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, 2001


[ ]  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 0-26594
                             -----------------------




                     PLM EQUIPMENT GROWTH & INCOME FUND VII
             (Exact name of registrant as specified in its charter)


              California                                  94-3168838
    (State or other jurisdiction of                    (I.R.S. Employer
    incorporation or organization)                    Identification No.)

   120 Montgomery Street, Suite 1350
           San Francisco, CA                                 94104
         (Address of principal                            (Zip code)
          executive offices)


       Registrant's telephone number, including area code: (415) 445-3201
                             -----------------------


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 ____


<PAGE>



                                    PLM EQUIPMENT GROWTH & INCOME FUND VII
                                           (A LIMITED PARTNERSHIP)
                                           CONDENSED BALANCE SHEETS
                                (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AMOUNTS)
                                                 (UNAUDITED)
<TABLE>
<CAPTION>

                                                                           September 30,        December 31,
                                                                               2001                2000
                                                                         -----------------------------------
<S>                                                                      <C>                   <C>
ASSETS
Equipment held for operating leases, at cost                             $       79,987        $       71,632
Less accumulated depreciation                                                   (41,076)              (35,114)
                                                                         ---------------------------------------
  Net equipment                                                                  38,911                36,518

Cash and cash equivalents                                                         6,767                 2,941
Restricted cash                                                                     217                   194
Accounts receivable, less allowance for doubtful accounts
    of $42 in 2001 and $27 in 2000                                                1,800                 1,502
Investments in unconsolidated special-purpose entities                            9,187                14,689
Deferred charges, net of accumulated amortization
    of $295 in 2001 and $209 in 2000                                                259                   264
Prepaid expenses and other assets                                                    31                   100
                                                                         ---------------------------------------

      Total assets                                                       $       57,172        $       56,208
                                                                         =======================================

LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
Accounts payable and accrued expenses                                    $          569        $          411
Due to affiliates                                                                   628                 1,182
Lessee deposits and reserve for repairs                                           1,163                   900
Notes payable                                                                    17,000                17,000
                                                                         ---------------------------------------
  Total liabilities                                                              19,360                19,493

Partners' capital:
Limited partners (5,323,569 limited partnership units as of
    September 30, 2001 and December 31, 2000)                                    37,812                36,715
General Partner                                                                      --                    --
                                                                         ---------------------------------------
  Total partners' capital                                                        37,812                36,715
                                                                         ---------------------------------------

      Total liabilities and partners' capital                            $       57,172        $       56,208
                                                                         =======================================
</TABLE>
















       See accompanying notes to unaudited condensed financial statements.


<PAGE>



                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A LIMITED PARTNERSHIP)
                       CONDENSED STATEMENTS OF OPERATIONS
         (IN THOUSANDS OF DOLLARS, EXCEPT WEIGHTED-AVERAGE UNIT AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                     For the Three Months               For the Nine Months
                                                      Ended September 30,               Ended September 30,
                                                     2001            2000              2001            2000
                                                   --------------------------------------------------------------
<S>                                                <C>            <C>               <C>             <C>
REVENUES

Lease revenue                                      $  4,001       $  4,226          $  12,120       $  11,931
Interest and other income                                50             55                186             154
Net gain on disposition of equipment                      8          2,520                 22           3,605
                                                   --------------------------------------------------------------
    Total revenues                                    4,059          6,801             12,328          15,690
                                                   --------------------------------------------------------------

EXPENSES

Depreciation and amortization                         2,015          1,854              6,055           4,826
Repairs and maintenance                                 502            661              1,265           1,807
Equipment operating expense                             450            483              1,236           1,343
Insurance expense                                       136            105                353             296
Management fees to affiliate                            213            240                642             651
Interest expense                                        316            367              1,006           1,094
General and administrative expenses
      to affiliates                                      68            263                362             719
Other general and administrative expenses               169            234                571             589
Provision for (recovery of) bad debts                   (10)            44                 15             113
                                                   --------------------------------------------------------------
    Total expenses                                    3,859          4,251             11,505          11,438
                                                   --------------------------------------------------------------

Equity in net income (loss) of unconsolidated
      special-purpose entities                         (339)           776              1,696             (69)
                                                   --------------------------------------------------------------

Net income (loss)                                  $   (139)      $  3,326          $   2,519       $   4,183
                                                   ==============================================================

PARTNERS' SHARE OF NET INCOME (LOSS)

Limited partners                                   $   (139)      $  3,200          $   2,393       $   3,805
General Partner                                          --            126                126             378
                                                   --------------------------------------------------------------

Total                                              $   (139)      $  3,326          $   2,519       $   4,183
                                                   ==============================================================

Limited partners' net income (loss) per
    weighted-average limited partnership unit      $  (0.03)      $   0.60          $    0.45       $    0.71
                                                   ==============================================================

Cash distributions                                 $     --       $  2,523          $   1,422       $   7,566
                                                   ==============================================================

Cash distributions per weighted-average
    limited partnership unit                       $     --       $   0.45          $    0.24       $    1.35
                                                   ==============================================================

</TABLE>









       See accompanying notes to unaudited condensed financial statements.



                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                            ( A LIMITED PARTNERSHIP)
              CONDENSED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
          FOR THE PERIOD FROM DECEMBER 31, 1999 TO SEPTEMBER 30, 2001
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>


                                                            Limited              General
                                                            Partners             Partner               Total
                                                          -------------------------------------------------------

<S>                                                       <C>                   <C>                 <C>
  Partners' capital as of December 31, 1999               $   42,747            $    --             $   42,747

Net income                                                     3,555                504                  4,059

Purchase of limited partnership units                             (3)                --                     (3)

Cash distribution                                             (9,584)              (504)               (10,088)
                                                          -------------------------------------------------------

  Partners' capital as of December 31, 2000                   36,715                 --                 36,715

Net income                                                     2,393                126                  2,519

Cash distribution                                             (1,296)              (126)                (1,422)
                                                          -------------------------------------------------------

  Partners' capital as of September 30, 2001              $   37,812            $    --             $   37,812
                                                          =======================================================

</TABLE>
































       See accompanying notes to unaudited condensed financial statements.



<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A LIMITED PARTNERSHIP)
                       CONDENSED STATEMENTS OF CASH FLOWS
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                       For the Nine Months
                                                                                       Ended September 30,
                                                                                        2001            2000
                                                                                    ------------------------------

<S>                                                                                  <C>             <C>
 OPERATING ACTIVITIES

 Net income                                                                          $    2,519      $    4,183
 Adjustments to reconcile net income to net cash
       provided by (used in) operating activities:
   Depreciation and amortization                                                          6,055           4,826
   Net gain on disposition of equipment                                                     (22)         (3,605)
   Equity in net (income) loss from unconsolidated special-purpose entities              (1,696)             69
   Changes in operating assets and liabilities:
     Restricted cash                                                                        (23)             75
     Accounts receivable, net                                                              (313)           (164)
     Prepaid expenses and other assets                                                       69              52
     Accounts payable and accrued expenses                                                  158             337
     Due to affiliates                                                                     (554)            262
     Lessee deposits and reserve for repairs                                                263            (209)
                                                                                     -----------------------------
       Net cash provided by operating activities                                          6,456           5,826
                                                                                     -----------------------------

