1999
held any units in Funds V, VI, and VII,  and their  assigns  and  successors  in
interest.  On June 29,  1999  the  court  also  entered  an order  preliminarily
approving as to form and substance the form of solicitation statement that is to
be  distributed to limited  partners of Funds V, VI, and VII in connection  with
the equitable settlement, following clearance by and with such changes necessary
to comply with the comments,  if any, of the Securities and Exchange  Commission
(SEC) in its review and clearance  procedures.  The monetary and equitable class
notices  will be sent  to the  monetary  and  equitable  classes,  respectively,
following clearance by the SEC of the solicitation statement.

The monetary settlement remains subject to certain conditions, including but not
limited to notice to the monetary class for purposes of the monetary  settlement
and final  approval of the monetary  settlement  by the court  following a final
fairness  hearing.   The  equitable   settlement  remains  subject  to  numerous
conditions, including but not limited to: (a) notice to the equitable class, (b)
review  and  clearance  by the SEC,  and  dissemination  to the  members  of the
equitable class, of solicitation  statements  regarding the proposed extensions,
(c) disapproval by less than 50% of the limited partners in Funds V, VI, and VII
of the proposed amendments to the limited partnership  agreements,  (d) judicial
approval of the proposed amendments to the limited partnership  agreements,  and
(e) final  approval of the equitable  settlement by the court  following a final
fairness  hearing.  The  monetary  settlement,  if  approved,  will  go  forward
regardless of whether the  equitable  settlement is approved or not. The Company
continues  to believe  that the  allegations  of the Koch and Romei  actions are
completely  without  merit  and  intends  to  continue  to  defend  this  matter
vigorously if the monetary settlement is not consummated.

The 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.

8.   COMMITMENTS

As of June 30,  1999,  the Company had  committed to purchase  $38.1  million of
equipment  for its  commercial  and  industrial  lease  and  finance  receivable
portfolio.

From July 1, 1999 to July 26,  1999,  the  Company  funded  $4.2  million of the
commitments  outstanding  as of June 30, 1999 for its  commercial and industrial
lease and finance receivable portfolio.

As of July 26,  1999,  the Company had  committed to purchase  $25.9  million of
equipment  for its  commercial  and  industrial  lease  and  finance  receivable
portfolio.

9.   OPERATING SEGMENTS

The Company operates in three operating  segments:  trailer leasing,  commercial
and industrial equipment leasing and financing, and the management of investment
programs and other transportation equipment leasing. The trailer leasing segment
includes twenty trailer rental  facilities that engage in short-term to mid-term
operating  leases of refrigerated and dry van trailers to a variety of customers
and  management of trailers for the  investment  programs.  The  commercial  and
industrial  equipment  leasing  and  financing  segment  originates  finance and
operating  leases  and loans on  commercial  and  industrial  equipment  that is
financed  through a  securitization  facility,  brokers  equipment,  and manages
institutional   programs  owning  commercial  and  industrial   equipment.   The
management of investment programs and



<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999



9.  OPERATING SEGMENTS (CONTINUED)

other  transportation  equipment leasing segment involves managing the Company's
syndicated  investment programs,  from which it earns fees and equity interests,
and arranging  short-term to mid-term  operating leases of other  transportation
equipment. The Company evaluates the performance of each segment based on profit
or loss from operations before allocating  general and  administrative  expenses
and certain  operating  support expenses and before allocating income taxes. The
segments  are managed  separately  because  each  operation  requires  different
business strategies.

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

                                                             Commercial       Management
                                                                and          of Investment
                                                             Industrial        Programs
                                                             Equipment         and Other
                                                              Leasing       Transportation
                                                Trailer         and            Equipment
For the three  months ended June 30, 1999       Leasing      Financing          Leasing         Other<F1>1      Total
-----------------------------------------
<S>                                               <C>             <C>             <C>            <C>            <C>
REVENUES
Lease income                                      $ 4,986         $ 4,886         $      437     $    --    $ 10,309
Fees earned                                           196             192              2,527          --       2,915
Gain (loss) on sale or disposition of
  assets, net                                          (3)          1,320                 --          --       1,317
Other                                                  --             551                313          --         864
  Total revenues                                    5,179           6,949              3,277          --      15,405
COSTS AND EXPENSES
Operations support                                  2,490           1,601                494         186       4,771
Depreciation and amortization                       1,780           1,770                113          --       3,663
General and administrative expenses                    --              --                 --       2,045       2,045
  Total costs and expenses                          4,270           3,371                607       2,231      10,479
Operating income (loss)                               909           3,578              2,670      (2,231)      4,926
Interest expense, net                                (634)         (2,343)              (612)         --      (3,589)
Other expenses, net                                    --             (26)                --        (124)       (150)
  Income (loss) before income taxes               $   275        $  1,209           $  2,058     $(2,355)   $  1,187
                                              ========================================================================

Total assets as of June 30, 1999                  $73,260        $175,855           $ 34,034     $ 8,954    $292,103
                                              ========================================================================

                                                             Commercial       Management
                                                                and          of Investment
                                                             Industrial        Programs
                                                             Equipment         and Other
                                                              Leasing       Transportation
                                                Trailer         and            Equipment
For the three  months ended June 30, 1998       Leasing      Financing          Leasing         Other<F1>1      Total
-----------------------------------------
REVENUES
Lease income                                      $ 1,855        $  5,722           $    917     $    --    $  8,494
Fees earned                                           253             414              3,409          --       4,076
Gain (loss) on sale or disposition of
  assets, net                                          (3)            882                654          --       1,533
Other                                                  --             332                873          --       1,205
  Total revenues                                    2,105           7,350              5,853          --      15,308
COSTS AND EXPENSES
Operations support                                  1,089           1,061              2,120         387       4,657
Depreciation and amortization                         850           2,337                310          --       3,497
General and administrative expenses                    --              --                 --       2,257       2,257
  Total costs and expenses                          1,939           3,398              2,430       2,644      10,411
Operating income (loss)                               166           3,952              3,423      (2,644)      4,897
Interest expense, net                                (379)         (2,521)              (405)         --      (3,305)
Other (expenses) income, net                           (1)             --                470          --         469
  Income (loss) before income taxes               $  (214)         $1,431           $  3,488     $(2,644)   $  2,061
                                              ========================================================================

Total assets as of June 30, 1998                  $33,935        $213,744            $37,726     $ 5,430    $290,835
                                              ========================================================================

--------
<FN>

<F1>1 Includes costs not  identifiable  to a particular  segment such as general and
administrative and certain operations support expenses.

