UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               -------------------

                                    FORM 10-Q


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

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


       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 ___


<PAGE>


<TABLE>
                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                                 BALANCE SHEETS
                 (in thousands of dollars, except unit amounts)
<CAPTION>


                                                                               March 31,          December 31,
                                                                                 2001                2000
                                                                           --------------------------------------
<S>                                                                        <C>                  <C>
  Assets

  Equipment held for operating leases, at cost                             $       79,773       $       71,632
  Less accumulated depreciation                                                   (37,112)             (35,114)
                                                                           --------------------------------------
    Net equipment                                                                  42,661               36,518
  Cash and cash equivalents                                                         1,489                2,941
  Restricted cash                                                                     203                  194
  Accounts receivable, less allowance for doubtful accounts
      of $50 in 2001 and $27 in 2000                                                1,513                1,502
  Investments in unconsolidated special-purpose entities                           14,003               14,689
  Deferred charges, net of accumulated amortization
      of $234 in 2001 and $209 in 2000                                                289                  264
  Prepaid expenses and other assets                                                   103                  100
                                                                           --------------------------------------
        Total assets                                                       $       60,261       $       56,208
                                                                           ======================================

  Liabilities and partners' capital

  Liabilities:
  Accounts payable and accrued expenses                                    $          507       $          411
  Due to affiliates                                                                 1,206                1,182
  Lessee deposits and reserve for repairs                                             957                  900
  Short-term notes payable to affiliate                                             5,500                   --
  Notes payable                                                                    17,000               17,000
                                                                           --------------------------------------
    Total liabilities                                                              25,170               19,493

  Partners' capital:
  Limited partners (5,323,569 limited partnership units as of
      March 31, 2001 and December 31, 2000)                                        35,091               36,715
  General Partner                                                                      --                   --
                                                                           --------------------------------------
    Total partners' capital                                                        35,091               36,715
                                                                           --------------------------------------
        Total liabilities and partners' capital                            $       60,261       $       56,208
                                                                           ======================================







<FN>
                 See accompanying notes to financial statements.
</FN>
</TABLE>

                                      -1-

<PAGE>

<TABLE>
                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                            STATEMENTS OF OPERATIONS
         (in thousands of dollars, except weighted-average unit amounts)
<CAPTION>

                                                                                    For the Three Months
                                                                                       Ended March 31,
                                                                                    2001            2000
                                                                                ------------------------------
<S>                                                                             <C>               <C>
  Revenues

  Lease revenue                                                                 $    3,991        $   3,657
  Interest and other income                                                             77               41
  Net gain on disposition of equipment                                                   2            1,096
                                                                                ------------------------------
    Total revenues                                                                   4,070            4,794
                                                                                ------------------------------
  Expenses

  Depreciation and amortization                                                      2,025            1,437
  Repairs and maintenance                                                              368              480
  Equipment operating expenses                                                         372              449
  Insurance expenses                                                                   164               68
  Management fees to affiliate                                                         208              201
  Interest expense                                                                     324              368
  General and administrative expenses to affiliates                                    183              238
  Other general and administrative expenses                                            233              150
  Provision for bad debts                                                               23               51
                                                                                ------------------------------
    Total expenses                                                                   3,900            3,442
                                                                                ------------------------------
  Equity in net loss of unconsolidated special-purpose entities                       (372)            (448)
                                                                                ------------------------------
  Net income (loss)                                                             $     (202)       $     904
                                                                                ==============================
  Partners' share of net income (loss)

  Limited partners                                                              $     (328)       $     778
  General Partner                                                                      126              126
                                                                                ------------------------------
  Total                                                                         $     (202)       $     904
                                                                                ==============================
  Limited partners' net income (loss) per
      weighted-average limited partnership unit                                 $    (0.06)       $    0.15
                                                                                ==============================
  Cash distribution                                                             $    1,422        $   2,407
                                                                                ==============================
  Cash distribution per weighted-average
      limited partnership unit                                                  $     0.24        $    0.43
                                                                                ==============================

