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 SEPTEMBER 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 October 28, 1999 - 7,982,974 shares.


<PAGE>


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

                                                                              For the Three Months              For the Nine Months
                                                                              Ended September 30,               Ended September 30,
                                                                              1999           1998              1999            1998
                                                                         ----------------------------------------------------------

     <S>                                                                     <C>            <C>               <C>             <C>
     REVENUES
     Operating lease income                                             $   7,344      $   3,295         $  16,634       $    8,341
     Management fees                                                        1,966          2,344             6,198            7,036
     Partnership interests and other fees                                     263             61               579              742
     Acquisition and lease negotiation fees                                    --            548             1,079            2,363
     (Loss) gain on the sale or disposition of assets, net                    (29)           283               (41 )          1,492
     Aircraft brokerage and services                                           --            204                --            1,090
     Other                                                                    343            345             1,031            1,369
                                                                      --------------------------------------------------------------
       Total revenues                                                       9,887          7,080            25,480           22,433
                                                                      --------------------------------------------------------------

     COSTS AND EXPENSES
     Operations support                                                     4,121          3,160             9,943            9,505
     Depreciation and amortization                                          2,172          1,221             5,651            3,461
     General and administrative                                             1,322          2,003             4,851            6,174
                                                                      --------------------------------------------------------------
       Total costs and expenses                                             7,615          6,384            20,445           19,140
                                                                      --------------------------------------------------------------
     Operating income                                                       2,272            696             5,035            3,293

     Interest expense                                                      (1,425)          (912)           (3,862)          (2,806)
     Interest income                                                           60            376               252              838
     Other income, net                                                        700             15               577              478
                                                                      --------------------------------------------------------------
       Income before income taxes                                           1,607            175             2,002            1,803

     Provision for income taxes                                               633             68               790              703
                                                                      --------------------------------------------------------------
       Net income from continuing operations                                  974            107             1,212            1,100

     Income from discontinued operations, net of income tax                   403          1,255             1,182            2,446
                                                                      --------------------------------------------------------------

     Net income before cumulative effect of accounting change               1,377          1,362             2,394            3,546

     Cumulative effect of accounting change                                    --             --              (236)             --
                                                                      --------------------------------------------------------------
          Net income to common shares                                   $   1,377      $   1,362         $   2,158       $    3,546
                                                                      ==============================================================
     Basic earnings per weighted-average common share outstanding:
           Income from continuing operations                            $    0.12      $    0.01         $    0.15       $     0.13
           Discontinued operations                                           0.05           0.15              0.15             0.29
           Cumulative effect of accounting change                              --             --             (0.03)              --
                                                                      --------------------------------------------------------------
         Net income                                                     $    0.17      $    0.16         $    0.27       $     0.42
                                                                      ==============================================================
     Diluted earnings per weighted-average common share outstanding:
           Income from continuing operations                            $    0.12      $    0.01         $    0.15       $     0.13
           Discontinued operations                                           0.05           0.15              0.14             0.28
           Cumulative effect of accounting change                              --             --             (0.03)              --
                                                                      --------------------------------------------------------------
         Net income                                                     $    0.17      $    0.16         $    0.26       $     0.41
                                                                      ==============================================================
</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>

                                                                          September 30,           December 31,
                                                                               1999                   1998
                                                                         ----------------------------------------

  <S>                                                                      <C>                      <C>
  Cash and cash equivalents                                                $      2,315             $      8,786
  Receivables (net of allowance for doubtful accounts of $0.7
    million as of September 30, 1999 and $0.4 million
    as of December 31, 1998)                                                      7,162                    5,003
  Receivables from affiliates                                                     3,213                    2,944
  Investment in direct finance leases, net                                        1,871                    2,082
  Net assets of discontinued operations                                          25,140                   27,342
  Equity interest in affiliates                                                  19,743                   22,588
  Assets held for sale                                                            8,004                       --
  Trailers held for operating leases                                             97,344                   63,044
    Less accumulated depreciation                                               (19,304)                 (15,516)
                                                                         -------------------------------------------
                                                                                 78,040                   47,528

  Restricted cash and cash equivalents                                            1,545                    2,261
  Other, net                                                                      3,784                    3,424
                                                                         -------------------------------------------
        Total assets                                                       $    150,817             $    121,958
                                                                         ===========================================


                      LIABILITIES AND SHAREHOLDERS' EQUITY

  Liabilities:
  Short term warehouse facility                                            $      7,600             $         --
  Senior secured notes                                                           22,559                   28,199
  Senior secured loan                                                            10,294                   14,706
  Other secured debt                                                             40,420                   13,142
  Payables and other liabilities                                                 10,457                    9,648
  Deferred income taxes                                                           8,492                    6,066
                                                                         -------------------------------------------
    Total liabilities                                                            99,822                   71,761

  Shareholders' equity:
  Common stock ($.01 par value, 50,000,000 shares
    authorized, 7,977,974 issued and outstanding as of
    September 30, 1999 and 8,159,919 as of December 31, 1998)                       112                      112
  Paid-in capital, in excess of par                                              75,057                   74,947
  Treasury stock (4,057,781 shares as of September 30, 1999
     and 3,875,836 shares as of December 31, 1998)                              (16,542)                 (15,072)
  Accumulated deficit                                                            (7,632)                  (9,790)
  ------------------------------------------------------------------------------------------------------------------
      Total shareholders' equity                                                 50,995                   50,197
                                                                         -------------------------------------------
        Total liabilities and shareholders' equity                         $    150,817             $    121,958
                                                                         ===========================================


</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 Nine Months Ended September 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

  Comprehensive 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                                                                            2,158        $   2,158             2,158
                                                                                                    =================
  Exercise of stock options                               9              570                                                 579
  Common stock repurchases                                            (2,149)                                             (2,149)
  Reissuance of treasury stock, net                     101              109                                                 210
                                         ===========================================================                 ===============
    Balances, September 30, 1999         $ 112    $  75,057        $ (16,542)      $   (7,632)                      $     50,995
                                         ===========================================================                 ===============


</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 Nine Months
                                                                                                         Ended September 30,
                                                                                                       1999               1998
                                                                                                   --------------------------------
  OPERATING ACTIVITIES
  <S>                                                                                                <C>                 <C>
  Net income from continuing operations                                                            $    1,212          $     1,100
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization                                                                     5,651                3,461
      Foreign currency translation                                                                         --                  (80)
      Deferred income tax expense (benefit)                                                             2,426               (7,298)
      Loss (gain) on sale or disposition of assets, net                                                    41               (1,529)
      Loss on sale of investment in subsidiary                                                             --                  245
      Undistributed residual value interests                                                              716                1,032
      Minority interest in net loss of subsidiaries                                                        --                 (100)
      Increase (decrease) in payables and other liabilities                                               977               (3,669)
      (Increase) decrease in receivables and receivables from affiliates                               (2,428)               2,310
      Amortization of organization and offering costs                                                   2,129                2,129
      (Increase) decrease in other assets                                                                (266)                 883
                                                                                                 ----------------------------------
        Cash provided by (used in) operating activities of continuing operations                       10,458               (1,516)
        Cash provided by operating activities of discontinued operations                                6,095               14,777
                                                                                                 ----------------------------------
        Net cash provided by operating activities                                                      16,553               13,261
                                                                                                 ----------------------------------


