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




[x]      Quarterly  Report Pursuant to Section 13 or 15(d) of the Securities and
         Exchange Act of 1934 For the fiscal quarter ended March 31, 1998

                                       or

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


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

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


Delaware                                                94-3041257
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                       Identification No.)

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




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


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



     Indicate the number of shares  outstanding of each of the issuer's  classes
of common  stock,  as of the latest  practicable  date:  common stock - $.01 par
value; outstanding as of May 11, 1998 - 8,337,603 shares.


<PAGE>





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


<TABLE>
<CAPTION>
                                                                                                  For the Three Months
                                                                                                    Ended March 31,
                                                                                                  1998            1997
                                                                                             ------------------------------

<S>                                                                                            <C>               <C>       
Revenues
Operating lease income                                                                         $     3,892       $    4,229
Finance lease income                                                                                 2,652            1,814
Management fees                                                                                      2,564            2,861
Partnership interests and other fees                                                                   324              486
Acquisition and lease negotiation fees                                                               1,027              178
Aircraft brokerage and services                                                                        524              674
Gain on the sale or disposition of assets, net                                                         762            1,368
Other                                                                                                  799              841
                                                                                             ----------------------------------
    Total revenues                                                                                  12,544           12,451

Costs and expenses
Operations support                                                                                   3,925            4,064
Depreciation and amortization                                                                        2,550            2,205
General and administrative                                                                           1,798            2,016
                                                                                             ----------------------------------
    Total costs and expenses                                                                         8,273            8,285
                                                                                             ----------------------------------

Operating income                                                                                     4,271            4,166

Interest expense                                                                                    (3,070)          (2,642)
Interest income                                                                                        395              386
Other expenses, net                                                                                     (6)             (21)
                                                                                             ----------------------------------
  Income before income taxes                                                                         1,590            1,889

Provision for income taxes                                                                             607              608
                                                                                             ----------------------------------

      Net income to common shares                                                              $       983       $    1,281
                                                                                             ==================================

Basic earnings per weighted-average common share outstanding                                   $      0.12       $     0.14
                                                                                             ==================================

Diluted earnings per weighted-average common share outstanding                                 $      0.11       $     0.14
                                                                                             ===================================

</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>


                                                                           March 31,              December 31,
                                                                             1998                     1997
                                                                      -------------------------------------------

<S>                                                                        <C>                       <C>        
Cash and cash equivalents                                                  $      5,227              $     5,224
Receivables                                                                       4,842                    4,969
Receivables from affiliates                                                       2,874                    5,007
Investment in direct finance leases, net                                        141,704                  119,613
Loans receivable                                                                  7,914                    5,861
Equity interest in affiliates                                                    25,522                   26,442

Assets held for sale                                                                433                       --
Transportation equipment held for operating leases                               52,143                   50,252

Less accumulated depreciation                                                   (24,751)                 (26,981 )
                                                                      -----------------------------------------------
                                                                                 27,392                   23,271

Commercial and industrial equipment held for operating leases                    25,518                   23,268
Less accumulated depreciation                                                    (6,239)                  (4,816 )
                                                                      -----------------------------------------------
                                                                                 19,279                   18,452

Restricted cash and cash equivalents                                             17,277                   18,278
Other, net                                                                        8,652                    9,166
                                                                      -----------------------------------------------
Total assets                                                               $    261,116              $   236,283
                                                                      ===============================================



            LIABILITIES, MINORITY INTEREST, AND SHAREHOLDERS' EQUITY


Liabilities:
Short-term warehouse facility                                              $     38,734              $    23,040
Senior secured loan                                                              19,118                   20,588
Senior secured notes                                                             22,588                   23,843
Other secured debt                                                                  549                      413
Nonrecourse debt                                                                 96,425                   81,302
Payables and other liabilities                                                   20,738                   25,366
Deferred income taxes                                                            15,397                   14,860
                                                                      -----------------------------------------------
  Total liabilities                                                             213,549                  189,412

Minority interest                                                                   323                      323

Shareholders' equity:
Common stock, ($.01 par value, 50,000,000 shares
  authorized, 8,339,298 issued and outstanding as of
  March 31, 1998 and 8,400,964 as of December 31, 1997)                             112                      112
Paid-in capital, in excess of par                                                74,729                   74,650
Treasury stock (3,696,188 and 3,633,883 shares at
   respective dates)                                                            (13,829)                 (13,435 )
Accumulated deficit                                                             (13,664)                 (14,647 )
Accumulated other comprehensive loss                                               (104)                    (132 )
    Total shareholders' equity                                                   47,244                   46,548
                                                                      -----------------------------------------------
      Total liabilities, minority interest, and shareholders' equity       $    261,116              $   236,283
                                                                      ===============================================
</TABLE>


             See accompanying notes to these consolidated financial
                                  statements.




<PAGE>



                             PLM INTERNATIONAL, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                         For the Year Ended December 31,
                         1997 and the Three Months Ended
                         March 31, 1998 (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            Loss              Income            Equity
                                   ------------------------------------------------------------------------------------------------


<S>                                      <C>          <C>            <C>             <C>               <C>               <C>       
  Balances, December 31, 1996            $  117       $  77,778      $   (12,382)    $  (19,193 )                        $   46,320
Comprehensive income
  Net income                                                                              4,667        $    4,667            4,667
  Other comprehensive loss:
    Foreign currency translation loss                                                      (123 )            (123)            (123 )
Comprehensive income                                                                                        4,544
                                                                                                     ====================
Common stock repurchases                     (5 )      (3,128  )          (1,268)                                           (4,401 )
Reissuance of treasury stock, net                                            215            (38 )                              177
Redemption of shareholder rights                                                            (92 )                              (92 )
  Balances, December 31, 1997               112          74,650          (13,435)       (14,779 )                           46,548

Comprehensive income
  Net income                                                                               983                983             983
  Other comprehensive income:
    Foreign currency translation gain                                                       28                 28              28
Comprehensive income                                                                                   $    1,011
                                                                                                    ====================
Common stock repurchases                                                    (605)                                            (605 )
Reissuance of treasury stock                                 79              211                                              290
                                        -----------------------------------------------------------------            --------------
  Balances, March 31, 1998               $  112       $  74,729      $   (13,829)    $  (13,768 )                    $     47,244
                                        =================================================================            ==============