<FN>
                 See accompanying notes to financial statements.
</FN>
</TABLE>

                                      -2-

<PAGE>

<TABLE>
                                   PLM EQUIPMENT GROWTH & INCOME FUND VII
                                          (A Limited Partnership)
                               STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For
                             the period from December 31, 1999 to March 31, 2001
                                         (in thousands of dollars)
<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 (loss)                                              (328)               126                   (202)


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


    Partners' capital as of March 31, 2001                 $   35,091            $    --             $   35,091
                                                           =======================================================


<FN>
                 See accompanying notes to financial statements.
</FN>
</TABLE>

                                      -3-

<PAGE>

<TABLE>
                                       PLM EQUIPMENT GROWTH & INCOME FUND VII
                                              (A Limited Partnership)
                                              STATEMENTS OF CASH FLOWS
                                             (in thousands of dollars)
<CAPTION>
                                                                                        For the Three Months
                                                                                          Ended March 31,
                                                                                         2001            2000
                                                                                     -----------------------------
<S>                                                                                   <C>             <C>
Operating activities

Net income (loss)                                                                     $     (202)     $      904
Adjustments to reconcile net income (loss)

      to net cash provided by (used in) operating activities:
  Depreciation and amortization                                                            2,025           1,437
  Net gain on disposition of equipment                                                        (2)         (1,096)
  Equity in net loss from unconsolidated special-purpose entities                            372             448
  Changes in operating assets and liabilities:
    Restricted cash                                                                           (9)            92
    Accounts receivable, net                                                                 (26)            (38)
    Prepaid expenses and other assets                                                         (3)              7
    Accounts payable and accrued expenses                                                     96             316
    Due to affiliates                                                                         24              96
    Lessee deposits and reserve for repairs                                                   57            (461)
                                                                                     -----------------------------
      Net cash provided by operating activities                                            2,332           1,705
                                                                                     -----------------------------
Investing activities

Payments for purchase of equipment and capitalized improvements                           (8,009)           (937)
Investment in and equipment purchased and placed in
    unconsolidated special purpose entities                                                  (86)             --
Distribution from unconsolidated special-purpose entities                                    399           1,317
Payments for acquisition fees to affiliate                                                  (135)             --
Payments for lease negotiation fees to affiliate                                             (50)             --
Proceeds from disposition of equipment                                                        19           2,530
                                                                                     -----------------------------
      Net cash (used in) provided by investing activities                                 (7,862)          2,910
                                                                                     -----------------------------
Financing activities

Proceeds from short-term notes payable to affiliate                                        5,500              --
Cash distribution paid to limited partners                                                (1,296)         (2,281)
Cash distribution paid to General Partner                                                   (126)           (126)
Purchase of limited partnership units                                                         --              (3)
                                                                                     -----------------------------
      Net cash provided by (used in) financing activities                                  4,078          (2,410)
                                                                                     -----------------------------

Net (decrease) increase in cash and cash equivalents                                      (1,452)          2,205
Cash and cash equivalents at beginning of period                                           2,941           2,495
                                                                                     -----------------------------
Cash and cash equivalents at end of period                                            $    1,489      $    4,700
                                                                                     =============================
<FN>
                 See accompanying notes to financial statements.
</FN>
</TABLE>

                                      -4-
<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2001

1.   Opinion of Management

In the opinion of the  management  of PLM Financial  Services,  Inc. (FSI or the
General Partner),  the accompanying  unaudited financial  statements contain all
adjustments  necessary,  consisting  primarily of normal recurring accruals,  to
present fairly the financial  position of PLM Equipment Growth & Income Fund VII
(the  Partnership) as of March 31, 2001 and December 31, 2000, the statements of
operations for the three months ended March 31, 2001 and 2000, the statements of
changes in partners'  capital for the period from December 31, 1999 to March 31,
2001, and the statements of cash flows for the three months ended March 31, 2001
and  2000.  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  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