  INVESTING ACTIVITIES
  Principal payments received on finance leases                                                           211                  170
  Purchase of property, plant, and equipment                                                             (512)                (182)
  Purchase of transportation equipment and capital improvements                                       (57,985)             (41,849)
  Proceeds from the sale of transportation equipment for lease                                            394                6,150
  Proceeds from the sale of assets held for sale                                                       13,801               22,366
  Sale of investment in subsidiary                                                                         --                  176
  Decrease in restricted cash and restricted cash equivalents                                             716               10,629
  Investing activities of discontinued operations                                                      12,301              (67,653)
                                                                                               ------------------------------------
        Net cash used in investing activities                                                         (31,074)             (70,193)

  FINANCING ACTIVITIES
  Borrowings of short-term warehouse credit facilities                                                 39,008               16,256
  Repayment of short-term warehouse credit facilities                                                 (31,408)             (16,000)
  Borrowings of senior secured notes                                                                       --                5,000
  Repayment of senior secured notes                                                                    (5,640)              (3,765)
  Repayment of senior secured loan                                                                     (4,412)              (4,412)
  Borrowings of other secured debt                                                                     28,570                  173
  Repayment of other secured debt                                                                      (1,292)                (114)
  Proceeds from exercise of stock options                                                                 579                  411
  Reissuance of treasury stock, net                                                                        42                   --
  Purchase of stock                                                                                    (2,149)              (1,017)
  Net financing activities of discontinued operations                                                 (15,248)              61,553
                                                                                                  ---------------------------------
        Net cash provided by financing activities                                                       8,050               58,085
                                                                                                  ---------------------------------

  Net (decrease) increase in cash and cash equivalents                                                 (6,471)               1,153
  Cash and cash equivalents at beginning of period                                                      8,786                5,224
                                                                                                   =================================
  Cash and cash equivalents at end of period                                                       $    2,315          $     6,377
                                                                                                   =================================

  SUPPLEMENTAL INFORMATION
  Net cash paid for interest from continuing operations                                            $    3,840          $     2,891
                                                                                                   =================================
  Net cash paid for interest from discontinued operations                                          $    7,937          $     7,280

                                                                                                   =================================
  Net cash paid for income taxes                                                                   $      212          $     1,529
                                                                                                   =================================
</TABLE>



       See accompanying notes to these consolidated financial statements.

<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 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
September 30, 1999 and December 31, 1998, statements of income for the three and
nine  months  ended  September  30,  1999 and 1998,  statements  of  changes  in
shareholders'  equity and  comprehensive  income for the year ended December 31,
1998 and the nine months ended  September 30, 1999 and  statements of cash flows
for the nine months ended September 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.   DISCONTINUED OPERATIONS

In the third quarter of 1999, the Company  entered into a non-binding  letter of
intent to sell its  wholly-owned  commercial and industrial  leasing  subsidiary
American Finance Group, Inc. (AFG).  Completion of the sale is expected to occur
during the first quarter of 2000.  Accordingly,  effective  with the issuance of
the third quarter 1999 financial statements, AFG's results of operations and net
assets have been  classified as  discontinued  operations and prior periods have
been  restated.  For  business  segment  reporting  purposes,   AFG's  data  was
previously reported as the segment "Commercial and industrial  equipment leasing
and financing".

The components of amounts  reflected in the income statements and balance sheets
for the discontinued operations are as follows:
<TABLE>
<CAPTION>


                                                                  For the Three Months                 For the Nine Months
                                                                       Ended September 30,             Ended September 30,
                                                                    1999          1998              1999             1998
                                                               ------------------------------------------------------------


     <S>                                                       <C>           <C>                <C>              <C>
     Income Statement
     Revenue                                                   $   6,257     $    7,843         $   19,676       $   20,342
     Costs and expenses                                           (5,617)        (5,849)           (17,741)         (16,325)
                                                               ------------------------------------------------------------
     Operating income                                                640          1,994              1,935            4,017
     Income tax                                                     (237)          (739)              (753)          (1,571)
                                                               -------------------------------------------------------------
     Net income from discontinued operations                   $     403     $    1,255         $    1,182       $    2,446
                                                               =============================================================
</TABLE>

3.   DISCONTINUED OPERATIONS (continued)

Net assets of discontinued  operations as of September 30, 1999 and December 31,
1998 are as follow:

<TABLE>
<CAPTION>


                                                                           September 30,      December 31,
                                                                               1999              1998
                                                                     -----------------------------------------
                                                                                (in thousands of dollars)

<S>                                                                   <C>                    <C>
Cash and cash equivalents                                             $         360          $         --
Restricted cash                                                               8,473                 8,088
Receivables                                                                   1,337                 2,279
Investment in direct finance leases                                         118,677               143,006
Loan receivables                                                             23,445                23,493
Commercial and industrial equipment, net                                     19,638                16,689
Other assets, net                                                             1,989                 3,898
Warehouse credit facility                                                   (20,100)              (34,420)
Nonrecourse securitized debt                                               (110,679)             (111,222)
Payables and other liabilities                                               (3,450)              (12,120)
Deferred income taxes                                                       (14,550)              (12,349)
                                                                     ========================================
  Net assets of discontinued operations                               $      25,140          $     27,342
                                                                     ========================================
</TABLE>

4.   FINANCING TRANSACTION ACTIVITIES

American Finance Group, Inc., 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 nine months  ended  September  30,  1999,  the Company  funded  $34.8
million in  equipment  that was placed on finance  lease.  Also  during the nine
months ended  September  30, 1999,  the Company sold  equipment on finance lease
with an original  equipment  cost of $40.5  million,  resulting in a net gain of
$0.4 million.

During the nine months ended September 30, 1999, the Company funded $6.1 million
in loans to customers.

5.   EQUIPMENT

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

During the nine months  ended  September  30,  1999,  the Company  funded  $20.3
million in  commercial  and  industrial  equipment  that was placed on operating
lease.  During the nine months  ended  September  30,  1999,  the  Company  sold
commercial and industrial  equipment that was on operating  lease for a net gain
of $1.7 million.

During the first nine months of 1999, the Company  purchased  trailers for $36.2
million  and sold  trailers  with a net  book  value  of $0.4  million  for $0.4
million.