</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 Three Months
                                                                                                          Ended March 31,
                                                                                                     1998                1997
                                                                                                -----------------------------------
<S>                                                                                               <C>                  <C>       
Operating activities
Net income                                                                                        $       983          $    1,281
Adjustments to reconcile net income to net cash
  provided by operating activities:
    Depreciation and amortization                                                                       2,550               2,205
    Foreign currency translation                                                                           28                 (17 )
    Deferred income tax expense                                                                           537                 696
    Gain on sale or disposition of assets, net                                                           (762)             (1,368 )
    Undistributed residual value interests                                                                200                 108
    Minority interest in net income of subsidiaries                                                        --                   5
    Increase in payables and other liabilities                                                            186               1,018
    Decrease in receivables and receivables from affiliates                                             1,184               2,537
    Amortization of organization and offering costs                                                       720                 722
    Decrease (increase) in other assets                                                                   283              (1,096 )
                                                                                                 ----------------------------------
      Net cash provided by operating activities                                                         5,909               6,091
                                                                                                 ----------------------------------

Investing activities
Principal payments received on finance leases                                                           6,356               3,832
Principal payments received on loans                                                                      967                 478
Investment in direct finance leases                                                                   (38,809)            (16,528 )
Investment in loans receivable                                                                         (3,020)               (777 )
Purchase of property, plant, and equipment                                                               (126)                (14 )
Purchase of transportation equipment and capital improvements                                         (11,259)            (13,170 )
Purchase of commercial and industrial equipment held for operating lease                               (5,255)             (3,277 )
Proceeds from  the sale of transportation equipment for lease                                           1,078               4,717
Proceeds from the sale of assets held for sale                                                          5,366              15,600
Proceeds from the sale of commercial and industrial equipment on finance lease                          6,523              14,722
Proceeds from the sale of commercial and industrial  equipment on operating lease                       2,883               3,207
Decrease (increase) in restricted cash and restricted cash equivalents                                  1,001              (2,302 )
                                                                                                 ----------------------------------
      Net cash (used in) provided by investing activities                                             (34,295)              6,488

Financing activities
Borrowings of short-term warehouse facility                                                            36,285              23,360
Repayment of short-term warehouse facility                                                            (20,591)            (31,802 )
Repayment of senior secured loan                                                                       (1,470)                 --
Repayment of senior secured notes                                                                      (1,255)                 --
Repayment of other secured debt                                                                           (31)                (62 )
Borrowings of other secured debt                                                                          167                  --
Borrowings of nonrecourse debt                                                                         18,121               5,680
Repayment of nonrecourse debt                                                                          (2,232)             (3,398 )
Purchase of stock                                                                                        (605)                 --
                                                                                                 ----------------------------------
      Net cash provided by (used in) financing activities                                              28,389              (6,222 )
                                                                                                 ----------------------------------

Net increase in cash and cash equivalents                                                                   3               6,357
Cash and cash equivalents at beginning of period                                                        5,224               7,638

                                                                                                 ----------------------------------
Cash and cash equivalents at end of period                                                        $     5,227          $   13,995
                                                                                                 ==================================

Supplemental information
Net cash paid for interest                                                                        $     3,451          $    2,626
                                                                                                 ==================================
Net cash paid for income taxes                                                                    $       632          $       15
                                                                                                 ==================================
Reissuance of treasury stock                                                                      $       290          $      177
                                                                                                 ==================================
Commercial and industrial purchases included in accounts payable                                  $     6,031          $    3,444
                                                                                                 ==================================
</TABLE>

             See accompanying notes to these consolidated financial
                                  statements.




<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1998



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 March
31, 1998 and December 31, 1997,  statements of income for the three months ended
March 31, 1998 and 1997,  statements of changes in shareholders'  equity for the
year ended  December 31, 1997 and the three  months  ended March 31,  1998,  and
statements  of cash flows for the three  months  ended  March 31, 1998 and 1997.
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,  1997,  on file with the  Securities  and
Exchange Commission.

Accounting Pronouncements

In June 1997,  the  Financial  Accounting  Standards  Board issued SFAS No. 130,
"Reporting Comprehensive Income," which requires enterprises to report, by major
component and in total,  all changes in equity from nonowner  sources;  and SFAS
No. 131,  "Disclosures about Segments of an Enterprise and Related Information,"
which establishes annual and interim reporting  standards for a public company's
operating  segments  and  related  disclosures  about  its  products,  services,
geographic  areas and major  customers.  Both  statements  are effective for the
Company's  fiscal  year  ended  December  31,  1998,  with  earlier  application
permitted.  The effect of  adoption of these  statements  will be limited to the
form and content of the Company's  disclosures and will not affect the Company's
results of operations, cash flow, or financial position. As of the first quarter
of 1998, the Company has adopted SFAS No. 130,  disclosing the foreign  currency
translation gain (loss) as a component of comprehensive  income on a gross basis
because it relates to a foreign investment permanently reinvested outside of the
United States.

In February 1998, the Financial  Accounting Standards Board issued SFAS No. 132,
"Employers'  Disclosures  about  Pensions and Other  Post-retirement  Benefits,"
which  revises  employers'  disclosure   obligations  about  pension  and  other
post-retirement  benefit  plans.  The  statement is  effective  for fiscal years
beginning after December 15, 1997, with earlier application permitted. Since the
Company  currently has no pension or other  post-retirement  benefit plans,  the
statement has no impact on the Company.

Reclassifications

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

      4.    Financing Transaction Activities

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





<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1998



Financing Transaction Activities (continued)

Prior to 1998,  the Company  expensed  initial direct lease  origination  costs,
which were not  material,  as  incurred.  Under  generally  accepted  accounting
principles,  the effects of such activities, if material, should be capitalized.
Because the Company  anticipates its portfolio of equipment on lease to continue
to grow during the next few years,  and for the resulting  initial  direct lease
origination costs to become material, effective January 1, 1998, the Company now
capitalizes  these costs which  totaled  $0.3 million for the three months ended
March 31, 1998.  Initial direct lease  origination  costs are amortized over the
life of the related lease.