</FN>
</TABLE>


<PAGE>



                                              PLM INTERNATIONAL, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   JUNE 30, 1999



9.   Operating Segments (continued)
<TABLE>
<CAPTION>

                                                             Commercial       Management
                                                                and          of Investment
                                                             Industrial        Programs
                                                             Equipment         and Other
                                                              Leasing       Transportation
                                                Trailer         and            Equipment
For the six months ended June 30, 1999          Leasing      Financing          Leasing         Other<F2>2      Total
---------------------------------------
<S>                                               <C>            <C>               <C>        <C>            <C>
EVENUES
Lease income                                      $ 8,677        $ 10,257          $     624  $       --    $ 19,558
Fees earned                                           401             407              5,226          --       6,034
Gain (loss) on sale or disposition of
  assets, net                                         (12)          1,642                 --          --       1,630
Other                                                  --           1,113                677          --       1,790
  Total revenues                                    9,066          13,419              6,527          --      29,012
COSTS AND EXPENSES
Operations support                                  4,389           2,681                988         544       8,602
Depreciation and amortization                       3,239           3,600                223          --       7,062
General and administrative expenses                    --              --                 --       3,529       3,529
  Total costs and expenses                          7,628           6,281              1,211       4,073      19,193
Operating income (loss)                             1,438           7,138              5,316      (4,073)      9,819
Interest expense, net                              (1,188)         (4,785)            (1,058)         --      (7,031)
Other expenses, net                                    --            (974)                --        (124)     (1,098)
  Income (loss) before income taxes               $   250        $  1,379          $   4,258  $   (4,197)   $  1,690
                                              ========================================================================
Cumulative effect of accounting change,
  net of tax of $165                              $    --        $    236          $     --   $      --     $    236
                                              ========================================================================

Total assets as of June 30, 1999                  $73,260        $175,855          $  34,034  $    8,954    $292,103
                                              ========================================================================

                                                             Commercial       Management
                                                                and          of Investment
                                                             Industrial        Programs
                                                             Equipment         and Other
                                                              Leasing       Transportation
                                                Trailer         and            Equipment
For the six months ended June 30, 1998          Leasing      Financing          Leasing         Other<F2>2      Total
---------------------------------------
REVENUES
Lease income                                      $ 3,433        $  9,980          $   1,625  $       --    $ 15,038
Fees earned                                           515             804              6,672          --       7,991
Gain on sale or disposition of assets, net             73           1,086              1,136          --       2,295
Other                                                   3             628              1,897          --       2,528
  Total revenues                                    4,024          12,498             11,330          --      27,852
COSTS AND EXPENSES
Operations support                                  1,942           2,024              3,831         669       8,466
Depreciation and amortization                       1,527           3,633                887          --       6,047
General and administrative expenses                    --              --                 --       4,171       4,171
  Total costs and expenses                          3,469           5,657              4,718       4,840      18,684
Operating income (loss)                               555           6,841              6,612      (4,840)      9,168
Interest expense, net                                (682)         (4,548)              (750)         --      (5,980)
Other (expenses) income, net                           (1)             --                464          --         463
  Income (loss) before income taxes               $  (128)         $2,293          $   6,326  $  (4,840)    $  3,651
                                              ========================================================================

Total assets as of June 30, 1998                  $33,935        $213,744          $  37,7    $   5,430     $290,835
                                              ========================================================================
<FN>
<F2>2 Includes costs not  identifiable  to a particular  segment such as general and
administrative and certain operations support expenses.
</FN>
</TABLE>


10.      CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX

In April 1998, the American  Institute of Certified  Public  Accountants  issued
Statement of Position  98-5,  "Reporting  on the Costs of Start-Up  Activities,"
which requires costs related to start-up  activities to be expensed as incurred.
The statement  requires that an initial  application be reported as a cumulative
effect of a change in accounting  principle.  The Company adopted this statement
during the first quarter of 1999,  at which time it took a $0.2 million  charge,
net of tax of $0.2 million, related to start-up costs



<PAGE>



                                              PLM INTERNATIONAL, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   JUNE 30, 1999



10.      CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX (CONTINUED)

AFG. This charge had an effect of reducing basic  earnings per  weighted-average
common share and diluted earnings per weighted-average common share by $0.03 for
the six months ended June 30, 1999.

11.      STOCK OFFERING

During 1998,  AFG filed a registration  statement  with the U.S.  Securities and
Exchange Commission for the purpose of undertaking an initial public offering of
common stock. During the first quarter of 1999, the Company's Board of Directors
determined  that it was in the  Company's  best interest to sell AFG rather than
proceed with a stock offering.  As a result of this decision,  the Company wrote
off $1.0 million of costs related to the proposed initial public offering during
1999, which is included in other expenses,  net, on the consolidated  statements
of income. The Company has engaged an investment banking firm to pursue the sale
of AFG.

12.      SUBSEQUENT EVENTS

On July 1, 1999, the Company, through its wholly-owned subsidiary, TEC Acquisub,
Inc.,  purchased $4.6 million in marine  containers,  which the Company plans to
sell to affiliated  programs.  TEC Acquisub,  Inc.  borrowed $3.6 million on its
short-term warehouse credit facility to partially fund the purchase.

On July 1, 1999,  the Company  borrowed  $1.4  million  under its $15.0  million
credit facility loan agreement,  increasing the total borrowings  outstanding on
the facility to $6.2 million.




<PAGE>




Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS

TRAILER LEASING

The Company operates twenty trailer rental  facilities that engage in short-term
and  mid-term   operating   leases.   Nineteen  of  these   facilities   operate
predominantly  refrigerated  trailers  used to  transport  temperature-sensitive
commodities,  consisting primarily of food products.  One facility operates only
dry van  (non-refrigerated)  trailers. The Company intends to move virtually all
of its dry van trailers to this facility plus another two locations that will be
established  in  1999.  To date in  1999,  the  Company  has  opened  three  new
refrigerated  trailer  yards.  The Company  intends to continue to increase  its
trailer fleet with new or late-model  used  refrigerated  trailers which will be
placed  in  existing  yards  and  new  facilities  to be  opened  in  additional
geographical markets.

COMMERCIAL AND INDUSTRIAL EQUIPMENT LEASING AND FINANCING

The Company funds and manages long-term direct finance leases, operating leases,
and loans through its American  Finance  Group,  Inc. (AFG)  subsidiary.  Master
lease agreements are entered into with  predominantly  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  point-of-sale,
materials  handling,  computer and  peripheral,  manufacturing,  general-purpose
plant and  warehouse,  communications,  medical,  and  construction  and  mining
equipment.  Through  AFG,  the  Company  is also  engaged in the  management  of
institutional programs for which it receives management fees. In previous years,
the Company  acquired  equipment  for the  institutional  programs  for which it
earned acquisition fees, but the Company does not anticipate acquiring equipment
for the institutional programs in the future. The Company also earns syndication
fees for arranging  purchases and sales of equipment between other  unaffiliated
third parties.

During the first quarter of 1999,  the Company's  Board of Directors  determined
that it was in the Company's  best interest to sell AFG. The Company has engaged
an investment banking firm to pursue the sale of AFG.

MANAGEMENT OF INVESTMENT PROGRAMS AND OTHER TRANSPORTATION EQUIPMENT LEASING

The Company has syndicated  investment programs from which it earns various fees
and equity interests.  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 allow the Company to
receive fees for the acquisition and initial leasing of the equipment.  The Fund
I program  does not provide for  acquisition  and lease  negotiation  fees.  The
Company  invested the equity raised  through  syndication  for these programs in
transportation  equipment and related assets, 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.
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 the program,  subject to
certain  allocation  provisions.  The  Company's  interest in the  earnings  and
distributions  of Fund I will increase to 25% after the investors  have received
distributions equal to their original invested capital.

In 1996, the Company announced the suspension of public syndication of equipment
leasing  programs  with  the  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  liquidate  and the
managed equipment portfolio for these programs becomes permanently reduced.

The Company will  occasionally  own  transportation  equipment  prior to sale to
affiliated  programs.  During this period,  the Company  earns lease revenue and
incurs interest expense.