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
program.  Equipment held for sale is valued at the lower of the depreciated cost
or the fair value less costs to sell.  During the first nine months of 1999, the
Company

<PAGE>


5.   EQUIPMENT (continued)

purchased marine  containers for $21.8 million,  and sold marine  containers for
$13.8  million to affiliated  programs at cost,  which  approximated  their fair
market value. As of September 30, 1999, the Company held marine  containers with
a net book value of $8.0 million for sale to affiliated programs. As of December
31, 1998, the Company had no equipment held for sale.

6.   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 on December 14, 1999. The
Company believes it will be able to renew these facilities on substantially  the
same terms upon  expiration.  As of September  30, 1999,  FSI and PLM  Equipment
Growth Fund VI had $7.6 million and $1.0 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 September 30, 1999, AFG
had $20.1 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 allowed the Company to borrow up to $150.0 million
through  October 12, 1999. In October 1999,  this facility was amended to extend
the  facility  through  October 10, 2000 and reduce the amount  available  to be
borrowed to $125.0 million.  Repayment of the facility  matches the terms of the
underlying  leases.  As of  September  30,  1999,  there were $105.5  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 September  30,  1999,  90% of the ADLB had been
hedged.

During the first nine months of 1999,  the Company  made  principal  payments of
$2.4 million on its  nonrecourse  notes payable  remaining.  As of September 30,
1999, the Company had $5.2 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 the second quarter of 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
September 30, 1999,  the Company had borrowed $8.6 million under this  facility.
Principal 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 nine months of 1999, the Company entered into four $5.0 million
debt  agreements   bearing   interest  at  6.20%,   6.81%,   6.90%,  and  7.05%,
respectively,  each with payments of $0.1 million due monthly through 2006, with
a final payment of $1.3 million,  $1.3 million,  $1.3 million, and $1.2 million,
respectively,  due in 2006, secured by certain trailer equipment.  In return for
favorable  financing  terms,  these  agreements give beneficial tax treatment in
these secured trailers to the lenders.

During the first nine  months of 1999,  the Company  repaid $4.4  million of the
senior secured loan, $5.6 million of the senior secured notes,  and $1.3 million
of the other secured debt, in accordance with the debt repayment schedules.


<PAGE>


7.   SHAREHOLDERS' EQUITY

During the first nine months of 1999, the Company  repurchased 359,215 shares of
the Company's common stock for $2.1 million, under the $5.0 million common stock
repurchase  program  authorized by the Company's  Board of Directors in December
1998. As of September 30, 1999,  422,515 shares had been repurchased  under this
plan, for a total of $2.5 million.

During the nine months ended September 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  stock as a stock  grant,  and
143,000 shares were issued for the exercise of stock options.  Consequently, the
total common shares outstanding  decreased to 7,977,974 as of September 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  September 30, 1999 was 8,061,551 and during the three months ended
September 30, 1998 was 8,356,102.  The weighted-average  number of shares deemed
outstanding for the basic earnings per share calculation  during the nine months
ended  September  30,  1999 was  8,097,489,  and  during the nine  months  ended
September 30, 1998 was 8,358,214.  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
September 30, 1999 was  8,137,547,  and during the three months ended  September
30,  1998  was  8,503,075.   The   weighted-average   number  of  shares  deemed
outstanding,  including  potentially  dilutive  common  shares,  for the diluted
earnings per  weighted-average  share  calculation  during the nine months ended
September 30, 1999 was 8,204,268, and during the nine months ended September 30,
1998 was 8,518,381.

8.   LEGAL MATTERS

The Company and various of its wholly-owned subsidiaries are named as defendants
in a lawsuit  filed as a purported  class  action in January 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  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.  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, and the court denied plaintiffs' motion to remand, which
denial was upheld on appeal.  In December  1997,  the court  granted  defendants
motion  to  compel  arbitration  of the named  plaintiffs'  claims,  based on an
agreement to arbitrate  contained in the limited  partnership  agreement of each
Partnership.  Plaintiffs  appealed this decision,  but in June 1998  voluntarily
dismissed  their appeal  pending  settlement  of the Koch  action,  as discussed
below.

In June 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,

<PAGE>


8.   LEGAL MATTERS  (Continued)

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  in  certain   California   limited
partnerships  for  which  FSI  acts  as  the  general  partner,   including  the
Partnerships.  The  complaint (as amended in August 1997) alleges the same facts
and the same nine causes of action as in the Koch action, plus additional causes
of action against all of the defendants,  including alleged unfair and deceptive
practices, constructive fraud, unjust enrichment, a claim for treble damages and
violations of the California Securities Law of 1968.

In July 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 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 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.  The monetary  settlement  provides  for a settlement  and
release of all claims against defendants 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  partnership
funds 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; (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 court, among other things, preliminarily approved the monetary and equitable
settlements  in June 1999,  and set a final  fairness  hearing for  November 16,
1999.  For  settlement  purposes,  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.

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

<PAGE>


8.  LEGAL MATTERS (Continued)

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
incidental  to its  business.  Management  does  not  believe  that any of these
actions will be material to the financial condition of the Company.

9.   PURCHASE COMMITMENTS

As of September 30, 1999, the Company had committed to purchase $16.3 million of
equipment  for its  commercial  and  industrial  lease  and  finance  receivable
portfolio.

From October 1, 1999 to October 28, 1999, the Company funded $4.4 million of the
commitments  outstanding  as of  September  30,  1999  for  its  commercial  and
industrial lease and finance receivable portfolio.

As of October 28, 1999,  the Company had committed to purchase  $14.5 million of
equipment  for its  commercial  and  industrial  lease  and  finance  receivable
portfolio.

As of September 30, 1999, the Company had committed to purchase $10.0 million of
marine  containers.  As of  September  30,  1999,  the Company had accrued  $3.4
million for marine  containers,  which the Company has taken delivery of and the
Company had classified these containers as assets held for sale.

10.  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 22 trailer rental facilities that engage in short 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 management of investment
programs and other  transportation  equipment  leasing segment involves managing
its  syndicated  investment  programs,  from  which  it earns  fees  and  equity
interests,   and  arranging  short  to  mid-term   operating   leases  of  other
transportation  equipment.  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.  In the third quarter of 1999, the Company
entered into a non-binding letter of intent to sell its wholly-owned  commercial
and industrial  leasing  subsidiary  American  Finance Group,  Inc. (AFG).  This
segment is accounted for as discontinued  operations.  The Company evaluates the
performance  of each  segment  based on profit or loss  from  operations  before
allocating  general and  administrative  expenses and before  allocating  income
taxes.  The segments are managed  separately  because  each  operation  requires
different business strategies.