 INVESTING ACTIVITIES

 Payments for purchase of equipment and capitalized improvements                         (8,014)        (10,824)
 Investment in and equipment purchased and placed in
     unconsolidated special-purpose entities                                                (86)             --
 Distribution from unconsolidated special-purpose entities                                1,992           3,827
 Distribution from liquidation of unconsolidated special-purpose entities                 5,292           2,433
 Payments of acquisition fees to affiliate                                                 (366)           (125)
 Payments of lease negotiation fees to affiliate                                            (82)            (28)
 Proceeds from disposition of equipment                                                      56          10,554
                                                                                     -----------------------------
       Net cash (used in) provided by investing activities                               (1,208)          5,837
                                                                                     -----------------------------

 FINANCING ACTIVITIES

 Proceeds from short-term notes payable to affiliate                                      5,500              --
 Payments of short-term notes payable to affiliate                                       (5,500)             --
 Cash distribution paid to limited partners                                              (1,296)         (7,188)
 Cash distribution paid to General Partner                                                 (126)           (378)
 Purchase of limited partnership units                                                       --              (3)
                                                                                     -----------------------------
       Net cash used in financing activities                                             (1,422)         (7,569)
                                                                                     -----------------------------

 Net increase in cash and cash equivalents                                                3,826           4,094
 Cash and cash equivalents at beginning of period                                         2,941           2,495
                                                                                     -----------------------------
 Cash and cash equivalents at end of period                                          $    6,767      $    6,589
                                                                                     =============================

 Supplemental information

 Interest paid                                                                       $      690      $      727
                                                                                     =============================
 Noncash transfer of equipment at net book value from
   unconsolidated special-purpose entities                                           $       --      $    5,688
                                                                                     =============================
</TABLE>




       See accompanying notes to unaudited condensed financial statements.


<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A LIMITED PARTNERSHIP)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1. OPINION OF MANAGEMENT

In the opinion of the  management  of PLM Financial  Services,  Inc. (FSI or the
General Partner),  the accompanying  unaudited  condensed  financial  statements
contain all  adjustments  necessary,  consisting  primarily of normal  recurring
accruals,  to present fairly the condensed  financial  position of PLM Equipment
Growth & Income Fund VII (the Partnership) as of September 30, 2001 and December
31, 2000,  the condensed  statements of operations for the three and nine months
ended  September  30,  2001 and 2000,  the  condensed  statements  of changes in
partners'  capital for the period from  December 31, 1999 to September 30, 2001,
and the condensed  statements of cash flows for the nine months ended  September
30, 2001 and 2000. Certain information and note disclosures normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles in the United  States of America have been  condensed or omitted from
the  accompanying  condensed  financial  statements.  For  further  information,
reference should be made to the financial  statements and notes thereto included
in the Partnership's  Annual Report on Form 10-K for the year ended December 31,
2000, on file at the Securities and Exchange Commission.

2. SCHEDULE OF PARTNERSHIP PHASES

As of September 30, 2001,  pursuant to the equitable  settlement  related to the
Koch  and  Romei  actions  (see  Note 10 to the  unaudited  condensed  financial
statements), the Partnership phases have been amended. The amendment extends the
period in which the Partnership will be able to reinvest its cash flow,  surplus
cash,  and equipment  sale proceeds in additional  equipment  until December 31,
2004. During that time, the General Partner may purchase  additional  equipment,
consistent  with  the  objectives  of  the  Partnership.  The  Partnership  will
terminate  on December  31,  2013,  unless  terminated  earlier upon sale of all
equipment or by certain other events.

3. CASH DISTRIBUTIONS

Cash  distributions  are recorded when paid and may include amounts in excess of
net income that are  considered to represent a return of capital.  For the three
months ended  September 30, 2001 and 2000, cash  distributions  totaled $-0- and
$2.5  million,  respectively.  For the nine months ended  September 30, 2001 and
2000, cash  distributions  totaled $1.4 million and $7.6 million,  respectively.
None of the cash  distributions  to the limited  partners during the nine months
ended  September  30,  2001,  were  deemed  to  be a  return  of  capital.  Cash
distributions  of $3.2  million to the limited  partners  during the nine months
ended September 30, 2000, were deemed to be a return of capital.

During 2001,  the General  Partner made the decision to temporally  suspend cash
distributions to the partners.

4. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES

The balance due to affiliates as of September 30, 2001 included $0.2 million due
to FSI and its affiliates for management fees and $0.5 million due to affiliated
unconsolidated  special-purpose  entities (USPEs). The balance due to affiliates
as of December 31, 2000 included $0.1 million due to FSI and its  affiliates for
management fees and $1.0 million due to an affiliated USPE.

During the nine months ended September 30, 2001, the  Partnership  borrowed $5.5
million from the General Partner to fund the purchase of marine containers.  The
General Partner charged the Partnership market interest rates on the outstanding
balance of the short-term  notes totaling $0.1 million for the nine months ended
September  30,  2001.  All loans from the  General  Partner  had been  repaid by
September 30, 2001.

The  Partnership's  proportional  share of  USPE-affiliated  management  fees of
$10,000 and $0.1 million  were payable to FSI and its  affiliate as of September
30, 2001 and December 31, 2000, respectively.


<PAGE>



                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A LIMITED PARTNERSHIP)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

4. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES (continued)

The Partnership's  proportional share of the affiliated expenses incurred by the
USPEs  during 2001 and 2000 is listed in the  following  table (in  thousands of
dollars):
<TABLE>
<CAPTION>
                                                     For the Three Months               For the Nine Months
                                                      Ended September 30,               Ended September 30,
                                                     2001            2000              2001            2000
                                                   -------------------------------------------------------------
<S>                                                <C>            <C>               <C>             <C>
Management fees                                    $     27       $     62          $     123       $     230
Data processing and administrative
   expenses                                              17             15                 88              56
</TABLE>

The Partnership  and USPE's paid FSI $0.5 million for equipment  acquisition and
lease negotiation fees during the nine months ended September 30, 2001 and 2000.

5. EQUIPMENT

Owned equipment held for operating leases is stated at cost.  Equipment held for
sale is stated at the lower of the equipment's  depreciated  cost or fair value,
less cost to sell, and is subject to a pending contract for sale. The components
of owned equipment were as follows (in thousands of dollars):
<TABLE>
<CAPTION>
                                               September 30,        December 31,
                                                 2001                 2000
                                             -----------------------------------

<S>                                          <C>                  <C>
Marine containers                            $    38,934          $   30,599
Marine vessels                                    22,212              22,212
Rail equipment                                     9,599               9,580
Aircraft                                           5,483               5,483
Trailers                                           3,759               3,758
                                             ------------         -----------
                                                  79,987              71,632
Less accumulated depreciation                    (41,076)            (35,114)
                                             ------------         -----------
    Net equipment                            $    38,911          $   36,518
                                             ============         ===========
</TABLE>

As of September 30, 2001, all owned equipment in the Partnership's portfolio was
on lease except for 15 railcars. As of December 31, 2000, all owned equipment in
the  Partnership's  portfolio was on lease except for 23 railcars.  The net book
value of the  equipment  off lease was $0.2 million as of September 30, 2001 and
December 31, 2000.

During the nine months ended  September  30,  2001,  the  Partnership  purchased
marine  containers for $8.0 million and paid acquisition fees of $0.4 million to
FSI.