Beginning in the  Partnership's  seventh year of operations,  which commences on
January 1, 2002, the General Partner will stop purchasing  additional equipment.
Surplus cash, if any,  less  reasonable  reserves,  will be  distributed  to the
partners.  Beginning  in the  Partnership's  ninth  year  of  operations,  which
commences on January 1, 2004,  the General  Partner  intends to begin an orderly
liquidation of the Partnership's  assets.  The General Partner  anticipates that
the liquidation of the assets will be completed by the end of the  Partnership's
twelfth year of operations. The Partnership will terminate on December 31, 2013,
unless  terminated  earlier  upon sale of all  equipment  and 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 March 31, 2001 and 2000,  cash  distributions  totaled $1.4 million
and $2.4  million,  respectively.  Cash  distributions  of $1.3 million and $1.5
million to the limited partners during the three months ended March 31, 2001 and
2000, respectively, were deemed to be a return of capital.

4.   Transactions with General Partner and Affiliates


The balance due to  affiliates as of March 31, 2001 included $0.2 million due to
FSI and its affiliates for management fees, $43,000 for administrative expenses,
and $1.0  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 three  months  ended  March 31,  2001,  short-term  notes  payable to
affiliate  increased $5.5 million to fund the  Partnership's  purchase of marine
containers  during the first quarter of 2001.  The General  Partner  charged the
Partnership  market interest rates on the outstanding  balance of the short-term
notes totaling $15,000 for the three months ended March 31, 2001.

The Partnership's  proportional share of USPE-affiliated management fees of $0.1
million were payable as of March 31, 2001 and December 31, 2000.

                                      -5-

<PAGE>

                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2001

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):

                                                       For the Three Months
                                                         Ended March 31,
                                                       2001           2000
                                                    ---------------------------
  Management fees                                   $      59      $      81
  Data processing and administrative
     expenses                                              41             23

The  Partnership  and USPEs  accrued or paid FSI $0.2  million  and  $15,000 for
equipment  acquisition and lease  negotiation fees during the three months ended
March 31, 2001 and 2000, respectively.

5.   Equipment

The components of owned equipment were as follows (in thousands of dollars):

                                                  March 31,         December 31,
                                                   2001                2000
                                               ---------------------------------

  Marine containers                            $   38,726          $    30,599
  Marine vessels                                   22,212               22,212
  Rail equipment                                    9,594                9,580
  Aircraft                                          5,483                5,483
  Trailers                                          3,758                3,758
                                               -----------         ------------
                                                   79,773               71,632
  Less accumulated depreciation                   (37,112)             (35,114)
                                               -----------         ------------
      Net equipment                            $   42,661          $    36,518
                                               ===========         ============

As of March 31, 2001, all owned equipment in the Partnership's  portfolio was on
lease except for 7 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 $0.1  million and $0.2  million as of March 31,
2001 and December 31, 2000, respectively.

During the three months ended March 31, 2001, the Partnership  purchased  marine
containers for $8.0 million and paid acquisition fees of $0.1 million to FSI.


During the three  months  ended March 31, 2001,  the  Partnership  disposed of a
marine container with a net book value of $2,000 for proceeds of $4,000.  During
the three months ended March 31, 2000, the Partnership  disposed of a commercial
aircraft,  a railcar,  and  trailers  with an  aggregate  net book value of $1.3
million for proceeds of $2.4 million.

                                      -6-

<PAGE>

                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2001
<TABLE>
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):
<CAPTION>
                                                                                      March 31,      December 31,
                                                                                        2001             2000
                                                                                   -------------------------------
<S>                                                                                <C>               <C>
38% interest in a trust owning a Boeing 737-300 Stage III commercial aircraft      $    6,515        $    6,497
50% interest in a trust owning a MD-82 Stage III commercial aircraft                    3,524             3,751
80% interest in an entity owning a dry bulk-carrier marine vessel                       3,403             3,482
50% interest in a trust owning a MD-82 Stage III commercial aircraft                      561               900
44% interest in an entity that owned a dry bulk-carrier marine vessel                      --                59
                                                                                   ---------------   -------------
           Net investments                                                          $  14,003        $   14,689
                                                                                   ===============   =============
</TABLE>
As of March 31, 2001 and December 31, 2000, all  jointly-owned  equipment in the
Partnership's USPE portfolio was on lease.