<PAGE>


10.  OPERATING SEGMENTS (continued)

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 September 30, 1999    Leasing              Financing         Leasing        Other<F1>1    Total
                                              -------------------------------------------------------------------------------
REVENUES
<S>                                              <C>                 <C>              <C>              <C>          <C>
Lease income                                     $  7,069            $     --         $      275       $     --     $  7,344
Fees earned                                           227                  --              2,002             --        2,229
Loss on sale or disposition of assets, net            (29)                 --                 --             --          (29)
Other                                                  10                  --                333             --          343
                                              -------------------------------------------------------------------------------
  Total revenues                                    7,277                  --              2,610             --        9,887
                                              -------------------------------------------------------------------------------
COSTS AND EXPENSES
Operations support                                  3,365                  --                691             65        4,121
Depreciation and amortization                       2,053                  --                119             --        2,172
General and administrative expenses                    --                  --                 --          1,322        1,322
                                              ------------------------------------------------------------------------------
  Total costs and expenses                          5,418                  --                810          1,387        7,615
                                              ------------------------------------------------------------------------------
Operating income (loss)                             1,859                  --              1,800         (1,387)       2,272
Interest expense, net                                (902)                 --               (463)            --       (1,365)
Other income, net                                      --                  --                700             --          700
                                              ------------------------------------------------------------------------------
  Income (loss) before income taxes              $    957            $     --         $    2,037       $ (1,387)    $  1,607
                                              ===============================================================================

Income from discontinued operations, net of      $     --            $    403         $      --        $     --     $    403
tax
                                              ==============================================================================

Total assets as of September 30, 1999            $ 83,781            $ 25,140         $   35,084       $  6,812     $150,817
                                              ==============================================================================


                                                                      Commercial       Management
                                                                         and         of Investment
                                                                      Industrial       Programs
                                                                      Equipment         and Other
                                                                       Leasing       Transportation
                                                Trailer                 and           Equipment
For the three  months ended September 30, 1998  Leasing               Financing         Leasing       Other<F1>1      Total

                                              ------------------------------------------------------------------------------
REVENUES
Lease income                                     $  2,721            $     --         $      574       $     --     $  3,295
Fees earned                                           306                  --              2,647             --        2,953
Gain on sale or disposition of assets, net             40                  --                243             --          283
Other                                                  --                  --                549             --          549
                                              ------------------------------------------------------------------------------
  Total revenues                                    3,067                  --              4,013             --        7,080
                                              ------------------------------------------------------------------------------
COSTS AND EXPENSES
Operations support                                  1,205                  --              1,311            644        3,160
Depreciation and amortization                       1,014                  --                207             --        1,221
General and administrative expenses                    --                  --                 --          2,003        2,003
                                              ------------------------------------------------------------------------------
  Total costs and expenses                          2,219                  --              1,518          2,647        6,384
                                              ------------------------------------------------------------------------------
Operating income (loss)                               848                  --              2,495         (2,647)         696
Interest expense, net                                (414)                 --               (122)            --         (536)
Other income, net                                      --                  --                 15             --           15
                                              ------------------------------------------------------------------------------
  Income (loss) before income taxes              $    434            $     --         $    2,388       $ (2,647)    $    175
                                              ===============================================================================

Income from discontinued operations, net of      $     --            $  1,255         $      --        $     --     $  1,255
tax
                                              ===============================================================================

Total assets as of September 30, 1998            $ 38,692            $ 26,694         $   32,179      $   9,147     $106,712
                                              ==============================================================================

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


<PAGE>


10.  OPERATING SEGMENTS (continued)
<TABLE>
<CAPTION>

                                                                      Commercial      Management
                                                                        and         of Investment
                                                                      Industrial       Programs
                                                                      Equipment        and Other
                                                                       Leasing      Transportation
                                                   Trailer                and          Equipment
For the nine months ended September 30, 1999       Leasing            Financing        Leasing        Other<F1>2    Total
                                               -----------------------------------------------------------------------------
REVENUES
<S>                                              <C>                 <C>             <C>             <C>         <C>
Lease income                                     $ 15,746            $     --        $      888      $     --    $ 16,634
Fees earned                                           628                  --             7,228            --       7,856
Loss on sale or disposition of assets, net            (41)                 --                --            --         (41)
Other                                                  10                  --             1,021            --       1,031
                                              -----------------------------------------------------------------------------
  Total revenues                                   16,343                  --             9,137            --      25,480
                                              -----------------------------------------------------------------------------
COSTS AND EXPENSES
Operations support                                  7,754                  --             1,579           610       9,943
Depreciation and amortization                       5,292                  --               359            --       5,651
General and administrative expenses                    --                  --                --         4,851       4,851
                                              -----------------------------------------------------------------------------
  Total costs and expenses                         13,046                  --             1,938         5,461      20,445
                                              -----------------------------------------------------------------------------
Operating income (loss)                             3,297                  --             7,199        (5,461)      5,035
Interest expense, net                              (2,090)                 --            (1,520)           --      (3,610)
Other income (expenses), net                           --                  --               700          (123)        577
                                              -----------------------------------------------------------------------------
  Income (loss) before income taxes              $  1,207            $     --        $    6,379      $ (5,584)   $  2,002
                                              =============================================================================

Income from discontinued operations, net of      $     --            $  1,182        $       --      $     --    $  1,182
tax
                                              =============================================================================
Cumulative effect of accounting change,
  net of tax                                     $     --            $   (236)       $       --      $     --    $   (236)
                                              =============================================================================

Total assets as of September 30, 1999            $ 83,781            $ 25,140        $   35,084      $  6,812    $150,817
                                              =============================================================================


                                                                      Commercial     Management
                                                                         and        of Investment
                                                                      Industrial      Programs
                                                                      Equipment       and Other
                                                                       Leasing     Transportation
                                                  Trailer               and           Equipment
For the nine months ended September 30, 1998      Leasing             Financing        Leasing      Other<F2>2      Total

                                              -----------------------------------------------------------------------------
REVENUES
Lease income                                     $  6,154            $     --        $    2,187      $     --    $  8,341
Fees earned                                           822                  --             9,319            --      10,141
Gain on sale or disposition of assets, net            113                  --             1,379            --       1,492
Other                                                   3                  --             2,456            --       2,459
                                              -----------------------------------------------------------------------------
  Total revenues                                    7,092                  --            15,341            --      22,433
                                              -----------------------------------------------------------------------------
COSTS AND EXPENSEs
Operations support                                  3,148                  --             5,044         1,313       9,505
Depreciation and amortization                       2,541                  --               920            --       3,461
General and administrative expenses                    --                  --                --         6,174       6,174
                                              -----------------------------------------------------------------------------
  Total costs and expenses                          5,689                  --             5,964         7,487      19,140
                                              -----------------------------------------------------------------------------
Operating income (loss)                             1,403                  --             9,377        (7,487)      3,293
Interest expense, net                              (1,096)                 --              (872)           --      (1,968)
Other income (expenses), net                           (1)                 --               479            --         478
                                              -----------------------------------------------------------------------------
  Income (loss) before income taxes              $    306            $     --        $    8,984      $ (7,487)   $  1,803
                                               =============================================================================

Income from discontinued operations, net of      $     --            $  2,446        $       --      $     --    $  2,446
tax
                                              =============================================================================

Total assets as of September 30, 1998            $ 38,692            $ 26,694        $   32,179      $  9,147    $106,712
                                              =============================================================================
<FN>
<F2> 2 Includes costs not  identifiable to a particular  segment such as general
     and administrative and certain operations support expenses.