During the nine months ended  September 30, 2001,  the  Partnership  disposed of
marine  containers  with a net book value of $19,000  for  proceeds  of $41,000.
During the nine months ended September 30, 2000, the  Partnership  disposed of a
commuter aircraft,  trailers, marine containers,  and railcars with an aggregate
net book value of $6.9 million for $10.5 million.



<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A LIMITED PARTNERSHIP)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

6. INVESTMENTS IN UNCONSOLIDATED SPECIAL-PURPOSE ENTITIES

The net investments in USPEs includes the following jointly-owned equipment (and
related assets and liabilities) (in thousands of dollars):
<TABLE>
<CAPTION>
                                                                                 September 30,     December 31,
                                                                                       2001           2000
                                                                                 ------------------------------
<S>                                                                              <C>              <C>
    38% interest in a trust owning a Boeing 737-300 Stage III commercial
              aircraft                                                           $    5,873       $    6,497
    50% interest in a trust owning a MD-82 Stage III commercial aircraft              3,139            3,751
    50% interest in a trust owning a MD-82 Stage III commercial aircraft                187              900
    80% interest in an entity that owned a dry bulk-carrier marine vessel               (12 )          3,482
    44% interest in an entity that owned a dry bulk-carrier marine vessel                --               59
                                                                                 -----------      -----------
        Net investments                                                          $    9,187       $   14,689
                                                                                 ===========      ===========
</TABLE>

As of September 30, 2001 and December 31, 2000, all  jointly-owned  equipment in
the Partnership's USPE portfolio was on lease.

During the nine months ended  September 30, 2001,  the General  Partner sold the
Partnership's 80% interest in an entity owning a dry bulk-carrier marine vessel.
The Partnership's  interest in this entity was sold for proceeds of $5.3 million
for its net investment of $3.4 million. Included in the net gain on sale of this
entity was the unused portion of marine vessel dry-docking of $0.2 million.

7. OPERATING SEGMENTS

The  Partnership  operates in five primary  operating  segments:  marine  vessel
leasing,  trailer  leasing,   aircraft  leasing,  railcar  leasing,  and  marine
container  leasing.  Each  equipment  leasing  segment  engages in short-term to
mid-term operating leases to a variety of customers.

The following  tables present a summary of the operating  segments (in thousands
of dollars):
<TABLE>
<CAPTION>
                                            Marine                                    Marine
     For the three months ended             Vessel   Trailer    Aircraft  Railcar    Container
         September 30, 2001                Leasing   Leasing    Leasing   Leasing    Leasing    Other(1)    Total
     ----------------------------------    --------- ---------  --------- ---------  --------- ---------  -----------
<S>                                        <C>       <C>        <C>       <C>        <C>       <C>        <C>
     REVENUES
       Lease revenue                       $  1,425  $    165   $    271  $    582   $  1,558  $     --   $  4,001
       Interest income and other                 --        --         --        --         --        50         50
       Gain on disposition of equipment          --        --         --        --          8        --          8
                                           ------------------------------------------------------------------------
         Total revenues                       1,425       165        271       582      1,566        50      4,059

     COSTS AND EXPENSES
       Operations support                       837        82          3       134         16        16      1,088
       Depreciation and amortization            311        52        102       136      1,405         9      2,015
       Interest expense                          --        --         --        --         --       316        316
       Management fees to affiliate              71         8         14        41         79        --        213
       General and administrative expenses       38        37         --        17         --       145        237
       Recovery of bad debts                     --        --         --        (1)        (9)       --        (10)
                                           ------------------------------------------------------------------------
         Total costs and expenses             1,257       179        119       327      1,491       486      3,859
                                           ------------------------------------------------------------------------
     Equity in net loss of USPEs                (37)       --       (302)       --         --        --       (339)
                                           ------------------------------------------------------------------------
     Net income (loss)                     $    131       (14)      (150)      255         75      (436)      (139)
                                           ========================================================================

     Total assets as of September 30, 2001 $  6,110  $  1,102   $  9,564  $  3,747   $ 29,613  $  7,036   $ 57,172
                                           ========================================================================


(1)  Includes certain assets not identifiable to a particular  segment,  such as
     cash, prepaid expenses, and deferred charges. Also includes interest income
     and costs not  identifiable  to a  particular  segment,  such as,  interest
     expense, certain amortization,  general and administrative,  and operations
     support expenses.
</TABLE>


<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A LIMITED PARTNERSHIP)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

7.   OPERATING SEGMENTS (continued)

<TABLE>
<CAPTION>
                                            Marine                                    Marine
     For the three months ended             Vessel   Trailer    Aircraft  Railcar    Container
         September 30, 2000                Leasing   Leasing    Leasing   Leasing    Leasing    Other(1)    Total
     ----------------------------------    --------- ---------  --------- ---------  --------- ---------  -----------

<S>                                        <C>       <C>        <C>       <C>        <C>       <C>        <C>
     REVENUES
       Lease revenue                       $  1,472  $    898   $    271  $    610   $    975  $     --   $  4,226
       Interest income and other                 --        --         --        --         --        55         55
       Gain (loss) on disposition of             --     2,521         --        (2)         1        --      2,520
     equipment
                                           ------------------------------------------------------------------------
         Total revenues                       1,472     3,419        271       608        976        55      6,801

     COSTS AND EXPENSES
       Operations support                       807       323          2       105          2        10      1,249
       Depreciation and amortization            341       313        154       156        884         6      1,854
       Interest expense                          --        --         --        --         --       367        367
       Management fees to affiliate              74        52         13        52         49        --        240
       General and administrative expenses       19       230          3        14         --       231        497
       Provision for (recovery of) bad           --        57         --       (13)        --        --         44
     debts
                                           ------------------------------------------------------------------------
         Total costs and expenses             1,241       975        172       314        935       614      4,251
                                           ------------------------------------------------------------------------
     Equity in net income (loss) of USPEs       897        --       (141)       --         20        --        776
                                           ------------------------------------------------------------------------
     Net income (loss)                     $  1,128  $  2,444   $    (42) $    294   $     61  $   (559)  $  3,326
                                           ========================================================================

     Total assets as of September 30, 2000 $ 11,166  $  1,304   $ 12,644  $  4,388   $ 26,056  $  6,870   $ 62,428
                                           ========================================================================
</TABLE>
<TABLE>
<CAPTION>

                                            Marine                                    Marine
     For the nine months ended              Vessel   Trailer    Aircraft  Railcar    Container
         September 30, 2001                Leasing   Leasing    Leasing   Leasing    Leasing    Other(1)    Total
     ----------------------------------    --------- ---------  --------- ---------  --------- ---------  -----------

<S>                                        <C>       <C>        <C>       <C>        <C>       <C>        <C>
     REVENUES
       Lease revenue                       $  4,321  $    473   $    814  $  1,794   $  4,718  $     --   $ 12,120
       Interest income and other                 --        --         33        --         --       153        186
       Gain on disposition of equipment          --         1         --        --         21        --         22
                                           ------------------------------------------------------------------------
         Total revenues                       4,321       474        847     1,794      4,739       153     12,328