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.
<TABLE>
The following  tables present a summary of the operating  segments (in thousands
of dollars):
<CAPTION>
                                            Marine                                    Marine
     For the three months ended             Vessel   Trailer    Aircraft  Railcar    Container
         March 31, 2001                    Leasing   Leasing    Leasing   Leasing    Leasing    Other1      Total
     ----------------------------------    --------- ---------  --------- ---------  --------- ---------  -----------
<S>                                        <C>       <C>        <C>       <C>        <C>       <C>        <C>
     Revenues
       Lease revenue                       $  1,463  $    170   $    271  $    611   $  1,476  $     --   $  3,991
       Interest income and other                 --        --         --        --         --        77         77
       Gain on disposition of equipment          --        --         --        --          2        --          2
                                           ------------------------------------------------------------------------
         Total revenues                       1,463       170        271       611      1,478        77      4,070

     Costs and expenses
       Operations support                       596        63          4       163         18        60        904
       Depreciation and amortization            310        52        154       135      1,367         7      2,025
       Interest expense                          --        --         --        --         --       324        324
       Management fees to affiliate              73         9         14        39         73        --        208
       General and administrative expenses       14        22          4        16         --       360        416
       Provision for (recovery of) bad debts     --        (3)        --        18          8        --         23
                                           ------------------------------------------------------------------------
         Total costs and expenses               993       143        176       371      1,466       751      3,900
                                           ------------------------------------------------------------------------
     Equity in net income (loss) of USPEs       107        --       (479)      --         --        --        (372)
                                           ------------------------------------------------------------------------
     Net income (loss)                     $    577  $     27   $   (384) $    240   $     12  $   (674)  $   (202)
                                           ========================================================================

     Total assets as of March 31, 2001     $ 10,189  $  1,194   $ 11,136  $  4,000   $ 31,862  $  1,880   $ 60,261

                                           ========================================================================
<FN>
--------------------------------------
1 Includes  interest income and costs not identifiable to a particular  segment,
such as, interest expense, and certain amortization, general and administrative,
and operations support expenses.
</FN>
</TABLE>

                                      -7-

<PAGE>
                                       PLM EQUIPMENT GROWTH & INCOME FUND VII
                                              (A Limited Partnership)
                                           NOTES TO FINANCIAL STATEMENTS
                                                   March 31, 2001

7.   Operating Segments (continued)
<TABLE>
<CAPTION>
                                            Marine                                    Marine
     For the three months ended             Vessel   Trailer    Aircraft  Railcar    Container
         March 31, 2000                    Leasing   Leasing    Leasing   Leasing    Leasing    Other2      Total
     ----------------------------------    --------- ---------  --------- ---------  --------- ---------  -----------
<S>                                        <C>       <C>        <C>       <C>        <C>       <C>        <C>
     Revenues
       Lease revenue                       $  1,259  $    878   $    271  $    648   $    601  $     --   $  3,657
       Interest income and other                 --        --         --        --         --        41         41
       Gain (loss) on disposition of             --       (20)     1,117        (1)        --        --      1,096
     equipment
                                           ------------------------------------------------------------------------
         Total revenues                       1,259       858      1,388       647        601        41      4,794

     Costs and expenses
       Operations support                       649       222          9       105          2        10        997
       Depreciation and amortization            341       317        199       157        417         6      1,437
       Interest expense                          --        --         --        --         --       368        368
       Management fees to affiliate              63        48         14        46         30        --        201
       General and administrative expenses       10       196          3        19         --       160        388
       Provision for bad debts                   --        44         --         7         --        --         51
                                           ------------------------------------------------------------------------
         Total costs and expenses             1,063       827        225       334        449       544      3,442
                                           ------------------------------------------------------------------------
     Equity in net income (loss) of USPEs      (108)       --       (393)       --         54        (1)      (448)
                                           ------------------------------------------------------------------------
     Net income (loss)                     $     88  $     31   $    770  $    313   $    206  $   (504)  $    904
                                           ========================================================================

     Total assets as of March 31, 2000     $ 13,789  $  7,813   $ 15,046  $  4,561   $ 17,715  $  5,018   $ 63,942
                                           ========================================================================
</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
months ended March 31, 2001 and 2000 was 5,323,569 and 5,323,734, respectively.