</FN>
</TABLE>

<PAGE>


11.  CUMULATIVE EFFECT OF ACCOUNTING CHANGE FROM DISCONTINUED OPERATIONS, 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 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 its  commercial  and
industrial  equipment  operations  which is being  accounted for as discontinued
operations.

12.  SUBSEQUENT EVENTS

In October 1999, the Company sold $4.6 million of containers held for sale to an
affiliated program at its cost, which approximated their fair market value.

In October 1999, the Company amended its nonrecourse  securitization facility to
extend the facility  through October 10, 2000 and reduce the amount available to
be borrowed under this facility to $125.0 million.

In October  1999,  the Company  entered into two debt  agreements  totaling $5.0
million  bearing  interest at 6.71%,  with  payments of $0.1 million due monthly
beginning  November of 1999 and a final  payment of $0.8  million  due  November
2006,  secured by certain trailer equipment.  In return for favorable  financing
terms,  these agreements give beneficial tax treatment in these secured trailers
to the lenders.

On October 26, 1999,  the Company  agreed to sell its wholly -owned  subsidiary,
American Finance Group,  Inc., for approximately $29 million in cash to Guaranty
Federal  Bank,  subject  to closing  adjustments  which are not  expected  to be
material.  Consummation  of the  transaction  is subject to various  conditions,
including the approval of PLM  shareholders,  and closing of the  transaction is
expected  to occur only  after  such  approval  has been  secured  and all other
conditions have been satisfied.


<PAGE>



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

TRAILER LEASING

The Company operates 22 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.  Three  facilities  operate only dry van
(non-refrigerated)  trailers.  The Company  intends to move virtually all of its
dry van trailers to these facilities.  In 1999, the Company has opened three new
refrigerated trailer yards.

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.

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.

In the third quarter of 1999, the Company  entered into a non-binding  letter of
intent to sell its  wholly-owned  commercial and industrial  leasing  subsidiary
American Finance Group, Inc. (AFG).




<PAGE>


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

The following analysis reviews the operating results of the Company:

REVENUES
<TABLE>
<CAPTION>

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

<S>                                                                   <C>                 <C>
Operating lease income                                                $     7,344         $      3,295
Management fees                                                             1,966                2,344
Partnership interests and other fees                                          263                   61
Acquisition and lease negotiation fees                                         --                  548
(Loss) gain on the sale or disposition of assets, net                         (29)                 283
Aircraft brokerage and services                                                --                  204
Other                                                                         343                  345
                                                                     -----------------------------------------
  Total revenues                                                      $     9,887         $      7,080
</TABLE>

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

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

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

<S>                                                                   <C>                     <C>
Refrigerated and dry van over-the-road trailers                       $     7,069             $      2,721
Lease income from assets held for sale                                        263                      128
Intermodal trailers                                                            --                      451
Other                                                                          12                       (5)
                                                                     -----------------------------------------
  Total operating lease income                                        $     7,344             $      3,295
</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 $4.0 million during the third quarter of 1999,  compared to the
same quarter of 1998, due to the following:

(a)  A $4.3  million  increase in  operating  lease  income was  generated  from
     refrigerated and dry van trailer  equipment,  of which $3.9 million was due
     to an  increase  in the  amount of these  types of  equipment  owned and on
     operating  lease, and $0.4 million was due to higher  utilization.  For the
     quarter ended  September 30, 1999, the average  investment in  refrigerated
     and dry van trailer equipment was $92.1 million,  compared to $44.7 million
     for the third quarter of 1998.

(b)  A $0.1 million  increase in operating  lease income  generated  from assets
     held for sale.  During the third quarter of 1999,  the Company owned marine
     containers,  which generated $0.3 million in operating lease income.  As of
     September 30, 1999, these marine  containers are held for sale.  During the
     third  quarter of 1998,  the  Company  owned a 14.7%  interest in an entity
     owning a marine  vessel that  generated  $0.1  million in  operating  lease
     income.  The Company  sold its interest in the entity that owned the marine
     vessel, at cost, which approximated the fair market value, to an affiliated
     program during the third quarter of 1998.




<PAGE>


These  increases  in  operating  lease  income were  partially  offset by a $0.5
million  decrease in operating lease income from intermodal  trailers due to the
sale of all of the Company's intermodal trailers during August 1998.

MANAGEMENT FEES:

Management fees are, for the most part, based on the gross revenues generated by
equipment under  management.  Management fees were $2.0 million and $2.3 million
for the quarters ended September 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.

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 $0.3 million and $0.5 million for the quarters  ended
September  30,  1999 and 1998,  respectively.  In  addition,  a decrease of $0.1
million and $0.4 million in the Company's residual interests in the programs was
recorded  during the quarters ended  September 30, 1999 and 1998,  respectively.
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.

ACQUISITION AND LEASE NEGOTIATION FEES:

During the quarter ended  September  30, 1999,  the Company did not purchase any
equipment on behalf of the EGF programs and no acquisition and lease negotiation
fees were recorded.  This is compared to the Company's purchase of $10.0 million
in  transportation  and other  equipment  during the quarter ended September 30,
1998,  resulting in a $0.5 million decrease in acquisition and lease negotiation
fees.

Because of the  Company's  decision to halt  syndication  of  equipment  leasing
programs  with the close of Fund I in 1996 and because Fund I has a no front-end
fee structure,  acquisition  and lease  negotiation  fees will be  substantially
reduced in the future.

(LOSS) GAIN ON THE SALE OR DISPOSITION OF ASSETS, NET:

During the quarter ended  September 30, 1999,  the Company  recorded  $29,000 in
loss on the sale or  disposition  of  transportation  equipment  with a net book
value of $0.2 million for  proceeds of $0.2  million.  During the quarter  ended
September  30, 1998,  the Company  recorded  $0.3 million in gain on the sale or
disposition of assets with a net book value of $5.2 million for proceeds of $5.5
million.

AIRCRAFT BROKERAGE AND SERVICES:

Aircraft  brokerage  and services  revenue  decreased  $0.2  million  during the
quarter ended  September 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.



<PAGE>



COSTS AND EXPENSES

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

Operations support                      $     4,121             $      3,160
Depreciation and amortization                 2,172                    1,221
General and administrative                    1,322                    2,003
                                      -----------------------------------------
  Total costs and expenses              $     7,615             $      6,384

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 $1.0 million (30%) for the quarter ended September 30, 1999,
compared to the quarter ended September 30, 1998.  Operations  support  expenses
related  to the  trailer  leasing  segment  increased  $2.2  million  due to the
expansion of its trailer rental  operations.  This increase was offset by a $1.2
million  decrease in operations  support  expenses  related to the management of
investment  programs and other  transportation  equipment  leasing segment,  and
other expenses mainly related 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 (78%) for the
quarter ended  September 30, 1999,  compared to the quarter ended  September 30,
1998. The increase  resulted from an increase in depreciation  for  refrigerated
trailer equipment on operating lease.