During the three months ended March 31, 1998,  the Company  funded $38.8 million
in  equipment  that was placed on finance  lease.  Also during the three  months
ended  March 31,  1998,  the Company  sold  equipment  on finance  lease with an
original  equipment  cost  of  $6.6  million,  resulting  in a net  gain of $0.1
million.

5.   Equipment

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

During the three months ended March 31, 1998, the Company funded $5.3 million in
commercial and industrial equipment, which was placed on operating lease. During
the  three  months  ended  March 31,  1998,  the  Company  sold  commercial  and
industrial  equipment that was on operating lease, with an original cost of $2.9
million, for a net gain of $0.1 million.

During the first three months of 1998, the Company  purchased  trailers for $6.4
million  and sold  trailers  with a net  book  value  of $1.0  million  for $1.1
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
partnership.  Equipment held for sale is valued at the lower of the  depreciated
cost or the fair  value less costs to sell.  During  the first  three  months of
1998, the Company  purchased  railcars for $1.8 million and portable heaters for
$3.0 million. The railcars were sold during the first quarter to an unaffiliated
third party for a net gain of $0.5  million.  The  portable  heaters were resold
during the first quarter to an affiliated program at cost. As of March 31, 1998,
the Company held an aircraft  engine with a net book value of $0.3 million and a
20%  interest in a commuter  aircraft  with a net book value of $0.1 million for
sale to third  parties.  As of December 31,  1997,  the Company had no equipment
held for sale.

6.   Debt

Assets  acquired  and held on an interim  basis for  placement  with  affiliated
partnerships,  for placement in the Company's  nonrecourse debt facility, or for
sale to  unaffiliated  third parties  have,  from time to time,  been  partially
funded by a $50.0 million  short-term  warehouse  facility.  The Company amended
this facility in 1997 to extend its  availability  until  November 2, 1998.  The
facility,  which is shared with PLM Equipment  Growth Funds (EGFs) V and VI, PLM
Equipment Growth & Income Fund VII (EGF VII), and Professional  Lease Management
Income Fund I, LLC (Fund I), allows the Company to purchase  equipment  prior to
its  designation to a specific  program or  partnership.  Borrowings  under this
facility  by the other  eligible  borrowers  reduce the amount  available  to be
borrowed by the Company.  As of March 31, 1998, the Company had $38.7 million in
borrowings under this facility.  There were no other borrowings on this facility
as of March 31, 1998. All  borrowings  under this facility are guaranteed by the
Company.  The Company  believes it will be able to extend the facility  prior to
its expiration on similar terms.




<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1998



Debt (continued)

The Company has  available a nonrecourse  securitization  facility to be used to
acquire  assets on a  nonrecourse  basis,  which is  secured  by direct  finance
leases,  operating leases, and loans on commercial and industrial equipment that
generally has terms from one to seven years.  The Company  amended this facility
on October 14,  1997,  increasing  it from $80.0  million to $125.0  million and
extending  its  availability  until  October  13,  1998.  As of March 31,  1998,
borrowings under this facility were $82.1 million.  The Company believes it will
be able to extend this  facility on similar  terms prior to its  expiration.  In
addition,  during the first quarter of 1998, the Company assumed $5.1 million in
additional  nonrecourse  notes payable,  bearing interest from 8.32% to 9.5% per
annum, resulting in total nonrecourse notes payable of $14.3 million as of March
31, 1998.  Principal and interest on the notes are due monthly beginning January
1, 1998 through October 31, 2001. The notes are secured by direct finance leases
for  commercial and industrial  equipment that have terms  corresponding  to the
repayment of the notes.

During the first quarter of 1998,  the Company repaid $1.5 million of the senior
secured loan and $1.3 million of the senior  secured notes,  in accordance  with
the debt repayment schedules.

7.   Shareholders' Equity

During the first quarter of 1998, the Company  completed the $5.0 million common
stock repurchase program authorized by the Company's Board of Directors in March
1997. As of March 31, 1998, 920,054 shares had been repurchased under this plan,
for a total of $5.0 million.

During the three  months ended March 31,  1998,  56,588  shares were issued from
treasury stock as part of the senior management bonus program.  During the three
months ended March 31, 1998, 118,254 shares were repurchased.  Consequently, the
total common shares outstanding decreased to 8,339,298 as of March 31, 1998 from
the  8,400,964  outstanding  as of  December  31,  1997.  Net  income  per basic
weighted-average common share outstanding was computed by dividing net income to
common shares by the weighted-averag  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 March 31,
1998 and 1997 was 8,385,299 and 9,168,688,  respectively.  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 March 31, 1998 and 1997 was  8,576,397  and  9,441,322,
respectively.

8.   Legal Matters

In November  1995,  a former  employee of PLM  International  filed and served a
first amended  complaint (the complaint) in the United States District Court for
the  Northern  District  of  California  (Case No.  C-95-2957  MMC)  against the
Company,  the PLM International,  Inc. Employee Stock Ownership Plan (ESOP), the
ESOP's trustee, and certain individual employees, officers, and directors of the
Company. The complaint contains claims for relief alleging breaches of fiduciary
duties and various violations of the Employee  Retirement Income Security Act of
1974  (ERISA)  arising  principally  from  purported  defects in the  structure,
financing,  and termination of the ESOP, and for defendants'  allegedly engaging
in prohibited  transactions and interfering with plaintiff's rights under ERISA.
Plaintiff seeks monetary damages, rescission of the preferred stock transactions
with the ESOP and/or  restitution of ESOP assets,  and attorneys' fees and costs
under  ERISA.  In  January  1996,  PLMI and other  defendants  filed a motion to
dismiss  the  complaint  for lack of subject  matter  jurisdiction,  arguing the
plaintiff  lacked  standing  under ERISA.  The motion was granted and on May 30,
1996, the district court entered a judgment dismissing the complaint for lack of
subject matter jurisdiction. Plaintiff appealed to the U.S. Court of Appeals for
the Ninth Circuit  seeking a reversal of the district  court's  dismissal of his
ERISA  claims,  and in an opinion  filed on October 23, 1997,  the Ninth Circuit
reversed  the  decision  of the  district  court  and  remanded  the case to the
district court for further  proceedings.  PLMI filed a petition for rehearing on
November  6, 1997,  which was denied on November  20,  1997.  The Ninth  Circuit
mandate was filed in the district court on December 1, 1997.