<PAGE>





COMPARISON OF THE COMPANY'S OPERATING RESULTS FOR THE THREE MONTHS ENDED
JUNE 30, 1999 AND 1998

The following analysis reviews the operating results of the Company:

REVENUES
<TABLE>
<CAPTION>

                                                                                       For the Three Months
                                                                                          Ended June 30,
                                                                                1999                        1998
                                                                                -----------------------------------
                                                                                          (in thousands dollars)


<S>                                                                         <C>                          <C>
Operating lease income                                                      $  7,573                     $   5,452
Finance lease income                                                           2,736                         3,042
Management fees                                                                2,271                         2,535
Partnership interests and other fees                                              26                           357
Acquisition and lease negotiation fees                                           618                         1,184
Gain on the sale or disposition of assets, net                                 1,317                         1,533
Aircraft brokerage and services                                                   --                           362
Other                                                                            864                           843
                                                                    ---------------------------------------------------
  Total revenues                                                            $ 15,405                     $  15,308


The fluctuations in revenues for the three months ended June 30, 1999,  compared
to the same quarter in 1998, are summarized and explained below.

OPERATING LEASE INCOME BY TYPE:

                                                                                       For the Three Months
                                                                                           Ended June 30,
                                                                                1999                        1998
                                                                    --------------------------------------------
                                                                                      (in thousands of dollars)


Refrigerated and dry van over-the-road trailers                             $  4,986                     $   1,854
Commercial and industrial equipment                                            2,155                         2,686
Lease income from assets held for sale                                           408                           284
Intermodal trailers                                                               --                           590
Other                                                                             24                            38
                                                                    ---------------------------------------------------

</TABLE>

Operating  lease  income  includes  revenues  generated  from  assets  held  for
operating  leases and assets  held for sale that are on lease.  Operating  lease
income increased $2.1 million during the second quarter of 1999, compared to the
same quarter of 1998, due to the following:

(a)  A $3.1  million  increase in  operating  lease  income was  generated  from
     refrigerated  and dry van trailer  equipment  of which  approximately  $2.8
     million was due to an  increase  in the amount of these types of  equipment
     owned and on operating  lease,  and  approximately  $0.3 million was due to
     higher  utilization.  For the  quarter  ended June 30,  1999,  the  average
     investment in refrigerated and dry van trailer equipment was $78.8 million,
     compared to $39.2 million for the second quarter of 1998.

(b)  A $0.1 million increase in operating lease income was generated from assets
     held for sale.  During the second  quarter of 1999,  the Company owned $6.8
     million in marine  containers that were sold on June 30, 1999 to affiliated
     programs at cost, which  approximated  their fair market value. The Company
     earned $0.4  million in operating  lease income on these marine  containers
     during the second  quarter of 1999.  During the second quarter of 1998, the
     Company  purchased a 100% interest in an entity owning a marine vessel that
     generated $0.3 million in operating lease income. The Company sold 85.3% of
     its  interest  in the entity  that owned the marine  vessel,  at cost which
     approximated  the fair market value,  to an affiliated  program  during the
     second quarter of 1998.




<PAGE>





These  increases  in  operating  lease  income  were  partially  offset  by  the
following:

(a)  A $0.6 million decrease in operating lease income from intermodal  trailers
     resulted from the sale of all of the Company's  intermodal  trailers during
     August 1998.

(b)  A $0.5 million  decrease in  operating  lease  income from  commercial  and
     industrial  equipment was due to a decrease in the amount of these types of
     equipment owned and on operating lease.

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.  Finance lease income  decreased  $0.3 million in the second quarter of
1999,  compared to the same quarter in 1998, due to a decrease in commercial and
industrial  assets that were on finance  lease.  For the quarter  ended June 30,
1999,  the  average  investment  in direct  finance  leases was $136.4  million,
compared to $150.1 million for the second quarter of 1998.

MANAGEMENT FEES:

Management fees are, for the most part, based on the gross revenues generated by
equipment  under  management.  Management fees were $2.3 million for the quarter
ended June 30, 1999 and were $2.5  million for the quarter  ended June 30, 1998.
The lower management fees resulted from a net decrease in managed equipment from
the  PLM  Equipment  Growth  Fund  (EGF)  programs.   With  the  termination  of
syndication  activities  in 1996,  management  fees from the older  programs are
decreasing  and are expected to continue to decrease as the  programs  liquidate
their equipment portfolios.

The Company also earns management fees from the  institutional  programs managed
by the Company's AFG  subsidiary.  During both the quarters  ended June 30, 1999
and 1998, management fees for the institutional  programs were $0.2 million, and
were included in the above  amounts.  The Company does not expect to sell assets
in the future to the  institutional  programs.  It will,  however,  continue  to
manage the existing portfolios for these programs. As a result,  management fees
from the  institutional  programs  are  expected  to  decrease  in the future as
equipment is sold from the existing portfolios and not replaced.

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 $0.4 million for the quarter  ended June 30, 1999 and
were $0.5 million for the quarter ended June 30, 1998.  In addition,  a decrease
in the Company's residual interests in the programs was recorded as $0.4 million
during the quarter  ended June 30, 1999 and as $0.1  million  during the quarter
ended June 30, 1998.  The decrease in net earnings and  distribution  levels and
residual  interests  in  1999,  compared  to  1998,  resulted  mainly  from  the
disposition  of equipment  in certain of the EGF  programs.  Residual  income is
based on the  general  partner's  share of the  present  value of the  estimated
disposition proceeds of the equipment portfolios of the affiliated  partnerships
when the equipment is purchased.  Net decreases in the recorded  residual values
result  when  partnership  assets  are sold and the  proceeds  are less than the
original investment in the sold equipment.




<PAGE>





ACQUISITION AND LEASE NEGOTIATION FEES:

During  the  quarter  ended June 30,  1999,  the  Company,  on behalf of the EGF
programs,  purchased  transportation and other equipment for $29.9 million.  The
Company did not take acquisition and lease  negotiation fees on $16.6 million of
this  equipment,  as the Company has reached  certain fee limitations for one of
its limited partnership programs per the partnership agreement. This is compared
to the Company's purchase of $17.4 million in transportation and other equipment
during the quarter ended June 30, 1998,  resulting in a $0.4 million decrease in
acquisition and lease negotiation fees.

During the quarter  ended June 30, 1999,  no equipment  was purchased by AFG for
the  institutional  investment  programs,  compared to $8.1 million for the same
quarter in 1998, resulting in a $0.2 million comparative decrease in acquisition
and lease  negotiation  fees.  The Company does not expect to sell assets in the
future to the institutional  programs. It will, however,  continue to manage the
existing portfolios for these programs.

Because of the  Company's  decision to halt  syndication  of  equipment  leasing
programs with the close of Fund I in 1996, because Fund I has a no front-end fee
structure,  and because the Company does not expect to sell assets in the future
to the  institutional  programs,  acquisition and lease negotiation fees will be
substantially reduced in the future.

GAIN ON THE SALE OR DISPOSITION OF ASSETS, NET:

During the quarter ended June 30, 1999, the Company recorded a $1.3 million gain
on the sale or disposition of commercial  and industrial  equipment.  During the
quarter  ended June 30,  1998,  the Company  recorded a $1.5 million gain on the
sale or disposition of assets. Of this gain, $0.6 million resulted from the sale
or disposition of transportation  equipment and $0.9 million related to the sale
of commercial and industrial equipment.

AIRCRAFT BROKERAGE AND SERVICES:

Aircraft  brokerage  and services  revenue  decreased  $0.4  million  during the
quarter  ended June 30, 1999,  compared to the same quarter of 1998,  due to the
sale of the Company's  aircraft leasing and spare parts brokerage  subsidiary in
August 1998.