     COSTS AND EXPENSES
       Operations support                     2,048       227          5       428         53        93      2,854
       Depreciation and amortization            930       157        410       406      4,130        22      6,055
       Interest expense                          --        --         --        --         --     1,006      1,006
       Management fees to affiliate             216        24         41       125        236        --        642
       General and administrative expenses       73        93         11        45         --       711        933
       Provision for (recovery of) bad           --        (3)        --        18         --        --         15
     debts
                                           ------------------------------------------------------------------------
         Total costs and expenses             3,267       498        467     1,022      4,419     1,832     11,505
                                           ------------------------------------------------------------------------
     Equity in net income (loss) of USPEs     1,998        --       (302)       --         --        --      1,696
                                           ------------------------------------------------------------------------
     Net income (loss)                     $  3,052  $    (24)  $     78  $    772   $    320  $ (1,679)  $  2,519
                                           ========================================================================

     Total assets as of September 30, 2001 $  6,110  $  1,102   $  9,564  $  3,747   $ 29,613  $  7,036   $ 57,172
                                           ========================================================================

(1)  Includes certain assets not identifiable to a particular  segment,  such as
     cash, prepaid expenses, and deferred charges. Also includes interest income
     and costs not  identifiable  to a  particular  segment,  such as,  interest
     expense, certain amortization,  general and administrative,  and operations
     support expenses.
</TABLE>



<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A LIMITED PARTNERSHIP)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

7.   OPERATING SEGMENTS (continued)
<TABLE>
<CAPTION>
                                             Marine                                    Marine
     For the nine months ended               Vessel    Trailer    Aircraft  Railcar    Container
         September 30, 2000                  Leasing   Leasing    Leasing   Leasing    Leasing    Other(2)    Total
     ------------------------------------    --------  ---------  --------  ---------  --------  ---------  ----------

 <S>                                          <C>       <C>        <C>       <C>        <C>       <C>        <C>
    REVENUES
       Lease revenue                         $ 4,155   $  2,694   $   814   $  1,861   $ 2,407   $     --   $ 11,931
       Interest income and other                  --         --        --         --        --        154        154
       Gain (loss) on disposition of              --      2,462     1,118         (3)       28         --      3,605
     equipment
                                             ------------------------------------------------------------------------
         Total revenues                        4,155      5,156     1,932      1,858     2,435        154     15,690

     COSTS AND EXPENSES
       Operations support                      2,183        813        28        386         6         30      3,446
       Depreciation and amortization           1,023        944       507        470     1,863         19      4,826
       Interest expense                           --         --        --         --        --      1,094      1,094
       Management fees to affiliate              208        149        41        133       120         --        651
       General and administrative expenses        51        604         9         60        --        584      1,308
       Provision for (recovery of) bad debts      --        128        --        (15)       --         --        113
                                             ------------------------------------------------------------------------
         Total costs and expenses              3,465      2,638       585      1,034     1,989      1,727     11,438
                                             ------------------------------------------------------------------------
     Equity in net income (loss) of USPEs        756         --      (953)        --       129         (1)       (69)
                                             ------------------------------------------------------------------------
     Net income (loss)                       $ 1,446   $  2,518   $   394   $    824   $   575   $ (1,574)  $  4,183
                                             ========================================================================

     Total assets as of September 30, 2000   $11,166   $  1,304   $12,644   $  4,388   $26,056   $  6,870   $ 62,428
                                             ========================================================================

(2)  Includes certain assets not identifiable to a particular  segment,  such as
     cash, prepaid expenses, and deferred charges. Also includes interest income
     and costs not  identifiable  to a  particular  segment,  such as,  interest
     expense, certain amortization,  general and administrative,  and operations
     support  expenses.  Also  includes net loss from an investment in an entity
     that owned a mobile offshore drilling unit.

</TABLE>

8.   NET INCOME (LOSS) PER WEIGHTED-AVERAGE PARTNERSHIP UNIT

Net income (loss) per weighted-average Partnership unit was computed by dividing
net income  (loss)  attributable  to limited  partners  by the  weighted-average
number  of  Partnership  units  deemed   outstanding   during  the  period.  The
weighted-average number of Partnership units deemed outstanding during the three
and nine months ended  September 30, 2001 was  5,323,569.  The  weighted-average
number of Partnership units deemed  outstanding during the three and nine months
ended September 30, 2000 was 5,323,569 and 5,323,624, respectively.

9. DEBT

During  2001,  the General  Partner  entered into a joint $15.0  million  credit
facility on behalf of the  Partnership,  PLM Equipment  Growth Fund VI (EGF VI),
Professional  Lease Management Income Fund I (Fund I), and Acquisub LLC (ACQ), a
wholly owned subsidiary of PLM International which is the parent company of FSI.
The facility  provides  interim  financing of up to 100% of the  aggregate  book
value of eligible  equipment owned by the Partnership,  as defined in the credit
facility. The Partnership, EGF VI, Fund I, and ACQ collectively may borrow up to
$15.0 million of this facility.  Outstanding  borrowings by one borrower  reduce
the  amount  available  to each  of the  other  borrowers  under  the  facility.
Individual  borrowings  may be outstanding  for no more than 270 days,  with all
advances due no later than April 12, 2002.  Interest accrues at either the prime
rate or adjusted LIBOR plus 2.0% at the borrower's option and is set at the time
of an advance of funds.  Borrowings  by the  Partnership  are  guaranteed by PLM
International.

As of September 30, 2001, no eligible  borrower had any  outstanding  borrowings
under the warehouse facility.







<PAGE>



                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A LIMITED PARTNERSHIP)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

10. CONTINGENCIES

PLM   International,Inc.   (the   Company)  and  various  of  its  wholly  owned
subsidiaries  are defendants in a class action lawsuit filed in January 1997 and
which is pending in the United States  District Court for the Southern  District
of Alabama,  Southern Division (Civil Action No.  97-0177-BH-C) (the court). The
named  plaintiffs are six individuals who invested in 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),  collectively
(the  Funds),  each a California  limited  partnership  for which the  Company's
wholly owned subsidiary, PLM Financial Services, Inc. (FSI), acts as the General
Partner.

The complaint  asserts  causes of action  against all  defendants  for fraud and
deceit,  suppression,  negligent  misrepresentation,  negligent and  intentional
breaches 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
Funds, and concealing such mismanagement from investors in the Funds. Plaintiffs
seek unspecified compensatory damages, as well as punitive damages.

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,  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 the Funds. The complaint  alleges the same facts and the same causes
of action as in the Koch action, plus additional causes of action against all of
the defendants,  including alleged unfair and deceptive practices and violations
of  state  securities  law.  In July  1997,  defendants  filed a  petition  (the
petition) in federal district court under the Federal Arbitration Act seeking to
compel  arbitration of plaintiff's  claims.  In October 1997, the district court
denied  the  Company'  s  petition,  but in  November  1997,  agreed to hear the
Company's  motion for  reconsideration.  Prior to  reconsidering  its order, the
district court dismissed the petition pending settlement of the Romei action, as
discussed  below.  The state court action  continues  to be stayed  pending such
resolution.

In February 1999 the parties to the Koch and Romei actions  agreed to settle the
lawsuits,  with  no  admission  of  liability  by any  defendant,  and  filed  a
Stipulation  of Settlement  with the court.  The  settlement is divided into two
parts,  a  monetary  settlement  and  an  equitable  settlement.   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 $6.6
million.  The final settlement  amount will depend on the number of claims filed
by class members,  the amount of the administrative costs incurred in connection
with the  settlement,  and the amount of attorneys' fees awarded by the court to
plaintiffs'  attorneys.  The Company will pay up to $0.3 million of the monetary
settlement,  with  the  remainder  being  funded  by an  insurance  policy.  For
settlement  purposes,  the monetary  settlement 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 Funds  between May 23, 1989 and August
30, 2000. The monetary  settlement,  if approved,  will go forward regardless of
whether the equitable settlement is approved or not.