9.   Contingencies

PLM  International,  (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.

------------------------------------
2 Includes  interest income and costs not identifiable to a particular  segment,
such as interest expense, and 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.


                                       -8-
<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2001

9.   Contingencies (continued)

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  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. The monetary  settlement  remains subject to certain
conditions,  including  final  approval by the court  following a final fairness
hearing.  The  equitable  settlement  remains  subject  to  certain  conditions,
including judicial approval of the proposed amendments and final approval of the
equitable settlement by the court following a final fairness hearing.


                                      -9-

<PAGE>


                     PLM EQUIPMENT GROWTH & INCOME FUND VII
                             (A Limited Partnership)
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2001

9.   Contingencies (continued)

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. Any objector to the settlement
may  file  objections  to  the  Report  and   Recommendation.   The  Report  and
Recommendation,  along with any  objections,  will be reviewed  by the  district
court judge,  who may approve,  reject or modify any of the  magistrate  judge's
findings  or  recommendations,  and who may also  receive  further  evidence  or
recommit  the matter to the  magistrate  judge.  The parties  await the district
court's  ruling on the Report  and  Recommendation.  The  Company  continues  to
believe  that the  allegations  of the Koch and  Romei  actions  are  completely
without  merit and intends to continue to defend this matter  vigorously  if the
monetary settlement is not consummated.


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

10.  Subsequent Event


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
agreement.  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.


                      (This space intentionally left blank)


                                      -10-

<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 March 31, 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 three months  ended March 31,  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  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):

                                                       For the Three Months
                                                          Ended March 31,
                                                       2001             2000
                                                    ----------------------------

  Marine containers                                 $  1,458           $  599
  Marine vessels                                         867              610
  Railcars                                               448              543
  Aircraft                                               267              262
  Trailers                                               107              656

Marine containers: Lease revenues and direct expenses for marine containers were
$1.5  million and $18,000  respectively,  for the three  months  ended March 31,
2001, compared to $0.6 million and $2,000, respectively,  during the same period
of 2000.  An increase in lease  revenues of $0.3 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.
Additionally,  an increase of $0.6 million was due to the purchase of additional
equipment during the first quarter of 2001.

Marine  vessels:  Marine  vessel lease  revenues and direct  expenses  were $1.5
million and $0.6  million,  respectively,  for the three  months ended March 31,
2001, compared to $1.3 million and $0.6 million,  respectively,  during the same
period of 2000.  Marine vessel lease revenues  increased $0.2 million during the
three months  ended March 31, 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 first quarter of 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.


Railcars:  Railcar lease revenues and direct expenses were $0.6 million and $0.2
million,  respectively,  for the three months ended March 31, 2001,  compared to
$0.6 million and $0.1 million,  respectively,  during the same period of 2000. A
decrease in railcar lease  revenues of $37,000 was due to lower  re-lease  rates
earned on existing  railcars  whose leases  expired  during 2001. An increase in
railcar  repairs  of $0.1  million  was due to higher  repairs  during the three
months ending March 31, 2001 compared to the same period of 2000.


Aircraft:  Aircraft  lease  revenues and direct  expenses  were $0.3 million and
$4,000,  respectively,  for the three months  ended March 31, 2001,  compared to
$0.3 million and $9,000, 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 March 31, 2001,  compared to
$0.9 million and $0.2 million,  respectively,  during the same period of 2000. A
decrease in trailer  contribution  of $0.5 million was due to the sale of 78% of
the Partnership's trailers during 2000.