GENERAL AND ADMINISTRATIVE:
General and  administrative  expenses  decreased  $0.7 million  (34%) during the
quarter  ended  September  30,  1999,  compared  to the  same  quarter  in 1998,
primarily due to a $0.4 million decrease in compensation  and benefits  expenses
due to a decrease in staffing,  $0.2 million decrease in professional  services,
and $0.1 million  decrease in rent and office related expenses due to a decrease
in staffing and office space requirements.

OTHER INCOME AND EXPENSES

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

Interest expense              $    (1,425)            $      (912)
Interest income                        60                     376
Other income, net                     700                      15

INTEREST EXPENSE:

Interest expense increased $0.5 million (56%) during the quarter ended September
30, 1999, compared to the same quarter in 1998, due to an increase in borrowings
to fund trailer purchases.


<PAGE>



INTEREST INCOME:

Interest income  decreased $0.3 million (84%) during the quarter ended September
30,  1999,  compared to the same quarter of 1998,  as a result of lower  average
cash balances during the quarter ended September 30, 1999,  compared to the same
quarter of 1998.

OTHER INCOME, NET:

Other income of $0.7 million for the quarter ended September 30, 1999 represents
mileage income received from the railroads.

PROVISION FOR INCOME TAXES:

For the three months ended  September  30, 1999,  the provision for income taxes
was $0.6 million,  representing  an effective  rate of 39%. For the three months
ended  September  30, 1998,  the  provision  for income taxes was $0.1  million,
representing an effective rate of 39%.

NET INCOME FROM DISCONTINUED OPERATIONS:

Net income from  discontinued  operations  was $0.4 million for the three months
ended  September  30, 1999  compared to $1.3  million for the three months ended
September 30, 1998.  Income from  discontinued  operations  for the three months
ended  September  30, 1999 and 1998  included  revenues of $6.3 million and $7.8
million, respectively.

Operating lease income from  discontinued  operations  increased to $2.4 million
for the three months ended September 30, 1999,  compared to $2.1 million for the
same period of 1998 which  resulted from an increase in the amount of commercial
and  industrial  equipment  owned and on operating  lease.  Finance lease income
decreased to $2.7 million for the three months ended September 30, 1999 compared
to $3.5  million for the same period of 1998 which  resulted  from a decrease in
commercial and industrial equipment that were on finance lease.

Acquisition and lease  negotiation fees from discontinued  operations  decreased
$0.3 million  during the third  quarter of 1999  compared to the same quarter of
1998 due to no equipment being purchased by AFG for the institutional investment
programs  during the third  quarter of 1999,  compared to $11.9  million for the
same quarter of 1998 for which the Company  earned $0.3  million in  acquisition
and lease negotiation fees.

During the third  quarter of 1999,  AFG recorded a $0.5 million gain on the sale
or disposition of commercial and industrial equipment,  compared to $1.0 million
for the same quarter of 1998.

Depreciation and amortization expense from discontinued  operations increased to
$2.1  million for the three months ended  September  30, 1999,  compared to $1.6
million  for the same  quarter  of 1998 due to an  increase  in  commercial  and
industrial  equipment on operating lease.  Interest  expenses  decreased to $2.3
million for the three months ended  September  30, 1999 compared to $3.1 million
for the same period of 1998 due to lower  average  debt  outstanding  during the
three months ended September 30, 1999, compared to the same period in 1998.

NET INCOME

As a result of the foregoing, for the three months ended September 30, 1999, net
income  was  $1.4  million,   resulting  in  basic  and  diluted   earnings  per
weighted-average  common  share  outstanding  of $0.17.  For the same quarter in
1998, net income was $1.4 million,  resulting in basic and diluted  earnings per
weighted-average common share outstanding of $0.16.


<PAGE>


Comparison  of the  Company's  Operating  Results  for  the  Nine  Months  Ended
September 30, 1999 and 1998

The following analysis reviews the operating results of the Company:

REVENUES

                                                     For the Nine Months
                                                      Ended September 30,
                                                     1999                 1998
                                            ------------------------------------
                                                     (in thousands of dollars)


Operating lease income                    $    16,634             $      8,341
Management fees                                 6,198                    7,036
Partnership interests and other fees              579                      742
Acquisition and lease negotiation fees          1,079                    2,363
(Loss) gain on the sale or disposition of
assets, net                                       (41)                   1,492
Aircraft brokerage and services                    --                    1,090
Other                                           1,031                    1,369
                                      -----------------------------------------
  Total revenues                          $    25,480             $     22,433

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

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

                                                          For the Nine Months
                                                          Ended September 30,
                                                       1999                      1998
                                                 -----------------------------------------
                                                         (in thousands of dollars)

<S>                                              <C>                     <C>
Refrigerated and dry van over-the-road trailers  $    15,746             $      6,153
Lease income from assets held for sale                   850                      412
Intermodal trailers                                       --                    1,630
Other                                                     38                      146
                                                 -----------------------------------------
  Total operating lease income                   $    16,634             $      8,341
</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 $8.3 million during the nine months ended  September 30, 1999,
compared to the same period of 1998, due to the following:

(a)  A $9.6  million  increase in  operating  lease  income was  generated  from
     refrigerated and dry van trailer equipment of which $7.0 million was due to
     an  increase  in the  amount  of these  types  of  equipment  owned  and on
     operating  lease, and $2.6 million was due to higher  utilization.  For the
     nine  months  ended   September  30,  1999,   the  average   investment  in
     refrigerated and dry van trailer  equipment was $80.1 million,  compared to
     $42.1 million for the same period of 1998.

(b) A $0.4 million  increase in operating lease income was generated from assets
    held for sale.  During the nine months ended September 30, 1999, the Company
    purchased  $21.8  million in marine  containers  and sold  $13.8  million to
    affiliated programs at cost, which approximated their fair market value. The
    Company  earned  $0.9  million in  operating  lease  income on these  marine
    containers  during the nine months ended September 30, 1999. During the nine
    months ended September 30, 1998, the Company owned an entity owning a marine
    vessel that  generated $0.4 million in operating  lease income.  The Company
    sold its interest in the entity that owned the marine vessel at cost,  which
    approximated fair market value, to an affiliated program during 1998.



<PAGE>


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

(a)  A $1.6 million decrease in operating lease income from intermodal  trailers
     due to the sale of all of the Company's intermodal trailers in 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.

MANAGEMENT FEES:

Management fees are, for the most part, based on the gross revenues generated by
equipment under  management.  Management fees were $6.2 million and $7.0 million
for the nine  months  ended  September  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.