The equitable  settlement  provides,  among other things, for: (a) the extension
(until  January 1, 2007) of the date by which FSI must complete  liquidation  of
the Funds' equipment,  (b) the extension (until December 31, 2004) of the period
during which FSI can reinvest the Funds' funds in additional  equipment,  (c) an
increase of up to 20% in the amount of front-end fees (including acquisition and
lease  negotiation  fees)  that  FSI  is  entitled  to  earn  in  excess  of the
compensatory   limitations   set   forth  in  the  North   American   Securities
Administrator's  Association's Statement of Policy; (d) a one-time repurchase by
each  of  Fund  V,  Fund  VI and  Fund  VII of up to 10% of  that  partnership's
outstanding units for 80% of net asset value per unit; and (e) the deferral of a
portion of the  management  fees paid to an  affiliate  of FSI  until,  if ever,
certain  performance  thresholds  have been met by the  Funds.  Subject to final
court

<PAGE>



                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A LIMITED PARTNERSHIP)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

10. CONTINGENCIES (continued)

approval,  these  proposed  changes  would be made as  amendments to each Fund's
limited  partnership  agreement if less than 50% of the limited partners of each
Fund vote against such  amendments.  The equitable  settlement also provides for
payment of additional  attorneys'  fees to the  plaintiffs'  attorneys from Fund
funds in the event, if ever, that certain  performance  thresholds have been met
by the Funds. The equitable settlement class consists of all investors,  limited
partners,  assignees  or unit  holders  who on August 30, 2000 held any units in
Fund V, Fund VI, and Fund VII, and their assigns and successors in interest.

The court  preliminarily  approved  the monetary and  equitable  settlements  in
August 2000, and information regarding each of the settlements was sent to class
members in  September  2000. A final  fairness  hearing was held on November 29,
2000,  and on April 25, 2001 the federal  magistrate  judge assigned to the case
entered a Report and Recommendation  recommending final approval of the monetary
and equitable settlements to the federal district court judge. On July 24, 2001,
the federal  district  court judge  adopted the Report and  Recommendation,  and
entered a final judgment  approving both  settlements.  No appeal has been filed
and the time for filing an appeal has expired. Therefore, monetary class members
who submitted  claims will be paid their  settlement  amount out of the monetary
fund by the third-party  claims  administrator once the final settlement amounts
are calculated pursuant to the formula set forth in the settlement agreement and
court order.  Similarly the equitable  settlement will be implemented  promptly.
For  those  equitable  class  members  who  submitted  timely  requests  for the
repurchase of their limited partnership units, the respective  partnerships will
repurchase such units by December 31, 2001.

The  Partnership  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  or  results  of
operations of the Partnership.













                      (This space intentionally left blank)



<PAGE>


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

(I) RESULTS OF OPERATIONS

COMPARISON OF THE PLM EQUIPMENT  GROWTH & INCOME FUND VII'S (THE  PARTNERSHIP'S)
OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

(A) Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as repairs  and  maintenance,
equipment operating,  and asset-specific  insurance expenses) on owned equipment
decreased during the three months ended September 30, 2001, compared to the same
period of 2000.  Gains or losses from the sale of equipment,  interest and other
income,  and certain  expenses such as depreciation and amortization and general
and  administrative  expenses relating to the operating  segments (see Note 7 to
the unaudited  condensed  financial  statements),  are not included in the owned
equipment  operation  discussion  because  they are indirect in nature and not a
result of  operations,  but the result of owning a portfolio of  equipment.  The
following  table  presents  lease  revenues less direct  expenses by segment (in
thousands of dollars):
<TABLE>
<CAPTION>
                                                    For the Three Months
                                                    Ended September 30,
                                                   2001             2000
                                                 ---------------------------
<S>                                              <C>              <C>
Marine containers                                $ 1,542          $   973
Marine vessels                                       588              665
Railcars                                             448              505
Aircraft                                             268              269
Trailers                                              83              575
</TABLE>

Marine containers: Lease revenues and direct expenses for marine containers were
$1.6 million and $16,000 respectively,  for the three months ended September 30,
2001, compared to $1.0 million and $2,000, respectively,  during the same period
of 2000.  An increase in lease  revenues of $0.5 million was due to the purchase
of additional equipment during 2001 and 2000. Additionally,  an increase of $0.1
million was due to the transfer of the Partnership's  interest in an entity that
owned marine containers from an unconsolidated  special-purpose entity (USPE) to
owned equipment during 2000.

Marine  vessels:  Marine  vessel lease  revenues and direct  expenses  were $1.4
million and $0.8 million, respectively, for the three months ended September 30,
2001, compared to $1.5 million and $0.8 million,  respectively,  during the same
period of 2000. Marine vessel lease revenues  decreased $47,000 during the three
months ended September 30, 2001 due to a reduction in the lease rate for both of
the Partnership's marine vessels.

Railcars:  Railcar lease revenues and direct expenses were $0.6 million and $0.1
million,  respectively,  for the three months ended September 30, 2001 and 2000.
Railcar  contribution  decreased  $0.1  million due to lower  lease  revenues of
$28,000 on  railcars  whose  lease  expired  during  2001 and higher  repairs of
$29,000  during the third  quarter of 2001 when  compared  to the same period of
2000.

Aircraft:  Aircraft  lease  revenues and direct  expenses  were $0.3 million and
$3,000, respectively, for the three months ended September 30, 2001, compared to
$0.3 million and $2,000, respectively, during the same period of 2000.

Trailers:  Trailer lease revenues and direct expenses were $0.2 million and $0.1
million,  respectively,  for the three months ended September 30, 2001, compared
to $0.9 million and $0.3 million, respectively,  during the same period of 2000.
The decrease in trailer  contribution of $0.5 million was due to the sale of 78%
of the Partnership's trailers during 2000.


<PAGE>


(B) Indirect Expenses Related to Owned Equipment Operations

Total indirect expenses of $2.8 million for the three months ended September 30,
2001  decreased  from $3.0  million  for the same  period  in 2000.  Significant
variances are explained as follows:

     (i) A $0.3 million decrease in general and  administrative  expenses during
the three months ended  September  30, 2001  compared to the same period of 2000
was due to a decrease of $0.1 million in  professional  services and lower costs
of $0.2 million  resulting  from the sale of 78% of the  Partnership's  trailers
during 2000.

     (ii) A $0.1 million decrease in interest expense was due to a lower average
outstanding  debt balance in the third quarter of 2001 when compared to the same
period of 2000.

     (iii) A $0.2 million  increase in depreciation  and  amortization  expenses
from 2000  levels  reflects  an increase  of $0.7  million in  depreciation  and
amortization expenses resulting from the purchase of additional equipment during
2001 and 2000. The increase was offset, in part, by the decrease of $0.3 million
caused by the  double-declining  balance method of depreciation which results in
greater depreciation in the first years an asset is owned and a decrease of $0.3
million due to the sale of equipment during 2001 and 2000.