<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1998



Legal Matters (continued)

On January 12, 1998, plaintiff filed with the district court an expedited motion
for  leave to file a second  amended  complaint  in order to bring  the  fourth,
fifth,  and sixth  claims for relief as a class  action on behalf of himself and
all  similarly  situated  people.  These  claims  allege that PLMI and the other
defendants   breached  their  fiduciary   duties  and  entered  into  prohibited
transactions  in connection  with the termination of the ESOP and by causing the
ESOP to sell or exchange the  preferred  shares held for the benefit of the ESOP
participants  for less than their fair market value.  The district court granted
the  motion on  February  9, 1998 and set a trial  date of March  20,  1999.  In
February 1998, the defendants  filed a motion to dismiss the fourth,  fifth, and
sixth claims relating to the  termination of the ESOP, and  plaintiff's  seventh
claim relating to defendants' alleged interference with plaintiff's rights under
ERISA,  all for failure to state claims for relief.  The  plaintiff  has opposed
this motion and a hearing date has not yet been scheduled.  The parties are also
engaged in ongoing  discovery.  The Company does not believe the claims have any
merit and plans to continue to defend this matter vigorously.

The Company and various of its  affiliates  are named as defendants in a lawsuit
filed as a class  action on  January  22,  1997 in the  Circuit  Court of Mobile
County,  Mobile,  Alabama, Case No. CV-97-251 (the Koch action). The plaintiffs,
who  filed  the  complaint  on their  own and on  behalf  of all  class  members
similarly  situated,  are six  individuals  who  allegedly  invested  in certain
California  limited  partnerships  (the  Partnerships) for which FSI acts as the
general  partner,  including PLM Equipment  Growth Fund IV, PLM Equipment Growth
Fund V, PLM  Equipment  Growth Fund VI, and PLM  Equipment  Growth & Income Fund
VII. The complaint  asserts eight causes of action  against all  defendants,  as
follows:  fraud  and  deceit,   suppression,   negligent  misrepresentation  and
suppression, intentional breach of fiduciary duty, negligent breach of fiduciary
duty, unjust enrichment,  conversion, and conspiracy.  Additionally,  plaintiffs
allege a cause of action against PLM Securities  Corp. for breach of third party
beneficiary  contracts in violation of the National  Association  of  Securities
Dealers  rules of fair  practice.  Plaintiffs  allege that each  defendant  owed
plaintiffs  and the class  certain  duties due to their  status as  fiduciaries,
financial advisors, agents, general partner, and control persons. Based on these
duties,  plaintiffs  assert liability  against the 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.

On March 6, 1997, the defendants removed the Koch action from the state court to
the United States District Court for the Southern District of Alabama,  Southern
Division (Civil Action No. 97-0177-BH-C) based on the district court's diversity
jurisdiction,  following which plaintiffs filed a motion to remand the action to
the state court.  On September 24, 1997, the district  court denied  plaintiffs'
motion and dismissed  without  prejudice the individual claims of the California
class  representative,  reasoning  that he had  been  fraudulently  joined  as a
plaintiff.  On October 3, 1997,  plaintiffs  filed a motion  requesting that the
district  court  reconsider  its ruling or, in the  alternative,  that the court
modify its order  dismissing the California  plaintiff's  claims so that it is a
final  appealable  order,  as well as  certify  for an  immediate  appeal to the
Eleventh  Circuit  Court of Appeals that part of its order  denying  plaintiffs'
motion to remand.  On October 7, 1997,  the district  court denied each of these
motions.  In responses to such denial,  plaintiffs  filed a petition for writ of
mandamus  with the Eleventh  Circuit,  which was denied on November 18, 1997. On
November 24,  1997,  plaintiffs  filed with the Eleventh  Circuit a petition for
rehearing and  consideration by the full court of the order denying the petition
for a writ of mandamus, which petition was supplemented by plaintiffs on January
27, 1998.

On  October  10,  1997,  defendants  filed a motion  to  compel  arbitration  of
plaintiffs' claims,  based on an agreement to arbitrate contained in the limited
partnership  agreement  of each  Partnership,  and to stay  further  proceedings
pending the outcome of such arbitration. Notwithstanding plaintiffs' opposition,
the district court granted the motion on December 8, 1997. On December 15, 1997,
plaintiffs  filed with the Eleventh Circuit a notice of appeal from the district
court's order granting  defendants' motion to compel arbitration and to stay the
proceedings,  and of the  district  court's  September  24,  1997 order  denying
plaintiffs'  motion to  remand  and  dismissing  the  claims  of the  California
plaintiff.  Plaintiffs  filed an amended  notice of appeal on December 31, 1997.
Appellate briefs have not yet been filed in this matter.



<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1998



8.   Legal Matters (continued)

The Company  believes  that the  allegations  of the Koch action are  completely
without merit and intends to continue to defend this matter vigorously.

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

On July 31, 1997, the defendants  filed with the district court for the Northern
District of California  (Case No.  C-97-2847  WHO) a petition  under the Federal
Arbitration Act seeking to compel  arbitration of plaintiff's  claims and for an
order  staying  the  state  court   proceedings   pending  the  outcome  of  the
arbitration.  In connection with this motion,  plaintiff agreed to a stay of the
state court  action  pending the  district  court's  decision on the petition to
compel arbitration. By memorandum and order dated October 23, 1997, the district
court denied the Company's petition to compel arbitration.  On November 5, 1997,
the  Company  filed  an  expedited  motion  for  leave  to  file  a  motion  for
reconsideration  of this order,  which  motion was granted on November 14, 1997.
The parties have agreed to have oral argument on the reconsideration  motion set
for July 22, 1998.  The state court action has been stayed  pending the district
court's decision on this motion.