PARTNERSHIP INTERESTS AND OTHER FEES:

The Company  records as  revenues  its equity  interest  in the  earnings of the
Company's affiliated programs. The net earnings and distribution levels from the
affiliated programs were $1.1 million and $1.5 million for the nine months ended
September  30,  1999 and 1998,  respectively.  In  addition,  a decrease of $0.6
million and $0.8 million in the Company's residual interests in the programs was
recorded during the nine months ended September 30, 1999 and 1998, respectively.
The decrease in net  earnings,  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.

ACQUISITION AND LEASE NEGOTIATION FEES:

During the nine months ended  September 30, 1999, the Company,  on behalf of the
EGF programs,  purchased  transportation  and other equipment for $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 $42.9 million in transportation and other equipment
during the nine months ended  September  30,  1998,  resulting in a $1.3 million
decrease in acquisition and lease negotiation fees.

Because of the  Company's  decision to halt  syndication  of  equipment  leasing
programs  with the close of Fund I in 1996 and because Fund I has a no front-end
fee structure,  acquisition  and lease  negotiation  fees will be  substantially
reduced in the future.

GAIN (LOSS) ON THE SALE OR DISPOSITION OF ASSETS, NET:

During the nine months ended September 30, 1999, the Company recorded $41,000 in
loss on the sale or disposition  of  transportation  equipment.  During the nine
months ended  September 30, 1998,  the Company  recorded $1.5 million in gain on
the sale or disposition of assets.  Of this gain, $0.5 million resulted from the
Company purchased and subsequently sold railcars to an unaffiliated third party.

AIRCRAFT BROKERAGE AND SERVICES:

Aircraft  brokerage and services revenue  decreased $1.1 million during the nine
months ended September 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.



<PAGE>


OTHER REVENUE:

Other revenue  decreased $0.3 million during the nine months ended September 30,
1999,  compared to the same period of 1998,  primarily due to decreased  revenue
earned for providing data processing services to the affiliated programs.

COSTS AND EXPENSES

                                             For the Nine Months
                                             Ended September 30,
                                        1999                         1998
                                     -----------------------------------------
                                          (in thousands of dollars)

Operations support                    $     9,943             $      9,505
Depreciation and amortization               5,651                    3,461
General and administrative                  4,851                    6,174
                                      -----------------------------------------
  Total costs and expenses            $    20,445             $     19,140

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  $0.4 million (5%) for the nine months ended  September 30,
1999, compared to the same period of 1998. Operations support expense related to
the trailer leasing  segment  increased $4.6 million due to the expansion of PLM
Rental, with the addition of a total of twelve rental yards in 1998 and 1999 and
new trailers to existing  yards.  These  increases were offset by a $4.2 million
decrease in operations  support expenses related to the management of investment
programs and other transportation  equipment leasing segment, and other expenses
mainly  related 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 $2.2 million (63%) for the nine
months ended September 30, 1999, compared to the nine months ended September 30,
1998.  The increase  resulted from an increase in  depreciation  of $2.8 million
from  refrigerated  trailer  equipment on operating  lease,  which was partially
offset by the reduction of $0.6 million in depreciation  expense from intermodal
trailers and other equipment.

GENERAL AND ADMINISTRATIVE:

General and administrative expenses decreased $1.3 million (21%) during the nine
months ended September 30, 1999, compared to the same period in 1998,  primarily
due to a $0.7  million  decrease  in rent and office  related  expenses,  a $0.5
million decrease in compensation and benefits expenses,  a $0.1 million decrease
in travel and  entertainment  expenses,  a $0.1  million  decrease in  insurance
expenses,  and a $0.1 million decrease in sublease commissions.  These increases
were due to a decrease in staffing and office space requirements.

OTHER INCOME AND EXPENSES

                                               For the Nine Months
                                                Ended September 30,
                                               1999                1998
                                         ---------------------------------------
                                             (in thousands of dollars)

Interest expense                          $    (3,862)      $     (2,806)
Interest income                                   252                838
Other income, net                                 577                478

INTEREST EXPENSE:

Interest  expense  increased  $1.1  million  (38%)  during the nine months ended
September  30,  1999,  compared  to the same  period in 1998.  Interest  expense
related to the trailer leasing segment increased $1.0 million due to an increase
in borrowings to fund trailer purchases.

INTEREST INCOME:

Interest  income  decreased  $0.6  million  (70%)  during the nine months  ended
September  30, 1999,  compared to the same period of 1998,  as a result of lower
average cash balances during the nine months ended September 30, 1999,  compared
to the same period of 1998.

OTHER INCOME, NET:

Other  income of $0.6  million  for the nine  months  ended  September  30, 1999
represents $0.7 million of mileage income received from the railroads, partially
offset by $0.1  million  in  expenses  related to the  settlement  of a lawsuit.
During the nine months ended  September  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 8).

PROVISION FOR INCOME TAXES:

For the nine months ended September 30, 1999, the provision for income taxes was
$0.8 million,  representing  an effective rate of 39%. For the nine months ended
September   30,  1998,   the  provision  for  income  taxes  was  $0.7  million,
representing an effective rate of 39%.

NET INCOME FROM DISCONTINUED OPERATIONS:

Net income from  discontinued  operations  was $1.2  million for the nine months
ended  September  30, 1999  compared to $2.4  million for the nine months  ended
September  30, 1998.  Income from  discontinued  operations  for the nine months
ended  September 30, 1999 and 1998 included  revenues of $19.7 million and $20.3
million, respectively.

Operating lease income from  discontinued  operations  increased to $6.8 million
for the nine months ended  September 30, 1999,  compared to $6.4 million for the
same  period  of  1998  due to an  increase  in the  amount  of  commercial  and
industrial  equipment  owned  and  on  operating  lease.  Finance  lease  income
decreased to $8.6 million for the nine months ended  September 30, 1999 compared
to $9.2 million for the same period of 1998 due to a decrease in commercial  and
industrial assets that were on finance lease.

Acquisition and lease  negotiation fees from discontinued  operations  decreased
$0.7 million for the nine months ended September 30, 1999,  compared to the same
period of 1998 due to no equipment being purchased by AFG for the  institutional
investment  programs  during the first nine  months of 1999,  compared  to $26.0
million for the same period of 1998,  for which the Company  earned $0.7 million
of acquisition and lease negotiation fees.

During the first nine months of 1999 and 1998, AFG recorded $2.1 million gain on
the sale or disposition of commercial and industrial equipment.

Operations  support from discontinued  operations  increased to $4.1 million for
the nine months ended  September  30, 1999 compared to $3.4 million for the same
period of 1998 primarily due to an increase in compensation and benefits expense
resulting  from a new bonus  program  initiated in 1999 to retain AFG  employees
during  AFG's   potential  sale  and  increased   staffing.   Depreciation   and
amortization  expenses  increased  to $5.7  million  for the nine  months  ended
September 30, 1999, compared to $5.4 million for the same quarter of 1998 due to
an increase in the commercial and industrial equipment on operating lease.