COSTS AND EXPENSES

                                            For the Three Months
                                                Ended June 30,
                                       1999                         1998
                                        ---------------------------------------
                                          (in thousands of dollars)


Operations support                    $    4,771               $    4,657
Depreciation and amortization              3,663                    3,497
General and administrative                 2,045                    2,257
                                      ------------------------------------------
  Total costs and expenses            $   10,479               $   10,411

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,  increased  $0.1  million  (2%) for the quarter  ended June 30,  1999,
compared to the quarter ended June 30, 1998.  Operations support expense related
to the trailer  leasing  segment  increased $1.4 million due to the expansion of
PLM Rental,  with the  addition of ten rental yards and new trailers to existing
yards.  Operations  support  expense  related to the  commercial  and industrial
equipment  leasing  and  financing  segment  increased  $0.5  million  due to an
increase in compensation  and benefits  expenses which resulted from a new bonus
program  initiated in 1999 to retain AFG employees  during AFG's  potential sale
and increased staffing.  These increases were partially offset by a $1.8 million
decrease in operations  support expenses related to the management of investment
programs and other transportation  equipment leasing segment, and other expenses
related  mainly to the sale of the  Company's  aircraft  leasing and spare parts
brokerage  subsidiary  in  August  1998,  and the sale of  other  transportation
equipment including intermodal trailers (discussed in the operating lease income
section).

DEPRECIATION AND AMORTIZATION:

Depreciation  and  amortization  expenses  increased  $0.2  million (5%) for the
quarter ended June 30, 1999,  compared to the quarter  ended June 30, 1998.  The
increase  resulted  from  an  increase  in  refrigerated  trailer  equipment  on
operating  lease,  which was partially  offset by the  reduction in  depreciable
commercial and industrial  equipment and intermodal trailers and other equipment
(discussed in the operating lease income section).





<PAGE>





GENERAL AND ADMINISTRATIVE:

General and  administrative  expenses  decreased  $0.2  million  (9%) during the
quarter ended June 30, 1999, compared to the same quarter in 1998, primarily due
to a $0.1 million decrease in compensation and benefits expenses, a $0.2 million
decrease  in sublease  commissions,  and a $0.1  million  decrease in travel and
entertainment  expenses,  partially  offset by a $0.2 million  increase in legal
expenses related to the potential sale of AFG.

OTHER INCOME AND EXPENSES

                                                  For the Three Months
                                                     Ended June 30,
                                          1999                         1998
                                         --------------------------------------
                                                (in thousands of dollars)


Interest expense                         $   (3,822)          $    (3,604)
Interest income                                 233                   299
Other (expenses) income, net                   (150)                  469


INTEREST EXPENSE:

Interest  expense  increased $0.2 million (6%) during the quarter ended June 30,
1999,  compared  to the same  quarter in 1998,  related to the  trailer  leasing
segment, due to an increase in borrowings to fund trailer purchases.

INTEREST INCOME:

Interest  income  decreased $0.1 million (22%) during the quarter ended June 30,
1999,  compared to the same quarter of 1998,  as a result of lower  average cash
balances during the quarter ended June 30, 1999, compared to the same quarter of
1998.

OTHER (EXPENSES) INCOME, NET:

Other  expenses of $0.2  million for the quarter  ended June 30, 1999 are mainly
related to the  settlement of a lawsuit.  During the second quarter of 1998, the
Company  recorded  income of $0.7 million related to the settlement of a lawsuit
against  Tera Power  Corporation  and  others,  and  recorded an expense of $0.3
million  related to a legal  settlement for the Koch and Romei actions (refer to
Note 7).

PROVISION FOR INCOME TAXES:

For the three  months ended June 30, 1999,  the  provision  for income taxes was
$0.5 million,  representing an effective rate of 39%. For the three months ended
June 30, 1998, the provision for income taxes was $0.9 million,  representing an
effective rate of 42%.




<PAGE>





NET INCOME

As a result of the  foregoing,  for the three months  ended June 30,  1999,  net
income  was  $0.7  million,   resulting  in  basic  and  diluted   earnings  per
weighted-average  common  share  outstanding  of $0.09.  For the same quarter in
1998, net income was $1.2 million,  resulting in basic and diluted  earnings per
weighted-average common share outstanding of $0.14.




<PAGE>





COMPARISON OF THE COMPANY'S OPERATING RESUTLS FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND 1998

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

REVENUES

                                                                                       For the Six Months
                                                                                          Ended June 30,
                                                                                   1999                       1998
                                                                    --------------------------------------------
                                                                                       (in thousands of dollars)
<S>                                                                       <C>                          <C>
Operating lease income                                                    $   13,670                   $    9,344
Finance lease income                                                           5,888                        5,694
Management fees                                                                4,639                        5,099
Partnership interests and other fees                                             316                          681
Acquisition and lease negotiation fees                                         1,079                        2,211
Gain on the sale or disposition of assets, net                                 1,630                        2,295
Aircraft brokerage and services                                                   --                          886
Other                                                                          1,790                        1,642
                                                                    ----------------------------------------------
  Total revenues                                                          $   29,012                   $   27,852

</TABLE>

The fluctuations in revenues for the six months ended June 30, 1999, compared to
the six months ended June 30, 1998, are summarized and explained below.

OPERATING LEASE INCOME BY TYPE:
<TABLE>
<CAPTION>

                                                                                       For the Six Months
                                                                                           Ended June 30,
                                                                                  1999                       1998
                                                                    --------------------------------------------
                                                                                      (in thousands of dollars)


<S>                                                                    <C>                           <C>
Refrigerated and dry van over-the-road trailers                        $       8,677                 $       3,432
Commercial and industrial equipment                                            4,380                         4,299
Lease income from assets held for sale                                           587                           284
Intermodal trailers                                                               --                         1,179
Other                                                                             26                           150
                                                                    ---------------------------------------------------
  Total operating lease income                                         $      13,670                 $       9,344

</TABLE>

Operating  lease  income  includes  revenues  generated  from  assets  held  for
operating  leases and assets  held for sale that are on lease.  Operating  lease
income  increased  $4.3  million  during  the six months  ended  June 30,  1999,
compared to the same period of 1998, due to the following:

(a)  A $5.2  million  increase in  operating  lease  income was  generated  from
     refrigerated and dry van trailer  equipment,  of which  approximately  $4.6
     million was due to an  increase  in the amount of these types of  equipment
     owned and on operating  lease,  and  approximately  $0.6 million was due to
     higher  utilization.  For the six months ended June 30,  1999,  the average
     investment in refrigerated and dry van trailer equipment was $75.0 million,
     compared to $37.7 million for the same period of 1998.

(b)  A $0.1  million  increase in  operating  lease  income was  generated  from
     commercial  and industrial  equipment,  due to an increase in the amount of
     these types of equipment owned and on operating lease.

(c)  A $0.3 million increase in operating lease income was generated from assets
     held for sale. During the six months ended June 30, 1999, the Company owned
     $13.8 million in marine containers that were sold to affiliated programs at
     cost, which  approximated  their fair market value. The Company earned $0.6
     million in operating lease income on these marine containers during the six
     months ended June 30, 1999.  During the six months ended June 30, 1998, the
     Company  owned a 100%  interest  in an entity  owning a marine  vessel that
     generated $0.3 million in operating lease income. The Company sold 85.3% of
     its  interest  in the entity  that owned the marine  vessel at cost,  which
     approximated fair market value, to an affiliated  program during the second
     quarter of 1998.

These  increases  in  operating  lease  income  were  partially  offset  by  the
following:

(a)  A $1.2 million decrease in operating lease income from intermodal  trailers
     was due to the  sale of all of the  Company's  intermodal  trailers  during
     August 1998.