In  connection  with  her  opposition  to  the  Company's   petition  to  compel
arbitration,  on August 22, 1997 the plaintiff  filed an amended  complaint with
the  state  court  alleging  two new  causes  of action  for  violations  of the
California  Securities Law of 1968 (California  Corporations Code Sections 25400
and 25500),  and for violation of California  Civil Code Sections 1709 and 1710.
Plaintiff has also served certain discovery  requests on defendants.  Because of
the stay, no response to the amended  complaint or to the discovery is currently
required.  The Company believes that the allegations of the amended complaint in
the Romei action are completely  without merit and intends to defend this matter
vigorously.

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

9.   Purchase Commitments

As of March 31, 1998, the Company, through its AFG subsidiary,  had committed to
purchase $176.1 million of equipment for its commercial and industrial lease and
finance receivable portfolio.

From April 1, 1998 to May 11,  1998,  the Company,  through its AFG  subsidiary,
funded $5.4 million of the commitments  outstanding as of March 31, 1998 for its
commercial and industrial lease and finance receivable portfolio.

As of May 11,  1998,  the Company had  committed to purchase  $179.7  million of
equipment  for its  commercial  and  industrial  lease  and  finance  receivable
portfolio.

10.      Subsequent Events

In April 1998, the Company sold an aircraft engine with a net book value of $0.3
million to an  unaffiliated  third  party for a net gain of $0.7  million.  This
aircraft was included in assets held for sale as of March 31, 1998.



<PAGE>



                             PLM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1998



10.      Subsequent Events (continued)

In May 1998,  the Company  sold its 20%  interest  in a commuter  aircraft to an
unaffiliated  third party for  approximately its net book value of $0.1 million.
This aircraft was included in assets held for sale as of March 31, 1998.

On April 10, 1998,  the Court  entered a judgment in favor of the Company in its
lawsuit  against Tera Power  Corporation  and others.  The judgment  awarded the
Company  $830,000 plus  attorney's  fees and costs.  On May 4, 1998, the Company
received $950,000 from one of the defendants in full settlement of this case.

In March 1998, the Company announced that its Board of Directors  authorized its
management  to engage  investment  bankers  for the  purpose of  undertaking  an
initial  public  offering of common  stock for AFG. On May 7, 1998,  AFG filed a
registration  statement  with the  Securities  and Exchange  Commission  for the
initial  public  offering.  The  offering  is  expected to commence in the third
quarter  of 1998;  however,  the  timing of the  offering  is  subject to market
conditions and other factors.




<PAGE>





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

Commercial and Industrial Equipment Leasing

A major  activity  of the Company is the funding  and  management  of  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  materials-handling,  computer,  point-of-sale,
general  plant  and  warehouse,  mining  and  construction,  and  communications
equipment.   Through  AFG,  the  Company  also  engages  in  the   servicing  of
institutional  investment  programs for which it originates  leases and receives
acquisition  and management  fees. The Company also earns  syndication  fees for
arranging purchases and sales of equipment to other unaffiliated third parties.

In March 1998, the Company announced that its Board of Directors  authorized its
management  to engage  investment  bankers  for the  purpose of  undertaking  an
initial  public  offering of common  stock for AFG. On May 7, 1998,  AFG filed a
registration  statement  with the  Securities  and Exchange  Commission  for the
initial  public  offering.  The  offering  is  expected to commence in the third
quarter  of 1998;  however,  the  timing of the  offering  is  subject to market
conditions and other factors.

Trailer Leasing

The Company operates 13 trailer rental  facilities that engage in short-term and
mid-term operating leases.  Equipment  operated in these facilities  consists of
dry van trailers leased to a variety of customers and refrigerated trailers used
to transport  temperature  sensitive food products.  The Company opened three of
these rental yards in the first  quarter of 1998 and intends to open  additional
rental  yard  facilities  in the future.  The Company is selling  certain of its
older  trailers  and is  replacing  them  with  new or  late-model  refrigerated
trailers.  The new trailers will be placed in existing  rental  facilities or in
new yards.

Other Transportation  Equipment Leasing,  Management of Investment Programs, and
Other

The Company also owns a portfolio of  transportation  equipment,  in addition to
the dry van and refrigerated  over-the-road trailers mentioned above, from which
it earns operating lease revenue and incurs  operating  expenses.  The Company's
transportation  equipment held for operating lease and held for sale as of March
31,1998,  which  consists of a commuter  aircraft,  a 20% interest in a commuter
aircraft, an aircraft engine, and intermodal trailers, was mainly built prior to
1988. As the equipment ages, the Company continues to monitor the performance of
these assets and current  market  conditions  for leasing  equipment in order to
seek the best  opportunities  for investment.  Failure to replace  equipment may
result in shorter lease terms,  higher costs of  maintaining  and operating aged
equipment, and, in certain instances, limited remarketability.

The  Company  also has an 80%  interest  in a company  owning  100% of a company
located in Australia  involved in aircraft  brokerage  and aircraft  spare parts
sales.

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  invests  the  equity  raised  through   syndication  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,  which is
typically 10 to 12 years. The limited partnership  agreements  generally entitle
the  Company  to  receive  a 1% or 5%  interest  in the cash  distributions  and
earnings  of a program,  subject to certain  allocation  provisions.  The Fund I
agreement  entitles the Company to a 15% interest in the cash  distributions and
earnings of the program,  subject to certain allocation  provisions,  which will
increase to 25% after the investors have received  distributions  equal to their
original invested capital.




<PAGE>





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 begin  liquidation and
the managed equipment portfolio for these programs becomes permanently reduced.

Comparison of the Company's  Operating  Results for the Three Months Ended March
31, 1998 and 1997

The following analysis reviews the operating results of the Company:

Revenues
<TABLE>
<CAPTION>

                                                                                  For the Three Months
                                                                                     Ended March 31,
                                                                            1998                          1997
                                                                    --------------------------------------------
                                                                                 (in thousands of dollars)


<S>                                                                      <C>                             <C>          
Operating lease income                                                   $     3,892                     $   4,229    
Finance lease income                                                           2,652                         1,814
Management fees                                                                2,564                         2,861
Partnership interests and other fees                                             324                           486
Acquisition and lease negotiation fees                                         1,027                           178
Aircraft brokerage and services                                                  524                           674
Gain on the sale or disposition of assets, net                                   762                         1,368
Other                                                                            799                           841
                                                                    ---------------------------------------------------
  Total revenues                                                         $     12,544                    $  12,451 

</TABLE>

The fluctuations in revenues for the three months ended March 31, 1998, compared
to the same quarter in 1997, are summarized and explained below.