(C) Net Gain on Disposition of Owned Equipment

The net gain on  disposition  of owned  equipment  for the third quarter of 2001
totaled  $8,000,  and  resulted  from  the  sale of  marine  containers  with an
aggregate  net book value of $5,000 for  proceeds  of  $14,000.  The net gain on
disposition  of owned  equipment  for the third  quarter  of 2000  totaled  $2.5
million, and resulted from the sale of trailers, railcars, and marine containers
with an aggregate net book value of $5.5 million for proceeds of $8.0 million.

(D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities

Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity  method is shown in the following  table by equipment  type
(in thousands of dollars):
<TABLE>
<CAPTION>
                                                                            For the Three Months
                                                                            Ended September 30,
                                                                           2001              2000
                                                                        -----------------------------
<S>                                                                     <C>              <C>
Marine vessels                                                          $     (37)       $     897
Aircraft                                                                     (302)            (141)
Marine containers                                                              --               20
                                                                        ------------     ------------
    Equity in net income (loss) of USPEs                                $    (339)       $     776
                                                                        ============     ============
</TABLE>

Marine vessels: During the three months ended September 30, 2001, lease revenues
of  $(2,000)  were  offset by direct  expenses  and  administrative  expenses of
$36,000.  During the same period of 2000, lease revenues of $0.6 million and the
gain of $0.9  million from the sale of the  Partnership's  interest in an entity
that owned a marine vessel were offset by depreciation expense, direct expenses,
and administrative expenses of $0.6 million.

The decreases in marine vessel lease  revenues of $0.6 million and  depreciation
expense, direct expenses, and administrative expenses of $0.6 million during the
three  months  ended  September  30,  2001,  were  caused  by  the  sale  of the
Partnership's  interest in an entity that owned a marine  vessel during 2001 and
the sale of a  Partnership's  interest  in an entity that owned  another  marine
vessel during 2000.

Aircraft:  During the three months ended  September 30, 2001,  lease revenues of
$0.5  million  were  offset  by  depreciation  expense,   direct  expenses,  and
administrative  expenses of $0.8 million.  During the same period of 2000, lease
revenues of $0.8 million were offset by depreciation  expense,  direct expenses,
and administrative expenses of $0.9 million.

Lease revenues  decreased $0.3 million due to the reduction in the lease rate as
part of new lease agreements of the commercial aircraft.

The  decrease in  depreciation  expense,  direct  expenses,  and  administrative
expenses of $0.1 million was due to $0.1 million in lower  depreciation  expense
as the  result of the  double  declining-balance  method of  depreciation  which
results in greater depreciation in the first years an asset is owned.

Marine  containers:  During 2000, the  Partnership's  interest in an entity that
owned marine containers was transferred to owned equipment.

(E) Net Income (Loss)

As a result of the foregoing, the Partnership had a net loss of $0.1 million for
the three  months  ended  September  30,  2001,  compared  to net income of $3.3
million  during the same period of 2000. The  Partnership's  ability to acquire,
operate,  and liquidate assets,  secure leases,  and re-lease those assets whose
leases  expire  is  subject  to  many  factors.   Therefore,  the  Partnership's
performance in the third quarter of 2001 is not necessarily indicative of future
periods.

COMPARISON  OF THE  PARTNERSHIP'S  OPERATING  RESULTS FOR THE NINE MONTHS  ENDED
SEPTEMBER 30, 2001 AND 2000

(A) Owned Equipment Operations

Lease  revenues  less  direct  expenses  (defined  as repairs  and  maintenance,
equipment operating,  and asset-specific  insurance expenses) on owned equipment
increased during the nine months ended September 30, 2001,  compared to the same
period of 2000. The following table presents lease revenues less direct expenses
by segment (in thousands of dollars):
<TABLE>
<CAPTION>
                                                       For the Nine Months
                                                       Ended September 30,
                                                      2001             2000
                                                    ---------------------------

<S>                                                 <C>              <C>
Marine containers                                   $ 4,665          $ 2,401
Marine vessels                                        2,273            1,972
Railcars                                              1,366            1,475
Aircraft                                                809              786
Trailers                                                246            1,881
</TABLE>

Marine containers: Lease revenues and direct expenses for marine containers were
$4.7 million and $0.1 million respectively,  for the nine months ended September
30,  2001,  compared to $2.4 million and $6,000,  respectively,  during the same
period of 2000.  An  increase in lease  revenues of $1.5  million was due to the
purchase of additional equipment during 2001 and 2000. Additionally, an increase
of $0.8  million  was due to the  transfer of the  Partnership's  interest in an
entity  that owned  marine  containers  from an  unconsolidated  special-purpose
entity (USPE) to owned equipment during 2000.

Marine  vessels:  Marine  vessel lease  revenues and direct  expenses  were $4.3
million and $2.0 million,  respectively, for the nine months ended September 30,
2001, compared to $4.2 million and $2.2 million,  respectively,  during the same
period of 2000.

Marine vessel lease revenues increased $0.2 million during the nine months ended
September  30, 2001.  The increase in lease  revenues was caused by the required
dry docking of one of the  Partnership's  two wholly owned marine vessels during
the nine months ended  September 30, 2000 which was not required during the same
period of 2001.  During 2000, the marine vessel was off-lease  while  undergoing
dry docking and was not earning any lease revenues.

Marine  vessel direct  expenses  decreased  $0.2 million  during the nine months
ended  September 30, 2001.  The decrease in direct  expenses was caused by lower
depreciation   expense   of  $0.1   million   as  the   result  of  the   double
declining-balance  method of depreciation which results in greater  depreciation
in the first years an asset is owned and lower marine operating expenses of $0.1
million.

Railcars:  Railcar lease revenues and direct expenses were $1.8 million and $0.4
million, respectively, for the nine months ended September 30, 2001, compared to
$1.9 million and $0.4 million,  respectively,  during the same period of 2000. A
decrease in railcar  lease  revenues of $0.1  million was due to lower  re-lease
rates earned on railcars whose leases expired during 2001.

Aircraft:  Aircraft  lease  revenues and direct  expenses  were $0.8 million and
$5,000, respectively,  for the nine months ended September 30, 2001, compared to
$0.8 million and $28,000, respectively, during the same period of 2000.

Trailers:  Trailer lease revenues and direct expenses were $0.5 million and $0.2
million, respectively, for the nine months ended September 30, 2001, compared to
$2.7 million and $0.8 million,  respectively,  during the same period of 2000. A
decrease in trailer  contribution  of $1.6 million was due to the sale of 78% of
the Partnership's trailers during 2000.

(B) Indirect Expenses Related to Owned Equipment Operations

Total indirect  expenses of $8.7 million for the nine months ended September 30,
2001  increased  from $8.0  million  for the same  period  in 2000.  Significant
variances are explained as follows:

     (i) A $1.2 million increase in depreciation and amortization  expenses from
2000  levels  reflects  an  increase  of  $2.0  million  in   depreciation   and
amortization expenses resulting from the purchase of additional equipment during
2001 and 2000 and an increase of $0.5 million resulting from the transfer of the
Partnership's  interest in an entity that owned marine containers from a USPE to
owned equipment during 2000. These increases were offset, in part, by a decrease
of $0.5 million caused by the  double-declining  balance method of  depreciation
which results in greater depreciation in the first years an asset is owned and a
decrease of $0.8 million due to the sale of equipment during 2001 and 2000.