(b)  A $0.1  million  decrease in other  operating  lease  income was due to the
     Company's  strategic decision to dispose of certain  transportation  assets
     and exit certain equipment markets.

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.  Finance  lease income  increased  $0.2 million in the six months ended
June 30,  1999,  compared  to the same  period in 1998,  due to an  increase  in
commercial and industrial  assets that were on finance lease. For the six months
ended June 30, 1999, the average  investment in direct finance leases was $137.9
million, compared to $134.4 million for the same period of 1998.

MANAGEMENT FEES:

Management fees are, for the most part, based on the gross revenues generated by
equipment under  management.  Management fees were $4.6 million and $5.1 million
for the six months ended June 30, 1999 and 1998,  respectively.  The decrease in
management  fees resulted from a net decrease in managed  equipment from the PLM
Equipment  Growth  Fund (EGF)  programs.  With the  termination  of  syndication
activities in 1996,  management  fees from the older programs are decreasing and
are expected to continue to decrease as the programs  liquidate  their equipment
portfolios.

The Company also earns management fees from the  institutional  programs managed
by the Company's AFG subsidiary.  During both the six months ended June 30, 1999
and 1998, management fees for the institutional  programs were $0.4 million, and
were included in the above  amounts.  The Company does not expect to sell assets
in the future to the  institutional  programs.  It will,  however,  continue  to
manage the existing portfolios for these programs. As a result,  management fees
from the  institutional  programs  are  expected  to  decrease  in the future as
equipment is sold from the existing portfolios and not replaced.

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 $0.8 million for the six months ended June 30, 1999 and
$1.0 million for the six months ended June 30, 1998. In addition,  a decrease in
the  Company's  residual  interests in the programs was recorded as $0.5 million
during the six months ended June 30, 1999 and $0.3 million during the six months
ended June 30, 1998.  The decrease in net earnings and  distribution  levels and
residual  interests  in  1999,  compared  to  1998,  resulted  mainly  from  the
disposition of equipment in certain of the EGF programs. Residual income is



<PAGE>





based on the  general  partner's  share of the  present  value of the  estimated
disposition proceeds of the equipment portfolios of the affiliated  partnerships
when the equipment is purchased.  Net decreases in the recorded  residual values
result  when  partnership  assets  are sold and the  proceeds  are less than the
original investment in the sold equipment.

ACQUISITION AND LEASE NEGOTIATION FEES:

During the six months  ended June 30, 1999,  the  Company,  on behalf of the EGF
programs,  purchased  transportation and other equipment for approximately $37.1
million.  The Company did not take  acquisition  and lease  negotiation  fees on
$16.6  million  of this  equipment,  as the  Company  has  reached  certain  fee
limitations  for one of its limited  partnership  programs  per the  partnership
agreement.  This is  compared  to the  Company's  purchase  of $32.9  million in
transportation  and other  equipment  during the six months ended June 30, 1998,
resulting in a $0.7 million decrease in acquisition and lease negotiation fees.




<PAGE>





During the six months ended June 30, 1999, no equipment was purchased by AFG for
the institutional  investment  programs,  compared to $14.1 million for the same
period in 1998,  resulting in a $0.4 million  decrease in acquisition  and lease
negotiation  fees.  The Company  does not expect to sell assets in the future to
the institutional  programs.  It will, however,  continue to manage the existing
portfolios for these programs.

Because of the  Company's  decision to halt  syndication  of  equipment  leasing
programs with the close of Fund I in 1996, because Fund I has a no front-end fee
structure,  and because the Company does not expect to sell assets in the future
to the  institutional  programs,  acquisition and lease negotiation fees will be
substantially reduced in the future.

GAIN ON THE SALE OR DISPOSITION OF ASSETS, NET:

During the six months ended June 30, 1999,  the Company  recorded a $1.6 million
gain on the sale or disposition of commercial and industrial  equipment.  During
the six months ended June 30, 1998, the Company  recorded a $2.3 million gain on
the sale or disposition of assets.  Of this gain, $0.8 million resulted from the
sale or  disposition  of  previously  leased  transportation  equipment and $1.0
million related to the sale of commercial and industrial equipment.  Also during
the six months ended June 30, 1998, the Company  purchased and subsequently sold
railcars to an unaffiliated third party for a net gain of $0.5 million.

AIRCRAFT BROKERAGE AND SERVICES:

Aircraft  brokerage and services  revenue  decreased $0.9 million during the six
months ended June 30, 1999, compared to the same period of 1998, due to the sale
of the Company's aircraft leasing and spare parts brokerage subsidiary in August
1998.

OTHER REVENUE:

Other revenue  increased $0.1 million during the six months ended June 30, 1999,
compared to the same period of 1998, due to a $0.5 million increase in financing
income earned on loans made by AFG. The increase in revenue was partially offset
by a $0.2 million  decrease in  brokerage  fees earned by AFG and a $0.2 million
decrease in other revenues.

COSTS AND EXPENSES
<TABLE>
<CAPTION>

                                                                                       For the Six Months
                                                                                           Ended June 30,
                                                                                1999                     1998
                                                                                ----------------------------------------
                                                                                      (in thousands of dollars)


<S>                                                                            <C>                           <C>
Operations support                                                             $     8,602                   $     8,466
Depreciation and amortization                                                        7,062                         6,047
General and administrative                                                           3,529                         4,171
                                                                       ---------------------------------------------------
  Total costs and expenses                                                     $    19,193                   $    18,684
</TABLE>





<PAGE>






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,  increased  $0.1  million (2%) for the six months ended June 30, 1999,
compared  to the six months  ended June 30,  1998.  Operations  support  expense
related  to the  trailer  leasing  segment  increased  $2.4  million  due to the
expansion of PLM Rental,  with the addition of ten rental yards and new trailers
to existing  yards.  Operations  support  expense  related to the commercial and
industrial equipment leasing and financing segment increased $0.7 million due to
an increase in compensation and benefits  expenses  resulting from the expansion
of the commercial  and industrial  equipment  lease  portfolio,  and a new bonus
program  initiated in 1999 to retain AFG employees  during AFG's potential sale.
These increases were partially  offset by a $3.0 million  decrease in operations
support  expenses  related to the  management of  investment  programs and other
transportation



<PAGE>





equipment leasing segment,  and other expenses related mainly to the sale of the
Company's aircraft leasing and spare parts brokerage  subsidiary in August 1998,
and the sale of other  transportation  equipment  including  intermodal trailers
(discussed in the operating lease income section).

DEPRECIATION AND AMORTIZATION:

Depreciation and amortization  expenses increased $1.0 million (17%) for the six
months ended June 30, 1999,  compared to the six months ended June 30, 1998. The
increase  resulted  from  an  increase  in  refrigerated  trailer  equipment  on
operating  lease,  which was  partially  offset by a  reduction  in  depreciable
intermodal trailers and other equipment (discussed in the operating lease income
section).

GENERAL AND ADMINISTRATIVE:

General and administrative  expenses decreased $0.6 million (15%) during the six
months ended June 30, 1999,  compared to the same period in 1998,  primarily due
to a $0.3 million decrease in compensation and benefits expenses; a $0.2 million
decrease in rent and office-related  expenses; a $0.1 million decrease in travel
and entertainment expenses; and a $0.2 million decrease in sublease commissions.
This  decrease in expenses was  partially  offset by a $0.2 million  increase in
legal expenses related to the potential sale of AFG.