Operating lease revenues by equipment type:

<TABLE>
<CAPTION>

                                                                                  For the Three Months
                                                                                      Ended March 31,
                                                                             1998                        1997
                                                                    --------------------------------------------
                                                                                  (in thousands of dollars)


<S>                                                                      <C>                           <C>                      
Commercial and industrial equipment                                      $     1,613                   $     1,243              
Dry van and refrigerated over-the-road trailers                                1,578                         1,210
Intermodal trailers                                                              589                           738
Mobile offshore drilling units                                                    --                           604
Aircraft                                                                          58                           269
Marine containers                                                                 --                            53
Other                                                                             54                           112
                                                                    ---------------------------------------------------
  Total operating lease revenues                                         $     3,892                   $     4,229              

</TABLE>

Operating  lease  revenues  include  revenues  generated  from  assets  held for
operating  leases and assets  held for sale that are on lease.  Operating  lease
revenues  decreased $0.3 million  during the first quarter of 1998,  compared to
the  same  quarter  of  1997.  Operating  lease  revenues  decreased  due to the
following:

During the first quarter of 1997, the Company owned one mobile offshore drilling
unit, as well as a 25.5%  interest in another  mobile  offshore  drilling  unit,
which  generated  $0.6 million in lease  revenues.  Both of these drilling units
were  sold at the  Company's  cost to an  affiliated  program  during  the first
quarter of 1997.  During the first quarter of 1998, the only revenue the Company
earned on  equipment  prior to sale to its  managed  programs  was $0.1  million
earned from portable heaters.

As of March 31,  1998,  the  Company  owned  transportation  equipment  held for
operating  leases and held for sale,  with an  original  cost of $53.1  million,
which was $12.1 million less than the original cost of transportation  equipment
owned  and held for  operating  lease as of March 31,  1997.  The  reduction  in
equipment,  on an  original  cost  basis,  is a  consequence  of  the  Company's
strategic decision to dispose of certain  underperforming  transportation assets
and exit certain equipment  markets,  which had resulted in an 89% net reduction
in its  aircraft  portfolio,  a 100%  net  reduction  in  its  marine  container
portfolio, and a 5% net reduction in its intermodal trailer portfolio,  compared
to these  portfolios  as of March 31,  1997.  The  reduction  in  transportation
equipment available for lease is the primary reason aircraft,  marine container,
and  intermodal  trailer  revenue  was  reduced,   compared  to  the  prior-year
comparable period.

Intermodal trailer revenue also decreased due to lower utilization,  compared to
the same quarter of the prior year.

The  Company  entered  into an  agreement  in  January  1997 to lease all of its
storage  equipment  assets to a third  party on a finance  lease,  as opposed to
short-term  operating  leases,  resulting in a $0.1 million  decrease in storage
equipment operating lease revenues.

These  decreases were partially  offset by a $0.4 million  increase in operating
lease  revenues  generated from  commercial and industrial  equipment and a $0.4
million increase in operating lease revenues generated from refrigerated trailer
equipment,  due to an increase in the amount of these types of  equipment  owned
and on operating lease.

Finance lease income:

The Company earns finance lease income for certain leases originated by AFG that
are either  retained for  long-term  investment  or sold to third  parties or to
institutional  investment programs.  Finance lease income increased $0.8 million
in the first quarter of 1998,  compared to the same quarter in 1997,  reflecting
an increase in commercial and industrial  assets that were on finance lease. For
the quarter  ended March 31,  1998,  the average  investment  in direct  finance
leases was $120.5  million,  compared to $69.3  million for the first quarter of
1997.

Management fees:

Management fees are, for the most part, based on the gross revenues generated by
equipment under  management.  Management fees were $2.6 million and $2.9 million
for the quarters  ended March 31, 1998 and 1997,  respectively.  The decrease in
management  fees  resulted  from a net  decrease in managed  equipment  from the
remaining  older  programs.  With the  termination of syndication  activities in
1996,  management  fees from the older  programs are expected to decrease in the
future as they begin liquidation and the associated  equipment portfolio becomes
permanently  reduced.  This  decrease has been and is expected to continue to be
offset,  in part, by management  fees earned from the  institutional  investment
programs serviced by AFG.

Partnership interests and other fees:

The Company  records as  revenues  its equity  interest  in the  earnings of the
Company's affiliated programs. The net earnings and distribution levels from the
affiliated  programs  were $0.5 million and $0.6 million for the quarters  ended
March 31, 1998 and 1997,  respectively.  In addition, a decrease of $0.2 million
and $0.1  million  in the  Company's  residual  interests  in the  programs  was
recorded  during the quarters ended March 31, 1998 and 1997,  respectively.  The
decrease in net earnings and distribution  levels and residual  interests in the
quarter  ended March 31, 1998,  compared to the same  quarter of 1997,  resulted
mainly from the disposition of equipment in certain of the PLM Equipment  Growth
Fund (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  programs  when the  equipment is  purchased.  Net
decreases in the recorded  residual  values result when  partnership  assets are
sold and the reinvestment  proceeds are less than the original investment in the
sold equipment.





<PAGE>





Acquisition and lease negotiation fees:

During the  quarter  ended March 31,  1998,  the  Company,  on behalf of the EGF
programs,  purchased  transportation  and other equipment for $6.4 million and a
beneficial  interest  in an entity that owns a marine  vessel for $9.2  million,
compared to no equipment purchased on behalf of the EGFs during the same quarter
of  1997,  resulting  in a  $0.8  million  increase  in  acquisition  and  lease
negotiation  fees.  Also during the  quarter  ended  March 31,  1998,  equipment
purchased by AFG for the  institutional  investment  programs was $6.0  million,
compared to $6.3 million for the same quarter in 1997, resulting in $0.2 million
in acquisition  and lease  negotiation  fees for both  quarters.  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.

Aircraft brokerage and services:

         Aircraft  brokerage  and services  revenue,  which  represents  revenue
earned by Aeromil Holdings,  Inc., the Company's  aircraft  leasing,  spare part
sales, and brokerage subsidiary, decreased $0.2 million during the quarter ended
March 31, 1998, compared to the same quarter in 1997, due to a decrease in spare
parts sales.