                                      -11-

<PAGE>

(B)  Indirect Expenses Related to Owned Equipment Operations

Total  indirect  expenses of $3.0  million for the three  months ended March 31,
2001  increased  from $2.4  million  for the same  period  in 2000.  Significant
variances are explained as follows:

     (i)   A $0.6 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 and an increase of $0.2 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 the
decrease  of $0.1  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.

     (ii)  A $28,000 increase in general and administrative  expenses during the
three  months  ended  March  31,  2001 was due to an  increase  of $0.1  million
resulting from allocations by the General Partner due to severance costs related
to staff reductions  offset,  in part, by lower costs of $0.2 million  resulting
from the sale of 78% of the  Partnership's  trailers during 2000 compared to the
same period of 2000.

     (iii) A $44,000  decrease  in interest  expense was due to a lower  average
outstanding  debt balance in the first quarter of 2001 when compared to the same
period of 2000.

     (iv)  A  $28,000  decrease  in the  provision  for bad  debts  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 first quarter of 2001 totaled
$2,000,  and resulted from the sale of a marine  container with an aggregate net
book value of $2,000 for  proceeds  of $4,000.  The net gain on  disposition  of
equipment for the first quarter of 2000 totaled $1.1 million,  and resulted from
the sale of a commuter aircraft,  a railcar,  and trailers with an aggregate net
book value of $1.3 million for proceeds of $2.4 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):

                                                     For the Three Months
                                                        Ended March 31,
                                                    2001              2000
                                                  ----------------------------

  Marine vessels                                  $    107         $   (108)
  Aircraft                                            (479)            (393)
  Marine containers                                     --               54
  Mobile offshore drilling unit                         --               (1)
                                                  ----------       -----------
    Equity in net loss of USPEs                   $   (372)        $   (448)
                                                  ==========       ===========

Marine vessels:  During the three months ended March 31, 2001, lease revenues of
$0.5  million  were  offset  by  depreciation  expense,   direct  expenses,  and
administrative  expenses of $0.4 million.  During the same period of 2000, lease
revenues of $0.7 million were offset by depreciation  expense,  direct expenses,
and administrative expenses of $0.9 million.

The decrease in marine  vessel lease  revenues of $0.2 million and  depreciation
expense, direct expenses, and administrative expenses of $0.2 million during the
three  months  ended  March  31,  2001,  was  caused  by the  sale of one of the
Partnership's  entities  that owned a marine  vessel  during 2000.  Depreciation
expense,  direct expenses,  and administrative  expenses decreased an additional
$0.2 million caused by


                                      -12-

<PAGE>

lower operating expenses of $0.1 million and a refund of $0.1 million for marine
vessel fuel during the three months  ended March 31,  2001, a similar  event did
not occur during the same period of 2000.

Aircraft:  During the three months ended March 31, 2001,  lease revenues of $0.7
million were offset by depreciation expense, direct expenses, and administrative
expenses of $1.1 million. During the same period of 2000, lease revenues of $0.5
million were offset by depreciation expense, direct expenses, and administrative
expenses of $0.9 million.  Lease revenues increased $0.1 million due to a Boeing
737-300 being  on-lease in the first  quarter of 2001 that was off-lease  during
the same period of 2000.

The  increase  in  expenses  of $0.2  million  was due to  required  repairs and
maintenance of $0.3 million to the Boeing 737-300 that were not required  during
the same period of 2000 offset in part,  by $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 $0.2 million for
the three months  ended March 31,  2001,  compared to net income of $0.9 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 first quarter of 2001 is not necessarily  indicative of future  periods.  In
the first  quarter of 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 three months ended March 31, 2001, the Partnership  generated  operating
cash  of  $2.7  million  (net  cash  provided  by  operating  activities,   plus
non-liquidating  distributions from USPEs) to meet its operating obligations and
make distributions (total for three months ended March 31, 2001 of approximately
$1.4 million) to the partners.