     (ii)A $0.4 million decrease in general and  administrative  expenses during
the nine months ended  September 30, 2001 was due to lower costs of $0.5 million
resulting from the sale of 78% of the Partnership's  trailers during 2000 offset
in part, by an increase of $0.1 million when compared to the same period of 2000
resulting from allocations by the General Partner due to severance costs related
to staff reductions.

     (iii) A $0.1 million  decrease in the  provision for bad debts was based on
the General Partner's  evaluation of the collectability of receivables  compared
to the same period of 2000.

(C) Net Gain on Disposition of Owned Equipment

The net gain on disposition of equipment for the nine months ended September 30,
2001 totaled  $22,000,  and resulted from the sale of marine  containers with an
aggregate  net book value of $19,000 for  proceeds  of $41,000.  The net gain on
disposition  of equipment  for the nine months ended  September 30, 2000 totaled
$3.6  million,  and  resulted  from the sale of a commuter  aircraft,  railcars,
marine containers, and trailers with an aggregate net book value of $6.9 million
for proceeds of $10.5 million.

(D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities

Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity  method is shown in the following  table by equipment  type
(in thousands of dollars):
<TABLE>
<CAPTION>
                                                                             For the Nine Months
                                                                             Ended September 30,
                                                                            2001             2000
                                                                         ----------------------------

<S>                                                                      <C>                   <C>
Marine vessels                                                           $  1,998          $   756
Aircraft                                                                     (302)            (953)
Marine containers                                                              --              129
Mobile offshore drilling unit                                                  --               (1)
                                                                         -----------       ----------
  Equity in net income (loss) of USPEs                                   $  1,696          $   (69
                                                                         ===========       ==========
</TABLE>

Marine vessels:  During the nine months ended September 30, 2001, lease revenues
of $0.7 million and the gain of $2.1 million from the sale of the  Partnership's
interest  in an entity that owned a marine  vessel  were offset by  depreciation
expense,  direct expenses, and administrative  expenses of $0.8 million.  During
the same period of 2000,  lease  revenues  of $2.2  million and the gain of $0.9
million  from the sale of the  Partnership's  interest in an entity that owned a
marine  vessel  were  offset  by  depreciation  expense,  direct  expenses,  and
administrative expenses of $2.4 million.

The decrease in marine  vessel lease  revenues of $1.5 million and  depreciation
expense, direct expenses, and administrative expenses of $1.5 million during the
nine  months  ended   September  30,  2001,  was  caused  by  the  sale  of  the
Partnership's  interest in an entity that owned a marine  vessel during 2001 and
the sale of a  Partnership's  interest in an entity  that owned a marine  vessel
during 2000.

Aircraft:  During the nine months ended  September 30, 2001,  lease  revenues of
$1.7  million  and other  income of $0.8  million  were  offset by  depreciation
expense,  direct expenses, and administrative  expenses of $2.8 million.  During
the same  period  of  2000,  lease  revenues  of $2.0  million  were  offset  by
depreciation  expense,  direct  expenses,  and  administrative  expenses of $2.9
million.

Lease  revenues  increased  $0.2 million due to a Boeing  737-300 being on-lease
during the nine months  ended  September  30, 2001 that was  off-lease  for four
months  during the same  period of 2000.  This  increase in lease  revenues  was
offset by a decrease of $0.4 million due to the reduction of the lease rate on a
MD-82 as part of a new lease agreement of this commercial aircraft. Other income
increased  $0.8 million  during the nine months ended  September 30, 2001 due to
the  recognition  of $0.8  million in engine  reserve  liability  as income upon
termination of a previous lease agreement.  A similar event did not occur during
the same period of 2000.

During the nine  months  ended  September  30,  2001,  repairs  and  maintenance
increased $0.2 million on the Boeing 737-300 when compared to the same period of
2000.  This  increase was offset by a decrease of $0.4  million in  depreciation
expense resulting from the double declining-balance method of depreciation which
results in greater depreciation in the first years an asset is owned.

Marine  containers:  During 2000, the  Partnership's  interest in an entity that
owned marine containers was transferred to owned equipment.

(E) Net Income

As a result of the foregoing,  the  Partnership had a net income of $2.5 million
for the nine months ended  September  30,  2001,  compared to net income of $4.2
million  during the same period of 2000. The  Partnership's  ability to acquire,
operate,  and liquidate assets,  secure leases,  and re-lease those assets whose
leases  expire  is  subject  to  many  factors.   Therefore,  the  Partnership's
performance  in the nine months  ended  September  30,  2001 is not  necessarily
indicative of future  periods.  In the nine months ended September 30, 2001, the
Partnership  distributed  $1.3  million to the  limited  partners,  or $0.24 per
weighted-average limited partnership unit.

(II) FINANCIAL CONDITION -- CAPITAL RESOURCES, LIQUIDITY, AND DISTRIBUTIONS

For the  nine  months  ended  September  30,  2001,  the  Partnership  generated
operating cash of $8.4 million (net cash provided by operating activities,  plus
non-liquidating  distributions from USPEs) to meet its operating obligations and
make  distributions  (total for nine  months  ended  September  30, 2001 of $1.4
million) to the partners.

During the nine months ended  September 30, 2001,  the  Partnership  disposed of
marine containers for proceeds of $41,000 and collected unpaid sales proceeds in
accounts receivable at December 31, 2000 of $15,000.

During the nine months ended  September  30,  2001,  the  Partnership  purchased
marine  containers for $8.0 million and paid  acquisition and lease  negotiation
fees of  $0.4  million  to PLM  Financial  Services,  Inc.  (FSI or the  General
Partner) for this equipment.

Accounts  receivable  increased  $0.3  million  during  the  nine  months  ended
September 30, 2001 due to the timing of cash receipts.

Investments  in USPEs  decreased  $5.5  million  during  the nine  months  ended
September 30, 2001. Decreases to the Partnership's investments in USPEs were due
to the  receipt  of $2.0  million of cash  distributions  from the USPEs and the
receipt of $5.3 million of liquidating  proceeds  resulting from the sale of the
Partnership's  interest in an entity that owned a marine vessel. These decreases
were  partially  offset  by $1.7  million  of  income  that  was  recorded  from
operations  from the  Partnership's  equity  interests in USPEs and $0.1 million
additional investment by the Partnership in a USPE.

Accounts  payable  increased $0.2 million during the nine months ended September
30, 2001 due to the timing of payments to vendors.

During the nine months ended September 30, 2001, the  Partnership  borrowed $5.5
million  from the General  Partner to fund the  purchase  of marine  containers.
These borrowings were repaid to the General Partner as of September 30, 2001. In
addition,  the Partnership paid $0.8 million in engine reserves to an affiliated
USPE and received $0.2 million in engine reserves from an affiliated USPE.

During the nine months  ended June 30,  2001,  lessee  deposits  and reserve for
repairs  increased  $0.3  million due to an increase in the reserve for a marine
vessel dry docking of $0.2  million and an increase in the reserve for  aircraft
engine repairs of $0.1 million.

The  Partnership  is scheduled to make an annual debt payment of $3.0 million to
the lenders of the notes payable on December 31, 2001. The cash for this payment
will come from operations and proceeds from equipment sales.