Gain on the sale or disposition of assets, net:

During the quarter  ended March 31, 1998,  the Company  recorded $0.8 million in
gain on the sale or disposition of assets.  Of this gain, $0.1 million  resulted
from the sale or disposition of trailers and $0.2 million related to the sale of
commercial and industrial equipment.  Also during the first quarter of 1998, the
Company purchased and subsequently sold railcars to an unaffiliated  third party
for a net gain of $0.5  million.  During the quarter  ended March 31, 1997,  the
Company  recorded $1.4 million in gain on the sale or disposition of assets.  Of
this gain,  $0.2  million  resulted  from the sale or  disposition  of trailers,
marine  containers,  commuter  aircraft,  and storage  units,  and $0.8  million
related to the sale of  commercial  and  industrial  equipment.  Also during the
first quarter of 1997, the Company  purchased and subsequently sold a commercial
aircraft to an unaffiliated third party for a net gain of $0.4 million.

Costs and Expenses

<TABLE>
<CAPTION>

                                                                                  For the Three Months
                                                                                     Ended March 31,
                                                                               1998                      1997
                                                                    --------------------------------------------
                                                                                (in thousands of dollars)


<S>                                                                      <C>                         <C>                        
Operations support                                                       $     3,925                 $       4,064              
Depreciation and amortization                                                  2,550                         2,205
General and administrative                                                     1,798                         2,016
                                                                    ---------------------------------------------------
  Total costs and expenses                                               $     8,273                 $       8,285        

</TABLE>

Operations support:

Operations  support expense,  including salary and  office-related  expenses for
operational  activities,  equipment  insurance,  repair and  maintenance  costs,
equipment  remarketing  costs,  costs of goods sold,  and provision for doubtful
accounts,  decreased  $0.1  million  (3%) for the quarter  ended March 31, 1998,
compared to the same quarter in 1997. The decrease  resulted from a $0.2 million
decrease  in  compensation  and  benefits  expense,  mainly as a result of lower
commission  and bonus  expenses,  offset by a $0.1  million  increase in trailer
repair and maintenance expenses.





<PAGE>





Depreciation and amortization:

Depreciation  and  amortization  expenses  increased  $0.3 million (16%) for the
quarter ended March 31, 1998,  compared to the quarter ended March 31, 1997. The
increase  resulted from an increase in commercial and  industrial  equipment and
refrigerated trailer equipment on operating lease, which was partially offset by
the reduction in  depreciable  aircraft,  containers,  and  intermodal  trailers
(discussed in the operating lease revenue section).

General and administrative:

General and  administrative  expenses  decreased  $0.2 million  (11%) during the
quarter  ended March 31, 1998,  compared to the same quarter in 1997,  primarily
due to a $0.1 million  decrease in  compensation  and benefits  expenses,  after
allocations  to the  managed  programs,  as a result of a decrease  in  staffing
requirements,  and a $0.1 million decrease in legal expenses related to the Koch
action (refer to Note 8).

Other Income and Expenses

<TABLE>
<CAPTION>

                                                                               For the Three Months
                                                                                  Ended March 31,
                                                                             1998                    1997
                                                                   -------------------------------------------
                                                                             (in thousands of dollars)


<S>                                                                      <C>                   <C>                 
Interest expense                                                         $  (3,070)            $   (2,642)         
Interest income                                                                395                    386
Other expense, net                                                              (6)                   (21)

</TABLE>

Interest expense:

Interest expense increased $0.4 million (16%) during the quarter ended March 31,
1998,  compared to the same quarter in 1997, due to an increase in borrowings on
the  nonrecourse  debt  facility  and the senior  secured  notes  facility.  The
increase in interest expense caused by these increased  borrowings was partially
offset by lower  interest  expense  resulting  from  reductions  in the  amounts
outstanding on the senior secured loan and the short-term warehouse facility.

Provision for income taxes:

For the three months ended March 31, 1998,  the  provision  for income taxes was
$0.6 million,  representing an effective rate of 38%. For the three months ended
March 31,1997, the provision for income taxes was $0.6 million,  representing an
effective  rate of 32%. In 1997,  the  Company's  income tax rate  included  the
benefit  of  certain  income  earned  from  foreign  activities  that  has  been
permanently invested outside the United States.

Net Income

As a result of the  foregoing,  for the three months  ended March 31, 1998,  net
income  was  $1.0  million,   resulting  in  basic  and  diluted   earnings  per
weighted-average common share outstanding of $0.12 and $0.11, respectively.  For
the same quarter in 1997,  net income was $1.3  million,  resulting in basic and
diluted earnings per weighted-average common share outstanding of $0.14.





<PAGE>





Liquidity and Capital Resources

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

         Liquidity in 1998 and beyond will  depend,  in part,  on the  continued
remarketing of the equipment portfolio at similar lease rates, the management of
existing  sponsored  programs,  the effectiveness of cost control programs,  the
purchase  and  sale of  equipment,  the  volume  of  commercial  and  industrial
equipment  leasing  transactions  for which the Company earns fees and a spread,
and the potential  proceeds from the initial public offering of AFG.  Management
believes  that the Company can  accomplish  the  preceding and that it will have
sufficient  liquidity and capital resources for the future.  Future liquidity is
influenced by the factors summarized below.

     Debt financing:

Senior  Secured Loan:  The  Company's  senior loan with a syndicate of insurance
companies,  which had an  outstanding  balance of $19.1  million as of March 31,
1998 and May 11,  1998,  provides  that  equipment  sale  proceeds  from pledged
equipment  or cash  deposits  be  placed  into  collateral  accounts  or used to
purchase  additional  equipment  to the extent  required  to meet  certain  debt
covenants.  As of March 31, 1998, the cash collateral  balance for this loan was
$9.7  million and is included in  restricted  cash and cash  equivalents  on the
Company's  balance sheet.  The facility  required  quarterly  interest  payments
through March 31, 1997, with quarterly  principal  payments of $1.5 million plus
interest charges beginning June 30, 1997 through termination of the loan in June
2001.