Interest  expense  decreased to $7.4 million for the nine months ended September
30,  1999  compared  to $7.9  million  for the same  period of 1998 due to lower
average  debt  outstanding  during the nine months  ended  September  30,  1999,
compared to the same period in 1998. Other expenses of $1.0 million for the nine
months ended  September 30, 1999  represent the expense  related to the proposed
initial public  offering of AFG (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).

CUMULATIVE EFFECT OF ACCOUNTING CHANGE:

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 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 its  commercial  and
industrial  equipment  operations  which is being  accounted for as discontinued
operations.

NET INCOME

As a result of the foregoing,  for the nine months ended September 30, 1999, net
income  was  $2.2  million,   resulting  in  basic  and  diluted   earnings  per
weighted-average common share outstanding of $0.27 and $0.26, respectively.  For
the same period in 1998,  net income was $3.5  million,  resulting  in basic and
diluted  earnings per  weighted-average  common share  outstanding  of $0.42 and
$0.41, respectively.

LIQUIDITY AND CAPITAL RESOURCES

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

Liquidity  in the  remainder  of 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 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 $125.0 million,  secured by direct finance leases,  operating
leases,  and loans on commercial and industrial  equipment at AFG that generally
have terms of one to seven  years.  The  facility  is  available  for a one-year
period expiring October 10, 2000. Repayment of the facility matches the terms of
the underlying  leases.  As of September 30, 1999,  $105.5 million in borrowings
was outstanding  under this facility.  As of October 28, 1999, $104.4 million in
borrowings was outstanding under this facility.

In addition to the $125.0 million  nonrecourse debt facility discussed above, as
of September  30, 1999 and October 28,  1999,  the Company also had $5.2 million
and $5.0 million,  respectively,  in nonrecourse notes payable secured by direct
finance  leases on commercial  and  industrial  equipment at AFG that 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 September 30,
1999,  the Company  and EGF VI had $7.6  million  and $1.0  million  outstanding
borrowings  under this  facility,  respectively.  As of October  28,  1999,  the
Company had $0.9 million in  borrowings  outstanding  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 be outstanding for 120 days. Interest accrues at prime or LIBOR plus
137.5 basis points, at the option of the Company.  As of September 30, 1999, the
Company had $20.1 million  outstanding  under this  facility.  As of October 28,
1999, the Company had $21.1 million outstanding under this facility.

SENIOR SECURED NOTES: The Company's senior secured notes agreement, which had an
outstanding  balance of $22.6  million as of September  30, 1999 and October 28,
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 $10.3 million as of September 30,
1999 and October 28, 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 September
30, 1999, the cash  collateral  balance for this loan was $2,000 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.

OTHER SECURED  DEBT: As of September 30, 1999,  the Company had $31.8 million in
six debt agreements, bearing interest from 5.35% to 7.05%, each with payments of
$0.1  million  due monthly in  advance.  The debt is secured by certain  trailer
equipment.

In the second quarter of 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
September 30, 1999,  the Company had borrowed $8.6 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.

INTEREST-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 September 30, 1999, the swap agreements had
a  weighted-average  duration of 1.40 years,  corresponding  to the terms of the
related debt.  As of September  30, 1999, a notional  amount of $94.8 million of
interest-rate swap agreements  effectively fixed interest rates at an average of
6.52% on such  obligations.  For the  nine  months  ended  September  30,  1999,
interest expense increased by $0.5 million due to these arrangements.

TRAILER LEASING:

The Company operates 22 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.  Three  facilities  operate only dry van
(non-refrigerated)  trailers.  The Company  intends to move virtually all of its
dry van trailers to these facilities.  In 1999, the Company has opened three new
refrigerated trailer yards. During the nine months ended September 30, 1999, the
Company  purchased  $36.2  million of primarily  refrigerated  trailers and sold
refrigerated  and dry van  trailers  with a net book value of $0.4  million  for
proceeds of $0.4  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.

OTHER TRANSPORTATION EQUIPMENT LEASING AND OTHER:

During the first nine months of 1999, the Company  purchased  marine  containers
for $21.8 million, and the Company sold $13.8 million to affiliated programs, at
cost, which  approximated  their fair market value. In October 1999, the Company
sold an  additional  $4.6 million of these marine  containers  to an  affiliated
program, at cost which approximated their fair 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 October 28, 1999,  422,515 shares had been repurchased under this plan for
a total of $2.5 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
September   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 have been fully
tested as of September 30, 1999 and are compliant.

As of September 30, 1999, the Company has spent $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 of
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.

The Company is currently  developing a contingency  plan to address the possible
failure of any systems,  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  and  including  manual  processes.   The  Company
anticipates that these plans will be completed by December 31, 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 market 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
September  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,
$8.6 million of other  secured debt,  and the senior  secured notes are variable
rate debt.  The  Company  estimates  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, $0.1 million in 2000,
$0.2  million in 2001,  $0.1  million in 2002,  $0.1  million in 2003,  and $0.1
million  thereafter.  The Company  estimates 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, $0.3 million in 2000,
$0.3  million in 2001,  $0.2  million in 2002,  $0.1  million in 2003,  and $0.3
million thereafter.

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 8 to the consolidated financial statements.

Item 5.  Other information

The Company has agreed to sell its wholly -owned  subsidiary,  American  Finance
Group,  Inc., for  approximately  $29 million in cash to Guaranty  Federal Bank,
subject  to  closing   adjustments  which  are  not  expected  to  be  material.
Consummation of the transaction is subject to various conditions,  including the
approval  of PLM  shareholders,  and closing of the  transaction  is expected to
occur only after such  approval has been secured and all other  conditions  have
been  satisfied.  A copy of the  agreement  relating to such sale is attached as
Exhibit 10.7.

Item 6.  Exhibits and Reports on Form 8-K

(A)  Exhibits

10.1      Severance   Agreement  among  PLM  International,   Inc.  and  certain
          employees dated August 1999.

10.2      Amendment #1 dated April 2, 1999 to Master Lease  Agreement  among PLM
          International,  Inc. and Wells Fargo  Equipment  Finance,  Inc.  dated
          April 2, 1999.

10.3      Master Lease  Agreement among PLM  International,  Inc. and Associates
          Leasing, Inc. dated August 25, 1999.

10.4      Master Lease Agreement  among PLM Rental Inc. and Fleet Capital,  Inc.
          dated September 23, 1999.

10.5      Amendment #2 dated  October 12, 1999 to Master Lease  Agreement  among
          PLM International,  Inc. and Wells Fargo Equipment Finance, Inc. dated
          April 2, 1999.

10.6      Master  Lease  Agreement  among PLM Rental Inc.  and US Bancorp  dated
          September 22, 1999.

10.7      Stock Sales  Agreement  among PLM  International,  Inc.  and  Guaranty
          Federal Bank dated October 26, 1999.

(B)  Reports on Form 8-K





<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:     October 28, 1999