OTHER INCOME AND EXPENSES
<TABLE>
<CAPTION>

                                                                                  For the Six Months
                                                                                     Ended June 30,
                                                                              1999                      1998
                                                                   -------------------------------------------
                                                                                (in thousands of dollars)


<S>                                                                         <C>                       <C>
Interest expense                                                            $   (7,507)          $    (6,674)
Interest income                                                                    476                   694
Other (expenses) income, net                                                    (1,098)                  463

</TABLE>

INTEREST EXPENSE:

Interest  expense  increased $0.8 million (12%) during the six months ended June
30, 1999,  compared to the same period in 1998.  Interest expense related to the
trailer leasing segment  increased $0.5 million due to an increase in borrowings
to fund  trailer  purchases.  Interest  expense  related to the  commercial  and
industrial  equipment  leasing and financing  segment  increased  $0.3 due to an
increase in borrowings to fund commercial and industrial equipment purchases.

INTEREST INCOME:

Interest  income  decreased  $0.2 million (31%) during the six months ended June
30, 1999, compared to the same period of 1998, as a result of lower average cash
balances during the six months ended June 30, 1999,  compared to the same period
of 1998.




<PAGE>





OTHER (EXPENSES) INCOME, NET:

Other  expenses of $1.1 million for the six months ended June 30, 1999 represent
$1.0 million in expense  related to the proposed  initial public offering of the
Company's AFG subsidiary  (during the first quarter of 1999, the Company's Board
of Directors  determined  that it was in the Company's best interest to sell AFG
rather  than  proceed  with a  stock  offering,  and  therefore  wrote  off  all
associated  offering  costs),  and  $0.1  million  in  expense  related  to  the
settlement of a lawsuit.  During the six months ended June 30, 1998, the Company
recorded  other income of $0.7 million  related to the  settlement  of a lawsuit
against Tera Power Corporation and others,  and recorded expense of $0.3 million
related to a legal settlement for the Koch and Romei actions (refer to Note 7).





<PAGE>





PROVISION FOR INCOME TAXES:

For the six months ended June 30, 1999,  the provision for income taxes was $0.7
million,  representing  an effective  rate of 40%. For the six months ended June
30, 1998,  the  provision  for income taxes was $1.5  million,  representing  an
effective rate of 40%.

CUMULATIVE EFFECT OF ACCOUNTING CHANGE, MET OF TAX:

In April 1998, the American  Institute of Certified  Public  Accountants  issued
Statement of Position  98-5,  "Reporting  on the Costs of Start-Up  Activities,"
which requires costs related to start-up  activities to be expensed as incurred.
The statement  requires that an initial  application be reported as a cumulative
effect of a change in accounting  principle.  The Company adopted this statement
during the first quarter of 1999,  at which time it took a $0.2 million  charge,
net of tax of $0.2 million, related to start-up costs of AFG.

NET INCOME

As a result of the foregoing, for the six months ended June 30, 1999, net income
was $0.8 million,  resulting in basic and diluted earnings per  weighted-average
common share outstanding of $0.10 and $0.09,  respectively.  For the same period
in 1998,  net income was $2.2 million,  resulting in basic and diluted  earnings
per weighted-average common share outstanding of $0.26.


LIQUIDITY AND CAPITAL RESOURCES

Cash  requirements  have  historically  been  satisfied  through  cash flow from
operations, borrowings, and the sale of equipment.

Liquidity in 1999 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, the volume of commercial and industrial and trailer equipment
leasing transactions, additional borrowings, and the potential proceeds from the
sale of AFG.  Management  believes the Company can  accomplish the preceding and
that it will have sufficient liquidity and capital resources for the next twelve
months. Future liquidity is influenced by the factors summarized below.

DEBT FINANCING:

NONRECOURSE SECURITIZED DEBT:  The Company has  available a  nonrecourse  debt
facility for up to $150.0 million,  secured by direct finance leases,  operating
leases,  and loans on commercial  and  industrial  equipment that generally have
terms of one to seven years.  The facility is  available  for a one-year  period
expiring  October 12, 1999.  Repayment of the facility  matches the terms of the
underlying  leases.  The  Company  believes  that it will be able to renew  this
facility on  substantially  the same terms upon its  expiration and increase its
borrowing  capacity as needed. As of June 30, 1999, $101.9 million in borrowings
was  outstanding  under this  facility.  As of July 26 , 1999,  $99.4 million in
borrowings was outstanding under this facility.





<PAGE>





In addition to the $150.0 million  nonrecourse debt facility discussed above, as
of June 30, 1999 and July 26, 1999,  the Company had $6.0 million in nonrecourse
notes  payable,  secured by direct  finance  leases on commercial and industrial
equipment at AFG, which have terms  corresponding to the note repayment schedule
that began April 1998 and ends March 2001. The notes bear interest from 8.32% to
9.5% per annum.

FSI WAREHOUSE CREDIT  FACILITY:  Assets acquired and held on an interim basis by
FSI for sale to affiliated  programs or third  parties have,  from time to time,
been partially funded by this warehouse  credit facility.  This facility is also
used to  temporarily  finance  the  purchase  of  trailers  prior  to  permanent
financing  being  obtained.  This  facility  expires on December 14,  1999.  The
Company  believes it will be able to renew this  facility on  substantially  the
same terms upon its expiration.

This facility is shared with EGF VI, PLM Equipment Growth & Income Fund VII (EGF
VII), and Fund I. Borrowings under this facility by the other eligible borrowers
reduce the amount available to be borrowed by the Company.  All borrowings under
this  facility  are  guaranteed  by the  Company.  This  facility  provides  80%
financing for  transportation  assets purchased by the Company.  The Company can
hold assets under this facility for up to 150 days. Interest accrues at prime or
LIBOR plus 162.5  basis  points,  at the option of the  Company.  As of June 30,
1999,  the  Company  had $10.4  million  of  outstanding  borrowings  under this
facility,  and there were no borrowings  outstanding  under this facility by any
other eligible borrowers.  As of July 26, 1999, the Company had $15.5 million of
outstanding  borrowings  under  this  facility,  and  there  were no  borrowings
outstanding under this facility by any other eligible borrowers.

AFG WAREHOUSE CREDIT FACILITY:  Assets acquired and held on an interim basis by
AFG for  placement  in the  Company's  securitization  facility  or for  sale to
unaffiliated  third parties have, from time to time, been partially  funded by a
$60.0 million warehouse credit facility. The facility expires December 14, 1999;
however,  the  Company  believes  it  will be able to  renew  this  facility  on
substantially the same terms upon its expiration.

This  facility  provides for financing of 100% of the present value of the lease
stream  of  commercial  and  industrial  equipment  for up to  90%  of  original
equipment cost of the assets held on this facility.

Borrowings secured by  investment-grade  lessees can be held under this facility
until the  facility's  expiration.  Borrowings  secured  by  noninvestment-grade
lessees may by outstanding for 120 days. Interest accrues at prime or LIBOR plus
137.5 basis  points,  at the option of the  Company.  As of June 30,  1999,  the
Company had $22.9 million outstanding under this facility. As of July 26 , 1999,
the Company had $23.1 million outstanding under this facility.