Senior  Secured  Notes:  On June 28, 1996,  the Company  closed a  floating-rate
senior  secured  note  agreement  that allowed the Company to borrow up to $27.0
million within a one-year  period.  During the quarter ended March 31, 1998, the
Company  paid $1.3  million on this  facility.  As of March 31, 1998 and May 11,
1998, the Company had $22.6 million outstanding under this agreement.  Principal
payments of $1.3 million are payable quarterly  through  termination of the loan
on August 15, 2002.

Warehouse  Facility:  Assets acquired and held on an interim basis for placement
with affiliated  programs or sale to third parties or purchased for placement in
the Company's  nonrecourse debt facility have, from time to time, been partially
funded by a $50.0  million  short-term  warehouse  facility.  During  1997,  the
availability  of this facility was extended  until November 2, 1998. The Company
believes  that it will be able to extend this facility on similar terms prior to
its expiration.

This facility,  which is shared with PLM Equipment Growth Funds (EGFs) V and VI,
PLM  Equipment  Growth &  Income  Fund VII (EGF  VII),  and  Professional  Lease
Management Fund I, LLC (Fund I), allows the Company to purchase  equipment prior
to its designation to a specific program.  Borrowings under this facility by the
other  eligible  borrowers  reduce the amount  available  to be  borrowed by the
Company. As of March 31, 1998, the Company had $38.7 million in borrowings under
this  facility.  As of May 11, 1998, the Company had $29.6 million in borrowings
under this facility. There were no other borrowings on this facility as of March
31, 1998 or May 11, 1998.

Nonrecourse  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 that generally have terms of one to seven
years.  This facility is available for a one-year  period  expiring  October 13,
1998.  Repayment of the facility matches the terms of the underlying leases. The
Company  believes that it will be able to renew this  facility on  substantially
the same terms  upon its  expiration.  As of March 31,  1998,  $82.1  million in
borrowings  was  outstanding  under this  facility.  As of May 11,  1998,  $87.4
million in borrowings was outstanding under this facility.

   In addition to the $125.0 million  nonrecourse debt facility discussed above,
as of March 31, 1998 and May 11, 1998,  the Company had $14.3  million and $18.5
million,  respectively,  in nonrecourse  notes payable secured by direct finance
leases on commercial and industrial  equipment that have terms  corresponding to
the note repayment  schedules  beginning November 1997 through October 2001. The
notes bear interest from 8.32% to 9.5% per annum.





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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   debt.  As  of  March  31,  1998,   the  swap   agreements   had  a
weighted-average  duration  of 1.0  years,  corresponding  to the  terms  of the
related  debt.  As of March 31,  1998,  a  notional  amount of $86.1  million of
interest-rate swap agreements  effectively fixed interest rates at an average of
6.66% on such obligations.  For the three months ended March 31, 1998,  interest
expense increased by $0.1 million due to these arrangements.

Commercial and industrial equipment leasing:

The Company earns finance lease or operating lease income for leases  originated
and  retained by AFG.  The funding of leases  requires  the Company to retain an
equity  interest in all leases financed  through the nonrecourse  debt facility.
AFG also originates  loans in which it takes a security  interest in the assets.
From  January 1, 1998 through May 6, 1998,  the Company  funded  commercial  and
industrial  leases and finance  receivables  with an original  equipment cost of
$52.5  million.  A portion of these  transactions  was  financed,  on an interim
basis,  through the Company's  warehouse  facility.  Some  equipment  subject to
leases is sold to institutional investment programs for which the Company is the
servicer.  Acquisition  and  management  fees  are  received  for the  sale  and
subsequent  servicing  of these  leases.  The Company  believes  that this lease
origination operation is a growth area for the future.

In March 1998, the Company announced that its Board of Directors  authorized its
management  to engage  investment  bankers  for the  purpose of  undertaking  an
initial  public  offering of common  stock for AFG. On May 7, 1998,  AFG filed a
registration  statement  with the  Securities  and Exchange  Commission  for the
initial  public  offering.  The  offering  is  expected to commence in the third
quarter  of 1998;  however,  the  timing of the  offering  is  subject to market
conditions and other factors.

As of March 31, 1998,  the Company had committed to purchase  $176.1  million of
equipment  for its  commercial  and  industrial  lease  and  finance  receivable
portfolio,  to be held by the  Company or sold to the  institutional  investment
programs or to other third parties.

From April 1, 1998  through May 11,  1998,  the Company  funded $5.4  million of
commitments  outstanding  as of March 31, 1998 for its commercial and industrial
lease and finance receivable portfolio.

As of May 11,  1998,  the Company had  committed to purchase  $179.7  million of
equipment  for its  commercial  and  industrial  lease  and  finance  receivable
portfolio.

     Trailer leasing:

The Company operates 13 trailer rental  facilities that engage in short-term and
mid-term operating leases.  Equipment  operated in these facilities  consists of
dry van trailers leased to a variety of customers and refrigerated trailers used
to transport  temperature  sensitive food products.  The Company opened three of
these rental yards in the first  quarter of 1998 and intends to open  additional
rental  yard  facilities  in the future.  The Company is selling  certain of its
older  trailers  and is  replacing  them  with  new or  late-model  refrigerated
trailers.  The new trailers will be placed in existing  rental  facilities or in
new yards.

Other transportation  equipment leasing,  management of investment programs, and
other:

During the first quarter ended March 31, 1998, the Company generated proceeds of
$6.4 million from the sale of  transportation  equipment.  The net proceeds from
the sale of assets that were  collateralized  as part of the senior secured loan
facility were placed in a collateral account.

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

The  Company  also has an 80%  interest  in a company  owning  100% of a company
located in Australia  involved in aircraft  brokerage  and aircraft  spare parts
sales.

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

Year 2000 Compliance:

The Company is currently  addressing the year 2000 computer  software issues and
is creating a timetable for carrying out any program  modifications  that may be
required.  The  Company  anticipates  all  such  program  modifications  will be
completed by the end of 1998. The Company does not  anticipate  that the cost of
these modifications will be material.

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.





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                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

See Note 8 to the consolidated financial statements.


Item 6.  Exhibits and Reports on Form 8-K

(A)      Exhibits

None.

(B)      Reports on Form 8-K

None.





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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: May 11, 1998

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