During the three  months  ended March 31, 2001,  the  Partnership  disposed of a
marine  container for proceeds of $4,000 and collected  unpaid sales proceeds in
accounts receivable at December 31, 2000 of $15,000.

During the three months ended March 31, 2001, the Partnership  purchased  marine
containers for $8.0 million and paid  acquisition and lease  negotiation fees of
$0.2 million to the General Partner for this equipment.

Investments in USPEs  decreased $0.7 million during the three months ended March
31, 2000 due to cash  distributions  of $0.4 million to the Partnership from the
USPEs  and a $0.4  million  loss  that was  recorded  from  operations  from the
Partnership's equity interests in USPEs.

Accounts payable  increased $0.1 million during the three months ended March 31,
2001 due to an increase of trade payables resulting from the accrual of interest
expense  due  to the  lender  of  the  notes  payable  which  is due to be  paid
semi-annually.

During the three  months  ended  March 31,  2001,  short-term  notes  payable to
affiliates  increased $5.5 million to fund the Partnership's  purchase of marine
containers.

During the three months ended March 31,  2001,  lessee  deposits and reserve for
repairs  increased  $0.1  million due to an increase in the reserve for a marine
vessel dry docking of $32,000 and an increase in the reserve for aircraft engine
repairs of $25,000.

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.

During April 2001, the General Partner entered into a joint $15.0 million credit
facility on behalf of the  Partnership,  PLM Equipment  Growth & Income Fund VII
(EGF VII),  Professional  Lease Management

                                      -13-
<PAGE>

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  agreement.  The Partnership,  EGF
VII,  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.

(III)    OUTLOOK FOR THE FUTURE

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. Two of the Partnership's marine vessels
have fixed-rate  leases that will expire during 2001 exposing them to re-leasing
and re-pricing  activity.  Freight rates earned by the  Partnership's  remaining
marine vessel began to show signs of  improvement  during the later half of 2000
and, in the absence of new additional orders,  would be expected to continue and
stabilize over the next one to two years.

2.  Railcar  loadings in North  America for the first  quarter of 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.  Although,  there was some upward  pressure on container
prices  during the fourth  quarter of 2000,  this trend was reversed  during the
first quarter of 2001.

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, and cash  distributions to
the partners,  to acquire  additional  equipment during the first seven years of
Partnership  operations,  which concludes December 31, 2001. The General Partner
believes  that  these   acquisitions  may  cause  the  Partnership  to  generate
additional earnings and cash flow for the Partnership.

Beginning in the  Partnership's  seventh year of operations,  which commences on
January 1, 2002,  the General  Partner  will stop  reinvesting  excess cash into
additional  equipment.  Surplus cash, if any, less reasonable reserves,  will be
distributed  to the  partners.  Beginning  in the  Partnership's  ninth  year of

                                      -14-
<PAGE>

operations,  which  commences on January 1, 2004, the General Partner intends to
begin an orderly  liquidation of the Partnership's  assets. The Partnership will
terminate  on December  31,  2013,  unless  terminated  earlier upon sale of all
equipment and by certain other events.



                                      -15-

<PAGE>

(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 three months ended March 31,  2001,  83% of the  Partnership's
total lease  revenues  from  wholly-  and  partially-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)


                                      -16-

<PAGE>



                          PART II -- OTHER INFORMATION


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

           (a)    Exhibits


           10.1   Warehousing  Credit Agreement among PLM  International,  Inc.,
                  PLM Equipment  Growth Fund VI, PLM  Equipment  Growth & Income
                  Fund VII,  Professional  Lease Management Income Fund I, LLC.,
                  and Imperial Bank and PFF Bank and Trust dated April 13, 2001.


           (b)    Reports on Form 8-K

                  None.


                                      -17-

<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:  May 7, 2001                      By:      /s/ Richard K Brock
                                                 -------------------
                                                 Richard K Brock
                                                 Vice President and
                                                 Chief Financial Officer


                                      -18-

<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: May 7, 2001              By:
                                        -----------------------------------
                                        Richard K Brock
                                        Vice President and
                                        Chief Financial Officer


                                      -19-