SENIOR SECURED NOTES: The Company's senior secured notes agreement, which had an
outstanding  balance of $24.4  million  as of June 30,  1999 and July 26 , 1999,
bears  interest  at  LIBOR  plus 240  basis  points.  The  Company  has  pledged
substantially  all  of  its  future  management  fees,   acquisition  and  lease
negotiation  fees,  data  processing  fees,  and  partnership  distributions  as
collateral  to the  facility.  The  facility  required  quarterly  interest-only
payments  through  August  15,  1997,  with  principal  plus  interest  payments
beginning  November  15,  1997.  Principal  payments of $1.9 million are payable
quarterly through termination of the loan on August 15, 2002.

SENIOR SECURED LOAN: The  Company's  senior loan with a syndicate of insurance
companies, which had an outstanding balance of $11.8 million as of June 30, 1999
and July 26, 1999,  provides that equipment sale proceeds from pledged equipment
or cash  deposits  be  placed  into a  collateral  account  or used to  purchase
additional  equipment to the extent  required to meet  certain  debt  covenants.
Pledged  equipment for this loan consists of the storage equipment and virtually
all trailer  equipment  purchased prior to August 1998. As of June 30, 1999, the
cash collateral  balance for this loan was $49,000 and is included in restricted
cash and cash  equivalents on the Company's  balance  sheet.  The facility bears
interest at 9.78% and  required  quarterly  interest  payments  through June 30,
1997, with quarterly  principal  payments of $1.5 million plus interest  charges
beginning  June 30, 1997 and  continuing  until  termination of the loan in June
2001.




<PAGE>





OTHER SECURED DEBT: As of June 30, 1999,  the Company had $12.5 million in other
secured  debt,  bearing  interest  from 5.35% to 5.55%,  with  payments  of $0.2
million due monthly in advance,  beginning December 1998, and a final payment of
$3.3  million  due  November  2005.  The  debt is  secured  by  certain  trailer
equipment.

In April 1999,  the Company  entered into a $5.0 million  secured debt agreement
bearing interest at 6.20%,  with payments of $0.1 million due monthly  beginning
April 1999,  and a final  payment of $1.3 million due April 2006. As of June 30,
1999, the Company had $4.9 million in borrowings under this debt agreement.  The
debt is secured by certain  trailer  equipment.  The Company intends to use this
type of debt to finance  the  purchase of new  trailers  in the future,  as this
financing provides for favorable  financing terms in exchange for beneficial tax
treatment in these secured trailers to the lenders.

In May 6, 1999, the Company  entered into a $15.0 million  credit  facility loan
agreement  bearing interest at LIBOR plus 1.5%. This facility allows the Company
to borrow up to $15.0 million within a one-year period. As of June 30, 1999, the
Company had borrowed $4.8 million under this facility.  Payments of $0.1 million
are due quarterly  beginning  August 2000,  with a final payment of $1.4 million
due August 2006. The facility is secured by certain trailer equipment.

INYRTRDY-RATE SWAP CONTRACTS:  The Company has entered into  interest-rate swap
agreements in order to manage the  interest-rate  exposure  associated  with its
nonrecourse  securitized  debt. As of June 30, 1999,  the swap  agreements had a
weighted-average  duration  of 1.43  years,  corresponding  to the  terms of the
related  debt.  As of June 30,  1999,  a  notional  amount of $98.4  million  of
interest-rate swap agreements  effectively fixed interest rates at an average of
6.47% on such  obligations.  For the six months  ended June 30,  1999,  interest
expense increased by $0.5 million due to these arrangements.

TRAILER LEASING:

The Company operates twenty trailer rental  facilities that engage in short-term
and  mid-term   operating   leases.   Nineteen  of  these   facilities   operate
predominantly  refrigerated  trailers  used to  transport  temperature-sensitive
commodities,  consisting primarily of food products.  One facility operates only
dry van  (non-refrigerated)  trailers. The Company intends to move virtually all
of its dry van trailers to this facility plus another two locations that will be
established  in  1999.  To date in  1999,  the  Company  has  opened  three  new
refrigerated  trailer  yards.  The Company  intends to continue to increase  its
trailer fleet with new or late-model  used  refrigerated  trailers which will be
placed  in  existing  yards  and  new  facilities  to be  opened  in  additional
geographical  markets.  During the six months ended June 30,  1999,  the Company
purchased $24.9 million of primarily refrigerated trailers and sold refrigerated
and dry van trailers  with a net book value of $0.2 million for proceeds of $0.2
million.  The net proceeds from the sale of assets that were  collateralized  as
part of the senior loan facility were placed in a collateral account.

COMMERCIAL AND INDUSTRIAL EQUIPMENT LEASING AND FINANCING:

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  nonrecourse
securitization  facility. AFG also originates loans in which it takes a security
interest in the assets financed.  During the six months ended June 30, 1999, the
Company  funded  lease  and loan  transactions  for  commercial  and  industrial
equipment  with an  original  equipment  cost of $41.6  million.  During the six
months ended June 30, 1999, the Company sold commercial and industrial equipment
with a net book  value of $33.9  million  for  proceeds  of $35.5  million.  The
majority of these  transactions was financed,  on an interim basis,  through the
Company's warehouse credit facility.

In  previous  years,  the  Company  acquired  and  serviced  equipment  for  the
institutional  programs for which it earned acquisition and management fees. The
Company  does  not  believe  it will be  selling  assets  in the  future  to the
institutional  programs.  It will,  however,  continue  to manage  the  existing
portfolios for these programs.

As of June 30,  1999,  the Company had  committed to purchase  $38.1  million of
equipment  for its  commercial  and  industrial  lease and  finance  receivables
portfolio,  to be held by the  Company or sold to third  parties,  of which $5.5
million had been received by lessees and accrued for as of June 30, 1999.




<PAGE>





From July 1, 1999  through  July 26,  1999,  the Company  funded $4.2 million of
commitments  outstanding  as of June 30, 1999 for its  commercial and industrial
lease and finance receivables portfolio.

As of July 26,  1999,  the Company had  committed to purchase  $25.9  million of
equipment  for its  commercial  and  industrial  lease and  finance  receivables
portfolio.

During the first quarter of 1999,  the Company's  Board of Directors  determined
that it was in the Company's  best interest to sell AFG. The Company has engaged
an investment banking firm to pursue the sale of AFG.

OTHER TRANSPORTATION EQUIPMENT LEASING AND OTHER:

During the first six months of 1999, the Company purchased marine containers for
$13.8 million,  and sold them to affiliated programs at cost, which approximated
their fair market value.

STOCK REPURCHASE PROGRAM:

In  December  1998,  the  Company  announced  that its  Board of  Directors  had
authorized the  repurchase of up to $5.0 million of the Company's  common stock.
As of July 26 , 1999,  327,415 shares had been repurchased under this plan for a
total of $2.0 million.

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

EFFECTS OF THE YEAR 2000:

It is possible that the Company's currently installed computer systems, software
products, and other business systems, or those of the Company's vendors, service
providers,  and customers,  working  either alone or in  conjunction  with other
software or systems,  may not accept  input of,  store,  manipulate,  and output
dates on or after January 1, 2000 without error or  interruption,  a possibility
commonly known as the "Year 2000" or "Y2K" problem.

The Company has  established a special Year 2000  oversight  committee to review
the impact of Year 2000  issues on its  business  systems in order to  determine
whether such systems will retain  functionality  after  December 31, 1999. As of
June 30, 1999, the Company has completed inventory, assessment,  remediation and
testing stages of its Year 2000 review of its core business information systems.
Specifically,  the Company (a) has integrated  Year  2000-compliant  programming
code  into  its  existing   internally   customized  and  internally   developed
transaction  processing  software  systems and (b) the Company's  accounting and
asset  management  software  systems  have been made  Year  2000  compliant.  In
addition,  numerous  other  software  systems  provided  by vendors  and service
providers  have been replaced with systems  represented by the vendor or service
provider  to be Year 2000  functional.  These  systems  will be fully  tested by
September 30, 1999 and are expected to be compliant.