As a result of the  settlement of the Koch and Romei actions (see note 10 to the
unaudited condensed financial  statements),  the Partnership will purchase up to
10% of the  Partnership's  limited  partnership  units  for 80% of the net asset
value per unit during the fourth quarter of 2001. The General Partner, on behalf
of the Partners,  expects to purchase 356,247 limited partnership units for $3.3
million.  The cash for this purchase will come from  available cash at September
30, 2001.

During April 2001, the General Partner entered into a joint $15.0 million credit
facility on behalf of the  Partnership,  PLM Equipment  Growth Fund VI (EGF VI),
Professional  Lease Management Income Fund I (Fund I), and Acquisub LLC (ACQ), a
wholly owned subsidiary of PLM International which is the parent company of FSI.
The facility  provides  interim  financing of up to 100% of the  aggregate  book
value of eligible  equipment owned by the Partnership,  as defined in the credit
facility. The Partnership, EGF VI, Fund I, and ACQ collectively may borrow up to
$15.0 million of this facility.  Outstanding  borrowings by one borrower  reduce
the  amount  available  to each  of the  other  borrowers  under  the  facility.
Individual  borrowings  may be outstanding  for no more than 270 days,  with all
advances due no later than April 12, 2002.  Interest accrues at either the prime
rate or adjusted LIBOR plus 2.0% at the borrower's option and is set at the time
of an advance of funds.  Borrowings  by the  Partnership  are  guaranteed by PLM
International.

As of November 9, 2001, no eligible borrower has any outstanding borrowings.

The  General  Partner  is  currently  in  discussions  with the  lenders  of the
warehouse credit facility to lower the amount available to be borrowed under the
facility from $15.0 million to $10.0 million.

(III) OUTLOOK FOR THE FUTURE

Pursuant to the equitable  settlement related to the Koch and Romei actions (see
Note 10 to the unaudited  condensed financial  statements),  as of September 30,
2001, the Partnership phases have been amended. The amendment extends the period
in which the Partnership  will be able to reinvest its cash flow,  surplus cash,
and equipment  sale proceeds in additional  equipment  until  December 31, 2004.
During  that time,  the  General  Partner  may  purchase  additional  equipment,
consistent  with  the  objectives  of  the  Partnership.  The  Partnership  will
terminate  on December  31,  2013,  unless  terminated  earlier upon sale of all
equipment or by certain other events.

The primary  objective of the  Partnership,  through the end of the reinvestment
phase,  is to maximize the  long-term  return on the partner's  investment.  The
General  Partner  believes  this  can  be  achieved  through  making  additional
investments  with cash flow generated  from  operations in equipment that can be
readily leased or has the possibility for appreciation in value.

Until  completion  of the Koch and Romei  matters  related  to the  purchase  of
Partnership units (see note 10 to the unaudited condensed financial statements),
the Partnership will not make cash distributions to the partners.

Several factors may affect the Partnership's  operating  performance in 2001 and
beyond,  including  changes in the markets for the  Partnership's  equipment and
changes in the regulatory environment in which that equipment operates.

The Partnership's operation of a diversified equipment portfolio in a broad base
of markets is intended to reduce its exposure to volatility in individual
equipment sectors.

Factors  affecting the Partnership's  contribution  during the remainder of 2001
and beyond include:

1. Marine  vessel  bulk-carrier  freight  rates are  dependent  upon the overall
condition of the international economy. The Partnership's two marine vessels had
fixed-rate  leases that expired in 2001. The General  Partner signed a new lease
with the existing  lessee  resulting in a lease rate reduction of  approximately
10%.

2. Railcar  loadings in North  America for the nine months ended  September  30,
2001 are below those of 2000.  This  decrease has led to lower  utilization  and
lower  contribution  to the  Partnership  as existing  leases expire and renewal
leases are negotiated.

3. The cost of new marine  containers  have been at  historic  lows for the past
several  years  which has caused  downward  pressure on per diem lease rates for
this type of equipment.

4. The tragic  events of  September  11, 2001 have  significantly  impacted  the
commercial airline industry and consequently the demand for commercial aircraft.
The General  Partner  expects the  Partnership to be affected as a result of the
excess supply of off-lease  aircraft now available in the market, as well as the
weakened  financial  strength of the Partnership's  aircraft lessees.  No direct
damage occurred to any of the Partnership's aircraft as a result of these events
and the General Partner is currently unable to determine the long-term  effects,
if any, these events may have on the Partnership's aircraft. As of September 30,
2001,  substantially all of the Partnership's  lease receivables  remain current
for owned aircraft and the Partnership's interests in trusts that own commercial
aircraft.

The  ability  of the  Partnership  to  realize  acceptable  lease  rates  on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
and  government  or other  regulations.  The  unpredictability  of some of these
factors,  or of their occurrence,  makes it difficult for the General Partner to
clearly  define  trends or  influences  that may impact the  performance  of the
Partnership's  equipment.  The General  Partner  continually  monitors  both the
equipment  markets and the performance of the  Partnership's  equipment in these
markets. The General Partner may decide to reduce the Partnership's  exposure to
equipment  markets in which it determines it cannot operate equipment to achieve
acceptable  rates of  return.  Alternatively,  the  General  Partner  may make a
determination to enter equipment markets in which it perceives  opportunities to
profit from supply/demand instabilities or other market imperfections.

The unpredictability of some of these factors, or of their occurrence,  makes it
difficult for the General  Partner to clearly  define trends or influences  that
may impact the performance of the Partnership's equipment.

The  Partnership  intends to use  excess  cash flow,  if any,  after  payment of
operating  expenses,  principal and interest on debt,  redemption of Partnership
units, and cash distributions to the partners,  to acquire additional  equipment
through the end of the  reinvestment  phase on December  31,  2004.  The General
Partner  believes that these  acquisitions may cause the Partnership to generate
additional earnings and cash flow for the Partnership.

(IV) FORWARD-LOOKING INFORMATION

Except for the historical  information contained herein, this Form 10-Q contains
forward-looking  statements  that  involve  risks  and  uncertainties,  such  as
statements of the Partnership'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  Partnership's  actual results could differ  materially from
those discussed here.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership's  primary market risk exposure is that of currency  devaluation
risk.  During the nine months ended September 30, 2001, 84% of the Partnership's
total  lease  revenues  from  wholly-  and  jointly-owned  equipment  came  from
non-United States domiciled lessee's.  Most of the Partnership's  leases require
payment in United States (U.S.) currency.  If these lessees'  currency  devalues
against the U.S. dollar, the lessees could potentially  encounter  difficulty in
making the U.S. dollar denominated lease payments.

























                      (This space intentionally left blank)


<PAGE>




                          PART II -- OTHER INFORMATION


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K
           --------------------------------

           (a)    Exhibits

                  None.

           (b)    Reports on Form 8-K

                  Report dated  September 5, 2001  announcing  the engagement of
                  Deloitte & Touche LLP as the  Partnership's  auditors  and the
                  dismissal of KPMG, LLP.





<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 EQUIPMENT GROWTH & INCOME FUND VII

                                    By:      PLM Financial Services, Inc.
                                             General Partner



Date:  November 12, 2001            By:      /s/ Stephen M. Bess
                                             -------------------
                                             Stephen M. Bess
                                             President and
                                             Current Chief Accounting Officer