As of June 30, 1999, the Company has spent  approximately $0.1 million to become
Year 2000 compliant and does not anticipate any additional  Year  2000-compliant
expenditures.

Some risks  associated  with the Year 2000 problem are beyond the ability of the
Company to control,  including the extent to which third parties can address the
Year  2000  problem.  The  Company  is  communicating  with  vendors,   services
providers,  and customers in order to assess the Year 2000 compliance  readiness
of such  parties  and the  extent  to which the  Company  is  vulnerable  to any
third-party  Year 2000  issues.  As part of this  process,  vendors  and service
providers  were  ranked in terms of the  relative  importance  of the service or
product  provided.  All service  providers  and vendors who were  identified  as
medium to high relative  importance were surveyed to determine Year 2000 status.
The Company has received satisfactory responses to Year 2000 readiness inquiries
from surveyed service providers and vendors.

It is possible that certain of the Company's  equipment  lease portfolio may not
be Year 2000 compliant. The Company has contacted equipment manufacturers of the
portion of the Company's leased equipment portfolio identified as date sensitive
to assure Year 2000 compliance or to develop remediation strategies. The Company
does not expect that non-Year 2000 compliance of its leased equipment  portfolio
will have an adverse  material impact on its financial  statements.  The Company
has surveyed the majority of its lessees and the majority of those surveyed have
responded satisfactorily to Year 2000 readiness inquiries.

There can be no  assurance  that the  software  systems of such  parties will be
converted or made Year 2000  compliant in a timely  manner.  Any failure by such
other parties to make their respective  systems Year 2000 compliant could have a
material  adverse  effect on the business,  financial  position,  and results of
operations  of the  Company.  The Company has made and will  continue an ongoing
effort to recognize and evaluate potential exposure relating to third-party Year
2000 noncompliance. The Company will implement a contingency plan if the Company
determines that third-party  noncompliance  would have a material adverse effect
on the Company's business, financial position, or results of operation.




<PAGE>












The Company is currently  developing a contingency  plan to address the possible
failure  of any  systems  or  vendors  or  service  providers  due to Year  2000
problems.  For the purpose of such  contingency  planning,  a reasonably  likely
worst case scenario  primarily  anticipates  an inability to access  systems and
data on a temporary basis resulting in possible delay in reconciliation of funds
received or payment of monies owed. The Company is evaluating  whether there are
additional  scenarios which have not been identified.  Contingency planning will
encompass   strategies  up  to  an  including  manual  processes.   The  Company
anticipates that these plans will be completed by September 30, 1999.

ACCOUNTING PRONOUNCEMENTS:

In June 1998, the Financial  Accounting  Standards  Board (FASB) issued SFAS No.
133,  "Accounting  for Derivative  Instruments  and Hedging  Activities,"  which
standardizes  the  accounting  for  derivative  instruments,  including  certain
derivative instruments embedded in other contracts,  by requiring that an entity
recognize  those items as assets or  liabilities  in the  statement of financial
position and measure them at fair value.

FASB Statement No. 137,  "Accounting for Derivatives,  Instruments,  and Hedging
Activities  - Deferral  of the  Effective  Date of FASB  Statement  No.  133, an
amendment of FASB Statement No. 133," issued in June 1999,  defers the effective
date of Statement No. 133.  Statement No. 133, as amended,  is now effective for
all fiscal  quarters of all fiscal years  beginning  after June 15, 2000.  As of
June 30, 1999, the Company is reviewing the effect SFAS No. 133 will have on the
Company's consolidated financial statements.



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.

Item 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company's  primary  market risk  exposure is that of interest  rate risk. A
change in the U.S. prime  interest  rate,  LIBOR rate, or lender's cost of funds
based on  commercial  paper  market  rates  would  affect  the rate at which the
Company could borrow funds under its various borrowing facilities.  Increases in
interest rates to the Company, which may cause the Company to raise the implicit
rates  charged to its  customers,  could in turn result in a reduction in demand
for the Company's lease financing.  The Company's  warehouse credit  facilities,
$4.8 million of other  secured debt,  and the senior  secured notes are variable
rate debt. The Company  estimates  that a 1 percent  increase or decrease in the
Company's   variable  rate  debt  would  result  in  an  increase  or  decrease,
respectively, in interest expense of $0.2 million in 1999, $0.2 million in 2000,
$0.1  million in 2001,  $0.1  million  in 2002,  $31,000  in 2003,  and  $50,000
thereafter.  The Company  estimates that a 2 percent increase or decrease in the
Company's   variable  rate  debt  would  result  in  an  increase  or  decrease,
respectively, in interest expense of $0.4 million in 1999, $0.4 million in 2000,
$0.3  million in 2001,  $0.1  million in 2002,  $0.1  million in 2003,  and $0.1
million thereafter.

The Company hedges  borrowings  under the nonrecourse  securitization  facility,
effectively  fixing  the rate of these  borrowings.  The  Company  is  currently
required to hedge  against the risk of interest  rate  increases  for 90% of the
aggregate  discounted lease balance of those leases and loans used as collateral
for its nonrecourse  securitization facility, but the Company generally does not
enter  into  hedges  for  leases  designated  for  syndication  or for leases of
transportation  equipment.  Such  hedging  activities  may limit  the  Company's
ability to  participate  in the benefits of any decrease in interest  rates with
respect to the hedged portfolio of leases, but may also protect the Company from
increases in interest rates for the hedged portfolio. All of the Company's other
financial assets and liabilities are at fixed rates.





<PAGE>





                       PART II OTHER INFORMATION


Item 1. LEGAL PROCEEDINGS

See Note 7 to the consolidated financial statements.

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

At the Annual  Meeting of  Stockholders  held May 27,  1999,  one  proposal  was
submitted to a vote of the Company's security holders.

Warren G.  Lichtenstein  and Howard M.  Lorber were  re-elected  to the Board of
Directors of the Company. The votes cast in the election were as follows:

       Nominee                           For              Votes Withheld

Warren G. Lichtenstein                6,328,238              212,597
Howard M. Lorber                      6,324,746              216,089



Directors whose terms continued after the Annual Meeting of Stockholders held on
May 27, 1999 are as follows:

Class I (Terms  Expire in 2000)
Robert N. Tidball
Robert L. Witt

Class II (Terms Expire in 2001)
Randall L.-W. Caudill
Douglas P. Goodrich
Harold R. Somerset



Item 6.           EXHIBITS AND REPORTS ON FORM 8-K

(A)      Exhibits

10.1      $15,000,000  Facility  Agreement  among PLM  International,  Inc.  and
          Meespierson N.V., dated May 6, 1999.

10.2      Second  Amendment to PLM  International,  Inc. 1998  Management  Stock
          Compensation Plan, dated May 29, 1999.

10.3      Employment  Agreement among American  Finance Group,  Inc. and certain
          employees, dated January 1, 1999.

10.4      Retention  Agreement  among American  Finance Group,  Inc. and certain
          employees, dated April 1999.

(B)       Reports on Form 8-K

None.



<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 K Brock
                                    Vice President and
                                    Corporate Controller






      Date: July 26, 1999




<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 K Brock
                                                          Richard K Brock
                                                          Vice President and
                                                          Corporate Controller






          Date: July 26, 1999

                                                       -30-


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